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. 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, Canada
May 20, 2008

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

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The accompanying notes are an integral part of these financial statements

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The accompanying notes are an integral part of these financial statements

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The accompanying notes are an integral part of these financial statement

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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.

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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.

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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.

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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 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.

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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)

● 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 equivalents		Held for trading
Bonds, trust units and shares		Available for sale
Warrants and convertibles debentures		Held for trading
Amounts receivable from partners and others		Loans and receivable
Long-term investments		Held for trading
Accounts payable and accrued liabilities		Other 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 investments	34,496,012	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.

 

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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 Statements
February 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.

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Structure after the plan of arrangement

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