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

AMENDED FORM 20-F ANNUAL REPORT
  FISCAL ENDED 2004 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
  V6C 3L2(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**

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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TABLE OF CONTENTS

|ITEM 1.    | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS                             | 3 
|---------- | --------------------------------------------------------------------------------- | --
|           |                                                                                   |   
|ITEM 2.    | OFFER STATISTICS AND EXPECTED TIMETABLE                                           | 3 
|           |                                                                                   |   
|ITEM 3.    | KEY INFORMATION                                                                   | 4 
|           |                                                                                   |   
|ITEM 4.    | INFORMATION ON THE COMPANY                                                        | 7 
|           |                                                                                   |   
|ITEM 5.    | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                      | 14
|           |                                                                                   |   
|ITEM 6.    | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                        | 18
|           |                                                                                   |   
|ITEM 7.    | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                 | 24
|           |                                                                                   |   
|ITEM 8.    | FINANCIAL INFORMATION                                                             | 25
|           |                                                                                   |   
|ITEM 9.    | THE OFFER AND LISTING                                                             | 26
|           |                                                                                   |   
|ITEM 10.   | ADDITIONAL INFORMATION                                                            | 27
|           |                                                                                   |   
|ITEM 11.   | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
      RISK                   | 32
|           |                                                                                   |   
|ITEM 12.   | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                            | 33
|           |                                                                                   |   
|ITEM 13.   | DEFAULT, DIVIDEND ARREARAGES AND DELINQUENCIES                                    | 33
|           |                                                                                   |   
|ITEM 14.   | MATERIAL MODIFICATIONS TO THE RIGHT OF SECURITY
      HOLDERS AND USE OF PROCEEDS | 33
|           |                                                                                   |   
|ITEM 15.   | CONTROLS AND PROCEDURES                                                           | 33
|           |                                                                                   |   
|ITEM 16A.  | AUDIT COMMITTEE FINANCIAL EXPERT                                                  | 34
|           |                                                                                   |   
|ITEM 16B.  | CODE OF ETHICS                                                                    | 34
|           |                                                                                   |   
|ITEM 17.   | FINANCIAL STATEMENTS                                                              | 36
|           |                                                                                   |   
|ITEM 18.   | FINANCIAL STATEMENTS                                                              | 36
|           |                                                                                   |   
|ITEM 19.   | EXHIBITS                                                                          | 36
|           |                                                                                   |   
|SIGNATURES | 59                                                                               

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This Annual Report on Form 20-F contains statements that constitute
  "forward-looking statements" within the meaning of Section 27A of the Securities
  Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange
  Act”). These statements appear in a number of different places in this
  Annual Report and can be identified by words such as "estimates", "projects",
  "expects", "intends", "believes", "plans", or their negatives or other comparable
  words. Such forward-looking statements involve known and unknown risks, uncertainties
  and other factors which may cause our actual results, performance or achievements
  to be materially different from any future results, performance or achievements
  that may expressed or implied by such forward-looking statements. The statements,
  including the statements contained in Item 3D “Risk Factors”, Item
  4B “Business Overview”, Item 5 “Operating and Financial Review
  and Prospects” and Item 11 “Quantitative and Qualitative Disclosures
  About Market Risk”, are inherently subject to a variety of risks and uncertainties
  that could cause actual results, performance or achievements to differ significantly.
  Forward-looking statements include statements regarding the outlook for our
  future operations, plans and timing for our exploration programs, statements
  about future market conditions, supply and demand conditions, forecasts of future
  costs and expenditures, the outcome of legal proceedings, and other expectations,
  intentions and plans that are not historical fact. You are cautioned that any
  such forward-looking statements are not guarantees and may involve risks and
  uncertainties. Our actual results may differ materially from those in the forward-looking
  statements due to risks facing us or due to actual facts differing from the
  assumptions underlying our predictions. Some of these risks and assumptions
  include:

|- | general economic and business conditions, including changes in interest
      rates;                                            
|- | --------------------------------------------------------------------------------------------------------------------------------
|- | prices of natural resources, costs associated with mineral exploration
      and other economic conditions;                     
|- | natural phenomena;                                                                                                              
|- | actions by government authorities, including changes in government regulation;                                                  
|- | uncertainties associated with legal proceedings;                                                                                
|- | changes in the resources market;                                                                                                
|- | future decisions by management in response to changing conditions;                                                              
|- | our ability to execute prospective business plans; and misjudgments in
      the course of preparing forward-looking statements.

We advise you that these cautionary remarks expressly qualify
  in their entirety all forward-looking statements attributable to us or persons
  acting on our behalf. We assume no obligation to update our forward-looking
  statements to reflect actual results, changes in assumptions or changes in other
  factors affecting such statements. You should carefully review the cautionary
  statements and risk factors contained in this and other documents that we file
  from time to time with the Securities and Exchange Commission.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not required

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not required

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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    |   | Year    |   | Year       |   | Year       |   | Year       |  
|---------------------------- | ------- | - | ------- | - | ---------- | - | ---------- | - | ---------- | -
|                             | Ended   |   | Ended   |   | Ended      |   | Ended      |   | Ended      |  
|                             | 1/31/04 |   | 1/31/03 |   | 1/31/02(1) |   | 1/31/01(1) |   | 1/31/00(1) |  
|                             |         |   |         |   | Restated   |   | Restated   |   | 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(2)          | ($147   | ) | ($ 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 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 years ending 31 January 2001 and 2002 by
        $2,680,623 and $606,162 respectively.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Cumulative Restated Net Loss since incorporation has been ($14,361,251).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (3)                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Under US GAAP and SEC regulations, the Company would have expensed all
      mineral property acquisition/exploration costs in the period incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 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-cancelable (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.

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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 | 

Not applicable.

C.           Reason
  for the offer and use of proceeds.

Not applicable.

D.           Risk Factors

An investment in our common shares is highly speculative and
  subject to a number of risks. Only those persons who can bear the risk of the
  entire loss of their investment should participate. An investor should carefully
  consider the risks described below and the other information that we file with
  the Securities and Exchange Commission and with Canadian securities regulators
  before investing in our common shares. The risks described below are not the
  only ones faced. Additional risks that we are aware of or that we currently
  believe are immaterial may become important factors that affect our business.
  If any of the following risks occur, or if others occur, our business, operating
  results and financial condition could be seriously harmed and the investor may
  lose all of their investment.

Exploration and Development

Mineral exploration is a speculative business and involves
  a high degree of risk. There is no known body of commercial ore on the NorthMet
  Project and there is no certainty that the expenditures to be made by us in
  the exploration or completion of a Definitive Feasibility Study or otherwise
  will result in discoveries of commercial quantities of minerals. The exploration
  for and development of mineral deposits involves significant risks, which even
  a combination of careful evaluation, experience and knowledge may not eliminate.
  Although the discovery of an ore body may result in substantial rewards, few
  properties explored are ultimately developed into producing mines. Significant
  expenditures may be required to

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locate and establish ore reserves, to develop metallurgical
  processes and to construct mining and processing facilities at a particular
  site. It is impossible to ensure that the current exploration programs planned
  by PolyMet will result in a profitable commercial mining operation. Significant
  capital investment is required to achieve commercial production from successful
  exploration efforts.

The commercial viability of a mineral deposit is dependent
  upon a number of factors. These include deposit attributes such as size, grade
  and proximity to infrastructure, current and future metal prices (which can
  be cyclical), and government regulations, including those relating to prices,
  taxes, royalties, land tenure, land use, importing and exporting of minerals
  and necessary supplies and environmental protection. The complete effect of
  these factors, either alone or in combination, cannot be entirely predicted,
  and their impact may result in PolyMet not receiving an adequate return on invested
  capital.

The figures for mineral resources stated in this Annual Report
  are estimates and no assurance can be given that the anticipated tonnages and
  grades will be achieved or that the indicated level of recovery will be realized.
  Market fluctuations and the prices of metals may render resources uneconomic.
  Moreover, short-term operating factors relating to the mineral deposits, such
  as the need for orderly development of the deposits or the processing of new
  or different grades of ore, may cause a mining operation to be unprofitable
  in any particular accounting period.

There is no assurance that any of our mineral resources
  will ever be classified as reserves under the disclosure standards of the Securities
  and Exchange Commission.

Item 4.D of this Annual Report discusses our mineral resources
  in accordance with Canadian National Instrument 43-101. Resources are classified
  as “measured resources”, indicated resources” and “inferred
  resources” under NI 43-101. However, U.S. investors are cautioned that
  the United States Securities and Exchange Commission does not recognize these
  resource classifications. There is no assurance that any of our mineral resources
  will be converted into reserves under the disclosure standards of the United
  States Securities and Exchange Commission.

Conflicts of InterestCertain 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.

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.

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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.

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 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 definitive 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 the results of which determined a capital
      cost reduction could be available by simplifying the on-site hydrometallurgical
      process and the inclusion of the Cliffs-Erie plant and infrastructure.
- In the event the acquisition of the Cliffs-Erie facilities
      is completed, management is of the belief this could 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
      permit applications required to permit the project in light of existing
      permits in place for the Cliffs-Erie facility and in the event of a favourable
      definitive feasibility study this would also include permits for a new open
      pit at NorthMet.
- 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.

---

In accordance with the Company’s primary objective of
  developing its NorthMet project, 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.

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

Cautionary Note to U.S. Investors

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. For clarification, we have no properties that contain “reserves”
  as defined by the SEC and we have provided the following property information
  in accordance with National Instrument 43-101.

(a)           History

The NorthMet Project was discovered by US Steel Corp (“USX”)
  in 1969. Originally, it was thought to be a high-grade, underground copper-nickel
  resource. Drilling in the 1970’s demonstrated that it was in fact a high
  tonnage, low grade deposit, amenable to open pit mining. The grade improved
  at depth. The inability to produce separate clean nickel or copper concentrates
  led to further process evaluation and development. At that time there was no
  recognition of any contained PGM’s.

The Minnesota Department of Natural Resources (“DNR”)
  subsequently discovered that PGM’s were associated with the nickel and
  copper in the resource. In 1989, Fleck Resources (“Fleck”) acquired
  a 20-year renewable mining lease over the property from USX and commenced an
  investigation into the potential for mining and recovering copper, nickel and
  PGM’s. Fleck re-assayed pulps and rejects from previous drilling to obtain
  data on PGM’s. The encouraging potential to produce extra revenue attracted
  joint venture partners (Nerco and Argosy Mining) who assisted in identifying
  and quantifying the PGM values. However these companies were not able to develop
  a metallurgical process that could economically produce separate acceptable
  concentrates for sale to a smelter, or economically extract the contained metals
  from a bulk concentrate.

In the mid-90’s, Fleck began investigating the use of
  hydrometallurgical processes, including bio-leaching and pressure oxidation,
  to determine the benefit to the Project. Fleck Resources changed its name to
  PolyMet Mining Corporation in 1998 and focused on a hydrometallurgical extractive
  technology. This led to the development of the PlatSolTM Process in 1998. The
  operating conditions of the PlatSolTM Process are such that the copper, nickel,
  cobalt and precious metals are all placed in solution in a single operation.
  Since the initial PlatSolTM testwork, the process has evolved and testwork on
  concentrates other deposits around the world led to improved recoveries of PGMs
  from the 92% level to 97%.

---

In July 2000, PolyMet entered into a joint venture arrangement
  with North Limited (“North”), a major Australian mining company,
  to progress the NorthMet Project to commercial production. Under the joint venture
  arrangement, North had the opportunity to ultimately earn an 87.5% interest
  in the PolyMet Project through funding and production of a Feasibility Study
  and funding 100% of the total capital costs to develop the project.

In August 2000 Rio Tinto Limited (“Rio Tinto”)
  completed an on-market takeover of North. Subsequently, Rio Tinto decided not
  to proceed with the NorthMet project and PolyMet exercised its 30-day pre-emptive
  right, under a “change of control” clause, to terminate the joint
  venture arrangement. Consequently, PolyMet has regained a 100% interest in the
  NorthMet Project.

Following completion of the metallurgical pilot plant work
  in November 2000, PolyMet commissioned a Pre-Feasibility Study on the project
  in November 2000, based on the PlatSol process. This study was completed in
  April 2001. The Pre-Feasibility Study was for a 50,000tpd operation. The economics
  of this project were found to be unacceptably low and required a high up front
  capital expenditure. No further work was done until March 2003, when new management
  took over the company and commenced a detailed review of the project.

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.




(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.
  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.

---

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

(e)            Permitting
  and 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.

Two winter wildlife studies, wetland and plant species evaluations,
  and preliminary geohydrology and rock geochemistry studies were completed in
  1999, 2000 and 2001. These environmental studies are important to future permitting
  efforts.

Based on the Pre-feasibility Study, permitting of the NorthMet
  project will require substantial investment of both time and funds. The estimated
  permitting time frame is 3 to 3.5 years at an estimated cost of $6

---

to $6.5 million. The timetable for the NorthMet project
  to move from pre-feasibility through permitting and construction to full operation
  is estimated to be six years. This estimate incorporates the 3 to 3.5 years
  for permitting and 1.5 years for plant construction.

As both EIS and permitting of the project will be subject
  to the arrangements of a land swap, PolyMet believes that this land swap with
  US Forest Service should be completed in conjunction with the feasibility study.
  PolyMet anticipates that negotiations with US Forest Service take approximately
  2 years from the commencement of a feasibility study and will cost approximately
  $3.5 million to complete. The Company has no assurance with land swap will
  be completed and that it will do so in this time frame or cost.

Subsequent to the Company’s option with Cliffs-Erie,
  in the event the Company acquires the facilities management is of the belief
  the permitting requirements will be reduced substantially as it is the Company’s
  intention to utilize permits already in place for the Cliffs facility. There
  is no assurance at this time the Company will meet its option requirements and
  therefore use of permits currently in place with Cliffs is speculative.

(f)           
  History of 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 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.

(i)            Drilling

The NorthMet Project is a large, low-grade,
  polymetallic disseminated magmatic sulfide deposit containing copper, nickel,
  palladium, platinum, cobalt, gold and silver.

The NorthMet Project has been extensively
  drilled. To date, 201 holes have been drilled over a 4.5 km open ended strike
  length of the area for a total drilled length of 55,800 metres.

Cautionary Note to United States
  Investors Concerning Estimates of Measured, Indicated and Inferred Resources

This section uses the terms 'measured
  resources’, 'indicated resources’ and 'inferred resources’.
  PolyMet advises the United States investors that while these terms are recognized
  and required by Canadian regulations (under National Instrument 43-101 Standards
  of Disclosure for Mineral Projects), the United States Securities and Exchange
  Commission does not recognize them.United States investors are cautioned
  not to assume that any part or all of the mineral deposits in these categories
  will ever be converted to reserves. In addition, 'inferred resources’
  have a great amount of uncertainty as to their existence and economic and legal
  feasibility. It cannot be assumed that all or any part of an Inferred Mineral
  Resource will ever be upgraded to a higher category. Under Canadian Rules, estimates
  of Inferred Mineral Resources may not form the basis of Feasibility or Pre-Feasibility
  Studies, or economic studies except for a Preliminary Assessment as defined
  under 43-101. United States investors are cautioned not

---

to assume that part or all of an
  inferred resource exists, or is economically or legally mineable.

The resource estimates included in the
  Pre-feasibility Study of April 2001 and prepared by Independent Mining Consultants
  Inc. of Tucson (“IMC”) are shown in the table below.

|Geological Resource
      Above
      $7.42
      cuttoff | Ktonnes Above Cutoff | %     | Average Grades
|--------------------------------------------------------- | -------------------- | ----- | --------------
|Of                                                        | NSR                  | CuEq  | Cu            
|Total                                                     | US$/t                | %     | %             
|Measured                                                  | 201,653              | 46.8% | 11.97         
|Indicated                                                 | 133,853              | 31.0% | 12.41         
|Inferred                                                  | 95,653               | 22.2% | 12.74         
|Total                                                     | 431,159              |       | 12.27         

The drilling to date has been adequate to complete the pre-feasibility
  level work (conceptual) required for mine planning. Appendix 6 indicates the
  definition for pre-feasibility requirements. It is proposed to complete further
  in-fill drilling, sufficient to establish a mineable pit reserve, as part of
  a feasibility study.

(i)            Future
  Exploration

The very large size of the NorthMet Project, both in terms
  of resource size and capital cost estimates, requires PolyMet to seek some form
  of joint venture agreement with a large, financially sound mining company. These
  efforts are ongoing.

The next step necessary to attract a partner in this project
  is to re-evaluate the project using parameters that coincide more closely with
  the mining economy and metal prices as they exist currently. Given the results
  from the initial pre-feasibility study, the project should now be optimized
  to reflect better economics, along with reduced capital and operating costs.

After completion of a more optimized project size and scope,
  a final feasibility study should be prepared. The funding requirements to complete
  this final feasibility study will depend on the type of project resulting from
  the optimization study. It is estimated that this final feasibility study, including
  permitting, environmental studies, land acquisitions, etc., will cost less than
  US$20 million.

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 |  
| | Cost                |   | -        |  |   | (38,582  | ) |   | (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

As at January 31, 2004, the Company operated in one segment,
  the exploration of the base and precious metals at its NorthMet Project in Minnesota,
  United States. Other reconciling adjustments comprise general and administrative
  costs, stock based compensation expense, financing expenses, foreign exchange
  interest income, assets, purchase of property, plant and equipment and amortization
  reported by the Canadian head office.

|2004                                    |   | NorthMet   |  |   | Other       |  |   |             
|--------------------------------------- | - | ---------- |  | - | ----------- |  | - | ------------
|                                        |   | Project in |  |   | reconciling |  |   |             
|                                        |   | U.S.       |  |   | adjustments |  |   | Consolidated
|                                        |   |            |  |   |             |  |   |             
|Segment operating loss                  | $ | 124,473    |  | $ | 22,327      |  | $ | 146,800     
|Purchase property, plant and            |   |            |  |   |             |  |   |             
|equipment                               | $ | 500,000    |  | $ | 2,061       |  | $ | 502,061     
|                                        |   |            |  |   |             |  |   |             
|Proceeds on sale of resource property   | $ | —          |  | $ | 219,925     |  | $ | 219,925     
|Proceeds on disposal of property, plant |   |            |  |   |             |  |   |             
|and equipment                           | $ | 33,331     |  | $ | —           |  | $ | 33,331      
|Identifiable assets                     | $ | 505,500    |  | $ | 519,437     |  | $ | 1,024,937   
|                                        |   |            |  |   |             |  |   |             
|2003                                    |   |            |  |   |             |  |   |             
|Segment operating loss                  | $ | 376,462    |  | $ | 95,217      |  | $ | 471,679     
|Purchase property, plant and            |   |            |  |   |             |  | $ |             
|equipment                               | $ | —          |  | $ | —           |  |   | —           
|Proceeds on disposal of property, plant |   |            |  |   |             |  |   |             
|and equipment                           | $ | 48,301     |  | $ | —           |  | $ | 48,301      
|Identifiable assets                     | $ | 11,626     |  | $ | 40,001      |  | $ | 51,627      

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 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.

Planned Exploration Activities

The Company’s current available cash and working capital
  will be adequate to maintain its property lease summarized in Item 4. of this
  Annual Report and administrative costs for the next 12 months. In order to advance
  the NorthMet project further additional funding will be required and there are
  no assurances the Company will be able to complete the necessary financings
  or joint venture in order to carry out any further work. See Risk Factors.

---

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;
    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.

Requirements of Financing

Development of the NorthMet project to feasibility will require
  additional equity and possible debt financing both which involve significant
  risks some of which have been referred to previously in this document. As we
  are in the exploration stage, we do not have revenues from operations and, except
  for income from cash and cash equivalents, we rely on equity funding for our
  continuing financial liquidity. We do not have any arrangements or commitments
  in place for any additional financing.

---

(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”).

(e)          Off-Balance Sheet
  Arrangements

Not applicable.

(f)          Tabular Disclosure
  of Contractual Obligations

|                        | Payments due Period
|----------------------- | -------------------
|                        | Less than 1 Year   
|Lease
      Obligations | —                  
|                        |                    

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 agreement requires
  future annual lease payments of $75,000 by 4 January 2005 and $150,000
  from 4 January 2006 to 2009.

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
  $75,000 ($150,000 after January 2005) annual lease payments on each
  successive anniversary date.

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 received by the Company.
  The Company’s recovery of the advance royalty payments is subject to the
  lessor receiving an amount not less than the amount of the annual lease payment
  due for that year. Subsequent to the year, USX assigned the lease to RGGS Land
  & Minerals Ltd., L.P.

(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.

|Name and municipality of residence and position | Business Experience for the past five years                                                                                                                                                                                                                  | Previous service as a director or officer
|----------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------
|William F. Murray, P.Eng(2)
      Canada        | Mining Executive, director and officer of a private
      engineering and management firm, director of several public resource companies;
      Director, President and CEO of the Company wherein 85% of was dedicated
      to the affairs of the Company. | March 17, 2003                           
|George Molyviatis(1)(3), Geneva                 | Financier, Banker, President of an international
      lumber company; Director of the Company                                                                                                                                                               | March 17, 2003                           
|Ian Forrest(1)(3),Geneva                        | Chartered Accountant, director of several public
      resource companies director of the Company                                                                                                                                                            | Oct. 3, 2003                             
|Dr. David Dreisinger(**1)****(2) (3)**Canada    | Ph.D., a professor of the Faculty of Applied
      Science, Department of Metal and Materials Engineering at University
      of British Columbia. Director of the Company                                                                                   | Oct. 3, 2003                             
|Terese J. Gieselman Canada                      | Mining Executive, director and officer of private
      consulting management firm, officer of several public resource companies;
      Chief Financial Officer of the Company wherein 50% of her time was dedicated
      to the affairs of the Company.    | October 3, 2003                          

|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.

|Name & Principal Position                    | Year               | Annual Compensation                | Long Term Compensation               
|-------------------------------------------- | ------------------ | ---------------------------------- | -------------------------------------
|Salary ($)                                   | Bonus ($)          | Other ($)                          | Awards                               
|                                             |                    |                                    | Securities Under   Option  
      (#)
|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                            

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”) Grants

During the Most Recently Completed Financial Year

|Name           | Securities Under Option/SARs Granted (#) | % of Total Options/SARs Granted to Employees in Financial Year | Exercise or Base Price ($/Security) | Market Value of Securities Underlying Options/SARs on the Date of Grant ($/Security) | Expiration Date
|-------------- | ---------------------------------------- | -------------------------------------------------------------- | ----------------------------------- | ------------------------------------------------------------------------------------ | ---------------
|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

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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 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,
  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 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

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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 a consultant for the majority of the administrative and all financial/accounting
  activities, during this relatively dormant period. 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 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 |  | $ | 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.

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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.

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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.

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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/By-Laws.

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.

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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 nonresident
  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.

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 nonresident
  holder did not deal at arm’s length, or the non-resident 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 non-resident 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

Not applicable

---

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

I.           Subsidiary
  Information

Not Applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
  MARKET RISK

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
  HOLDERS AND USE OFPROCEEDS

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

An evaluation was performed under the supervision and with
  the participation of the Company’s management, including the chief executive
  officer and chief financial officer, of the effectiveness of the design and
  operation of the Company’s disclosure controls and procedures (as defined
  in Rule 13a-15 of the Exchange Act, as amended) as of the end of the period
  covered by the Annual Report on 20-F. Based on that evaluation, the Company’s
  management, including the chief executive officer and chief financial officer,
  concluded that the Company’s disclosure controls and procedures were effective
  as of the end of the period covered by this Annual Report to provide reasonable
  assurance that information required to be disclosed by the Company in the reports
  that it files or submits under the Exchange Act, as amended, is recorded, processed,
  summarized and reported with the time period specified in the U.S. Securities
  and Exchange Commission rules and forms.

---

B.           Changes
  in Internal Controls

The Company’s management which includes the chief executive
  officer and chief financial officer, identified no change in the Company’s
  internal control over financial reporting that occurred during the Company’s
  fiscal year ended January 31, 2004, and that has materially affected, or is
  reasonably likely to materially affect, the Company’s internal control
  over financial reporting.

The term “internal control over financial reporting”
  is defined as a process designed by, or under the supervision of, the registrant's
  principal executive and principal financial officers, or persons performing
  similar functions, and effected by the registrant's board of directors, management
  and other personnel, to provide reasonable assurance regarding the reliability
  of financial reporting and the preparation of financial statements for external
  purposes in accordance with generally accepted accounting principles and includes
  those policies and procedures that:

| | (1) | Pertain to the maintenance of records that in reasonable
        detail accurately and fairly reflect the transactions and dispositions
        of the assets of the registrant;                                                                                                                                                                                                 
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) | Provide reasonable assurance that transactions are
        recorded as necessary to permit preparation of financial statements in
        accordance with generally accepted accounting principles, and that receipts
        and expenditures of the registrant are being made only in accordance with
        authorizations of management and directors of the registrant; and
|
| | (3) | Provide reasonable assurance regarding prevention
        or timely detection of unauthorized acquisition, use or disposition of
        the registrant's assets that could have a material effect on the financial
        statements.                                                                                                                                          

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 PLATSOLTM 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 | January 31
|------------------ | ---------- | ----------
|                   | 2004       | 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

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.   | Code of Ethics                                                                                                                                    
| |      |                                                                                                                                                   
| | 7.   | 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 CEO                                                                                                            
| |      |                                                                                                                                                   
| | 12.2 | Section 302 Certification
      of CFO                                                                                                            
| |      |                                                                                                                                                   
| | 13.1 | Section 906 Certification
      of CEO                                                                                                            
| |      |                                                                                                                                                   
| | 13.2 | Section 906 Certification
      of CFO                                                                                                            

---

POLYMET MINING CORP.

CONSOLIDATED FINANCIAL STATEMENTS

31 JANUARY 2004

U.S. Funds

---

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. 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 in accordance with Canadian generally
  accepted accounting principles.

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

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   

---

|PolyMet Mining Corp.Consolidated Balance SheetAs at 31 January U.S. Funds | Statement 1
|------------------------------------------------------------------------- | -----------

|ASSETS                                        |            |            |        |   | 2004        |   |   | 2003        |  
|--------------------------------------------- | ---------- | ---------- | ------ | - | ----------- | - | - | ----------- | -
|Current                                       |            |            |        |   |             |   |   |             |  
|Cash                                          |            |            |        | $ | 495,551     |   | $ | 3,187       |  
|Miscellaneous receivables                     |            |            |        |   | 21,881      |   |   | 6,216       |  
|Prepaid expenses                              |            |            |        |   | 5,466       |   |   | -           |  
|                                              |            |            |        |   | 522,898     |   |   | 9,403       |  
|Investments(Note 4)                           |            |            |        |   | 253         |   |   | 253         |  
|Other Assets(Note 5b)                         |            |            |        |   | 500,000     |   |   | -           |  
|Property, Plant and Equipment(Note 6)         |            |            |        |   | 1,786       |   |   | 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 par value |            |            |        |   |             |   |  
|Issued and fully paid:                        |            |            |        |   |             |   |   |             |  
|                                              | 2004       | 2003       |        |   |             |   |   |             |  
|For cash                                      | 44,089,554 | 31,755,026 | shares |   | 15,177,765  |   |   | 14,129,447  |  
|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  |  
|Deficit- Statement 2                          |            |            |        |   | (14,361,251 | ) |   | (14,214,451 | )
|                                              |            |            |        |   | 925,565     |   |   | (31,001     | )
|                                              |            |            |        | $ | 1,024,937   |   | $ | 51,627      |  

|ON BEHALF OF THE BOARD: |           
|----------------------- | ----------
|                        |           
|“William Murray”        | , Director
|                        |           
|“David Dreisinger”      | , Director

- See Accompanying Notes -

---

|PolyMet Mining Corp.Consolidated Statement of Shareholders’ Equity U.S. Funds | Statement 2
|----------------------------------------------------------------------------- | -----------

|                           | Common Shares |  |                       |  |   |            |   |  
|-------------------------- | ------------- |  | --------------------- |  | - | ---------- | - | -
|                           | Authorized    |  | Issued and Fully 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 -

---

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

|                                                           |   | 2004      |   |   | 2003      |   |   | 2002      |  
|---------------------------------------------------------- | - | --------- | - | - | --------- | - | - | --------- | -
|General and Administrative                                 |   |           |   |   |           |   |   |           |  
|Administration fees and wages                              | $ | 84,508    |   | $ | 143,146   |   | $ | 259,606   |  
|Professional fees                                          |   | 58,806    |   |   | 27,358    |   |   | 59,330    |  
|Stock-based compensation expense                           |   | 55,048    |   |   | -         |   |   | -         |  
|Travel and automotive                                      |   | 25,278    |   |   | 10,074    |   |   | 33,987    |  
|Consulting fees                                            |   | 21,278    |   |   | 27,267    |   |   | 47,226    |  
|Transfer agent and filing fees                             |   | 20,221    |   |   | 7,205     |   |   | 6,510     |  
|Office and telephone                                       |   | 9,106     |   |   | 51,942    |   |   | 51,685    |  
|Rent                                                       |   | 8,767     |   |   | 26,158    |   |   | 30,376    |  
|Shareholders’ information                                  |   | 5,032     |   |   | 14,880    |   |   | 72,120    |  
|Interest expense (income), net                             |   | 380       |   |   | 589       |   |   | (20,781   | )
|Amortization                                               |   | 275       |   |   | 5,606     |   |   | 20,517    |  
|Licenses, dues and taxes                                   |   | -         |   |   | 1,882     |   |   | 3,072     |  
|Investor relations and financing                           |   | -         |   |   | 955       |   |   | 36,175    |  
|Conventions                                                |   | -         |   |   | -         |   |   | 445       |  
|Property search                                            |   | -         |   |   | -         |   |   | -         |  
|Bad debts                                                  |   | -         |   |   | -         |   |   | -         |  
|Loss Before the Undernoted                                 |   | 288,699   |   |   | 317,062   |   |   | 600,268   |  
|                                                           |   |           |   |   |           |   |   |           |  
|Other Expenses (Income)                                    |   |           |   |   |           |   |   |           |  
|Pre-feasibility exploration costs                          |   |           |   |   |           |   |   |           |  
|- Schedule
      1                                         |   | 91,616    |   |   | 112,318   |   |   | 606,162   |  
|Loss (gain) on disposal of investments                     |   | -         |   |   | 5,717     |   |   | (45,476   | )
|Write down of investments to market
      value            |   | -         |   |   | -         |   |   | -         |  
|Loss (Gain) on foreign exchange
      conversion           |   | (22,230   | ) |   | 14,824    |   |   | (5,192    | )
|Loss (gain) on sale of resource
      properties           |   | (219,925  | ) |   | -         |   |   | -         |  
|Loss (gain) on sale of property,
      plant and equipment |   | 8,640     |   |   | 21,758    |   |   | -         |  
|                                                           |   | (141,899  | ) |   | 154,617   |   |   | 555,494   |  
|Loss for the Year                                          | $ | 146,800   |   | $ | 471,679   |   | $ | 1,155,762 |  
|                                                           |   |           |   |   |           |   |   |           |  
|                                                           |   |           |   |   |           |   |   |           |  
|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 -

---

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

|                                                            |   | 2004      |   |   | 2003     |   |   | 2002       |  
|----------------------------------------------------------- | - | --------- | - | - | -------- | - | - | ---------- | -
|Operating Activities                                        |   |           |   |   |          |   |   |            |  
|Loss for the year                                           | $ | (146,800  | ) | $ | (471,679 | ) | $ | (1,155,762 | )
|Adjustments to reconcile loss to
      net cash             |   |           |   |   |          |   |   |            |  
|Amortization                                                |   | 275       |   |   | 6,321    |   |   | 22,233     |  
|Stock-based
      compensation expense                      |   | 55,048    |   |   | -        |   |   | -          |  
|Loss
      (gain) on disposal of investments                |   | -         |   |   | 5,717    |   |   | (45,476    | )
|Write-down
      of investments to market value             |   | -         |   |   | -        |   |   | -          |  
|Loss
      (gain) on sale of resource properties            |   | (219,925  | ) |   | -        |   |   | -          |  
|Loss
      (gain) on sale of property, plant and equipment  |   | 8,640     |   |   | 21,758   |   |   | -          |  
|Changes in current assets and liabilities                   |   |           |   |   |          |   |   |            |  
|Miscellaneous
      receivables                             |   | (15,665   | ) |   | 16,021   |   |   | (9,540     | )
|Prepaid
      expenses                                      |   | (5,466    | ) |   | 18,649   |   |   | 2,619      |  
|Accounts
      payable                                      |   | 20,378    |   |   | 19,583   |   |   | (359,203   | )
|                                                            |   |           |   |   |          |   |   |            |  
|Net cash used in operating activities                       |   | (303,515  | ) |   | (383,630 | ) |   | (1,545,129 | )
|                                                            |   |           |   |   |          |   |   |            |  
|Financing Activities                                        |   |           |   |   |          |   |   |            |  
|Share capital - for cash                                    |   | 1,044,684 |   |   | -        |   |   | 277,713    |  
|Net cash provided by financing
      activities             |   | 1,044,684 |   |   | -        |   |   | 277,713    |  
|                                                            |   |           |   |   |          |   |   |            |  
|Investing Activities                                        |   |           |   |   |          |   |   |            |  
|Option payment                                              |   | (500,000  | ) |   | -        |   |   | -          |  
|Purchase of property, plant and
      equipment             |   | (2,061    | ) |   | -        |   |   | (2,456     | )
|Proceeds on disposal of property,
      plant and equipment |   | 33,331    |   |   | 48,301   |   |   | -          |  
|Proceeds on disposal of investments                         |   | -         |   |   | 15,908   |   |   | 51,540     |  
|Proceeds on sale of resource property                       |   | 219,925   |   |   | -        |   |   | -          |  
|Purchase of investments                                     |   | -         |   |   | -        |   |   | -          |  
|Net cash used in investing activities                       |   | (248,805  | ) |   | 64,209   |   |   | 49,084     |  
|                                                            |   |           |   |   |          |   |   |            |  
|                                                            |   |           |   |   |          |   |   |            |  
|Net Increase (Decrease) in Cash                             |   | 492,364   |   |   | (319,421 | ) |   | (1,218,332 | )
|Cash Position - Beginning of year                           |   | 3,187     |   |   | 322,608  |   |   | 1,540,940  |  
|Cash Position - End of Year                                 | $ | 495,551   |   | $ | 3,187    |   | $ | 322,608    |  

|Schedule of Non-Cash Investing and Financing
      Activities |   |       |  |   |   |  |   |   | 
|------------------------------------------------------------- | - | ----- |  | - | - |  | - | - | 
|                                                              |   |       |  |   |   |  |   |   | 
|Share capital issued for debt settlement                      | $ | 3,634 |  | $ | - |  | $ | - | 
|Share capital issued for resource property                    | $ | -     |  | $ | - |  | $ | - | 
|Investments received on sale of resource properties           | $ | -     |  | $ | - |  | $ | - | 

- See Accompanying Notes -

---

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

|                                   |   |           |  |   |          |  |   |        |  |   |         |  |   |         |  |   | 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 -

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 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)                             
|  
|   |                                
|  
|   |                                
|  
|   |                                

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

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

| |  | •                                                                                                               | Monetary assets and liabilities at year-end rates,                                         
| |  | --------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------
| |  | •                                                                                                               | All other assets and liabilities at historical rates, and                                  
| |  | •                                                                                                               | Revenue and expense items at the average rate of exchange prevailing during
      the year.
| |  |                                                                                                                 |                                                                                            
| |  | Exchange gains and losses arising from these transactions
      are reflected in income or expense in the year.

| | g) | Environmental Expenditures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    | The operations of the Company may in the future
        be affected from time to time in varying degrees by changes in environmental
        regulations, including those for future removal and site restoration costs.
        Both the likelihood of new regulations and their overall effect upon the
        Company vary greatly and are not predictable. The Company’s policy
        is to meet or, if possible, surpass standards set by relevant legislation,
        by application of technically proven and economically feasible measures.
|
| |    | Environmental expenditures that relate to ongoing
        environmental and reclamation programs are charged against earnings as
        incurred or capitalized and amortized depending on their future economic
        benefits. Estimated future removal and site restoration costs, when the
        ultimate liability is reasonably determinable, are charged against earnings
        over the estimated remaining life of the related business operation, net
        of expected recoveries.                                                  

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

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

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.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 Value |  |   | 2004 |  |   | 2003 | 
| | ---------------------- | - | ------------ |  | - | ---- |  | - | ---- | 
| | American Platinum Inc. | $ | -            |  | $ | 1    |  | $ | 1    | 
| | Aloak 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)                                                                       
|  
|   |                                                                          

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

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

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

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

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

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

| |                         |   |       |  |   |              |  |   | 2004     |  |   | 2003     | 
| | ----------------------- | - | ----- |  | - | ------------ |  | - | -------- |  | - | -------- | 
| |                         |   |       |  |   | Accumulated  |  |   | Net Book |  |   | Net Book | 
| |                         |   | Cost  |  |   | Amortization |  |   | Value    |  |   | Value    | 
| |                         |   |       |  |   |              |  |   |          |  |   |          | 
| | Land                    | $ | -     |  | $ | -            |  | $ | -        |  | $ | 38,582   | 
| | Furniture and equipment |   | 2,061 |  |   | 275          |  |   | 1,786    |  |   | 1,017    | 
| | Computers               |   | -     |  |   | -            |  |   | -        |  |   | 2,372    | 
| |                         | $ | 2,061 |  | $ | 275          |  | $ | 1,786    |  | $ | 41,971   | 

|  
|--
|7.
|  
|  
|  
|  
|  
|  

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

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

| |  |                                                      | 2004      |   | 2003      |  
| |  | ---------------------------------------------------- | --------- | - | --------- | -
| |  |                                                      | Options   |   | Options   |  
| |  | Outstanding - Beginning of year                      | 1,851,052 |   | 1,858,552 |  
| |  | Granted                                              | 2,591,500 |   | 550,000   |  
| |  | Re-priced and extended expiry                        | 541,052   |   | -         |  
| |  | Cancelled options for re-pricing and
      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:
| |  | ----------------------------------------------------------------------------------------------------------------------------

| |  |                | Prior          |                |          
| |  | -------------- | -------------- | -------------- | ---------
| |  |                | Exercise Price | Exercise Price |          
| |  | Expiry Date    | (CDN)          | (CDN)          | Number   
| |  | 17 March 2007  | $ 0.25         | $ 0.10         | 441,052  
| |  | 17 March 2007  | $ 0.46         | $ 0.10         | 100,000  
| |  | 7 January 2008 | -              | $ 0.08         | 410,400  
| |  | 18 July 2008   | -              | $ 0.10         | 1,641,500
| |  | 3 October 2008 | -              | $ 0.13         | 950,000  
| |  |                |                |                | 3,542,952

| |    | 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         | Nil   
| |  | Expected stock price volatility | 103%  
| |  | Expected option life in years   | 4 to 5

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

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

| |  |                |   | 2003   
| |  | -------------- | - | -------
| |  |                |   |        
| |  | Loss           |   |        
| |  | As Reported    | $ | 471,679
| |  | Pro forma      | $ | 489,992
| |  | Loss Per Share |   |        
| |  | As Reported    | $ | 0.01   
| |  | Pro 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:                                                        

| |  |                                                | 2003     
| |  | ---------------------------------------------- | ---------
| |  |                                                | Warrants 
| |  | Outstanding - Beginning of year                | 3,428,923
| |  | Issued - April 2003 private
      placement    | -        
| |  | - July 2003 private placement                  | -        
| |  | - January 2004 private placement               | -        
| |  | Exercised - April 2003 private
      placement | -        
| |  | Outstanding - End of year                      | 3,428,923

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

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

| |  |                       |   | Per Common     |             |            
| |  | --------------------- | - | -------------- | ----------- | -----------
| |  |                       |   | Share          |             | Common     
| |  |                       |   | Exercise Price | Warrants    | Share      
| |  | Expiry Date           |   | (CDN)          | Outstanding | Entitlement
| |  | 16 November 2006      | $ | 0.20           | 3,428,923   | 3,428,923  
| |  | 8 May 2004            | $ | 0.10           | 1,418,150   | 1,418,150  
| |  | 24 September 2005 (i) | $ | 0.15           | 1,373,446   | 1,373,446  
| |  | 2 February 2006 (ii)  | $ | 0.25           | 3,498,333   | 3,498,333  
| |  |                       |   |                | 9,718,852   | 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.                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.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    |  |   | 2002   
| |  | ----------------------------- | - | ------ |  | - | ------- |  | - | -------
| |  | Administration fees and wages | $ | 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)          
|  
|   | b)          

| |  |      |   | Parent Company |  |   | U.S. Subsidiary
| |  | ---- | - | -------------- |  | - | ---------------
| |  | Year |   | Amount (CDN)   |  |   | Amount         
| |  | 2005 | $ | -              |  | $ | 8,700          
| |  | 2006 |   | -              |  |   | 14,500         
| |  | 2007 |   | 728,700        |  |   | 17,300         
| |  | 2008 |   | 481,100        |  |   | 20,100         
| |  | 2009 |   | 296,600        |  |   | 23,100         
| |  | 2010 |   | 151,300        |  |   | 26,500         
| |  | 2011 |   | 324,000        |  |   | 27,900         
| |  | 2012 |   | -              |  |   | 30,000         
| |  | 2018 |   | -              |  |   | 217,600        
| |  | 2019 |   | -              |  |   | 392,500        
| |  | 2020 |   | -              |  |   | 496,700        
| |  | 2021 |   | -              |  |   | 414,400        
| |  | 2022 |   | -              |  |   | 367,400        
| |  | 2023 |   | -              |  |   | 247,400        
| |  | 2024 |   | -              |  |   | 124,500        
| |  |      | $ | 1,981,700      |  | $ | 2,428,600      

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.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    |   |   | 2002      |  
| |  | --------------------------------------------------------- | - | ------- | - | - | ------- | - | - | --------- | -
| |  | Investments - Canadian basis                              | $ | 253     |   | $ | 253     |   | $ | 21,878    |  
| |  | Adjustment to market                                      |   | (228    | ) |   | (228    | ) |   | (2,545    | )
| |  | Investments - U.S. basis                                  | $ | 25      |   | $ | 25      |   | $ | 19,333    |  
| |  |                                                           |   |         |   |   |         |   |   |           |  
| |  |                                                           |   | 2004    |   |   | 2003    |   |   | 2002      |  
| |  | Contra-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 |   | $ | 1,155,762 |  
| |  | Adjustment of portfolio investments to market             |   | -       |   |   | (2,317  | ) |   | 70,698    |  
| |  | Net loss and comprehensive loss - U.S. basis              | $ | 146,800 |   | $ | 469,362 |   | $ | 1,226,460 |  
| |  |                                                           |   |         |   |   |         |   |   |           |  

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

|11. | Segmented Information
      As at January 31, 2004, the Company operates in one
        segment, the exploration of the base and precious metals at its NorthMet
        Project in Minnesota, United States. Other reconciling adjustments comprise
        general and administrative costs, stock based compensation expense, financing
        expenses, foreign exchange interest income, assets, purchase of property,
        plant and equipment and amortization reported by the Canadian head office.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 2004                              |   | NorthMet   |  |   | Other       |  |   |             
| |  | --------------------------------- | - | ---------- |  | - | ----------- |  | - | ------------
| |  |                                   |   | Project in |  |   | reconciling |  |   |             
| |  |                                   |   | U.S.       |  |   | adjustments |  |   | Consolidated
| |  | Segment operating loss            | $ | 124,473    |  | $ | 22,327      |  | $ | 146,800     
| |  | Purchase property, plant and      |   |            |  |   |             |  |   |             
| |  | equipment                         | $ | 500,000    |  | $ | 2,061       |  | $ | 502,061     
| |  | Proceeds on sale of resource      |   |            |  |   |             |  |   |             
| |  | property                          | $ | —          |  | $ | 219,925     |  | $ | 219,925     
| |  | Proceeds on disposal of property, |   |            |  |   |             |  |   |             
| |  | plant and equipment               | $ | 33,331     |  | $ | —           |  | $ | 33,331      
| |  | Identifiable assets               | $ | 505,500    |  | $ | 519,437     |  | $ | 1,024,937   
| |  |                                   |   |            |  |   |             |  |   |             
| |  | 2003                              |   |            |  |   |             |  |   |             
| |  | Segment operating loss            | $ | 376,462    |  | $ | 95,217      |  | $ | 471,679     
| |  | Purchase property, plant and      |   |            |  |   |             |  | $ |             
| |  | equipment                         | $ | —          |  | $ | —           |  |   | —           
| |  | Proceeds on disposal of property, |   |            |  |   |             |  |   |             
| |  | plant and equipment               | $ | 48,301     |  | $ | —           |  | $ | 48,301      
| |  | Identifiable assets               | $ | 11,626     |  | $ | 40,001      |  | $ | 51,627      

---

|PolyMet Mining Corp.Notes to Consolidated Financial Statements31 January 2004U.S. Funds | 
|--------------------------------------------------------------------------------------- | 
|                                                                                        | 

|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)                                                                                                                                                                                     
|    |                                                                                                                                                                                        
|    | e)                                                                                                                                                                                     
|    |                                                                                                                                                                                        

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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 6, 2005

POLYMET MINING CORP.

/s/ William Murray
  Name: William Murray 
  Title: Chief Executive Officer

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