----

| */s/ Jonathan Cherry*                 |   | */s/ Patrick Keenan*    |   |
|---------------------------------------|--------|-------------------------|--------|
| Jonathan Cherry                       |   | Patrick Keenan          |   |
| President and Chief Executive Officer |   | Chief Financial Officer |   |

----

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|                                                  |   | December 31,2017 |     |   | January 31,2017 |   |
|-------------------------------------------------------|--------|------------------|----------|--------|-----------------|--------|
| ASSETS                                                |   |             |     |   |            |   |
|                                                  |   |             |     |   |            |   |
| Current                                               |   |             |     |   |            |   |
| Cash                                                  |   | $                | 6,931    |   |            | $      | 18,674 |   |
| Amounts receivable (Note 5)                           |   |             | 432      |   |            |   | 749 |   |
| Prepaid expenses                                      |   |             | 811      |   |            |   | 813 |   |
|                                                  |   |             | 8,174    |   |            |   | 20,236 |   |
| Non-Current                                           |   |             |     |   |            |   |   |   |
| Amounts receivable (Note 5)                           |   |             | 2,533    |   |            |   | 2,012 |   |
| Mineral Property, Plant and Equipment (Notes 3 and 4) |   |             | 395,205  |   |            |   | 364,913 |   |
| Intangible (Note 5)                                   |   |             | 3,130    |   |            |   | 1,888 |   |
| Total Assets                                          |   |             | 409,042  |   |            |   | 389,049 |   |
|                                                  |   |             |     |   |            |   |   |   |
| LIABILITIES                                           |   |             |     |   |            |   |   |   |
|                                                  |   |             |     |   |            |   |   |   |
| Current                                               |   |             |     |   |            |   |   |   |
| Accounts payable and accruals                         |   |             | 3,630    |   |            |   | 3,188 |   |
| Convertible debt (Notes 7 and 8)                      |   |             | 49,067   |   |            |   | - |   |
| Non-convertible debt (Notes 7 and 9)                  |   |             | 92,268   |   |            |   | - |   |
| Environmental rehabilitation provision (Note 6)       |   |             | 1,266    |   |            |   | 781 |   |
|                                                  |   |             | 146,231  |   |            |   | 3,969 |   |
| Non-Current                                           |   |             |     |   |            |   |   |   |
| Convertible debt (Notes 7 and 8)                      |   |             | -        |   |            |   | 42,154 |   |
| Non-convertible debt (Notes 7 and 9)                  |   |             | -        |   |            |   | 65,752 |   |
| Environmental rehabilitation provision (Note 6)       |   |             | 64,136   |   |            |   | 69,845 |   |
| Total Liabilities                                     |   |             | 210,367  |   |            |   | 181,720 |   |
|                                                  |   |             |     |   |            |   |   |   |
| SHAREHOLDERS’ EQUITY                            |   |             |     |   |            |   |   |   |
|                                                  |   |             |     |   |            |   |   |   |
| Share Capital (Note 10)                               |   |             | 269,516  |   |            |   | 268,895 |   |
| Share Premium                                         |   |             | 1,151    |   |            |   | 1,151 |   |
| Equity Reserves                                       |   |             | 60,505   |   |            |   | 59,682 |   |
| Deficit                                               |   |             | (132,497 | )      |            |   | (122,399 | ) |
| Total Shareholders’ Equity                      |   |             | 198,675  |   |            |   | 207,329 |   |
| Total Liabilities and Shareholders’ Equity      |   | $                | 409,042  |   |            | $      | 389,049 |   |
|                                                  |   |             |     |   |            |   |   |   |

| ON BEHALF OF THE BOARD OF DIRECTORS:                                                                                                          |   |                                                                                                                                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                          |   |                                                                                                                                                                      |
|           /s/ Jonathan Cherry            , Director |   |              /s/ Dr. David Dreisinger            , Director |

----

|                                                           |   | For the 11months endedDecember 31, 2017 |        |   | For the 12months endedJanuary 31, 2017 |   |
|----------------------------------------------------------------|--------|-----------------------------------------|-------------|--------|----------------------------------------|--------|
| General and Administrative Expenses                            |   |                                    |        |   |                                   |   |
| Salaries, directors’ fees and related benefits           |   | $                                       | 2,209       |   |                                   | $      | 2,199 |   |
| Share-based compensation (Note 10)                             |   |                                    | 1,318       |   |                                   |   | 1,808 |   |
| Professional fees                                              |   |                                    | 784         |   |                                   |   | 432 |   |
| Regulatory fees                                                |   |                                    | 137         |   |                                   |   | 154 |   |
| Investor and public relations                                  |   |                                    | 1,036       |   |                                   |   | 1,227 |   |
| Office and administration                                      |   |                                    | 637         |   |                                   |   | 756 |   |
| Amortization                                                   |   |                                    | 4           |   |                                   |   | 18 |   |
| Total General and Administration Expenses                      |   |                                    | 6,125       |   |                                   |   | 6,594 |   |
|                                                           |   |                                    |        |   |                                   |   |   |   |
| Other Expenses (Income)                                        |   |                                    |        |   |                                   |   |   |   |
| Finance costs - net (Note 11)                                  |   |                                    | 2,233       |   |                                   |   | 2,672 |   |
| (Gain) / loss on foreign exchange                              |   |                                    | 6           |   |                                   |   | (7 | ) |
| Gain on disposal of financial instrument (Note 5)              |   |                                    | (36         | )      |                                   |   | (8 | ) |
| Loss on disposal of intangible (Note 5)                        |   |                                    | 1,324       |   |                                   |   | - |   |
| Loss on disposal of lands (Note 5)                             |   |                                    | 469         |   |                                   |   | - |   |
| Other income                                                   |   |                                    | (23         | )      |                                   |   | (22 | ) |
| Total Other Expenses                                           |   |                                    | 3,973       |   |                                   |   | 2,635 |   |
|                                                           |   |                                    |        |   |                                   |   |   |   |
| Loss for the Period                                            |   |                                    | 10,098      |   |                                   |   | 9,229 |   |
|                                                           |   |                                    |        |   |                                   |   |   |   |
| Other Comprehensive Loss (Income)                              |   |                                    |        |   |                                   |   |   |   |
| Reclassified gain on disposal of financial instrument (Note 5) |   |                                    | 36          |   |                                   |   | 8 |   |
| Items that may be subsequently reclassified to profit or loss: |   |                                    |        |   |                                   |   |   |   |
| Unrealized gain on financial instrument (Note 5)               |   |                                    | 166         |   |                                   |   | (221 | ) |
| Other Comprehensive Income for the Period                      |   |                                    | 202         |   |                                   |   | (213 | ) |
|                                                           |   |                                    |        |   |                                   |   |   |   |
| Total Comprehensive Loss for the Period – Net of Tax     |   | $                                       | 10,300      |   |                                   | $      | 9,016 |   |
|                                                           |   |                                    |        |   |                                   |   |   |   |
|                                                           |   |                                    |        |   |                                   |   |   |   |
| Basic and Diluted Loss per Share                               |   | $                                       | (0.03       | )      |                                   | $      | (0.03 | ) |
|                                                           |   |                                    |        |   |                                   |   |   |   |
| Weighted Average Number of Shares                              |   |                                    | 318,891,961 |   |                                   |   | 288,998,010 |   |

----

|                                                   |   | Share Capital (authorized = unlimited) |        |   | Equity Reserves |   |    |    |   |   |        |   |
|--------------------------------------------------------|--------|----------------------------------------|-------------|--------|-----------------|--------|---------|---------|--------|--------|-------------|--------|
|                                                   |   |                                   |        |   |            |   |    |    |   |   |        |   |   | Accumulated |   |   |   |   |   |   |   |   | Total |   |
|                                                   |   | Issued                                 |        |   | Share           |   |    | Share   |   |   | Contributed |   |   | Other Comp |   |   | Equity |   |   |   |   |   | Shareholders' |   |
|                                                   |   | Shares                                 |        |   | Capital         |   |    | Premium |   |   | Surplus     |   |   | Inc / (Loss) |   |   | Reserves |   |   | Deficit |   |   | Equity |   |
| Balance - January 31, 2016                             |   |                                   | 277,557,082 |   |            | $      | 242,917 |    |   | $      | 1,151       |   |   | $ | 53,560 |   |   | $ | 199 |   |   | $ | 53,759 |   |   | $ | (113,170 | ) |   | $ | 184,657 |   |
| Total comprehensive loss for the period                |   |                                   | -           |   |            |   | -       |    |   |   | -           |   |   |   | - |   |   |   | 213 |   |   |   | 213 |   |   |   | (9,229 | ) |   |   | (9,016 | ) |
| Private placement and issuance costs (Note 10)         |   |                                   | 40,074,418  |   |            |   | 25,091  |    |   |   | -           |   |   |   | 3,444 |   |   |   | - |   |   |   | 3,444 |   |   |   | - |   |   |   | 28,535 |   |
| Refinance of debentures (Notes 7, 8 and 9)             |   |                                   | -           |   |            |   | -       |    |   |   | -           |   |   |   | 250 |   |   |   | - |   |   |   | 250 |   |   |   | - |   |   |   | 250 |   |
| Payment of land purchase options (Note 10)             |   |                                   | 241,376     |   |            |   | 200     |    |   |   | -           |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 200 |   |
| Vesting of restricted shares and RSU’s (Note 10) |   |                                   | 537,481     |   |            |   | 575     |    |   |   | -           |   |   |   | (694 | ) |   |   | - |   |   |   | (694 | ) |   |   | - |   |   |   | (119 | ) |
| Share-based compensation (Note 10)                     |   |                                   | 135,162     |   |            |   | 112     |    |   |   | -           |   |   |   | 2,406 |   |   |   | - |   |   |   | 2,406 |   |   |   | - |   |   |   | 2,518 |   |
| Bonus share cost amortization (Note 10)                |   |                                   | -           |   |            |   | -       |    |   |   | -           |   |   |   | 304 |   |   |   | - |   |   |   | 304 |   |   |   | - |   |   |   | 304 |   |
| Balance - January 31, 2017                             |   |                                   | 318,545,519 |   |            | $      | 268,895 |    |   | $      | 1,151       |   |   | $ | 59,270 |   |   | $ | 412 |   |   | $ | 59,682 |   |   | $ | (122,399 | ) |   | $ | 207,329 |   |
| Total comprehensive loss for the period                |   |                                   | -           |   |            |   | -       |    |   |   | -           |   |   |   | - |   |   |   | (202 | ) |   |   | (202 | ) |   |   | (10,098 | ) |   |   | (10,300 | ) |
| Payment of land purchase options (Note 10)             |   |                                   | 396,616     |   |            |   | 256     |    |   |   | -           |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 256 |   |
| Vesting of restricted shares and RSU’s (Note 10) |   |                                   | 360,963     |   |            |   | 365     |    |   |   | -           |   |   |   | (365 | ) |   |   | - |   |   |   | (365 | ) |   |   | - |   |   |   | - |   |
| Share-based compensation (Note 10)                     |   |                                   | -           |   |            |   | -       |    |   |   | -           |   |   |   | 1,111 |   |   |   | - |   |   |   | 1,111 |   |   |   | - |   |   |   | 1,111 |   |
| Bonus share cost amortization (Note 10)                |   |                                   | -           |   |            |   | -       |    |   |   | -           |   |   |   | 279 |   |   |   | - |   |   |   | 279 |   |   |   | - |   |   |   | 279 |   |
| Balance – December 31, 2017                      |   |                                   | 319,303,098 |   |            | $      | 269,516 |    |   | $      | 1,151       |   |   | $ | 60,295 |   |   | $ | 210 |   |   | $ | 60,505 |   |   | $ | (132,497 | ) |   | $ | 198,675 |   |

----

|                                                                         |   | For the 11months endedDecember 31, 2017 |    |   | For the 12months endedJanuary 31, 2017 |   |
|------------------------------------------------------------------------------|--------|-----------------------------------------|---------|--------|----------------------------------------|--------|
| Operating Activities                                                         |   |                                    |    |   |                                   |   |
| Loss for the period                                                          |   | $                                       | (10,098 | )      |                                   | $      | (9,229 | ) |
| Items not involving cash:                                                    |   |                                    |    |   |                                   |   |   |   |
| Amortization                                                                 |   |                                    | 4       |   |                                   |   | 18 |   |
| Environmental rehabilitation provision accretion (Note 6)                    |   |                                    | 1,776   |   |                                   |   | 1,465 |   |
| Share-based compensation (Note 10)                                           |   |                                    | 1,318   |   |                                   |   | 1,808 |   |
| Unrealized loss on foreign exchange                                          |   |                                    | 1       |   |                                   |   | 4 |   |
| Loss on disposal of intangible (Note 5)                                      |   |                                    | 1,324   |   |                                   |   | - |   |
| Loss on disposal of lands (Note 5)                                           |   |                                    | 469     |   |                                   |   | - |   |
| Gain on disposal of financial instruments (Note 5)                           |   |                                    | (36     | )      |                                   |   | (8 | ) |
| Changes in non-cash working capital:                                         |   |                                    |    |   |                                   |   |   |   |
| Amounts receivable                                                           |   |                                    | 23      |   |                                   |   | (40 | ) |
| Prepaid expenses                                                             |   |                                    | 2       |   |                                   |   | 472 |   |
| Accounts payable and accruals                                                |   |                                    | 227     |   |                                   |   | 47 |   |
| Net cash used in operating activities                                        |   |                                    | (4,990  | )      |                                   |   | (5,463 | ) |
|                                                                         |   |                                    |    |   |                                   |   |   |   |
| Financing Activities                                                         |   |                                    |    |   |                                   |   |   |   |
| Share issuance proceeds, net of costs (Note 10)                              |   |                                    | -       |   |                                   |   | 28,535 |   |
| Debenture funding, net of costs (Notes 7 and 9)                              |   |                                    | 14,917  |   |                                   |   | 13,943 |   |
| Debenture repayment (Notes 7 and 9)                                          |   |                                    | -       |   |                                   |   | (5,111 | ) |
| Cash settled RSU’s (Note 10)                                           |   |                                    | -       |   |                                   |   | (119 | ) |
| Net cash provided by financing activities                                    |   |                                    | 14,917  |   |                                   |   | 37,248 |   |
|                                                                         |   |                                    |    |   |                                   |   |   |   |
| Investing Activities                                                         |   |                                    |    |   |                                   |   |   |   |
| Property, plant and equipment purchases (Note 4)                             |   |                                    | (21,030 | )      |                                   |   | (23,445 | ) |
| Financial instrument disposal proceeds (Note 5)                         |   |                                    | 171     |   |                                   |   | 82 |   |
| Intangible purchases (Note 5)                                                |   |                                    | (810    | )      |                                   |   | - |   |
| Net cash used in investing activities                                        |   |                                    | (21,669 | )      |                                   |   | (23,363 | ) |
|                                                                         |   |                                    |    |   |                                   |   |   |   |
| Net Increase (Decrease) in Cash                                              |   |                                    | (11,742 | )      |                                   |   | 8,422 |   |
| Effect of foreign exchange on Cash                                           |   |                                    | (1      | )      |                                   |   | (4 | ) |
| Cash - Beginning of period                                                   |   |                                    | 18,674  |   |                                   |   | 10,256 |   |
| Cash - End of period                                                         |   | $                                       | 6,931   |   |                                   | $      | 18,674 |   |
|  Supplemental information – non-cash investing and financing      |   |                                    |    |   |                                   |   |   |   |
|    Accounts payable and accruals                              |   | $                                       | (60     | )      |                                   | $      | (207 | ) |
|    Transfer from PP&E to intangible (Note 5)              |   |                                    | 2,320   |   |                                   |   | - |   |
|    Debt accretion and capitalized interest (Notes 7, 8 and 9) |   |                                    | 18,512  |   |                                   |   | 15,103 |   |
|    Share-based compensation (Note 10)                         |   |                                    | 232     |   |                                   |   | 710 |   |
|    Bonus share amortization (Note 10)                         |   |                                    | 279     |   |                                   |   | 304 |   |
|    Fair value of shares issued for land options (Note 10)     |   | $                                       | 256     |   |                                   | $      | 200 |   |

----

----

| 1. | Nature of Business and Liquidity |
|----|----------------------------------|

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----

| 2. | Summary of Significant Accounting Policies |
|----|--------------------------------------------|

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| 3. | Mineral Property Agreements |
|----|-----------------------------|

| 4. | Mineral Property, Plant and Equipment |
|----|---------------------------------------|

| Net Book Value                               |   | NorthMet |    |   | Other fixed assets |   |   | Total  |   |
|----------------------------------------------|--------|----------|---------|--------|--------------------|--------|--------|--------|--------|
| Balance at January 31, 2016                  |   | $        | 321,559 |   |               |   | 90     |   |   |   | 321,649 |   |
| Additions                                    |   |     | 38,767  |   |               |   | 89     |   |   |   | 38,856 |   |
| Changes to rehabilitation provision (Note 6) |   |     | 4,467   |   |               |   | -      |   |   |   | 4,467 |   |
| Amortization                                 |   |     | -       |   |               |   | (59    | )      |   |   | (59 | ) |
| Balance at January 31, 2017                  |   |     | 364,793 |   |               |   | 120    |   |   |   | 364,913 |   |
| Additions                                    |   |     | 39,474  |   |               |   | 32     |   |   |   | 39,506 |   |
| Disposals (Note 5)                           |   |     | (2,789  | )      |               |   | -      |   |   |   | (2,789 | ) |
| Changes to rehabilitation provision (Note 6) |   |     | (6,363  | )      |               |   | -      |   |   |   | (6,363 | ) |
| Amortization                                 |   |     | -       |   |               |   | (62    | )      |   |   | (62 | ) |
| Balance at December 31, 2017                 |   | $        | 395,115 |   |               | $      | 90     |   |   | $ | 395,205 |   |

----

----

| NorthMet                                        |   | December 31,2017 |    |   | January 31,2017 |   |
|-------------------------------------------------|--------|------------------|---------|--------|-----------------|--------|
| Mineral property acquisition and interest costs |   | $                | 86,863  |   |            | $      | 68,352 |   |
| Mine plan and development                       |   |             | 50,250  |   |            |   | 47,833 |   |
| Environmental                                   |   |             | 122,396 |   |            |   | 111,421 |   |
| Consulting and wages                            |   |             | 52,965  |   |            |   | 49,715 |   |
| Reclamation and remediation (Note 6)            |   |             | 60,289  |   |            |   | 66,652 |   |
| Site activities                                 |   |             | 21,403  |   |            |   | 19,871 |   |
| Mine equipment                                  |   |             | 949     |   |            |   | 949 |   |
| Total                                           |   | $                | 395,115 |   |            | $      | 364,793 |   |

----

----

| 5. | Intangible and EIP Receivable |
|----|-------------------------------|

|                                   |   | 11 months endedDecember 31, 2017 |   |   | 12 months endedJanuary 31, 2017 |   |
|----------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| Intangible – beginning of period |   | $                                | 1,888  |   |                            | $      | 1,888 |   |
| Additions                              |   |                             | 3,130  |   |                            |   | - |   |
| Disposals                              |   |                             | (1,888 | )      |                            |   | - |   |
| Intangible – end of period       |   | $                                | 3,130  |   |                            | $      | 1,888 |   |
|                                       |   | 11 months endedDecember 31, 2017 |   |   | 12 months endedJanuary 31, 2017 |   |
|--------------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| EIP Receivable – beginning of period |   | $                                | 2,656  |   |                            | $      | 2,517 |   |
| Initial recognition                        |   |                             | 564    |   |                            |   | - |   |
| Collections                                |   |                             | (171   | )      |                            |   | (82 | ) |
| Gain (Loss) on re-measurement              |   |                             | (166   | )      |                            |   | 221 |   |
| EIP Receivable – end of period       |   |                             | 2,883  |   |                            |   | 2,656 |   |
| Less current portion                       |   |                             | (350   | )      |                            |   | (644 | ) |
| Non-current portion                        |   | $                                | 2,533  |   |                            | $      | 2,012 |   |

----

----

| 6. | Environmental Rehabilitation Provision |
|----|----------------------------------------|

|                                                               |   | 11 months endedDecember 31, 2017 |   |   | 12 months endedJanuary 31, 2017 |   |
|--------------------------------------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| Environmental Rehabilitation Provision – beginning of period |   | $                                | 70,626 |   |                            | $      | 65,684 |   |
| Change in estimate                                                 |   |                             | (6,363 | )      |                            |   | 4,467 |   |
| Liabilities discharged                                             |   |                             | (637   | )      |                            |   | (990 | ) |
| Accretion expense                                                  |   |                             | 1,776  |   |                            |   | 1,465 |   |
| Environmental Rehabilitation Provision – end of period       |   |                             | 65,402 |   |                            |   | 70,626 |   |
| Less current portion                                               |   |                             | (1,266 | )      |                            |   | (781 | ) |
| Non-current portion                                                |   | $                                | 64,136 |   |                            | $      | 69,845 |   |

----

----

| 7. | Glencore Financing |
|----|--------------------|

| · | Equity – five separate agreements comprising $25.0 million placement of PolyMet common shares in calendar 2009 in two tranches; a $30.0 million placement of PolyMet common shares in calendar 2010 in three tranches; a $20.0 million placement of PolyMet common shares in calendar 2011 in one tranche; a $20.960 million purchase of PolyMet common shares in the 2013 Rights Offering; and a $10.583 million purchase of PolyMet common shares in the 2016 Private Placement (see Note 10); |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Convertible debt (“Glencore Convertible Debt”) – agreement comprising $25.0 million initial principal secured convertible debentures drawn in four tranches (see Notes 8 and 16); |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Non-convertible debt (“Glencore Non-Convertible Debt”) – four separate agreements comprising $30.0 million initial principal secured debentures in calendar 2015 drawn in four tranches; an $11.0 million initial principal secured debenture in calendar 2016 drawn in one tranche; $14.0 million initial principal secured debenture in calendar 2016 drawn in four tranches; and a $20.0 million initial principal secured debenture in calendar 2017 drawn and to be drawn in two tranches (see Note 9).  Subsequent to December 31, 2017, a fifth separate agreement was entered into comprising up to $80.0 million initial principal secured debentures in calendar 2018 to be drawn in five tranches at the Company’s option (see Note 16); |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Marketing Agreement whereby Glencore committed to purchase all of the Company’s production of concentrates, metal, or intermediate products on market terms at the time of delivery for at least the first five years of production; and |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Corporate Governance Agreement whereby from January 1, 2014 as long as Glencore holds 10% or more of PolyMet's shares (on a fully diluted basis), Glencore has the right, but not obligation, to nominate at least one director and not more than the number of directors proportionate to Glencore's fully diluted ownership of PolyMet, rounded down to the nearest whole number, such number to not exceed 49% of the total board.   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | 92,836,072 shares representing 29.1% of PolyMet's issued shares (January 31, 2017 - 92,836,072 shares); |
|--------|---------------------------------------------------------------------------------------------------------|

| · | Glencore Convertible Debt exchangeable through the exercise of an exchange warrant (“Exchange Warrant”) at $1.2696 per share into 38,660,854 common shares of PolyMet (including capitalized and accrued interest as at December 31, 2017), and where the exercise price and the number of shares issuable are subject to conventional anti-dilution provisions.  See Notes 8 and 16 for additional details; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Warrants to purchase 7,055,626 common shares at $1.00 per share at any time until October 28, 2021, subject to acceleration on the earlier of receipt of permits necessary to construct NorthMet or the twelve month anniversary of the issue date provided the 20-day VWAP of PolyMet common shares is equal to or greater than $1.50 (“Acceleration Triggering Event”), and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions.  See 2016 Agreements below for additional details; and |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Warrants to purchase 625,000 common shares at $0.7797 per share at any time until October 28, 2021, and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions.  See 2016 Agreements below for additional details. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 8. | Convertible Debt |
|----|------------------|

|                                         |   | 11 months endedDecember 31, 2017 |    |   | 12 months endedJanuary 31, 2017 |   |
|----------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| Convertible Debt – beginning of period |   | $                                | 42,154  |   |                            | $      | 35,986 |   |
| Accretion and capitalized interest           |   |                             | 6,913   |   |                            |   | 6,168 |   |
| Convertible Debt – end of period       |   |                             | 49,067  |   |                            |   | 42,154 |   |
| Less current portion                         |   |                             | (49,067 | )      |                            |   | - |   |
| Non-current portion                          |   | $                                | -       |   |                            | $      | 42,154 |   |

----

----

| 9. | Non-Convertible Debt |
|----|----------------------|

|                                                                                     |   | 11 months endedDecember 31, 2017 |    |   | 12 months endedJanuary 31, 2017 |   |
|------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| IRRRB – beginning of period                                                        |   | $                                | -       |   |                            | $      | 4,962 |   |
|     Accretion and capitalized interest                               |   |                             | -       |   |                            |   | 149 |   |
|     Repayment                                                        |   |                             | -       |   |                            |   | (5,111 | ) |
|         IRRRB – end of period (Note 9a)    |   |                             | -       |   |                            |   | - |   |
|                                                                                     |   |                             |    |   |                            |   |   |   |
| Glencore – beginning of period                                                     |   |                             | 65,752  |   |                            |   | 43,023 |   |
|     Accretion and capitalized interest                               |   |                             | 11,599  |   |                            |   | 8,786 |   |
|     Funding, net of costs                                            |   |                             | 14,917  |   |                            |   | 13,943 |   |
|         Glencore – end of period (Note 9b) |   |                             | 92,268  |   |                            |   | 65,752 |   |
|                                                                                     |   |                             |    |   |                            |   |   |   |
|    Total Non-Convertible Debt                                             |   |                             | 92,268  |   |                            |   | 65,752 |   |
|        Less current portion                           |   |                             | (92,268 | )      |                            |   | - |   |
|    Non-current portion                                                    |   | $                                | -       |   |                            | $      | 65,752 |   |

| a) | IRRRB |
|----|-------|

| b) | Glencore |
|----|----------|

----

----

|  | b) | Glencore - Continued |
|--|----|----------------------|

| 10. | Share Capital |
|-----|---------------|

|  | a) | Issuances for Cash and Land Acquisition |
|--|----|-----------------------------------------|

----

----

|  | b) | Share-Based Compensation |
|--|----|--------------------------|

|  | c) | Share Options |
|--|----|---------------|

|                                    |   | 11 months endedDecember 31, 2017 |       |   | 12 months endedJanuary 31, 2017 |   |
|-----------------------------------------|--------|----------------------------------|------------|--------|---------------------------------|--------|
|                                    |   | Number of Options                |       |   | Weighted AverageExercise Price  |   |   | Number of Options |   |   | Weighted AverageExercise Price |   |
| Outstanding – beginning of period |   |                             | 20,962,002 |   |                            |   | 1.10 |   |   |   | 18,975,002 |   |   |   | 1.29 |   |
| Granted                                 |   |                             | 2,142,000  |   |                            |   | 0.62 |   |   |   | 5,502,000 |   |   |   | 0.76 |   |
| Expired                                 |   |                             | (1,445,000 | )      |                            |   | 2.19 |   |   |   | (3,515,000 | ) |   |   | 1.64 |   |
| Outstanding – end of period       |   |                             | 21,659,002 |   |                            |   | 0.98 |   |   |   | 20,962,002 |   |   |   | 1.10 |   |

----

----

|  | c) | Share Options - Continued |
|--|----|---------------------------|

|                                       |   |                             |   |   |                            |   |
|--------------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
|                                       |   |                             |   |   |                            |   |
|                                       |   | 11 months endedDecember 31, 2017 |   |   | 12 months endedJanuary 31, 2017 |   |
| Risk-free interest rate                    |   | 1.42% to 1.82%                   |   |   | 1.01% to 1.30%                  |   |
| Expected dividend yield                    |   | -                                |   |   | -                               |   |
| Expected forfeiture rate                   |   | -                                |   |   | -                               |   |
| Expected volatility                        |   | 53.91% to 57.06%                 |   |   | 55.88% to 59.17%                |   |
| Expected life in years                     |   | 2.50 to 5.00                     |   |   | 2.50 to 5.00                    |   |
| Weighted average fair value of each option |   | $0.22 to $0.32                   |   |   | $0.26 to $0.38                  |   |
| Range of Exercise Prices | Number of optionsoutstanding | Number of optionsexercisable | Weighted AverageExercise Price | Weighted AverageRemaining Life |
|--------------------------|------------------------------|------------------------------|--------------------------------|--------------------------------|
| 0.7110 to 0.7977         | 11,754,000                   | 10,020,667                   | 0.73                           | 3.92                           |
| 0.8200 to 0.9972         | 3,839,000                    | 3,789,000                    | 0.97                           | 5.89                           |
| 1.0058 to 1.5000         | 4,096,002                    | 4,096,002                    | 1.15                           | 2.78                           |
| 1.7689 to 2.4886         | 1,665,000                    | 1,465,000                    | 2.01                           | 2.15                           |
| 2.6273 to 3.0695         | 305,000                      | 182,500                      | 2.81                           | 0.74                           |
|                     | 21,659,002                   | 19,553,169                   | 0.98                           | 3.87                           |

----

----

|  | d) | Restricted Shares and Restricted Share Units |
|--|----|----------------------------------------------|

|                              |   | 11 months endedDecember 31, 2017 |      |   | 12 months endedJanuary 31, 2017 |   |
|-----------------------------------|--------|----------------------------------|-----------|--------|---------------------------------|--------|
| Outstanding - beginning of period |   |                             | 2,618,020 |   |                            |   | 990,471 |   |
| Issued                            |   |                             | 1,077,869 |   |                            |   | 2,303,239 |   |
| Forfeited                         |   |                             | (8,896    | )      |                            |   | - |   |
| Vested                            |   |                             | (405,963  | )      |                            |   | (675,690 | ) |
| Outstanding - end of period       |   |                             | 3,281,030 |   |                            |   | 2,618,020 |   |

|  | e) | Bonus Shares |
|--|----|--------------|

|                                    | 11 months endedDecember 31, 2017 | 12 months endedJanuary 31, 2017 |
|-----------------------------------------|----------------------------------|---------------------------------|
|                                    | Allocated                        | Authorized& Unissued        | Allocated | Authorized& Unissued |
| Outstanding – beginning of period | 3,150,000                        | 3,640,000                       | 3,150,000 | 3,640,000 |
| Outstanding – end of period       | 3,150,000                        | 3,640,000                       | 3,150,000 | 3,640,000 |

----

----

|  | f) | Share Purchase Warrants |
|--|----|-------------------------|

|                                    |   | 11 months endedDecember 31, 2017 |       |   | 12 months endedJanuary 31, 2017 |   |
|-----------------------------------------|--------|----------------------------------|------------|--------|---------------------------------|--------|
|                                    |   | Number ofPurchaseWarrants        |       |   | WeightedAverageExercise Price   |   |   | Number ofPurchaseWarrants |   |   | WeightedAverageExercise Price |   |
| Outstanding – beginning of period |   |                             | 27,780,213 |   |                            | $      | 0.95 |   |   |   | 6,919,287 |   |   | $ | 0.91 |   |
| Issued                                  |   |                             | -          |   |                            |   | - |   |   |   | 21,322,212 |   |   |   | 0.99 |   |
| Expiration                              |   |                             | (6,458,001 | )      |                            |   | (0.82 | ) |   |   | (461,286 | ) |   |   | (2.17 | ) |
| Outstanding – end of period       |   |                             | 21,322,212 |   |                            | $      | 0.99 |   |   |   | 27,780,213 |   |   | $ | 0.95 |   |
|                                            |   |                             |   |
|-------------------------------------------------|--------|----------------------------------|--------|
|                                            |   | 11 months endedDecember 31, 2017 |   |   | 12 months endedJanuary 31, 2017 |   |
| Risk-free interest rate                         |   |                             | -      |   |   | 0.98% to 1.33% |   |
| Expected dividend yield                         |   |                             | -      |   |   | - |   |
| Expected forfeiture rate                        |   |                             | -      |   |   | - |   |
| Expected volatility                             |   |                             | -      |   |   | 55.58% to 58.47% |   |
| Expected life in years                          |   |                             | -      |   |   | 2.50 to 5.00 |   |
| Weighted average fair value of each warrant (1) |   |                             | -      |   |   | $0.19 to $0.40 |   |

|  | (1) | The fair value of share purchase warrants was used in determining the allocation of net proceeds under the relative fair value method for Placement Units on October 18, 2016 and Glencore Units on October 28, 2016.  See Notes 7 and 10a for additional details. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                       |   | 11 months endedDecember 31, 2017 |    |   | 12 months endedJanuary 31, 2017 |   |
|--------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| Debt accretion and capitalized interest:   Convertible debt (Notes 7 and 8) |   | $                                | 6,913   |   |                            | $      | 6,168 |   |
|    Non-convertible debt (Notes 7 and 9)                                     |   |                             | 11,599  |   |                            |   | 8,935 |   |
| Environmental rehabilitation provision accretion (Note 6)                                  |   |                             | 1,776   |   |                            |   | 1,465 |   |
| Other finance costs                                                                        |   |                             | 562     |   |                            |   | 1,261 |   |
| Less: amounts capitalized on qualifying assets                                             |   |                             | (18,512 | )      |                            |   | (15,103 | ) |
|        Finance costs                                    |   |                             | 2,338   |   |                            |   | 2,726 |   |
| Interest income:   Bank deposits                                            |   |                             | (105    | )      |                            |   | (54 | ) |
|        Finance income                                   |   |                             | (105    | )      |                            |   | (54 | ) |
|           Finance costs - net            |   | $                                | 2,233   |   |                            | $      | 2,672 |   |
|                                   |   | 11 months endedDecember 31, 2017 |   |   | 12 months endedJanuary 31, 2017 |   |
|----------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| Salaries and other short-term benefits |   | $                                | 1,898  |   |                            | $      | 1,828 |   |
| Other long-term benefits               |   |                             | 42     |   |                            |   | 44 |   |
| Share-based payment (1)                |   |                             | 836    |   |                            |   | 1,709 |   |
|     Total          |   | $                                | 2,776  |   |                            | $      | 3,581 |   |

| (1) | Share-based payment represents the amount capitalized or expensed during the period (see Note 10). |
|-----|----------------------------------------------------------------------------------------------------|

----

----

|  | a) | Effective tax rate |
|--|----|--------------------|

|                                                |   | 11 months endedDecember 31, 2017 |    |   | 12 months endedJanuary 31, 2017 |   |
|-----------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| Loss for the year before taxes                      |   | $                                | (10,098 | )      |                            | $      | (9,229 | ) |
| Canadian statutory tax rate                         |   |                             | 27.0    | %      |                            |   | 26.0 | % |
| Expected tax recovery                               |   |                             | (2,726  | )      |                            |   | (2,400 | ) |
| Difference in foreign tax rates                     |   |                             | (84     | )      |                            |   | (413 | ) |
| Non-deductible items                                |   |                             | 356     |   |                            |   | 470 |   |
| Change in tax rate                                  |   |                             | 5,025   |   |                            |   | - |   |
| Change in unrecognized deferred tax and other items |   |                             | (2,571  | )      |                            |   | 2,343 |   |
| Income Tax Expense / (Recovery)                     |   | $                                | -       |   |                            | $      | - |   |

| b) | Deferred income tax assets and liabilities |
|----|--------------------------------------------|

|                                                            |   | 11 months endedDecember 31, 2017 |    |   | 12 months endedJanuary 31, 2017 |   |
|-----------------------------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| Non-capital loss carry forward assets                           |   | $                                | 27,799  |   |                            | $      | 35,992 |   |
| Mineral property acquisition, exploration and development costs |   |                             | (27,799 | )      |                            |   | (35,992 | ) |
| Other                                                           |   |                             | -       |   |                            |   | - |   |
| Net deferred income tax liabilities                             |   | $                                | -       |   |                            | $      | - |   |
|                                    |   | 11 months endedDecember 31, 2017 |   |   | 12 months endedJanuary 31, 2017 |   |
|-----------------------------------------|--------|----------------------------------|--------|--------|---------------------------------|--------|
| Non-capital loss carry forward assets   |   | $                                | 22,786 |   |                            | $      | 25,619 |   |
| Capital loss carry forward assets       |   |                             | 360    |   |                            |   | 347 |   |
| Intercompany receivable assets          |   |                             | 2,109  |   |                            |   | 2,031 |   |
| Other assets                            |   |                             | 1,159  |   |                            |   | 1,059 |   |
| Unrecognized deferred income tax assets |   | $                                | 26,414 |   |                            | $      | 29,056 |   |

----

----

|  Contractual Obligations |   | CarryingValue |    |   | ContractualCash flows |   |    | Less than1 year |   |   | 1 – 3years |   |   | 3 – 5years |   |   | More than5 years |   |
|-------------------------------|--------|---------------|---------|--------|-----------------------|--------|---------|-----------------|--------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
| Accounts payable and accruals |   | $             | 3,630   |   |                  | $      | 3,630   |            |   | $      | 3,630            |   |   | $                | -      |   |             | $      | - |   |   | $ | - |   |
| Convertible debt (Note 8)     |   |          | 49,067  |   |                  |   | 51,183  |            |   |   | 51,183           |   |   |             | -      |   |             |   | - |   |   |   | - |   |
| Non-convertible debt (Note 9) |   |          | 92,268  |   |                  |   | 96,294  |            |   |   | 96,294           |   |   |             | -      |   |             |   | - |   |   |   | - |   |
| Firm commitments              |   |          | -       |   |                  |   | 1,529   |            |   |   | 448              |   |   |             | 581    |   |             |   | 500 |   |   |   | - |   |
|     Total |   | $             | 144,965 |   |                  | $      | 152,636 |            |   | $      | 151,555          |   |   | $                | 581    |   |             | $      | 500 |   |   | $ | - |   |
|                          |   | Loans andreceivables |   |   | Availablefor sale |   |   | Othe financialliabilities |   |   | Totalcarrying value |   |
|-------------------------------|--------|----------------------|--------|--------|-------------------|--------|--------|--------------------------------|--------|--------|---------------------|--------|
| Financial assets              |   |                 |   |   |              |   |   |                           |   |   |                |   |
| Cash                          |   | $                    | 6,931  |   |              | $      | -      |                           |   | $      | -                   |   |   | $ | 6,931 |   |
| Amounts receivable            |   |                 | 82     |   |              |   | 2,883  |                           |   |   | -                   |   |   |   | 2,965 |   |
| Total financial assets        |   | $                    | 7,013  |   |              | $      | 2,883  |                           |   | $      | -                   |   |   | $ | 9,896 |   |
|                          |   |                 |   |   |              |   |   |                           |   |   |                |   |   |   |   |   |
| Financial liabilities         |   |                 |   |   |              |   |   |                           |   |   |                |   |   |   |   |   |
| Accounts payable and accruals |   | $                    | -      |   |              | $      | -      |                           |   | $      | 3,630               |   |   | $ | 3,630 |   |
| Convertible debt              |   |                 | -      |   |              |   | -      |                           |   |   | 49,067              |   |   |   | 49,067 |   |
| Non-convertible debt          |   |                 | -      |   |              |   | -      |                           |   |   | 92,268              |   |   |   | 92,268 |   |
| Total financial liabilities   |   | $                    | -      |   |              | $      | -      |                           |   | $      | 144,965             |   |   | $ | 144,965 |   |

----

----

|                          |   | Loans andreceivables |   |   | Availablefor sale |   |   | Otherfinancialliabilities |   |   | Totalcarrying value |   |
|-------------------------------|--------|----------------------|--------|--------|-------------------|--------|--------|---------------------------|--------|--------|---------------------|--------|
| Financial assets              |   |                 |   |   |              |   |   |                      |   |   |                |   |
| Cash                          |   | $                    | 18,674 |   |              | $      | -      |                      |   | $      | -                   |   |   | $ | 18,674 |   |
| Amounts receivable            |   |                 | 105    |   |              |   | 2,656  |                      |   |   | -                   |   |   |   | 2,761 |   |
| Total financial assets        |   | $                    | 18,779 |   |              | $      | 2,656  |                      |   | $      | -                   |   |   | $ | 21,435 |   |
|                          |   |                 |   |   |              |   |   |                      |   |   |                |   |   |   |   |   |
| Financial liabilities         |   |                 |   |   |              |   |   |                      |   |   |                |   |   |   |   |   |
| Accounts payable and accruals |   | $                    | -      |   |              | $      | -      |                      |   | $      | 3,188               |   |   | $ | 3,188 |   |
| Convertible debt              |   |                 | -      |   |              |   | -      |                      |   |   | 42,154              |   |   |   | 42,154 |   |
| Non-convertible debt          |   |                 | -      |   |              |   | -      |                      |   |   | 65,752              |   |   |   | 65,752 |   |
| Total financial liabilities   |   | $                    | -      |   |              | $      | -      |                      |   | $      | 111,094             |   |   | $ | 111,094 |   |

|  | Level 1 – | Quoted prices (unadjusted) in active markets for identical assets or liabilities. |
|--|-----------------|-----------------------------------------------------------------------------------|

|  | Level 2 – | Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. |
|--|-----------------|------------------------------------------------------------------------------------------------------------------------------------|

|  | Level 3 – | Inputs for the asset or liability that are not based on observable market data. |
|--|-----------------|---------------------------------------------------------------------------------|

----

----

|                 |   | December 31,2017 |   |   | January 31,2017 |   |
|----------------------|--------|------------------|--------|--------|-----------------|--------|
| Cash                 |   | $                | 6,931  |   |            | $      | 18,674 |   |
| Convertible debt     |   |             | 49,067 |   |            |   | 42,154 |   |
| Non-convertible debt |   | $                | 92,268 |   |            | $      | 65,752 |   |

----

----