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

FORM 20-F

ANNUAL REPORT FISCAL 2004 ENDED JANUARY 31, 2004

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

OR

x ANNUAL REPORT
  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
  For the fiscal period ended January 31, 2004

OR

 ̈ TRANSITION REPORT
  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from _____ to _____

Commission file number 0-18701

POLYMET MINING CORP.(Formerly Fleck Resources Ltd.)
  (Exact name of Registrant as specified in its charter)

British Columbia, Canada(Jurisdiction of incorporation or organization)

Suite 1116-925 West Georgia St., Vancouver, British Columbia
  V6C3L2(Address of principal executive offices)

Securities to be registered pursuant to Section 12(b) of
  the Act: None

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

Common Shares, without par value(Title of Class)

Securities for which there is a reporting obligation pursuant
  to Section 15(d) of the Act: None

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Indicate the number of outstanding shares of each of the issuer's
  classes of capital or common shares as of the close of the period covered by
  the annual report. 44,992,054

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

Indicate by check mark which financial statement item the registrant
  has elected to follow:

Item 17 x Item
  18  ̈

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POLYMET MINING CORP.

TABLE OF CONTENTS

|               |                                                                                  
|-------------- | ---------------------------------------------------------------------------------
|Item 1.        | Identity of Directors,
      Senior Management and Advisors                      
|Item 2.        | Offer Statistics and Expected Timetable                                          
|Item 3.        | Key Information                                                                  
|Item 4.        | Information on the Company                                                       
|Item 5.        | Operating and Financial
      Review and Prospects                               
|Item 6.        | Directors, Senior Management and Employees                                       
|Item 7.        | Major Shareholders and
      Related Party Transactions                          
|Item 8.        | Financial Information                                                            
|Item 9.        | The Offer and Listing                                                            
|Item 10.       | Additional Information                                                           
|Item 11.       | Quantitative and Qualitative
      Disclosure About Market Risk                  
|Item 12.       | Description of Securities Other than Equity
      Securities                     
|Item 13.       | Default, Dividend Arrearages
      and Delinquencies                             
|Item 14.       | Material Modifications to the Right of
      Security Holders and Use of Proceeds
|Item 15.       | Controls and Procedures                                                          
|Item 16A.      | Audit Committee Financial Expert                                                 
|Item 16B.      | Code of Ethics                                                                   
|Item 16C.      | Principal Accountant Fees and Services                                           
|Item 17.       | Financial Statements                                                             
|Item 18.       | Financial Statements                                                             
|Item 19.       | Financial Statements
      and its Exhibits                                      
|               |                                                                                  
|Signature Page

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ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
  AND ADVISORS

Not required

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

Not required

ITEM 3.     KEY INFORMATION

A.     Selected Financial Data

The following table presents selected financial information.
  The Company's financial statements are stated in United States Dollars and are
  prepared in accordance with Canadian Generally Accepted Accounting Principles
  (GAAP); the application of which, in the case of the Company, conforms in all
  material respects for the periods presented with US GAAP, except as disclosed
  in footnotes to the financial statements.

Selected Financial Data
  (US$ in 000s)

|                       | Year
      Ended
      1/31/04 | Year
      Ended
      1/31/03 | Year
      Ended
      1/31/02
      Restated | Year
      Ended
      1/31/01
      Restated | Year
      Ended
      1/31/00
      Restated
|---------------------- | ------------------------------ | ------------------------------ | --------------------------------------------- | --------------------------------------------- | ---------------------------------------------
|Revenue                | $0                             | $0                             | $0                                            | $0                                            | $0                                           
|Net Income (Loss)      | ($147)                         | ($472)                         | ($1156)                                       | ($3,314)                                      | ($5,725)                                     
|(Loss) Per Share       | ($0.00)                        | ($0.01)                        | ($0.04)                                       | ($0.12)                                       | ($.26)                                       
|Dividends Per Share    | $0.00                          | $0.00                          | $0.00                                         | $0.00                                         | $0.00                                        
|Wtg. Avg. Shares (000) | 35,452                         | 32,658                         | 31,925                                        | 27,041                                        | 22,714                                       
|Working Capital        | $424                           | ($73)                          | $322                                          | $1,181                                        | $1,020                                       
|Long-Term Debt         | $0                             | $0                             | $0                                            | $0                                            | $0                                           
|Shareholders Equity   | $926                           | ($31)                          | $441                                          | $1,319                                        | $2,266                                       
|Total Assets           | $1,025                         | $52                            | $504                                          | $1,741                                        | $1,883                                       
|                       |                                |                                |                                               |                                               |                                              
|US GAAP Net Loss       | ($147)                         | ($469)                         | ($1,226)                                      | ($3,303)                                      | ($2,279)                                     
|US GAAP EPS            | $0                             | (0.01)                         | ($0.04)                                       | ($.12)                                        | ($.12)                                       
|US GAAP Mineral Prop.  | $0                             | $0                             | $0                                            | $0                                            | $0                                           
|US GAAP Shareholders  |                                |                                |                                               |                                               |                                              
|Equity                 | $926                           | ($29)                          | $441                                          | $1,319                                        | $2,266                                       
|US GAAP Total Assets   | $1,025                         | $52                            | $504                                          | $1,741                                        | $2,397                                       

|(1) | Cumulative Restated Net Loss since incorporation has been
      ($14,361,251).                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Under US GAAP and SEC regulations, the
        Company would have expensed all mineral property acquisition/exploration
        costs in the period incurred.

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| | Under US GAAP, long-term investments would be written
        down to market value on an individual basis and charged to a contra-equity
        account for unrealized losses on investments.
      Under US GAAP, contingently-cancellable (and escrowed)
        common shares would not have been included in the calculation of weighted-average-number-of-shares
        used to determine EPS.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The rate of exchange was 1.3222 on July 15, 2004.

All monetary amounts are expressed in United States dollars
  except otherwise indicated. The following table sets forth the rate of exchange
  for the Canadian Dollar at the end of each of the previous six months and the
  five most recent fiscal years ended January 31st, the average rates for each
  year and the range of high and low rates for month end period and each year.
  For purposes of this table, the rate of exchange means the noon buying rate
  in New York City for cable transfers in foreign currencies as certified for
  customs purposes by the Federal Reserve Bank of New York. The table sets forth
  the number of Canadian Dollars required under that formula to buy one US Dollar.
  The average rate means the average of the exchange rates on the last day of
  each month during the year.

|For the month end | High   | Low   
|----------------- | ------ | ------
|June 30, 2004     | 1.3453 | 1.3383
|May 31, 2004      | 1.3637 | 1.3603
|April 30, 2004    | 1.3762 | 1.3664
|March 31, 2004    | 1.3103 | 1.3048
|February 28, 2004 | 1.3510 | 1.3333
|January 31, 2004  | 1.3360 | 1.3238

|For the year ended | Average | High | Low 
|------------------ | ------- | ---- | ----
|1/31/04            | 1.38    | 1.53 | 1.27
|1/31/03            | 1.56    | 1.61 | 1.50
|1/31/02            | 1.56    | 1.61 | 1.52
|1/31/01            | 1.48    | 1.45 | 1.45
|1/31/00            | 1.47    | 1.51 | 1.45

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B.     Capitalization and indebtedness

Not applicable.

C.     Reason for the offer and use of proceeds.

Not applicable.

D.     Risk Factors

An investment in PolyMets Common Shares is subject to
  the risks and uncertainties inherent in PolyMets business. Any investor
  should consider the following factors, as well as other information set forth
  in this annual report, in connection with an investment in PolyMets Common
  Shares. If any of the risks described below occur, PolyMets business,
  results of operations and financial condition could be adversely affected. In
  such cases, the price of PolyMets Common Shares could decline, and investors
  could lose all or part of their investment.

Risks Inherent in Mining

Exploration for economic deposits of minerals is subject to
  a number of risk factors. While the rewards for mining companies can be substantial
  if an economically viable discovery is made, few of the properties explored
  are ultimately developed into producing mines. The Company's ability to continue
  exploration and development of its properties is dependent upon its ability
  to raise significant additional funds in the future. Should the Company not
  be able to obtain such financing, a portion of its interest in properties may
  be lost to joint venture partners, or its properties may be lost entirely.

The Company's mineral operations are subject to governmental
  legislation, policies and controls relating to prospecting, development, production,
  environmental protection, mining taxes and labor standards. In addition, the
  profitability of a particular mining prospect is affected by the market for
  base and precious metals, which entails the assessment of many factors, some
  of which include changing production costs, the supply and demand for metals,
  the rate of inflation, the inventory of metal producing corporations, the political
  environment and changes in international investment patterns.

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Ownership of mineral interests involves certain inherent risks
  due to the difficulties of determining the validity of certain claims, as well
  as the potential for problems arising from the frequently ambiguous transfer
  history characteristic of many mineral interests. The Company has investigated
  ownership of its mineral interests and, to the best of its knowledge, ownership
  interests are in good standing.

The Company may become subject to liability for certain hazards
  against which it cannot insure or against which it may elect not to insure because
  of high premium costs or other reasons. Payment of such liabilities would reduce
  funds available for acquisition of mineral properties or exploration and development.

Conflicts of Interest

Certain directors, officers or promoters of the Company are
  directors, officers, significant shareholders or promoters of other publicly
  listed companies. As a result, potential conflicts of interest may arise with
  respect to the exercise by such persons of their respective duties for the Company.
  In the event that such a conflict of interest arises at a meeting of the directors
  of the Company, a director who has such a conflict will abstain from voting
  for or against the approval of such participation or such terms. In the appropriate
  cases, the Company will establish a special committee of independent directors
  to review a matter in which several directors, or management, may have a conflict.
  Other than as indicated, the Company has no other procedures or mechanisms to
  deal with conflicts of interest.

Absence of Dividends

The Company has never declared or paid cash dividends on its
  Common Shares and does not anticipate doing so in the foreseeable future. There
  can be no assurance that the Company's board of directors will ever declare
  cash dividends, which action is exclusively within its discretion. Investors
  cannot expect to receive a dividend on the Company's Common Shares in the foreseeable
  future, if at all.

Dilution

The Company may in the future grant to some or all of its
  own and its subsidiaries' directors, officers, insiders and key employees options
  to purchase the Company's Common Shares as non-cash incentives to those employees.
  Such options may be granted at exercise prices equal to market prices at time
  when the public market is depressed. To the extent that significant numbers
  of such options may be granted and exercised, the interests of the then existing
  shareholders of the Company may be subject to additional dilution.

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The Company is currently without a source of revenue and will
  most likely be required to issue additional securities to finance its operation
  and may also issue substantial additional securities to finance the development
  of any or all of its projects.

Volatility of Common Share Price and Volume

The Company's Common Shares are listed for trading on the
  TSX Venture Exchange. Shareholders of the Company may be unable to sell significant
  quantities of the Common Shares into the public trading markets without a significant
  reduction in the price of the shares, if at all. The market price of the Common
  Shares may be affected significantly by factors such as changes in the Company's
  operating results, the availability of financings, fluctuations in the price
  of metals, the interest of investors, traders and others in small exploration
  stage public companies such as the Company and general market conditions. In
  recent years the securities markets have experienced a high level of price and
  volume volatility, and the market price of securities of many companies, particularly
  small capitalization exploration companies similar to the Company, have experienced
  wide fluctuations, which have not necessarily been related to the operating
  performances, underlying asset values or future prospects of such companies.
  There can be no assurance that future fluctuations in the price of the Company's
  shares will not occur.

Adverse Tax Consequences to U.S. Shareholders Resulting
  From the Company's PFIC Status

The Company believes that it is qualified as a passive foreign
  investment company ("PFIC") for the fiscal year ended January 31, 2003 and may
  qualify as a PFIC in the future with respect to U.S. Holders of the Company's
  common shares because the only source of income is interest, a passive source
  of income under the PFIC rules.

See Item 10 Additional Information - Taxation - United States
  Federal Income Tax

Consequences for a more detailed discussion of material United
  States federal income tax consequences for U.S. Shareholders.

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ITEM 4.    INFORMATION ON THE COMPANY

A.     History and Development of the Company

The Company was incorporated in British Columbia, Canada on
  March 4, 1981 under the name Fleck Resources Ltd. The Company changed its name
  from Fleck Resources to Polymet Mining Corp. on June 10, 1998.

The Companys head office is situated at Suite 1116 
  925 West Georgia Street, Vancouver, B.C. V6C 3L2. Its registered and records
  office is the Companys legal counsels offices situated at 1040 
  999 West Hastings Street, Vancouver, B.C. V6C 2W2. The Company is a reporting
  issuer in each of the provinces of Albert, British Columbia and Ontario. The
  Companys shares have been listed on the TSX Venture Exchange (TSX V) since
  April 13, 1984 with the symbol "POM" and on the Over the Counter Bulletin Board
  (OTCBB) under the symbol POMGF in the United States.

The principal expenditures of the Company are related to its
  NorthMet Project located in Minnesota, USA. During the years ended January 31,
  2004, 2003 and 2002 expenditures totaling $6,736,016.

The Company relies principally on equity financing to fund
  its projects and expenditures.

B.     Business Overview

PolyMet Mining Corp. (hereinafter referred to as the "Company"
  or "Registrant") is engaged in the exploration and development, when warranted,
  of natural resource properties. The Companys primary mineral property
  is the NorthMet Project, a polymetallic project in northeastern Minnesota, USA.

The Company controlled and explored several minerals properties
  prior to Fiscal 2000; however, exploration activities subsequently have concentrated
  on development of the NorthMet Project. During 2000 and 2001 the Company completed
  diamond core and reverse circulation, drilling programs and in April 2001 completed
  a pre-feasibility study. During 2002 (fiscal 2003), the only on-site project
  work completed was associated with environmental mitigation.

In the years ended January 31, 2004, 2003 and 2002, the Company
  did not have any active operations that generated revenues.

On March 17, 2003, the Company incurred a change of management.
  As a result the Companys officers and directors resigned and a new President,
  Secretary, Chief Financial Officer and three board

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members were appointed. Subsequently, the Company moved is
  head offices from Denver, Colorado to Vancouver, British Columbia as noted hereinabove.

Managements primary focus for the year ended was to
  achieve an understanding of the economic viability on its Northmet project.
  In order to do so, Polymet had several milestones to accomplish most importantly:

- In December 2003, the Company, entered into a Memorandum
      of Understanding granting and option to acquire certain equipment from Cleveland
      Cliffs of Cleveland, Ohio (Cliffs) located near the Companys
      NorthMet projects as well as certain other infrastructure facilities. Under
      the terms of the agreement Cliffs will maintain available designated elements
      of the facility while the Company develops its feasibility study on the
      NorthMet project. As consideration for the exclusive option, the Company
      has agreed to a cash payment of $500,000 by 31 January 2004 (paid) and the
      issuance to Cliffs of 1,000,000 common shares (issued 30 March 2004) to
      maintain the exclusive rights until 30 June 2006. Within six months of completion
      of a bankable feasibility study for the NorthMet project the Company shall
      complete the acquisition for an agreed consideration.
- In January 2004 the Company commenced an independent
      scoping study, to update the process and infrastructure aspects of its 2001
      pre-feasibility study integrating the key components of the Cliffs-Erie
      facility. The study was completed on March 31, 2004 and determined a considerable
      capital cost reduction by simplifying the on-site hydrometallurgical process
      and inclusion of the Cliffs-Erie plant and infrastructure. The cost estimates
      for process plant and infrastructure amounts to capital of $199 million
      and operating costs of $6.59 per tonne. The additional capital and operating
      costs for contract mining and other owners costs are included in a full
      43-101 report completed by Patrick Downey and Associates.
- The acquisition of the Cliffs-Erie facilities will allow
      the Company to expedite environmental permitting since most of the difficult
      construction and infrastructure components have been completed. In February
      2004, Polymet retained Barr Engineering Company of Minneapolis to ascertain
      the requirements for an Environmental Impact Study and put in place field
      monitoring and

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- Polymet retained Bateman Engineering Pty. of Brisbane,
      Australia as the principal engineer for the Definitive Feasibility Study
      for the NorthMet project.
- On June 17, 2004 the Company announced the closing of
      a non-brokered private placement for a total of 1,550,000 Units (the "Units"),
      each Unit comprised of one common share and one-half of one non-transferable
      share purchase warrant, in the capital stock of the Company at $0.80 per
      unit to net the treasury an aggregate of $1,240,000 took place effective
      June 8, 2004. One full share purchase warrant entitles the investors to
      purchase one additional common share of the Company for a period of 18 months
      from the closing at $1.20 per share. A finder's fee in the amount of 7.5%
      of the gross proceeds with respect to the placement of 825,000 units has
      been paid in the form of 61,875 shares in the capital stock of the Company
      at a deemed price of $0.80 per share.



C.     Organizational Structure

As at January 31, 2004 the Company had two (2) wholly owned
  subsidiaries, Fleck Minerals Inc., incorporated in Ontario, and PolyMet Mining
  Inc., incorporated in Minnesota, USA.

D.     Property, plant and equipment

NorthMet Project, Minnesota, USA

(a)     Introduction

The NorthMet Project was discovered by USX (formerly US Steel)
  in the late 1960s. USX exploration included the drilling of 112 core holes and
  geological and surface mapping along a grid on 183-meter centers. The holes
  ranged in depth from 49 meters to 807 meters, with an average depth of 366 meters.
  Mineralized rock as thick as 91 meters was encountered in the holes; the average
  mineralized thickness is 21 meters.

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In 1989, PolyMet acquired a 20-year renewable mining lease
  for the NorthMet Project from USX. To date the Company has expended $6,236,016.
  These expenditures supported drilling, sampling, assaying, environmental, metallurgical
  testing and the pre-feasibility studies.

The following diagrams illustrate the location of the NorthMet Project.

Figure No. 1
  NorthMet Project Map



The Company commissioned various independent mining consultants
  to provide for the NorthMet Project an Interim Report on Resource Estimation,
  NorthMet Project, the Pre-Feasibility Study and the Technical update prepared
  in accordance with an independent Qualified Person's Review and Technical Report,
  as defined in National Instrument 43-101 ("NI 43-101") of the Canadian Securities
  Administrators, Standards of Disclosure for Mineral Projects, and in compliance
  with Form 43-101F1 (the "Technical Report"). These reports were completed in
  October 1999,and March 2001 respectively and are summarized herein.

In addition, in 2004 the Company commissioned Penguin Automated
  Systems, Inc (PASI)to study the capital and operating costs impact subsequent
  to the acquisition of the Cliffs Erie plant on the Northmet Project, with the
  use of the PlatsolTMprocess an established recovery technology for
  copper. In addition the Company Commissioned Bateman Engineering Pty Ltd of
  Brisbane, Australia to audit the PASI Report confirming the PASI Report conclusions.
  Subsequent to the completion of the PASI Report and Bateman audit, the Company
  commissioned an independent mining consultant to provide a technical update
  for the Northmet Project prepared in accordance with an independent Qualified
  Person's Review and Technical Report, as defined in NI 43-101 of the

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Canadian Securities Administrators, Standards of Disclosure
  for Mineral Projects, and in compliance with Form 43-101F1.

The Company is incorporated under the laws of British Columbia
  in Canada. The mineral reserves and resources described in this Annual Report
  are estimates and have been prepared in compliance with NI 43-101. The definitions
  of proven and probable reserves used in NI 43-101 differ from the definitions
  in SEC Industry Guide 7. In addition, the terms "mineral resources", "measured
  mineral resource", "indicated mineral resource" and "inferred mineral resource"
  are defined In and required to be, disclosed by NI 43-101; however, these terms
  are not defined terms under SEC Industry Guide 7 and normally are not permitted
  to be used in reports and registration statements filed with the SEC. Accordingly,
  information, contained in this Annual Report containing descriptions of the
  Company's mineral deposits may not be comparable to similar information made
  public by U.S. companies subject to the reporting and disclosure requirements
  under the United States federal securities laws and the rules and regulations
  thereunder.

The PASI study investigated the capital and operating cost
  impact of integrating the established material handling, crushing, milling and
  infrastructure of the mothballed Cliffs-Erie plant on the Northmet project;
  with use of the PlatSol process and established recovery technology for
  copper cathode. This PlatSol hydrometallurgical process was specifically
  designed to extract the base metals and precious metals from NorthMet ore concentrates.
  The capital cost for process plant and infrastructure was estimated by PASI
  at US$199.4 million and operating costs at US$6.59 per tonne. These costs were
  updated to March 2004, at the pre-feasibility level, and using established estimating
  methods.

The PASI study confirmed that re-use of the nearby brownfields
  Cliffs-Erie facility at an initial through-put of 25,000 tons per day of ore
  from the NorthMet project will provide a capital cost saving of US$179 million
  compared to the 2001 estimates for a greenfields operation and there
  are further savings available to future expansions.

The Company signed, on February 16, 2004, a comprehensive
  agreement with Cleveland Cliffs Inc. to acquire specific mining assets at the
  former LTV Steel Mining Company property, now called. The Cliffs-Erie crusher
  and concentrator processed 100,000 tons per day of taconite ore prior to being
  mothballed in 2000. The crushing and grinding circuits at Cliffs-Erie facilities
  may be directly re-used for the front end processing of NorthMet ores. New flotation
  circuits must be added to

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complement the new PlatSol hydrometallurgical process
  and on-site copper SX/EW.

PolyMets 2001 pre-feasibility study envisioned on-site
  production of copper cathode, nickel cathode and cobalt carbonate at an all
  new processing facility. The Company now plans to simplify the on-site hydrometallurgical
  processes at Cliffs Erie by producing only copper cathode and shipping a nickel/cobalt
  concentrate to specialty refiners. PolyMet uses the proprietary PlatSol
  process which has the distinction of extracting all of the value metals in a
  single hydrometallurgical step. This includes the base metals (copper, nickel
  and cobalt) as well as gold, platinum and palladium. The gold, platinum and
  palladium report to a concentrate referred to as PGMs- platinum group
  metals. This high value precious metal concentrate will be sent to a specialty
  refiner. The PASI study confirms that processing a nickel/cobalt concentrate
  by off-take partners will provide a capital cost saving of over US$60 million.

The PASI document was audited by Bateman Engineering Pty Ltd
  (Bateman) from both technical and cost perspectives. Bateman will be
  the principal consultant for PolyMets definitive feasibility study (DFS).
  The PASI document is included as the plant and infrastructure component of the
  43-101 update report by Patrick Downey & Associates which includes mining
  and other owners costs.

Batemans audit of the Penguin Automated Systems, Inc.
  (PASI) investigation into the efficacy of the NorthMet Project found no critical
  technical flaws or critical cost flaws following release of the PASI study in
  late-April, 2004.

The Company is currently in advanced negotiations with several
  off-take companies who would be refiners of the nickel/cobalt concentrates and/or
  the platinum group metals.

(b)     Location/Access/Climate

The NorthMet Project land position covers 4,162 acres or 6.5
  square miles of patented mineral rights. The property is located in St. Louis
  County in the Mesabi Range District about 60 miles north of Duluth, Minnesota
  and just two miles south of large open-pit Mesabi Range iron mining operations.
  As a result, infrastructure is already in place for continued exploration and
  future mine development. The Project is easily accessible via state and county
  roads. A 12-mile all-season gravel road links the NorthMet Project to the nearby
  town of Babbitt. A private railroad crosses the property immediately south of
  the deposit. Two other railway lines are located within ten miles and connect

---

with three ports on Lake Superior. There is ready access to
  industrial electric power. The property is zoned for patented mineral rights.

The acquisition of the Cliffs Erie site will provide greater
  than 80% of infrastructure required for the development of the project, including
  excellent road and rail access and low cost industrial power. The Cliffs Erie
  rail tracks and established roads run alongside the planned NorthMet pit and
  a new spur and rail load-out facility will link to this existing rail infrastructure.

The electrical distribution and sub-stations from the main
  feed at the plant site are fully operational and will be used for the Polymet
  project. Water permits also exist for the Cliffs Erie facility. The town of
  Babbitt, 10km to the north of NorthMet, and Hoyt Lakes 10 km to the south have
  the community infrastructure to support the requirements of the NorthMet workforce.

Reclaim water, utilities and services, compressed air supply,
  power supply and distribution, offices, warehousing and laboratories will all
  be provided for by existing facilities at the Cliffs Erie plant site. New assay
  laboratory equipment will be purchased for the NorthMet project.

|(c) | Claims and ownership
|--- | --------------------
|    |                     
|    | (i)                 

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| |       | Due to the financial difficulties experienced by PolyMet
        during 2002, the Company obtained approval from US Steel to make the annual
        lease payment on the NorthMet property on a quarterly basis. US Steel
        agreed to payment of the $75,000 owing January 2003 as to $18,750 on 31
        January 2003, $18,750 on 9 March 2003 and $37,500 on 18 June 2003. Lease
        payments were 2004 were paid in accordance with the lease agreement.
      The Company can, at its option, terminate the lease
        at any time by giving written notice to the lessor not less than 90 days
        prior to the effective termination date or can extend the 20-year term
        by continuing to make annual lease payments. The lease payments are considered
        advance royalty payments and shall be deducted from future production
        royalties payable to the lessor, which range from 3% to 5% based on the
        net smelter return per ton of ore mined received by the Company. The Companysrecovery of the advance royalty payments is subject to the lessor
        receiving an amount not less than the amount of the annual lease payment
        for that year.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ii)  | State of Minnesota Minerals Leases (USA).
      During Fiscal 2002 PolyMet successfully bid on 16 State
        of Minnesota minerals leases covering 4,363.41 acres. These leases are
        in proximity of proposed mining and waste disposal sites associated with
        the Project. The strategic location of these leases should facilitate
        Project economics and viability over the long term. Total cost of these
        three-year leases is US$16,784.67 paid in advance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iii) | Surface Rights
      The United States Forest Service (USFS) acquired the
        surface rights to the NorthMet property from USX in the 1930s and,
        at present, the USFS remains the surface rights owner of most of the NorthMet
        property. USX retained the mineral rights and the right to explore and
        mine on the site. As a result of this retention, while the USFS is the
        surface rights owner for most of the NorthMet Property, they cannot prohibit
        mining on the site. LTV Steel Mining Company/Erie Mining Company owns
        portions of sections 10, 11 and 12 near their private railroad. However,
        it may be beneficial for the Project to enter into land swap arrangements
        with the US Forest                                                                                                                                                                                                                                                                                                                                                                                                                                             

---

| |  | Service to simplify the permitting process and to allow
        the project access to lands for waste rock stockpiling. The use of Cliffs-Erie
        existing pits for waste could obviate such forestry issues and this will
        be studied during the feasibility study. US regulations require an equivalent
        value of land to be swapped for the land to be used by the Project. The
        US Forest Service has indicated to PolyMet their willingness to carry
        out such a land swap. Costs for completing land swap arrangements have
        not been included in Estimates of Capital Costs.
      As both EIS and permitting of the project will be subject
        to the arrangements of the land swap, PolyMet believes that this land
        swap with US Forest Service should be completed in conjunction with the
        Bankable Feasibility Study. PolyMet recommends that negotiations with
        US Forest Service commence early in the Bankable Feasibility Study timetable.
      Table 1 - Land Swap
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Task                                     | Cost
      (US$ Million) | Start
      (Month
      Number) | Timing
      (Months)
|---------------------------------------- | ------------------------ | -------------------------------- | ---------------------
|US Forest
      Service Land 
      Swap | 3.5                      | 1                                | 24                   

(d)     History

The NorthMet Project, (formerly the Dunka Road Deposit), was
  acquired by US Steel in 1938. Their exploration for iron revealed the presence
  of copper and nickel. A 1971 study for US Steel suggested mineralized deposits
  to a depth of 2000 feet and recommended underground mining techniques for recovery.

The NorthMet deposit is in an historic and active mining area.
  Mining is the economic mainstay of northeastern Minnesota, which is the source
  of the majority of U.S. domestic iron ore. Much of the population has worked
  in the mining industry and local opinion is predominately pro-mining. The State
  of Minnesota offers low mining taxes, along with cash incentives and co-financing
  programs to stimulate mining activities.

(e)     Environmental

---

The environmental review process in Minnesota is reasonably
  well defined. Various permits from state and federal authorities will be necessary.
  An environmental impact Statement (EIS) will be required, with the Minnesota
  Department of National Resources as the lead agency.

During the pre-feasibility study, PolyMet had on staff a number
  of environmental consultants to coordinate both the environmental studies and
  the permitting required to bring the NorthMet Project to production. No cultural
  sites were identified either from a review of existing data and literature,
  or from aerial photographs. The neighboring Babbitt Project (also called Minnmax)
  completed a full Environmental Impact Statement (EIS) which was filed as a public
  document by then operator Amax Mining and this study did not produce any significant
  findings. Northmet completed their-own preliminary Baseline Environmental Study
  in April 2000. This study addressed:

- Wildlife Usage, including threatened and endangered wildlife;
- Preliminary Wetlands Survey;
- Ground Water Quality; and
- The Development of the Geochemical Study Plan.

No evidence was found of any threatened or endangered animals
  in the area. The area was identified as a major wetland area with some 70% of
  the land being classified as wetlands. The wetlands that will be disturbed by
  operations at NorthMet will have to be replaced on at least a 1:1 ratio in terms
  of the existing wetland mitigation scheme. The practice of replacing wetlands
  is well established in the area and this can be a relatively high ongoing operating
  cost for a project. The use of the extensive tailings and water storage areas
  which are part of the Cliffs Erie deal will mitigate most of such costs. Disturbance
  of the wet lands in the open pit area would be the most affected area.

Table 1 - Estimated NorthMet Wetlands Mitigation Requirements

|Area                                   | Acres
|-------------------------------------- | -----
|Pit                                    | 1020 
|Rock Dump West -                       | 0    
|CE Pit back fill                       | 0    
|Rock Dump East -                       | 0    
|CE Pit back fill                       | 0    
|Flotation Tailings Dam -               | 0    
|CE permitted site                      |      
|Hydro-Metallurgical Residue Dam -      |      
|CE existing                            |      
|Plant and Roads -                      |      
|CE existing                            |      
|Total                                  | 1020 
|Wetlands Mitigation Requirement at 70% | 714  

---

In terms of the Federal and State Wetland Mitigation legislation,
  the NorthMet Project must replace any wetlands disturbed on the NorthMet property
  on at least an acre for acre basis. Initial surveys undertaken have shown 70%
  of the NorthMet open pit area is classified as wetlands. The use of Cliffs Erie
  obviates almost all of the previous requirements from the 2001 study.

The option to use key lands and impoundments in the Cliffs-Erie
  deal lessens the original estimates of the Wetlands Mitigation requirements.
  These are currently considered to be limited to the open pit area of 714 acres.
  Wetlands Mitigation is a key step in bringing the NorthMet Project into production.
  With this reduced Wetlands Mitigation scope the costs will now be part of the
  required project capital and not an up-front cost component within the Bankable
  Feasibility Study.

The major steps, estimated costs and timetable required to
  complete all environmental matters to obtain the necessary State and Federal
  permits are generally described in Table 3 below. The use or re-use of the Cliffs
  Erie site will obviate much of the costs and requirements projected in the 2001
  pre-feasibility study since critical items like tailings areas are already included.

The land swap with US Forest Service has been included separately
  in the cost and timing estimates given in Table 3. While it could have a significant
  impact on the EIS and permitting process, the early completion of this land
  swap should simplify and accelerate the EIS and permitting process.

In order to enable the timely completion of project permitting
  and meet Federal and State environmental requirements, the EIS process will
  be initiated during the Bankable Feasibility Study. The Pertinent aspects of
  the permitting process must be constantly monitored during the feasibility study.
  A draft EIS will be released for public comment prior to completion of the Bankable
  Feasibility Study. Subject to the satisfactory completion of the EIS, the Project
  will then apply to obtain the necessary construction and operating permits to
  develop the Project. The EIS will include the following:

- Collection of all Baseline data for submission to EIS team;
- Development and submission of Plan of Operation;

---

- Minnesota Department of Natural Resources (DNR) selection and
    appointment of sub-contractor (environmental consultants) to prepare EIS;
- Sub-contractor preparation of Draft EIS;
- Draft EIS released for public comment;
- Final EIS prepared and issued;
- Federal Findings of No Significant Impact and Record of Decision;
- Awarding of State Environmental Permits.

(f) Permits

The major permits required by the Project are:

- Plan of Operations/Environmental Impact Statement;
- Mining and Reclamation Permit (Mining and Closure Plan) issued by the DNR;
- Air Emissions Permits (one for construction and one for operations) issued
    by Pollution Control Agency of Minnesota (PCA) ;
- State Wetlands Review;
- Minnesota Non Ferrous Mine Permit and Five Year Operating Plan;
- Storm Water Permit
- 401 Water Quality Certification;
- Water Discharge Permits (Surface and Ground Water) issued by PCA and
- 404 Wetlands Mitigation Permit issued by the United States Army Corps of Engineers
    (Corps).

As the project moves forward PolyMet will need to work with
  the relevant agencies to amend existing permits where required for use on the
  base metal operations at NorthMet and Cliffs-Erie.

Table 3 - NorthMet EIS and Permitting Cost and Timing Estimates

|Task                       | Cost
      (US$ Million) | Start
      (Month Number) | Timing
      (Months)
|-------------------------- | ------------------------ | -------------------------- | ---------------------
|Baseline Study             | 0.45                     | 1                          | 6-10                 
|Plan of Operations         | 0.15                     | 6                          | 2                    
|Preparation of Draft EIS   | 0.30                     | 11                         | 12                   
|Preparation of Final EIS   | 0.60                     | 23                         | 6                    
|Major Permits              | 0.40                     | 8                          | 22-29                
|Federal Record of Decision |                          | 30-32                      | 1                    
|Total                      | 1.90                     |                            | 34                   

---

The expected time line from start to receipt of the required
  permits for the operations could be approximately 3 years at an estimated cost
  of US$1.90 million. This excludes any cost of land acquisition or swapping for
  wetlands mitigation and the estimated cost of US$3.5 million for the US Forest
  Service land swaps.

The political climate in Minnesota is favourable for permitting
  of a new mining operation. The communities in the Iron Ore Range have been badly
  affected by the recent mine closures, and the existing labour force is seeking
  employment. Officials throughout the Minnesota state government have indicated
  a strong desire to replace the lost income and jobs and to assist in getting
  new economic development underway in the area.

(f)     Exploration

During September 1999 to February 2000, and again in the forth
  quarter of Fiscal 2001, the Company completed diamond core and reverse circulation
  drilling programs. These programs were designed with two-fold purposes: 1) in-fill
  drilling for estimated resource calculations, and 2) collect mineralized material
  for a mini-continuous pilot plant testing program. PolyMet has drilled 87 of
  the 201 drill holes now in the deposit. In addition, the Company, with the assistance
  of Minnesotas Natural Resources Research Institute, assayed previously
  unassayed sections of the USX drill core. Chemex Labs in Reno, Nevada assayed
  samples of mineralized rock. Acme Analytical in Vancouver, B.C. ran check assays.
  The Company has incorporated the drill results into the new resource calculations
  included in the pre-feasibility study completed in April 2001.

The only on-site project work during 2002 was associated with
  environmental mitigation. Buckets of drill cuttings from previous drilling campaigns
  were collected and subsequently disposed of in a manner specified by appropriate
  state and federal environmental personnel. Also, all drill holes were plugged
  in accordance with State of Minnesota regulations and appropriate paperwork
  filed.

(g)     Metallurgy

One of the two major accomplishments of PolyMet in Fiscal
  2002 was completion of a metallurgical testing program that demonstrated successfully,
  through operation of a continuous pilot plant, the metallurgical recovery process
  developed.

---

PolyMet began in 1999 an extensive metallurgical testing program
  to solve the minerals recovery challenges that historically plagued the NorthMet
  mineralization. This was achieved at the bench-scale level through the innovative
  application of existing technologies and subsequently demonstrated through successful
  pilot plant operations.

The first step in the process is to produce a bulk concentrate,
  resulting from good recoveries of all saleable minerals at high concentration
  ratios. These concentrates are then subjected to a pressure oxidation process
  that places all desired metals into solution under one-set of operating conditions.
  These metals are then selectively removed from solution for subsequent sale
  in various forms.

During the last half of calendar year 2000 and the first quarter
  of 2001, the developed process, called the PlatSol Process, was tested by operating
  a continuous, mini-pilot plant. The pilot plant was operated under the control
  of Lakefield Research Laboratories located in Ontario, Canada, as was all environmental
  testing associated with every phase of plant operation.

The process developed yielded base metal extraction percentages
  in the high 90s, PGM extraction percentages of 95% and gold extraction
  near 90%. The success of the process developed greatly enhances Project economics.
  Detailed environmental testing of every aspect of the process (air, effluents,
  plant products and waste discharge) show the process to be far superior environmentally
  to traditional smelting alternatives for metals recovery. The Company believes
  the process will easily meet all State of Minnesota and Federal environmental
  standards and requirements.

(h)     Pre-feasibility Study

The second major accomplishment by PolyMet during Fiscal 2002
  was completion of the NorthMet Project Pre-feasibility Study (Study) performed
  by independent consultants which included Independent Mining Consultants Inc,
  Amec and SRI. The objectives of this Study were: 1) to clarify and quantify
  to the extent possible the basic factors that govern the chances for Project
  success, 2) to assess the various relationships that exist between the variables
  that directly or indirectly affect Project economics, and 3) to provide the
  Company the information necessary to decide whether or not the Project justifies
  the expenditures of additional monies for completion of a final feasibility
  study.

The Study was made under a suite of operating, cost and price
  assumptions believed to be reasonable at the time. Only one set

---

of operating and other conditions were analyzed; there was
  no attempt to optimize Project economics. The following table summarizes the
  metal prices used in the Study and the resulting quantities of metals produced
  and their respective values under the Study assumptions.

|Table 1: Summary of Payable Metal and Base Case Commodity
      Prices
|----------------------------------------------------------------------
|Metal                                                                 
|Copper                                                                
|Nickel                                                                
|Cobalt                                                                
|Palladium                                                             
|Platinum                                                              
|Gold                                                                  
|Credit for Silver, Zinc, and Other PGMs at $0.30 Per Ore
      Ton   
|TOTAL GROSS REVENUE                                                   

The Study resulted in an estimated capital cost for the Project
  of US$630.7 million, including a contingency of US$74.5 million. Total operating
  costs were estimated at US$8.96 per ton of ore mined and processed.

At a copper cut-off grade of 0.01%, the total geologic resource
  is estimated at about 1.0 billion tons. Of this total, approximately 664 million
  tons are classified in the measured and indicated categories.
  Approximately 409.1 million tons are classified as reserves at grades of 0.29%
  copper, 0.08% nickel, 67.2 ppm cobalt, 0.28 ppm palladium, 0.08 ppm platinum,
  and 0.04 ppm gold. The proposed mine plan incorporates some 486.8 million tons
  of potential mineable resource in a conventional open-pit mining operation.

Based on a proposed production rate of 55,000 tpd of feed,
  the Project would have a mine life of 24+ years. Overall Project economics,
  on a before-tax basis, follow:

|Net Present Value @ 10% Discount Rate:   | US$171.1 million
|---------------------------------------- | ----------------
|Internal Rate of Return:                 | 14.1%           
|Payback Period from Start of Production: | 5.4 years       

(i)     Capital and Operating Cost Estimates

---

Estimates of capital and operating costs were generated at
  the pre-feasibility level in the April 2001 Pre-Feasibility Study led by IMC.
  Since the project was taken over by new management in March 2003, four critical
  elements have been revised as follows:

| | 1. | Smaller higher grade mine plan.                                                                 
| | -- | ------------------------------------------------------------------------------------------------
| | 2. | Elimination of complex nickel cobalt recovery circuits and
      conversion to nickel hydroxide.
| | 3. | Securing the mothballed Cliffs Erie Mill concentrator.                                          
| | 4. | Use of a contract miner.                                                                        

P. Downey and Associates, with the assistance of PASI and
  IMC, have revised the 2001 capital and operating costs included in the Pre-feasibility
  Study and updated them to current first quarter 2004 pricing.

(a)     Capital Costs

Revised Capital Cost Estimate

|Description                        | Totals (US$
|---------------------------------- | -----------
|                                   | Millions)  
|Mining- using contract miner       | 5.76       
|Crushing/Milling/Flotn            | 24.91      
|(Existing Cliffs/Erie)             | 31.05      
|PlatSol-                          | 25.19      
|Copper SX/EW Plant                 |            
|PGM Recovery Circuit               | 20.62      
|Nickel Hydroxide recovery circuits | 6.00       
|Tailings, Water & Services         | 4.55       
|(Existing Cliffs Erie)             |            
|Plant Site Utilities & Facilities  | 12.59      
|(Existing Cliffs Erie)             |            
|Sub Total Direct Costs             | 130.67     
|Indirect Costs (Inc. Fees, working | 73.13      
|capital & 20% Contingency)         |            
|Other Acquisition-incl. land and   | 31.00      
|infrastructure                     |            
|Total Project Costs                | 234.80     

The capital cost estimate includes the estimated direct cost
  for equipment, material and labour. In addition, cost estimates were developed
  for the project indirect costs including EPCM, start up, construction indirects,
  first fill, spares and contingency. The estimate was developed based on a site
  visit and inspection of existing equipment and facilities, and the following
  main sources of information:

- Contract Mining and Associated Services

---

- Process Design Criteria by PASI.
- Process Flow Sheets.
- Facility General Arrangement Drawings.
- Electrical and Mechanical Equipment List.
- Budget Quotations from Equipment Suppliers.
- Current Labour and Material Costs for the Area.
- The AMEC Simons Mining & Metals 2001 Pre-feasibility Report.

---

(b)     Operating Costs

The 2001 Pre-Feasibility Study estimate of operating costs
  included an owner operated mining fleet, an all new processing plant, infrastructure
  and G&A costs associated with the on-site production of a PGM concentrate,
  copper cathode, nickel cathode and cobalt sulphide.

The current revised project operating costs use the same basic
  project data updated to 2003 but are based on a simplified flowsheet whereby
  only copper cathode is produced on site. The revised operating costs also reflect
  a contract mining operation and use of the Cliffs Erie crusher/mill/concentrator.
  The Cliffs Erie facility also received a beneficial electrical power rate for
  the first 25 MW of usage and this rate has been carried in the current operating
  cost estimate. Labour rates are based on data available from Minnesota Iron
  Range mines. The operating cost estimates include a 5% contingency, as detailed
  in Table 9.

Revised Operating Cost Estimate

|Cost Area                | Annual Cost(US$ Millions) | Cost/Tonne Ore(US$/Tonne/Ore)
|------------------------ | ------------------------- | -----------------------------
|General & Administrative | 4,856,600                 |                              
|(G & A)                | 4,856,600                 | 0.53                         
|Subtotal G & A           |                           |                              
|                         |                           |                              
|Mine                     |                           |                              
|Contract miner           |                           |                              
|Sub Total Mine           | 28,938,000                | 3.21                         
|                         |                           |                              
|Mill & Process           |                           |                              
|Reagents & consumables   | 22,142,258                |                              
|Labour Costs             | 10,977,823                |                              
|Operating Supplies       | 400,000                   |                              
|Maintenance Supplies     | 1,915,896                 |                              
|Environmental            | 300,000                   |                              
|Sub Total Mill & Process | 35,735,977                | 3.91                         
|                         |                           |                              
|Power                    | 16,746,886                | 1.84                         
|                         |                           |                              
|Total Operating Costs    | 86,277,463                | 9.49                         
|                         |                           |                              
|5% Contingency           | 4,313,873                 | 0.95                         
|                         |                           |                              
|Total Operating Costs    | 90,591,336                | 10.44                        
|                         |                           |                              

The following items are not included in the direct cash operating cost estimate:

- Product delivery to smelters or copper cathode end users.
- Selling and marketing costs

---

- Corporate overhead
- Depreciation, amortization and depletion
- Interest charges

(j) Mining

The original mine plan for the pre-feasibility study of 2001
  was for a mining rate of 20,075 ktons per year (55,000 tons per day for 365
  days). This plan was modified for the current update to 9,125 ktonnes per annum
  (25,000 tonnes per day for 365 days). The mine is scheduled to operate 360 days
  per year. The new mine plan is based on using a mine contractor to complete
  all mining operations with Polymet staff supervising mine plan operations and
  mine geology.

Mine development will generally follow that outlined by IMC
  in the pre-feasibility study with the exception that Phase 6 and 7 will only
  occur if metal prices and capital and operating costs warrant this development.
  The goal of the phases is to develop the mine in a logical order by commencing
  the mine with the higher grade material which also has a lower strip ratio.
  The mine plan will then progress to higher strip ratios. Phase 1 is in the northeastern
  part of the deposit with phase 2 in the southwestern portion. The remaining
  three phases will push the hanging wall south. Exits will be maintained to the
  south during all phases of mining so that access can be obtained to the rail
  load-out facility.

Waste rock will be stored in dumps located to the north and
  east of the main ore body. The waste dumps will be located outside of any potential
  ore body extensions should Polymet decide to expand the pit. Waste facilities
  will be constructed in 7m lifts with an overall slope angle of 22 degrees (2.5H:1V).

Mining operations will be carried out by mining contractor.
  The contractor will provide all necessary fleet requirements for a turn-key
  mining operation based on the required annual mine production schedule. Work
  activities will include:

- Construction of the initial out-of-pit access roads from
      the pit area to the rail load-out facility and the mine rail spur and to
      the waste rock storage areas.
- Removal of all topsoil from the mine and waste storage
      areas. Replace topsoil on the waste storage areas at completion of mining
      as part of ongoing mine reclamation.
- Pre-production development required to expose ore for
      initial production.
- Mine and transport ore to the rail load-out facility.

---

- Maintain all mine work areas, in-pit haul roads, and
      external haul roads.
- Maintain waste storage areas.

The major mine fleet will consist of nine 185 t trucks, one
  18m3 and one 11m3loaders, two 23 m3shovels
  and two blasthole drills. Support equipment will include track dozers and motor
  graders to maintain road surfaces, dumps and operating benches.

Mining will be conducted year round based on three 8 hour
  shifts per day.

Mine operating costs are based on data from similar mining
  operations and contract mining costs. The costs cover all general labour and
  consumable costs, amortization of initial equipment capital investment, equipment
  depreciation and contractor profit.

(i) Future Exploration

The results of technical update indicate that the Northmet
  project, as currently defined, shows sufficient potential to be carried forward
  to the next phase which is a feasibility study. The purpose of the feasibility
  study will be to examine all aspects of the project development and to establish
  with greater accuracy its economic and technical viability.

The Marathon Deposit, Ontario, Canada:

By an agreement dated 6 November 2000, the Company granted
  a third party the option to acquire a 50% working interest in certain leased
  mineral properties located in Ontario, Canada referred to as the Marathon property.
  During the year ended 31 January 2004, the Company received termination notification
  from the optionee.

By an agreement dated 12 September 2003, which closed on 21
  January 2004, the Company sold the Marathon leases and related land for proceeds
  of $250,000. Details of the related gain (loss) on sale are as follows:

|                    |   | Marathon |  |   | Marathon |   |   |         |  
|------------------- | - | -------- |  | - | -------- | - | - | ------- | -
|                    |   | Leases   |  |   | Land     |   |   | Total   |  
|Proceeds            | $ | 219,925  |  | $ | 30,075   |   | $ | 250,000 |  
|                    |   |          |  |   |          |   |   | (38,582 | )
|Cost                |   | -        |  |   | (38,582  | ) |   |         |  
|Gain (loss) on sale | $ | 219,925  |  | $ | (8,507   | ) | $ | 211,418 |  

Regulations and Government Rules

---

The mining industry has been subject to increasing government
  controls and regulations in recent years. The Company has obtained all necessary
  permits for exploration work performed to date and anticipates no material problems
  obtaining the necessary permits to proceed with further development.

ITEM 5.     OPERATING AND FINANCIAL
  REVIEW AND PROSPECTS

This discussion and analysis should be read in conjunction
  with the Company's consolidated financial statements. The Company's reporting
  currency is the United States dollar and are prepared in accordance with Canadian
  Generally Accepted Accounting Principles (GAAP); however, there are no material
  differences between U.S. GAAP and Canadian GAAP regarding the financial statements.
  All amounts in this discussion and in the consolidated financial statements
  are expressed in United States dollars, unless identified otherwise.

(a)     Operating Results

Summary of Financial Results

Polymet recorded a loss in 2004 of $146,800 ($0.00) compared
  to a loss of $471,679 ($0.01 per share) in 2003 and a loss of $1,155,762 ($0.04
  per share) in 2002. Losses in 2002 were attributed the restatement of exploration
  and pre-feasibility acquisition costs due to a change in accounting principles
  and the downsizing and eventual move of the Companys head office operations.

The Company during 2004 expended $288,699 in general and administrative
  costs compared to $331,886 in 2003 and $595,076 in 2002 and $91,616 in exploration,
  pre-feasibility and lease payments compared to $112,318 in 2003 and $606,162
  in 2002.

Change in Accounting Policy

The Company adopted the recommendations of CICA Handbook Section
  3870, Stock-Based Compensation and Other Stock-Based Payments, effective for
  all awards granted on or after 1 February 2003. This established standards for
  the recognition, measurement and disclosure of stock-based compensation and
  other stock-based payments made in exchange for goods and services.

As encouraged by CICA Handbook Section 3870, the Company has
  enacted prospectively early adoption of the fair value based method of accounting
  for awards issued to employees for the fiscal year beginning 1 February 2003.

---

The new standard requires that all stock-based awards made
  to employees and non-employees be measured and recognized using a fair value
  based method. In prior years, stock-based compensation expense was only recognized
  when stock-based compensation awards were made to non-employees, while pro-forma
  disclosure was acceptable for awards made to employees.

During fiscal year 2003, the Company changed is accounting
  policy with respect to accounting for exploration expenditures. In 2002 and
  prior periods, acquisition and exploration expenditures were capitalized to
  mineral properties. Under the new policy, exploration expenditures (including
  lease/option payments) are expensed while acquisition expenditures continue
  to be capitalized. This change has been applied retroactively and has increased
  the deficit as at 31 January 2000 by $2,876,565 and increased the loss for the
  year ended 2002 by $606,162.

Summary of Operating Results

Fiscal 2004 Ended 1/31/04 versus Fiscal 2003

The Companys primary objective for the current year
  was to achieve certain milestones with respect to the NorthMet project. The
  Company was successful in obtaining the option to acquire the Cliffs-Erie facility,
  which upon exercise will significantly reduce the capital costs for the project.
  In addition an independent scoping study on the NorthMet project was completed
  integrating the Cliffs-Erie facility and its impact on the overall pre-feasibility
  capital costs. Expenditures of $500,000 were made to obtain the option to acquire
  the Cliffs-Erie facility and during March 2004, upon receipt of regulatory approval
  of the option agreement, the Company issued 1,000,000 common shares to maintain
  the exclusive rights under the option to 30 June 2006.

With the Companys focus on the NorthMet project, it
  reached an agreement for the sale of Marathon leases and related land for proceeds
  of $250,000.

Fiscal 2003 Ended 1/31/03 versus Fiscal 2002

Fiscal 2003 focused on survivability of the Company during
  very difficult economic conditions. Management continued its efforts to attract
  a strategic partner for the NorthMet Project, as well as solicit investment
  equity capital into the Company. The Company subsequent to year end completed
  a private placement for net proceeds of $73,410.

The only work performed on-site at the NorthMet Project consisted
  of environmental mitigation of drill holes and the disposal of

---

drill cuttings from previous drilling campaigns. All such
  work has now been completed.

No field work of significance was performed by Geomaque Explorations
  on the Marathon Project.

Fiscal 2002 Ended 1/31/02 versus Fiscal 2001

In Fiscal 2002 the Company completed two major milestones
  impacting the NorthMet Project. The first was completion of and final reporting
  on operations of the continuous mini-pilot plant used to demonstrate the PlatSol
  metallurgical process previously developed by the Company. The pilot plant testing
  program successfully demonstrated application of the process to NorthMet mineralization,
  with high recoveries of payable minerals/metals achieved. Also, rigid environmental
  testing of every phase of pilot plant operations showed the process to be free
  of any significant environmental issues.

The second milestone achieved was completion of the NorthMet
  Project Pre-feasibility Study. This study was conducted by external consultants
  and evaluated the Project under one set of operating design, production and
  metals pricing assumptions. There was no attempt to optimize Project size or
  economics. The resulting financial data showed the Project, under the conditions
  evaluated, would generate an estimated before-tax Internal Rate of Return (IRR)
  of 14.1%, a Net Present Value (NPV) at a 10% discount rate of US$171.1 million,
  and an undiscounted Payback Period of 5.4 years after the start of production.
  PolyMets management believes the studys results show the Project
  to be deserving of further work and financial expenditures to take it to the
  next level, which is completion of a final feasibility study or bankable document.
  This next phase of Project advancement is estimated to cost approximately US$20
  million, including land acquisition.

The status of the Marathon Project was advanced during Fiscal
  2002 as a result of additional exploration work performed on the property by
  Geomaque Explorations, Ltd. Exploration activities focused on the drilling of
  15 diamond core holes, the resampling and assaying of core from previously drilled
  holes, surface mapping and sampling, the construction of a complete database,
  and modeling of the deposit. The work performed by Geomaque was the result of
  an earn-in agreement between PolyMet and Geomaque, whereby the later
  company performs necessary exploration on the property in exchange for an equity
  position in the Project.

The new resource estimate for the Marathon Project, based
  on the most recent data, show the resource to contain in excess of one

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million ounces of platinum and palladium at grades presently
  being mined at a property north of the Marathon Project. These ounces are contained
  in the measured and indicated resource categories.

Liquidity And Capital Resources

Working Capital

As at January 31, 2004, Polymet had working capital of $423,526,
  with approximately $495,551 in cash and, $27,347 in other working capital and
  $501,786 in mineral property, plant and equipment expenditures.

The Company relies principally on equity financing to fund
  its projects and expenditures. The Company has no internal source of funding
  and thus it depends on the ability to finance by raising funds by the sale of
  shares.

Operating Cash Flow

For the year ended January 31, 2004, net cash inflows of $1,044,684
  exceeded cash outflows of $552,320 resulting in a positive cash flow of $492,364,
  which when combined with the $3,187 cash balance from year end 2003 results
  in an ending cash position of $495,551. The cash inflows were a result of three
  private placements for a total of 11,648,318 shares at prices ranging from CDN
  $0.0525 to CDN $0.15 per share for proceeds of $1,035,071. Cash outflows comprised
  principally of $500,000 for the Cliffs-Erie acquisition and general and administrative
  costs of $288,699.

Financing Activities

The following outlines the Companys financing activities for the period
  ended January 31, 2004:

- March 2003, the Company arranged a private placement
      of 1,904,760 units at CDN $0.0525 per unit for cash in the amount of CDN$67,507.
      Each unit consists of one common share and one share purchase warrant to
      purchase one common share at CDN $0.10 for one year. Two directors subscribed
      for 190,476 units;
- September 2003, the Company arranged a private placement
      of 2,746,892 units at CDN $0.10 for cash in the amount of CDN$247,158. Each
      unit consists one common share and one share purchase warrant to purchase
      an additional common share at CDN $0.15 in year one and CDN $0.17 in year
      two;

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- January 2004, the Company completed a private placement of 6,996,666 units
    at CDN$0.15 for cash in the amount of CDN$1,049,499. Each unit consists of
    one common share and one-half of one share purchase warrant. One full share
    purchase warrant entitles the holder to purchase one additional common share
    for a period of 24 months at a price of CDN$0.25 per share provided that should
    the Companys shares trade on the TSX Venture Exchange at over CDN$0.50
    per share for over 25 consecutive trading days, the warrants will terminate
    30 days thereafter. A finders fee of CDN$50,000 cash and 60,000 commons
    shares at a deemed price of CDN$0.15 per share was paid.
- During the year ended, 486,610 share purchase warrants were exercised at
    an exercise price of CDN$0.10.
- During the year ended stock options in the amount of 89,600 were exercised
    at a price of CDN$0.08 per share.

There were no shares or financing activities for the fiscal period ended January
  31, 2003.

During 2002 the Company completed a private placement for 3,428,923 units at CDN $0.13 per unit, which netted the Company $277,713. Each unit consists of one common share and one share purchase warrant which allow the holder to acquire 3,428,923
additional common shares for CDN $0.17 in the first year, CDN $0.18 in the second year, and CDN $0.20 in the third year through fifth year following issuance of the units.  Proceeds from the financing were primarily utilized for ongoing exploration
work at the NorthMet Property of $606,162 and for general administrative expenses of $595,076.

(c)     Research and Development, Patents and Licenses,
  Etc.

Not applicable.  See Item 4, Information on the Company, D. Property, Plant and Equipment, for a review of the Companys exploration activities.

(d)     Trend Information

There are no trends, commitments, events or uncertainties presently known to management that are reasonably expected to have a material effect on the Companys business, financial condition or results of operation other than uncertainty as to
the speculative nature of the business (Refer to the heading entitled Risk Factors).

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(e)     Off-Balance Sheet Arrangements

Not applicable.

(f)     Tabular Disclosure of Contractual Obligations

Not applicable.

(g)     Safe Harbour

Not applicable.

ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND
  EMPLOYEES

A.     Directors and Senior Management

Each Director serves until the next annual general meeting
  or until his/her successor is duly elected, unless his/her office is vacated
  in accordance with the Articles of the Company. The laws/regulations of British
  Columbia require that a majority of the members of the Board of Directors consist
  of Canadian residents.

Casual vacancies on the Board of Directors are filled by election
  from nominees by the remaining Directors and the persons filling those vacancies
  hold office until the next Annual General Meeting, at which time they may be
  re-elected or replaced.

The following table sets out the name of the directors as
  at July 15, 2003,the country in which each is ordinarily a resident, all office
  of the Company now held by each of them, their principal occupations, the period
  of time for which each has been a director of the Company, and the number of
  common shares of the Company beneficially owned by each, directly or indirectly,
  or over which control or direction is exercised, as at the date hereof.

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|                                                        |                | Common   
|------------------------------------------------------- | -------------- | ---------
|Name, Occupation, Present Position(s) with the Company, | Date(s) Served | Shares   
|Resident Country                                        | as a Director  | Held(4)  
|                                                        |                |          
|William F. Murray, P.Eng(2);                            |                |          
|Mining Executive, director and officer                  | March 17, 2003 | 95,238   
|of a private engineering and management firm,           |                |          
|director of several public resource companies;          |                |          
|Director, President and CEO of the Company.             |                |          
|Canada                                                  |                |          
|                                                        |                |          
|P. Terry OKane(2), , Mining Executive, director        |                |          
|of several                                              | March 17, 2003 | 95,238   
|public resource companies,                              |                |          
|director of a capital pool company;                     |                |          
|Director of the Company                                 |                |          
|Canada                                                  |                |          
|                                                        |                |          
|George Molyviatis(1)(3), Financier
      ,              |                |          
|Banker, President                                       | March 17, 2003 | 3,816,983
|of an international lumber company;                     |                |          
|Director of the Company                                 |                |          
|Geneva                                                  |                |          
|                                                        |                |          
|Ian Forrest(1)(3), Chartered Accountant,                |                |          
|director of several                                     | Oct. 3, 2003   | 250,000  
|public resource companies                               |                |          
|Director of the Company                                 |                |          
|Geneva                                                  |                |          
|                                                        |                |          
|Dr. David Dreisinger(1) )(2) (3) Ph.D., a professor     |                |          
|of the                                                  | Oct. 3, 2003   | Nil      
|Faculty of Applied Science, Department of Metal         |                |          
|and Materials Engineering at University of              |                |          
|British Columbia.                                       |                |          
|Director of the Company                                 |                |          
|Canada                                                  |                |          

1. Member of the Audit Committee
2. Member of the Compensation Committee
3. Member of Corporate Governance Committee
4. Shares beneficially owned, directly or indirectly, or over which control
    or direction is exercised, as at April 14, 2004, based upon information furnished
    to the Company by individual Directors. Unless otherwise indicated, such shares
    are held directly.

STATEMENT OF EXECUTIVE COMPENSATION

The Company has one (1) Named executive officer. The Statement of Executive
  Compensation required under Form 51-904F to the Securities Act requires disclosure
  of compensation for each Chief Executive Officer and for each of the Companys
  (including subsidiaries) four most highly compensated executive officers, other
  than the CEO, provided that disclosure is not required for an executive officer
  where total salary and bonus does not exceed $100,000.

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Summary Compensation Table

|Name and principal position                     | Year                                                                    | AnnualCompensation                    | Long-term compensation 
|----------------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------- | -----------------------
|Salary
      ($)                                | Bonus
      ($)                                                         | Other
      ($)                       | Awards                 
|Securities
      Under
      Option
      (#)   | Restricted
      Shares or
      Restricted
      Share Units
      ($) | LTIP payouts
      ($)               
|William Murray
      President/CEO              | 2004
      2003
      2002                                              | US$45,810
      N/A
      N/A         | Nil
      N/A
      N/A
|Dr. Donald W. Gentry
      Former President/CEO | 2004
      2003
      2002                                              | NIL
      US$103,288
      US$115,000 | Nil
      nil
      nil

Effective March 17, 2003, Mr. Donald W. Gentry resigned and William F. Murray
  was appointed President and CEO.

Long Term Incentive Plan (LTIP) Awards

The Company does not have a LTIP, pursuant to which cash or non-cash compensation intended to serve as an incentive for performance (whereby performance is measured by reference to financial performance or the price of the Companys securities)
was paid or distributed to the Named Executive Officer during the most recently completed financial year.

Option/Stock Appreciation Rights (SAR) GrantsDuring the Most Recently Completed Financial Year

|Name           | SecuritiesUnderOption/SARsGranted(#) | % of TotalOptions/SARsGranted
      toEmployees inFinancialYear | Exercise orBase Price($/Security) | Market ValueofSecuritiesUnderlyingOptions/SARson the Dateof Grant($/Security) | ExpirationDate 
|-------------- | ------------------------------------ | --------------------------------------------------------------- | --------------------------------- | ----------------------------------------------------------------------------- | ---------------
|William Murray | 656,600                              | 20%                                                             | CDN $0.10                         | CDN $0.10                                                                     | July 18, 2008  
|William Murray | 300,000                              | 9%                                                              | CDN $0.13                         | CDN $0.10                                                                     | October 3, 2008

Aggregated Options/SAR Exercises in Last Financial Yearand Financial Year-End Option/SAR Values

The following table (presented in accordance with the Rules)
  sets forth details of all exercises of stock options during the most

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recently completed financial year by each of the Named Executive
  Officers and the number of unexercised options held by the Named Executive Officers.

|Name              | Securities Acquired on Exercise
      (#) | Aggregate Value Realized
      ($) | Unexercised Options/ SARs at Fiscal Year-End
        ($)
      Exercisable/Unexercisable | Value of Unexercised In-the-Money Options/ SARs at Fiscal Year-End
        ($)
      Exercisable/Unexercisable
|----------------- | ----------------------------------------- | ---------------------------------- | ---------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------
|William F. Murray | Nil                                       | Nil                                | 956,600                                                                                  | 153,682                                                                                                       

Option Re-Pricing

Pursuant to an Independent Contractor Agreement dated 1 August
  2002, the Company contracted for the services of its former president/chief
  executive officer for a term of one year to 31 July 2003. Under the terms of
  the agreement, the compensation included the retention of 541,052 previously
  granted options to purchase shares of the Company wherein the, 541,052 options
  were re-priced to CDN $0.10 and extended to 17 March 2007.

Defined Benefit or Actuarial Plan Disclosure

There is no pension plan or retirement benefit plan that has
  been instituted by the Corporation and none are proposed at this time.

Compensation Committee

The Compensation Committee, consisting of William Murray,
  Terry OKane and David Dreisinger, determines the compensation of the executive
  officers of the Company. See Report on Executive Compensation for
  further details.

Compensation of Directors

The Company has no arrangements, standard or otherwise, pursuant
  to which Directors are compensated by the Company or its subsidiaries for their
  services in their capacity as Directors, or for committee participation, involvement
  in special assignments or for services as consultant or expert during the most
  recently completed financial year or subsequently, up to and including the date
  of this information circular.

The Company does have a formalized stock option plan (the
  Plan) for the granting of incentive stock options to the officers,

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employees and Directors. The purpose of granting such options
  is to assist the Company in compensating, attracting, retaining and motivating
  the Directors of the Company and to closely align the personal interests of
  such persons to that of the shareholders.

The following stock options were outstanding to directors
  of the Company at the most recently completed financial year:

|             | Number of           | Exercise Price |            
|------------ | ------------------- | -------------- | -----------
|Date Granted | Shares under Option | Per Share      | Expiry Date
|             |                     |                |            
|7/18/03      | 1,641,500           | CDN $0.10      | 7/18/08    
|10/3/03      | 950,000             | CDN $0.13      | 10/3/08    

Bonus Share Agreements

The Company, subject to regulatory acceptance, has established
  a share incentive plan for its Directors and Key Employees. The plan provides
  for share bonuses to be issued to the individuals upon the Company reaching
  certain identifiables in its business plan, and is intended to reward the individuals
  for their unique expertise and experience in achieving these milestones. The
  Board of Directors is of the view that, from a corporate governance perspective,
  it is more appropriate to provide a reward mechanism of this nature than to
  provide incentive to insiders exclusively in the form of stock options, since
  the Companys share price can vary in accordance with a range of external
  factors not related to the performance of management and key employees.

The milestones have been established as follows:

Milestone 1: Completion of an agreement with Cleveland
    Cliffs for the use or purchase of what is referred to as the Cliffs Erie Facility.
    This consist of certain real property located near Hoyt Lakes, Minnesota (the
    Erie Site), on which are located various ore processing facilities
    formerly operated by LTV Steel Mining Company as part of that companys
    taconite mining and processing operations (the Property). The
    Property will be used to process mineral products from the Companys
    Northmet property, in nearby Babbitt, Minnesota. Share Bonus: On achievement of Milestone 1, 1,500,000
    shares will be issued to the Directors as a group and an additional 90,000
    shares will be issued to the Key Employees. Milestone 2:Negotiation and completion of an off-take
    agreement with a senior metals producer for the purchase of the nickel hydroxide
    concentrate produced from the Northmet


---

Property, and/or an equity investment in the Company by such
    a producer or producers. Share Bonus: On achievement of Milestone 2,900,000
    shares will be issued to the Directors as a group and an additional 400,000
    shares will be issued to the Key Employees. Milestone 3: Completion of a bankable feasibility
    study which indicates that production from the Northmet Property is commercially
    feasible. Share Bonus: On completion of Milestone 3, 1,500,000
    shares will be issued to the Directors as a group and an additional 950,000
    shares will be issued to the Key Employees. Milestone 4: Commencement of Commercial Production
    of the Northmet Property. Share Bonus:On completion of Milestone 4, 2,400,000
    shares will be issued to the Directors as a group and an additional 840,000
    shares will be issued to the Key Employees.


The Company received shareholder approval for the Bonus
    Share Plan on May 28, 2004 and is currently awaiting regulatory approval.

Other Remuneration

During the last financial year there was not any other remuneration
  paid or payable, directly or indirectly by the Company and any of its subsidiaries
  pursuant to an existing plan or arrangement to its directors or Named Executive
  Officer.

Report on Executive Compensation

As part of its responsibilities, the Compensation Committee
  reviews the Companys overall compensation plan and the policies pertaining
  thereto to ensure that they are consistent with the Companys goals of
  attracting and retaining the best available people, align the employees
  interests with those of the Company, and pay for performance. In establishing
  levels of remuneration and in granting stock options, the executives performance,
  level of expertise, responsibilities, length of service to the Company and comparable
  levels of remuneration paid to executives of other companies of comparable size
  and development within the industry are taken into consideration.

---

See Report on Executive Compensation Table for
  more information on remuneration of Named Executive Officer.

Defined Benefit or Actuarial Plan Disclosure

There is no pension plan or retirement benefit plan that has
  been instituted by the Corporation and none are proposed at this time.

C.     Board Practices

CORPORATE GOVERNANCE PRACTICES

Board of Directors

During the 2004 reporting period the board of directors of
  the Company (the Board) was comprised of two related and three unrelated
  members.

The Board is committed to a high standard of corporate governance
  and, although not listed on The Toronto Stock Exchange (TSE), the
  Board follows the Guidelines for Improved Corporate Governance adopted by the
  TSE.

Two Directors, namely, William Murray, the President and Chief
  Executive Officer and Terry OKane, the Chief Financial Officer are related
  directors. Mr. George Molyviatis, Ian Forrest and David Dreisinger are unrelated
  Director as that term is used in the TSE Guidelines.

Committees of the Board

The Companys Board shall be comprised of five directors,
  of which three can be defined as unrelated director or director
  who is independent of management and if free from any interest an any business
  or other relationship which could, or could reasonably be perceived to, materially
  interfere with the directors ability to act with a view to the best interests
  of the Company, other than interests and relationships arising from shareholdings
  and do not have interests in or relationships with the Company.

The Board has established three standing committees, the Audit
  Committee, Compensation Committee and Corporate Governance Committee.

The main objective for the Compensation Committee is to attract,
  retain and appropriately motivate the Companys Executive Officers to maximize
  shareholder value. Having regard to the Companys present state of development
  and limited financial resources, the compensation of Executive Officers has
  two

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components, namely, a salary and stock options. The Corporate
  Governance Committees mandate is to enhance the Companys governance
  through continuing assessment of the Companys approach to corporate governance.
  The Committee is responsible for recommending to the Board, candidates for nomination
  as Directors, and the composition of various Board committees, and reviews the
  Companys structures to ensure that the Board is able to function independent
  of management.

D.     Employees

From January 2002 to the end of July 2002, the Company had
  one employee. From August 2002 to March 17, 2003, the Company utilized the services
  of one non-salaried executive officer and all financial/accounting activities
  were contracted to a consultant. None of the Company's employees were covered
  by a collective bargaining agreement. Subsequent to the change of management
  the President is paid as a consultant along with an independent consultant for
  administrative and accounting activities.

E.     Share Ownership

See B. Compensation.

ITEM 7.     MAJOR SHAREHOLDERS
  AND RELATED PARTY TRANSACTIONS

A.     Major Shareholders

To the best of the knowledge of the directors and senior officers
  of the Company, the following is the only shareholder of the Company that beneficially
  owns, directly or indirectly, or exercises control over, shares carrying more
  than 5% of the outstanding voting rights attached to the Company's Common Shares
  as at July 22, 2004.

|Name of Shareholder         | No. of Shares | % of Issued Shares
|--------------------------- | ------------- | ------------------
|Northern Securities Limited | 3,251,600     | .06%              

As at July 22, 2003, there were 390 holders of record of the
  Company's Common Shares of which 300 were U.S. residents owning 9,828,726 (18%)
  of the Company's outstanding shares.

The Registrant is a publicly owned Canadian corporation, the
  shares of which are owned by Canadian residents, US residents, and residents
  of other countries. The Registrant is not owned or controlled directly or indirectly
  by another corporation or any

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foreign government. There are no arrangements, known to the
  Company, the operation of which may at a subsequent date result in a change
  of control of the Company.

B.     Related Party Transactions

The Company has conducted transactions with officers, directors
  and persons or companies related to directors as follows:

a) Paid or accrued amounts as follows:

|                              | 2004 |        | 2003 |   | 2002    | 
|----------------------------- | ---- | ------ | ---- | - | ------- | 
|                              |      |        |      |   |         | 
|Administration fees and wages | $    | 52,388 |      | $ | 103,288 | 

b) As at 31 January 2004, accounts payable included $NIL (2003 - $18,750) owed to a director.

c) Issued 2,143,906 shares and 1,881,476 warrants to related parties on private
  placements during the year ended 31 January 2004 for cash in the amount of $99,925.

C.     Interest of experts and counsel

Not applicable.

ITEM 8.     FINANCIAL INFORMATION

A.     Consolidated Statements and Other Financial
  Information

See Item 17

Legal Proceedings

The Company does not know of any material active or pending
  legal proceedings against them; nor is the Company involved as a plaintiff in
  any material proceeding or pending litigation. The Company knows of no active
  or pending proceedings against anyone that might materially adversely affect
  an interest of the Company.

Dividend Policy

Since its incorporation, Polymet has not declared or paid,
  and has no present intention to declare or to pay in the foreseeable future,
  any cash dividends with respect to its Common Shares. Earnings will be retained
  to finance further growth and development of the business of Polymet. However,
  if the Board of Directors declares dividends, all Common Shares will participate

---

equally in the dividends, and, in the event of liquidation,
  in the net assets, of Polymet.

B.     Significant Changes

The Company issued 145,400 common shares on exercise of options
  at CDN $0.08 for proceeds of approximately $8,750.

The Company issued 95,238 common shares on exercise of warrants
  at CDN $0.10 for proceeds of approximately $7,150.

The Company granted 620,000 options at CDN $0.40 to employees
  and officers, expiring 3 March 2008.

On May 28, 2003 the Company received shareholder approval
  to amend its Plan to a maximum number of shares to a rolling 10% of the Companys
  issued and outstanding shares.

In addition the Company received shareholder approval to establish
  a bonus share plan for a maximum of 8,580,000 shares over a three-year time
  frame (the Bonus Plan). The bonus shares are intended as an incentive
  and compensation for certain critical achievements related to the development
  of the Companys NorthMet project. The Bonus Plan is subject to further
  regulatory approval.

On June 17, 2004 the Company announced the closing of a non-brokered
  private placement for a total of 1,550,000 Units (the "Units"), each Unit comprised
  of one common share and one-half of one non-transferable share purchase warrant,
  in the capital stock of the Company at $0.80 per unit to net the treasury an
  aggregate of $1,240,000 took place effective June 8, 2004. One full share purchase
  warrant entitles the investors to purchase one additional common share of the
  Company for a period of 18 months from the closing at $1.20 per share. A finder's
  fee in the amount of 7.5% of the gross proceeds with respect to the placement
  of 825,000 units has been paid in the form of 61,875 shares in the capital stock
  of the Company at a deemed price of $0.80 per share.

On July 5, 2004 the Company granted 1,175,000 options at CDN
  $0.66 ( a Discounted Market Price in accordance with the policies of the TSX
  Venture Exchange) to various directors, employees and consultants, expiring
  5 July 2009. The options are subject to a four month hold period.

ITEM 9.THE OFFER
  AND LISTING

A.     The Offer and Listing Details

---

The following table outlines the annual high and low market prices for the five most recent fiscal periods:

|Fiscal Period    | High | Low
|---------------- | ---- | ---
|January 31, 2004 | .30  | .25
|January 31, 2003 | .12  | .04
|January 31, 2002 | .66  | .10
|January 31, 2001 | 1.25 | .42
|January 31, 2000 | 2.87 | .95

The following table outlines the high and low market prices for each fiscal financial quarter for the two most recent fiscal periods and any subsequent period:

|Fiscal Quarter   | High | Low 
|---------------- | ---- | ----
|                 |      |     
|April 30, 2004   | .89  | .82 
|January 31, 2004 | .30  | .25 
|October 31, 2003 | .17  | .14 
|July 31, 2003    | .09  | .08 
|April 30, 2003   | .08  | .05 
|January 30,2003  | .08  | .045
|July 31, 2002    | .27  | .10 
|April 30, 2002   | .12  | .08 

The following table outlines the high and low market prices for each of the most recent six months:

|Month             | High | Low 
|----------------- | ---- | ----
|                  |      |     
|June 30, 2004     | .83  | .80 
|May 31, 2004      | .81  | .78 
|April 30, 2004    | .89  | .82 
|March 31, 2004    | .80  | .74 
|February 28, 2004 | .55  | .475

B.     Plan of Distribution

Not applicable.

C.     Markets

The Company's common shares trade on the TSX Venture Exchange in British Columbia, Canada under the symbol "POM. The Company's common shares commenced trading April 1984. In August 2000, the Company listed on the OTCBB under the symbol
POMGF.

D.     Selling Shareholders

---

Not applicable.

E.     Dilution

Not applicable.

F.     Expense of the issue

Not applicable.

ITEM 10.     ADDITIONAL INFORMATION

A.     Share Capital

Not applicable.

B.     Memorandum and articles of association

The Companys Certificate of Incorporation and Articles/By-Laws
  are Incorporated by Reference to Form 20-FR. The Company confirms no changes
  have been made the Companys Articles/ByLaws.

C.     Material Contracts

The Company has not entered into any material contracts for
  the past two fiscal periods ending January 31, 2004 and January 31, 2003 other
  than those contracts entered into in the ordinary course of business.

D.     Exchange Controls

There are currently no governmental laws, decrees, regulations
  or other legislation of Canada, which affects the import or export of capital,
  including the availability of cash and cash equivalents for use by the Company.
  For a general discussion of the remittance of dividends, interest or other payments
  to non-resident holders of the Common Shares. See "E. Taxation".

E.     Taxation

Taxation - The following summary of the material Canadian
  federal income tax considerations generally applicable in respect of the common
  shares reflects the Companys opinion. The tax consequences to any particular
  holder of common shares will vary according to the status of that holder as
  an individual, trust, corporation or member of a partnership, the jurisdiction
  in which that holder is subject to taxation, the place where that holder is
  resident and, generally, according to that holders particular circumstances.
  This summary is applicable only to holders who are resident in the United States,
  have never been resident in

---

Canada, deal at arms length with the Company, hold their
  common shares as capital property and who will not use or hold the common shares
  in carrying on business in Canada. Special rules, which are not discussed in
  this summary, may apply to a United States holder that is an issuer that carries
  on business in Canada and elsewhere.

This summary is based upon the provisions of the Income Tax
  Act of Canada and the regulations thereunder (collectively, the Tax Act,
  or ITA) and the Canada-United States Tax Convention as amended by the
  Protocols thereto (the Tax Convention) as at the date of the Annual
  Report and the current administrative practices of Revenue Canada, Customs,
  Excise and Taxation. This summary does not take into account Canadian provincial
  income tax consequences.

This summary is not exhaustive of all possible income tax
  consequences. It is not intended as legal or tax advice to any particular holder
  of common stock and should not be so construed. Each holder should consult his
  own tax advisor with respect to the income tax consequences applicable to him
  in his own particular circumstances.

North American Free Trade Agreement (Canada) - The
  Investment Act was amended with the North American Free Trade Agreement (NAFTA)
  to provide for special review thresholds for Americans (including American-controlled
  entities as defined in the Investment Act). Under the Investment
  Act, as amended, an investment in the Registrants common shares by an
  American would be review able only if it was an investment to acquire control
  of the Registrant and the value of the assets of the Registrant was equal to
  or greater than a specified amount (the Review Threshold), which
  increases in stages. The Review Threshold is currently $150 million.

Disposition of Common Shares - If a non-resident were
  to dispose of common shares of the Company to another Canadian corporation which
  deals or is deemed to deal on a non-arms length basis with the non-resident
  and that, immediately after the disposition, is connected with the Company (i.e.,
  which holds shares representing more than 10% of the voting power and more than
  10% of the market value of all issued and outstanding shares of the Company),
  the amount by which the fair market value of any consideration (other than any
  shares of the purchaser corporation) exceeds the paid-up capital of the common
  shares sold will be deemed to be taxable as a dividend paid by the purchasing
  corporation, either immediately or eventually by means of a deduction in computing
  the paid-up capital of the purchasing corporation, and subject to withholding
  taxes as described below.

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Under the Tax Act, a gain from the sale of common shares by
  a non-resident will not be subject to Canadian tax, provided the shareholder
  (and/or persons who do not deal at arms length with the shareholder) have
  not held a substantial interest in the Company (25% or more of the
  shares of any class of the Companys stock) at any time in the five years
  preceding the disposition. Generally, the Tax Convention will exempt from Canadian
  taxation any capital gain realized by a resident of the United States, provided
  that the value of the common shares is not derived principally from real property
  situated in Canada.

Dividend - In the case of any dividends paid to non-residents,
  the Canadian tax is withheld by the Company, which remits only the net amount
  to the shareholder. By virtue of Article X of the Tax Convention, the rate of
  tax on dividends paid to residents of the United States is generally limited
  to 15% of the gross dividend (or 5% in the case of certain corporate shareholders
  owning at least 10% of the Companys voting shares upon ratification of
  the Protocol amending the treaty. In the absence of the Tax Convention provisions,
  the rate of Canadian withholding tax imposed on non-residents is 25% of the
  gross dividend. Stock dividends received by non-residents from the Company are
  taxable by Canada as ordinary dividends and therefore the withholding tax rates
  will be applicable.

Where a holder disposes of common shares to the Company (unless
  the Company acquired the common shares in the open market in the manner in which
  shares would normally be purchased by any member of the public), this will result
  in a deemed dividend to the U.S. holder equal to the amount by which the consideration
  paid by the Company exceeds the paid-up capital of such stock. The amount of
  such dividend will be subject to withholding tax as described above.

Capital Gains - A non-resident of Canada is not subject
  to tax under the ITA in respect of a capital gain realized upon the disposition
  of a share of a class that is listed on a prescribed stock exchange unless the
  share represents taxable Canadian property to the holder thereof.
  A common share of the Company will be taxable Canadian property to a non-resident
  holder if, at any time during the period of five years immediately preceding
  the disposition, the non-resident holder, persons with whom the non-resident
  holder did not deal at arms length, or the nonresident holder and persons
  with whom he/she did not deal at arms length owned 25% or more of the
  issued shares of any class or series of the Company. In the case of a non-resident
  holder to whom shares of the Company represent taxable Canadian property and
  who is resident in the United States, no Canadian tax will be payable on a capital
  gain realized on such shares by reason of the Tax Convention unless the value
  of such shares is derived

---

principally from real property situated in Canada or the nonresident
  holder previously held the shares while resident in Canada. The Company believes
  that the value of its common shares is not derived from real property situated
  inside Canada.

Certain United States Federal Income Tax Consequences
  - The following is a discussion of certain possible United States Federal income
  tax consequences, under the law, generally applicable to a U.S. Holder (as defined
  below) of common shares of the Company. This discussion does not address all
  potentially relevant Federal income tax matters and it does not address consequences
  peculiar to persons subject to special provisions of Federal income tax law,
  such as those described below as excluded from the definition of a U.S. Holder.
  In addition, this discussion does not cover any state, local or foreign tax
  consequences.

The following discussion is based upon the sections of the
  Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations,
  published Internal Revenue Service (IRS) rulings, published administrative
  positions of the IRS and court decisions that are currently applicable, any
  or all of which could be materially and adversely changed, possibly on a retroactive
  basis, at any time. In addition, the discussion does not consider the potential
  effects, both adverse and beneficial, of possible legislation which, if enacted,
  could be applied, possibly on a retroactive basis, at any time. The following
  discussion is for general information only and is not intended to be, nor should
  it be construed to be, legal or tax advice to any holder or prospective holder
  of common shares of the Company and no opinion or representation with respect
  to the United States Federal income tax consequences to any such holder or prospective
  holder is made. Accordingly, holders and prospective holders of common shares
  of the Company should consult their own tax advisors about the federal, state,
  local, and foreign tax consequences of purchasing, owning and disposing of common
  shares of the Company.

U.S. Holders - As used herein, a (U.S. Holder)
  includes a holder of common shares of the Company who is a citizen or resident
  of the United States, a corporation created or organized in or under the laws
  of the United States or of any political subdivision thereof and any other person
  or entity whose ownership of common shares of the Company is effectively connected
  with the conduct of a trade or business in the United States. A U.S. Holder
  does not include persons subject to special provisions of Federal income tax
  law, such as tax-exempt organizations, qualified retirement plans, financial
  institutions, insurance companies, real estate investment trusts, regulated
  investment companies, broker-dealers, non-resident

---

alien individuals or foreign corporations whose ownership
  of common shares of the Company is not effectively connected with the conduct
  of a trade or business in the United States and shareholders who acquired their
  stock through the exercise of employee stock options or otherwise as compensation.

Distributions on Common Shares of the Company - U.S.
  Holders receiving dividend distributions (including constructive dividends)
  with respect to common shares of the Company are required to include in gross
  income for United States Federal income tax purposes the gross amount of such
  distributions to the extent that the Company has current or accumulated earnings
  and profits, without reduction for any Canadian income tax withheld from such
  distributions. Such Canadian tax withheld may be credited, subject to certain
  limitations, against the U.S. Holders United States Federal Income tax
  liability or, alternatively, may be deducted in computing the U.S. Holders
  United States Federal taxable income by those who itemize deductions. (See more
  detailed discussion at Foreign Tax Credit below). To the extent
  that distributions exceed current or accumulated earnings and profits of the
  Company, they will be treated first as a return of capital up to the U.S. Holders
  adjusted basis in the common shares and thereafter as gain from the sale or
  exchange of the common shares. Preferential tax rates for long-term capital
  gains are applicable to a U.S. Holder which is an individual, estate or trust.
  There are currently no preferential tax rates for long-term capital gains for
  a U.S. Holder which is a corporation.

Dividends paid on the common shares of the Company will not
  generally be eligible for the dividends received deduction provided to corporations
  receiving dividends from certain United States corporations. A U.S. Holder which
  is a corporation may, under certain circumstances, be entitled to a 70% deduction
  of the United States source portion of dividends received from the Company (unless
  the Company qualifies as a foreign personal holding company or a
  passive foreign investment company, as defined below) if such U.S.
  Holder owns shares representing at least 10% of the voting power and value of
  the Company. The availability of this deduction is subject to several complex
  limitations which are beyond the scope of this discussion.

Foreign Tax Credit - A U.S. Holder who pays (or has
  withheld from distributions) Canadian income tax with respect to the ownership
  of common shares of the Company may be entitled, at the option of the U.S. Holder,
  to either a deduction or a tax credit for such foreign tax paid or withheld.
  Generally, it will be more advantageous to claim a credit because a credit reduces
  United States Federal income taxes on a dollar-for-dollar basis, while a deduction
  merely reduces the taxpayers income subject

---

to tax. This election is made on year-by-year basis and applies
  to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld
  from) the U.S. Holder during the year. There are significant and complex limitations
  which apply to the credit, among which is the general limitation that the credit
  cannot exceed the proportionate share of the U.S. Holders United States
  income tax liability that the U.S. Holders foreign source income bears
  to his/her or its worldwide taxable income. In the determination of the application
  of this limitation, the various items of income and deduction must be classified
  into foreign and domestic sources. Complex rules govern this classification
  process. There are further limitations on the foreign tax credit for certain
  types of income such as passive income, high withholding tax
  interest, financial services income, shipping income,
  and certain other classifications of income. The availability of the foreign
  tax credit and the application of the limitations on the credit are fact specific
  and holders and prospective holders of common shares of the Company should consult
  their own tax advisors regarding their individual circumstances.

Disposition of Common Shares of the Company - A U.S.
  Holder will recognize gain or loss upon the sale of common shares of the Company
  equal to the difference, if any, between (i) the amount of cash plus the fair
  market value of any property received, and (ii) the shareholders tax basis
  in the common shares of the Company. This gain or loss will be capital gain
  or loss if the common shares are capital asset in the hands of the U.S. Holder,
  which will be a short-term or long-term capital gain or loss depending upon
  the holding period of the U.S. Holder. Gains and losses are netted and combined
  according to special rules in arriving at the overall capital gain or loss for
  a particular tax year. Deductions for net capital losses are subject to significant
  limitations. For U.S. Holders which are individuals, any unused portion of such
  net capital loss may be carried over to be used in later tax years until such
  net capital loss is thereby exhausted. For U.S. Holders which are corporations
  (other than corporations subject to Subchapter S of the Code), an unused net
  capital loss may be carried back three years from the loss year and carried
  forward five years from the loss year to be offset against capital gains until
  such net capital loss is thereby exhausted.

Other Considerations - In the following four circumstances,
  the above sections of the discussion may not describe the United States Federal
  income tax consequences resulting from the holding and disposition of common
  shares of the Company. However, on the basis of (a) the number of shareholders
  of its common shares, (b) the majority ownership of its shares by Canadian residents,
  and c) the majority of its assets are actively managed (not passively

---

held), the Company believes that its is neither a Foreign
  Personal Holding Company, Foreign Investment Company, Passive
  Foreign Investment Company, nor a Controlled Foreign Corporation.

Foreign Personal Holding Company - If at any time during
  a taxable year more than 50% of the total combined voting power or the total
  value of the Company outstanding shares is owned, actually or constructively,
  by five or fewer individuals who are citizens or residents of the United States
  and 50% or more of the Companys gross income for such year was derived
  from certain passive sources (e.g. from dividends received from its subsidiaries),
  the Company would be treated as a foreign personal holding company.
  In that event, U.S. Holders that hold common shares of the Company would be
  required to include in gross income for such year their allowable portions of
  such passive income to the extent the Company does not actually distribute such
  income.

Foreign Investment Company - If 50% or more of the
  combined voting power or total value of the Company outstanding shares are held,
  actually or constructively, by citizens or residents of the United States, United
  States domestic partnerships or corporations, or estates or trusts other than
  foreign estates or trusts (as defined by the Code Section 7701(a)(31)), and
  the Company is found to be engaged primarily in the business of investing, reinvesting,
  or trading in securities, commodities, or any interest therein, it is possible
  that the Company might be treated as a foreign investment company
  as defined in Section 1246 of the Code, causing all or part of any gain realized
  by a U.S. Holder selling or exchanging common shares of the Company to be treated
  as ordinary income rather than capital gains.

Passive Foreign Investment Company - As a foreign corporation
  with U.S. Holders, the Company could potentially be treated as a passive foreign
  investment company (PFIC), as defined in Section 1297 of the Code,
  depending upon the percentage of the Companys income which is passive,
  or the percentage of the Companys assets which is held for the purpose
  of producing passive income. Certain United States income tax legislation contains
  rules governing PFICs which can have significant tax effects on U.S. shareholders
  of foreign corporations. These rules do not apply to non-U.S. shareholders.
  Section 1297(a) of the Code defines a PFIC as a corporation that is not formed
  in the United States and, for any taxable year, either (i) 75% or more of its
  gross income is passive income, which includes interest, dividends
  and certain rents and royalties or (ii) the average percentage, by fair market
  value (or, if the company is a controlled foreign corporation or makes an election,
  by adjusted tax basis), of its assets that produce or are held for the

---

production of passive income is 50% or more. The
  taxation of a US shareholder who owns stock in a PFIC is extremely complex and
  is therefore beyond the scope of this discussion. US persons should consult
  with their own tax advisors with regards to the impact of these rules.

Controlled Foreign Corporation - If more than 50% of
  the voting power of all classes of stock or the total value of the stock of
  the Company is owned, directly or indirectly, by citizens or residents of the
  United States, United States domestic partnerships and corporations or estates
  or trusts other than foreign estates or trusts, each of whom own 10% or more
  of the total combined voting power of all classes of stock of the Company or
  the total value of the stock of (United States shareholder), the
  Company could be treated as a controlled foreign corporation under Subpart
  F of the Code.

This classification would effect many complex results including
  the required inclusion by such United States shareholders in income of their
  pro rata share: of Subpart F Income (as specially defined by the
  Code) of the Company; of the Companys earnings invested in U.S. property;
  and of earnings invested excess passive assets (as specifically
  defined by the Code). The Company, in addition, under Section 1248 of the Code,
  gain from the sale or exchange of common shares of the Company by a U.S. person
  who is or was a United States shareholder (as defined in the Code) at any time
  during the five years period ending with the sale or exchange is treated as
  ordinary dividend income to the extent of earnings and profits of the Company
  attributable to the stock sold or exchanged. Because of the complexity of Subpart
  F, and because it is not clear that the Company is a controlled foreign corporation,
  a more detailed review of these rules is outside of the scope of this discussion.

F.     Dividends and Paying Agents

Not applicable.

G.     Statements by Experts

Patrick G. Downey,P.Eng. of Patrick Downey & Associates
  Ltd. graduated with an Honours Degree of Bachelor of Science in Engineering
  from Queen University of Belfast, Ireland in 1982 and is a registered Professional
  Engineer (No. 18474) by the Association of Professional Engineers and Geoscientists
  of British Columbia and has worked as an Engineer for a total of 22 years since
  graduation from university.

---

Patrick Downey, by reason of education, affiliation with a
  professional association (as defined in NI 43-101) and past relevant work experience,
  fulfills the requirements to be a qualified person for the purposes
  of NI 43-101.

Patrick Downey is responsible for the preparation of the technical
  report entitled Independent Technical Report on the Northmet Project
  dated July 22, 2004 (the Updated Technical Report) relating to the
  Northmet Project property referenced herein and disclosure of same consented
  to in the Certificate of Author dated July 22, 2004.

H.     Documents on Display

All documents referred to in this Form 20-F are available
  for inspection at the office of the Company, listed below, during normal office
  hours.

> Polymet Mining Corp. 
>     #1116  925 West Georgia Street 
>     Vancouver, British Columbia 
>     V6C 3L2 Canada

The Company is subject to the informational requirements of
  the Securities Exchange Act of 1934, as amended, and it files reports, registration
  statements and other information with the Securities and Exchange Commission
  (the "SEC").

The Company's reports, registration statements and other information
  can be inspected on the SEC's website at www.sec.gov, and such information can
  be inspected and copies ordered at the public reference facilities maintained
  by the SEC at the following locations:

|Judiciary Plaza      | 500 West Madison 
|-------------------- | -----------------
|Room 1024            | Suite 1400       
|Washington, DC 20549 | Chicago, IL 60661

I.     Subsidiary Information

Not Applicable.

ITEM 11.     QUANTITATIVE AND QUALITATIVE DISCLOSURE
  ABOUT MARKETRISK

The Company is exposed only to market risk from changes in
  foreign currency exchange, although the exposure is not considered sufficient
  to have a material effect on our results of

---

operations and financial condition. The Companys only
  means of funding is by way of equity financing which would be completed in Canadian
  Funds. The result of which exposes the Company to foreign currency exchange
  rate risk as our reporting currency is the U.S. dollar. Polymet holds financial
  instruments in Canadian dollars. A depreciation of the Canadian dollar against
  the United States dollar will decrease the fair value and an appreciation of
  the Canadian dollar against the U.S. dollar will increase the fair value of
  such financial instruments.

The Company has no publicly or privately traded securities
  or market instruments aside from its own equity. The only publicly traded securities
  are the Common Shares of the Company, which trade on the TSX Venture Exchange.
  The Company has no debt instruments subject to interest payments, sales contracts,
  swaps, derivatives, or forward agreements or contracts, or inventory.

The Company has no currency or commodity contracts, and the
  Company does not trade in such instruments.

The Company has no cash flow or revenue from operations, the
  Company does not have currency or other market exposure to operating activity.

The Company has no debt instruments, which are subject to
  interest payments.

The Company periodically accesses the capital markets with
  the issuance of new shares to fund operating expenses, and the Company does
  not maintain significant cash reserves over periods of time that could be materially
  affected by fluctuations in interest rates or foreign exchange rates.

ITEM 12.     DESCRIPTION OF
  SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable.

ITEM 13.     DEFAULT, DIVIDEND
  ARREARAGES AND DELINQUENCIES

None

ITEM 14.     MATERIAL MODIFICATIONS
  TO THE RIGHT OF SECURITY HOLDERSAND USE OF PROCEEDS

Option Re-pricing

On 5 May 2003, consent resolutions were approved to re-price
  the 541,052 previously granted options from CDN $0.25 to CDN $0.10 per share
  and to amend the expiry date to 17 March 2007, subject to regulatory approval.

---

Shareholder Rights Plan

Effective 4 December 2003, the Company adopted a Shareholder
  Rights Plan (Rights Plan), subject to the ratification by the Company's
  shareholders at a meeting to be held within six months of the date of the Rights
  Plan, such approval was received on May 28, 2004. Under the Rights Plan, the
  Company has issued one right for no consideration in respect of each outstanding
  common share of the Company to all holders of record of common shares on 4 December
  2003. All common shares issued by the Company during the term of the Rights
  Plan will have one right represented by the certificates representing the common
  shares of the Company. The term of the Rights Plan is 10 years, unless the rights
  are earlier redeemed or exchanged. The Rights issued under the Rights Plan become
  exercisable only if a party acquires 20% or more of the Company's common shares
  without complying with the Rights Plan or without the approval of the Board
  of Directors of the Company.

Each Right entitles the registered holder thereof to purchase
  from the Company on the occurrence of certain events, one common share of the
  Company at the price of CDN$50 per share, subject to adjustment (the Exercise
  Price). However, if a Flip-in Event (as defined in the Rights Plan) occurs,
  each Right would then entitle the registered holder to receive, upon payment
  of the Exercise Price, that number of common shares that have a market value
  at the date of that occurrence equal to twice the Exercise Price. The Rights
  are not exercisable until the Separation Time as defined in the Rights Plan.

ITEM 15.     CONTROLS AND PROCEDURES

A.    Evaluation of Disclosure Controls
  and Procedures

The Company evaluated the effectiveness of the design and
  operation of its disclosure controls and procedures (as defined in Rule 13a-14(c)
  under the Securities Exchange Act of 1934, as amended) as of a date (the "Evaluation
  Date") within 90 days prior to the filing date of this report. Based upon that
  evaluation, the Chief Executive Officer concluded that, as of the Evaluation
  Date, the Company's disclosure controls and procedures were effective in timely
  alerting them to the material information relating to the Company (or the Company's
  consolidated subsidiaries) required to be included in the Company's periodic
  SEC filings.

B.     Changes in Internal Controls

---

There were no significant changes made in the Company's internal
  controls or, to the Company's knowledge, in other factors that could significantly
  affect these controls subsequent to the date of their evaluation.

ITEM 16A.    Audit Committee Financial
  Expert

As at the Companys financial year ended January 31,
  2004, the audit committee consisted of three directors, one of whom would be
  determined as a financial expert.

Ian Forrest

Mr. Forrest is a Chartered Accountant practicing in Geneva
  and specializing in finance, banking and tax consulting. He is a director of
  two Canadian public companies, Caledonian Mining Corporation and Mengold Resources
  Inc.

David Dreisinger

Dr. Dreisinger is a professor in the Faculty of Applied Science,
  Department of Metal and Materials Engineering, at the University of British
  Columbia and holds the prestigious Industrial Research Chair in Hydrometallurgy.
  In addition to his professorship, Dr. Dreisinger is a consultant to many of
  the major mining companies worldwide. Dr. Dreisinger is co-inventor of the PLATSOL
  process which management sees as the major discriminator in the technical success
  of the NorthMet project. Dr. Dreisinger will be responsible for guiding process
  related matters as the Company advances through feasibility study and operations.

ITEM 16B.     CODE OF ETHICS

During the Companys current fiscal year the Board of
  Directors adopted it Corporate Governance Policy with included the Corporate
  Governance Mandate, Audit Committee Mandate, Compensation Committee Mandate
  and a Code of Ethics, in accordance with the requirements of this Annual Report.

The Company recently created a new and more informative website
  and is in the process of updating it to include its Corporate Governance Policy,
  Mandates and Code of Ethics on such site.

ITEM 16C.     PRINCIPAL ACCOUNTANT
  FEES AND SERVICES

The following outlines the expenditures for accounting fees
  for the last two fiscal periods ended:

---

|                   | January 31 2004 |  | January 31 2003 | 
|------------------ | --------------- |  | --------------- | 
|                   |                 |  |                 | 
|Audit Fees         | 15,500          |  | 15,500          | 
|Audit Related Fees | 0               |  | 0               | 
|Tax Fees           | 3,500           |  | 3,500           | 
|All Other Fees     | 0               |  | 0               | 

PART III

ITEM 17.     FINANCIAL STATEMENTS

The Company's financial statements are stated in United States
  Dollars (USD$) and are prepared in accordance with U.S. and Canadian Generally
  Accepted Accounting Principles (GAAP); the application of which, in the case
  of the Company, conforms in all material respects for the periods presented
  with US GAAP, except as disclosed in footnotes to the financial statements.

The following financial statements and notes thereto required
  under ITEM #17 are attached hereto and found immediately preceding the signature
  page of this Form 20-F Annual Report.

Audited Financial Statements for Fiscal 2004/2003/2002 ended
  January 31st.

ITEM 18.     FINANCIAL STATEMENTS

Not Applicable

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ITEM 19.     EXHIBITS

|1.   | Certificate of Incorporation and Articles/By-Laws 
      -- Incorporated by Reference to Form 20-FR, Form 20-F Annual Reports, and
      Form 6-K's --
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                       
|2.   | Instruments defining the rights of holders of equity or debt securities
        being registered. 
        -- Refer to Exhibit No. 1 --               
|     |                                                                                                                                                       
|3.   | Material Contracts: 
      -- Incorporated by Reference to Form 20-FR, Form 20-F Annual Reports, and
      Form 6-K's --                              
|     |                                                                                                                                                       
|4.   | Foreign Patents: Not Applicable                                                                                                                       
|     |                                                                                                                                                       
|5.   | Diagram of Parent and Subsidiaries 
      -- Incorporated by Reference to Form 20-FR, Form 20-F Annual Reports, and
      Form 6-K's                 
|     |                                                                                                                                                       
|6.   | Technical Report dated July 22,
      2004 prepared by Patrick Downey & Associates Ltd. Attached.                                                     
|     |                                                                                                                                                       
|7.   | Code of Ethics                                                                                                                                        
|     |                                                                                                                                                       
|8.   | Other Exhibits: 
      -- Incorporated by Reference to Form 20-FR, Form 20-F Annual Reports, and
      Form 6-K's --                                  
|     |                                                                                                                                                       
|12.1 | Section 302 Certification
      of Chief Executive Officer                                                                                            
|     |                                                                                                                                                       
|12.2 | Section 302 Certification
      of Chief Financial Officer                                                                                            
|     |                                                                                                                                                       
|13.1 | Section 906 Certification
      of Chief Executive Officer                                                                                            
|     |                                                                                                                                                       
|13.2 | Section 906 Certification
      of Chief Financial Officer                                                                                            

---

SIGNATURES

The Registrant hereby certifies that it meets all of the requirements
  for filing on Form 20-F and has duly caused and authorized the undersigned to
  sign this Annual Report on its behalf.

Dated: July 28, 2004.

| | POLYMET MINING CORP.
      /s/ William Murray
        Name: William Murray
        Title: Chief Executive Officer
| | -----------------------------------------------------------------------------------------------------------------

---

POLYMET MINING CORP.

An Exploration Stage Company

CONSOLIDATED FINANCIAL STATEMENTS

31 JANUARY 2004

U.S. Funds



F-1

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AUDITORS REPORT

---

To the Shareholders of PolyMet Mining Corp.:

We have audited the consolidated balance sheets of PolyMet
  Mining Corp. as at 31 January 2004 and 2003 and the consolidated statements
  of shareholders equity, loss and cash flows for the years ended 31 January
  2004, 2003 and 2002, and cumulative from inception (4 March 1981) through 31
  January 2004. These consolidated financial statements are the responsibility
  of the Companys management. Our responsibility is to express an opinion
  on these consolidated financial statements based on our audits.

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

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  31 January 2004 and 2003 and the results of its operations and cash flows for
  the years ended 31 January 2004, 2003 and 2002, and cumulative from inception
  (4 March 1981) through 31 January 2004 in accordance with Canadian generally
  accepted accounting principles.

|Vancouver, B.C. | STALEY, OKADA & PARTNERS
|--------------- | ------------------------
|30 March 2004   | CHARTERED ACCOUNTANTS   

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COMMENTS BY AUDITORS FOR U.S. READER ON CANADA - U.S. REPORTING CONFLICT

In the United States, reporting standards for auditors require
  the addition of an explanatory paragraph (following the opinion paragraph) when
  financial statements are affected by future events, the outcome of which is
  indeterminable. As discussed in Note 1, the Companys continued existence
  as a going concern is dependent upon the future economic success of its exploration
  and development activities, the Companys ability to continue to secure
  adequate financing and the Company achieving a positive cash flow and profitable
  operations. Our report to the shareholders dated 30 March 2004, is expressed
  in accordance with Canadian reporting standards, which do not require a reference
  to such going concern considerations in the auditors report when the situation
  is adequately disclosed in the financial statements.

|Vancouver, B.C. | STALEY, OKADA & PARTNERS
|--------------- | ------------------------
|30 March 2004   | CHARTERED ACCOUNTANTS   

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F-2

---

|PolyMet Mining Corp.         | Statement 1
|---------------------------- | -----------
|An Exploration Stage Company |            
|Consolidated Balance Sheet   |            
|As at 31 January             |            
|U.S. Funds                   |            

|ASSETS                                    |   | 2004      |  |   | 2003   | 
|----------------------------------------- | - | --------- |  | - | ------ | 
|Current                                   |   |           |  |   |        | 
|Cash                                      | $ | 495,551   |  | $ | 3,187  | 
|Accounts receivable                       |   | 21,881    |  |   | 6,216  | 
|Prepaid expenses                          |   | 5,466     |  |   | -      | 
|                                          |   | 522,898   |  |   | 9,403  | 
|Investments (Note 4)                      |   | 253       |  |   | 253    | 
|Property, Plant and Equipment (Note 6)    |   | 501,786   |  |   | 41,971 | 
|                                          | $ | 1,024,937 |  | $ | 51,627 | 
|                                          |   |           |  |   |        | 
|                                          |   |           |  |   |        | 
|LIABILITIES                               |   |           |  |   |        | 
|Current                                   |   |           |  |   |        | 
|Accounts payable                          | $ | 99,372    |  | $ | 82,628 | 
|                                          |   |           |  |   |        | 
|Continued Operations (Note 1)             |   |           |  |   |        | 
|                                          |   |           |  |   |        | 
|                                          |   |           |  |   |        | 
|SHAREHOLDERS EQUITY (DEFICIENCY)         |   |           |  |   |        | 
|Share Capital- Statement 2 (Note 7)       |   |           |  |   |        | 
|Authorized:                               |   |           |  |   |        | 
|1,000,000,000 common
      shares without |   |           |  |   |        | 
|Issued and fully paid:                    |   |           |  |   |        | 

|                                      | 2004       |  | 2003       |  |        |   |             |   |             |  
|------------------------------------- | ---------- |  | ---------- |  | ------ | - | ----------- | - | ----------- | -
|                                      |            |  |            |  |        |   |             |   |             |  
|                                      | 44,089,554 |  | 31,755,026 |  | shares |   | 15,177,765  |   | 14,129,447  |  
|For cash                              |            |  |            |  |        |   |             |   |             |  
|For property                          | 902,500    |  | 902,500    |  | shares |   | 54,003      |   | 54,003      |  
|For stock-based                       |            |  |            |  |        |   |             |   |             |  
|compensation                          | -          |  | -          |  | Shares |   | 55,048      |   | -           |  
|                                      | 44,992,054 |  | 32,657,526 |  | shares |   | 15,286,816  |   | 14,183,450  |  
|                                      |            |  |            |  |        |   |             |   |             |  
|                                      |            |  |            |  |        |   |             |   |             |  
|                                      |            |  |            |  |        |   | (14,361,251 | ) | (14,214,451 | )
|Deficit - Cumulative Net Losses Since |            |  |            |  |        |   |             |   |             |  
|Inception-Statement 2                 |            |  |            |  |        |   | 925,565     |   | (31,001     | )
|                                      |            |  |            |  |        |   |             |   |             |  
|                                      |            |  |            |  |        | $ | 1,024,937   | $ | 51,627      |  

William
  MurrayDirector

David
  Dreisinger
  Director

- See Accompanying Notes -

F-3

---

|PolyMet Mining Corp.                    | Statement 2
|--------------------------------------- | -----------
|An Exploration Stage Company            |            
|Consolidated Statement of Shareholders |            
|Equity                                  |            
|U.S. Funds                              |            

|                     | Common Shares |  |  |                  |  |   |            |  
|-------------------- | ------------- |  |  | ---------------- |  | - | ---------- | -
|                     |               |  |  | Issued and Fully |  |   |            |  
|                     | Authorized    |  |  | Paid             |  |   |            |  
|                     | Shares        |  |  | Shares           |  |   | Amount     |  
|Balance -            |               |  |  |                  |  |   |            |  
|31 January 2001      | 1,000,000,000 |  |  | 29,228,603       |  | $ | 13,905,737 |  
|Loss for the year    |               |  |  |                  |  |   |            |  
|-
      Statement 3  | -             |  |  | -                |  |   | -          |  
|Shares issued for    |               |  |  |                  |  |   |            |  
|cash:                |               |  |  |                  |  |   |            |  
|Private              |               |  |  |                  |  |   |            |  
|placements           | -             |  |  | 3,428,923        |  |   | 286,405    |  
|Less:
      Issuance |               |  |  |                  |  |   |            |  
|costs                | -             |  |  | -                |  |   | (8,692     | )
|Balance -            |               |  |  |                  |  |   |            |  
|31 January 2002      | 1,000,000,000 |  |  | 32,657,526       |  |   | 14,183,450 |  
|Loss for the year    |               |  |  |                  |  |   |            |  
|-
      Statement 3  | -             |  |  | -                |  |   | -          |  
|Balance -            |               |  |  |                  |  |   |            |  
|31 January 2003      | 1,000,000,000 |  |  | 32,657,526       |  |   | 14,183,450 |  
|Loss for the year    | -             |  |  | -                |  |   | -          |  
|Shares issued for    |               |  |  |                  |  |   |            |  
|cash:                |               |  |  |                  |  |   |            |  
|Private              |               |  |  |                  |  |   |            |  
|placements           | -             |  |  | 11,648,318       |  |   | 1,035,071  |  
|Less:
      Issuance |               |  |  |                  |  |   |            |  
|costs                | -             |  |  | -                |  |   | (42,946    | )
|Exercise
      of    |               |  |  |                  |  |   |            |  
|warrants             | -             |  |  | 486,610          |  |   | 40,808     |  
|Exercise
      of    |               |  |  |                  |  |   |            |  
|options              | -             |  |  | 89,600           |  |   | 5,210      |  
|Shares issued to     |               |  |  |                  |  |   |            |  
|settle debt          | -             |  |  | 50,000           |  |   | 3,634      |  
|Shares issued for    |               |  |  |                  |  |   |            |  
|finders fee         | -             |  |  | 60,000           |  |   | 6,541      |  
|Stock-based          |               |  |  |                  |  |   |            |  
|compensation         | -             |  |  | -                |  |   | 55,048     |  
|Balance -            |               |  |  |                  |  |   |            |  
|31 January 2004      | 1,000,000,000 |  |  | 44,992,054       |  | $ | 15,286,816 |  

- See Accompanying Notes -

F-4

---

|PolyMet Mining Corp.           | Statement 3
|------------------------------ | -----------
|An Exploration Stage Company   |            
|Consolidated Statement of Loss |            
|For the Years Ended 31 January |            
|U.S. Funds                     |            

|                                                 |   |           |   |   |           |   |   |           |   | Cumulative  |           
|------------------------------------------------ | - | --------- | - | - | --------- | - | - | --------- | - | ----------- | ----------
|                                                 |   |           |   |   |           |   |   |           |   | From        |           
|                                                 |   |           |   |   |           |   |   |           |   | Inception   |           
|                                                 |   |           |   |   |           |   |   |           |   | (4 March 19 |           
|                                                 |   |           |   |   |           |   |   |           |   | 81          | )         
|                                                 |   |           |   |   |           |   |   |           |   | Through     |           
|                                                 |   |           |   |   |           |   |   |           |   | 31 January  |           
|                                                 |   | 2004      |   |   | 2003      |   |   | 2002      |   |             | 2004      
|General and Administrative                       |   |           |   |   |           |   |   |           |   |             |           
|Administration fees and wages                    | $ | 84,508    |   | $ | 143,146   |   | $ | 259,606   |   | $           | 2,048,352 
|Professional fees                                |   | 58,806    |   |   | 27,358    |   |   | 59,330    |   |             | 702,066   
|Stock-based compensation expense                 |   | 55,048    |   |   | -         |   |   | -         |   |             | 55,048    
|Travel and automotive                            |   | 25,278    |   |   | 10,074    |   |   | 33,987    |   |             | 316,635   
|Consulting fees                                  |   | 21,278    |   |   | 27,267    |   |   | 47,226    |   |             | 188,248   
|Transfer agent and filing fees                   |   | 20,221    |   |   | 7,205     |   |   | 6,510     |   |             | 157,741   
|Office and telephone                             |   | 9,106     |   |   | 51,942    |   |   | 51,685    |   |             | 596,807   
|Rent                                             |   | 8,767     |   |   | 26,158    |   |   | 30,376    |   |             | 727,499   
|Shareholders information                        |   | 5,032     |   |   | 14,880    |   |   | 72,120    |   |             | 471,848   
|Interest expense (income), net                   |   | 380       |   |   | 15,413    |   |   | (25,973   | ) |             | (517,776  
|Amortization                                     |   | 275       |   |   | 5,606     |   |   | 20,517    |   |             | 109,431   
|Licenses, dues and taxes                         |   | -         |   |   | 1,882     |   |   | 3,072     |   |             | 93,915    
|Investor relations and financing                 |   | -         |   |   | 955       |   |   | 36,175    |   |             | 659,139   
|Conventions                                      |   | -         |   |   | -         |   |   | 445       |   |             | 68,611    
|Property search                                  |   | -         |   |   | -         |   |   | -         |   |             | 124,454   
|Bad debts                                        |   | -         |   |   | -         |   |   | -         |   |             | 37,493    
|Loss Before the Undernoted                       |   | 288,699   |   |   | 331,886   |   |   | 595,076   |   |             | 5,839,511 
|Other Expenses (Income)                          |   |           |   |   |           |   |   |           |   |             |           
|Pre-feasibility exploration costs                |   |           |   |   |           |   |   |           |   |             |           
|- Schedule 1                                     |   | 91,616    |   |   | 112,318   |   |   | 606,162   |   |             | 9,020,542 
|Loss (gain) on disposal of investments           |   | -         |   |   | 5,717     |   |   | (45,476   | ) |             | (378,115  
|Write down of investments to
      market value  |   | -         |   |   | -         |   |   | -         |   |             | 197,884   
|Gain on foreign exchange conversion              |   | (22,230   | ) |   | -         |   |   | -         |   |             | (22,230   
|Loss (gain) on sale of resource
      properties |   | (219,925  | ) |   | -         |   |   | -         |   |             | (337,219  
|Loss (gain) on sale of property, plant
      and |   | 8,640     |   |   | 21,758    |   |   | -         |   |             | 40,878    
|                                                 |   | (141,899  | ) |   | 139,793   |   |   | 560,686   |   |             | 8,521,740 
|                                                 |   |           |   |   |           |   |   |           |   |             |           
|Loss for the Year                                | $ | 146,800   |   | $ | 471,679   |   | $ | 1,155,762 |   | $           | 14,361,251
|                                                 |   |           |   |   |           |   |   |           |   |             |           
|                                                 |   |           |   |   |           |   |   |           |   |             |           
|Loss per Share                                   | $ | (0.00     | ) | $ | (0.01     | ) | $ | (0.04     | ) |             |           
|                                                 |   |           |   |   |           |   |   |           |   |             |           
|                                                 |   |           |   |   |           |   |   |           |   |             |           
|                                                 |   |           |   |   |           |   |   |           |   |             |           
|Weighted Average Number of
      Shares          |   | 35,452,26 |   |   | 32,657,52 |   |   | 31,943,55 |   |             |           

- See Accompanying Notes -

F-5

---

|PolyMet Mining Corp.                 | Statement 4
|------------------------------------ | -----------
|An Exploration Stage Company         |            
|Consolidated Statement of Cash Flows |            
|For the Years Ended 31 January       |            
|U.S. Funds                           |            

|                                                 |   |           |   |   |          |   |   |             |   | Cumulative  |            
|------------------------------------------------ | - | --------- | - | - | -------- | - | - | ----------- | - | ----------- | -----------
|                                                 |   |           |   |   |          |   |   |             |   | From        |            
|                                                 |   |           |   |   |          |   |   |             |   | Inception   |            
|                                                 |   |           |   |   |          |   |   |             |   | (4 March 19 |            
|                                                 |   |           |   |   |          |   |   |             |   | 81          | )          
|                                                 |   |           |   |   |          |   |   |             |   | Through     |            
|                                                 |   |           |   |   |          |   |   |             |   | 31 January  |            
|                                                 |   | 2004      |   |   | 2003     |   |   | 2002        |   |             | 2004       
|Operating Activities                             |   |           |   |   |          |   |   |             |   |             |            
|Loss for the year                                | $ | (146,800  | ) | $ | (471,679 | ) | $ | (1,155,762) |   | $           | (14,361,251
|Adjustments to reconcile loss to net
      cash  |   |           |   |   |          |   |   |             |   |             |            
|Amortization                                     |   | 275       |   |   | 6,321    |   |   | 22,233      |   |             | 119,839    
|Stock-based
      compensation expense           |   | 55,048    |   |   | -        |   |   | -           |   |             | 55,048     
|Loss (gain)
      on disposal of investments     |   | -         |   |   | 5,717    |   |   | (45,476     | ) |             | (378,115   
|Write-down of investments
      to market        |   | -         |   |   | -        |   |   | -           |   |             | 197,884    
|Loss (gain) on sale
      of resource            |   | (219,925  | ) |   | -        |   |   | -           |   |             | (337,219   
|Loss (gain) on sale
      of property, plant     |   | 8,640     |   |   | 21,758   |   |   | -           |   |             | 40,878     
|Changes in current assets and liabilities        |   |           |   |   |          |   |   |             |   |             |            
|Accounts receivable                              |   | (15,665   | ) |   | 16,021   |   |   | (9,540      | ) |             | (21,881    
|Prepaid expenses                                 |   | (5,466    | ) |   | 18,649   |   |   | 2,619       |   |             | (5,466     
|Accounts payable                                 |   | 20,378    |   |   | 19,583   |   |   | (359,203    | ) |             | 103,006    
|Net cash used in operating                       |   |           |   |   |          |   |   |             |   |             |            
|activities                                       |   | (303,515  | ) |   | (383,630 | ) |   | (1,545,129  | ) |             | (14,587,277
|Financing Activities                             |   |           |   |   |          |   |   |             |   |             |            
|                                                 |   |           |   |   |          |   |   |             |   |             |            
|Share capital - for
      cash                   |   | 1,044,684 |   |   | -        |   |   | 277,713     |   |             | 15,174,131 
|                                                 |   |           |   |   |          |   |   |             |   |             |            
|Net cash provided by
      financing activities  |   | 1,044,684 |   |   | -        |   |   | 277,713     |   |             | 15,174,131 
|                                                 |   |           |   |   |          |   |   |             |   |             |            
|Investing Activities                             |   |           |   |   |          |   |   |             |   |             |            
|Purchase of property,
      plant and equipment  |   | (502,061  | ) |   | -        |   |   | (2,456      | ) |             | (755,798   
|Proceeds on disposal
      of property, plant    |   | 33,331    |   |   | 48,301   |   |   | -           |   |             | 93,295     
|Proceeds on disposal
      of investments        |   | -         |   |   | 15,908   |   |   | 51,540      |   |             | 842,009    
|Proceeds on sale of
      resource property      |   | 219,925   |   |   | -        |   |   | -           |   |             | 219,925    
|Purchase of investments                          |   | -         |   |   | -        |   |   | -           |   |             | (490,734   
|Net cash used in investing
      activities      |   | (248,805  | ) |   | 64,209   |   |   | 49,084      |   |             | (91,303    
|                                                 |   |           |   |   |          |   |   |             |   |             |            
|                                                 |   |           |   |   |          |   |   |             |   |             |            
|Net Increase (Decrease) in Cash                  |   | 492,364   |   |   | (319,421 | ) |   | (1,218,332  | ) |             | 495,551    
|Cash Position - Beginning
      of year          |   | 3,187     |   |   | 322,608  |   |   | 1,540,940   |   |             | -          
|Cash Position - End of Year                      | $ | 495,551   |   | $ | 3,187    |   | $ | 322,608     |   | $           | 495,551    
|                                                 |   |           |   |   |          |   |   |             |   |             |            
|                                                 |   |           |   |   |          |   |   |             |   |             |            
|                                                 |   |           |   |   |          |   |   |             |   |             |            
|Schedule of Non-Cash                             |   |           |   |   |          |   |   |             |   |             |            
|Investing and Financing                          |   |           |   |   |          |   |   |             |   |             |            
|Activities                                       |   |           |   |   |          |   |   |             |   |             |            
|Share capital issued
      for debt settlement   | $ | 3,634     |   | $ | -        |   | $ | -           |   | $           | 3,634      
|Share capital issued
      for resource property | $ | -         |   | $ | -        |   | $ | -           |   | $           | 54,003     
|Investments received
      on sale of resource   |   |           |   |   |          |   |   |             |   |             |            
|properties                                       | $ | -         |   | $ | -        |   | $ | -           |   | $           | 171,297    

- See Accompanying Notes -

F-6

---

|PolyMet Mining Corp.                     | Schedule 1
|---------------------------------------- | ----------
|An Exploration Stage Company             |           
|Consolidated Schedule of Pre-Feasibility |           
|Exploration Costs                        |           
|For the Years Ended 31 January           |           
|U.S. Funds                               |           

|                            |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   | Cumulative |  
|--------------------------- | - | --------- |  | - | -------- |  | - | ------ |  | - | ------- |  | - | ------- |  | - | ---------- | -
|                            |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   | From       |  
|                            |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   | Inception  |  
|                            |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   | (4 March   |  
|                            |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   | 1981)      |  
|                            |   | NorthMet  |  |   | Marathon |  |   |        |  |   |         |  |   |         |  |   | Through    |  
|                            |   | Minnesota |  |   | Ontario  |  |   |        |  |   |         |  |   |         |  |   | 31 January |  
|                            |   | U.S.A.    |  |   | Canada   |  |   | 2004   |  |   | 2003    |  |   | 2002    |  |   | 2004       |  
|Direct                      |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|Amortization                | $ | -         |  | $ | -        |  | $ | -      |  | $ | 715     |  | $ | 1,716   |  | $ | 10,408     |  
|Camp and general            |   | 4,750     |  |   | -        |  |   | 4,750  |  |   | 6,745   |  |   | 64,569  |  |   | 795,176    |  
|Cost recovery               |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | -       |  |   | (295,607   | )
|Drilling                    |   | -         |  |   | -        |  |   | -      |  |   | 20,726  |  |   | 80,123  |  |   | 2,125,352  |  
|Environmental               |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | 2,172   |  |   | 394,144    |  
|Field transportation        |   | -         |  |   | -        |  |   | -      |  |   | 3,963   |  |   | 2,300   |  |   | 573,658    |  
|Geological and              |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|geophysical                 |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | 49,310  |  |   | 1,783,331  |  
|Government grants           |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | -       |  |   | (111,961   | )
|Land lease, taxes
      and |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|licenses                    |   | -         |  |   | 1,154    |  |   | 1,154  |  |   | 1,851   |  |   | 2,884   |  |   | 387,503    |  
|Metallurgical               |   | 10,712    |  |   | -        |  |   | 10,712 |  |   | 1,545   |  |   | 81,195  |  |   | 1,741,214  |  
|Mine planning               |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | -       |  |   | 203,720    |  
|Staking and periodic        |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|option
      payments       |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|-
      Cash                |   | 75,000    |  |   | -        |  |   | 75,000 |  |   | 76,773  |  |   | 95,361  |  |   | 1,075,404  |  
|-
      Shares              |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | -       |  |   | 54,003     |  
|Roadwork                    |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | -       |  |   | 112,975    |  
|Sampling, survey
      and  |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|studies                     |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | 226,532 |  |   | 1,145,059  |  
|                            |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|Total Costs for the         |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|Year                        |   | 90,462    |  |   | 1,154    |  |   | 91,616 |  |   | 112,318 |  |   | 606,162 |  |   | 9,994,379  |  
|Option Payments and         |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|Sales Proceeds              |   | -         |  |   | -        |  |   | -      |  |   | -       |  |   | -       |  |   | (973,837   | )
|                            |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   |            |  
|Net Costs for the Year      | $ | 90,462    |  | $ | 1,154    |  | $ | 91,616 |  | $ | 112,318 |  | $ | 606,162 |  | $ | 9,020,542  |  

- See Accompanying Notes -

F-7

---

PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004U.S. Funds

|1. | Continued Operations
      These consolidated financial statements have been prepared
        on the basis of accounting principles applicable to a going concern,
        which assumes that the Company will continue in operation for the foreseeable
        future and will be able to realize its assets and discharge its liabilities
        in the normal course of operations.
      The Company has incurred significant operating losses
        over the past several fiscal years, has cumulative net losses since inception
        of $14,361,251, has significant expenditure requirements to continue its
        exploration and development activities on the NorthMet property and has
        significant cash requirements to complete its option agreement on the
        Cleveland Cliffs property, plant and equipment.
      These consolidated financial statements do not reflect
        adjustments that would be necessary if the going concern assumption were
        not appropriate because management believes that the actions already taken
        or planned, will mitigate the adverse conditions and events which raise
        doubts about the validity of the going concern assumption used in preparing
        these consolidated financial statements.
      If the going concern assumption were not appropriate
        for these consolidated financial statements, then adjustments would be
        necessary to the carrying value of the assets and liabilities, the reported
        revenue and expenses and the balance sheet classifications used.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Significant Accounting Policies
|-- | -------------------------------
|   |                                
|   | a)                             

| | b) | Mineral Operations
      The Company is in the process of exploring its mineral
        properties and has not yet determined whether these properties contain
        ore reserves that are economically recoverable.
      Exploration expenses incurred prior to determination
        of the feasibility of mining operation, periodic option payments and administrative
        expenses are expenses are expended as incurred. Mineral property acquisition
        costs and exploration and development expenditures incurred subsequent
        to the determination of the feasibility of mining operation are deferred
        until the property is placed into production, sold, allowed to lapse or
        abandoned. Acquisition costs include cash and fair market value of common
        shares. These capitalized costs will be amortized over the estimated life
        of the property following commencement of commercial production or written
        off if the property is sold, allowed to lapse or abandoned or when an
        impairment of values has occurred.
      Ownership in mineral interests involves certain inherent
        risks due to the difficulties of determining the validity of certain claims
        as well as the potential for problems arising from the frequently ambiguous
        conveyance history characteristic of many mineral interests. The Company
        has investigated ownership of its mineral interests and, to the best of
        its knowledge, ownership of its interests are in good standing.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-8

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PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|2. | Significant Accounting
        Policies - Continued
|-- | ---------------------------------------------------
|   |                                                    
|   | c)                                                 
|   |                                                    
|   | d)                                                 
|   |                                                    
|   | e)                                                 
|   |                                                    
|   | f)                                                 
|   |                                                    
|   | g)                                                 

F-9

---

PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|2. | Significant Accounting
        Policies - Continued
|-- | ---------------------------------------------------
|   |                                                    
|   | h)                                                 
|   |                                                    
|   | i)                                                 

| |  | i)  | The proceeds from the exercise of stock options, warrants
        and escrow shares are recorded as share capital in the amount for which
        the option, warrant or escrow share enabled the holder to purchase a share
        in the Company.                         
| |  | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |     |                                                                                                                                                                                                                                                                              
| |  | ii) | Share capital issued for non-monetary consideration is recorded at an
      amount based on fair market value reduced by an estimate of transaction
      costs normally incurred when issuing shares for cash, as determined by the
      board of directors of the Company.

| | j) | Income Taxes
      Income taxes are calculated using the asset and liability
        method. Temporary differences arising from the difference between the
        tax basis of an asset or liability and its carrying amount on the balance
        sheet are used to calculate future income tax liabilities or assets. Future
        income tax liabilities or assets are calculated using tax rates anticipated
        to apply in the periods that the temporary differences are expected to
        reverse. Temporary differences arising on acquisitions result in future
        income tax liabilities or assets. The benefits of losses available for
        carry-forward to future years for tax purposes are recognized to the extent
        that realization of such benefits is more likely than not.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | k) | Stock-Based Compensation  Change in Accounting
        Policy
      The Company adopted the recommendations of CICA Handbook
        Section 3870, Stock-Based Compensation and Other Stock-Based Payments,
        effective for all awards granted on or after 1 February 2003. This established
        standards for the recognition, measurement and disclosure of stock-based
        compensation and other stock-based payments made in exchange for goods
        and services.
      As encouraged by CICA Handbook Section 3870, the Company
        has enacted prospectively early adoption of the fair value based method
        of accounting for awards issued to employees for the fiscal year beginning
        1 February 2003.
      The new standard requires that all stock-based awards
        made to employees and non-employees be measured and recognized using a
        fair value based method. In prior years, stock-based compensation expense
        was only recognized when stock-based compensation awards were made to
        non-employees, while pro-forma disclosure was acceptable for awards made
        to employees.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-10

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PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|2. | Significant Accounting Policies -
        Continued
|-- | ---------------------------------------------------
|   |                                                    
|   | l)                                                 

|3. | Fair Value of Financial Instruments
      The carrying value of cash, accounts receivable, accounts
        payable and investments (Note 4)approximates the fair value of
        these financial instruments due to their short-term maturity or capacity
        of prompt liquidation.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Investments
      Details are as follows:
|-- | -----------------------------------------

Market
      
      
      2004
      
      
      2003ValueAmerican Platinum Inc.
      $
      -
      
      $
      1
      
      $
      1Aloak Corp.
      
      25
      
      
      252
      
      
      252$
      25
      
      $
      253
      
      $
      253


|   | These investments represent minority interests of less than 10% in the
      respective companies.    
|-- | ------------------------------------------------------------------------------------------------------
|   |                                                                                                       
|5. | Resource Property Agreements
      The Companys material resource property agreements are as follows:

| | a) | NorthMet, Minnesota, U.S.A. - Lease
      By an agreement dated 4 January 1989 and a subsequent
        amendment, the Company entered into a lease agreement with USX Corporation
        (USX) on certain lands in St. Louis County, Minnesota. The
        term of the lease is 20 years and calls for total annual lease payments
        of $1,475,000. All lease payments have been paid or accrued to 31 January
        2004. The lessor has indicated that the Company does not have the required
        appropriate insurance coverage pursuant to the terms of the agreement.
        The Company intends to acquire appropriate insurance coverage as it re-activates
        field programs and feasibility study work in the 2005 fiscal year. The
        agreement requires future annual lease payments of $75,000 by 4 January
        2005 and $150,000 from 4 January 2006 to 2009.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-11

---

PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|5. | Resource Property Agreements - Continued
|-- | ----------------------------------------
|   |                                         
|   | a)                                      
|   |                                         
|   | b)                                      

F-12

---

PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|5. | Resource Property Agreements - Continued
|-- | ----------------------------------------
|   |                                         
|   | c)                                      

Marathon
      
      MarathonLeases
      
      Land
      
      TotalProceeds
      $
      219,925
      
      $
      30,075
      
      $
      250,000Cost
      
      -
      
      
      (38,582
      )
      
      (38,582
      )Gain (loss) on sale
      $
      219,925
      
      $
      (8,507
      )
      $
      211,418


|6. | Property, Plant and Equipment
      Details are as follows:
|-- | -----------------------------------------------------------

2004
      
      2003Accumulated
      
      
      Net Book
      
      
      Net BookCost
      
      
      Amortization
      
      
      Value
      
      
      ValueCleveland Cliffs option (Note 5 b)
      $
      500,000
      
      $
      -
      
      $
      500,000
      
      $
      -Land
      
      -
      
      
      -
      
      
      -
      
      
      38,582Furniture and equipment
      
      2,061
      
      
      275
      
      
      1,786
      
      
      1,017Computers
      
      -
      
      
      -
      
      
      -
      
      
      2,372$
      502,061
      
      $
      275
      
      $
      501,786
      
      $
      41,971


|7. | Share Capital
|-- | -------------
|   |              
|   | a)           
|   |              
|   | b)           

F-13

---

PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|7. | Share Capital - Continued
|-- | -------------------------
|   |                          
|   |                          

2004
      
      2003Options
      
      OptionsOutstanding - Beginning of year
      1,851,052
      
      1,858,552Granted
      2,591,500
      
      550,000Re-priced and extended expiry
      541,052
      
      -Cancelled options for re-pricingand extension
      (541,052
      )
      -Forfeited or expired
      (810,000
      )
      (557,500
      )Exercised
      (89,600
      )
      -Outstanding - End of year
      3,542,952
      
      1,851,052


| | As at 31 January 2004, the following director, former director and employee
      share purchase options were outstanding:
| | --------------------------------------------------------------------------------------------------------------------------

PriorExercise
      
      ExercisePrice
      
      PriceExpiry Date
      (CDN)
      
      (CDN)
      
      Number17 March 2007
      $ 0.25
      
      $ 0.10
      
      441,05217 March 2007
      $ 0.46
      
      $ 0.10
      
      100,0007 January 2008
      -
      
      $ 0.08
      
      410,40018 July 2008
      -
      
      $ 0.10
      
      1,641,5003 October 2008
      -
      
      $ 0.13
      
      950,0003,542,952


| |    | As at 31 January 2004 all options had vested and were exercisable,
      except for the 950,000 options granted during the year at CDN $0.13 per
      share. These options may not be exercised until approved by the shareholders
      at the next annual general meeting. The weighted average exercise price
      per option was CDN $0.11 per share and the weighted average remaining contractual
      life of the options was 4.26 years.                                                                                                                                                                                           
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | c) | Stock-Based Compensation
      During the year ended 31 January 2004, the Company re-priced
        541,052 options to CDN $0.10 and issued 1,641,500 options to directors,
        officers, and employees with an exercise price of CDN $0.10 per option.
        The fair value of stock option compensation is $55,048, which has been
        recorded in the accounts of the Company. The weighted average grant-date
        fair value of options granted is CDN $0.05. This value is estimated at
        the date of the grant using the Black-Scholes Option Pricing Model with
        the following weighted average assumptions:

Risk-free interest rate
      2.68%Expected dividend yield
      NilExpected stock price volatility
      103%Expected option life in years
      4 to 5


F-14

---

PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|7. | Share Capital - Continued
|-- | -------------------------
|   |                          
|   |                          

2003As Reported
      $
      471,679Pro forma
      $
      489,992Loss Per ShareAs Reported
      $
      0.01Pro forma
      $
      0.01


| | The fair value of each option granted was estimated on the date of grant
      using the Black-Scholes option-pricing model with the following weighted
      average assumptions:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | 2003   
|------------------------------- | -------
|Risk-free interest rate         | 4.08%  
|Expected dividend yield         | NIL    
|Expected stock price volatility | 93%    
|Expected life of options        | 5 years

| |    | The weighted average grant-date fair value of options granted in the
        prior year was CDN $0.05 per option.
| | -- | -----------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                  
| | d) | Details of stock purchase warrant activity is as follows:                                                        

**2004**
      
      2003**Warrants**
      
      WarrantsOutstanding - Beginning of year
      **3,428,923**
      
      3,428,923Issued - April 2003 private placement
      **1,904,760**
      
      -- July 2003 private placement
      **1,373,446**
      
      -- January 2004 private placement
      **3,498,333**
      
      -Exercised - April 2003 private placement
      **(486,610**
      )
      -Outstanding - End of year
      **9,718,852**
      
      3,428,923


| | As at 31 January 2004, the following share purchase warrants were outstanding:
| | ------------------------------------------------------------------------------

Per CommonShare
      
      
      
      CommonExercise Price
      
      Warrants
      
      ShareExpiry Date
      
      (CDN)
      
      Outstanding
      
      Entitlement16 November 2006
      $
      0.20
      
      3,428,923
      
      3,428,9238 May 2004
      $
      0.10
      
      1,418,150
      
      1,418,15024 September 2005 (i)
      $
      0.15
      
      1,373,446
      
      1,373,4462 February 2006 (ii)
      $
      0.25
      
      3,498,333
      
      3,498,3339,718,852
      
      9,718,852


(i)
      The exercise price in the first year
          to 24 September 2004 at $0.15 per common share and in the second year
          to 24 September 2005 at $0.17 per common share.(ii)
      The exercise price is $0.25 per share
          and the expiry date is 2 February 2006, provided that should the Companys
          shares trade on the TSX Venture Exchange at over CDN$0.50 per share
          for over 25 consecutive trading days, the warrants will terminate 30
          days thereafter.


| | e) | Shareholder Rights Plan
      Effective 4 December 2003, the Company adopted a Shareholder
        Rights Plan (Rights Plan), subject to the ratification by
        the Company's shareholders at a meeting to be held within six months of
        the date of the Rights Plan. Under the Rights Plan, the Company has issued
        one right for no consideration in respect of each outstanding common share
        of the Company to all holders of record of common shares on 4 December
        2003. All common shares issued by the Company during the term of the Rights
        Plan will have one right represented by the certificates representing
        the common shares of the Company. The term of the Rights Plan is 10 years,
        unless the rights are earlier redeemed or exchanged. The Rights issued
        under the Rights Plan become exercisable only if a party acquires 20%
        or more of the Company's common shares without complying with the Rights
        Plan or without the approval of the Board of Directors of the Company.
      Each Right entitles the registered holder thereof to
        purchase from the Company on the occurrence of certain events, one common
        share of the Company at the price of CDN$50 per share, subject to adjustment
        (the Exercise Price). However, if a Flip-in Event (as defined
        in the Rights Plan) occurs, each Right would then entitle the registered
        holder to receive, upon payment of the Exercise Price, that number of
        common shares that have a market value at the date of that occurrence
        equal to twice the Exercise Price. The Rights are not exercisable until
        the Separation Time as defined in the Rights Plan.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-15

---

PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|8. | Related Party Transactions
      In addition to transactions disclosed elsewhere in these
        financial statements, the Company has conducted transactions with officers,
        directors and persons or companies related to directors as follows:
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                          
|   | b)                                                                                                                                                                                                                                                       

2004
      
      2003
      
      
      2002Administration fees andwages
      $
      52,388
      
      $
      103,288
      
      $
      188,710


|   | b)           | As at 31 January 2004, accounts payable included $NIL (2003 - $18,750)
      owed to a director.                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | c)           | Issued 2,143,906 shares and 1,881,476 warrants to
        related parties on private placements during the year ended 31 January
        2004 for cash in the amount of $99,925.                                                                                                                                                                                                                                                                                                   
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|9. | Income Taxes
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | a)           | The Company has approximately CDN $3,769,000 of
        resource related expenditures in Canada that may be carried forward indefinitely
        and used to reduce prescribed taxable income in future years. The Companys
        U.S. subsidiary has approximately $5,416,000 of resource related expenditures,
        which may be used to reduce prescribed taxable income in future years.
        The benefit of these expenditures has not been recorded in the accounts.
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | b)           | The Company and its U.S. subsidiary also have tax losses
        carried forward available to reduce future taxable income. The benefit
        of these losses has not been recorded in the accounts and expire as follows:                                                                                                                                                                                                                                                       

ParentCompany
      
      U.S.Amount
      
      SubsidiaryYear
      
      (CDN)
      
      Amount2005
      $
      -
      
      $
      8,7002006
      
      -
      
      
      14,5002007
      
      728,700
      
      
      17,3002008
      
      481,100
      
      
      20,1002009
      
      296,600
      
      
      23,1002010
      
      151,300
      
      
      26,5002011
      
      324,000
      
      
      27,9002012
      
      -
      
      
      30,0002018
      
      -
      
      
      217,6002019
      
      -
      
      
      392,5002020
      
      -
      
      
      496,7002021
      
      -
      
      
      414,4002022
      
      -
      
      
      367,4002023
      
      -
      
      
      247,4002024
      
      -
      
      
      124,500$
      1,981,700
      
      $
      2,428,600


F-16

---

PolyMet Mining Corp. An Exploration Stage Company Notes to Consolidated Financial Statements 31January 2004 U.S. Funds

|10. | Differences Between Canadian
        and United States Generally Accepted Accounting Principles
      These consolidated financial statements are prepared
        in accordance with accounting principles generally accepted in Canada.
        The U.S. Securities and Exchange Commission requires that financial statements
        of foreign companies contain a reconciliation presenting the statements
        on the basis of accounting principles generally accepted in the U.S. Any
        differences in accounting principles as they pertain to the accompanying
        consolidated financial statements are not material except as follows:
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| | The effects of the differences in accounting principles on investments,
      net loss and comprehensive loss are as follows:
| | -----------------------------------------------------------------------------------------------------------------------------

2004
      
      2003
      
      2002Investments - Canadian basis
      $
      253
      
      $
      253
      
      $
      21,878Adjustment to market
      
      (228
      )
      
      (228
      )
      
      (2,545
      )Investments - U.S. basis
      $
      25
      
      $
      25
      
      $
      19,3332004
      
      
      2003
      
      
      2002Contra-equity account for unrealized gains(losses) on investments- Canadian basis
      $
      -
      
      $
      -
      
      $
      -Unrealized holding gain (loss) on investments- Prior years
      
      (228
      )
      
      (2,545
      )
      
      68,153- Current year
      
      -
      
      
      2,317
      
      
      (70,698
      )Contra-equity account for unrealized gains(losses) on investments - U.S. basis
      $
      (228
      )
      $
      (228
      )
      $
      (2,545
      )Net loss - Canadian and U.S. Basis
      $
      146,800
      
      $
      471,679
      
      $
      1,155,762Adjustment of portfolio investments to market
      
      -
      
      
      (2,317
      )
      
      70,698Net loss and comprehensive loss - U.S. basis
      $
      146,800
      
      $
      469,362
      
      $
      1,226,460


F-17

---

|11. | Segmented Information
      The Company is engaged in the mineral exploration industry
        and conducts its exploration programs in Canada and the U.S. Segmented
        information on a geographic basis is as follows:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2004
      Canada
      
      U.S.
      
      ConsolidatedSegment operating loss
      $
      22,327
      
      $
      124,473
      
      $
      146,800Identifiable assets
      $
      519,437
      
      $
      505,500
      
      $
      1,024,9372003Segment operating loss
      $
      95,217
      
      $
      376,462
      
      $
      471,679Identifiable assets
      $
      40,001
      
      $
      11,626
      
      $
      51,627


|12. | Subsequent Events
      In addition to items disclosed elsewhere in these financial
        statements, the Company conducted the following transactions after 31
        January 2004:
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                        
|    | a)                                                                                                                                                                                     
|    |                                                                                                                                                                                        
|    | b)                                                                                                                                                                                     
|    |                                                                                                                                                                                        
|    | c)                                                                                                                                                                                     
|    |                                                                                                                                                                                        
|    | d)                                                                                                                                                                                     

F-18

---