**Management’s Reports**

**Responsibility for Financial Information**

 Virginia Mines management is responsible for the preparation, integrity and objectivity of the financial statements and other financial information presented in this Annual Report. These financial statements have been prepared in accordance with Canadian generally accepted accounting principles and include some amounts that are based on estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly in all material respects.

Virginia Mines’ policy is to maintain systems of internal accounting, and administrative and disclosure controls—reinforced by standards of conduct and ethics set out in written policies—to provide reasonable assurance that the financial information is relevant, accurate and reliable, and that assets are appropriately accounted for and adequately safeguarded.

 The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the financial statements. The Board carries out this responsibility principally through its Audit Committee. The Audit Committee is appointed by the Board and is composed of independent outside directors. The Committee meets periodically with management and external auditors to review accounting, auditing and internal control matters. These financial statements have been reviewed and approved by the Board of Directors on the recommendation of the Audit Committee.

 The financial statements have been audited by PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., the independent auditors, in accordance with the Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States) on behalf of the shareholders. The external auditors have full and free access to the Audit Committee.

**Internal Control over Financial Reporting**

 Virginia Mines management is responsible for establishing and maintaining adequate internal control over financial reporting. Virginia Mines’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in Canada.

 Virginia Mines’ internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Virginia Mines; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in Canada, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of Virginia Mines; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Virginia Mines’ assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 Management conducted an evaluation of the effectiveness of Virginia Mines’ internal control over financial reporting based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Due to the existence of a material weakness described below, management concluded that Virginia Mines’ internal control over financial reporting was not effective as at February 29, 2008.

 A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual financial statements will not be prevented or detected on a timely basis. As at February 29, 2008, Virginia Mines did not maintain effective controls over a spreadsheet used in the calculation of a gain on the sale of a mining property in consideration of short-term investments. Specifically, effective controls were not designed and in place to monitor this process and ensure spreadsheet information was recorded and calculated accurately. This deficiency resulted in a material audit adjustment in the Company’s financial statements for the year ended February 29, 2008. Unless remediated, this deficiency could result in a material misstatement in the Company’s financial statements and notes disclosure that would not be prevented nor detected.

 The effectiveness of the Company’s internal control over financial reporting as at February 29, 2008 has been audited by PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., the independent auditors, as stated in their report which appears herein.

*André Gaumond*  President

*Gaétan Mercier*  Chief financial officer 

----

**Independent Auditors' Report**

**To the Shareholders of  Virginia Mines Inc.**

  We have completed an integrated audit of the financial statements and internal control over financial reporting of **Virginia Mines Inc.** as at February 29, 2008 and audits of its 2007 and 2006 financial statements. Our opinions, based on our audits, are presented below.

**Financial statements**

 We have audited the accompanying balance sheets of Virginia Mines Inc. as at February 29, 2008 and February 28, 2007, and the related statements of earnings, comprehensive income (loss), changes in shareholders' equity and cash flows for each of the years in the three-year period ended February 29,  2008. 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 of the Company's financial statements 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 about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. A financial statement audit also includes assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at February 29, 2008 and February 28, 2007 and the results of its operations and its cash flows for each of the years in the three-year period ended February 29, 2008 in accordance with Canadian generally accepted accounting principles.

 As discussed in Note 16, the Company has restated certain amounts presented in its 2007 reconciliation to United States generally accepted accounting principles.

As discussed in Note 2 to the financial statements, effective March 1, 2007, the Company changed the manner in which it accounts for financial instruments.

**Internal control over financial reporting**

 We have also audited Virginia Mines Inc.'s internal control over financial reporting as at February 29, 2008, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's  management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility  is to express an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

 We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control  over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal  control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of  compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual financial statements will not be prevented or detected on a timely basis. A material weakness in internal control  over financial reporting related to spreadsheet controls as described in Management's Report on Internal Control over Financial Reporting existed as at February 29, 2008.

 We considered this material weakness in determining the nature, timing and extent of audit tests applied in our audit of the February 29, 2008 financial statements, and our opinion regarding the effectiveness of the Company's internal control over financial reporting does not affect our opinion on  those financial statements.

 In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as at February 29, 2008 based on criteria established in Internal Control – Integrated Framework issued by the COSO.

**Chartered Accountants**

  Quebec, Quebec, CanadaMay 20, 2008

| **Virginia Mines Inc.**                                                     |                                                                           |         |                                  |
|-----------------------------------------------------------------------------|--------------------------------------------------------------------------------|--------------|---------------------------------------|
| (an exploration company)                                                    |                                                                           |         |                                  |
| Balance Sheets                                                              |                                                                           |         |                                  |
|                                                                        |                                                                           |         |                                  |   |
| (expressed in Canadian dollars)                                             |                                                                           |         |                                  |
|                                                                        |                                                                           |         | **As at February 29,** | **As at February 28,** |
|                                                                        |                                                                           |         | **2008**                              | **2007** |
|                                                                        |                                                                           |         | **$**                                 | **$** |
| **Assets**                                                                  |                                                                           |              |                                       |
|                                                                        |                                                                           |         |                                       |  |
| **Current assets**                                                          |                                                                           |              |                                       |
| Cash and cash equivalents                                                   |                                                                           | 8,665,254    | 6,139,543                             |
| Short-term investments (note 4)                                             |                                                                           | 36,194,101   | 34,496,012                            |
| Accounts receivable (note 5)                                                |                                                                           | 7,012,349    | 8,922,319                             |
| Prepaid expenses                                                            |                                                                           | 128,484      | 96,935                                |
|                                                                        |                                                                           |         |                                       |  |
|                                                                        |                                                                           |         | 52,000,188                            | 49,654,809 |
|                                                                        |                                                                           |         |                                       |  |
| **Long-term investments**(note 6)                                           |                                                                           | 1,444,000    | -                                     |
|                                                                        |                                                                           |         |                                       |  |
| **Property, plant and equipment,** at cost less accumulated depreciation of |                                                                                |              |
|                                                                        | $35,838 ($18,695 as at February 28, 2007)                                      | 133,415      | 11,471                                |
|                                                                        |                                                                           |         |                                       |  |
| **Mining properties** (note 7)                                              |                                                                           | 14,896,717   | 9,738,536                             |
|                                                                        |                                                                           |              |                                       |
| **Intangible asset,** at cost less accumulated amortization of              |                                                                                |              |
|                                                                        | $5,573 ($4,963 as at February 28, 2007)                                        | 1,425        | 2,035                                 |
|                                                                        |                                                                           |         |                                       |  |
|                                                                        |                                                                           |         | 68,475,745                            | 59,406,851 |
|                                                                        |                                                                           |         |                                       |  |
| **Liabilities**                                                             |                                                                           |              |                                       |
|                                                                        |                                                                           |         |                                       |  |
| **Current liabilities**                                                     |                                                                           |              |                                       |
| Accounts payable and accrued liabilities                                    |                                                                                |              |
|                                                                        | Companies held by Directors (note 11)                                          | 175,286      | 30,685                                |
|                                                                        | Others                                                                         |         | 3,719,989                             | 3,191,435 |
|                                                                        |                                                                           |         |                                       |  |
|                                                                        |                                                                           |         | 3,895,275                             | 3,222,120 |
|                                                                        |                                                                           |         |                                       |  |
| **Shareholders' Equity**                                                    |                                                                           |              |                                       |
|                                                                        |                                                                           |         |                                       |  |
| **Share Capital**                                                           |                                                                           | 98,204,815   | 94,447,526                            |
| Authorized                                                                  |                                                                           |              |                                       |
|                                                                        | Unlimited number of common shares, voting and participating, whitout par value |              |                                       |
| Issued and fully paid                                                       |                                                                           |              |                                       |
|                                                                        | 27,005,110 common shares (26,425,698 as at February 28, 2007)                  |              |                                       |
| **Warrants** (note 8)                                                       |                                                                           | -            | 261,114                               |
| **Stock options** (note 9a)                                                 |                                                                           | 3,966,778    | 2,895,074                             |
| **Contributed surplus** (note 9a)                                           |                                                                           | 29,481       | 26,028                                |
| **Deficit**                                                                 |                                                                           | (39,638,943) | (41,445,011)                          |
| **Accumulated other comprehensive income**                                  | 2,018,339                                                                      | -            |
|                                                                        |                                                                           |         |                                       |  |
|                                                                        |                                                                           |         | 64,580,470                            | 56,184,731 |
|                                                                        |                                                                           |         |                                       |  |
|                                                                        |                                                                           |         | 68,475,745                            | 59,406,851 |
|                                                                        |                                                                           |         |                                  |   |
| The accompanying notes are an integral part of these financial statements.  |                                                                           |
|                                                                        |                                                                           |         |                                  |   |
| **Approved by the Board, *(s) André Gaumond , Director***            | ***(s) André Lemire , Director***                                       |

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| **Virginia Mines Inc.**                                                              |                    |             |                         |
|--------------------------------------------------------------------------------------|-------------------------|------------------|------------------------------|
| (an exploration company)                                                             |                    |             |                         |
| Statements of Earnings                                                               |                    |             |                         |
|                                                                                 |                    |             |                         |   |
| (expressed in Canadian dollars)                                                      |                    |             |                         |
|                                                                                 |                    |             |                         |   |
|                                                                                 |                    | **Year ended**   |                              |  |
|                                                                                 |                    | **February 29,** | **Years ended February 28,** |
|                                                                                 |                    | **2008**         | **2007**                     | **2006** |
|                                                                                 |                    | **$**            | **$**                        | **$** |
| **General and administrative expenses**                                              |                         |                  |                              |
| Professional and maintenance fees (note 9a)                                          | 863,518                 | 2,691,814        | 449,157                      |
| Management fees (note 11)                                                            | 300,000                 | 182,144          | 53,812                       |
| Rent, office expenses and bonus                                                      | 1,063,911               | 1,039,500        | 658,763                      |
| Employee benefits - stock options                                                    | 6,479                   | 3,078            | 975,472                      |
| Advertising and exhibitions                                                          | 164,566                 | 93,236           | 173,626                      |
| Travelling                                                                           | 93,089                  | 80,648           | 107,398                      |
| Depreciation of property, plant and equipment                                        | 17,143                  | 3,412            | 4,470                        |
| Amortization of the intangible asset                                                 | 610                     | 872              | 1,245                        |
| General exploration costs (note 9a)                                                  | 1,227,331               | 1,319,369        | 474,205                      |
| Grants, credit on duties refundable for loss and refundable tax credit for resources | (200,925)               | (176,870)        | (126,676)                    |
| Cost of mining properties abandoned or written off (note 7)                          | 611,511                 | 1,909,273        | 1,124,145                    |
|                                                                                 |                    | 4,147,233        | 7,146,476                    | 3,895,617 |
|                                                                                 |                    |                  |                              |  |
| **Other income (expenses)**                                                          |                         |                  |                              |
| Dividends and interests                                                              | 1,970,287               | 1,703,103        | 1,301,133                    |
| Fees invoiced to partners                                                            | 1,107,980               | 293,869          | 106,599                      |
| Option payments received as financial instruments in excess of cost of               |                         |                  |                              |
|                                                                                 | mining property         | -                | 4,338,141                    | - |
| Gain on sale of short-term investments                                               | 2,085,194               | 1,009,767        | 680,021                      |
| Gain on sale of mining properties (note 7f and h)                                    | 6,360,000               | 319,198          | 429,961                      |
| Other than temporary writedown of short-term investments                             | (3,530,156)             | (298,960)        | -                            |
| Writedown of long-term investments (note 6)                                          | (2,455,387)             | -                | -                            |
| Unrealized losses on investments held for trading                                    | (1,630,425)             | -                | -                            |
|                                                                                 |                    | 3,907,493        | 7,365,118                    | 2,517,714 |
|                                                                                 |                    |                  |                              |  |
| **Earnings (loss) before income taxes and discontinued operation**                   | (239,740)               | 218,642          | (1,377,903)                  |
|                                                                                 |                    |                  |                              |  |
| **Future income taxes**(note 12)                                                     | 146,014                 | -                | (5,405,455)                  |
|                                                                                 |                    |                  |                              |  |
| **Net earnings (net loss) from continuing operations**                               | (385,754)               | 218,642          | 4,027,552                    |
|                                                                                      |                    |                  |                              |  |
| **Net earnings (net loss) from discontinued operation**                              | -                       | (637,494)        | 151,157                      |
| **Net earnings (net loss) for the year**                                             | (385,754)               | (418,852)        | 4,178,709                    |
|                                                                                 |                    |                  |                              |  |
| **Basic net earnings (net loss) per share from continuing**                          |                         |                  |                              |
|                                                                                 | **operations**(note 13) | (0.014)          | 0.009                        | 0.177 |
|                                                                                 |                    |                  |                              |  |
| **Basic net earnings (net loss) per share from the discontinued**                    |                         |                  |                              |
|                                                                                 | **operation**(note 13)  | -                | (0.025)                      | 0.007 |
|                                                                                 |                    |                  |                              |  |
| **Total basic net earnings (net loss) per share**                                    | (0.014)                 | (0.016)          | 0.184                        |
|                                                                                 |                    |                  |                              |  |
| **Diluted net earnings (net loss) per share from continuing**                        |                         |                  |                              |
|                                                                                 | **operations**(note 13) | (0.014)          | 0.009                        | 0.171 |
|                                                                                 |                    |                  |                              |  |
| **Diluted net earnings (net loss) per share from the discontinued**                  |                         |                  |                              |
|                                                                                 | **operation**(note 13)  | -                | (0.025)                      | 0.006 |
|                                                                                      |                    |                  |                              |  |
| **Total diluted net earnings (net loss) per share**                                  | (0.014)                 | (0.016)          | 0.177                        |
|                                                                                 |                    |             |                         |   |
| The accompanying notes are an integral part of these financial statements.           |                    |             |                         |

Page 2

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| **Virginia Mines Inc.**                      |                                                                                                                                                  |             |                         |
|----------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|------------------------------|
| (an exploration company)                     |                                                                                                                                                  |             |                         |
| Statement of Comprehensive Income (Loss)     |                                                                                                                                                  |             |                         |
|                                         |                                                                                                                                                  |             |                         |   |
| (expressed in Canadian dollars)              |                                                                                                                                                  |             |                         |
|                                         |                                                                                                                                                  |             |                         |   |
| **Comprehensive income (loss)**              |                                                                                                                                                  |             |                         |
|                                         |                                                                                                                                                  | **Year ended**   |                              |  |
|                                         |                                                                                                                                                  | **February 29,** | **Years ended February 28,** |
|                                         |                                                                                                                                                  | **2008**         | **2007**                     | **2006** |
|                                         |                                                                                                                                                  | **$**            | **$**                        | **$** |
| **Net earnings (net loss) for the year**     | (385,754)                                                                                                                                             | (418,852)        | 4,178,709                    |
|                                         |                                                                                                                                                  |                  |                              |  |
| **Other comprehensive loss**                 |                                                                                                                                                       |                  |                              |
|                                         | Unrealized losses on available-for-sale investments,                                                                                                  |                  |                              |  |
|                                         | net of related income taxes of $2,401                                                                                                                 | (12,958)         | -                            | - |
|                                         | Reclassification of other than temporary declines in value on available-for-sale investments to net earnings, net of related income taxes of $180,479 | 974,273          | -                            | - |
|                                         | Reclassification of gains on available-for-sale investments realized                                                                                  |                  |                              |  |
|                                         | upon sale to net earnings, net of related income taxes of $324,092                                                                                    | (1,749,537)      | -                            | - |
|                                         |                                                                                                                                                  |                  |                              |  |
|                                         |                                                                                                                                                  | (788,222)        | -                            | - |
|                                         |                                                                                                                                                  |                  |                              |  |
| **Comprehensive income (loss) for the year** | (1,173,976)                                                                                                                                           | (418,852)        | 4,178,709                    |

The accompanying notes are an integral part of these financial statements.

Page 3

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| **Virginia Mines Inc.**                                                                                                                 |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------------|------------|--------|------------|--------|-------------------|--------|------------------------------|--------|-------------|--------|-----------|-----------|--------|--------|--------------|--------|
| (an exploration company)                                                                                                                |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |
| Statement of Changes in Shareholders' Equity                                                                                            |         |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |
| **For the year ended February 29, 2008**                                                                                                |         |       |   |       |   |              |   |                         |   |        |   |      |      |   |   |         |   |   |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| (expressed in Canadian dollars)                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        | **Accumulated         other compre-    hensive income** |  |  |
|                                                                                                                                         |              |            |        |            |        | **Stock options** |        | **Contributed      surplus** |        | **Deficit** |        |           | **Total** |
| **Share capital    common shares**                                                                                                      | **Warrants** |            |
|                                                                                                                                         |              | **Number** |        | **$**      |        | **Number**        |        | **$**                        |        | **Number**  |        | **$**     |           | **$**  |        | **$**        |        | **$** |  | **$** |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| **Balance as at March 1, 2007**                                                                                                         |              | 26,425,698 |        | 94,447,526 |        | 484,162           |        | 261,114                      |        | 1,086,500   |        | 2,895,074 |           | 26,028 |        | (41,445,011) |        | - |  | 56,184,731 |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Impact of adopting new accounting standards (note 2)                                                                                    |              | -          |        | -          |        | -                 |        | -                            |        | -           |        | -         |           | -      |        | 2,191,822    |        | 2,806,561 |  | 4,998,383 |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Warrants exercised (note 8)                                                                                                             |              | 484,162    |        | 3,088,620  |        | (484,162)         |        | (261,114)                    |        | -           |        | -         |           | -      |        | -            |        | - |  | 2,827,506 |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Stock options exercised (note 9a)                                                                                                       |              | 80,250     |        | 572,027    |        | -                 |        | -                            |        | (80,250)    |        | (219,847) |           | -      |        | -            |        | - |  | 352,180 |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Stock options expired (note 9a)                                                                                                         |              | -          |        | -          |        | -                 |        | -                            |        | (1,000)     |        | (3,453)   |           | 3,453  |        | -            |        | - |  | - |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Stock options granted (note 9a)                                                                                                         |              | -          |        | -          |        | -                 |        | -                            |        | 361,750     |        | 1,295,004 |           | -      |        | -            |        | - |  | 1,295,004 |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Acquisition of a mining property                                                                                                        |              | 15,000     |        | 99,000     |        | -                 |        | -                            |        | -           |        | -         |           | -      |        | -            |        | - |  | 99,000 |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Share issue expenses                                                                                                                    |              | -          |        | (2,358)    |        | -                 |        | -                            |        | -           |        | -         |           | -      |        | -            |        | - |  | (2,358) |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Net loss for the year                                                                                                                   |              | -          |        | -          |        | -                 |        | -                            |        | -           |        | -         |           | -      |        | (385,754)    |        | - |  | (385,754) |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Net change in the fair value of avaliable-for-sale    investments, net of related income taxes of $146,014                              |              | -          |        | -          |        | -                 |        | -                            |        | -           |        | -         |           | -      |        | -            |        | (788,222) |  | (788,222) |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| **Balance as at February 29, 2008**                                                                                                     |              | 27,005,110 |        | 98,204,815 |        | -                 |        | -                            |        | 1,367,000   |        | 3,966,778 |           | 29,481 |        | (39,638,943) |        | 2,018,339 | (1) | 64,580,470 |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
|                                                                                                                                         |              |            |        |            |        |                   |        |                              |        |             |        |           |           |        |        |              |        |  |  |  |
| Deficit and accumulated other comprehensive income as at February 29, 2008 totalling $37,620,304 ($41,445,011 as at February 28, 2007). |              |
| (1) The entire balance of accumulated other comprehensive income is related to avaliable-for-sale investments.                          |              |            |

The accompanying notes are an integral part of these financial statements

Page 4

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| **Virginia Mines Inc.**                                                                         |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |
|-------------------------------------------------------------------------------------------------|-------------------|-------------------|--------|------------|--------|----------------------|--------|-------------------|--------|------------------|--------|----------|-------------|------------|-----------|-----------|--------|------------|--------|-----------|--------|-------------------------|--------|
| (an exploration company)                                                                        |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |
| Statement of Changes in Shareholders' Equity                                                    |              |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |
| **For the year ended February 28, 2007**                                                        |              |              |   |       |   |                 |   |              |   |             |   |     |        |       |      |      |   |       |   |      |   |                    |   |   |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| (expressed in Canadian dollars)                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        | **Contributed surplus** |        |  |  |  |
|                                                                                                 |                   | **Share capital** |        |            |        | **Warrants (units)** |        | **Stock options** |        | **Unit options** |        |          | **Deficit** |            | **Total** |
|                                                                                                 | **common shares** | **Warrants**      |
|                                                                                                 |                   | **Number**        |        | **$**      |        | **Number**           |        | **$**             |        | **Number**       |        | **$**    |             | **Number** |           | **$**     |        | **Number** |        | **$**     |        | **$**                   |        | **$** |  | **$** |
| **Balance as at March 1, 2006**                                                                 |                   | 24,078,286        |        | 85,471,959 |        | 417,712              |        | 446,117           |        | -                |        | -        |             | -          |           | -         |        | 47,865     |        | 101,178   |        | 1,274                   |        | (25,052,049) |  | 60,968,479 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Unit options exercised                                                                          |                   | 47,865            |        | 431,468    |        | -                    |        | -                 |        | 11,966           |        | 62,203   |             | -          |           | -         |        | (47,865)   |        | (101,178) |        | -                       |        | - |  | 392,493 |
| Warrants (units) exercised                                                                      |                   | 900               |        | 14,398     |        | -                    |        | -                 |        | (900)            |        | (4,678)  |             | -          |           | -         |        | -          |        | -         |        | -                       |        | - |  | 9,720 |
| Warrants exercised                                                                              |                   | 762               |        | 9,049      |        | (762)                |        | (814)             |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | -                       |        | - |  | 8,235 |
| Stock options granted                                                                           |                   | -                 |        | -          |        | -                    |        | -                 |        | -                |        | -        |             | 20,000     |           | 234,000   |        | -          |        | -         |        | -                       |        | - |  | 234,000 |
| Stock option exercised                                                                          |                   | 10,000            |        | 239,610    |        | -                    |        | -                 |        | -                |        | -        |             | (20,000)   |           | (234,000) |        | -          |        | -         |        | -                       |        | - |  | 5,610 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Transfer of Eleonore property's net assets and elimination of future income tax assets (note 3) |                   | -                 |        | -          |        | -                    |        | -                 |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | -                       |        | (15,974,110) |  | (15,974,110) |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants granted                                                                                |                   | -                 |        | -          |        | 484,162              |        | 261,114           |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | -                       |        | - |  | 261,114 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants exercised                                                                              |                   | 414,664           |        | 935,491    |        | (414,664)            |        | (442,861)         |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | -                       |        | - |  | 492,630 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants expired                                                                                |                   | -                 |        | -          |        | (2,286)              |        | (2,442)           |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | 2,442                   |        | - |  | - |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants (units) exercised                                                                      |                   | 10,316            |        | 65,879     |        | -                    |        | -                 |        | (10,316)         |        | (53,624) |             | -          |           | -         |        | -          |        | -         |        | -                       |        | - |  | 12,255 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants (units) expired                                                                        |                   | -                 |        | -          |        | -                    |        | -                 |        | (750)            |        | (3,901)  |             | -          |           | -         |        | -          |        | -         |        | 3,901                   |        | - |  | - |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Stock options exercised                                                                         |                   | 52,500            |        | 349,277    |        | -                    |        | -                 |        | -                |        | -        |             | (52,500)   |           | (143,152) |        | -          |        | -         |        | -                       |        | - |  | 206,125 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Stock options expired                                                                           |                   | -                 |        | -          |        | -                    |        | -                 |        | -                |        | -        |             | (7,000)    |           | (18,411)  |        | -          |        | -         |        | 18,411                  |        | - |  | - |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Stock options granted                                                                           |                   | -                 |        | -          |        | -                    |        | -                 |        | -                |        | -        |             | 1,146,000  |           | 3,056,637 |        | -          |        | -         |        | -                       |        | - |  | 3,056,637 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Issuance of shares for a cash consideration                                                     |                   | 1,210,405         |        | 4,786,279  |        | -                    |        | -                 |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | -                       |        | - |  | 4,786,279 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Acquisition of a mining property                                                                |                   | 600,000           |        | 2,168,769  |        | -                    |        | -                 |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | -                       |        | - |  | 2,168,769 |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Share issue expenses                                                                            |                   | -                 |        | (24,653)   |        | -                    |        | -                 |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | -                       |        | - |  | (24,653) |
|                                                                                                 |                   |                   |        |            |        |                      |        |                   |        |                  |        |          |             |            |           |           |        |            |        |           |        |                         |        |  |  |  |
| Net loss for the year                                                                           |                   | -                 |        | -          |        | -                    |        | -                 |        | -                |        | -        |             | -          |           | -         |        | -          |        | -         |        | -                       |        | (418,852) |  | (418,852) |
| **Balance as at February 28, 2007**                                                             |                   | 26,425,698        |        | 94,447,526 |        | 484,162              |        | 261,114           |        | -                |        | -        |             | 1,086,500  |           | 2,895,074 |        | -          |        | -         |        | 26,028                  |        | (41,445,011) |  | 56,184,731 |

The accompanying notes are an integral part of these financial statements

Page 5

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| **Virginia Mines Inc.**                      |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |
|----------------------------------------------|--------------|-------------------|--------|-------------|--------|----------------------|--------|-------------------|--------|------------------|--------|----------|-------------|-------------|-----------|-----------|--------|------------|--------|-----------|--------|-------------------------|--------|
| (an exploration company)                     |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |
| Statement of Changes in Shareholders' Equity |         |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |
| **For the year ended February 28, 2006**     |         |              |   |        |   |                 |   |              |   |             |   |     |        |        |      |      |   |       |   |      |   |                    |   |   |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| (expressed in Canadian dollars)              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        | **Contributed surplus** |        |  |  |  |
|                                              |              | **Share capital** |        |             |        | **Warrants (units)** |        | **Stock options** |        | **Unit options** |        |          | **Deficit** |             | **Total** |
| **common shares**                            | **Warrants** |
|                                              |              | **Number**        |        | **$**       |        | **Number**           |        | **$**             |        | **Number**       |        | **$**    |             | **Number**  |           | **$**     |        | **Number** |        | **$**     |        | **$**                   |        | **$** |  | **$** |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| **Balance as at March 1, 2005**              |              | 19,479,539        |        | 56,253,306  |        | 994,011              |        | 554,380           |        | -                |        | -        |             | 1,106,655   |           | 460,466   |        | -          |        | -         |        | 1,274                   |        | (29,230,758) |  | 28,038,668 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants granted                             |              | -                 |        | -           |        | 501,749              |        | 550,771           |        | -                |        | -        |             | -           |           | -         |        | -          |        | -         |        | -                       |        | - |  | 550,771 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants exercised                           |              | 1,078,048         |        | 5,648,018   |        | (1,078,048)          |        | (659,034)         |        | -                |        | -        |             | -           |           | -         |        | -          |        | -         |        | -                       |        | - |  | 4,988,984 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants (units) granted                     |              | -                 |        | -           |        | -                    |        | -                 |        | 17,509           |        | 91,024   |             | -           |           | -         |        | -          |        | -         |        | -                       |        | - |  | 91,024 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Warrants (units) exercised                   |              | 17,509            |        | 280,117     |        | -                    |        | -                 |        | (17,509)         |        | (91,024) |             | -           |           | -         |        | -          |        | -         |        | -                       |        | - |  | 189,093 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Stock options exercised                      |              | 1,213,155         |        | 4,519,684   |        | -                    |        | -                 |        | -                |        | -        |             | (1,213,155) |           | (801,534) |        | -          |        | -         |        | -                       |        | - |  | 3,718,150 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Unit options exercised                       |              | 70,035            |        | 631,386     |        | -                    |        | -                 |        | -                |        | -        |             | -           |           | -         |        | (70,035)   |        | (148,123) |        | -                       |        | - |  | 483,263 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Stock options granted                        |              | -                 |        | -           |        | -                    |        | -                 |        | -                |        | -        |             | 106,500     |           | 341,068   |        | 117,900    |        | 249,301   |        | -                       |        | - |  | 590,369 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Issuance of shares for a cash consideration  |              | 2,140,000         |        | 18,826,110  |        | -                    |        | -                 |        | -                |        | -        |             | -           |           | -         |        | -          |        | -         |        | -                       |        | - |  | 18,826,110 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Acquisition of a mining property             |              | 80,000            |        | 1,040,000   |        | -                    |        | -                 |        | -                |        | -        |             | -           |           | -         |        | -          |        | -         |        | -                       |        | - |  | 1,040,000 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Share issue expenses                         |              | -                 |        | (1,726,662) |        | -                    |        | -                 |        | -                |        | -        |             | -           |           | -         |        | -          |        | -         |        | -                       |        | - |  | (1,726,662) |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| Net earnings for the year                    |              | -                 |        | -           |        | -                    |        | -                 |        | -                |        | -        |             | -           |           | -         |        | -          |        | -         |        | -                       |        | 4,178,709 |  | 4,178,709 |
|                                              |              |                   |        |             |        |                      |        |                   |        |                  |        |          |             |             |           |           |        |            |        |           |        |                         |        |  |  |  |
| **Balance as at February 28, 2006**          |              | 24,078,286        |        | 85,471,959  |        | 417,712              |        | 446,117           |        | -                |        | -        |             | -           |           | -         |        | 47,865     |        | 101,178   |        | 1,274                   |        | (25,052,049) |  | 60,968,479 |

The accompanying notes are an integral part of these financial statement

Page 6

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| **Virginia Mines Inc.**                                                    |                                                                   |             |                         |
|----------------------------------------------------------------------------|------------------------------------------------------------------------|------------------|------------------------------|
| (an exploration company)                                                   |                                                                   |             |                         |
| Statements of Cash Flows                                                   |                                                                   |             |                         |
|                                                                       |                                                                   |             |                         |   |
| (expressed in Canadian dollars)                                            |                                                                   |             |                         |
|                                                                       |                                                                   | **Year ended**   |                              |  |
|                                                                       |                                                                   | **February 29,** | **Years ended February 28,** |
|                                                                       |                                                                   | **2008**         | **2007**                     | **2006** |
|                                                                       |                                                                   | **$**            | **$**                        | **$** |
|                                                                            |                                                                   |                  |                              |  |
| **Cash flows from operating activities from continuing operations**        |                                                                        |                  |                              |
| Net earnings (net loss) from continuing operations for the year            | (385,754)                                                              | 218,642          | 4,027,552                    |
| Items not affecting cash and cash equivalents                              |                                                                        |                  |                              |
|                                                                       | Cost of mining properties abandoned or written off                     | 611,511          | 1,909,273                    | 1,124,145 |
|                                                                       | Depreciation and loss on sale of property, plant and equipment         | 17,753           | 4,284                        | 6,198 |
|                                                                       | Stock-based compensation costs (note 9a)                               | 1,295,004        | 3,290,637                    | 341,068 |
|                                                                       | Other than temporary writedown of short-term investments               | 3,530,156        | 298,960                      | - |
|                                                                       | Writedown of long-term investments                                     | 2,455,387        | -                            | - |
|                                                                       | Option payments received as financial instruments in excess of cost of |                  |                              |  |
|                                                                       | mining property                                                        | -                | (4,338,141)                  | - |
|                                                                       | Gain on sale of short-term investments                                 | (2,085,194)      | (1,009,767)                  | (680,021) |
|                                                                       | Gain on sale of mining properties                                      | (6,360,000)      | (319,198)                    | (429,961) |
|                                                                       | Unrealized loss on investments held for trading                        | 1,630,425        | -                            | - |
|                                                                       | Future income taxes                                                    | 146,014          | -                            | (5,405,455) |
|                                                                       |                                                                   | 855,302          | 54,690                       | (1,016,474) |
|                                                                       |                                                                        |                  |                              |
| Net change in non-cash working capital items (note 10a)                    | (962,346)                                                              | 3,283,682        | 252,991                      |
|                                                                       | (107,044)                                                              | 3,338,372        | (763,483)                    |
| **Cash flows from operating activities from the**                          |                                                                        |                  |                              |
|                                                                       | **discontinued operation** (note 3d)                                   | -                | (1,802,127)                  | (581,859) |
|                                                                       |                                                                   | (107,044)        | 1,536,245                    | (1,345,342) |
|                                                                       |                                                                   |                  |                              |  |
| **Cash flows from financing activities from**                              |                                                                        |                  |                              |
|                                                                       | **continuing operations**                                              |                  |                              |  |
| Issuance of share capital and warrants                                     | 3,179,686                                                              | 6,174,461        | 28,821,013                   |
| Share issue expenses                                                       | (2,358)                                                                | (24,653)         | (1,300,019)                  |
|                                                                       |                                                                   | 3,177,328        | 6,149,808                    | 27,520,994 |
|                                                                       |                                                                   |                  |                              |  |
| **Cash flows from financing activities from the**                          |                                                                        |                  |                              |
|                                                                       | **discontinued operation**(note 3d)                                    | -                | -                            | 3,000,000 |
|                                                                       |                                                                   | 3,177,328        | 6,149,808                    | 30,520,994 |
|                                                                       |                                                                   |                  |                              |  |
| **Cash flows from investing activities from continuing operations**        |                                                                        |                  |                              |
| Net disposition (acquisition) of short-term investments                    | 5,694,717                                                              | (7,992,521)      | (11,805,485)                 |
| Decrease in deposit on exploration costs                                   | -                                                                      | -                | 49,430                       |
| Long-term investments                                                      | (3,899,387)                                                            | -                | -                            |
| Acquisition of mining properties                                           | (9,618,429)                                                            | (4,291,531)      | (5,866,656)                  |
| Change in credit on duties refundable for loss and refundable tax credit   |                                                                        |                  |                              |
|                                                                       | related to exploration costs applied against mining properties         | 6,973,228        | 652,485                      | - |
| Acquisition of property, plant and equipment                               | (39,174)                                                               | (3,666)          | -                            |
| Proceeds from disposal of mining properties                                | -                                                                      | 15,000           | 1,300                        |
| Option payments received                                                   | 344,472                                                                | 90,001           | -                            |
| Change in deferred charges                                                 | -                                                                      | -                | (341,722)                    |
|                                                                       |                                                                   | (544,573)        | (11,530,232)                 | (17,963,133) |
| **Cash flows from investing activities from the**                          |                                                                        |                  |                              |
|                                                                       | **discontinued operation**(note 3d)                                    | -                | (472,189)                    | (8,074,910) |
|                                                                       |                                                                   |                  |                              |  |
| **Net change in cash and cash equivalents**                                | 2,525,711                                                              | (4,316,368)      | 3,137,609                    |
| **Cash and cash equivalents - Beginning of year**                          | 6,139,543                                                              | 10,455,911       | 7,318,302                    |
| **Cash and cash equivalents - End of year**                                | 8,665,254                                                              | 6,139,543        | 10,455,911                   |
|                                                                       |                                                                   |             |                         |   |
| **Supplemental information**(note 10b)                                     |                                                                   |             |                         |
|                                                                       |                                                                   |             |                         |   |
| The accompanying notes are an integral part of these financial statements. |

> 
Page 7

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**Virginia Mines Inc.**(an exploration company)Notes to Financial Statements  February 29, 2008 and February 28, 2007 and 2006

  (expressed in Canadian dollars)

**1 Incorporation and nature of operations**

> 
The company, incorporated under the Canada Business Corporations Act, is in the business of acquiring and exploring mining    properties. It has not yet determined whether its properties contain ore reserves that are economically recoverable. The    recoverability of the amounts shown for mining properties is dependent upon the existence of economically recoverable ore    reserves, the ability of the company to obtain necessary financing to continue the exploration and development of its properties,  and upon future profitable production or proceeds from the disposal of properties.

**2 Summary of significant accounting policies**

> 
***Basis of presentation***    These financial statements have been prepared in accordance with Canadian generally accepted accounting principles. These    principles conform, in all material respects, with United States generally accepted accounting principles as it relates to the    company, except for the measurement differences described in note 16. The significant accounting policies, which have been    consistently applied, except for those affecting financial instruments are summarized as follows.***Use of estimates***    The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires    management to make estimates and assumptions that affect the amounts of assets and liabilities reported in the financial    statements. Those estimates and assumptions also affect the disclosure of contingencies at the date of the financial statements    and the reported amounts of revenues and expenses for the reporting periods. Significant estimates include the valuation of credit    on duties refundable for loss and the refundable tax credit for resources, the future income tax assets and liabilities, the    recoverability of long-term investments and the mining properties, the fair value of stock options granted and certain liabilities.    Actual results could differ from those estimates.***Cash and cash equivalents***    Cash and cash equivalents consist of cash on hand, balances with banks and highly liquid short-term investments with original    maturities of three months or less at the acquisition date.    ***Short-term investments***    Short-term investments consist primarily of bonds, trust units, convertible debenture and investments in public companies that do    not meet the definition of cash and cash equivalents.    In accordance with the new requirements of Section 3855 of the Canadian Institute of Chartered Accountants ("CICA")    Handbook, "Financial Instruments – Recognition and Measurement", adopted by the company as of March 1, 2007, short-term    investments that are bonds, trust units or investments in public companies are classified as available-for-sale investments.    Convertible debentures and warrants held by the company are classified as investments held for trading. Transactions are    recorded on settlement date, and investments are recognized at fair value. Unrealized gains and losses are recorded, net of    income taxes, if any, in comprehensive income in the case of available for sale investments or in net earnings for investments    held for trading. When available-for-sale investments are disposed of or impaired, these gains or losses are reclassified to net    earnings.    Prior to March 1, 2007, short-term investments were stated at the lower of amortized cost and market value.

Page 8

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**Virginia Mines Inc.**  (an exploration company)    Notes to Financial Statements  February 29, 2008 and February 28, 2007 and 2006(expressed in Canadian dollars)

> 
***Property, plant and equipment and depreciation***    Property, plant and equipment are recorded at cost less accumulated depreciation, and are depreciated using the declining    balance method at the rates of 20% for office equipment and 30% for field equipment.***Mining properties***    The company records its interests in mining properties and areas of geological interest at cost less option payments received and    other recoveries. Exploration costs related to these interests and projects are capitalized on the basis of specific claim blocks or    areas of geological interest until the mining properties to which they relate are placed into production, sold or abandoned.    Management reviews for impairment the carrying amount of mining properties on a regular basis. These costs will be amortized    over the estimated useful life of mining properties following commencement of production or written off if the mining properties    are sold or projects are abandoned. General exploration costs not related to specific mining properties are expensed as incurred.    

Although management has taken actions to verify the ownership rights for mining properties in which the company owns an      interest in accordance with industry standards for the current exploration phase of these properties, these procedures give no      assurance to the company as to title. The title to property may be subject to unrecognized prior agreements and not compliant      with regulatory requirements.***Intangible asset***    The intangible asset, which consists of Web site development expenses, is recorded at cost less accumulated amortization, and is    amortized using the declining balance method at a rate of 30%.***Credit on duties refundable for loss and refundable tax credit for resources***    The company is entitled to a credit on duties refundable for loss under the Mining Duties Act. This credit on duties refundable    for loss on mining exploration expenses incurred in the province of Quebec at a rate of 12% has been applied against the costs    incurred.    Furthermore, the company is entitled to a refundable tax credit for resources for mining companies on qualified expenditures    incurred. The refundable tax credit for resources may reach 38.75%. This tax credit has been applied against the costs incurred.

Page 9

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**Virginia Mines Inc**.  (an exploration company)  Notes to Financial Statements  February 29, 2008 and February 28, 2007 and 2006  (expressed in Canadian dollars)

> 
***Share capital***    Shares issued pursuant to flow-through financing agreements and for the acquisition of mining properties are recorded at their fair    market value. Upon the acquisition of mining properties, the carrying value may exceed the tax basis since the company    renounces the deductions in favour of the investors concerned. Future income taxes arising from the difference between the    carrying amount and the tax basis are recorded as share issue expenses.    Share issue expenses and future income taxes arising from the difference between the carrying value and the tax basis of    exploration costs are applied against share capital.***Government grants***    Government grants are recorded as income when the company has reasonable assurance that it has complied and will continue to    comply with all the conditions related to the grant. Grants related to expenses are included in earnings when the related expenses    are incurred. Grants related to exploration costs are deducted from the related mining properties.***Income taxes***    The company provides for income taxes using the liability method. Under this method, future income tax assets and liabilities are    determined based on deductible or taxable temporary differences between financial statement values and tax values of assets and    liabilities using enacted or substantively enacted income tax rates expected to be in effect for the period in which the differences    are expected to reverse.    The company establishes a valuation allowance against future income tax assets if, based on available information, it is more    likely than not that some or all of the future income tax assets will not be realized.***Basic and diluted earnings per share***    Basic earnings per share are calculated using the weighted average number of participating shares outstanding during the year.        Diluted earnings per share are calculated using the weighted average number of participating shares outstanding during the    period, plus the effects of dilutive potential participating shares outstanding during the year. The calculation of diluted earnings    per share is made using the treasury stock method, as if all dilutive potential shares had been issued at the later of the beginning of    the year or the date of issuance, as the case may be, and as if the funds obtained thereby had been used to purchase participating    shares of the company at the average quoted market value of the participating shares during the year.

Page 10

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**Virginia Mines Inc.**  (an exploration company)  Notes to Financial StatementsFebruary 29, 2008 and February 28, 2007 and 2006

  (expressed in Canadian dollars)

> 
***Stock-based compensation plan***    The company has established a stock-based compensation plan, which is described in note 9a. Any consideration received from    plan members upon the exercise of stock options is credited to share capital. The company accounts for compensation costs for    all forms of stock-based compensation awarded to employees and non-employees, including stock options, using a fair value    based method.**New accounting standards*****Accounting changes***    Effective March 1, 2007, the company adopted CICA Handbook Section 1506 "Accounting Changes". This Section establishes    criteria for changes in accounting policies and the accounting treatment and disclosures regarding changes in accounting policies,    changes in estimates and corrections of errors. In particular, this Section allows for voluntary changes in accounting policy only    when they result in the financial statements providing reliable and relevant information. Furthermore, this Section requires    disclosure of when an entity has not applied a new source of GAAP that has been issued but is not yet effective. Such disclosures    are provided below. The adoption of this Section had no further effects on the financial statements of the company for the year    ended February 29, 2008.***Financial instruments***    In January 2005, the CICA issued four new accounting standards in relating to financial instruments : Section 3855 "Financial    Instruments – Recognition and Measurement", Section 3865, "Hedges", Section 1530, "Comprehensive Income" and Section    3251 "Equity". Sections 3855 and 1530 were adopted by the company effective March 1, 2007. The company has applied these    changes retroactively without restatement of prior years.    The Section 3865, "Hedges", which is application of hedge accounting is optional, established standards for hedge accounting    application and the disclosure information. This standard has not have any significant impact on the financial statements of the    company.    Section 3855, "Financial Instruments – Recognition and Measurement" requires that all financial assets and financial liabilities    be recognized on the balance sheet when the company becomes a party to the contractual provisions of financial instruments. On    initial recognition, all financial instruments subject to Section 3855, including embedded derivative financial instruments that are    not closely related to the host contract, must be measured at fair value. The company has chosen June 1, 2002 as the    identification date for embeded derivatives.    After initial recognition, the measurement of financial instruments depends on their classification : held for trading, available-forsale,  loans and receivables and other than held-for-trading liabilities.

● **Held for trading**– Financial assets and financial liabilities required to be classified or designated as held for trading are      measured at fair value, with gains, losses and transaction costs recorded in net earnings for the period in which they      arise. Section 3855 allows an entity to designate any financial instrument as held for trading on initial recognition or      adoption of the accounting standard if reliable fair values are available, even if that instrument would not otherwise      satisfy the definition of a security held for trading. Transaction costs are recorded immediately in net earnings.

Page 11

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**Virginia Mines Inc.**(an exploration company)Notes to Financial StatementsFebruary 29, 2008 and February 28, 2007 and 2006

 

  (expressed in Canadian dollars)

> 
● **Available-for-sale** – Financial assets classified as available-for-sale are measured at fair value. Unrealized gains and      losses, are recognized directly in other comprehensive income, except for impairment losses, which are recognized in net      earnings. Upon derecognition of the financial asset, the accumulated gains or losses previously recognized in      Accumulated other comprehensive income are reclassified to net earnings. Transaction costs are added to the carrying      amount of the financial instrument.● **Loans and receivables** – Financial assets classified as loans and receivable are measured at amortized cost using the      effective interest method, which corresponds to costs due to their short terms to maturity.● **Other than held-for-trading liabilities** – Financial liabilities classified as other than held-for-trading are measured at      amortized cost using the effective interest method, which corresponds to costs due to their short term to maturity.      

 Following is a summary of the classifications the company has elected to apply to each of its significant categories of financial        instruments outstanding as of March 1, 2007 :
Cash and cash equivalentsHeld for tradingBonds, trust units and sharesAvailable for saleWarrants and convertibles debenturesHeld for tradingAmounts receivable from partners and othersLoans and receivableLong-term investmentsHeld for tradingAccounts payable and accrued liabilitiesOther than held-for-trading 
**Transitional adjustment**      On March 1, 2007, the company made ajustments to its financial instruments in the balance sheet. These adjustments made to the      previous fair value of warrants and convertible debentures have been recognized as an adjustment to the opening balance of      deficit and all adjustments to initial fair value of bonds, trust units and shares have been recognized to the opening balance of the      comprehensive income, net of related income taxes. Following table presents impact of the new accounting standards on the    balance sheet.
 **As at February 28, 2007****Impact of adopting new accounting standards****As at March 1, 2007** **Assets**Short-term investments34,496,012 4,998,383 39,494,395  **Shareholders' Equity**Deficit(41,445,011)2,191,822 (39,253,189)Accumulated other comprehensive income- 2,806,561 (1)2,806,561  **Impact on Shareholders' Equity**(41,445,011)4,998,383 (36,446,628)     (1) This amount is net of related income taxes of $600,493, which are accounted for to deficit.
 

Page 12

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**Virginia Mines Inc.**  (an exploration company)  Notes to Financial Statements  February 29, 2008 and February 28, 2007 and 2006(expressed in Canadian dollars)

> 
**Impact of new accounting standards not yet adopted****Capital Disclosures**    The CICA issued Section 1535, "Capital Disclosures". This Section establishes standards for disclosing information about an    entity's capital. The information will enable users of its financial statements to evaluate its objectives, policies and processes for    managing capital. An entity will also disclose whether it complies with capital requirements to which it is subject and the    consequences of non-compliance. This new standard will apply to the fiscal year beginning on March 1, 2008. The company is    presently evaluating the impact of this new standard on its financial statements.**Financial Instruments – Disclosures and Financial Instruments - Presentation**    The CICA issued new Sections 3862, "Financial Instruments – Disclosures", and 3863, "Financial Instruments – Presentation",    which will replace Section 3861, "Financial Instruments – Disclosure and Presentation". These Sections require enhanced    disclosures on financial asset and liability categories as well as a detailed analysis of the risks associated with the company's    financial instruments. Presentation requirements remain unchanged. These new standards will apply to the fiscal year beginning    on March 1, 2008. The company is presently evaluating the impact of these new standards on its financial statements.**Going Concern**    The CICA amended Section 1400, "General Standards of Financial Statement Presentation" to include requirements to assess and    disclose an entity's ability to continue as a going concern (going concern assumption). Based on the current situation, the company    does not expect to disclose additional information in its financial statements.**Goodwill and intangible assets**    In February 2008, the CICA issued Section 3064, "Goodwill and intangible assets", replacing Section 3062, "Goodwill and other    intangible assets" and Section 3450, "Research and development costs". Various changes have been made to other sections of the    CICA Handbook for consistency purposes. The new Sections will be applicable to financial statements relating to fiscal years    beginning on or after October 1, 2008. Accordingly, the company will adopt the new standards for its fiscal year beginning March    1, 2009. Section 3064 establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent    to its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from    the standards included in the previous Section 3062. The Company is presently evaluating the impact of these new standards on    its financial statements.

----

**Virginia Mines Inc.**(an exploration company)Notes to Financial StatementsFebruary 29, 2008 and February 28, 2007 and 2006

(expressed in Canadian dollars)

**3 Discontinued operation**

> 
    At a special shareholders' meeting held on March 24, 2006, a majority of Virginia Gold Mines shareholders voted in favour of    the plan of arrangement (effective March 31, 2006) involving Goldcorp Inc. ("Goldcorp"), Virginia Gold Mines Inc. ("Virginia    Gold Mines") and the company. The transaction was completed on March 31, 2006.    Further to this plan of arrangement, the following events occured :    Virginia Gold Mines became a wholly-owned subsidiary of Goldcorp, and holds the Eleonore property and assumed the    liabilities related to the Eleonore property. Effective April 25, 2006, the name Virginia Gold Mines was changed to "Les Mines    Opinaca Ltée".    Virginia Gold Mines transferred to the company the assets not related to the Eleonore property at fair market value for a    consideration consisting of the issuance of 18,017,817 shares by the company and the assumption by the company of the    liabilities not related to the Eleonore property, with the effect of increasing the deficit of $15,974,110 corresponding to the net    assets of Eleonore property and future income taxes assets of Virginia Gold Mines. Furthermore, the company has assumed the    continuing operations of Virginia Gold Mines, except for the Eleonore property.    

 The company acquired from Virginia Gold Mines a production royalty on the Eleonore property for a consideration consisting of      a cash payment of $16,099,000 and the issuance of 400 shares of the company. The stated value of the production royalty    acquired by the company from Virginia Gold Mines was nil, since they were entered into by related parties.    Virginia Gold Mines then subscribed for 6,119,595 shares of the company for a cash consideration of $16,099,000.    

 The reduction of Virginia Gold Mines' stated capital was paid in kind through a distribution of the shares of the company to its      shareholders. Each shareholder of Virginia Gold Mines received 0.5 share of the company for each share of Virginia Gold    Mines.    

 In addition, each shareholder of Virginia Gold Mines has exchanged his/her shares at a rate of 0.4 share of Goldcorp for one      share of Virginia Gold Mines.      

Virginia Gold Mines' warrants outstanding as at March 31, 2006 ceased to be exercisable for shares of Virginia Gold Mines.        Each warrant now entitles the holder to receive, upon exercise in accordance with the agreed-upon terms, the number of shares        of Goldcorp and of the company that the holder would have received under the plan of arrangement if, immediately before the        effective time, such holder had been the registered holder of the number of shares of Virginia Gold Mines he would have been        entitled to upon exercise.        

These transactions between the company and Virginia Gold Mines have been recorded at the carrying value since they were          entered into by related parties.          

Comparative figures for the year ended February 28, 2006 are derived from the financial statements of Virginia Gold Mines.

Page 14

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**Virginia Mines Inc.**(an exploration company)Notes to Financial Statements  February 29, 2008 and February 28, 2007 and 2006

(expressed in Canadian dollars)

    a) Presented below is a simplified corporate structure of Virginia Mines Inc. before and after the completion of the    plan of arrangement with Goldcorp:

**Structure before the plan of arrangement**

Page 15

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| **Virginia Mines Inc.**                          |                                                                                           |                                        |           |
|--------------------------------------------------|------------------------------------------------------------------------------------------------|---------------------------------------------|-----------|
| (an exploration company)                         |                                                                                           |                                        |      |
| Notes to Financial Statements                    |                                                                                           |                                        |           |
| February 29, 2008 and February 28, 2007 and 2006 |                                                                                           |                                        |      |
|                                             |                                                                                           |                                        |      |   |
| (expressed in Canadian dollars)                  |                                                                                           |                                        |      |
|                                             |                                                                                           |                                        |      |   |
| b)                                               | Earnings of the discontinued operation                                                         |                                        |      |   |
|                                             |                                                                                           |                                        |      |   |
|                                             |                                                                                           | **Year ended     February 29,**        |      |   |
|                                             |                                                                                           |                                        |      |
|                                             |                                                                                           | **Years ended February 28,** |
|                                             |                                                                                           | **2008**                                    | **2007**  | **2006** |
|                                             |                                                                                           | **$**                                       | **$**     | **$** |
|                                             |                                                                                           |                                        |      |   |
|                                             | Operating loss before income taxes                                                             | -                                           | (637,494) | (394,348) |
|                                             |                                                                                           |                                        |      |   |
|                                             | Income taxes recovery                                                                          | -                                           | -         | 545,505 |
|                                             |                                                                                           |                                             |           |  |
|                                             | Net earnings (net loss) from the discontinued operation                                        | -                                           | (637,494) | 151,157 |
|                                             |                                                                                           |                                        |      |   |
| c)                                               | The mining property of discontinued operation has changed as follows during the fiscal years : |

 

|   |                                                           | **Year ended February 29,** | **Year ended February 28,** |
|--------|----------------------------------------------------------------|-----------------------------|-----------------------------|
|   |                                                           |
|   |                                                           |
|   |                                                           | **2008**                    | **2007**                    |
|   |                                                           | **$**                       | **$**                       |
|   |                                                                |                             |                             |
|   | Mining property - Beginning of year                            | -                           | 192,124                     |
|   |                                                           |                             |                             |
|   | Mining property discontinued                                   | -                           | (192,124)                   |
|   |                                                           |                             |                             |
|   | Mining property - End of year                                  | -                           | -                           |
|   |                                                           |                             |                             |
|   | Exploration costs - Beginning of year                          | -                           | 11,205,333                  |
|   |                                                           |                             |                             |
|   | Cost incurred during the year                                  |                             |                             |
|   |                                                           |                             |                             |
|   | Analyses                                                       | -                           | 4,536                       |
|   | Drilling                                                       | -                           | 303,403                     |
|   | Geology                                                        | -                           | 107,799                     |
|   | Transport                                                      | -                           | 169,304                     |
|   | Professional fees                                              | -                           | 276,770                     |
|   | Accomodation                                                   | -                           | 14,234                      |
|   |                                                           | -                           | 12,081,379                  |
|   |                                                           |                             |                             |
|   | Credit on duties refundable for loss and refundable tax credit |                             |                             |
|   | for resources                                                  | -                           | (249,673)                   |
|   |                                                           |                             |                             |
|   | Exploration costs discontinued                                 | -                           | (11,831,706)                |
|   |                                                           |                             |                             |
|   | Exploration costs - End of year                                | -                           | -                           |
|   |                                                           |                             |                             |
|   | **Total discontinued mining property**                         | -                           | -                           |

 

Page 16

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| **Virginia Mines Inc.**                          |                                                     |                         |             |
|--------------------------------------------------|----------------------------------------------------------|------------------------------|-------------|
| (an exploration company)                         |                                                     |                         |        |
| Notes to Financial Statements                    |                                                     |                         |             |
| February 29, 2008 and February 28, 2007 and 2006 |                                                     |                         |        |
|                                             |                                                     |                         |        |   |
| (expressed in Canadian dollars)                  |                                                     |                         |        |
|                                             |                                                     |                         |        |   |
| d)                                               | Cash used by the discontinued operation are as follows:  |                         |        |   |
|                                             |                                                     |                         |        |   |
|                                             |                                                     |                         |        |   |
|                                             |                                                     | **Year ended February 29,**  |        |   |
|                                             |                                                     | **Years ended February 28,** |
|                                             |                                                     | **2008**                     | **2007**    | **2006** |
|                                             |                                                     | **$**                        | **$**       | **$** |
|                                             |                                                     |                         |        |   |
|                                             | **Cash flows from operating activities**                 |                         |        |   |
|                                             | Net earnings (net loss) from the discontinued operation  | -                            | (637,494)   | 151,157 |
|                                             | Items not affecting cash and cash equivalents            |                         |        |   |
|                                             | Future income taxes                                      | -                            | -           | (545,505) |
|                                             | Defered charges expensed during the year                 | -                            | 341,722     | - |
|                                             |                                                     | -                            | (295,772)   | (394,348) |
|                                             |                                                     |                              |             |  |
|                                             | Change in non-cash working capital items                 |                              |             |  |
|                                             | Amounts receivable                                       | -                            | (688,989)   | (187,511) |
|                                             | Accounts payable and accrued liabilities                 | -                            | (817,366)   | - |
|                                             |                                                     | -                            | (1,802,127) | (581,859) |
|                                             |                                                     |                              |             |  |
|                                             | **Cash flows from financing activities**                 |                              |             |  |
|                                             | Advances from Goldcorp Inc.                              | -                            | -           | 3,000,000 |
|                                             |                                                     |                              |             |  |
|                                             | **Cash flows from investing activities**                 |                              |             |  |
|                                             | Acquisition of a mining property                         | -                            | (472,189)   | (8,074,910) |
|                                             |                                                     |                              |             |  |
|                                             | **Cash used by the discontinued operation**              | -                            | (2,274,316) | (5,656,769) |
|                                             |                                                     |                         |        |   |
| e)                                               | Items not affecting cash related to investing activities |                         |        |   |

 

|                                               |   |   | **Year ended February 29,**  |     |     |
|----------------------------------------------------|--------|--------|------------------------------|----------|----------|
|                                               |   |   | **Years ended February 28,** |
|                                               |   |   | **2008**                     | **2007** | **2006** |
|                                               |   |   | **$**                        | **$**    | **$**    |
|                                               |   |   |                         |     |     |
| Credit on duties refundable for loss and           |   |   |                         |
| refundable tax credit related to exploration costs |   |   |                         |
| applied against the discontinued mining property   | -      | -      | (1,046,314)                  |
| Acquisition of a mining property included in       |   |   |                         |
| accounts payable and accrued liabilities           | -      | -      | 1,435,716                    |

Page 17

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| **Virginia Mines Inc.**                          |                                                                  |                        |                        |            |
|--------------------------------------------------|-----------------------------------------------------------------------|-----------------------------|-----------------------------|------------|
| (an exploration company)                         |                                                                  |                        |                        |       |
| Notes to Financial Statements                    |                                                                  |                        |                        |            |
| February 29, 2008 and February 28, 2007 and 2006 |                                                                  |                        |                        |
|                                             |                                                                  |                        |                        |       |   |
| (expressed in Canadian dollars)                  |                                                                  |                        |                        |       |
|                                             |                                                                  |                        |                        |       |   |
| **4**                                            | **Short-term investments**                                            |                        |                        |       |   |
|                                             |                                                                  |                        |                        |       |   |
|                                             | a) Allocation of investments by instrument                            |                        |                        |       |   |
|                                             |                                                                  |                        |                        |       |   |
|                                             | **Short-term investments available for sale**                         | **As at February 29, 2008** | **As at February 28, 2007** |
|                                             |                                                                  |                             | Carrying value         |            | Market value |
|                                             |                                                                  | Amortized cost              | Carrying value              |
|                                             |                                                                  | $                           | $                           | $          | $ |
| Bonds                                            |                                                                  |                        |                        |       |
|                                             | Federal                                                               | 1,458,062                   | 1,563,132                   | -          | - |
|                                             | Provincial                                                            | 8,671,695                   | 8,797,844                   | 4,621,364  | 4,642,254 |
|                                             | Paragovernmental                                                      | 2,789,246                   | 2,870,236                   | 7,724,210  | 7,769,717 |
|                                             | Municipal                                                             | 7,508,062                   | 7,704,661                   | 6,448,642  | 6,512,219 |
|                                             | Companies                                                             | 1,306,770                   | 1,305,224                   | 964,224    | 980,553 |
|                                             | Financial institutions                                                | 151,438                     | 141,075                     | 151,419    | 139,655 |
|                                             | Other                                                                 | 259,154                     | 254,603                     | 2,436,673  | 2,441,924 |
|                                             |                                                                  |                             |                             |            |  |
|                                             |                                                                  | 22,144,427                  | 22,636,775                  | 22,346,532 | 22,486,322 |
|                                             |                                                                  |                             |                             |            |  |
| Preferred shares of public companies             | 85,303                                                                | 94,558                      | 211,319                     | 179,672    |
| Common shares of public companies                | 5,390,801                                                             | 6,290,562                   | 4,183,706                   | 6,973,038  |
| Trust units                                      | 3,756,077                                                             | 4,817,645                   | 4,487,110                   | 4,987,147  |
| Other                                            | 278,594                                                               | 288,479                     | 298,595                     | 308,136    |
|                                             |                                                                  |                             |                             |            |  |
| **Total**                                        | 31,655,202                                                            | 34,128,019                  | 31,527,262                  | 34,934,315 |
|                                             |                                                                  |                        |                        |       |   |
|                                             |                                                                  |                        |                        |       |   |
|                                             | **Short-term investments held-for-trading**                           | **As at February 29, 2008** | **As at February 28, 2007** |
|                                             |                                                                  |                             | Carrying value         |            | Market value |
|                                             |                                                                  | Amortized cost              | Carrying value              |
|                                             |                                                                  | $                           | $                           | $          | $ |
| Convertibles debentures *                        | 1,996,857                                                             | 1,957,762                   | 1,658,642                   | 1,725,715  |
|                                             |                                                                  |                             |                             |            |  |
| Warrants of public companies                     | 108,320                                                               | 108,320                     | 1,310,108                   | 2,834,365  |
|                                             |                                                                  |                             |                             |            |  |
| **Total**                                        | 2,105,177                                                             | 2,066,082                   | 2,968,750                   | 4,560,080  |
|                                             |                                                                  |                             |                             |            |  |
|                                             |                                                                  | 33,760,379                  | 36,194,101                  | 34,496,012 | 39,494,395 |
|                                             |                                                                  |                        |                        |       |   |
|                                             |                                                                  |                        |                        |       |   |
|                                             | (*) These convertibles debentures are designated as held for trading. |                             |                        |       |

As at February 29, 2008, gross unrealized losses on available-for-sale securities totalled $975,732. On this amount, $74,732 related to bonds and preferred shares and results from wider credit spreads due to recent disruptions on capital markets as well as increases in market interest rates and not from deterioration in the creditworthiness of issuers and the balance of $901,000 on common shares and trust units related to the timing of the market prices, foreign exchange movements, on the early years in business cycle of the investees for certain investments. The company has the ability and intent to hold these securities for a period of time sufficient to allow for recovery in fair value. It determined that the gross unrealized losses are temporary in nature.

Page 18

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| **Virginia Mines Inc.**                                            |   |   |        |
|--------------------------------------------------------------------|--------|--------|--------|
| (an exploration company)                                           |   |   |   |
| Notes to Financial Statements                                      |   |   |        |
| February 29, 2008 and February 28, 2007 and 2006                   |   |   |
|                                                               |   |   |   |   |
| (expressed in Canadian dollars)                                    |   |   |   |
|                                                               |   |   |   |   |
| b) Allocation of bonds and convertible debentures by maturity date |   |

| **Bonds Maturity**                  | **As at February 29, 2008** |
|-------------------------------------|-----------------------------|
|                                | **Less than**               | **From 1 to** | **More than** |  |
|                                | **1 year**                  | **5 years** | **5 years** | **Total** |
|                                | **$**                       | **$** | **$** | **$** |
| Amortized cost                      | 6,247,681                   | 13,979,189 | 1,917,557 | 22,144,427 |
| Par value                           | 6,333,457                   | 13,740,240 | 1,880,000 | 21,953,697 |
| Carrying value                      | 6,297,182                   | 14,358,621 | 1,980,972 | 22,636,775 |
|                                |                             |  |  |  |  |
| **Bonds Maturity**                  | **As at February 28, 2007** |
|                                | **Less than**               | **From 1 to** | **More than** |  |
|                                | **1 year**                  | **5 years** | **5 years** | **Total** |
|                                | **$**                       | **$** | **$** | **$** |
| Carrying value                      | 10,644,382                  | 10,149,747 | 1,552,403 | 22,346,532 |
| Par value                           | 10,730,190                  | 9,805,395 | 1,530,000 | 22,065,585 |
| Market value                        | 10,673,277                  | 10,214,763 | 1,598,282 | 22,486,322 |
|                                |                             |  |  |  |  |
|                                |                             |  |  |  |  |
| **Convertible debentures maturity** | **As at February 29, 2008** |
|                                | **Less than**               | **From 1 to** | **More than** |  |
|                                | **1 year**                  | **5 years** | **5 years** | **Total** |
|                                | **$**                       | **$** | **$** | **$** |
| Amortized cost                      | -                           | 1,285,012 | 711,845 | 1,996,857 |
| Par value                           | -                           | 1,261,000 | 704,000 | 1,965,000 |
| Carrying value                      | -                           | 1,280,736 | 677,026 | 1,957,762 |
|                                |                             |  |  |  |  |
| **Convertible debentures maturity** | **As at February 28, 2007** |
|                                | **Less than**               | **From 1 to** | **More than** |  |
|                                | **1 year**                  | **5 years** | **5 years** | **Total** |
|                                | **$**                       | **$** | **$** | **$** |
| Carrying value                      | -                           | 740,862 | 917,781 | 1,658,643 |
| Par value                           | -                           | 729,000 | 912,000 | 1,641,000 |
| Market value                        | -                           | 782,413 | 943,302 | 1,725,715 |

c) Interest rateThe bonds bear interest at fixed rates ranging from 3.17% to 8.25% (from 3.00% to 8.25% as at February 28, 2007). The convertible debentures bear interest at fixed rates ranging from 5,70% to 8.25% (5.50% to 8.25% as at February 28, 2007).

Page 19

----

| **Virginia Mines Inc.**                          |                                                  |   |                  |
|--------------------------------------------------|-------------------------------------------------------|--------|------------------|
| (an exploration company)                         |                                                  |   |             |
| Notes to Financial Statements                    |                                                  |   |                  |
| February 29, 2008 and February 28, 2007 and 2006 |                                                  |   |             |
|                                             |                                                  |   |             |   |
| (expressed in Canadian dollars)                  |                                                  |   |             |
|                                             |                                                  |   |             |   |
| **5**                                            | **Amounts receivable**                                |   |             |   |
|                                             |                                                  |   | **As at**        | **As at** |
|                                             |                                                  |   | **February 29,** | **February 28,** |
|                                             |                                                  |   | **2008**         | **2007** |
|                                             |                                                  |   | **$**            | **$** |
|                                             |                                                  |   |             |   |
|                                             | Refundable tax credit for resources                   |   | 3,942,713        | 7,166,994 |
|                                             | Credit on duties refundable for loss                  |   | 2,117,942        | 1,370,068 |
|                                             | Amounts receivable under agreements with partnerships |   | 106,641          | 71,898 |
|                                             | Commodity taxes receivable                            |   | 771,218          | 197,284 |
|                                             | Other                                                 |   | 73,835           | 116,075 |
|                                             |                                                  |   | 7,012,349        | 8,922,319 |

**6 Long-term investments**

> 
    As at February 29, 2008, the company held $3,800,000 principal amount of non-bank sponsored Asset-Backed Commercial Paper    ("ABCP"). DBRS Limited (“DBRS”) placed this ABCP (the “Montreal Proposal ABCP”) “Under Review with Developing    Implications” following the August 16, 2007 announcement that a group representing banks, asset providers and major investors    had agreed in principle to a long-term proposal and interim agreement to convert the Montreal Proposal ABCP into term floatingrate    notes (“FRNs”) maturing no earlier than the scheduled termination dates of the underlying assets.

 The maturity dates of the Montreal Proposal ABCP held by the company initially ranging from August 23, 2007 to October 10,    2007. At the dates at which the company acquired the investments, the non-bank sponsored ABCP was rated R-1 (High) by DBRS  for $3,500,000 and R-1 (middle) for $300,000, the highest credit ratings for commercial paper.    On September 6, 2007, the Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper (the“Committee”) consisting of a panel of major Montreal Proposal ABCP investors was formed. On December 23, 2007, theChairman of the Committee announced the framework of the proposed restructuring of 20 of its issuers (the “MasterAgreement”), including the three issuers of the ABCP held by the company, and further extended the standstill agreement untilJanuary 31, 2008 and after until February 22, 2008. The Master Agreement proposed to (i) extend the maturity of the MontrealProposal ABCP to provide for a maturity similar to that of the underlying assets; (ii) pool certain series of Montreal ProposalABCP which are supported in whole or in part by underlying synthetic assets; (iii) mitigate the margin call obligations of theexisting conduits with margin call risk and create credit facilities; and (iv) support the liquidity needs of those Montreal ProposalABCP holders requiring it.

    The Montreal Proposal ABCP last traded in the active market on or about August 13, 2007 and there was no market quotations    available for the Montreal Proposal ABCP as at February 29, 2008.

 The company estimates the fair value of the Montreal Proposal ABCP using a valuation technique which incorporates a    probability weighted approach applied to discounted future cash flows considering the best available data regarding market    conditions for such investments as at February 29, 2008. In determining the fair value of the Montreal Proposal ABCP, the    Company assumes the Montreal Proposal ABCP will be converted into FRNs and in accordance with the key elements of the    Master Agreement. In addition, the Company assumes the restructured notes will include traditional securitized assets ($300,000    principal amount) having an average maturity of 8.4 years and bearing interest at a rate commensurate with AAA rated notes. The    company assumes the restructured pooled synthetic notes ($1,500,000 principal amount) will include collateralized debt    obligations (“CDOs”) having an average maturity of 8.4 years and bearing interest at a rate commensurate with AAA rated notes.

Page 20

----

**Virginia Mines Inc.**(an exploration company)Notes to Financial StatementsFebruary 29, 2008 and February 28, 2007 and 2006

  (expressed in Canadian dollars)

> 
  These pooled synthetic notes will be bifurcated into senior and subordinated notes, the significant majority of which are expected    to be ranked senior. Furthermore, in determining the fair value of the Montreal Proposal ABCP, the company assumes that returns    on the pooled synthetic notes will be reduced by the cost of a margin facility estimated to be 1.00%. The company assumes that    all US sub-prime residential mortgage-backed CDOs will be restructured as ineligible notes ($2,000,000 principal amount) having    and average maturity of 8.4 years and bearing interest at a rate commensurate with the rating of the underlying assets, ranging    from CCC to AAA. In determining the fair value, the company also included factors taking into consideration current market    conditions surrounding the Montreal Proposal ABCP such as liquidity and transparency. The restructuring costs of approximately    $150 million are expected to further reduce the returns on the Montreal Proposal ABCP. These costs will be allocated to the new    notes. As at February 29, 2008, the fair value of the company’s Montreal Proposal ABCP was estimated to $1,444,000 and was    classified as long-term investments.

 Since the fair value of the Montreal Proposal ABCP is determined using a probability-weighted approach and the foregoing    assumptions and is based on the company’s assessment of market conditions as at February 29, 2008, the fair value reported may    change materially in subsequent periods. In addition, the fair value estimate is dependent upon the likelihood, nature and timing    of future restructuring under the terms of the Montreal Proposal and the December 2007 Restructuring Proposal. The company    believes the outcome of the proposed restructuring will not have a material impact to the company’s financial condition.

On March 17, 2008, the Ontario Superior Court of Justice granted an initial order as well as an assembly order and established the    global restructuring process of ABCP issued by Montreal Proposal converted trusts under the Companies' Creditors Arrangement    Act (CCAA). On March 19, 2008, DBRS withdrew its ratings on all Montreal Proposal ABCP. On April 25, 2008, ABCP    holders of each issuer included in the Plan approved the resolution related to the proposed restructuring. The main goals of the    proposed restructuring plan are to replace ABCP issued by new longer term floating rate notes having a maturity similar to that of    the underlying assets and to reduce the risk of margin calls further by restructuring the margin call triggers of existing trusts. The    implementation date of the Plan was initially planned to be May 23, 2008 and remain subject to proceeding under the CCAA and    the allocation of notes in exchange of ABCP under the Plan will be made as soon as possible thereafter. As a result of the    acceptance of the Plan, the company expects to receive the following investments :
 MAV 1  Class A-1 Synthetic Notes798,000  Class A-2 Synthetic Notes507,000  Class B Synthetic Notes87,000  Class C Synthetic Notes43,000  Tracking notes - Traditional Assets (TA)365,000     1,800,000  MAV3 Tracking Notes - Ineligible Assets (IA)2,000,000     $3,800,000          
MAV 1 will be composed by 100% pooled synthetic notes or hybrids notes or a combination of synthetic and traditional notes  including ineligible pooled assets.    MAV 3 will be composed of notes supported exclusively by ineligible or traditional assets.    It is expected that the Class A-1 Synthetic Notes and Class A-2 Synthetic Notes of MAV1, will be rated AA by DBRS as of the    implementation date of the Plan. We will try to obtain ratings on the TA Tracking Notes. The Class B Synthetic Notes, the Class  C Synthetic Notes and the MAV3 IA Tracking Notes will not be rated.

Page 21

----

| **Virginia Mines Inc.**                          |                                   |                                  |                      |                                                        |
|--------------------------------------------------|----------------------------------------|---------------------------------------|---------------------------|--------------------------------------------------------|
| (an exploration company)                         |                                   |                                  |                      |                                                   |
| Notes to Financial Statements                    |                                   |                                  |                      |                                                   |  |
| February 29, 2008 and February 28, 2007 and 2006 |                                   |                                  |                      |
|                                             |                                   |                                  |                      |                                                   |   |   |   |
| (expressed in Canadian dollars)                  |                                   |                                  |                      |                                                   |   |
|                                             |                                   |                                  |                      |                                                   |   |   |   |
| **7**                                            | **Mining properties**                  |                                  |                      |                                                   |   |   |
|                                             |                                   |                                  |                      |                                                   |   |   |   |
|                                             |                                        |                                       |                           |                                                        |  | **Mining properties       abandoned,       written off,       under option or       sold, credit on       duties refundable       for loss,       refundable tax     credit for resources** |  |
|                                             |                                   |                                       |                           |                                                        |  |  |
|                                             |                                   |                                       |                           |                                                        |  |  |
|                                             |                                   |                                       |                           |                                                        |  |  |
|                                             |                                   |                                       |                           |                                                        |  |  |
|                                             |                                   |                                       |                           |                                                        |  |  |
|                                             |                                   |                                       |                           |                                                        |  |  |
|                                             |                                   |                                       |                           |                                                        |  | **Balance as at****February 29,****2008** |
|                                             |                                   | **# claims /****# permits** | **Undivided****interest** | **Balance as at****March 1, 2007** | **Costs****incurred** |
|                                             |                                   |
|                                             |                                   | **%**                                 | **$**                     | **$**                                                  | **$** | **$** |
|                                             | Anatacau (note 7d)                     | 207                                   |                      |                                                   |   |   |   |
|                                             | Mining property                        | 0                                     | -                         | 25,345                                                 | - | 25,345 |
|                                             | Exploration costs                      |                                  | -                         | 684,306                                                | (315,465) | 368,841 |
|                                             |                                   |                                  |                      | -                                                      | 709,651 | (315,465) | 394,186 |
|                                             |                                   |                                  |                      |                                                        |  |  |  |
|                                             | Corvet Est (note 7a)                   | 723                                   |                      |                                                        |  |  |  |
|                                             | Mining property                        | 100                                   | 30,401                    | -                                                      | - | 30,401 |
|                                             | Exploration costs                      |                                  | 1,007,474                 | -                                                      | (35,000) | 972,474 |
|                                             |                                   |                                  |                      | 1,037,875                                              | - | (35,000) | 1,002,875 |
|                                             |                                   |                                  |                           |                                                        |  |  |
|                                             | Coulon JV                              | 3,035                                 |                      |                                                        |  |  |  |
|                                             | Mining property                        | 50                                    | 185,531                   | 92,031                                                 | - | 277,562 |
|                                             | Exploration costs                      |                                  | 699,025                   | 3,619,062                                              | (2,006,123) | 2,311,964 |
|                                             |                                   |                                  | 884,556                   | 3,711,093                                              | (2,006,123) | 2,589,526 |
|                                             |                                   |                                  |                           |                                                        |  |  |
|                                             | Éléonore Régional | 641                                   |                      |                                                        |  |  |  |
|                                             | Mining property                        | 100                                   | 55,901                    | 101,460                                                | - | 157,361 |
|                                             | Exploration costs                      |                                  | 168,143                   | 582,646                                                | (268,600) | 482,189 |
|                                             |                                   |                                  | 224,044                   | 684,106                                                | (268,600) | 639,550 |
|                                             |                                   |                                  |                           |                                                        |  |  |
|                                             | FCI                                    | 412                                   |                      |                                                        |  |  |  |
|                                             | Mining property                        | 100                                   | 51,828                    | 30,634                                                 | - | 82,462 |
|                                             | Exploration costs                      |                                  | 336,351                   | 562,261                                                | (259,202) | 639,410 |
|                                             |                                   |                                  | 388,179                   | 592,895                                                | (259,202) | 721,872 |
|                                             |                                   |                                  |                           |                                                        |  |  |
|                                             | Gipouloux                              | 1,846                                 |                      |                                                        |  |  |  |
|                                             | Mining property                        | 100                                   | 206,432                   | -                                                      | - | 206,432 |
|                                             | Exploration costs                      |                                  | 62,162                    | 230,471                                                | (106,247) | 186,386 |
|                                             |                                   |                                  |                      | 268,594                                                | 230,471 | (106,247) | 392,818 |
|                                             |                                   |                                  |                      |                                                        |  |  |  |
|                                             |                                   | (forward)                             |                      | 2,803,248                                              | 5,928,216 | (2,990,637) | 5,740,827 |

----

| **Virginia Mines Inc**.                          |                                                         |                             |                      |                                                        |
|--------------------------------------------------|--------------------------------------------------------------|----------------------------------|---------------------------|--------------------------------------------------------|
| (an exploration company)                         |                                                         |                             |                      |                                                   |
| Notes to Financial Statements                    |                                                         |                             |                      |                                                   |  |
| February 29, 2008 and February 28, 2007 and 2006 |                                                         |                             |                      |
|                                             |                                                         |                             |                      |                                                   |   |   |   |
| (expressed in Canadian dollars)                  |                                                         |                             |                      |                                                   |   |
|                                             |                                                         |                                  |                           |                                                        |  |  |  |
|                                             |                                                              |                                  |                           |                                                        |  | **Mining properties   abandoned,   written off,   under option or   sold, credit on   duties refundable   for loss,   refundable tax   credit for resources** |  |
|                                             |                                                         |                                  |                           |                                                        |  |  |
|                                             |                                                         |                                  |                           |                                                        |  |  |
|                                             |                                                         |                                  |                           |                                                        |  |  |
|                                             |                                                         |                                  |                           |                                                        |  |  |
|                                             |                                                         |                                  |                           |                                                        |  |  |
|                                             |                                                         |                                  |                           |                                                        |  | **Balance as at****February 29,****2008** |
|                                             |                                                         | **# claims /****# permits** | **Undivided****interest** | **Balance as at****March 1, 2007** | **Costs****incurred** |
|                                             |                                                         |
|                                             |                                                         | **%**                            | **$**                     | **$**                                                  | **$** | **$** |
|                                             |                                                         |                             |                      |                                                   |   |   |   |
|                                             | (brought forward)                                            |                             | 2,803,248                 | 5,928,216                                              | (2,990,637) | 5,740,827 |
|                                             |                                                         |                             |                      |                                                        |  |  |  |
|                                             | Laguiche                                                     | 2,990                            |                      |                                                        |  |  |  |
|                                             | Mining property                                              | 100                              | 247,150                   | 148,390                                                | - | 395,540 |
|                                             | Exploration costs                                            |                             | 41,300                    | 566,011                                                | (357,761) | 249,550 |
|                                             |                                                         |                             | 288,450                   | 714,401                                                | (357,761) | 645,090 |
|                                             |                                                         |                             |                      |                                                        |  |  |  |
|                                             | Lac Gayot (note 7g)                                          | 492                              |                      |                                                        |  |  |  |
|                                             | Mining property                                              | 2                                | 100                       | 2,245,429                                              | 20,491 | - | 2,265,920 |
|                                             | Exploration costs                                            |                             |                      | 750,692                                                | 142,454 | (95,671) | 797,475 |
|                                             |                                                         |                             |                      | 2,996,121                                              | 162,945 | (95,671) | 3,063,395 |
|                                             |                                                         |                             |                      |                                                        |  |  |  |
|                                             | Nichicun                                                     | 1,501                            |                      |                                                        |  |  |  |
|                                             | Mining property                                              | 100                              | 157,574                   | 19,654                                                 | - | 177,228 |
|                                             | Exploration costs                                            |                             | 3,074                     | 447,986                                                | (206,521) | 244,539 |
|                                             |                                                         |                                  |                      | 160,648                                                | 467,640 | (206,521) | 421,767 |
|                                             |                                                         |                             |                      |                                                        |  |  |  |
|                                             | Poste Lemoyne Ext.                                           | 230                              |                      |                                                        |  |  |  |
|                                             | Mining property                                              | 100                              | 1,079,399                 | 23,905                                                 | - | 1,103,304 |
|                                             | Exploration costs                                            |                             | 775,682                   | 1,403,708                                              | (647,109) | 1,532,281 |
|                                             |                                                         |                             |                      | 1,855,081                                              | 1,427,613 | (647,109) | 2,635,585 |
|                                             |                                                         |                             |                      |                                                        |  |  |  |
|                                             | Wabamisk                                                     | 734                              |                      |                                                        |  |  |  |
|                                             | Mining property                                              | 100                              | 141,681                   | 974                                                    | - | 142,655 |
|                                             | Exploration costs                                            |                             | 228,435                   | 691,377                                                | (318,725) | 601,087 |
|                                             |                                                         |                             |                      | 370,116                                                | 692,351 | (318,725) | 743,742 |
|                                             |                                                         |                                  |                      |                                                        |  |  |  |
|                                             | Others                                                       |                             |                      |                                                        |  |  |  |
|                                             | Mining properties                                            |                             | 542,446                   | 410,585                                                | - | 953,031 |
|                                             | Exploration costs                                            |                             | 722,426                   | 851,279                                                | (880,425) | 693,280 |
|                                             |                                                         |                             | 1,264,872                 | 1,261,864                                              | (880,425) | 1,646,311 |
|                                             |                                                         |                             |                      | 9,738,536                                              | 10,655,030 | (5,496,849) | 14,896,717 |
|                                             |                                                         |                             |                      |                                                   |   |   |   |
|                                             | All mining properties are located in the province of Quebec. |                             |                      |                                                   |

 

----

| **Virginia Mines Inc.**                          |                                   |                        |                      |                                              |
|--------------------------------------------------|----------------------------------------|-----------------------------|---------------------------|----------------------------------------------|
| (an exploration company)                         |                                   |                        |                      |                                         |
| Notes to Financial Statements                    |                                   |                        |                      |                                         |  |
| February 29, 2008 and February 28, 2007 and 2006 |                                   |                        |                      |
|                                             |                                   |                        |                      |                                         |   |   |   |
| (expressed in Canadian dollars)                  |                                   |                        |                      |                                         |   |
|                                             |                                   |                        |                      |                                         |   |   |   |
|                                             |                                   |                             |                           |                                              |  | **Mining properties abandoned, written off, under option or sold, credit on duties refundable for loss, refundable tax credit for resources** |  |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             |                                   |                             |                           |                                              |  | **Balance as at    February 28, 2007** |
|                                             |                                   | **# claims /    # permits** | **Undivided    interest** | **Balance as at    March 1, 2006** | **Costs    incurred** |
|                                             |                                   |
|                                             |                                   | **%**                       | **$**                     | **$**                                        | **$** | **$** |
|                                             |                                   |                        |                      |                                         |   |   |
|                                             | Corvet Est                             | 723                         |                      |                                         |   |   |   |
|                                             | Mining property                        |                        | 100                       | 30,401                                       | - | - | 30,401 |
|                                             | Exploration costs                      |                        |                           | 1,037,729                                    | (474) | (29,781) | 1,007,474 |
|                                             |                                   |                             | 1,068,130                 | (474)                                        | (29,781) | 1,037,875 |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             | Coulon Pitaval                         | 368                         |                           |                                              |  |  |  |
|                                             | Mining property                        |                        | 100                       | 62,132                                       | 10,264 | - | 72,396 |
|                                             | Exploration costs                      |                        |                           | 231,800                                      | 97,686 | (44,695) | 284,791 |
|                                             |                                   |                             | 293,932                   | 107,950                                      | (44,695) | 357,187 |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             | Coulon JV                              | 598                         |                           |                                              |  |  |  |
|                                             | Mining property                        |                        | 100                       | 100,940                                      | (15) | - | 100,925 |
|                                             | Exploration costs                      |                        |                           | 376,439                                      | 9,599 | (28,876) | 357,162 |
|                                             |                                   |                             | 477,379                   | 9,584                                        | (28,876) | 458,087 |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             | Éléonore Régional | 613                         |                           |                                              |  |  |  |
|                                             | Mining property                        |                        | 100                       | 770                                          | 55,131 | - | 55,901 |
|                                             | Exploration costs                      |                        |                           | 45,469                                       | 247,160 | (124,486) | 168,143 |
|                                             |                                   |                             | 46,239                    | 302,291                                      | (124,486) | 224,044 |
|                                             |                                   |                             |                           |                                              |  |  |
|                                             | FCI                                    | 121                         |                           |                                              |  |  |  |
|                                             | Mining property                        | 2                           | 100                       | 12,820                                       | 19,871 | - | 32,691 |
|                                             | Exploration costs                      |                        |                           | 39,649                                       | 338,855 | (155,942) | 222,562 |
|                                             |                                   |                             | 52,469                    | 358,726                                      | (155,942) | 255,253 |
|                                             |                                   |                        |                           |                                              |  |  |  |
|                                             | Gipouloux                              | 1,613                       |                           |                                              |  |  |  |
|                                             | Mining property                        |                        | 100                       | -                                            | 206,432 | - | 206,432 |
|                                             | Exploration costs                      |                        |                      | -                                            | 115,328 | (53,166) | 62,162 |
|                                             |                                   |                        | -                         | 321,760                                      | (53,166) | 268,594 |
|                                             |                                   |                        |                      |                                              |  |  |  |
|                                             |                                   | (forward)                   |                      | 1,938,149                                    | 1,099,837 | (436,946) | 2,601,040 |

 

Page 24

----

| **Virginia Mines Inc.**                          |               |                        |                      |                                              |
|--------------------------------------------------|--------------------|-----------------------------|---------------------------|----------------------------------------------|
| (an exploration company)                         |               |                        |                      |                                         |
| Notes to Financial Statements                    |               |                        |                      |                                         |  |
| February 29, 2008 and February 28, 2007 and 2006 |               |                        |                      |
|                                             |               |                        |                      |                                         |   |   |   |
| (expressed in Canadian dollars)                  |               |                        |                      |                                         |   |
|                                             |               |                        |                      |                                         |   |   |   |
|                                             |               |                             |                           |                                              |  | **Mining properties abandoned, written off, under option or sold, credit on duties refundable for loss, refundable tax credit for resources** |  |
|                                             |               |                             |                           |                                              |  |  |
|                                             |               |                             |                           |                                              |  |  |
|                                             |               |                             |                           |                                              |  |  |
|                                             |               |                             |                           |                                              |  |  |
|                                             |               |                             |                           |                                              |  |  |
|                                             |               |                             |                           |                                              |  | **Balance as at    February 28, 2007** |
|                                             |               | **# claims     /# permits** | **Undivided    interest** | **Balance as at    March 1, 2006** | **Costs    incurred** |
|                                             |               |
|                                             |               | **%**                       | **$**                     | **$**                                        | **$** | **$** |
|                                             | (brought forward)  |                        | 1,938,149                 | 1,099,837                                    | (436,946) | 2,601,040 |
|                                             |               |                        |                      |                                              |  |  |  |
|                                             | Laguiche           | 2,213                       |                      |                                              |  |  |  |
|                                             | Mining property    |                        | 100                       | 58,520                                       | 188,630 | - | 247,150 |
|                                             | Exploration costs  |                        |                      | 270                                          | 76,123 | (35,093) | 41,300 |
|                                             |               |                        |                      | 58,790                                       | 264,753 | (35,093) | 288,450 |
|                                             |               |                        |                      |                                              |  |  |  |
|                                             | Lac Gayot          | 116                         |                      |                                              |  |  |  |
|                                             | Mining property    | 3                           | 100                       | 47,660                                       | 2,197,769 | - | 2,245,429 |
|                                             | Exploration costs  |                        |                      | 701,067                                      | 91,687 | (42,062) | 750,692 |
|                                             |               |                        |                      | 748,727                                      | 2,289,456 | (42,062) | 2,996,121 |
|                                             |               |                        |                      |                                              |  |  |  |
|                                             | Saganash           | 458                         |                      |                                              |  |  |  |
|                                             | Mining property    |                        | 100                       | 31,537                                       | 51,258 | - | 82,795 |
|                                             | Exploration costs  |                        |                      | 35,846                                       | 211,961 | (97,670) | 150,137 |
|                                             |               |                        |                      | 67,383                                       | 263,219 | (97,670) | 232,932 |
|                                             |               |                        |                      |                                              |  |  |  |
|                                             | Poste Lemoyne Ext. | 211                         |                      |                                              |  |  |  |
|                                             | Mining property    |                        | 100                       | 1,074,205                                    | 5,194 | - | 1,079,399 |
|                                             | Exploration costs  |                        |                      | 429,686                                      | 641,905 | (295,909) | 775,682 |
|                                             |               |                        |                      | 1,503,891                                    | 647,099 | (295,909) | 1,855,081 |
|                                             |               |                        |                      |                                              |  |  |  |
|                                             | Wabamisk           | 734                         |                      |                                              |  |  |  |
|                                             | Mining property    |                        | 100                       | 48,124                                       | 93,557 | - | 141,681 |
|                                             | Exploration costs  |                        |                      | 43,820                                       | 342,417 | (157,802) | 228,435 |
|                                             |               |                        |                      | 91,944                                       | 435,974 | (157,802) | 370,116 |
|                                             |               |                        |                      |                                              |  |  |  |
|                                             | Others             |                        |                      |                                              |  |  |  |
|                                             | Mining properties  |                        |                      | 568,629                                      | 492,014 | (412,071) | 648,572 |
|                                             | Exploration costs  |                        |                      | 1,589,799                                    | 1,274,903 | (2,118,478) | 746,224 |
|                                             |               |                        | 2,158,428                 | 1,766,917                                    | (2,530,549) | 1,394,796 |
|                                             |               |                        |                      | 6,567,312                                    | 6,767,255 | (3,596,031) | 9,738,536 |

Page 25

----

| **Virginia Mines Inc.**                          |                                                           |   |   |             |
|--------------------------------------------------|----------------------------------------------------------------|--------|--------|-------------|
| (an exploration company)                         |                                                           |   |   |        |
| Notes to Financial Statements                    |                                                           |   |   |             |
| February 29, 2008 and February 28, 2007 and 2006 |                                                           |   |   |
|                                             |                                                           |   |   |        |   |
| (expressed in Canadian dollars)                  |                                                           |   |   |        |
|                                             |                                                           |   |   |        |   |
|                                             | **Change in mining properties**                                |   |   |        |   |
|                                             |                                                           |   |   | **2008**    | **2007** |
|                                             |                                                           |   |   | **$**       | **$** |
|                                             |                                                           |   |   |             |  |
|                                             |                                                           |   |   |             |  |
|                                             | Balance- Beginning of year                                     |   |   | 9,738,536   | 6,567,312 |
|                                             |                                                           |   |   |             |  |
|                                             | Costs incurred during the year                                 |   |   |             |  |
|                                             |                                                           |   |   |             |  |
|                                             | Acquisition of mining properties                               |   |   | 124,000     | 2,168,769 |
|                                             | Claims and permits                                             |   |   | 749,469     | 1,151,336 |
|                                             | Analyses                                                       |   |   | 506,819     | 290,252 |
|                                             | Drilling                                                       |   |   | 2,663,005   | 421,173 |
|                                             | Geophysics                                                     |   |   | 1,146,434   | 457,406 |
|                                             | Geology                                                        |   |   | 585,843     | 301,911 |
|                                             | Geochemistry                                                   |   |   | 131,040     | 24,393 |
|                                             | Transport                                                      |   |   | 2,978,877   | 1,036,784 |
|                                             | Professional fees                                              |   |   | 1,453,003   | 763,041 |
|                                             | Accomodation                                                   |   |   | 316,540     | 152,190 |
|                                             |                                                           |   |   | 10,655,030  | 6,767,255 |
|                                             |                                                           |   |   |             |  |
|                                             | Mining properties under option                                 |   |   | (359,472)   | (80,424) |
|                                             | Mining properties abandoned, written off or sold               |   |   | (640,557)   | (1,939,285) |
|                                             | Credit on duties refundable for loss and refundable tax credit |   |        |             |
|                                             | for resources                                                  |   |   | (4,496,820) | (1,576,322) |
|                                             |                                                           |   |   | (5,496,849) | (3,596,031) |
|                                             |                                                           |   |   |             |  |
|                                             | Balance- End of year                                           |   |   | 14,896,717  | 9,738,536 |

> 
a) On May 6, 2005, the company granted Goldcorp Inc. ( formerly Placer Dome (CLA) Limited ) the option to acquire a 50%    interest in the Corvet Est property for a consideration consisting of $90,000 in cash and exploration work totalling $4,000,000 to    be carried out no later than May 6, 2010. As at February 29, 2008, Goldcorp Inc. had made a cash payment of $90,000 and had  spent $3,520,875 on exploration work.

  b) On November 20, 2006, the company granted Eloro Resources Ltd. the option to acquire a 50% interest in the La Grande Nord    property for a consideration consisting of $50,000 in cash or in shares and exploration work totalling $1,000,000 to be carried out    no later than November 20, 2011. As at February 29, 2008, Eloro Resources Ltd. had made a payment in shares of $30,000 and    had spent $705,262 on exploration work.

Page 26

----

**Virginia Mines Inc.**  (an exploration company)  Notes to Financial StatementsFebruary 29, 2008 and February 28, 2007 and 2006

  (expressed in Canadian dollars)

> 
    c) On March 1, 2007, the company granted Exploration Matamec Inc. the option to acquire a 100 % interest in the Uranium Nord    property for a consideration consisting of $47,532 in cash and the issuance of 200,000 shares of a company that will be    incorporated later on by Exploration Matamec inc.. As at February 29, 2008, Exploration Matamec inc. has made a cash payment    of $47,532 to acquire a 50 % interest.

    d) On April 26, 2007, IAMGOLD Corporation granted the company the option to acquire a 100 % interest in the Anatacau    property for a consideration consisting of $25,000 in cash and exploration work totalling $3,000,000 to be carried out no later    than December 31, 2012. As at February 29, 2008, the company has made a cash payment of $25,000 and has spent $684,306 on    exploration work.

    e) On May 8, 2007, the company granted Breakwater Resources Ltd. the option to acquire a 50 % interest in the Trieste property    for a consideration consisting of $50,000 in cash and exploration work totalling $1,000,000 no later than May 8, 2011. As at    February 29, 2008 Breakwater Resources Ltd. has made a cash payment of $25,000 and has spent $175,588 on exploration work.

f) On May 22, 2007, the company entered into agreement with Commerce Resources Corp. pursuant to which Commerce    Resources Corp. acquires a 100% interest in the 8 claims of the Tantale Erlandson property, in exchange for the issuance to the    company of 710,000 common shares and 290,000 warrants of Commerce Resources Corp. for a total value of $1,110,757. The    agreement is subject to a 1% net smelter return (NSR) in favour of the company. The gain of $1,109,174 arising from this    transaction is presented in the financial statements under "Gain on sale of mining properties".  

g) On August 20, 2007, the company granted Breakwater Resources Ltd. the option to acquire a 50 % interest in the Lac Gayot    property for a consideration consisting of $170,000 in cash over a four year period and exploration work totalling $10,000,000 no    later than August 20, 2016. As at February 29, 2008 Breakwater Resources Ltd. has spent $229,082 on exploration work.

h) On August 28, 2007, the company entered into agreement with Strateco Resources Inc. pursuant to which Strateco Resources    Inc. acquires a 100% interest in the 88 claims of the Apple property, in exchange for the issuance to the company of 3,250,000    common shares of Strateco Resources Inc. The agreement is subject to a 2% net smelter return (NSR) in favour of the company.    Strateco may buy back 1% of the royalty for $1,000,000. The gain of $5,250,826 arising from this transaction is presented in the    financial statements under "Gain on sale of mining properties".

i) On December 15, 2007, the company granted Northfields Metals Inc. the option to acquire its interest in the Uranium Sud    property for a consideration consisting of the issuance of 250,000 shares upon the listing of Northfields Metals Inc. on the TSX    Venture Exchange. If Northfields Metals Inc. is not listed on the TSX Venture Exchange before August 15, 2008, Virginia has    the right to terminate the contract. As at February 29, 2008, Northfields Metals Inc. was not listed on the TSX Venture    Exchange.

Page 27

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| **Virginia Mines Inc.**                                |     |      |      |
|--------------------------------------------------------|----------|-----------|-----------|
| (an exploration company)                               |     |      |      |
| Notes to Financial Statements                          |     |      |      |
| February 29, 2008 and February 28, 2007 and 2006       |     |      |
|                                                   |     |      |      |
| (expressed in Canadian dollars)                        |     |      |      |
|                                                   |     |      |      |
| **Cost of mining properties abandoned or written off** |     |      |
|                                                   |     |      |      |
|                                                   | **2008** | **2007**  | **2006**  |
|                                                   | **$**    | **$**     | **$**     |
|                                                   |     |      |      |
| Apple                                                  | -        | 41,914    | -         |
| Auclair                                                | -        | 385,706   | -         |
| Baie Payne                                             | -        | -         | 65,652    |
| Chutes-des-Passes                                      | 2,690    | -         | 159,020   |
| Coulon JV                                              | 195,167  | -         | 180,078   |
| Dieppe                                                 | -        | 3,764     | -         |
| Duquet                                                 | -        | -         | 14,291    |
| Eléonore Régional                        | -        | 10,545    | -         |
| EM1                                                    | -        | 109,694   | -         |
| Fosse Pt-Pd                                            | 4,883    | -         | -         |
| Gossan JFO                                             | -        | 7,599     | -         |
| Grenville                                              | -        | 4,273     | -         |
| Guyer Sud                                              | -        | 216       | 4,069     |
| Hélène                                   | 54,216   | -         | -         |
| La Grande Sud                                          | -        | 2,908     | -         |
| Eider                                                  | 112      | 60,228    | -         |
| Eakins                                                 | -        | 40,751    | -         |
| Lac Bonfait                                            | -        | -         | 65,436    |
| Lac Clarkie                                            | 34,972   | -         | -         |
| Lac Fagnant                                            | -        | -         | 65,587    |
| Lac Gayot                                              | -        | -         | 1,052     |
| Lac Hayot                                              | -        | 7,956     | -         |
| Lac Rivon                                              | 671      | -         | -         |
| Lac Noëlla                                        | -        | -         | 560,708   |
| Wahemen                                                | -        | 25,581    | -         |
| Lac Watson                                             | -        | 4,293     | -         |
| Laguiche                                               | 96,830   | -         | -         |
| Megatem                                                | -        | 943,757   | 6,703     |
| Megatem III                                            | -        | 247,137   | -         |
| Nemiscau                                               | 116,597  | -         | -         |
| Rivière Broadback                               | 73,068   | -         | -         |
| Triestre                                               | -        | 4,747     | -         |
| Uranium Sud                                            | 9,202    | -         | -         |
| Willbob                                                | 22,193   | -         | -         |
| 23D                                                    | -        | 8,199     | -         |
| AB7                                                    | 910      | -         | -         |
| Others                                                 | -        | 5         | 1,549     |
|                                                   |          |           |           |
| Total *                                                | 611,511  | 1,909,273 | 1,124,145 |

* Mining properties are abandonned or written off in whole or in part because of their low discovery potential.

Page 28

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| **Virginia Mines Inc.**                                                                                                     |         |                                |
|-----------------------------------------------------------------------------------------------------------------------------|--------------|-------------------------------------|
| (an exploration company)                                                                                                    |         |                                |
| Notes to Financial Statements                                                                                               |         |                                |
| February 29, 2008 and February 28, 2007 and 2006                                                                            |         |
|                                                                                                                        |         |                                |   |   |
| (expressed in Canadian dollars)                                                                                             |         |                                |
|                                                                                                                        |         |                                |   |   |
| **8**                                                                                                                       | **Warrants** |                                |   |
|                                                                                                                        |         |                                |   |   |
| The following tables present the warrant activity since March 1, 2005 and summarize information about outstanding warrants: |
|                                                                                                                        |         |                                |   |   |
|                                                                                                                        |         |                                |   |   |
|                                                                                                                        |         |                                | **Year Ended February 29, 2008** |
|                                                                                                                        |         |                                |  | **Weighted** |
|                                                                                                                        |         |                                |  | **average** |
|                                                                                                                        |         |                                | **Number** | **exercise price** |
|                                                                                                                        |         |                                |  | **$** |
|                                                                                                                        |         |                                |  |  |
|                                                                                                                        |         | Outstanding as at March 1, 2007     | 484,162 | 5.84 |
|                                                                                                                        |         | Exercised                           | (484,162) | 5.84 |
|                                                                                                                        |         | Outstanding as at February 29, 2008 | - | - |
|                                                                                                                        |         |                                |   |   |
|                                                                                                                        |         |                                |   |   |
|                                                                                                                        |         |                                | **Year Ended February 28, 2007** |
|                                                                                                                        |         |                                |  | **Weighted** |
|                                                                                                                        |         |                                |  | **average** |
|                                                                                                                        |         |                                | **Number** | **exercise price** |
|                                                                                                                        |         |                                |  | **$** |
|                                                                                                                        |         |                                |   |   |
|                                                                                                                        |              | Outstanding as at March 1, 2006 *   | 417,713 | 10.80 |
|                                                                                                                        |         | Granted **                          | 484,162 | 5.84 |
|                                                                                                                        |         | Exercised                           | (415,427) | 10.80 |
|                                                                                                                        |         | Expired                             | (2,286) | 10.80 |
|                                                                                                                        |         | Outstanding as at February 28, 2007 | 484,162 | 5.84 |
|                                                                                                                        |         |                                |   |   |
|                                                                                                                        |         |                                |   |   |
|                                                                                                                        |         |                                | **Year Ended February 28, 2006** |
|                                                                                                                        |         |                                |  | **Weighted** |
|                                                                                                                        |         |                                |  | **average** |
|                                                                                                                        |         |                                | **Number** | **exercise price** |
|                                                                                                                        |         |                                |  | **$** |
|                                                                                                                        |         |                                |   |   |
|                                                                                                                        |              | Outstanding as at March 1, 2005     | 994,011 | 4.02 |
|                                                                                                                        |         | Granted ***                         | 501,750 | 10.80 |
|                                                                                                                        |         | Exercised                           | (1,078,048) | 4.62 |
|                                                                                                                        |              | Outstanding as at February 28, 2006 | 417,713 | 10.80 |

Page 29

----

| **Virginia Mines Inc.**                          |                                                                                                                                                                               |                         |
|--------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|
| (an exploration company)                         |                                                                                                                                                                               |                         |
| Notes to Financial Statements                    |                                                                                                                                                                               |                         |
| February 29, 2008 and February 28, 2007 and 2006 |                                                                                                                                                                               |                         |
|                                             |                                                                                                                                                                               |                         |   |
| (expressed in Canadian dollars)                  |                                                                                                                                                                               |                         |
|                                             |                                                                                                                                                                               |                         |   |
|                                             | *Under the agreement entered into with Goldcorp Inc., 11% of the exercise price of those warrants will be cashed by the company and the balance will be allocated to Goldcorp Inc. |
|                                             |
|                                             | **These 484,162 warrants of $5.84 were granted under a private placement with Goldcorp Inc.                                                                                        |
|                                             | ***These warrants were granted in connection with private placements to common shareholders and to agents as share issue expenses.                                                 |
|                                             |
|                                             |                                                                                                                                                                               |                         |   |
|                                             |                                                                                                                                                                               |                         |   |
|                                             | The fair value of warrants granted has been estimated using the Black-Sholes model with the following assumptions :                                                                |
|                                             |                                                                                                                                                                               |                         |   |
|                                             |                                                                                                                                                                               |                         |   |
|                                             |                                                                                                                                                                               |                         |   |
|                                             |                                                                                                                                                                               | **Years ended February 28,** |
|                                             |                                                                                                                                                                               | **2007**                     | **2006** |
|                                             |                                                                                                                                                                               |                              |  |
|                                             | Risk-free interest rate                                                                                                                                                            | 4,11 %                       | 2,90 % |
|                                             | Expected volatility                                                                                                                                                                | 50 %                         | 55 % |
|                                             | Dividend yield                                                                                                                                                                     | Nil                          | Nil |
|                                             | Weighted average expected life                                                                                                                                                     | 18 months                    | 12 months |
|                                             | Weighted average fair value of warrants granted                                                                                                                                    | $0.539                       | $0.549 |

 

Page 30

----

**Virginia Mines Inc.**(an exploration company)Notes to Financial StatementsFebruary 29, 2008 and February 28, 2007 and 2006

(expressed in Canadian dollars)

**9 Stock options, unit options and warrants (units)**

> 
**a) Stock option plan**    On March 24, 2006, the company established a new stock option plan under which certain key employees, officers, directors and    suppliers may be granted stock options of the company. A maximum of 10% of outstanding shares may be granted (maximum of    5% of the number of common shares outstanding in favour of one person). Options vest immediately and are exercisable over a  maximum period of ten years following the grant date.

    The following tables present the stock option activity since March 1, 2005 and summarize information about stock options outstanding and exercisable as at February 29, 2008 :
 **Year Ended February 29, 2008** **Weighted** **average** **Number****exercise price** **$**Outstanding as at March 1, 20071,086,500 4.18 Granted361,750 6.53 Exercised(80,250)4.39 Expired(1,000)6.30 Outstanding and exercisable as at February 29, 20081,367,000 4.80 
The following table summarizes information about stock options outstanding and exercisable as at February 29, 2008 :
**Options outstanding and exercisable****Weighted         average exercise       price $********Weighted average remaining contractual life (years)****Exercise price****Number**between $3.89 and $5.221,065,5008.244.24between $6.30 and $7.06301,5009.696.76 1,367,0004.80

Page 31

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| **Virginia Mines Inc.**                                                                                          |                                |                                        |               |
|------------------------------------------------------------------------------------------------------------------|-------------------------------------|---------------------------------------------|--------------------|
| (an exploration company)                                                                                         |                                |                                        |               |
| Notes to Financial Statements                                                                                    |                                |                                        |               |
| February 29, 2008 and February 28, 2007 and 2006                                                                 |                                |                                        |
|                                                                                                             |                                |                                        |               |   |
| (expressed in Canadian dollars)                                                                                  |                                |                                        |               |
|                                                                                                             |                                |                                        |               |   |
|                                                                                                             | **Year Ended February 28, 2007**    |                                        |
|                                                                                                             |                                |                                             | **Weighted**       |   |
|                                                                                                             |                                |                                             | **average**        |   |
|                                                                                                             |                                | **Number**                                  | **exercise price** |   |
|                                                                                                             |                                |                                             | **$**              |   |
| Outstanding and exercisable as at March 1, 2006                                                                  | -                                   | -                                           |               |
|                                                                                                             | Granted                             | 1,166,000                                   | 4.17               |   |
|                                                                                                             | Exercised                           | (72,500)                                    | 3.93               |   |
|                                                                                                             | Expired                             | (7,000)                                     | 4.20               |   |
|                                                                                                             |                                     |                                             |                    |   |
|                                                                                                             | Outstanding as at February 28, 2007 | 1,086,500                                   | 4.18               |   |
|                                                                                                             |                                     |                                             |                    |   |
|                                                                                                             | Exercisable as at February 28, 2007 | 996,500                                     | 4.16               |   |
|                                                                                                             |                                |                                        |               |   |
|                                                                                                             |                                |                                        |               |   |
|                                                                                                             |                                |                                        |               |   |
|                                                                                                             |                                |                                        |               |   |
|                                                                                                             |                                |                                        |               |   |
|                                                                                                             | **Year Ended February 28, 2006**    |                                        |
|                                                                                                             |                                     |                                             | **Weighted**       |   |
|                                                                                                             |                                     |                                             | **average**        |   |
|                                                                                                             |                                     | **Number**                                  | **exercise price** |   |
|                                                                                                             |                                     |                                             | **$**              |   |
|                                                                                                             |                                     |                                             |                    |   |
| Outstanding and exercisable as at March 1, 2005                                                                  | 1,106,655                           | 2.04                                        |               |
|                                                                                                             | Granted                             | 106,500                                     | 13.82              |   |
|                                                                                                             | Exercised                           | (1,213,155)                                 | 3.06               |   |
|                                                                                                             |                                     |                                             |                    |   |
| Outstanding and exercisable as at February 28, 2006                                                              | -                                   | -                                           |               |
|                                                                                                             |                                |                                        |               |   |
| The fair value of stock options has been estimated using the Black-Scholes model with the following assumptions: |
|                                                                                                             |                                |                                        |               |   |
|                                                                                                             |                                |                                        |               |   |
|                                                                                                             |                                | **Year ended    February 29,**         |                    |  |
|                                                                                                             |                                |                                             |                    |
|                                                                                                             |                                | **Years Ended February 28,** |
|                                                                                                             |                                | **2008**                                    | **2007**           | **2006** |
|                                                                                                             |                                |                                             |                    |  |
| Risk-free interest rate                                                                                          | 4.00%                               | 4.29%                                       | 2,95 %             |
| Expected volatility                                                                                              | 53%                                 | 63%                                         | 57 %               |
| Dividend yield                                                                                                   | Nil                                 | Nil                                         | Nil                |
| Weighted average expected life                                                                                   | 72 months                           | 82 months                                   | 12 months          |
| Weighted average fair value of options granted                                                                   | $3.524                              | $2.685                                      | $1.601             |

 

Page 32

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| **Virginia Mines Inc.**                                                                                                                                                          |                                                                                             |     |                         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|----------|------------------------------|
| (an exploration company)                                                                                                                                                         |                                                                                             |     |                         |
| Notes to Financial Statements                                                                                                                                                    |                                                                                             |     |                         |
| February 29, 2008 and February 28, 2007 and 2006                                                                                                                                 |                                                                                             |     |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
| (expressed in Canadian dollars)                                                                                                                                                  |                                                                                             |     |                         |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             | **Stock-based compensation costs from stock option grants are included in the following items:** |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             |                                                                                             |     | **Year ended February 29,**  |  |  |
|                                                                                                                                                                             |                                                                                             |     |                              |  |
|                                                                                                                                                                             |                                                                                             |     | **Years Ended February 28,** |
|                                                                                                                                                                             |                                                                                             |     | **2008**                     | **2007** | **2006** |
|                                                                                                                                                                             |                                                                                             |     | **$**                        | **$** | **$** |
|                                                                                                                                                                             | Professionnal and maintenance fees                                                               | 498,860  | 2,374,315                    | 225,580 |
|                                                                                                                                                                             | General exploration costs                                                                        | 796,144  | 916,322                      | 115,488 |
|                                                                                                                                                                             |                                                                                             |     |                              |  |  |
|                                                                                                                                                                             |                                                                                             |     | 1,295,004                    | 3,290,637 | 341,068 |
|                                                                                                                                                                             |                                                                                             |     |                              |  |  |
| **b) Unit options**                                                                                                                                                              |                                                                                             |     |                         |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
| The following tables present the unit option activity since March 1, 2005 and summarizes information about    unit options outstanding and exercisable as at February 29, 2008 : |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             |                                                                                             |     |                              | **Weighted** |  |
|                                                                                                                                                                             |                                                                                             |     |                              | **average** |  |
|                                                                                                                                                                             |                                                                                             |     |                              | **exercise price** |  |
|                                                                                                                                                                             |                                                                                             |     | **Number**                   | **$** |  |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             | Outstanding and exercisable as at February 29, 2008                                              | -        | -                            |   |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             |                                                                                             |     |                              | **Weighted** |   |
|                                                                                                                                                                             |                                                                                             |     |                              | **average** |   |
|                                                                                                                                                                             |                                                                                             |     |                              | **exercise price** |   |
|                                                                                                                                                                             |                                                                                             |     | **Number**                   | **$** |   |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             | Outstanding and exercisable as at March 1, 2006                                                  | 47,865   | 8.20                         |   |
|                                                                                                                                                                             | Exercised                                                                                        | (47,865) | 8.20                         |   |
|                                                                                                                                                                             |                                                                                                  |          |                              |  |   |
|                                                                                                                                                                             | Outstanding and exercisable as at February 28, 2007                                              | -        | -                            |   |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             |                                                                                             |     |                              | **Weighted** |   |
|                                                                                                                                                                             |                                                                                             |     |                              | **average** |   |
|                                                                                                                                                                             |                                                                                             |     |                              | **exercise price** |   |
|                                                                                                                                                                             |                                                                                             |     | **Number**                   | **$** |   |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
|                                                                                                                                                                             | Outstanding and exercisable as at March 1, 2005                                                  | -        | -                            |   |
|                                                                                                                                                                             | Granted *                                                                                        | 117,900  | 8.20                         |   |
|                                                                                                                                                                             | Exercised                                                                                        | (70,035) | 8.20                         |   |
|                                                                                                                                                                             |                                                                                                  |          |                              |  |   |
|                                                                                                                                                                             | Outstanding and exercisable as at February 28, 2006                                              | 47,865   | 8.20                         |   |
|                                                                                                                                                                             |                                                                                             |     |                         |   |   |
| * Each unit option will entitle its holder, upon exercise, to one common share and one-quarter of one warrant.                                                                   |

Page 33

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| **Virginia Mines Inc.**                                                                                                                                                               |                                                |                                     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|------------------------------------------|
| (an exploration company)                                                                                                                                                              |                                                |                                     |
| Notes to Financial Statements                                                                                                                                                         |                                                |                                     |   |
| February 29, 2008 and February 28, 2007 and 2006                                                                                                                                      |                                                |
|                                                                                                                                                                                  |                                                |                                     |   |   |
| (expressed in Canadian dollars)                                                                                                                                                       |                                                |                                     |   |
| The fair value of unit options granted during the year ended February 28, 2006 has been estimated using the Black-Scholes model with the following assumptions:                       |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  | Risk-free interest rate                             |                                     | 2,77 % |
|                                                                                                                                                                                  | Expected volatility                                 |                                     | 56 % |
|                                                                                                                                                                                  | Dividend yield                                      |                                     |   | Nil |
|                                                                                                                                                                                  | Weighted average expected life                      |                                     | 12 months |
|                                                                                                                                                                                  | Weighted average fair value of unit options granted | $1.057                                   |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  | **c) Warrants (units)**                             |                                     |   |
|                                                                                                                                                                                  |                                                |                                     |   |   |
| The following table presents the warrants (units) activity since March 1, 2005 and summarizes information about warrants (units) outstanding and exercisable as at February 29, 2008: |
|                                                                                                                                                                                  |                                                |                                     |   |
|                                                                                                                                                                                  |                                                |                                     |  | **Weighted** |
|                                                                                                                                                                                  |                                                |                                     |  | **average** |
|                                                                                                                                                                                  |                                                |                                     |  | **exercise price** |
|                                                                                                                                                                                  |                                                |                                     | **Number** | **$** |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  | Outstanding and exercisable as at February 29, 2008 | -                                        | - |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  |                                                |                                     |  | **Weighted** |
|                                                                                                                                                                                  |                                                |                                     |  | **average** |
|                                                                                                                                                                                  |                                                |                                     |  | **exercise price** |
|                                                                                                                                                                                  |                                                |                                     | **Number** | **$** |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  | Outstanding and exercisable as at March 1, 2006     | -                                        | - |
|                                                                                                                                                                                  |                                                     | Further to the exercise of unit options* | 11,966 | 10.80 |
|                                                                                                                                                                                  |                                                     | Exercised                                | (11,216) | 10.80 |
|                                                                                                                                                                                  |                                                     | Expired                                  | (750) | 10.80 |
|                                                                                                                                                                                  |                                                     |                                          |  |  |
|                                                                                                                                                                                  | Outstanding and exercisable as at February 28, 2007 | -                                        | - |
|                                                                                                                                                                                  |                                                |                                     |   |   |
| *Under the agreement entered into with Goldcorp Inc., 11% of the exercise price of those warrants will be cashed by the company and the balance will be allocated to Goldcorp Inc.    |
|                                                                                                                                                                                  |                                                |                                     |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  |                                                |                                     |  | **Weighted** |
|                                                                                                                                                                                  |                                                |                                     |  | **average** |
|                                                                                                                                                                                  |                                                |                                     |  | **exercise price** |
|                                                                                                                                                                                  |                                                |                                     | **Number** | **$** |
|                                                                                                                                                                                  |                                                |                                     |   |   |
|                                                                                                                                                                                  | Outstanding and exercisable as at March 1, 2005     | -                                        | - |
|                                                                                                                                                                                  |                                                     | Further to the exercise of unit options  | 17,509 | 10.80 |
|                                                                                                                                                                                  |                                                     | Exercised                                | (17,509) | 10.80 |
|                                                                                                                                                                                  |                                                     |                                          |  |  |
|                                                                                                                                                                                  | Outstanding and exercisable as at February 28, 2006 | -                                        | - |
|                                                                                                                                                                                  |                                                |                                     |   |   |

Page 34

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| **Virginia Mines Inc.**                                                                        |                             |                         |                        |                         |           |           |
|------------------------------------------------------------------------------------------------|----------------------------------|------------------------------|-----------------------------|------------------------------|-----------|-----------|
| (an exploration company)                                                                       |                             |                         |                        |                         |      |           |
| Notes to Financial Statements                                                                  |                             |                         |                        |                         |           |           |
| February 29, 2008 and February 28, 2007 and 2006                                               |                             |                         |                        |                         |      |
|                                                                                           |                             |                         |                        |                         |      |      |
| (expressed in Canadian dollars)                                                                |                             |                         |                        |                         |      |      |
|                                                                                           |                             |                         |                        |                         |      |      |
| **10 Cash flows**                                                                              |                             |                         |                        |                         |      |      |
|                                                                                           |                             |                         |                        |                         |      |      |
| a) Net change in non-cash working capital items                                                |                             |                         |                        |                         |      |      |
|                                                                                           |                             |                         |                        |                         |      |      |
|                                                                                           | **Year Ended February 29,** |                              |                             |                              |           |      |
|                                                                                           |                                  |                              |
|                                                                                           |                                  | **Years ended February 29,** |                        |
|                                                                                           | **2008**                         |                              | **2007**                    |                              | **2006**  |      |
|                                                                                           | **$**                            |                              | **$**                       |                              | **$**     |      |
|                                                                                           |                             |                         |                        |                         |      |      |
| Amounts receivable                                                                             | (566,437)                        |                         | 903,673                     |                         | (84,949)  |      |
| Prepaid expenses                                                                               | (31,549)                         |                         | (11,072)                    |                         | (21,752)  |      |
| Accounts payable and accrued liabilities                                                       | (364,360)                        |                              | 2,391,081                   |                              | 359,692   |      |
|                                                                                           | (962,346)                        |                              | 3,283,682                   |                              | 252,991   |      |
|                                                                                           |                             |                         |                        |                         |      |      |
| b) Items not affecting cash and cash equivalents related to financing and investing activities |                             |
|                                                                                           |                             |                         |                        |                         |      |      |
|                                                                                           |                             |                         |                        |                         |      |      |
|                                                                                           |                             |                         | **Year Ended February 29,** |                              |           |           |
|                                                                                           |                             |                         |                             | **Years ended February 28,** |
|                                                                                           |                             |                         | **2008**                    |                              | **2007**  | **2006**  |
|                                                                                           |                             |                         | **$**                       |                              | **$**     | **$**     |
|                                                                                           |                             |                         |                        |                         |      |      |
| Long-term investments transferred to short-term investments                                    |                             | -                            |                        | -                            | 13,585    |
| Credit on duties refundable for loss and refundable                                            |                             |                         |                        |                         |      |      |
| tax credit receivable with respect to exploration costs                                        |                             |                         |                        |                         |      |
| applied against mining properties                                                              |                             |                         | 6,060,655                   |                         | 8,537,062 | 7,613,226 |
| Acquisition of mining properties included in accounts payable                                  |                             |                         |                        |                         |      |
| and accrued liabilities                                                                        |                             |                         | 1,289,354                   |                         | 351,752   | 44,797    |
| Stock options exercised and included in share capital                                          |                             |                         | 219,847                     |                         | 377,152   | 801,534   |
| Warrants exercised and included in share capital                                               |                             |                         | 261,114                     |                         | 443,675   | 659,034   |
| Warrants granted and included in share capital                                                 |                             |                         | -                           |                         | -         | 524,389   |
| Warrants granted and included in issue expenses                                                |                             |                         | -                           |                         | -         | 26,382    |
| Warrants (units) granted and included in shareholders' equity                                  |                             | -                            |                        | 62,203                       | -         |
| Warrants (units) exercised and included in share capital                                       |                             | -                            |                        | 58,302                       | -         |
| Unit options granted and included in issue expenses                                            |                             |                         | -                           |                         | -         | 249,301   |
| Unit options exercised and included in share capital                                           |                             |                         | -                           |                         | 101,178   | 148,123   |
| Stock options granted and included in share capital                                            |                             |                         | -                           |                         | -         | 341,068   |
| Stock options cancelled and included in contributed surplus                                    |                             | 3,453                        |                        | 18,411                       | -         |
| Mining properties sold in consideration of short-term investments                              |                             | 6,389,046                    |                        | 4,662,774                    | 434,085   |
| Mining property purchased in consideration of the issuance of shares                           | 99,000                           |                         | 2,168,769                   | 1,040,000                    |
| Mining properties optionned in consideration of short-term investments                         | 15,000                           |                         | -                           | -                            |
| Acquisitions of property, plant and equipment included in accounts                             |                             |                         |                        |                         |
| payable and accrued liabilities                                                                |                             |                         | 99,913                      |                         | -         | -         |

 

Page 35

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| **Virginia Mines Inc.**                          |                                                                                                                  |                                     |                         |      |        |
|--------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|------------------------------------------|------------------------------|-----------|--------|
| (an exploration company)                         |                                                                                                                  |                                     |                         |      |   |
| Notes to Financial Statements                    |                                                                                                                  |                                     |                         |      |        |
| February 29, 2008 and February 28, 2007 and 2006 |                                                                                                                  |                                     |                         |      |
|                                             |                                                                                                                  |                                     |                         |      |   |   |
| (expressed in Canadian dollars)                  |                                                                                                                  |                                     |                         |      |   |
|                                             |                                                                                                                  |                                     |                         |      |   |   |
| **11**                                           | **Related party transactions**                                                                                        |                                     |                         |      |   |   |
|                                             |                                                                                                                  |                                     |                         |      |   |   |
|                                             | The company entered into the following transactions with companies owned by directors :                               |
|                                             |                                                                                                                  |                                     |                         |      |   |   |
|                                             |                                                                                                                  | **Year Ended    February 29,** |                              |           |
|                                             |                                                                                                                  |                                          | **Years ended February 28,** |
|                                             |                                                                                                                  | **2008**                                 |                              | **2007**  |        | **2006** |
|                                             |                                                                                                                  | **$**                                    |                              | **$**     |        | **$** |
|                                             |                                                                                                                  |                                     |                         |      |   |   |
|                                             | Expenses capitalized in mining properties                                                                             | 818,373                                  |                              | 362,357   |        | 390,139 |
|                                             | Management fees                                                                                                       | 300,000                                  |                              | 169,014   |        | 300,000 |
|                                             | Rent, office expenses and bonus                                                                                       | 650,551                                  |                              | 1,059,142 |        | 564,497 |
|                                             | Travelling                                                                                                            | 54,384                                   |                              | 62,532    |        | 52,912 |
|                                             | Advertising and exhibitions                                                                                           | 1,117                                    |                              | 4,314     |        | 11,513 |
|                                             | General exploration costs                                                                                             | 201,582                                  |                              | 156,013   |        | 82,175 |
|                                             |                                                                                                                  | 2,026,007                                |                              | 1,813,372 |        | 1,401,236 |
|                                             |                                                                                                                  |                                          |                              |           |        |  |
|                                             | These transactions are in the normal course of operation and are measured at the exchange amount, which is the amount |
|                                             | of consideration established and agreed to by the related parties.                                                    |                                     |                         |      |   |

Page 36

----

 

| **Virginia Mines Inc.**                          |                                                                                                                    |   |                        |                              |             |
|--------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------------------------|-------------|
| (an exploration company)                         |                                                                                                                    |   |                        |                         |             |
| Notes to Financial Statements                    |                                                                                                                    |   |                        |                              |             |
| February 29, 2008 and February 28, 2007 and 2006 |                                                                                                                    |   |                        |                         |        |
|                                             |                                                                                                                    |   |                        |                         |        |   |
| (expressed in Canadian dollars)                  |                                                                                                                    |   |                        |                         |        |
|                                             |                                                                                                                    |   |                        |                         |        |   |
| **12****Future income taxes**                    |                                                                                                                    |   |                        |                         |        |
|                                             |                                                                                                                    |   |                        |                         |        |   |
|                                             | The reconciliation of the income tax expense, calculated using the combined federal and Quebec provincial statutory tax |
|                                             | rate, to the income tax expense presented in the financial statements is detailed as follows:                           |   |                        |
|                                             |                                                                                                                    |   |                        |                         |        |   |
|                                             |                                                                                                                    |   |                        |                         |        |   |
|                                             |                                                                                                                    |   | **Year Ended February 29,** |                              |             |  |
|                                             |                                                                                                                    |   |                             |                              |             |
|                                             |                                                                                                                    |   |                             | **Years Ended February 28,** |
|                                             |                                                                                                                    |   | **2008**                    |                              | **2007**    | **2006** |
|                                             |                                                                                                                    |   | **$**                       |                              | **$**       | **$** |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Earnings (loss) before income taxes from continued operations                                                           |   | (239,740)                   |                              | 218,642     | (1,377,903) |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Combined federal and provincial income tax rate of                                                                      |   |                             |                              |             |  |
|                                             | 31.92% (33.69% as at February 28, 2007 and 34.85% as at                                                                 |   |                             |                              |             |  |
|                                             | February 28, 2006)                                                                                                      |   | (77,000)                    |                              | 74,000      | (480,000) |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Non-taxable credit on duties refundable for loss                                                                        |   | (239,000)                   |                              | (96,000)    | (133,000) |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Tax benefit not recognized previously                                                                                   |   | -                           |                              | -           | (4,528,000) |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Non-deductible stock-based compensation                                                                                 |   | 417,000                     |                              | 1,109,000   | 79,000 |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Expiry of operating losses carried forward                                                                              |   | -                           |                              | -           | 127,000 |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Share issue expenses not affecting                                                                                      |   |                             |                              |             |  |
|                                             | earnings                                                                                                                |   | -                           |                              | (8,000)     | - |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Non-taxable portion of capital gain                                                                                     |   | (333,000)                   |                              | (16,000)    | (90,000) |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Non-deductible writedown and unrealized losses on investments                                                           |   | 1,215,000                   |                              | -           | - |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Non-taxable revenue                                                                                                     |   | (23,000)                    |                              | -           | - |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Change in enacted tax rates                                                                                             |   | (32,000)                    |                              | -           | (484,000) |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Future income tax assets generated by the plan                                                                          |   |                             |                              |             |  |
|                                             | of arrangement as described in Note 3                                                                                   |   | -                           |                              | (5,478,000) | - |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Other                                                                                                                   |   | (66,986)                    |                              | 35,000      | 103,545 |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Change in valuation allowance                                                                                           |   | (715,000)                   |                              | 4,380,000   | - |
|                                             |                                                                                                                    |   |                             |                              |             |  |
|                                             | Future income taxes                                                                                                     |   | 146,014                     |                              | -           | (5,405,455) |

Page 37

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| **Virginia Mines Inc.**                                                                                               |                   |    |        |                             |                              |
|-----------------------------------------------------------------------------------------------------------------------|------------------------|---------|-------------|-----------------------------|------------------------------|
| (an exploration company)                                                                                              |                   |    |        |                        |                              |
| Notes to Financial Statements                                                                                         |                   |    |        |                        |                              |  |
| February 29, 2008 and February 28, 2007 and 2006                                                                      |                   |    |        |                        |                         |
|                                                                                                                  |                   |    |        |                        |                         |   |   |
| (expressed in Canadian dollars)                                                                                       |                   |    |        |                        |                         |   |
|                                                                                                                  |                   |    |        |                        |                         |   |   |
| The significant components of future income tax assets and liabilities are detailed as follows:                       |                   |
|                                                                                                                  |                   |    |        | **Year Ended February 29,** |                              |  |  |
|                                                                                                                  |                   |    |        |                             |                              |  |
|                                                                                                                  |                   |    |        |                             | **Years Ended February 28,** |
|                                                                                                                  |                   |    |        | **2008**                    |                              | **2007** | **2006** |
|                                                                                                                  |                   |    |        | **$**                       |                              | **$** | **$** |
| Future income tax assets                                                                                              |                   |    |             |                             |                              |  |
|                                                                                                                  | Short-term investments |    | 453,000     |                             | 473,000                      | - |
|                                                                                                                  | Mining properties      |    | 1,938,000   |                             | 3,899,000                    | 4,532,318 |
|                                                                                                                  | Long-term investments  |    | 384,000     |                             | -                            | - |
|                                                                                                                  | Losses carried forward |    | -           |                             | -                            | 855,000 |
|                                                                                                                  | Share issue expenses   |    | 4,000       |                             | 6,000                        | 560,000 |
|                                                                                                                  | Other                  |    |        | 6,000                       |                              | 2,000 | 11,000 |
|                                                                                                                  |                   |    |        | 2,785,000                   |                              | 4,380,000 | 5,958,318 |
|                                                                                                                  |                   |    |        |                             |                              |  |  |
| Valuation allowance                                                                                                   |                   |    | (2,785,000) |                             | (4,380,000)                  | - |
|                                                                                                                  |                   |    |        | -                           |                              | - | 5,958,318 |
|                                                                                                                  |                   |    |        |                             |                              |  |  |
| Future income tax liabilities                                                                                         |                   |    |             |                             |                              |  |
|                                                                                                                  | Deferred charges       |    |        | -                           |                              | - | 72,000 |
|                                                                                                                  |                   |    |        |                             |                              |  |  |
| Net future income tax assets                                                                                          |                   |    | -           |                             | -                            | 5,886,318 |
|                                                                                                                  |                   |    |        |                        |                         |   |   |
|                                                                                                                  |                   |    |        |                        |                         |   |   |
| As at February 29, 2008, the non-refundable federal tax credit and non-refundable provincial tax credit for resources |
| were as follows :                                                                                                     |                   |    |        |                        |                         |   |
|                                                                                                                  |                   |    |        |                        |                         |   |   |
|                                                                                                                  | Expiry date            | Federal |             | Expiry date                 |                              | Provincial |   |
|                                                                                                                  |                        | $       |             |                             |                              | $ |   |
|                                                                                                                  | 2027                   | 234,114 |             | 2017                        |                              | 249,391 |   |
|                                                                                                                  | 2028                   | 625,925 |             | 2018                        |                              | 545,564 |   |
|                                                                                                                  |                   |    |        |                        |                         |   |   |
| These credits can be used up to the amount of income taxes payable for those years. These credits are not recognized  |
| because the company does not have the reasonable assurance that the credits will be realized.                         |                   |

 

----

| **Virginia Mines Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                         |   |                                     |                              |              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|------------------------------|--------------|
| (an exploration company)                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                         |   |                                     |                         |              |
| Notes to Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                         |   |                                     |                              |              |
| February 29, 2008 and February 28, 2007 and 2006                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                         |   |                                     |                         |         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                     |                         |         |   |
| (expressed in Canadian dollars)                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                         |   |                                     |                         |         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                     |                         |         |   |
| **13 Earnings per share**                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                         |   |                                     |                         |         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                     |                         |         |   |
| For the year ended February 29, 2008 and February 28, 2007, there was no difference between the basic and diluted loss per share since the dilutive effect of stock options, warrants and unit options was not included in the calculation; otherwise, the effect would have been anti-dilutive. Accordingly, the diluted loss per share for these periods was calculated using the basic weighted average number of shares outstanding (26,610,238 in 2008 and 25,724,742 in 2007). |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                     |                         |         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                     |                         |         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                     |                         |         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   | **Year Ended    February 29,** |                              |              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                          |                              |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                          | **Years Ended February 28,** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   | **2008**                                 |                              | **2007 (1)** | **2006 (1)** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   | **$**                                    |                              | **$**        | **$** |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                     |                         |         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Basic weighted average number of shares outstanding                                                          |   | 26,610,238                               |                              | 25,724,742   | 22,765,904 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Warrants                                                                                                     |   | 33,232                                   |                              | -            | 215,541 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Stock options                                                                                                |   | 384,848                                  |                              | 25,106       | 503,879 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Unit options                                                                                                 |   | -                                        |                              | 55           | 51,488 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                          |                              |              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Diluted weighted average number of shares outstanding                                                        |   | 27,028,318                               |                              | 25,749,903   | 23,536,812 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                          |                              |              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Items excluded from the calculation of diluted                                                               |   |                                          |                              |              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | earnings per share because the exercise price was greater than the average quoted value of the common shares |   |                                          |                              |              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                          |                              |              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Warrants                                                                                                     |   | -                                        |                              | 484,162      | - |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Stock options                                                                                                |   | 182,750                                  |                              | 616,500      | - |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                         |   |                                          |                              |              |  |
| (1) The earnings per share calculation include share consolidation which is 1:2 following the plan of arrangement (note 3)                                                                                                                                                                                                                                                                                                                                                           |

Page 39

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**Virginia Mines Inc.**(an exploration company)Notes to Financial StatementsFebruary 29, 2008 and February 28, 2007 and 2006

(expressed in Canadian dollars)

**14 Financial instruments**

> 
**Fair value of financial instruments**    Accounts receivable from partners and other and accounts payable and accrued liabilities are financial instruments whose    fair value approximates their carrying value due to their short-term maturity. The cash and cash equivalents are valued to    the fair value.

  The fair value of available-for-sale short-term investments is established using the bid price on the most beneficial active    market for this instrument that is readily available to the company. When a bid price is not available, the company uses    the closing price of the most recent transaction on such instrument.

  The fair value of bonds and convertible bonds is established in a manner similar to available-for-sale short-term    investments. Since there is no active market for the warrants, the company determined their fair value using an option    pricing model (Black and Scholes model).

  The fair value of long-term investments was determined using the method as described in note 6.

**Credit risk**    The credit risk associated with short-term investments arises mainly from the possibility that the issuer of the securities    may not be able to meet its obligations. The company minimizes its exposure to issuer risk by investing only in products    having an investment-grade rating. It also ensures to achieve a good diversification of its investments. In addition, the    company attempts to minimize its risks by entering into contracts only with large financial institutions and their    subsidiaries. The exposure to these risks is closely monitored and maintained within the limits stated in the investment  policy of the company, which is revised regularly.

 Cash and cash equivalents are deposited in bank accounts with Canadian chartered banks or invested in a diversified    manner in securities having an investment-grade rating.

  The credit risk associated with receivables from partners arises from the possibility that the partners may not be able to    repay their debts. These receivables result from exploration work carried out on projects in partnership with other mining    companies.

**Interest rate risk**  As at February 29, 2008 and February 28, 2007, the company's exposure to interest rate risk is summarized as follows:

| Cash and cash equivalents                   | Variable interest rate |
|---------------------------------------------|------------------------|
| Short-term investments                      | As described in note 4 |
| Amounts receivable from partners and others | Non-interest - bearing |
| Long-term investments                       | As described in note 6 |
| Accounts payable and accrued liabilities    | Non-interest - bearing |

**15 Comparative figures**

> 
  Certain comparative figures have been reclassified to conform with the current year presentation.

Page 40

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**Virginia Mines Inc.**  (an exploration company)  Notes to Financial StatementsFebruary 29, 2008 and February 28, 2007 and 2006

(expressed in Canadian dollars)

**16 United States generally accepted accounting principles (U.S. GAAP)**

> 
    The consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles    (GAAP) which differ, in certain respects, from U.S. GAAP as it relates to the company.    Additional disclosures required under U.S. GAAP have been provided in the financial statements and notes. The following    summarizes the principal measurement differences between Canadian and U.S. GAAP and other required disclosures under U.S.    GAAP.**a) Mining properties**    Under U.S. GAAP, the acquisition cost of mining properties and exploration costs incurred are expensed in the year in which they    are incurred.

    Under Canadian GAAP, the acquisition cost of mining properties and exploration costs incurred are capitalized until the property    is sold or abandoned.**b) Stock-based compensation plan**    Under U.S. GAAP a modification of the terms of an option that makes it more valuable is treated as an exchange of the original    option for a new option. The company repurchases the original instrument by issuing a new instrument of greater value, incurring    additional compensation cost for that incremental value. The incremental value is measured by the difference between the fair    value of the modified option and the value of the old option immediately before its terms are modified, determined based on the    shorter of its remaining expected life or the expected life of the modified option. In July 2003, the company repriced its stock    options.    Under Canadian GAAP no adjustment was required for the repricing of stock option granted before the adoption of CICA section    3870 "Stock based Compensation and Other Stock-Based Payments".**c) Short-term investments**    Under U.S. GAAP, short-term investments, such as bonds, trust units and public company shares are classified as available-forsale    securities or classified as securities held for trading in the case of warrants and convertible debentures. Consequently, these    securities are carried at fair value, with any unrealized holding gains or losses at balance sheet date being reflected in other    comprehensive loss, net of income taxes, for available-for-sale securities and recognized in net earnings for securities held for    trading.    Under Canadian GAAP, short-term investments were carried at the lower of cost and market value before March 1, 2007. Since    that date, there are no accounting differences between Canadian GAAP and U.S. GAAP. **d) Flow-through shares**    Canadian tax legislation allows a company to issue flow-through shares when the company agrees to incur qualifying expenditures    in accordance with the Income Tax Act and to renounce the related tax deductions in favour of investors who acquire these shares.

Page 41

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**Virginia Mines Inc.**  (an exploration company) Notes to Financial Statements February 29, 2008 and February 28, 2007 and 2006 

(expressed in Canadian dollars) 

****

 In accordance with Canadian GAAP, upon issuance of flow-through shares, funds received are recorded as share capital. When qualifying expenditures are renounced, share capital is reduced by the amount of the tax benefits renounced in favour of investors, calculated using the effective tax rate of the company for the period. Under U.S. GAAP, the premium or discount related to the price of flow-through shares, if any, is accounted for separately. When the company renounces to qualifying expenditures, the related premium or discount is recognized through a reversal of the tax provision, and future income tax liabilities are adjusted by the same amount through a charge to income. In addition, under U.S. GAAP, amounts received upon the issuance of flow-through shares and not spent on exploration costs are presented separately as exploration funds. Exploration funds must be excluded from cash in the statement of cash flows and presented in investing activities. 

**e) Income taxes**Under Canadian GAAP, the tax saving resulting from carry-forward of a loss recognized in a year subsequent to the year in which the loss was incurred is presented as a component of earnings before discontinued operations, regardless of the classification of the loss in the previous year. 

 Under U.S. GAAP, the subsequent recognition of the tax effect of items related to share capital must be recognized in the same manner as the transaction that created them. 

**f) Future income taxes**Under Canadian GAAP, the reversal of a valuation allowance directly related to an increase value of available-for-sale investments is recognized in net earnings, whereas under U.S. GAAP, such reversal is recorded in comprehensive income. 

  

Page 42

----

**Virginia Mines Inc.**(an exploration company)Notes to Financial Statements  February 29, 2008 and February 28, 2007 and 2006(expressed in Canadian dollars)

**New accounting standards  FASB Interpretation No. 48 – Accounting for Uncertainty in Income Taxes - An interpretation of FASB Statement  No. 109 (FIN 48)**  In June 2006, the FASB issued FASB interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of  FASB Statement No. 109, "Accounting for Income Taxes"" ("FIN 48"). FIN 48 prescribes a recognition threshold and  measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a  tax return. FIN 48 requires that the company recognize the possible impact of the refusal of a tax position in the financial  statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN 48  also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The  provisions of FIN 48 are effective beginning January 1, 2007 with the cumulative effect of the change in accounting principle  recorded as an adjustment to the opening balance of deficit. The company adopted this statement on March 1, 2007. Its adoption  had no impact on its financial statements.**FASB Statement No. 157 – Fair Value Measurements (SFAS 157)**  In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair value,  establishes a framework for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not  require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting  pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The company early adopted this  statement as of March 1, 2007. Its adoption had no significant impact on its financial statements.

**FASB Statement No. 159 – The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment  of FASB Statement No. 115 (SFAS 159)**

  On February 15, 2007, the FASB issued SFAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities –  Including an amendment of FASB Statement No. 115", which permits entities to choose to measure many financial instruments  and certain other items at fair value. Most of the provisions of this statement apply only to entities that elect the fair value option.  However, the amendment to SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities", applies to all entities  with available-for-sale and held-for-trading securities. This statement is effective for fiscal years beginning after November 15,  2007. The company early adopted this statement as of March 1, 2007 and has elected to designate the convertible debentures  under the fair value option. Its adoption had no significant impact on its financial statements.

Page 43

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| **Virginia Mines Inc.**                                                                               |        |                                   |                         |         |        |
|-------------------------------------------------------------------------------------------------------|-------------|----------------------------------------|------------------------------|--------------|-------------|
| (an exploration company)                                                                              |        |                                   |                         |         |        |
| Notes to Financial Statements                                                                         |        |                                   |                         |         |        |
| February 29, 2008 and February 28, 2007 and 2006                                                      |        |                                   |                         |         |
|                                                                                                  |        |                                   |                         |         |        |
| (expressed in Canadian dollars)                                                                       |        |                                   |                         |         |        |
|                                                                                                  |        |                                   |                         |         |        |
| **Reconciliation of net earnings (net loss) to conform with US GAAP**                                 |        |                                   |                         |
|                                                                                                  |        |                                   |                         |         |        |
|                                                                                                  |        |                                   |                         |         |        |
|                                                                                                  |        | **Year ended  February 29,** |                              |              |             |
|                                                                                                  |        |                                        | **Years ended February 28,** |
|                                                                                                  |        |                                        |                              |              |             |
|                                                                                                  |        | **2008**                               |                              | **2007**     | **2006**    |
|                                                                                                  |        | **$**                                  |                              | **$**        | **$**       |
|                                                                                                  |        |                                        |                              | restated (1) |             |
| Net earnings (net loss) from continuing operations for the                                            |        |                                   |                         |         |
| year in accordance with Canadian GAAP                                                                 |        | (385,754)                              |                         | 218,642      | 4,027,552   |
| Mining properties (a)                                                                                 |        | (5,158,181)                            |                         | (3,171,224)  | (1,294,581) |
| Repricing of stock options (b)                                                                        |        | -                                      |                         | -            | 2,529,009   |
| Unrealized gains on held-for-trading investments (c)                                                  | -           |                                   | 1,591,330                    | -            |
| Tax effect of flow-through shares (d)                                                                 |        | -                                      |                         | -            | (129,264)   |
| Income taxes (e)                                                                                      |        | -                                      |                         | -            | (556,259)   |
| Future income taxes (f)                                                                               |        | 146,014                                |                         | -            | -           |
|                                                                                                  |        |                                   |                         |         |        |
| Net earnings (net loss) from continuing operations for the                                            |        |                                   |                         |         |
| year in accordance with U.S. GAAP                                                                     |        | (5,397,921)                            |                         | (1,361,252)  | 4,576,457   |
|                                                                                                  |        |                                   |                         |         |        |
| Net earnings (net loss) from the discontinued operation for the year in accordance with Canadian GAAP |        |                                   |                         |         |
|                                                                                                  |        | -                                      |                         | (637,494)    | 151,157     |
| Mining properties (a)                                                                                 |        | -                                      |                         | -            | (8,464,312) |
| Net loss from the discontinued operation for the year in                                              |        |                                   |                         |         |
| accordance with U.S. GAAP                                                                             |        | -                                      |                         | (637,494)    | (8,313,155) |
| Net loss for the year in accordance with U.S. GAAP                                                    | (5,397,921) |                                   | (1,998,746)                  | (3,736,698)  |
|                                                                                                  |        |                                   |                         |         |        |
| Basic and diluted net earnings (net loss) from continuing                                             |        |                                   |                         |         |
| operations per share in accordance with U.S. GAAP                                                     | (0.203)     |                                   | (0.053)                      | 0.201        |
|                                                                                                  |        |                                   |                         |         |        |
| Basic and diluted net loss from the discontinued                                                      |        |                                   |                         |         |        |
| operation per share in accordance with U.S. GAAP                                                      | -           |                                   | (0.025)                      | (0.365)      |
|                                                                                                  |        |                                   |                         |         |        |
|                                                                                                  |        |                                   |                         |         |        |
| Total basic and diluted net loss per share in accordance with U.S. GAAP                               | (0.203)     |                                   | (0.078)                      | (0.164)      |

Page 44

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| **Virginia Mines Inc.**                                                                                                     |                   |             |             |                         |        |
|-----------------------------------------------------------------------------------------------------------------------------|------------------------|------------------|------------------|------------------------------|-------------|
| (an exploration company)                                                                                                    |                   |             |             |                         |        |
| Notes to Financial Statements                                                                                               |                   |             |             |                         |        |
| February 29, 2008 and February 28, 2007 and 2006                                                                            |                   |             |             |                         |
|                                                                                                                        |                   |             |             |                         |        |
| (expressed in Canadian dollars)                                                                                             |                   |             |             |                         |        |
|                                                                                                                        |                   |             |             |                         |        |
| (1) The company as restated it reconciliation of net earning (net loss) to conform with U.S. GAAP for the year ended        |
| February 28, 2007 to correct the classification of unrealized gains on held-for-trading investments that has been accounted |
| for in other comprehensive loss instead of to be accounted for in net earning.                                              |                   |             |             |
|                                                                                                                        |                   |             |             |                         |        |
| The effects of the restatement are as following :                                                                           |                   |             |             |                         |        |
|                                                                                                                        | As previously reported |             |             |                         |        |
|                                                                                                                        | Restatement            |             | Balance restated |                         |
|                                                                                                                        |                   |             |             |                         |        |
| Net loss from continuing operations                                                                                         | (2,952,582)            | 1,591,330        |             | (1,361,252)                  |        |
| Net loss for the year                                                                                                       | (3,590,076)            | 1,591,330        |             | (1,998,746)                  |        |
| Other comprehensive loss                                                                                                    | 3,416,463              | (1,591,330)      |             | 1,825,133                    |        |
| Basic and diluted net loss per share from continuing                                                                        |                   |             |             |                         |        |
| operations                                                                                                                  | (0.115)                | 0.062            |             | (0.053)                      |        |
| Basic and diluted net loss per share                                                                                        | (0.140)                | 0.062            |             | (0.078)                      |        |
|                                                                                                                        |                   |             |             |                         |        |
| Deficit                                                                                                                     | (53,087,395)           | 1,591,330        |             | (51,496,065)                 |        |
|                                                                                                                        |                   |             |             |                         |        |
| Accumulated other comprehensive income                                                                                      | 4,998,383              | (1,591,330)      |             | 3,407,053                    |        |
|                                                                                                                        |                   |             |             |                         |        |
|                                                                                                                        |                   |             |             |                         |        |
| **Condensed statements of earnings - under U.S. GAAP**                                                                      |                   |             |             |                         |
|                                                                                                                        |                   | **Year ended**   |                  |                              |             |
|                                                                                                                        |                   | **February 29,** |                  | **Years Ended February 28,** |
|                                                                                                                        |                   | **2008**         |                  | **2007**                     | **2006**    |
|                                                                                                                        |                   | **$**            |                  | **$**                        | **$**       |
|                                                                                                                        |                   |             |             | (restated)                   |        |
| General and administrative expenses                                                                                         |                   | (9,305,414)      |             | (10,317,700)                 | (2,661,189) |
| Other revenues net                                                                                                          |                   | 3,907,493        |             | 8,956,448                    | 2,517,714   |
|                                                                                                                        |                   |             |             |                         |        |
| Loss before income taxes and the discontinued operation                                                                     | (5,397,921)            |             | (1,361,252)      | (143,475)                    |
|                                                                                                                        |                   |             |             |                         |        |
| Future income taxes                                                                                                         |                   | -                |             | -                            | (4,719,932) |
|                                                                                                                        |                   |             |             |                         |        |
| Net earnings (net loss) from continuing operations                                                                          | (5,397,921)            |             | (1,361,252)      | 4,576,457                    |
|                                                                                                                        |                   |             |             |                         |        |
| Net loss from the discontinued operation                                                                                    |                   | -                |             | (637,494)                    | (8,313,155) |
|                                                                                                                        |                   |             |             |                         |        |
| Net loss for the year in accordance with U.S. GAAP                                                                          | (5,397,921)            |             | (1,998,746)      | (3,736,698)                  |

Page 45

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| **Virginia Mines Inc.**                                              |       |             |       |             |
|----------------------------------------------------------------------|------------|------------------|------------|------------------|
| (an exploration company)                                             |       |             |       |             |
| Notes to Financial Statements                                        |       |             |       |             |
| February 29, 2008 and February 28, 2007 and 2006                     |       |             |       |
|                                                                 |       |             |       |             |
| (expressed in Canadian dollars)                                      |       |             |       |             |
|                                                                 |       |             |       |             |
| **Reconciliation of Shareholders' Equity to conform with U.S. GAAP** |       |             |
|                                                                 |       |             |       |             |
|                                                                 |       | **As at**        |            | **As at**        |
|                                                                 |       | **February 29,** |            | **February 28,** |
|                                                                 |       | **2008**         |            | **2007**         |
|                                                                 |       | **$**            |            | **$**            |
|                                                                 |       |             |       |             |
| Shareholders' Equity in accordance with Canadian GAAP                | 64,580,470 |             | 56,184,731 |
| Mining properties (a)                                                |       | (14,896,717)     |       | (9,738,536)      |
| Unrealized gains on short-term investments (c)                       |       | -                |       | 4,998,383        |
|                                                                 |       |             |       |             |
| Shareholders' Equity in accordance with U.S. GAAP                    |       | 49,683,753       |       | 51,444,578       |
|                                                                 |       |             |       |             |
|                                                                 |       |             |       |             |
| **Balance sheets - under U.S. GAAP**                                 |       |             |       |             |
|                                                                 |       | **As at**        |            | **As at**        |
|                                                                 |       | **February 29,** |            | **February 28,** |
|                                                                 |       | **2008**         |            | **2007**         |
|                                                                 |       | **$**            |            | **$**            |
|                                                                 |       |             |       | (restated)       |
| Current assets                                                       |       |             |       |             |
| Cash and cash equivalents                                            |       | 8,665,254        |       | 6,139,543        |
| Short-term investments                                               |       | 36,194,101       |       | 39,494,395       |
| Amounts receivable                                                   |       | 7,012,349        |       | 8,922,319        |
| Prepaid expenses                                                     |       | 128,484          |       | 96,935           |
|                                                                 |       | 52,000,188       |       | 54,653,192       |
|                                                                 |       |             |       |             |
| Long-term investments                                                |       | 1,444,000        |       | -                |
|                                                                 |       |             |       |             |
| Property, plant and equipment                                        |       | 133,415          |       | 11,471           |
| Intangible assets                                                    |       | 1,425            |       | 2,035            |
|                                                                 |       | 53,579,028       |       | 54,666,698       |
|                                                                 |       |             |       |             |
|                                                                 |       |             |       |             |
| Current liabilities                                                  |       |             |       |             |
| Accounts payable and accrued lisbilities                             |       |             |       |             |
| Companies held by Directors                                          |       | 175,286          |       | 30,685           |
| Others                                                               |       | 3,719,989        |       | 3,191,435        |
|                                                                 |       | 3,895,275        |       | 3,222,120        |
|                                                                 |       |             |       |             |
| Shareholders' Equity                                                 |       |             |       |             |
| Share capital                                                        |       | 103,371,685      |       | 98,803,806       |
| Contributed surplus                                                  |       | 733,237          |       | 729,784          |
| Deficit                                                              |       | (56,893,986)     |       | (51,496,065)     |
| Accumulated other comprehensive income                               |       | 2,472,817        |       | 3,407,053        |
|                                                                 |       | 49,683,753       |       | 51,444,578       |
|                                                                 |       | 53,579,028       |       | 54,666,698       |

Page 46

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| **Virginia Mines Inc.**                                      |   |             |        |                         |         |
|--------------------------------------------------------------|--------|------------------|-------------|------------------------------|--------------|
| (an exploration company)                                     |   |             |        |                         |         |
| Notes to Financial Statements                                |        |             |        |                         |         |
| February 29, 2008 and February 28, 2007 and 2006             |   |             |        |                         |
|                                                         |   |             |        |                         |         |
| (expressed in Canadian dollars)                              |   |             |        |                         |         |
|                                                         |   |             |        |                         |         |
| **Statements of cash flows - under U.S. GAAP**               |   |             |        |                         |
|                                                         |   |             |        |                         |         |
|                                                         |   | **Year ended**   |             |                              |              |
|                                                         |   | **February 29,** |             | **Years Ended February 28,** |
|                                                         |   | **2008**         |             | **2007**                     | **2006**     |
|                                                         |   | **$**            |             | **$**                        | **$**        |
|                                                         |   |             |        |                         |         |
|                                                         |   |             |        |                         |         |
| Operating activities                                         |   | (2,407,773)      |        | (195,673)                    | (6,630,139)  |
| Financing activities                                         |   | 3,177,328        |        | 6,149,808                    | 27,722,813   |
| Investing activities                                         |   | 1,756,156        |        | (7,996,187)                  | (12,096,477) |
|                                                         |   |             |        |                         |         |
| Increase (decrease) in cash and cash equivalents             |   | 2,525,711        |        | (2,042,052)                  | 8,996,197    |
|                                                         |   |             |        |                         |         |
| Cash and cash equivalents used by the discontinued operation | -      |             | (2,274,316) | (5,656,769)                  |
|                                                         |   |             |        |                         |         |
| Cash and cash equivalents - Beginning of year                |   | 6,139,543        |        | 10,455,911                   | 7,116,483    |
|                                                         |   |             |        |                         |         |
| Cash and cash equivalents - End of year                      |   | 8,665,254        |        | 6,139,543                    | 10,455,911   |

Page 47

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| **Virginia Mines Inc.**                                                                                                                                                                                                   |                    |         |                      |   |                        |        |   |             |   |                   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------------|---------------------------|--------|-----------------------------|-------------|--------|------------------|--------|------------------------|
| (an exploration company)                                                                                                                                                                                                  |                    |         |                      |   |                        |        |   |             |   |                   |
| Notes to Financial Statements                                                                                                                                                                                             |                    |         |                      |   |                        |        |   |             |   |                        |
| February 29, 2008 and February 28, 2007 and 2006                                                                                                                                                                          |                    |         |                      |   |                        |        |   |             |   |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| (expressed in Canadian dollars)                                                                                                                                                                                           |                    |         |                      |   |                        |        |   |             |   |                   |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| **17 Quarterly financial information under Canadian GAAP (unaudited)**                                                                                                                                                    |                    |         |                      |   |                        |        |   |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| The financial statements of the first three quarters of 2008 have been restated to give effect to the following elements :                                                                                                |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| 1- Reclassification of warrants and convetible debentures initially accounted as available for sale investments, then they were held for trading investments                                                              |
| 2- Adjustment of gain on sale of mining properties in exchange of short-term investments which occured during the second quarter.                                                                                         |                    |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| The restatement modified the allocation of the comprehensive loss between net earnings and other comprehensive loss and the allocation in the Shareholders' Equity of deficit and accumulated other comprehensive income. |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| These restatements had no effect on operating activities, financing activities and investments activities.                                                                                                                |                    |         |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| The effects of the restatements are as following :                                                                                                                                                                        |                    |         |                      |   |                        |        |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
|                                                                                                                                                                                                                      | **Three-Month Periods** |              | **Three-Month Periods**   |        | **Three-Month Periods**     |
|                                                                                                                                                                                                                      | **Ended May 31, 2007**  |              | **Ended August 31, 2007** |        | **Ended November 30, 2007** |
|                                                                                                                                                                                                                      | As previously reported  | Restatements | Balance restated          |        | As previously reported      |             |        | Balance restated |        | As previously reported |  | Balance restated |
|                                                                                                                                                                                                                      |                         | Restatements |                           |        | Restatements                |
| Gain (loss) on sale of short-term investments                                                                                                                                                                             | 243,040                 | -            | 243,040                   |   | (54,077)                    | -           |   | (54,077)         |   | 251,195                | (218,718) | 32,477 |
| Gain on sale of mining properties                                                                                                                                                                                         | -                       | -            | -                         |   | 5,669,677                   | 690,323     |   | 6,360,000        |   | -                      | - | - |
| Unrealized losses on investments held for trading                                                                                                                                                                         | -                       | (1,151,550)  | (1,151,550)               |   | -                           | (423,816)   |   | (423,816)        |   | -                      | (116,453) | (116,453) |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| **Earnings (loss) before income taxes**                                                                                                                                                                                   | 206,089                 | (1,151,550)  | (945,461)                 |   | 1,945,421                   | 266,507     |   | 2,211,928        |   | 253,098                | (335,171) | (82,073) |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| **Future income taxes**                                                                                                                                                                                                   | (436,340)               | 202,961      | (233,379)                 |   | (133,608)                   | (46,972)    |   | (180,580)        |   | 756,554                | 58,236 | 814,790 |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| **Net earnings (net loss) from continuing operations**                                                                                                                                                                    | (230,251)               | (948,589)    | (1,178,840)               |   | 1,811,813                   | 219,535     |   | 2,031,348        |   | 1,009,652              | (276,935) | 732,717 |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| **Basic net earnings (net loss) per share**                                                                                                                                                                               | (0.009)                 | (0.036)      | (0.045)                   |   | 0.069                       | 0.008       |   | 0.077            |   | 0.038                  | (0.010) | 0.028 |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| **Diluted net earnings (net loss) per share**                                                                                                                                                                             | (0.009)                 | (0.036)      | (0.045)                   |   | 0.068                       | 0.008       |   | 0.076            |   | 0.037                  | (0.010) | 0.027 |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| **Other comprehensive loss**                                                                                                                                                                                              |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| Unrealized gains (losses) on available-for-sale investments,                                                                                                                                                              |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| net of related income taxes                                                                                                                                                                                               | (2,039,349)             | 1,142,557    | (896,792)                 |   | (624,453)                   | (1,171,872) |   | (1,796,325)      |   | 3,555,128              | 300,282 | 3,855,410 |
| Reclassification of other than temporary declines in value on                                                                                                                                                             |                    |         |                      |   |                        |        |   |             |   |                   |   |
| available-for-sale investments to net earnings, net of                                                                                                                                                                    |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| related income taxes                                                                                                                                                                                                      | -                       | -            | -                         |   | -                           | 908,771     |   | 908,771          |   | 42,585                 | - | 42,585 |
| Reclassification of gains (losses) on available-for-sale                                                                                                                                                                  |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| investments realized upon sale to net earnings, net of                                                                                                                                                                    |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| related income taxes                                                                                                                                                                                                      | -                       | (193,968)    | (193,968)                 |   | -                           | 43,566      |   | 43,566           |   | -                      | (23,347) | (23,347) |
|                                                                                                                                                                                                                      | (2,039,349)             | 948,589      | (1,090,760)               |   | (624,453)                   | (219,535)   |   | (843,988)        |   | 3,597,713              | 276,935 | 3,874,648 |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| **Deficit**                                                                                                                                                                                                               | (40,794,297)            | 362,268 *    | (40,432,029)              |   | (38,982,484)                | 581,803     |   | (38,400,681)     |   | (37,972,832)           | 304,868 | (37,667,964) |
|                                                                                                                                                                                                                      |                    |              |                      |   |                        |        |   |             |   |                   |   |   |
| **Accumulated other comprehensive income**                                                                                                                                                                                | 2,078,069               | (362,268)*   | 1,715,801                 |   | 1,453,616                   | (581,803)   |   | 871,813          |   | 5,051,329              | (304,868) | 4,746,461 |
|                                                                                                                                                                                                                      |                    |         |                      |   |                        |        |   |             |   |                   |   |   |
| (*) A reclassification of $1,310,857 has been made between the opening balance of deficit and accumulated other comprehensive income.                                                                                     |

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| **Virginia Mines Inc.**                                                  |                    |      |                    |        |                    |   |       |   |     |
|--------------------------------------------------------------------------|-------------------------|-----------|-------------------------|-------------|-------------------------|--------|------------|--------|----------|
| (an exploration company)                                                 |                    |      |                    |        |                    |   |       |   |     |
| Notes to Financial Statements                                            |                         |      |                    |        |                    |   |       |   |     |
| February 29, 2008 and February 28, 2007 and 2006                         |                    |      |                    |        |                    |   |       |   |     |
|                                                                     |                    |      |                    |        |                    |   |       |   |     |
| (expressed in Canadian dollars)                                          |                    |      |                    |        |                    |   |       |   |     |
|                                                                     |                    |      |                    |        |                    |   |       |   |     |
| **Quarterly Statements of Earnings (unaudited)**                         |                    |      |                    |        |                    |   |       |   |     |
|                                                                     | **Three-Month Periods** |           | **Three-Month Periods** |             | **Three-Month Periods** |
|                                                                     | **Ended May 31,**       |           | **Ended August 31,**    |             | **Ended November 30,**  |
|                                                                     | **2007**                | **2006**  |                         | **2007**    | **2006**                |        | **2007**   |        | **2006** |
|                                                                     | (restated)              |           |                         | (restated)  |                         |        | (restated) |        |          |
| **General and administrative expenses**                                  |                    |      |                    |        |                    |   |       |   |     |
| Professional and maintenance fees                                        | 34,649                  | 909,085   |                    | 290,330     | 1,296,757               |   | 41,910     |   | 157,061  |
| Management fees                                                          | 110,064                 | 11,312    |                    | 113,864     | 52,340                  |   | 76,072     |   | 82,398   |
| Rent, office expenses and bonus                                          | 320,525                 | 575,422   |                    | 237,818     | 209,001                 |   | 223,931    |   | 200,686  |
| Advertising and exhibitions                                              | 48,620                  | 20,921    |                    | 25,150      | 18,007                  |   | 61,262     |   | 33,583   |
| Travelling                                                               | 28,419                  | 31,975    |                    | 18,686      | 10,282                  |   | 29,595     |   | 21,326   |
| Depreciation of property, plant and equipment                            | 906                     | 717       |                    | 906         | 716                     |   | 907        |   | 716      |
| Amortization of the intangible asset                                     | 153                     | 218       |                    | 152         | 219                     |   | 153        |   | 218      |
| General exploration costs                                                | 248,988                 | 433,705   |                    | 340,214     | 451,358                 |   | 96,361     |   | 49,609   |
| Grants, credit on duties refundable for loss and refundable tax credit   |                    |      |                    |        |                    |   |       |   |     |
| for resources                                                            | (42,337)                | (33,076)  |                    | (58,428)    | (14,706)                |   | (44,074)   |   | (22,292) |
| Cost of mining properties abandoned or written off                       | 34,971                  | 15,292    |                    | 22,193      | -                       |   | 183,927    |   | 25,581   |
|                                                                     | 784,958                 | 1,965,571 |                    | 990,885     | 2,023,974               |   | 670,044    |   | 548,886  |
|                                                                     |                    |      |                    |        |                    |   |       |   |     |
| **Other income (expenses)**                                              |                    |      |                    |        |                    |   |       |   |     |
| Dividends and interests                                                  | 456,613                 | 364,617   |                    | 485,428     | 455,476                 |   | 521,629    |   | 434,034  |
| Fees invoiced to partners                                                | 291,394                 | 7,607     |                    | 355,607     | 55,814                  |   | 277,028    |   | 158,026  |
| Option payments received as financial instruments in excess of cost of   |                    |      |                    |        |                    |   |       |   |     |
| mining property                                                          | -                       | 3,788,527 |                    | -           | (1,595,496)             |   | -          |   |     |
| Gain on sale of short-term investments                                   | 243,040                 | 363,613   |                    | (54,077)    | 247,533                 |   | 32,477     |   | 394,195  |
| Gain on sale of mining properties                                        | -                       | 319,831   |                    | 6,360,000   | -                       |   | -          |   | -        |
| Other than temporary writedown of short-term investments                 | -                       | (295,469) |                    | (3,140,329) | -                       |   | (121,940)  |   | -        |
| Writedown of long-term investments                                       | -                       | -         |                    | (380,000)   | -                       |   | (4,770)    |   | -        |
| Unrealized losses on investments held for trading                        | (1,151,550)             | -         |                    | (423,816)   | -                       |   | (116,453)  |   | -        |
|                                                                     | (160,503)               | 4,548,726 |                    | 3,202,813   | (836,673)               |   | 587,971    |   | 986,255  |
|                                                                     |                    |      |                    |        |                    |   |       |   |     |
| **Earnings (loss) before income taxes**                                  | (945,461)               | 2,583,155 |                    | 2,211,928   | (2,860,647)             |   | (82,073)   |   | 437,369  |
| **Future income taxes**                                                  | (233,379)               | -         |                    | (180,580)   | -                       |   | 814,790    |   | -        |
| **Net earnings (net loss) from continuing operations**                   | (1,178,840)             | 2,583,155 |                    | 2,031,348   | (2,860,647)             |   | 732,717    |   | 437,369  |
|                                                                     |                    |      |                    |        |                    |   |       |   |     |
| **Basic net earnings (net loss) per share from continuing operations**   | (0.045)                 | 0.107     |                    | 0.077       | (0.011)                 |   | 0.028      |   | 0.017    |
|                                                                     |                    |      |                    |        |                    |   |       |   |     |
|                                                                     |                    |      |                    |        |                    |   |       |   |     |
| **Diluted net earnings (net loss) per share from continuing operations** | (0.045)                 | 0.107     |                    | 0.076       | (0.011)                 |   | 0.027      |   | 0.017    |

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| **Virginia Mines Inc.**                                                          |   |                    |      |                    |        |                    |   |       |   |     |
|----------------------------------------------------------------------------------|--------|-------------------------|-----------|-------------------------|-------------|-------------------------|--------|------------|--------|----------|
| (an exploration company)                                                         |   |                    |      |                    |        |                    |   |       |   |     |
| Notes to Financial Statements                                                    |   |                         |      |                    |        |                    |   |       |   |     |
| February 29, 2008 and February 28, 2007 and 2006                                 |   |                    |      |                    |        |                    |   |       |   |
|                                                                             |   |                    |      |                    |        |                    |   |       |   |     |
| (expressed in Canadian dollars)                                                  |   |                    |      |                    |        |                    |   |       |   |     |
|                                                                             |   |                    |      |                    |        |                    |   |       |   |     |
| **Quarterly Comprehensive Income (Loss) (unaudited)**                            |   |                    |      |                    |        |                    |   |       |   |
|                                                                             |   | **Three-Month Periods** |           | **Three-Month Periods** |             | **Three-Month Periods** |
|                                                                             |   | **Ended May 31,**       |           | **Ended August 31,**    |             | **Ended November 30,**  |
|                                                                             |   | **2007**                | **2006**  |                         | **2007**    | **2006**                |        | **2007**   |        | **2006** |
|                                                                             |   | (restated)              |           |                         | (restated)  |                         |        | (restated) |   |     |
|                                                                             |   |                    |      |                    |        |                    |   |       |   |     |
| **Net earnings (net loss) for the period**                                       |   | (1,178,840)             | 2,583,155 |                    | 2,031,348   | (2,860,647)             |   | 732,717    |   | 437,369  |
|                                                                             |   |                    |      |                    |        |                    |   |       |   |     |
| **Other comprehensive loss**                                                     |   |                    |      |                    |        |                    |   |       |   |     |
| Unrealized gains (losses) on available-for-sale investments, net of              |   | (896,792)               | -         |                    | (1,796,325) | -                       |   | 3,855,410  |   | -        |
| related income taxes                                                             |   |                    |      |                    |        |                    |   |       |   |     |
| Reclassification of other than temporary declines in value on available-for-sale |   |                    |      |                    |        |                    |   |       |   |     |
| investments to net earnings, net of related income taxes                         |   | -                       | -         |                    | 908,771     | -                       |   | 42,585     |   | -        |
| Reclassification of gains (losses) on available-for-sale investments realized    |   |                    |      |                    |        |                    |   |       |   |     |
| upon sale to net earnings, net of related income taxes                           |   | (193,968)               | -         |                    | 43,566      | -                       |   | (23,347)   |   | -        |
|                                                                             |   |                    |      |                    |        |                    |   |       |   |     |
|                                                                             |   | (1,090,760)             | -         |                    | (843,988)   | -                       |   | 3,874,648  |   | -        |
|                                                                             |   |                    |      |                    |        |                    |   |       |   |     |
| **Comprehensive income (loss) for the period**                                   |   | (2,269,600)             | 2,583,155 |                    | 1,187,360   | (2,860,647)             |   | 4,607,365  |   | 437,369  |

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| **Virginia Mines Inc.**                          |                   |   |                      |   |                                            |
|--------------------------------------------------|------------------------|--------|---------------------------|--------|-------------------------------------------------|
| (an exploration company)                         |                   |   |                      |   |                                            |
| Notes to Financial Statements                    |                        |   |                      |   |                                            |
| February 29, 2008 and February 28, 2007 and 2006 |                   |   |                      |   |                                            |
|                                             |                   |   |                      |   |                                            |
| (expressed in Canadian dollars)                  |                   |   |                      |   |                                            |
|                                             |                   |   |                      |   |                                            |
| **Quarterly restated Balance Sheet (unaudited)** |                   |   |                      |   |                                            |
|                                             |                   |   |                      |   |                                            |
|                                             |                   |   |                      |   |                                            |
| **Assets**                                       |                   |   |                      |   |                                            |
|                                             | **As at May 31, 2007** |   | **As at August 31, 2007** |   | **As at November 30, 2007** |
| **Current assets**                               |                   |   |                      |   |                                            |
| Cash and cash equivalents                        | 13,127,323             |   | 7,384,486                 |   | 10,108,998                                      |
| Short-term investments                           | 34,982,888             |   | 34,919,544                |   | 39,348,598                                      |
| Accounts receivable                              | 4,907,259              |   | 6,310,121                 |   | 5,875,086                                       |
| Prepaid expenses                                 | 104,251                |   | 166,130                   |   | 102,790                                         |
|                                             |                   |   |                      |   |                                            |
|                                             | 53,121,721             |   | 48,780,281                |   | 55,435,472                                      |
|                                             |                   |   |                      |   |                                            |
| **Long-term investments**                        | -                      |   | 3,413,467                 |   | 3,462,931                                       |
|                                             |                   |   |                      |   |                                            |
| **Property, plant and equipment**                | 14,465                 |   | 13,559                    |   | 12,652                                          |
|                                             |                   |   |                      |   |                                            |
| **Mining properties**                            | 11,028,676             |   | 12,296,478                |   | 13,998,109                                      |
|                                             |                   |   |                      |   |                                            |
| **Intangible asset**                             | 1,882                  |   | 1,730                     |   | 1,577                                           |
|                                             |                   |   |                      |   |                                            |
|                                             | 64,166,744             |   | 64,505,515                |   | 72,910,741                                      |
|                                             |                   |   |                      |   |                                            |
| **Liabilities**                                  |                   |   |                      |   |                                            |
|                                             |                   |   |                      |   |                                            |
| **Current liabilities**                          |                   |   |                      |   |                                            |
| Accounts payable and accrued liabilities         |                   |   |                      |   |                                            |
| Companies held by Directors                      | 136,534                |   | 354,956                   |   | 233,120                                         |
| Others                                           | 4,942,283              |   | 3,356,618                 |   | 4,114,037                                       |
|                                             |                   |   |                      |   |                                            |
|                                             | 5,078,817              |   | 3,711,574                 |   | 4,347,157                                       |
|                                             |                   |   |                      |   |                                            |
| **Shareholders' Equity**(restated)               |                   |   |                      |   |                                            |
|                                             |                   |   |                      |   |                                            |
| **Share Capital**                                | 94,447,526             |   | 94,567,936                |   | 98,139,969                                      |
| **Warrants**                                     | 261,114                |   | 261,114                   |   | -                                               |
| **Stock options**                                | 3,069,487              |   | 3,467,731                 |   | 3,319,090                                       |
| **Contributed surplus**                          | 26,028                 |   | 26,028                    |   | 26,028                                          |
| **Deficit**                                      | (40,432,029)           |   | (38,400,681)              |   | (37,667,964)                                    |
| **Accumulated other comprehensive income**       | 1,715,801              |   | 871,813                   |   | 4,746,461                                       |
|                                             | 59,087,927             |   | 60,793,941                |   | 68,563,584                                      |
|                                             | 64,166,744             |   | 64,505,515                |   | 72,910,741                                      |

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