Pacific Rim: El Dorado Gold Project, El Salvador

Overview - official data:

The El Dorado gold project, located in El Salvador approximately 65 kilometers northeast of the capital city San Salvador, is Pacific Rim’s flagship advanced-stage exploration property.

Pacific Rim is 100% owner of the El Dorado project. In Sep-tember 2005 the El Dorado project was expanded from 75 square kilometers in two exploration licenses to 144 square kilometers in three exploration licenses with nominal expiry dates of September 28, 2013 (one license) and September 29, 2013 (two licenses).

The project additionally includes a 12.75 square kilometer area pending conversion to an exploitation concession (the El Dorado “Exploitation Concession”), which underlying exploration license has a nominal expiry date of January 1, 2005.

The 18-month long South Minita definition drilling campaign culminated in June 2006 with the release of an updated resource estimate for the El Dorado project on June 19, 2006 in which a resource of 1.1 million ounces of gold and 7.4 million ounces of silver (or 1.2 million gold equivalent ounces) were estimated in the measured and indicated resource categories combined. The El Dorado resource estimate was amended in July 2006 with the additional tabulation of a small resource at the Nance Dulce deposit in the southern El Dorado project area.

Following the completion of the South Minita delineation drilling program during fiscal 2007 and the publication of the updated resource estimate for the El Dorado project, Pacific Rim resumed its exploration drilling program at El Dorado in the search for additional zones of gold mineralization in this extensive epithermal system. The Company’s renewed focus on exploration drilling during fiscal 2007 led to the discovery of three new areas of gold mineralization known as Deep Minita, Los Jobos and Balsamo.

Surface Rights Acquisitions
During fiscal 2004 Pacific Rim negotiated several option agreements to purchase surface rights from local land owners covering key portions of the El Dorado project area. During fiscal 2007 the Company commenced the process of exercising its option to purchase one of the larger parcels of land over which it holds a purchase option agreement, and advanced to the property owner $0.3 million of the $1.0 million total negotiated option payment. Subsequent to April 30, 2007 and upon transfer of title in the parcel of land to the Company, the final $0.7 million was paid.

Summary
The El Dorado project remains the cornerstone of Pacific Rim’s strategy for growth. Virtually all of the $10.4 million spent on direct exploration costs during fiscal 2007 was expended on the El Dorado project, primarily on the South Minita delineation drill program with minor expenditures on pre-development activities and community relations initiatives.

amora - Cerro Colorado Gold Project, El Salvador
During fiscal 2006 Pacific Rim signed an agreement to acquire a 100% interest in the Zamora gold project in El Salvador from a consortium of private companies. In September 2006, Pacific Rim signed an amendment to the Zamora option agreement to acquire a 100% interest in the Cerro Colorado exploration licenses while maintaining the Company’s interest in the Zamora claims in El Salvador.

Under the terms of the amended agreement Pacific Rim will maintain its option to purchase the Cerro Colorado and Zamora properties by making advanced royalty payments to the property vendor under the following schedule:

Upon TSX approval of the agreement:	100,000 shares plus 100,000 warrants of the Company
Yearly payments:	The greater of:
First anniversary	100,000 shares or US $100,000 in shares of the Company
Second anniversary	140,000 shares or US $140,000 in shares of the Company
Third anniversary	200,000 shares or US $200,000 in shares of the Company
Fourth anniversary	300,000 shares or US $300,000 in shares of the Company
Fifth and subsequent anniversaries	400,000 shares or US $400,000 in shares of the Company

The above advanced royalty payments schedule applies to both the Zamora and Cerro Colorado exploration license options and supersedes the original agreement terms. The advanced royalty payments will continue until production is achieved or the exploration concessions expire. Title to 100% of the Cerro Colorado and Zamora exploration licenses will be transferred to Pacific Rim at such time as a positive production decision is made by the Company. Upon achievement of commercial production from the Cerro Colorado or Zamora claims, the sellers will receive a 3% net smelter royalty to a maximum of US $10 million (inclusive of the dollar value of the advanced royalty payments made).

The Zamora claims comprise a 40 square kilometer land package located 50 kilometers north of San Salvador, in El Sal-vador. The Cerro Colorado claims comprise an 85 square kilometer land package located roughly 10 kilometers to the west of the Zamora claims. The Company is in the process of staking additional ground between the Cerro Colorado and Zamora claims to cover what the Company believes is a significant gold-bearing epithermal system, situated on a prolific gold belt on which a number of million-plus ounce gold systems have been discovered including the Marlin and Cerro Blanco mines in Guatemala and the Company’s El Dorado deposit in El Salvador.

During fiscal 2007 the Company conducted regional geological mapping and prospecting work within its Zamora and Cerro Colorado exploration license areas.

	a)	El Salvador Properties
		The Company holds a 100% interest in certain mineral properties in El Salvador known as El Dorado. An Environmental Impact Study has been submitted to governmental authorities for their consideration and required approval before the exploration licence can be converted to an exploitation concession which is required to carry out mining in the licence area.
		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 $4,000 ($1,000 for 1.5% and $3,000 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%.

Mineral Properties - Continued
	a)	El Salvador Properties - Continued
		ii)	By agreement dated March 29, 2006, the Company has superceded an option agreement dated November 14, 2003 to acquire a parcel of land suitable for mineral exploitation activities within the El Dorado exploration licence area. Under the terms of the new agreement the Company has prepaid an annual rental fee in the amount of $29 with the option to purchase the parcel for a payment of $971 at any time up to April 1, 2007. During the third quarter, the Company commenced the process of exercising its option to purchase the parcel and advanced $300 of the $971 payment. Subsequent to year-end and upon transfer of title in the parcel of land to the Company, the final $671 was paid.
		iii)	The Company maintains an additional 4 exploration licences adjacent to the El Dorado property known as Santa Rita, Guaco, Huaucuco and Pueblos.
		iv)	By agreement dated February 6, 2006, the Company agreed to acquire from a consortium of private companies a 100 % interest in an El Salvador exploration concession to be known as the Zamora property. The agreement was subsequently amended in September 2006 to include the acquisition of a 100% interest in the Cerro Colorado claims while maintaining the provisions in the agreement for the Company’s acquisition of the Zamora claims. Under the terms of the amended agreement, the Company maintains an option to purchase the exploration concession by making advance royalty payments as follows:

Upon TSX approval of the agreement	100,000 shares plus 100,000 warrants of the Company
Annual payments	The greater of:
First anniversary	100,000 shares or $100 in shares of the Company
Second anniversary	140,000 shares or $140 in shares of the Company
Third anniversary	200,000 shares or $200 in shares of the Company
Fourth anniversary	300,000 shares or $300 in shares of the Company
Fifth and subsequent anniversaries	400,000 shares or $400 in shares of the Company

The advance royalty payments will continue until production is achieved or the exploration concessions expire. Title to 100% of the Cerro Colorado and Zamora claims will be transferred to the Company at such time as a positive production decision is made by the Company. Upon achievement of commercial production the vendor will receive a 3% net smelter royalty to a maximum purchase price of $10,000 (inclusive of the value of the advance royalty payments made).

Upon TSX approval of the agreement, 50,000 shares were issued on March 8, 2006. Upon TSX approval of the amended agreement, 100,000 shares and 100,000 warrants of the Company were issued on November 8, 2006. On February 13, 2007, 100,000 shares were issued pursuant to the first anniversary payment.

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