----

----

| · | Obtaining permits on a timely basis; |
|--------|--------------------------------------|

| · | Raising the funds necessary to develop the NorthMet Project and continue operations; |
|--------|--------------------------------------------------------------------------------------|

| · | Execution of prospective business plans; and |
|--------|----------------------------------------------|

| · | Complying with applicable governmental regulations and standards. |
|--------|-------------------------------------------------------------------|

| · | Changes in general economic and business conditions, including changes in interest rates and exchange rates; |
|--------|--------------------------------------------------------------------------------------------------------------|

| · | Changes in the resource market including prices of natural resources, costs associated with mineral exploration and development, and other economic conditions; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Natural phenomena; |
|--------|--------------------|

| · | Actions by governments and authorities including changes in government regulation; |
|--------|------------------------------------------------------------------------------------|

| · | Uncertainties associated with legal proceedings; and |
|--------|------------------------------------------------------|

| · | Other factors, many of which are beyond the Company’s control. |
|--------|----------------------------------------------------------------------|

----

----

| · | On March 3, 2016, the state determined that the Final EIS addresses the objectives defined in the EIS scoping review, meets procedural requirements and responds appropriately to public comments.  The 30-day period allowed by law to challenge the state’s decision passed without any legal challenge being filed.  The Final EIS demonstrates that the NorthMet Project can be constructed and operated in compliance with environmental and human health standards; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On June 2, 2016, the Company agreed to issue up to an additional $14.0 million secured debentures to Glencore AG, a wholly owned subsidiary of Glencore plc (together “Glencore”), to fund permitting and general corporate purposes.  The debentures are on similar terms as the existing non-convertible senior secured Tranche F-J Debentures; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| · | On July 1, 2016, the Company repaid the $4.0 million initial principal loan from the Iron Range Resources and Rehabilitation Board (“IRRRB”); |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On July 11, 2016, the Company submitted applications for water-related permits required to construct and operate NorthMet; |
|--------|----------------------------------------------------------------------------------------------------------------------------|

| · | On July 12, 2016, the Eastern Region Regional Office of the USFS issued its response to comments on the Draft ROD for the land exchange and instructed the Superior National Forest to proceed with completing the Final ROD; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On August 2, 2016, the Company renewed its request for Water Quality Certification under Section 401 of the Clean Water Act; |
|--------|------------------------------------------------------------------------------------------------------------------------------|

| · | On August 24, 2016, the Company submitted the air quality permit application required to construct and operate NorthMet; |
|--------|--------------------------------------------------------------------------------------------------------------------------|

| · | On September 14, 2016, the Company and Glencore agreed to extend the maturity date of outstanding secured convertible debentures and outstanding secured non-convertible debentures to the earlier of March 31, 2018, availability of $100 million of debt or equity financing, or when it is prudent for the Company to repay the debt; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On October 18, 2016, the Company closed the initial tranche of a private placement of 25,963,167 units for gross proceeds of $19.472 million; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| · | On October 28, 2016, the Company closed the second tranche of a private placement of 14,111,251 units for gross proceeds of $10.583 million pursuant to Glencore’s right to maintain its pro rata ownership; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On November 3, 2016, the Company submitted the Permit to Mine application required to construct and operate NorthMet; |
|--------|-----------------------------------------------------------------------------------------------------------------------|

| · | On December 15, 2016, the Company received AEMA’s Environmental Excellence Award for its responsible development of the NorthMet Project; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On December 20, 2016, the Memorandum of Agreement of the Section 106 Consultation under the National Historic Preservation Act was signed by the statutory parties; and |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | On January 9, 2017, the USFS issued its Final ROD authorizing the land exchange. |
|--------|----------------------------------------------------------------------------------|

| · | Transfer of title to the surface rights over and around the NorthMet mineral rights to PolyMet; |
|--------|-------------------------------------------------------------------------------------------------|

| · | Decision by the state on 401 Water Quality Certification and U.S. Army Corps of Engineers (“USACE”) Final ROD and 404 wetlands permit under Clean Water Act; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Publication of draft state permits (Permit to Mine, air, water, dam safety and water appropriation permits) for public comment; |
|--------|---------------------------------------------------------------------------------------------------------------------------------|

| · | Decisions on state permit issuances; |
|--------|--------------------------------------|

| · | Completion of definitive cost estimate and Project update following permits; |
|--------|------------------------------------------------------------------------------|

| · | Completion of project implementation plan; |
|--------|--------------------------------------------|

| · | Repayment, restructuring, and/or conversion of Glencore loans; and |
|--------|--------------------------------------------------------------------|

| · | Completion of construction finance plan including commitment of debt prior to the issuance of permits, subject to typical conditions precedent such as receipt of key permits. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

| · | A 505-acre net increase of wetlands to the federal estate; |
|--------|------------------------------------------------------------|

| · | A net increase of 94 acres with public water frontage available for public and tribal use; |
|--------|--------------------------------------------------------------------------------------------|

| · | A 40-acre net gain in USFS lands; |
|--------|-----------------------------------|

| · | Improved management effectiveness by exchanging lands that have no public overland access with lands that do have access; |
|--------|---------------------------------------------------------------------------------------------------------------------------|

| · | Reduction of 33 miles in property boundaries to be managed by the USFS; |
|--------|-------------------------------------------------------------------------|

| · | Federal cost savings from the elimination of two easements and their associated administrative costs; and |
|--------|-----------------------------------------------------------------------------------------------------------|

| · | Conveyance of federal lands already adjacent to intensively developed private lands for other inholdings in the Superior National Forest. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| · | Section 404 Individual Permit for Impacted Wetlands |
|--------|-----------------------------------------------------|

| · | Permit to Mine |
|--------|----------------|

| · | Water Appropriations Permit |
|--------|-----------------------------|

| · | Dam Safety Permit |
|--------|-------------------|

| · | Wetland Replacement Plan |
|--------|--------------------------|

| · | Section 401 Certification (required before the USACE can issue its ROD and Section 404 Permit) |
|--------|------------------------------------------------------------------------------------------------|

| · | National Pollutant Discharge Elimination System (NPDES) Permit |
|--------|----------------------------------------------------------------|

| · | State Disposal System (SDS) Permit |
|--------|------------------------------------|

| · | Air Emissions Permit |
|--------|----------------------|

----

----

| · | Equity – five separate agreements comprising $25.0 million placement of PolyMet common shares in calendar 2009 in two tranches; a $30.0 million placement of PolyMet common shares in calendar 2010 in three tranches; a $20.0 million placement of PolyMet common shares in calendar 2011 in one tranche; a $20.960 million purchase of PolyMet common shares in the 2013 Rights Offering; and a $10.583 million purchase of PolyMet common shares in the 2016 Private Placement;  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Convertible debt ("Glencore Convertible Debt") – agreement comprising $25.0 million initial principal secured convertible debentures drawn in four tranches; and                                                                                                                                                                                                                                                                                                                    |
| · | Non-convertible debt ("Glencore Non-Convertible Debt") – three separate agreements comprising $30.0 million initial principal secured debentures in calendar 2015 drawn in four tranches; an $11.0 million initial principal secured debenture in calendar 2016 drawn in one tranche; and a $14.0 million initial principal secured debenture in calendar 2016 drawn in four tranches.                                                                                                   |

| · | 92,836,072 shares representing 29.1% of PolyMet's issued shares;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Glencore Convertible Debt exchangeable through the exercise of an exchange warrant ("Exchange Warrant") at $1.2696 per share into 33,265,768 common shares of PolyMet (including capitalized and accrued interest as at January 31, 2017) until the earlier of March 31, 2018, availability of $100 million of debt or equity financing, or an earlier date on which PolyMet can demonstrate that it is prudent to repay the debentures, subject to ten days notice during which time Glencore can elect to exercise the Exchange Warrant, and where the exercise price and the number of shares issuable are subject to conventional anti-dilution provisions;  |
| · | Warrants to purchase 6,458,001 common shares at $0.8231 per share at any time until December 31, 2017, subject to mandatory exercise if the 20-day volume weighted average price ("VWAP") of PolyMet common shares is equal to or greater than 150% of the exercise price and PolyMet has received permits and construction finance is available ("Exercise Triggering Event"), and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions;                                                                                                                                                               |
| · | Warrants to purchase 7,055,626 common shares at $1.00 per share at any time until October 28, 2021, subject to acceleration on the earlier of receipt of permits necessary to construct NorthMet or the 12 month anniversary of the issue date provided the 20-day VWAP of PolyMet common shares is equal to or greater than $1.50 ("Acceleration Triggering Event"), and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions; and                                                                                                                                                                     |
| · | Warrants to purchase 625,000 common shares at $0.7797 per share at any time until October 28, 2021, and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions.                                                                                                                                                                                                                                                                                                                                                                                                                                                |

----

----

----

----

----

----

| Three Months Ended                    | Jan 31 2017 | Oct 31 2016 | July 31 2016 | Apr 30 2016 | Jan 31 2016 | Oct 31 2015 | July 31 2015 | Apr 30 2015 |
|---------------------------------------|-------------|-------------|--------------|-------------|-------------|-------------|--------------|-------------|
| Revenues                              | -           | -           | -            | -           | -           | -           | -            | -           |
| General and Administrative            | (2,583)     | (993)       | (1,178)      | (1,840)     | (1,827)     | (1,170)     | (1,168)      | (1,343)     |
| Other Income (Expenses)               | (645)       | (1,101)     | (377)        | (512)       | (602)       | (491)       | (530)        | (2,215)     |
| Loss for the Period                   | (3,228)     | (2,094)     | (1,555)      | (2,352)     | (2,429)     | (1,661)     | (1,698)      | (3,558)     |
| Loss per Share (1)                    | (0.01)      | (0.01)      | (0.01)       | (0.01)      | (0.01)      | (0.01)      | (0.01)       | (0.01)      |
|                                  |        |        |         |        |        |        |         |        |
| Cash used in operating activities     | (1,589)     | (1,483)     | (855)        | (1,536)     | (1,717)     | (881)       | (712)        | (1,512)     |
| Cash provided by financing activities | 331         | 31,085      | 5,832        | -           | 11,156      | 5,880       | 8,025        | 7,954       |
| Cash used in investing activities     | (5,613)     | (6,339)     | (4,553)      | (6,858)     | (7,206)     | (6,138)     | (8,078)      | (5,806)     |

| (1) | Loss per share amounts may not reconcile due to rounding differences. |
|-----|-----------------------------------------------------------------------|

|   | January 31, 2017 - $0.811 million       | January 31, 2016 - $0.056 million |
|--------|-----------------------------------------|-----------------------------------|
|   | October 31, 2016 - $0.137 million  | October 31, 2015 - $0.148 million |
|   | July 31, 2016 - $0.233 million          | July 31, 2015 - $0.127 million    |
|   | April 30, 2016 - $0.627 million         | April 30, 2015 - $0.126 million   |

----

----

| Year Ended January 31,                    | 2017    | 2016    | 2015    |
|-------------------------------------------|---------|---------|---------|
| Revenues                                  | -       | -       | -       |
| Net Loss                                  | (9,229) | (9,346) | (7,276) |
| Basic and Diluted Loss Per Share          | (0.03)  | (0.03)  | (0.03)  |
| Total Assets                              | 389,049 | 337,660 | 313,229 |
| Long-Term Debt including Convertible Debt | 107,906 | 79,009  | 41,306  |
| Total Shareholders’ Equity          | 207,329 | 184,657 | 192,376 |

----

----

----

----

----

----

|  Contractual Obligations            |   | CarryingValue |    |   | ContractualCash flows |   |    | Less than1 year |   |   | 1 – 3years |   |   | 3 – 5years |    |   | More than5 years |   |
|------------------------------------------|--------|---------------|---------|--------|-----------------------|--------|---------|-----------------|--------|--------|------------------|--------|--------|------------------|---------|--------|------------------|--------|
| Accounts payable and accrued liabilities |   | $             | 3,188   |   |                  | $      | 3,188   |            |   | $      | 3,188            |   |   | $                | -       |   |             | $      | - |   |   | $ | - |   |
| Convertible debt                         |   |          | 42,154  |   |                  |   | 51,099  |            |   |   | -                |   |   |             | 51,099  |   |             |   | - |   |   |   | - |   |
| Non-convertible debt                     |   |          | 65,752  |   |                  |   | 79,766  |            |   |   | -                |   |   |             | 79,766  |   |             |   | - |   |   |   | - |   |
| Firm Commitments                         |   |          | -       |   |                  |   | 1,127   |            |   |   | 908              |   |   |             | 219     |   |             |   | - |   |   |   | - |   |
| Total                                    |   | $             | 111,094 |   |                  | $      | 135,180 |            |   | $      | 4,096            |   |   | $                | 131,084 |   |             | $      | - |   |   | $ | - |   |

----

----

|   | Level 1 | – | Quoted prices (unadjusted) in active markets for identical assets or liabilities.                                                  |
|--------|---------|---------|------------------------------------------------------------------------------------------------------------------------------------|
|   | Level 2 | – | Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. |
|   | Level 3 | – | Inputs for the asset or liability that are not based on observable market data.                                                    |

|                 | Impact on fair valuedue to 2% decreasein interest rate | Impact on fair valuedue to 1% decreasein interest rate | Impact on fair valuedue to 1% increasein interest rate | Impact on fair valuedue to 2% increasein interest rate |
|----------------------|--------------------------------------------------------|--------------------------------------------------------|--------------------------------------------------------|--------------------------------------------------------|
| Convertible debt     | 867                                                    | 429                                                    | (421)                                                  | (835)                                                  |
| Non-convertible debt | 1,352                                                  | 670                                                    | (657)                                                  | (1,303)                                                |

----

----

|                 |   | January 31,2017 |   |   | January 31,2016 |   |
|----------------------|--------|-----------------|--------|--------|-----------------|--------|
| Cash                 |   | $               | 18,674 |   |            | $      | 10,256 |   |
| Convertible debt     |   |            | 42,154 |   |            |   | 35,986 |   |
| Non-convertible debt |   | $               | 65,752 |   |            | $      | 47,985 |   |

----

----

|                                   |   | Year ended January 31, |   |
|----------------------------------------|--------|------------------------|--------|
|                                   |   | 2017 (1)               |   |   | 2016 (2) |   |
| Salaries and other short-term benefits |   | $                      | 1,828  |   |   | $ | 1,825 |   |
| Other long-term benefits               |   |                   | 44     |   |   |   | 36 |   |
| Share-based payment (3)                |   |                   | 1,709  |   |   |   | 411 |   |
| Total                                  |   | $                      | 3,581  |   |   | $ | 2,272 |   |

| (1) | Year ended January 31, 2017 includes Directors (Jonathan Cherry, Matthew Daley, David Dreisinger, W. Ian L. Forrest, Helen Harper, Alan Hodnik, William Murray, Stephen Rowland, and Michael Sill) and senior management (Jonathan Cherry, Douglas Newby, and Bradley Moore). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Year ended January 31, 2016 includes Directors (Jonathan Cherry, Matthew Daley, David Dreisinger, W. Ian L. Forrest, Alan Hodnik, William Murray, Stephen Rowland, and Michael Sill) and senior management (Jonathan Cherry, Douglas Newby, and Bradley Moore). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Share-based payment represents the amount expensed during the period. |
|-----|-----------------------------------------------------------------------|

----

----

----

----

----

----

| Type of Security                                |   | NumberOutstanding |        |   | Weighted Average Exercise Price |   |
|-------------------------------------------------|--------|-------------------|-------------|--------|---------------------------------|--------|
| Issued and outstanding common shares            |   |              | 318,545,519 |   |                            | $      | - |   |
| Restricted share units                          |   |              | 2,382,020   |   |                            | $      | - |   |
| Share options                                   |   |              | 20,412,002  |   |                            | $      | 1.06 |   |
| Share purchase warrants                         |   |              | 27,780,213  |   |                            | $      | 0.95 |   |
| Convertible debt including capitalized interest |   |              | 34,178,184  |   |                            | $      | 1.27 |   |

----

----