20-F/A 1 form20fa.htm AMENDMENT NO. 1 TO ANNUAL REPORT FOR THE FISCAL YEAR ENDED APRIL 30, 2004 Filed by Automated Filing Services Inc. (604) 609-0244 - Pacific Rim Mining Corp. - Form 20-F/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F/A
Amendment No. 1

(Mark One)

¨  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2004

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-13812

PACIFIC RIM MINING CORP.
(Exact name of Registrant as specified in its charter)

British Columbia, Canada
(Jurisdiction of incorporation or organization)

Suite 410 - 625 Howe Street, Vancouver, B.C. V6C 2T6
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each Class  Name of each exchange on which registered 
Common Shares, Without Par Value American Stock Exchange
  Toronto Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common Shares, Without Par Value
 (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Not Applicable
(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital of common stock as of April 30, 2004:
 80,483,994 Common Shares

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨

Indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 x  Item 18 ¨  

Explanatory Note: PACIFIC RIM MINING CORP. (the “Company” or the “Registrant”) is filing this Amendment No. 1 on Form 20-F/A to its Form 20-F for the year ended April 30, 2004, which was originally filed on August 18, 2004 with the United States Securities and Exchange Commission, to include Auditors' Report issued by PricewaterhouseCoopers LLP dated January 11, 2002, related to the audited statements of loss and cash-flows of Pacific Rim Mining Corp. for the year ended December 31, 2001. No other amendments were made to the Form 20-F annual report for the year ended April 30, 2004.

2

PART III

ITEM 17.             FINANCIAL STATEMENTS

The Financial Statements were prepared in accordance with Canadian GAAP and are presented in U.S. dollars. There are differences between United States and Canadian GAAP. A reconciliation of the financial statements to United States GAAP is set forth in Note 14 to the Consolidated Financial Statements forming part hereof.

The following financial statements and related schedules are included in this Item and form part of this Annual Report:

(a)     
Financial Statements for the financial period ended April 30, 2004, containing:
   
 
 
 
 
 
 
 

PACIFIC RIM MINING CORP.

(Formerly Dayton Mining Corporation)

CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2004 and 2003

Expressed in US Funds

 

 

F - 1


MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
 

To the Shareholders of Pacific Rim Mining Corp.:

The accompanying consolidated financial statements of the Company were prepared by management in accordance with accounting principles generally accepted in Canada, and within the framework of the summary of significant accounting policies noted in these consolidated financial statements. Management is responsible for all information in the annual report. All financial and operating data in the annual report is consistent, where appropriate, with that contained in the consolidated financial statements.

A system of internal accounting control is maintained in order to provide reasonable assurance that assets are safeguarded and that transactions are properly recorded and executed in accordance with management’s authorization. This system includes established policies and procedures, the selection and training of qualified personnel and an organization providing for appropriate delegation of authority and, where possible, segregation of responsibilities.

The Board of Directors discharges its responsibilities for the consolidated financial statements primarily through activities of its Audit Committee composed of three directors, none of whom are members of management. This Committee meets with management to assure that it is performing its responsibility to maintain financial controls and systems and to approve the annual audited consolidated financial statements of the Company. The Audit Committee also meets with the independent auditors to discuss the scope and the results of their audit and audit report prior to submitting the consolidated financial statements to the Board of Directors for approval.

The consolidated financial statements have been audited on behalf of the shareholders by the Company’s independent auditors, Staley, Okada & Partners, in accordance with Canadian and United States generally accepted auditing standards. The auditors’ report outlines the scope of their audit and their opinion on the consolidated financial statements.

“F. John Norman”  “Thomas C. Shrake” 
Chief Financial Officer  Chief Executive Officer 
   

F - 2


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 

To the Shareholders of Pacific Rim Mining Corp.:

We have audited the accompanying consolidated balance sheets of Pacific Rim Mining Corp. (formerly Dayton Mining Corporation) as of April 30, 2004 and 2003, and the related consolidated statements of loss, shareholders’ equity, and cash flows for the years ended April 30, 2004 and 2003 and for the four months ended April 30, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian Generally Accepted Auditing Standards and 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 the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 of April 30, 2004 and 2003, and the results of its operations and its cash flows for the years ended April 30, 2004 and 2003 and for the four months ended April 30, 2002, in conformity with Canadian generally accepted accounting principles.

The figures for the year ended December 31, 2001, which are presented for comparative purposes, were audited by another firm of Chartered Accountants, who issued an unqualified audit opinion dated January 11, 2002.

Vancouver, B.C.  STALEY, OKADA & PARTNERS 
May 28, 2004  CHARTERED ACCOUNTANTS 
   

F - 3

Independent Auditors’ Report

To the Shareholders of Pacific Rim Mining Corp. (formerly Dayton Mining Corporation)

We have audited the consolidated statements of loss and cash flows of Pacific Rim Mining Corp. (formerly Dayton Mining Corporation) for the year ended December 31, 2001. 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 audit.

We conducted our audit in accordance with generally accepted auditing standards in Canada and in the United States. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended December 31, 2001 in accordance with generally accepted accounting principles in Canada.

“PricewaterhouseCoopers LLP”

Chartered Accountants
Vancouver, B.C., Canada
January 11, 2002

F - 4


Pacific Rim Mining Corp.   Statement 1
(Formerly Dayton Mining Corporation)     
Consolidated Balance Sheets     
In thousands of U.S. dollars     

    As at     As at  
    April 30,     April 30,  
ASSETS    2004     2003  
         
Current Assets         
       Cash, cash equivalents and bullion (Note 1b)         
              Cash and cash equivalents  $ 1,463   $ 1,107  
              Bullion (Note 1b and 4)    1,301     594  
    2,764     1,701  
       Receivables    118     50  
       Inventories (Note 5)    2,930     8,829  
    5,812     10,580  
Inventories - Long-Term Portion (Note 5)    -     2,002  
Property, Plant and Equipment (Note 6)    5,102     5,455  
Closure Fund (Note 8b)    3,119     3,410  
  $ 14,033   $ 21,447  
             
             
LIABILITIES         
Current Liabilities         
       Accounts payable and accrued liabilities  $ 1,761   $ 1,228  
       Loans payable / due to related party (Note 8a)    828     231  
       Accrued closure costs - current portion (Note 8c)    190     1,488  
    2,779     2,947  
Loan Payable to a Related Party (Note 8a)    -     1,640  
Accrued Closure Costs (Note 8c)    1,636     1,900  
    4,415     6,487  
             
             
SHAREHOLDERS' EQUITY         
Share Capital - Statement 3 (Note 9)         
       Authorized:         
              1,000,000,000 common shares without par value         
       Issued and fully paid:         
              80,483,994 (2003 - 78,528,594) shares outstanding   57,690     56,173  
Deficit - Statement 3    (48,072 )    (41,213 ) 
    9,618     14,960  
  $ 14,033   $ 21,447  

APPROVED BY THE BOARD OF DIRECTORS:

"David K. Fagin", Director

"Thomas C. Shrake", Director

- See Accompanying Notes -

F-5


Pacific Rim Mining Corp.   Statement 2
Consolidated Statements of Loss     
In thousands of U.S. dollars, except for per share amounts     

    Year     Year     Four Months     Year  
    Ended     Ended     Ended     Ended  
    April 30,     April 30,     April 30,     December 31,  
    2004     2003     2002     2001  
Revenue                 
       Sales  $ 12,140   $ 12,509   $ 5,303   $ 14,913  
                         
Cost of Sales                 
       Operating costs    11,903     8,999     4,454     13,545  
       Depreciation, depletion and amortization    1,295     3,092     1,196     2,980  
       Write-down of mining interest (Note 7b)    -     1,262     -     -  
    13,198     13,353     5,650     16,525  
Mine Operating (Loss)    (1,058 )    (844 )    (347 )    (1,612 ) 
                         
Expenses (Income)                 
       Exploration                 
              - direct    5,144     3,346     250     700  
              - stock-based compensation (Note 9)    20     -     -     -  
       General and administrative                 
               - direct    878     937     437     1,131  
               - stock-based compensation (Note 9)   316     -     -     -  
       Write-down of marketable securities    -     275     -     70  
       Interest expense    47     78     28     15  
       Amalgamation costs    -     -     683     -  
       Foreign exchange    26     (28 )    (29 )    66  
       Interest income    (182 )    (175 )    (62 )    (122 ) 
       Gain on sale of mineral properties    -     (922 )    -     -  
       Gain on sale of marketable securities    -     (1,047 )    (59 )    (11 ) 
    6,249     2,464     1,248     1,849  
Loss Before Unusual Item    (7,307 )    (3,308 )    (1,595 )    (3,461 ) 
                 
Recovery (Write Off) of Investment In                 
       Andacollo Mine (Note 1c)    448     508     (6 )    90  
               
Loss for the Period  $ (6,859 )  $ (2,800 )  $ (1,601 )  $ (3,371 ) 
                         
Loss Per Share - Basic and Diluted  $ (0.09 )  $ (0.04 )  $ (0.03 )  $ (0.11 ) 

- See Accompanying Notes -

F-6


Pacific Rim Mining Corp.   Statement 3 
Consolidated Statements of Shareholders' Equity     
In thousands of U.S. dollars     

  Share Capital – Common Shares           
              Accumulated      
  Number      Amount      Deficit     Total Equity  
             
Balance - December 31, 2001  31,123,974    $ 53,810    $ (36,812 )  $ 16,998  
       Shares issued for amalgamation conversion for                   
              Dayton shareholders (1.76 for 1) (Note 1d)  23,654,220      -      -     -  
       Shares issued for acquisition of PRMC (Note 1d) 23,498,600      2,287      -     2,287  
       Shares issued for cash  132,000      45      -     45  
       Loss for the four months ended April 30, 2002  -      -      (1,601 )    (1,601 ) 
           
Balance - April 30, 2002  78,408,794      56,142      (38,413 )    17,729  
       Shares issued for cash  119,800      31          31  
       Loss for the year  -      -      (2,800 )    (2,800 ) 
           
Balance - April 30, 2003  78,528,594      56,173      (41,213 )    14,960  
       Shares issued for cash – options exercised  1,955,400      1,181      -     1,181  
       Stock option costs - stock-based compensation -      336      -     336  
       Loss for the year  -      -      (6,859 )    (6,859 ) 
           
Balance – April 30, 2004  80,483,994    $ 57,690    $ (48,072 )  $ 9,618  

- See Accompanying Notes -

F-7


Pacific Rim Mining Corp.   Statement 4 
Consolidated Statements of Cash Flows     
In thousands of U.S. dollars     

    Year     Year     Four Months     Year  
    Ended     Ended     Ended     Ended  
    April 30,     April 30,     April 30,     December 31,  
    2004     2003     2002     2001  
Operating Activities                 
       Loss for the period  $ (6,859 )  $ (2,800 )  $ (1,601 )  $ (3,371 ) 
              Adjustment to reconcile loss to cash flow                
                     provided by operations:                 
              Depletion, depreciation and amortization    800     2,717     1,035     2,980  
              Accrued closure costs    495     375     161     (22 ) 
              Stock-based compensation    336     -     -     -  
              Foreign exchange    26     (28 )    (29 )    59  
              Net interest earned on sinking fund    (174 )    (143 )    (50 )    (153 ) 
              Adjustment of sinking fund value    -     -     -     57  
              Gain on sale of marketable securities    -     (1,047 )    (59 )    (11 ) 
              Gain on sale of mineral properties    -     (922 )    -     -  
              Gain on sale of property, plant and                 
                     equipment included in operating costs   (290 )    -     -     -  
              Write-down of marketable securities    -     275     -     70  
              Write-down of mining interest    -     1,262     -     -  
    (5,666 )    (311 )    (543 )    (391 ) 
              Accounts payable and accrued liabilities   533     (138 )    (439 )    (698 ) 
              Closure cost expenditures    (2,057 )    (692 )    (83 )    (118 ) 
              Due to related parties    (1,043 )    (659 )    484     197  
              Inventories    7,194     (2,270 )    (144 )    (1,335 ) 
              Receivables    (68 )    26     163     (28 ) 
Cash Flow Used for Operating Activities    (1,107 )    (4,044 )    (562 )    (2,373 ) 
                         
Investing Activities                 
       Cash acquired on amalgamation    -     -     1,483     -  
       Purchases of property, plant and equipment    (461 )    (79 )    (138 )    (104 ) 
       Proceeds of disposition of property, plant and                
              equipment    304     56     -     -  
       Reclamation sinking fund withdrawals                 
              (contributions)    465     -     -     (352 ) 
Cash Flow Provided By (Used for) Investing                 
       Activities    308     (23 )    1,345     (456 ) 
                         
Financing Activities                 
       Issuance of share capital    1,181     31     45     -  
       Proceeds on sale of marketable securities    -     2,551     170     29  
Cash Flow Provided By Financing Activities    1,181     2,582     215     29  
                         
Foreign Exchange    (26 )    28     29     (59 ) 
Net Increase (Decrease) in Cash and Cash                 
       Equivalents    356     (1,457 )    1,027     (2,859 ) 
       Cash and cash equivalents - Beginning of                 
              period    1,107     2,564     1,537     4,396  
                         
Cash and Cash Equivalents - End of Period  $ 1,463   $ 1,107   $ 2,564   $ 1,537  
                         
Supplementary Schedule of Cash                 
       Transactions:                 
       Interest paid during the period  $ 61   $ 79   $ -   $ 141  
       Income taxes paid during the period  $ -   $ -   $ -   $ -  
                         
Supplementary Schedule of Non-cash                 
       Transactions:                 
       Shares issued for business combination  $ -   $ -   $ 2,287   $ -  
       Marketable securities received for mineral                 
              properties  $ -   $ 900   $ 1,000   $ -  
       Stock-based compensation  $ 336   $ -   $ -   $ -  
       Accrued closure costs capitalized as                 
              property, plant and equipment  $ 495   $ -   $ -   $ -  

- See Accompanying Notes -

F-8


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

1.     
Nature of Operations and Basis of Presentation
 
 
The Company is involved in the exploration, development and operation of gold properties. The Company owns a 49% interest in the Denton-Rawhide Mine, located near Fallon, Nevada, U.S.A., a 100% interest in certain exploration licence areas, known as El Dorado and La Calera, located in El Salvador and exploration interests in mineral claims in the United States.
 
 
Basis of Presentation
 
 
These consolidated financial statements are presented in accordance with generally accepted accounting principles ("GAAP") applicable in Canada and have been reconciled as to significant differences in measurement to generally accepted accounting principles applicable in the United States as disclosed in Note 14.
 
 
Certain of the comparative figures have been reclassified to conform to the current year's presentation.
 
 
These consolidated financial statements include the accounts of the Company's wholly-owned subsidiaries, Dayton Mining (US) Inc., DMC Cayman Inc., Andacollo Gold Inc., La Serena Inc., Dayton Chile Exploraciones Mineras Limitada, Dayton Acquisition Inc., 449200 B.C. Ltd., Pacific Rim El Salvador S.A. De C.V. and Recursos Salvadorenos S.A. de C.V. Also included in these consolidated financial statements are the accounts of the Company's wholly-owned subsidiaries, Pac Rim Cayman, Pac Rim Caribe III and International Pacific Rim S.A. from the date of acquisition of April 11, 2002.
 
 
The 49% joint venture interest in Denton-Rawhide is accounted for on the proportionate consolidation basis.
 
 
a)     
Reporting Currency
 
   
The United States dollar is the Company's principal reporting currency and the currency of measurement for all financial transactions reported in these consolidated financial statements.
 
 
b)     
Cash, Cash Equivalents and Bullion
 
   
The balance sheet presentation has been changed from previously used formats to separately report saleable bullion inventory located at gold refiners from all other inventories held. A total amount is reported for cash, cash equivalents and bullion to reflect management's view that the bullion reported is closely equivalent to cash, immediately available to cover short-term cash requirements.
 
 
c)     
Shut Down of Andacollo Mine
 
   
The carrying values of the assets and liabilities of the Chilean operating subsidiary that owned the Andacollo Mine were written off effective December 1, 2000 with a corresponding charge to income to reflect permanent closure of this mine and the estimated realizable value of capital assets after all liabilities have been liquidated.
 
   
Creditor distribution proceeds received from the "written off" subsidiary are credited to current year's income.

F-9


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

1.     
Nature of Operations and Basis of Presentation - Continued
 
 
d)     
Amalgamation of Dayton Mining Corporation and Pacific Rim Mining Corp.
 
   
On April 11, 2002 statutory approval was received from the Province of British Columbia Registrar of Companies for the amalgamation of Dayton Mining Corporation ("Dayton") and Pacific Rim Mining Corp. ("PRMC") under the name of Pacific Rim Mining Corp. (the "Company") as approved by the shareholders of each of the amalgamated companies on April 3, 2002. Dayton shareholders received 1.76 common shares of the Company in exchange for each common share of Dayton held and PRMC shareholders received 1.0 common share of the Company in exchange for each common share of PRMC held, resulting in Dayton and PRMC shareholders comprising 70% and 30% respectively of the Company. The amalgamation has been accounted for as a reverse takeover using the purchase method of accounting with Dayton identified as the acquirer. For financial statement purposes the Company is a continuation of Dayton. The shares issued as consideration by Dayton to acquire PRMC are recorded at the fair value of the net assets of PRMC, which has been determined to be the net book value of PRMC. The April 30, 2002 statements of loss and cash flows reflect amalgamated results from April 11, 2002 to April 30, 2002 with results for the period from January 1, 2002 to April 10, 2002 being solely Dayton results. The comparative figures for the year ended December 31, 2001 are solely Dayton.
 
   
Details of the net book value of PRMC as at April 11, 2002 were as follows:

    Cash, short-term investments and receivables $ 2,341  
    Property, plant and equipment    43  
    Accounts payable and accruals    (97 ) 
    Net Assets Acquired  $ 2,287  
           
    Value attributed to common shares issued  $ 2,287  
   
   

2.     
Significant Accounting Policies and Accounting Changes
 
 
Cash and Cash Equivalents
 
 
Cash and cash equivalents includes cash on hand, demand deposits, and short term highly liquid investments with a term to maturity of three months or less from inception which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in values.
 
 
Bullion
 
 
Gold and silver bullion is valued at the lower of cost and estimated fair market value.
 
 
Inventories
 
 
Inventories, comprised of ore on leach pads, gold in process and mine operating supplies are valued at the lower of cost and net realizable value.

F-10


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

2.     
Significant Accounting Policies and Accounting Changes - Continued
 
 
Property, Plant and Equipment
 
 
Property, plant and equipment is stated at estimated fair value as at the date of acquisition less accumulated depreciation and accumulated write-downs. Mining property, plant and equipment is depreciated using the unit of production method over estimated recoverable ounces.
 
 
Annually, reviews are undertaken to evaluate the carrying values of operating mines and development properties. If it is determined that the estimated net recoverable amount is significantly less than the carrying value and the impairment in value is likely to be permanent, a write-down to the net recoverable amount is made by a charge to earnings.
 
 
All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized. If no mineable ore body is discovered, previously capitalized costs are expensed in the period the property is abandoned. Expenditures for the development of new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on a units of production basis over estimated recoverable reserves.
 
 
Effective May 1, 2003, the Company prospectively adopted the Canadian Institute of Charter Accountants ("CICA") Handbook Section 3063 "Impairment of Long-Lived Assets", which requires that an impairment loss be recognized if the carrying value of a long-lived asset exceeds its fair market value. An estimate of fair market value is undertaken annually and the impairment loss, if any, is recorded. There were no impairment losses recorded during fiscal 2004. Management's estimates of resources, inventories and reclamation costs are subject to risks and uncertainties that may affect its assessment of the recoverability of mineral property costs.
 
 
Environmental Expenditures and Closure Costs
 
 
The operations of the Company may in the future be affected by changes in environmental regulations, including those for future removal and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Company's policy is to meet standards set by relevant legislation by application of technically proven and economically feasible measures.
 
 
Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against earnings as incurred or capitalized and amortized depending on their future economic benefits. Estimated future removal and site restoration costs, when the ultimate liability is reasonably determinable, are charged against earnings over the estimated remaining life of the operation, net of expected recoveries.

F-11


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

2.     
Significant Accounting Policies and Accounting Changes - Continued
 
 
Environmental Expenditures and Closure Costs - Continued
 
 
The Company's share of estimated closure costs associated with the Denton-Rawhide Mine at the time of acquisition was recognized in full as part of the acquisition cost. Increases in estimates of closure liabilities subsequent to the acquisition of Denton-Rawhide are accounted for in accordance with CICA 3110 " Asset Retirement Obligations " which conforms in all material respects to FASB (Financial Accounting Standards Board) Statement No. 146 as required under United States GAAP requirements for the reporting of asset retirement obligations. Effective May 1, 2003, the Company elected early implementation of CICA 3110, whereby the Company prospectively recognizes asset retirement obligations in the period in which they are incurred, if a reasonable estimate of fair market value can be made. The asset retirement costs are capitalized as part of the carrying amount of the long term asset to be amortized over the estimated remaining useful life of the asset and the associated liability is accreted over the estimated future ounces of gold production until settlement of the obligation. As a result of the adoption of this accounting standard, the carrying value of the Rawhide Mine and the corresponding asset retirement obligation was increased by $ 0.5 million during the year ended April 30, 2004.
 
 
Income Taxes
 
 
The Company uses the asset and liability method of accounting for future income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current period. Future income tax assets and liabilities are recognized for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes, which are likely to be realized.
 
 
Share Capital
 
 
i)     
The proceeds from the exercise of stock options, warrants and escrow shares are recorded as share capital in the amount for which the option, warrant or escrow share enabled the holder to purchase a share in the Company.
 
 
ii)     
Share capital issued for non-monetary consideration is recorded at fair market value.
 
 
Stock-based Compensation
 
 
Effective May 1, 2003, the Company has prospectively adopted the new recommendations of CICA Handbook Section 3870 " Stock-based Compensation and Other Stock-based Payments " which requires fair value accounting for all stock options issued during the year. This change in accounting treatment increased expenses by $336 in the current fiscal year. The prior years stock-based compensation expense was only recognized when stock-based compensation awards were made to non-employees, while pro forma disclosure was acceptable for awards made to employees.
 
 
Revenue Recognition
 
 
Revenues from the sale of all precious metal bullion are recognized when title to the bullion passes to the buyer.

F-12


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

2.     
Significant Accounting Policies and Accounting Changes - Continued
 
 
Loss per Share
 
 
Basic earnings (loss) per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuances would have a dilutive effect on earnings per share. The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per share by application of the treasury stock method.
 
 
Derivative Transactions
 
 
The Company may enter into gold hedging contracts to manage its exposure to fluctuations in the market price of gold and to establish minimum prices for certain of its future production. The Company's entire hedging activity is considered normal course sales requiring settlements through physical delivery. Gains or losses on these contracts are included in sales revenue when product is delivered against the contract.
 
 
Foreign Exchange
 
 
Transaction amounts denominated in other currencies are translated into their United States dollar equivalents at exchange rates prevailing at the transaction date. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect exchange rates prevailing at that date. Gains and losses arising from restatement of foreign currency monetary assets and liabilities at each year-end are included in earnings.
 
 
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 reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
   
3.     
Financial Instruments
 
 
The Company's financial instruments consist of cash and cash equivalents, bullion (Note 10) receivables, closure fund, accounts payable, amounts due to related parties and accrued closure costs. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from the financial instruments. The fair value of these financial instruments approximates their carrying value due to their short-term maturity or capacity of prompt liquidation.
   

F-13


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

4.      Bullion
   
  Details are as follows:

    April 30, 2004   April 30, 2003  
    Gold    Silver    Gold    Silver   
  Ounces at Refinery  2,727    39,600    1,544    15,402   
  Market value per ounce ($/oz.) $390.00    $6.00    $339.00    $4.63   
  Market Value  $1,064    $237    $523    $71   
  Total market value  $1,301    $594   
   
   
5.      Inventories
   
  Details are as follows:

      April 30,      April 30,  
      2004      2003  
  Production inventory  $ 2,696    $ 10,291  
  Supplies inventory    234      540  
      2,930      10,831  
  Less: Long term portion of production inventory   -      (2,002 ) 
    $ 2,930    $ 8,829  

  The estimated value of inventory that will not be recovered within the next fiscal year has been reclassified as long term.
   
   
6.      Property, Plant and Equipment
   
  Details are as follows:

      April 30,     April 30,  
      2004     2003  
  Cost  $ 10,320   $ 10,652  
  Accumulated depreciation and write-downs   (5,218 )    (5,197 ) 
    $ 5,102   $ 5,455  
       

F-14


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

7.      Mineral Properties
 
  a)     
El Salvador Properties
 
   
The Company holds a 100% interest in two exploration licence areas in El Salvador known as El Dorado and La Calera.
 
   
i)     
Annual advance minimum royalty payments are required on the El Dorado property, which are the greater of $50 per year or a 3% net smelter return royalty ("NSR"). The Company has the right to purchase the NSR for $4 million ($1 million for 1.5% and $3 million for the remainder) provided that the royalty is at least partially acquired within six months of commercial production.
 
     
All licences are subject to an El Salvador governmental NSR of 2%.
 
   
ii)     
By option agreement dated September 10, 2002, the Company agreed to acquire a 100% interest in the La Calera gold project, located near the El Dorado property. Under the agreement the Company, at its option, must make the following payments and exploration expenditures:

            Minimum   
      Option      Exploration   
      Payments      Expenditures   
  Upon signing (paid)  $ 5    $ -   
  Upon completion of a two month due diligence (paid)   15      -   
  On or before September 10, 2003 (paid and incurred)   20      25   
  On or before September 10, 2004 (paid subsequent to            
     year end and incurred)    35      50   
  On or before September 10, 2005 (incurred)    75      100   
  On or before September 10, 2006 (incurred)    150      200   
    $ 300    $ 375   

     
The property is subject to a 0.5% NSR which can be purchased by the Company for $200 if purchased within six months from the start of commercial production.
 
     
This property is also subject to an El Salvador governmental NSR of 2%.
 
    iii)     
By agreement dated November 14, 2003, the Company has agreed to an option to acquire a parcel of land near the El Dorado property. To exercise its option, the Company has to pay $14 on or before May 14, 2004 (paid subsequent to year end), $14 on or before May 14, 2005 and $971 on or before November 14, 2005.

F-15


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

7.     
Mineral Properties - Continued
 
 
b)     
Denton-Rawhide Joint Venture
 
   
The Company owns a 49% interest in the Denton-Rawhide Mine. The Company's 49% interest in assets and liabilities related to the joint venture is summarized as follows:

          April 30,     April 30,  
          2004     2003  
      Current assets  $ 4,434   $ 9,516  
      Inventories - long-term portion   -     2,002  
      Property, plant and equipment   878     1,219  
      Closure fund    3,119     3,410  
      Current liabilities    (2,061 )    (4,359 ) 
      Long-term liabilities    (1,636 )    (1,900 ) 
      Net assets  $ 4,734   $ 9,888  
       
The condensed statements of loss of the Company's 49% interest are as follows:  

                Four Months     Year Ended  
        Year Ended     Year Ended     Ended     December 31,  
        April 30, 2004     April 30, 2003     April 30, 2002     2001  
    Sales  $ 12,140   $ 12,509   $ 5,303   $ 14,913  
    Costs and expenses   (13,193 )    (13,348 )    (5,763 )    (16,639 ) 
    Net loss  $ (1,053 )  $ (839 )  $ (460 )  $ (1,726 ) 
               

During the year ended April 30, 2003, the Denton-Rawhide Mine experienced unexpected production shortfalls due to slower than expected heap leach recoveries. A review of the carrying value of the Denton-Rawhide investment indicated that the fair value of this investment had been impaired; therefore a $1,262 reduction in carrying value was recorded and charged to that year's operations.

The condensed statements of cash flows of the Company's 49% interest are as follows:


                Four Months     Year Ended  
        Year Ended     Year Ended     Ended     December 31,  
        April 30, 2004     April 30, 2003     April 30, 2002     2001  
    Cash flows provided by (used for)                 
             operations  $ 5,160   $ 549   $ 310   $ (595 ) 
    Cash flows provided by (used for)                 
             investment activities    (150 )    (23 )    (138 )    (104 ) 
    Cash flows from financing activities   (1,021 )    -     -     -  
                             
    Net cash flow  $ 3,989   $ 526   $ 172   $ (699 ) 

F-16


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

7.     
Mineral Properties – Continued
 
 
c)     
United States Exploration Properties
 
   
i)     
Aurora Property, Nevada
 
     
The Aurora project consists of 81 claims in an historic mining area known as the Aurora District of Nevada. The property is being acquired under a 20-year (with a 1-year extension provision) mining lease and option to purchase agreement dated December 15, 2003 which requires payments totalling $850 to be made on the following basis: $25 upon signing of the agreement (paid), $35 on the first anniversary of the agreement, $40 on the second anniversary, $60 on the third anniversary, $75 on the fourth and subsequent anniversaries to the total of $850. The property is subject to a 3% NSR, 2% of which can be purchased by the Company for $2,000 within six months from the start of commercial production. The Company can terminate this option agreement at any time without further liability to the Company.
 
   
ii)     
Surefire Property, Nevada
 
     
The Surefire property consists of 191 claims in the Crescent Valley area of Nevada. The 100% owned claims were staked by the Company in the current year.
 
 
d)     
Argentina Properties - Agreement with Silver Standard Resources Inc. ("SSO")
 
   
By agreement dated December 14, 2001, PRMC agreed to sell its 100% interest in certain subsidiaries that held the Diablillos mineral property located in Argentina. As consideration, SSO paid $3,400 in cash and treasury shares. PRMC received $1,500 in cash during the year ended December 31, 2001 and 383,025 common shares of SSO with a fair market value of $1,000 prior to the amalgamation date of April 11, 2002. During the fiscal year 2003, the Company received 142,970 shares of SSO, which had a fair market value of $900, thus completing the terms of the agreement. All amounts received from SSO were treated as a recovery of acquisition and deferred exploration costs on the Diablillos property and any recovery in excess of cost was treated as a gain, once received. The amount of the gain recorded during the year ended April 30, 2003 was $922.
 
8.     
Closure Fund, Accrued Closure Costs and Loan Payable/Due to a Related Party
 
 
a)     
Loan Payable / Due to a Related Party
 
   
The Company, as part of the Denton-Rawhide acquisition, agreed to reimburse Kinross Gold Corporation ("Kinross"), who was, at the time, a major shareholder of the Company and had a director in common, a principal amount of $2,118 for Kinross' interest in the reclamation and severance trust funds ("Closure Fund") held for the benefit of the Denton-Rawhide operation. The principal amount is repayable to Kinross, on an annual basis, from 25% of the net internal cash flow from the Denton-Rawhide Mine. Interest is payable annually at rates equivalent to those earned by the Closure Fund trust accounts. As a result of adjustments to working capital accounts at the time of purchase, the principal amount owing to Kinross was reduced to an outstanding amount of $1,849 of which $1,021 was paid on December 31, 2003 and the balance of $828 is payable at December 31, 2004. As at April 30, 2003, the outstanding loan amount was $1,849 plus accrued interest of $22 ($231 was determined to be the current portion of the loan based on management's estimate of the 25% of fiscal 2004 cash flows from Denton-Rawhide operations, and $1,640 was classified as long-term).

F-17


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

8.     
Closure Fund, Accrued Closure Costs and Loan Payable/Due to a Related Party - Continued
 
 
a)     
Loan Payable / Due to a Related Party - Continued
 
   
Kinross became a non-related party to the Company in December 2003 by virtue of the disposal of its entire shareholdings in the Company at that time.
 
 
b)     
Closure Fund
 
   
The Denton-Rawhide Closure Fund investments of $3,119 (2003 - $3,410) are held in a trust managed by a Trustee that is a large North American banking institution. The trust funds are invested in mutual funds composed of U.S. Government guaranteed fixed income securities with maturities of one to five years. The fair market value of the funds at April 30, 2004 was approximately $3,300 (2003 - $3,700). During the year ended April 30, 2004, $465 (2003 - $Nil) was drawn from the fund to pay severances owed to Denton-Rawhide employees due to the cessation of mining and processing activities and the related reduction of the workforce. These severances paid were part of the accrued closure costs. The Company will not have access to any excess funding of these funds until all related closure liabilities are satisfied and reclamation work is deemed complete by the Denton-Rawhide joint venture operator. Completion date of the reclamation work cannot be reasonably estimated at this time.
 
 
c)     
Accrued Closure Costs
 
   
The Company estimates its share of closure liabilities at the Denton-Rawhide Mine to be $1,826 at April 30, 2004 (2003 - $3,388) of which $1,636 (2003 - $1,900) is long-term and $190 (2003 - $1,488) is current. The closure trust funds are provided as security to the mine operator for the Company's portion of estimated closure liabilities.
 
   
9.     
Share Capital
 
 
Stock Options
 
 
Upon amalgamation, stock options outstanding under the plans of Dayton and PRMC were rolled over, provided that upon surrender, termination or expiry without exercise the shares would not be available for the grant of new options.
 
 
In October 2002 shareholders approved a new stock option and bonus plan under which, up to 6,000,000 common shares are reserved for the grant of stock options and up to 367,000 common shares are reserved for the grant of bonus shares to directors, employees or consultants ("eligible parties").

F-18


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

9.      Share Capital - Continued
 
  Stock Options – Continued
 
 
Stock options or bonus shares may be granted under the 2002 Plan, by the Board of Directors, to eligible parties, for a term of up to 10 years, at the closing price on the TSX on the date prior to the grant, and on conditions as may be determined by the Board of Directors. Details are as follows:

    Number of Options        
    Pre-   October   Weighted Average     
    Amalgamation   2002   Exercise Price     
    Plans   Plan   (in Cdn $)    Expiry 
  Options outstanding at April 30, 2002  5,356,880   -   $0.71   2003-2006 
  Year ended April 30, 2003           - granted  -   2,130,000   $0.62   2007 
                                                         - expired/cancelled (719,600 )  (20,000 )  $0.73   2002-2003 
                                                         - exercised  (119,800 )  -   $0.40   2002-2003 
  Options outstanding at April 30, 2003  4,517,480   2,110,000   $0.73   2003-2007 
  Year ended April 30, 2004           - granted  -   1,425,800   $0.80   2008 
                                                         - expired/cancelled (952,700 )  (130,000 )  $1.27   2004-2007 
                                                         - exercised  (1,760,400 )  (195,000 )  $0.80   2003-2008 
  Options outstanding at April 30, 2004  1,804,380   3,210,800   $0.60   2004-2008 
  Vested as at April 30, 2004  1,804,380   2,260,266   $0.56   2004-2008 
           
The following table summarizes information about stock options outstanding to directors and employees as at April 30, 2004.

      Exercise Price    Number    Number 
  Expiry Date    (in Cdn $)    Outstanding    Vested 
  June 29, 2004    $1.36   36,080    36,080 
  September 24, 2004    $1.30   29,000    29,000 
  May 28, 2005    $0.54   763,300    763,300 
  July 4, 2006    $0.29   976,000    976,000 
  April 18, 2007    $0.62   1,810,000    1,810,000 
  July 23, 2008    $0.43   170,800    56,933 
  October 8, 2008    $0.85   1,230,000    393,333 
          5,015,180    4,064,646 

F-19


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

9.  
Share Capital - Continued
 
 
Stock Options - Continued
 
 
The Company has prospectively adopted the recommendations of CICA Handbook Section 3870 "Stock-based Compensation and Other Stock-based Payments " for stock options granted to directors, officers and employees effective May 1, 2003. Comparative figures have been shown on a pro forma basis, as required.

  Stock-based compensation expense relating to:    2004(i)     2003(ii)  
         Administrative costs  $ 316   $ 473  
         Exploration costs    20     -  
  Total stock-based compensation  $ 336   $ 473  
               
  Loss for the year – as reported  $ (6,859 )  $ (2,800 ) 
  Loss for the year – pro forma  $ N/A   $ (3,273 ) 
  Loss Per Share - Basic and Diluted (in US dollars)        
         As reported  $ (0.09 )  $ (0.04 ) 
         Pro-forma  $ N/A   $ (0.04 ) 

  (i) 
Recorded as an expense with the offsetting entry to share capital. 
  (ii) 
Disclosed as an expense on a pro forma basis only. 
     
 
No stock-based compensation was reported in the fiscal periods ended April 30, 2002 and December 31, 2001.
     
 
The fair value of the options used in the information above has been estimated at the date of grant of options using the Black-Scholes Option Pricing Model with the following assumptions:

    April 30, 2004   April 30,2003  
  Average risk free interest rate  3.85%   4.31%  
  Average expected option life  4 years   4 years  
  Stock volatility – based on trading history 82.31%   89.46%  
  Dividend payments during life of option  Nil   Nil  
           
 
The Black-Scholes Option Pricing Model was created for use in estimating the fair value of freely tradable, fully transferable options. The Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the highly subjective input assumptions can materially effect the calculated values, management believes that the accepted Black-Scholes model does not necessarily provide a reliable measure of the fair value of the Company's stock option awards.

F-20


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

10.     
Gold Sales Contracts
 
 
At April 30, 2004, the Company's gold hedging position consisted of 6,000 ounces (2003 - 6,000) of forward sales contracts for future delivery of gold at various dates from May 2004 to October 2004 (2003 - May to August 2003) at an average price of US$411 (2003 - US$368) per ounce. At April 30, 2004 the Company had no financial exposure to market risks related to the settlement of outstanding hedges as gold spot prices were approximately US$390 (2003 - US$339) per ounce at that date. The estimated fair value of these contracts at the April 30, 2004 spot prices was $126 (2003 - $174), which represents the fair value to the Company on the balance sheet date if it were to settle these instruments prior to their maturity.
 
 
The credit risk exposure related to the Company's gold hedging activities is limited to the unrealized gains (losses) on outstanding contracts based on current market prices. The Company's gold hedging contract counter parties are large international credit-worthy institutions.
 
   
11.     
Income Taxes
 
 
As at April 30, 2004 the Company has the following tax loss carry forwards:

  Country    Category      Amount    Expiry 
  Argentina    Operating losses    $ 2,376   2005-2009
  Canada    Non-capital losses    $ 5,812   2005-2011
      Net capital losses    $ 2,380   N/A
      Mineral expenditures    $ 10,096   N/A
  El Salvador    Mineral expenditures    $ 12,665   (i)
  United States    Operating – Regular tax    $ 11,863   2005-2024
      Operating – Alternative minimum tax   $ 7,063   2008-2024

  (i) These expenditures expire when they are written-off for local accounting purposes. 
     
    Future income tax assets are not recorded for the above tax loss carry forwards due to the significant uncertainty of their recovery. The tax losses may be subject to audit and adjustment by local tax authorities 

F-21


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

12.      Commitments
 
  a)      Lease Commitments
 
    The Company has entered into operating leases for office premises and a photocopier. Minimum lease payments are as follows:

          Office             
        (i) Premises      Photocopier      Total 
    2005    $ 64.7    $ 3.6    $ 68.3 
    2006      43.9      3.6      47.5 
    2007      39.7      3.6      43.3 
    2008      33.6      3.6      37.2 
    2009      7.2      -      7.2 
        $ 189.1    $ 14.4    $ 203.5 

   
(i)     
In addition to the basic rent, the Company is responsible for its proportionate share of property taxes and operating costs.
 
  b)     
Proposed Sale of Subsidiaries
 
   
On March 31, 2004, the Company signed a Proposal for Acquisition Agreement in which it agreed to sell to an unrelated party 100% of the shares of its wholly owned subsidiaries Andacollo Gold Inc., La Serena Inc., Dayton Chile Exploraciones Mineras Limitada and Compania Minera Dayton ("CMD") for $5,000 cash and 4,000,000 common shares of the purchaser as follows:

        Cash    Shares 
    Upon closing  $ 1,000    3,000,000 
    On or before December 31, 2004    1,000    1,000,000 
    On or before December 31, 2005    1,000    - 
    On or before December 31, 2006    1,000    - 
    On or before December 31, 2007   1,000    - 
      $ 5,000    4,000,000 
   
The closing of the transaction is subject to (i) a satisfactory completion of due diligence by the purchaser, (ii) approval of the transaction by the board of directors of the purchaser, (iii) regulatory approval of the transaction, and (iv) reduction of CMD's debt from approximately US $2,700, to US $2,000 or less. CMD's primary holding is the Andacollo gold mine property in Chile which the Company officially shut down in December 2000.

F-22


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

13.      Segmented Information
   
  Details are as follows:

       Year   Year   Four Months   Year  
    Ended   Ended   Ended   Ended  
    April 30,   April 30,   April 30,   December 31,  
    2004   2003   2002   2001  
                           
  Total Assets         
       Canada  $ 1,017   $ 99   $ 2,682   $ 1,064  
       USA  8,556   17,094   18,445   19,275  
       El Salvador  4,457   4,252   4,184   4,184  
       Chile  3   2   19   17  
                           
       Total  $ 14,033   $ 21,447   $ 25,330   $ 24,540  
                           
  Total Property, Plant and Equipment         
       Canada  $ 9   $ 8   $ 11   $ 2  
       USA  909   1,263   5,238   6,262  
       El Salvador  4,184   4,184   4,184   4,184  
       Chile  -   -   17   17  
                           
       Total  $ 5,102   $ 5,455   $ 9,450   $ 10,465  
                           
  Revenue, Excluding Interest Income         
       Canada  $ -   $ -   $ -   $ -  
       USA  12,140   12,509   5,303   14,913  
       El Salvador  -   -   -   -  
       Chile  -   -   -   -  
                           
       Total  $ 12,140   $ 12,509   $ 5,303   $ 14,913  
                           
  Depreciation, Depletion and Amortization        
       Canada  $ 5   $ 4   $ 1   $ 6  
       USA  1,290   3,088   1,195   2,974  
       El Salvador  -   -   -   -  
       Chile  -   -   -   -  
                           
       Total  $ 1,295   $ 3,092   $ 1,196   $ 2,980  
                           
  Net Income (Loss)         
       Canada  $ (1,010 )  $ 847   $ (969 )  $ (1,021 ) 
       USA  (1,475 )  (1,004 )  (401 )  (1,770 ) 
       El Salvador  (4,822 )  (3,151 )  (231 )  (580 ) 
       Chile  448   508   -   -  
                           
       Total  $ (6,859 )  $ (2,800 )  $ (1,601 )  $ (3,371 ) 

F-23


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

14.

United States Generally Accepted Accounting Principles ("US GAAP")

The effect of the measurement differences between Canadian GAAP and US GAAP are summarized below.

Under US GAAP, securities that are available-for-sale are recorded at fair value and unrealized gains or losses are excluded from earnings and recorded as a separate component of shareholders' equity. Declines in fair value that are other than temporary are written off. Under Canadian GAAP, investments in marketable securities are carried at the lower of cost and estimated fair market value. The significant changes in the consolidated financial statements relative to US GAAP are as follows:

Statements of Loss (in thousands of US dollars, except for per share amounts)

      Year     Year     Four Months     Year  
      Ended     Ended     Ended     Ended  
      April 30,     April 30,     April 30,     December 31,  
      2004     2003     2002     2001  
                           
  Net loss following Canadian GAAP  $ (6,859 )  $ (2,800 )  $ (1,601 )  $ (3,371 ) 
  Loss on write-down of marketable securities    -     -     -     (62 ) 
                           
  Net loss following US GAAP    (6,859 )    (2,800 )    (1,601 )    (3,433 ) 
  Unrealized holding gain on marketable                 
            securities    -     50     72     43  
  Loss on write-down of marketable securities    -     -     -     62  
                           
  Comprehensive loss, following US GAAP    (6,859 )    (2,750 )    (1,529 )    (3,328 ) 
  Weighted average number of common shares,                 
            computed under US GAAP (thousands of                
            shares)    79,146     78,450     58,707     31,124  
                           
  Loss per share, following US GAAP  $ (0.09 )  $ (0.04 )  $ (0.03 )  $ (0.11 ) 

  Deficit and Comprehensive Gain (Loss) (in thousands of US dollars)

      April 30,     April 30,  
      2004     2003  
  Deficit         
            Adjusted deficit, beginning of period per US GAAP  $ (41,275 )  $ (38,475 ) 
            Net loss per US GAAP    (6,859 )    (2,800 ) 
            Adjusted deficit, end of period per US GAAP  $ (48,134 )  $ (41,275 ) 
               
  Accumulated Other Comprehensive Gain (Loss)         
            Beginning of period per US GAAP  $ -   $ (50 ) 
            Current year other comprehensive gain (loss)    -     50  
  Accumulated other comprehensive gain (loss), end of period        
            per US GAAP  $ -   $ -  

 
As the Company delivers gold against outstanding forward sales contracts, it has determined that there is no impact from the adoption of Statement of Financial Accounting Standard ("SFAS") No. 133, Accounting For Derivative Instruments and Hedging Activities.

F-24


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

14.     
United States Generally Accepted Accounting Principles - Continued
 
 
Recent U.S. Accounting Pronouncements
 
 
In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, " Business Combinations ". SFAS No. 141 mandates the purchase method of accounting for all business combinations initiated after June 30, 2001. In addition, SFAS No. 141 addresses the accounting for intangible assets and goodwill acquired in business combinations completed after June 30, 2001. The Company adopted SFAS No. 141, as required, with no material impact on its financial statements.
 
 
In June 2001, the FASB issued SFAS No. 142, " Goodwill and Other Intangible Assets ", which revises the accounting for purchased goodwill and other intangible assets. Under SFAS No. 142, goodwill and other intangible assets with indefinite lives will no longer be systematically amortized into operating results. Instead, each of these assets will be tested, in the absence of an indicator of possible impairment, at least annually, and upon an indicator of possible impairment, immediately. The Company adopted SFAS No. 142, as required, on January 1, 2002 with no material impact on its financial statements.
 
 
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations". SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related obligation for its recorded amount or incurs a gain or loss upon settlement. The Company adopted SFAS No. 143, as required, on May 1, 2003.
 
 
In August 2001, the FASB issued SFAS No. 144, " Accounting for the Impairment or Disposal of Long- lived Assets ". SFAS No. 144 was issued to resolve certain implementation issues that had arisen under SFAS No. 121. Under SFAS No. 144, a single uniform accounting model is required to be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, and certain additional disclosures are required. The Company adopted SFAS No. 144, as required, with no material impact on its financial statements.
 
 
In April 2002, the FASB issued SFAS No. 145, " Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ". SFAS No. 145 updates, clarifies and simplifies existing accounting pronouncements, by rescinding SFAS No. 4, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB No. 30 will now be used to classify those gains and losses. Additionally, SFAS No. 145 amends SFAS No. 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. Finally, SFAS No. 145 also makes technical corrections to existing pronouncements. While those corrections are not substantive in nature, in some instances, they may change accounting practice. The Company adopted the provisions of SFAS No. 145 that amended SFAS No. 13, as required, on May 15, 2002 for transactions occurring after such date with no material impact on its financial statements. The Company adopted the remaining provisions of SFAS No. 145, as required, on May 1, 2003 with no material impact on its financial statements.

F-25


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

14.     
United States Generally Accepted Accounting Principles - Continued
 
 
Recent U.S. Accounting Pronouncements - Continued
 
 
In June 2002, the FASB issued SFAS No. 146, " Accounting for Costs Associated with Exit or Disposal Activities ". SFAS No. 146 was issued to address the financial accounting and reporting for costs associated with exit or disposal activities, unless specifically excluded. SFAS No. 146 requires that a liability for costs associated with an exit or disposal activity be recognized and measured at its fair value in the period in which the liability is incurred. The Company adopted SFAS No. 146, as required, on May 1, 2003 with the result that the carrying value of the Rawhide Mine and the corresponding asset retirement obligation was increased by $0.5 million.
 
 

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition and Disclosure" . SFAS 148 amends SFAS No. 123, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 is effective for fiscal years beginning after December 15, 2002. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. The Company adopted SFAS No. 148, on May 1, 2003. This change in accounting treatment increased expenses by $336 in the current fiscal year (Note 9).

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), " Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity, if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. However, in December 2003, the FASB published a revision to FIN 46 to clarify some of the provisions of FIN 46, and to exempt certain entities from its requirements. Under the new guidance, there are new effective dates for companies that have interests in structures that are commonly referred to as special-purpose entities. The rules are effective in financial statements for periods ending after March 15, 2004. The adoption did not have any impact on the Company's financial statements.

 
 
On April 30, 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" . SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. The new guidance amends SFAS No. 133 for decisions made as part of the Derivatives Implementation Group ( "DIG") process that effectively required amendments to SFAS No. 133, and decisions made in connection with other FASB projects dealing with financial instruments and in connection with implementation issues raised in relation to the application of the definition of a derivative and characteristics of a derivative that contains financing components. In addition, it clarifies when a derivative contains a financing component that warrants special reporting in the statement of cash flows. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The Company adopted SFAS 149, as required, on July 1, 2003, with no material impact on its financial statements.

F-26


Pacific Rim Mining Corp.
Notes to Consolidated Financial Statements
April 30, 2004 and 2003
In thousands of U.S. dollars
 

14.     
United States Generally Accepted Accounting Principles - Continued
 
 
Recent U.S. Accounting Pronouncements - Continued
 
 
In May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" . SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company adopted SFAS 150, as required, on August 1, 2003, with no material impact on its financial statements.
 
 
In December 2003, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 104, Revenue Recognition. SAB 104 revises or rescinds portions of the interpretive guidance included in Topic 13 of the codification of staff accounting bulletins in order to make this interpretive guidance consistent with current authoritative accounting and auditing guidance and SEC rules and regulations. The adoption of SAB 104 did not have a material effect on the Company's financial statements.

F-27

3

ITEM 19:             EXHIBITS

Exhibits as follows:

Exhibit   Exhibit Description
Number    
     
12.1   Certification of Chief Executive Officer pursuant to s.302 of the Sarbanes-Oxley Act of 2002
     
12.2   Certification of Chief Financial Officer pursuant to s.302 of the Sarbanes-Oxley Act of 2002
     
13.1   Certification of Chief Executive Officer pursuant to s.906 of the Sarbanes-Oxley Act of 2002
     
13.2   Certification of Chief Financial Officer pursuant to s.906 of the Sarbanes-Oxley Act of 2002
     
14.1   Consent of Staley & Okada & Partners
     
14.2   Consent of PricewaterhouseCoopers LLP

4

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

    PACIFIC RIM MINING CORP. 
     
     
Date:  April 19, 2005  /s/ Thomas C. Shrake
    Thomas C. Shrake 
    Its: Chief Executive Officer 

5

EXHIBIT INDEX

Exhibit   Exhibit Description
Number    
     
12.1   Certification of Chief Executive Officer pursuant to s.302 of the Sarbanes-Oxley Act of 2002
     
12.2   Certification of Chief Financial Officer pursuant to s.302 of the Sarbanes-Oxley Act of 2002
     
13.1   Certification of Chief Executive Officer pursuant to s.906 of the Sarbanes-Oxley Act of 2002
     
13.2   Certification of Chief Financial Officer pursuant to s.906 of the Sarbanes-Oxley Act of 2002
     
14.1   Consent of Staley & Okada & Partners
     
14.2   Consent of PricewaterhouseCoopers LLP