If this report is an annual or transition report, indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934. [   ] Yes [X] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 1213 or 15 (d)
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. [X] Yes x[   ] No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-
accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the
Exchange Act. (Check one)

Large accelerated filer [   ]        Accelerated filer  [X]          Non-accelerated filer [   ]

Indicate by check mark which financial statement item the registrant has elected to follow:
[X]  Item 17        x[   ]  Item 18¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) [   ] Yes [X]  No

TABLE OF CONTENTS

Financial Statements:

2i

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 "expects", “anticipates”, "believes", "intends", "estimates", “potential”, “possible”, "projects", "expects""plans", "intends"and similar expressions, or statements that events, conditions or results “will”, "believes"“may”, "plans"“could”, or “should” occur or be achieved 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 and development 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:

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 noexpressly disclaim any obligation to update our forward-lookingpublicly or otherwise these statements, whether as a result of new information, future events or otherwise except to reflect actual results, changes in assumptions or changes in other factors affecting such statements.the extent required by law. 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.Commission (the “SEC”).

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not requiredrequired.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE –

Not requiredrequired.

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ITEM 3. KEY INFORMATION

A.        Selected Financial Data

The following table presents selected financial information. The Company'sOur 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 USUnited States (“US”) GAAP, except as disclosed in the footnotes to the financial statements. The selected financial data should be read in conjunction with the consolidated financial statements and other information included elsewhere in the Annual Report.

Selected Financial Data
(US$ in 000’s)000’s, except loss per share and weighted average shares))

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B.      Capitalization and indebtedness

Not applicable.

C.      Reasonyear ended 31 January 2005 under the share bonus program were understated by $638,000. The Company has restated its consolidated financial statements for the offeryears ended 31 January 2006 and use2005 to reflect these items. As a result of proceeds.the restatement, Loss per Share for the year ended 31 January 2005 increased by $0.02.

Not applicable.Unless otherwise indicated, all monetary amounts in this annual report are expressed in United States dollars , the Company’s reporting currency.

D.        Risk Factors

An investmentFactors that could cause our actual results to differ materially from those described in our common shares is highly speculativethe forward-looking statements contained in this Annual report 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 thatdocuments we file with the Securities and Exchange Commission and with Canadian securities regulators before investing in our common shares. Theinclude the risks described belowbelow. You should also refer to the other information in this Annual Report, including the financial statements and accompanying notes thereto.

RISKS RELATING TO OUR BUSINESS

Our metals exploration and development efforts are not the only ones faced. Additional risks that we are aware of or that we currently believe are immaterialhighly speculative in nature and may become important factors that affectbe unsuccessful.

As a development stage company, 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 explorationwork is a speculative business and involves a high degree of risk. There is no known body of commercial ore on the NorthMet Projectunique 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. greater risks than are generally associated with other businesses.

The exploration for and development of mineral deposits involves significant risks,uncertainties, which even a combination of careful evaluation, experience, and knowledge may notcannot 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 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 programsdevelopment program we have 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     We are subject to all of a mineral depositthe risks inherent in the mining industry, including, without limitation, the following:

• Success in discovering and developing commercially viable quantities of minerals is dependent uponthe result of a number of factors. These include deposit attributes such as size, gradefactors, including the quality of management, the interpretation of geological data, the level of geological and proximitytechnical expertise and the quality of land available for exploration;

• Exploration for minerals is highly speculative and involves substantial risks, even when conducted on properties known to infrastructure, currentcontain significant quantities of mineralization, and futuremost exploration projects do not result in the discovery of commercially mineable deposits of ore;

• Operations are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air and water quality standards, pollution and other environmental protection controls, all of which are subject to change and are becoming more stringent and costly to comply with;

• A large number of factors beyond our control, including fluctuations in metal prices (which can be cyclical), and production costs, inflation, the proximity and liquidity of precious metals and energy fuels markets and processing equipment, government regulations, including thoseregulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and necessary suppliesenvironmental protection, and other economic conditions, will affect the economic feasibility of mining;

• Substantial expenditures are required to construct mining and processing facilities; and

3

• In the development stage of a mining operation, our mining activities could be subject to substantial operating risks and hazards, including metal bullion losses, environmental protection. The complete effecthazards, industrial accidents, labor disputes, encountering unusual or unexpected geologic formations or other geological or grade problems, encountering unanticipated ground or water conditions, cave-ins, pit-wall failures, flooding, rock falls, periodic interruptions due to inclement weather conditions or other unfavorable operating conditions and other acts of God. Some of these risks and hazards are not insurable or may be subject to exclusion or limitation in any coverage which we obtain or may not be insured due to economic considerations.

As a result of all of these factors, we may run out of money, in which case we will have to suspend or cease operations.

We have had no production history and we do not know if we will generate revenues in the future.

While we were incorporated in 1981, we have no history of producing minerals. We have not developed or operated any mines, and we have no operating history upon which an evaluation of our future success or failure can be made. We currently have no mining operations of any kind. Our ability to achieve and maintain profitable mining operations is dependent upon a number of factors, including our ability to either aloneattract a partner to operate, or to successfully build and operate mines, processing plants and related infrastructure ourselves.

We are subject to all the risks associated with establishing new mining. We may not successfully establish mining operations or profitably produce metals at any of our properties. As such, we do not know if we will ever generate revenues.

We have a history of losses which we expect to continue into the future. If we do not begin to generate revenues or find alternate sources of capital, we will either have to suspend or cease operations.

As a development stage company with no holdings in combination,any producing mines, we continue to incur losses and expect to incur losses in the future. As of January 31, 2007, we had an accumulated deficit of $52,599,000. We may not be able to achieve or sustain profitability in the future. If we do not begin to generate revenues or find alternate sources of capital, we may either have to suspend or cease operations.

We may not be able to raise the funds necessary to develop our mineral properties. If we are unable to raise such additional funds, we will have to suspend or cease operations.

We will need to seek additional financing to complete our development and construction of the NorthMet Project. Sources of such external financing include future equity offerings, advance payments by potential customers to secure long-term supply contracts, grants and low-cost debt from certain state financial institutions, and commercial debt secured by the NorthMet Project. The failure to obtain such additional financing could have a material adverse effect on our results of operations and financial condition. We may not be able to secure the financing necessary to sustain exploration and development activities in the future. If we cannot be entirely predicted,raise the money necessary to continue to explore and their impactdevelop our property, we will have to suspend or cease operations.

Our actual reserves and mineral resources may result in PolyMet not receiving an adequate return on invested capital.conform to our established estimates.

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The figures for reserves and mineral resources stated in this Annual Report are estimates and no assuranceassurances 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 reserves and mineral resources uneconomic. Moreover, short-term operating factors relating to the mineral deposits,

4

such as the need for the 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.SEC.

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 CommissionSEC 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.

ConflictsOur future activities could be subject to environmental laws and regulations which may have a materially adverse effect on our future operations, in which case our operations could be suspended or terminated.

We, like other development stage companies doing business in the United States and Canada, are subject to a variety of Interest
Certain directors, officers or promotersfederal, provincial, state and local statutes, rules and regulations designed to, among other things:

• protect the environment, including the quality of the Companyair and water in the vicinity of exploration, development, and mining operations;

• remediate the environmental impacts of those exploration, development, and mining operations;

• protect and preserve wetlands and endangered species; and

• mitigate negative impacts on certain archeological and cultural sites.

We are directors, officers,required to obtain various governmental permits to conduct exploration at our properties. Obtaining the necessary governmental permits is often a complex and time-consuming process involving numerous U.S. or Canadian federal, provincial, state, and local agencies. The duration and success of each permitting effort is contingent upon many variables not within our control. In the context of obtaining permits or approvals, we must comply with known standards, existing laws, and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations implemented by the permitting authority. The failure to obtain certain permits or the adoption of more stringent permitting requirements could have a material adverse effect on our business, operations, and properties and we may be unable to proceed with our exploration and development programs.

Federal legislation and implementing regulations adopted and administered by the U.S. Environmental Protection Agency, Forest Service, Bureau of Land Management, Fish and Wildlife Service, Mine Safety and Health Administration, and other federal agencies, and legislation such as the Federal Clean Water Act, Clean Air Act, National Environmental Policy Act, Endangered Species Act, and Comprehensive Environmental Response, Compensation, and Liability Act, have a direct bearing on U.S. exploration, development and mining operations. Due to the uncertainties inherent in the permitting process, we cannot be certain that we will be able to obtain required approvals for proposed activities at any of our properties in a timely manner, or that our proposed activities will be allowed at all.

The process of obtaining federal and local regulatory approvals is increasingly cumbersome, time-consuming, and expensive, and the cost and uncertainty associated with the permitting process could have a material adverse effect on exploring, developing or mining our properties. Moreover, compliance with statutory environmental quality requirements described above may require significant shareholderscapital outlays, significantly affect our earning power, or promoterscause material changes in our intended activities. Environmental

5

standards imposed by federal, state, or local governments may be changed or become more stringent in the future, which could materially and adversely affect our proposed activities.

Because the price of metals fluctuate, if the prices of metals in our ore body decrease below a specified level, it may no longer be profitable to develop our NorthMet Project for those metals and we will cease operations.

Prices of metals are determined by some of the following factors:

• expectations for inflation;

• the strength of the United States dollar;

• global and regional supply and demand; and

• political and economic conditions and production costs in major metals producing regions of the world.

The aggregate effect of these factors on metals prices is impossible for us to predict. In addition, the prices of metals are sometimes subject to rapid short-term and/or prolonged changes because of speculative activities. The current demand for and supply of various metals affect the prices of copper, nickel, cobalt, platinum, palladium and gold, but not necessarily in the same manner as current supply and demand affect the prices of other publicly listed companies.commodities. The supply of these metals primarily consists of new production from mining. If the prices of copper, nickel, cobalt, platinum, palladium and gold are, for a substantial period, below our foreseeable costs of production, we could cease operations.

We may not have adequate, if any, insurance coverage for some business risks that could lead to economically harmful consequences to us.

Our businesses are generally subject to a number of risks and hazards, including:

• industrial accidents;

• railroad accidents;

• labor disputes;

• environmental hazards;

• electricity stoppages;

• equipment failure; and

• severe weather and other natural phenomena.

These occurrences could result in damage to, or destruction of, mineral properties, production facilities, transportation facilities, or equipment. They could also result in personal injury or death, environmental damage, waste of resources or intermediate products, delays or interruption in mining, production or transportation activities, monetary losses and possible legal liability. The insurance we maintain against risks that are typical in our business may not provide adequate coverage. Insurance against some risks (including liabilities for environmental pollution or certain hazards or interruption of certain business activities) may not be available at a reasonable cost or at all. 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 suchaccidents or other negative developments involving our mining, production or transportation facilities could have 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,material adverse effect on our operations.

The mining industry is an intensely competitive industry, and we may have a conflict. Other than as indicated, the Company has nodifficulty effectively competing with 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 somining companies in the foreseeable future. There can

We face intense competition from other mining and producing companies. In recent years, the mining industry has experienced significant consolidation among some of our competitors, as a result these

6

companies may be no assurancemore diversified than us. We cannot assure you that the Company's boardresult 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 Sharescurrent or further consolidation in the foreseeable future, if at all.industry will not adversely affect us.

Dilution
The CompanyIn addition, because mines have limited lives we must periodically seek to replace and expand our reserves by acquiring new properties. Significant competition exists to acquire properties producing or capable of producing copper, nickel and other metals.

We may experience delays, higher than expected costs, difficulties in obtaining environmental permits and other obstacles when implementing our capital expenditure projects.

We are investing heavily to further increase our production capacity, logistics capabilities and to expand the future grant to some or allscope of its ownminerals we produce. Our expansion 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 bemining projects are subject to additional dilution.a number of risks that may make them less successful than anticipated, including:

• we may encounter delays or higher than expected costs in obtaining the necessary equipment or services to build and operate our projects; and
• adverse mining conditions may delay and hamper our ability to produce the expected quantities of minerals.

If we are unable to successfully manage these risks, our growth prospects and profitability may suffer.

The Company is currently without a source of revenue and will most likely be required to issue additional securities to finance its operation andRISKS RELATED TO THE OWNERSHIP OF OUR STOCK

We may also issue substantial additional securities to finance the development of any or all of its projects.experience volatility in our stock price.

Volatility of Common Share Price and Volume
The Company's Common SharesOur common shares are listed for trading on the TSX VentureToronto Stock Exchange and on the American Stock Exchange. Shareholders of the CompanyOur shareholders may be unable to sell significant quantities of the Common Sharescommon 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 Sharesour common shares may be affected significantly by factors such as changes in the Company'sour operating results, the availability of financings,funds, fluctuations in the price of metals, the interest of investors, traders and others in small explorationdevelopment stage public companies such as the Companyus 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 explorationdevelopment companies similar to the Company,us, have experienced wide fluctuations, which have not necessarily been related to the operating performances, underlying asset values, or the future prospects of such companies. There can be no assurance that future fluctuations in the price of the Company'sour shares will not occur.

6A large number of shares will be eligible for future sale and may depress our stock price.

Our shares that are eligible for future sale may have an adverse effect on the price of our stock. As of January 31, 2007 there were 121,378,876 of our common shares outstanding. The average trading volume for the three months prior to January 31, 2007 was approximately 51,000 shares per day on the Toronto Stock Exchange and 133,000 shares per day on the American Stock Exchange. Sales of substantial amounts of our common shares, or a perception that such sales could occur, and the existence of options or warrants to purchase common shares at prices that may be below the then current market price of our common shares, could adversely affect the market price of our common shares and could impair our ability to raise capital through the sale of our equity securities.

Your ownership interest, voting power and the market price of our common stock may decrease because we have issued, and may continue to issue, a substantial number of securities convertible or exercisable into our common stock.

We have issued common shares and options, and warrants to purchase our common shares to satisfy our obligations and fund our operations (see Item 5.A). In the future, because we currently do not have a source of revenue, we will likely issue additional common shares, options, warrants, preferred stock or other securities exercisable for or convertible into our common shares to raise money for our continued operations or as non-cash incentives to our own and our subsidiaries' directors, officers, insiders, and key

7

Adverse Tax Consequencesemployees. If additional sales of equity occur, your ownership interest and voting power in us will be diluted and the market price of our common shares may decrease.

Under our “rolling” Stock Option Plan which was adopted on October 3, 2003, approved by our shareholders on May 28, 2004, and accepted by the TSX-Venture Exchange on June 29, 2004, options may be granted equal in number to U.S.10% of the issued and outstanding capital of the Company at the time of grant of the stock option. As of January 31, 2007 we could issue options to purchase up to 12,137,887 shares. Under our bonus share incentive plan (the “Bonus Plan”) for our directors and key employees approved by the disinterested shareholders at the Company’s shareholders’ meeting held on May 28, 2004 we may issue an additional 4,940,000 shares upon achieving certain milestones. On November 4, 2004, the Company adopted, and the shareholders approved, a revised Bonus Plan limiting the aggregate shares that may be issued under the Bonus Plan and the Company’s Amended Stock Option plan to not more than 20% of the Company’s issued and outstanding capital at the time of the issuance of options and bonus shares.

Upon any issuances or exercise of options issued, the ownership interests and voting power of existing shareholders may be further diluted.

We have a Shareholders Resulting FromRights Plan Agreement and certain employment and management contracts that contain provisions designed to discourage a change of control.

A Shareholders Rights Plan between us and shareholders effective as of December 3, 2003 and certain employment and management agreements contain provisions that could discourage an acquisition or change of control without our board of directors’ approval. Under the Company's PFIC StatusShareholders Rights Plan, if a shareholder individually or in concert with other shareholders acquires 20% or more of our common shares outstanding without complying with the Shareholder Rights Plan or without the approval of our Board of Directors, all holders of record will have a right to one common share for each share owned. Each right entitles the holder to a certain number of shares, as calculated under the Rights Plan. We have also entered into agreements with certain key employees and officers that contain severance provisions in the event of a take-over bid. The Rights Plan and the preceding agreements may make it more difficult for a third party to acquire control of us, even if such a change of control is more beneficial to shareholders.

The Company believesBecause we believe that it is qualifiedwe will be classified as a passive foreign investment company ("PFIC") for the fiscal year ended January 31, 2005 and(a PFIC), U.S. holders of our common stock may qualify as a PFIC in the future with respectbe subject 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 forthat are worse than those that would apply if we were not a PFIC.

Because we believe that we will be classified as a passive foreign investment company (a PFIC), U.S. Shareholders.holders of our common stock may be subject to United States federal income tax consequences that are worse than those that would apply if we were not a PFIC, such as ordinary income treatment plus a charge in lieu of interest upon a sale or disposition of shares of our common stock even if the shares were held as a capital asset. See “Certain United States Federal Income Tax Consequences.”

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ITEM 4. INFORMATION ON THE COMPANY

A.        History and Development of the Company

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

The Company’s headOur principal executive office is situated at Suite 23501003 –1177 West Hastings Street, Vancouver, B.C. V6E 2K3. ItsOur phone number is (604) 669-4701. Our registered and records office is the Company’slocated at our legal counselscounsel’s offices situated at 10402500 – 999700 West HastingsGeorgia Street, Vancouver, B.C. V6C 2W2. The CompanyV7Y 1B3. Our agent in the U.S. is Poly Met Mining, Inc. whose office is located at P.O. Box 475, County Road 666, Hoyt Lakes, Minnesota 55750-0475.

We are a reporting issuer in each of the provinces of Albert,following Canadian provinces: Alberta, British Columbia, and Ontario. The Company’sOur common shares have been listed on the TSX Exchange (TSX) since February 1, 2007 and, formerly, on the TSX Venture Exchange (TSX V) since(formerly the Vancouver Stock Exchange) from April 13, 1984 withto January 31, 2007 under the symbol "POM" and since June 26, 2006 our common shares have been listed on the Over the Counter Bulletin Board (“OTCBB”)American Stock Exchange (AMEX) under the symbol “POMGF” in“PLM”.

During the United States.

The principal expendituresyears ended January 31, 2007, 2006, and 2005 we spent $13.015 million, $12.130 million and $1.623 million, respectively to acquire property, and perform pre-feasibility work and perform work post completion of the Company are related to itsour Definitive Feasibility Study primarily on our NorthMet Project located in Minnesota, USA. DuringIn addition, during the years ended January 31, 2007, 2006, and 2005 January 31, 2004,we issued shares valued at $6.160 million, $7.564 million and 2003$0.229 million, respectively, in optioning and purchasing a nearby crushing and grinding plant and associated infrastructure (the “Erie Plant”) and land.

All of these expenses were incurred at our NorthMet Project and were funded from the proceeds of equity financings. With the exception of the Erie Plant acquisition, until the completion of Definitive Feasibility Study, these expenditures totaling $2,556,237.

The Company relies principally on equity financing to fund its projects and expenditures.were expensed. Expenditures after the completion of the Definitive Feasibility Study, have been capitalized.

B.        Business Overview

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

In the years ended January 31, 2007, 2006 and 2005, 2004we conducted exploration, development and 2003, the Companyacquisition activities only and did not haveconduct any active operations that generated revenues. Thus, we rely principally on equity financings to fund our projects and expenditures.

Since 2003, we have focused on commencing commercial production on our NorthMet Project. We have focused our efforts on four main areas:

9

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 2005 was to continue to advance itsDecember 20, 2006 we acquired extensive additional infrastructure associated with our NorthMet Project with its environmentalfrom Cliffs. We obtained a railroad connection linking the mine development site and permitting needs, commencement ofthe existing crushing and grinding plant that was acquired from Cliffs in 2005 as well as a 120-railcar fleet, locomotive fueling and maintenance facilities, water rights and pipelines, large diameter core drill programadministrative offices on site and continued negotiations with off take partnership agreements. Someapproximately 6,000 acres to the east and west of the highlightsmine development site and contiguous to our existing tailing facilities.

The purchase price for the year included:

• An agreement dated February 14, 2004, has granted the Company an option to acquire certain property, plant and equipment from Cleveland Cliffsthis additional infrastructure consisted of Cleveland, Ohio (“Cliffs”) located near the Company’s NorthMet project. The Company paid a US$500,000 option payment during the year ended January 31, 2004 and issued 1,000,0002 million of our common shares on March 30, 2004 at a deemed price of CDN$0.30 per shareand US$15 million in cash to Cliffs.

7

• We retained Bateman Engineering Pty. of Brisbane, Australia to complete a review of the Scoping Study for the Northmet Projectbe issued and to lead the Definitive Feasibility Study (DFS) as coordinating consultant. Bateman will complete the process design (including the design and supervision of a third pilot plant campaign) and the detail engineering and estimates for the plant and infrastructure. Other important elements of the DFS that will be fully integrated with Bateman’s work include:

10

• On
  

  		Bateman has sub-contracted some of the work to other specialist companies. In 2005, we received reports from Hellmann & Schofield, a geologic consulting firm, and Australian Mine Design Development Pty Ltd, a mine engineering firm, both of which are based in Australia, that provided a review of the geologic and mine model and mine planning.
  		As part of the data assembly that was used to support the DFS, we conducted an extensive program of drilling including infill and geotechnical core drilling that enhanced the quality of our geologic analysis and understanding and has provided us with material that has been used in pilot plant testing to optimize the process design.
  		Since completion of the DFS we have conducted an infill drill program comprising approximately 19,000 feet in 47 holes designed to improve the classification of reserves.
  	4.	DFS Overview. The DFS established several milestones for the NorthMet Project:
  		i)	Mineral Resources Expanded: measured and indicated mineral resources have been expanded to 422.1 million tons grading 0.28% copper, 0.08% nickel and 0.01 ounces per ton (opt) of precious metals (palladium, platinum and gold), compared with 358 million tons grading 0.26% copper, 0.08% nickel, and 0.01 opt of precious metals that was previously reported. In addition, the DFS reports inferred mineral resources of 120.6 million tons grading 0.25% copper, 0.07% nickel, and 0.01 opt of precious metals.
  			U.S. investors are cautioned that the SEC 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 SEC. Mineral resources are not reserves and do not have demonstrated economic viability.
  		ii)	Reserves Established: PolyMet has, for the first time, established proven and probable reserves. This material, contained within the measured and indicated resources, totals 181.7 million tons grading 0.31% copper, 0.09% nickel, and 0.01 opt of precious metals. These reserves, which represent only 43% of the measured and indicated resources, are based on copper at $1.25 per pound, nickel at $5.60 per pound, and precious metal prices of $210, $800 and $400 per ounce, respectively, for palladium, platinum and gold.
  			The final operational mine plan will be completed in parallel with the final stages of the permitting process. This will include the results from a highly selective drill campaign that we completed in April 2007 comprising approximately of 19,000 feet of drilling in 47 holes that is focused on converting resources into proven and probable reserves as well as completion of pit optimization that is expected to reduce the amount of waste material to be mined within the 20-year permit, reduce the unit costs per ton of rock mined, and may enhance the grade to be mined.
  		iii)	Project Scope Expanded: The DFS is based on processing of 32,000 tons of ore per day, compared with 27,500 tons per day in the previous Technical Report published in July 2004. The capital costs reflect PolyMet’s commitment to world class environmental practices that meet or exceed Minnesota’s stringent environmental standards. Furthermore, detailed engineering has demonstrated several operational improvements that have resulted in scope changes to the capital cost estimates.
  		iv)	Environmental Review: A considerable part of the DFS is focused on environmental considerations. Since starting the program in early 2004, PolyMet has already spent approximately $8 million on permitting and environmental work, including completion of the Environmental Assessment Worksheet, which has been subject to public review. The state

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  ---

  
  

  		of Minnesota has engaged Environmental Resource Management and Knight Piesold to complete the Environmental Impact Statement (EIS). The State has announced that it expects the draft EIS to be published by early November 2007.
  	v)	Capital Costs: Initial direct capital costs, including contingency, for this enlarged project are estimated at $312.1 million. Indirect costs including engineering and construction management, project insurance, the anticipated cost of environmental insurance related to reclamation and closure guarantees, and other owners costs are estimated at $67.5 million, for a total capital cost of $379.6 million. Sustaining capital is projected at $71.8 million for the first 20 years.
  		Approximately $52 million – or an increase of 22% – of the $140 million increase in initial direct costs compared with previous estimate in 2004 is related to inflation. The economic mine model also includes a total working capital requirement that peaks at approximately $22.0 million in full-scale production.

  
  

  5.

  Financing and corporate development.During the fiscal year ended January 31, 2007, we received approximately $18.7 million from the exercise of stock purchase warrants and stock options. Subsequent to the fiscal year end, we obtained approximately $41 million from a private placement financing of 15 million units, at US$2.75 per unit, with each unit comprising one common share and one-half of one warrant. Each, whole warrant is exercisable into a common share at a price of US$4.00 at any time until October 13, 2008 subject to an early trigger if the 20- day volume weighted average price of the common shares is US$6.00 or more.

  We have also continued to strengthen our management team at both the corporate level and at our facilities in Minnesota. During the period ended January 11, 2005,31, 2007, we announced the submissionappointed Joe Scipioni as Vice President – Operations and Construction and Niall Moore as Corporate Secretary and Group Controller. Subsequent to the Statefiscal year end we appointed William D. Corneliuson to the Board, and we promoted Joe Scipioni to the position of Minnesota regulatorsChief Operating Officer and appointed Phillip Brodie-Hall as Group Vice President – Construction and Andy Clark as Area Manager – Facilities. We also reported that Warren Hudelson had decided to retire from his position as Executive Vice President and Director of the necessary information to advance the state’s environmental review process. The filingsUS subsidiary, Poly Met Mining, Inc. but he will lead to production ofcontinue as an Environmental Impact Statement (EIS) on the NorthMet Project. The NorthMet Project is adjacent to existing taconite mining operations and will reuse the former LTV Steel Mining Company plant and infrastructure, now called Cliffs- Erie. hawse have also submitted the information necessary for the Minnesota Department of Natural Resources to prepare a Draft Scoping Environmental Assessment Worksheet (EAW). Our data provides detailed answers to a series of project related questions.
  Preparation of the Draft Scoping EAW and related Draft Scoping Decision will set the stage for subsequent third-party preparation of an exhaustive EIS that will involve public participation. The EAW documents will also become publicly available when fully compiled by the state. Submittal of the EAW follows a public information meeting held November 3 (what year?) in Hoyt Lakes, Minnesota by the Minnesota Department of Natural Resources, the lead state agency responsible for the environmental review process and granting our Permit to Mine.

• On March 14, 2005 we reached an agreement among federal and state regulators to cooperate in preparing a single Environmental Impact Statement (EIS) on the NorthMet Project.
• We completed 42,000 feet of large diameter core drilling at the NorthMet Project. The drilling, which is part of a much larger drilling program scheduled for this year, provides metallurgical sample material for pilot-plant metallurgical test work at SGS Lakefield commencing in August 2005. The drill program, which totals 90,000 feet is integraladvisor to the completion of a definitive feasibility study and will allow resource definition, detailed mine planning, waste rock characterization and other important aspects for the environmental permitting program. The pilot plant is intended to demonstrate the process, provide product sample for off-take agreements and to allow the engineer Bateman to provide process guarantees. The metallurgical results of the pilot plant will add new information to our ongoing bankable feasibility study that is aimed at commercial development of the NorthMet deposit.
• We deployed a second drilling contractor at the NorthMet project. Diamond drilling equipment was used to produce NTW core for in-fill drilling that will help further define the NorthMet resource.
• We commissioned two additional 43-101 technical reports, to complete a revised resource model based on a geological and drill hole database, which has been updated and contains over 17,000, validated assayed intervals. The database will continue to be expanded during 2005 as the results of the current in-fill and metallurgical-sample drill programs are added on completion.

C.        Organizational Structure

As at January 31, 2005 we hadWe have two (2) wholly owned subsidiaries,subsidiaries: (1) Fleck Minerals Inc., incorporated in Ontario, Canada, and PolyMet(2) Poly Met Mining, Inc., incorporated in Minnesota, USA.

8D.        Property, Plant and Equipment

Plant

Our Erie Plant comprises a large crushing, grinding and milling facility that was built by LTV Steel in the mid-1950s and processed low grade iron ore known as taconite that was transported to the facility by railroad from local mines. Since the mid-1960s the plant was operated by Cliffs on behalf of LTV Steel and processed approximately 100,000 tons per day of taconite ore. The plant was shut down in 2000 when LTV Steel filed for bankruptcy protection since when it has been maintained initially by Cliffs and, since November 15, 2005, by us. The plant did not operate during the period ended January 31, 2007. The plant is located approximately six miles west of our NorthMet deposit, about five miles north-northwest of the town of Hoyt Lakes, itself located about fifteen miles west of Virginia, Minnesota. The plant covers approximately 6,400 acres, or approximately 10.0 square miles.

On December 20, 2006 we acquired from Cliffs a railroad connection linking the mine development site and the Erie Plant as well as a 120-railcar fleet, locomotive fueling and maintenance facilities, water rights

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D.      and pipelines, large administrative offices on site and approximately 6,000 acres to the east and west of and contiguous to PolyMet's existing tailing facilities.

Before 2000, Cliffs had undertaken numerous programs to update and modernize control systems in the Erie Plant. The plant is generally in good physical condition and was operating at or near full capacity prior to its closure. We have examined the plant in detail and have restarted certain pieces of equipment and believe it to be serviceable.

Equipment

All of our material fixed assets are located at the Erie Plant and include: two rail dump pockets each with a 60” gyratory crusher, 3 x seven-foot standard cone crushers, 6 x seven-foot short-head crushers, 30 mill circuits each comprising one 12’x 14' rod mill and one 12’x 14' ball mill, 3 x 12'x 24' regrind mills, flotation cells, maintenance facilities and spare parts, extensive conveyors, feeders, bins, auxiliary facilities and offices, established infrastructure including a 250 MVA high voltage electrical substation, water supply, roads, tailings basins, 120 rail cars, locomotive fueling and maintenance facilities, water pipelines, and large administrative offices.

We are currently in the environmental process to obtain all necessary permits required to operate the Erie Plant and all the material fixed assets, as listed above.

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 is located immediately south of the historic Mesabi Iron Range in northeastern Minnesota. Mining in the Iron Range dates back to the 1850’s when high grade iron ore known as hematite was discoveredfirst mined commercially. During the 1940s and 50s, with reserves of hematite dwindling, the iron industry began to focus on taconite, a lower-grade iron ore. Six large crushing, grinding, milling facilities were built by various iron and steel companies to process the taconite, including the Erie Plant that we acquired in November 2005.

Following the discovery of copper and nickel in the 1940s, in the 1960s United States Steel Corporation (“US Steel”) staked ground at what was then called Dunka Road, now called NorthMet. At that time, the market did not recognize platinum group metals (PGMs) or gold and the market for PGMs was small because there was no reliable method to assay low grades of these metals. US Steel Corp (“USX”) in 1969. Originally, it was thought to beinvestigated the deposit as a high-grade, underground copper-nickel resource. Drilling in the 1970’s demonstrated thatresource, but considered it was in fact a high tonnage, low-grade deposit, amenable to open pit mining. The grade improved at depth. Thebe uneconomic based on its inability to produce separate, clean nickel orand copper concentrates led to further process evaluation and development. Atwith the metallurgical processes available at that time there was no recognition of any contained PGM’s.time.

TheIn 1987, the Minnesota Department of Natural Resources Research Institute (“DNR”NRRI”) subsequently discoveredpublished data suggesting that PGM’s were associated with the nickel and coppera large resource of platinum group minerals or PGMs may be in the resource.base of the Duluth Complex. In 1989, we acquired a 20-year renewable mining lease over the property from USXUS Steel and commenced an investigation into the potential for mining and recoveringrecovery of copper, nickel, and PGM’s.PGMs. We re-assayed pulps and rejects fromconducted a program to re-assay the previous drilling to obtain data on PGM’s. The encouraging potential to produce extra revenue attracteddrill core for PGMs. We entered into joint venture partners (Nercoagreements with Nerco and Argosy Mining) whoMining, which assisted in identifying and quantifying thepotential PGM values. However, these companies were not able to develop a metallurgical process that could economically producethe challenge of producing separate acceptable concentrates for sale to a smelter, or economically extract the contained metals from a bulk concentrate.of saleable copper and nickel remained.

In the mid-90’s, we began investigating the use of hydrometallurgical processes, including bio-leaching and pressure oxidation, to determine the benefit to the Project.oxidation. In 1998 we focused on a hydrometallurgical extractive technology, which led to the development of the PlatSol^TMPlatSol™ Process. The operating conditions ofThis process uses autoclaves, which are high temperature, high pressure, oxygen-enriched vessels, to oxidize the PlatSol^TM Process are such thatsulfidic ores and leach the metals therein. This technology has been used commercially in the copper, nickel cobalt and precious metals are all placed in solution in a single operation. Sinceindustries since the initial PlatSol^TM 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%.1980s.

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In July 2000, we entered into a joint venture arrangement with North Limited (“North”), a major Australian mining company, to progressadvance 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 ofby producing a Feasibility Studyfeasibility 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 projectProject and we exercised our 30-day pre-emptive right, under a “change of control” clause, to terminate the joint venture arrangement. Consequently,As a result, we regained a 100% interest in the NorthMet Project.

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Following completion of the metallurgical pilot plant work in November 2000, we commissioned a Pre-Feasibility Studypre-feasibility study on the project in November 2000, based on the PlatSol process. This studythat was completed in April 2001. The Pre-Feasibility Study was forpre-feasibility study included a 50,000tpd operation.50,000 metric tonne per day (55,000 short tpd) operation and assumed the construction of a new, stand-alone processing plant including metal smelters to produce copper, nickel and cobalt metals on site. The study found the economics of this projectthe NorthMet Project were found to be unacceptably low and requiredowing to the capital cost of building a high up front capital expenditure.new plant facility combined with low metal prices prevailing at that time. No further work was done until March 2003, when a new management team took over theour company and commenced a detailed review of the project.

ToThe new management team believed that the Erie Plant had the potential to substantially reduce the capital cost and to simplify the permitting process which could improve the project economics.

As of January 31, 2007, we have expended $6,236,016$38.166 million primarily on the acquisition of the Erie Plant and related infrastructure. During the three years ended January 31, 2007 we expended and additional $21.587 million on pre-feasibility work at the deposit and plant. Since inception, we have a cumulative deficit of $52.599 million, much of which has been incurred directly and indirectly in connection with our NorthMet Project. These expenditures supported drilling, sampling, assaying, environmental, metallurgical testing, and the pre-feasibility studies.

The following diagrams illustratediagram illustrates the location of the NorthMet Project.

Figure No. 1
NorthMet Project Map

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(b)        Location/Access/Climate

The NorthMet Project land position covers 4,162a total of 16,600 acres or 25.9 square miles comprising two areas: the NorthMet mine site totaling 4,200 acres or 6.5 square miles of patented mineral rights.rights and the Erie plant site totaling 12,400 acres of freehold land located approximately six miles west of the mine site. 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-mileThe surfaced Hoyt Road links the plant to the town of Hoyt Lakes, itself approximately fifteen miles east of Virginia, Minnesota which is located on State Highway 53. The mine site is accessible by an all-season gravel road linksfrom the NorthMet Project to the nearby town of Babbitt. Aplant site and a private railroad crosses the property immediately south of the deposit.deposit and runs to the plant site. There is a high-voltage power line supplied by Minnesota Power that supplies the plant site and there is ready access to industrial electric power at the mine site. Two other railway lines are located within ten miles and connect with three ports on Lake Superior. ThereSuperior and into the US national and Trans-Canadian railroad system.

The northern Minnesota climate is ready accesscontinental, characterized by wide variations in temperature. The temperature in the nearby town of Babbit averages -14ºC (7ºF) in January and 19ºC (66ºF) in July. The average annual precipitation is 28 inches with approximately 30% during the months from November to industrial electric power. The property is zoned for patented mineral rights.April and 70% from May through October.

(c)        Claims and ownership

10              (i)        NorthMet Lease

Pursuant to an agreement dated January 4, 1989, subsequently amended and assigned, we lease certain lands in covering 4,162 acres or 6.5 square miles located in St. Louis County, Minnesota, known as the NorthMet Project, from RGGS Land & Minerals Ltd., L.P (“RGGS”). During the year ended January 31, 2005, US Steel assigned the lease to RGGS. The current term of the renewable lease is 20 years and calls for future annual lease payments of $150,000 in January 2007 through 2009.

We can, at our option, terminate the lease at any time by providing written notice to RGGS at least 90 days prior to the effective termination date or can indefinitely extend the 20 year term by continuing to making the annual lease payment of $150,000 on each successive anniversary date.

The lease payments are considered advance royalty payments and will be deducted from future production royalties payable to RGGS, which range from 3% to 5% based on the net smelter return that we receive. Our 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.

              (ii)        The Erie Plant

By a Memorandum of Understanding dated December 5, 2003 and an option agreement dated February 14, 2004, we obtained an option (“Cliffs Option”) to acquire certain property, plant, and equipment (“Cliffs Assets”) from Cleveland Cliffs of Cleveland, Ohio (“Cliffs”) located near our NorthMet Project. As consideration for the exclusive Cliffs Option, we paid $500,000 prior to January 31, 2004 and issued to Cliffs 1,000,000 common shares on March 30, 2004, valued at $229,320 to maintain our exclusive rights until June 30, 2006. The option gave us exclusive rights until June 30, 2006 subject to the payment of an additional $5 million to Cliffs with six months of completion of a bankable feasibility study.

On September 15, 2005 we reached an agreement with Cliffs on the terms for the early exercise of our option to acquire 100% ownership of large portions of the former LTV Steel Mining Company ore processing plant in northeastern Minnesota (the “Asset Purchase Agreement”).

On November 15, 2005, we consummated the Asset Purchase Agreement and completed the acquisition thereunder. The property, plant, and equipment assets we now own include land, crushing, milling, and

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flotation capacity, complete spare parts, plant site buildings, real estate, tailings impoundments and mine work shops, as well as access to extensive mining infrastructure.

The consideration for the Asset Purchase Agreement was $1.0 million in cash, the issuance of 6,200,547 of our common shares (issued on November 15, 2005, at fair market value of $7,564,444), and a note in the aggregate principal amount of $2.4 million plus interest at 4% a year that will be paid in quarterly installments of $250,000 commencing March 31, 2006. As of March 31, 2007 the first five payments have been made. As of January 31, 2007, $169,000 of accrued interest has been capitalized as part of the cost of the NorthMet Project assets.

On September 14, 2006, we announced that our wholly-owned US subsidiary Poly Met Mining, Inc. had entered into an agreement with Cliffs whereby we would acquired property and associated rights (Cliffs II.) We closed the transaction on December 20, 2006. The transaction provides us with a railroad connection linking the mine development site and the existing crushing and the Erie Plants well as a 120-railcar fleet, locomotive fueling and maintenance facilities, water rights and pipelines, large administrative offices on site and approximately 6,000 acres to the east and west of and contiguous to our existing tailing facilities.

The purchase price for this additional infrastructure consisted of 2 million of our common shares and US$15 million in cash to be issued and paid in four tranches:

• 2 million shares of PolyMet;
• US$1 million in cash paid at closing;
• US$7 million in cash payable in quarterly installments of US$250,000 commencing December 31, 2006 with the balance payable upon receipt of commercial finance. Interest will be payable quarterly from December 31, 2006 at the Wall Street Journal Prime Rate; and
• US$7 million payable in quarterly installments of US$250,000 commencing on December 31, 2009. There will be no interest accrued until December 31, 2009 after which it will be payable quarterly at the Wall Street Journal Prime Rate.

PolyMet also assumed certain liabilities associated with the property.

As of March 31, 2007 we had paid the first two quarterly installments of the loan plus interest.

The Erie Plant

		Due to the financial difficulties experienced during 2002, we obtained approval from US Steel to make the annual lease payment on the NorthMet property on a quarterly basis. US Steel has agreed to payment of the $75,000 owing 4 January 2003 as to $18,750 on 31 January 2003, $18,750 on 9 March 2003 and $37,500 on 18 June 2003.
		We can, at our option, terminate the lease at any time by giving written notice to the lessor not less than 90 days prior to the effective termination date or can extend the 20-year term by continuing to make annual lease payments. The lease payments are considered advance royalty payments and shall be deducted from future production royalties payable to the lessor, which range from 3% to 5% based on the net smelter return per ton of ore mined. Our recovery of the advance royalty payments is subject to the lessor receiving an amount not less than the amount of the annual lease payment for that year.
	(ii)	State of Minnesota Minerals Leases (USA).
		During fiscal 2002, we successfully bid on 16 State of Minnesota minerals leases covering 4,363.41 acres. These leases are in proximity of proposed mining and waste disposal sites associated with the Project. The strategic location of these leases should facilitate Project economics and viability over the long term. Total cost of these three-year leases was US$16,784.67 paid in advance.

As set forth under the Asset Purchase Agreement, we have assumed certain ongoing site-related environmental and reclamation obligations of Cliffs in connection with the Erie Plant. Once we obtain our permit to mine and Cliffs is released from its obligations by certain state agencies, we will be directly obligated to comply with applicable environmental and reclamation obligations. Prior to Cliffs acquisition of the plant from LTV Steel and prior to our acquisition of the plant from Cliffs, both Cliffs and we undertook environmental assessments and concluded that there were no material liabilities other than the ultimate closure and reclamation of the site. Until operating permits are granted to us, Cliffs remains the named party of record for such obligations although, as part of the Asset Purchase Agreement, we have indemnified Cliffs for such costs. As of January 31, 2007 we estimate that liability to be approximately $23.4 million and, based on the expected timing of such payments, our cost of capital, and anticipated inflation rates, we made a provision of $3.4 million in our financial statements at that date.

(e)Under the terms of the agreement Cliffs will have the right to participate on a pro-rata based on their ownership of 6.7% of our outstanding common shares in future cash equity financings. We have a 20 business day first right to either buy or place some or all of our shares owned by Cliffs should Cliffs decide to sell.

As of January 31, 2007, we do not have any producing mines, thus, we are not yet utilizing the Erie Plant.

The Erie Plant comprises a large crushing, grinding and million facility that was built by LTV Steel in the mid-1950s and processed low grade iron ore known as taconite that was transported to the facility by railroad from local mines. Since the mid-1960s the plant was operated by Cliffs on behalf of LTV Steel

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and processed approximately 100,000 tons per day of taconite ore. The plant was shut down in 2000 when LTV Steel filed for bankruptcy protection since when it has been maintained initially by Cliffs and, since November 15, 2005, by us. The plant did not operate during the period ended January 31, 2007.

The plant is located approximately six miles west of our NorthMet deposit, about five miles north-northwest of the town of Hoyt Lakes, itself located about fifteen miles west of Virginia, Minnesota. The plant covers approximately 12,400 acres, or approximately 19.4 square miles, and is powered by electricity from local power lines.

The total plant facilities include two rail dump pockets, each with a 60” gyratory crusher, 3 x seven-foot standard cone crushers, 6 x seven-foot short-head crushers, 30 mill circuits each comprising one 12’x 14' rod mill and one 12’x 14' ball mill, 3 x 12'x 24' regrind mills, flotation cells, maintenance facilities and spare parts, extensive conveyors, feeders, bins, auxiliary facilities and offices, established infrastructure including a 250 MVA high voltage electrical substation, water supply, roads, tailings basins and rail facilities.

With the completion of Cliffs II, we also own a 120-railcar fleet, locomotive fueling and maintenance facilities, water rights and pipelines, and large administrative offices on site.

Until the plant was closed in 2000, Cliffs had undertaken numerous programs to update and modernize control systems. The plant is generally in good physical condition and was operating at or near full capacity prior to its closure. We have examined the plant in detail and have restarted certain pieces of equipment and believe it to be serviceable.

We plan to use less than one third of the historic productive capacity to crush and grind material that we expect to mine from the NorthMet deposit. We intend to construct new facilities to recover copper metal, nickel and cobalt concentrates, and precious metal precipitates. These new facilities replace the equivalent facilities used historically to recover iron from the taconite, which are not applicable to our anticipated metal products.

(d)        Permitting and Environmental

The environmental review process in the State of Minnesota is reasonably well defined.well-defined. Various permits from state and federal authorities will be necessary. An environmental impactEnvironmental 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.

BasedWe commenced the permitting process in early 2004. As of January 31, 2007, we had spent approximately $6.5 million on the Pre-feasibility Study,environmental and permitting of the NorthMet project will require substantial investment of both timeactivities and funds. The estimated permitting time frame is 3 to 3.5 years atwe anticipate spending an estimated cost of $6additional $5.0 million 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.complete this work.

As both EIS and permitting of the project will be subject to the arrangements of a land swap, we believe 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. We have no assurance that the land swap will be completed and that it will do so in this time frame or cost.

In the event that the Company acquires the facilities, under option with Cliffs Erie, we believe that the permitting requirements will be reduced substantially by utilizing the permits already in place for the Cliffs facility. There is no assurance at this time that we will meet our option requirements and therefore use of permits currently in place with Cliffs is speculative.

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(f)(e)        History of Exploration

During September 1999 to February 2000,Prospectors first discovered copper and againnickel near Ely, Minnesota about 20 miles north of NorthMet in the fourth quarter1940s. Subsequently, the Bear Creek Mining Company conducted a regional exploration program resulting in the discovery of Fiscal 2001,the Babbitt deposit (northeast of NorthMet). US Steel staked an exploration program in the Duluth Complex in the late 1960’s and over the next few years drilled 112 core holes into the NorthMet property (then called Dunka Road).

In 1987, the Minnesota NRRI published data suggesting the presence of a large resource of PGMs in the base of the Duluth Complex and, in 1989 we completed diamondcommenced an investigation into the potential for mining

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and recovery of copper, nickel, and PGMs. We re-assayed pulps and rejects from the previous US Steel drilling to obtain data on the PGMs.

In the early 1990s we leased the NorthMet property first to Nerco Minerals and later to Argosy Mining which continued to delineate the contained PGMs and drilled a few additional core holes.

From 1998 to present, we have conducted four drilling programs totaling 243 holes for approximately 146,000 ft. of core and reverse circulation drilling. The latest campaign comprising 47 holes totaling 19,000 feet was completed subsequent to the fiscal year ended January 31, 2007 and, combined with earlier drilling, programs. These programs were designed with two-fold purposes: 1) in-fill drilling for estimated resource calculations,brings the total to 357 diamond and 2) collect mineralized material for a mini-continuous pilot-plant testing program. We have drilled 87 of the 201 drillreverse circulation holes now in theaggregating to approximately 280,000 feet. In addition, with the assistance of Minnesota’s Natural Resources Research Institute, we assayed previously unassayed sections of the USX drill core. The assays were conductedhave meticulously recompiled all prior work started by Chemex LabsUS Steel in Reno, Nevada and Acme Analytical in Vancouver, B.C. ran the check assays. We have incorporated the drill results into the calculations included in the pre-feasibility study completed in April 2001.1969.

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.

Mineral Resources and Reserves

The drilling to dateNorthMet deposit has been adequate to completeextensively drilled during several campaigns starting with US Steel Corporation’s work in the pre-feasibility level work (conceptual) required for mine planning.late 1960s and culminating in PolyMet’s 2005 program. Within the overall

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(i)      Future Explorationmineralized envelope, PolyMet has defined measured and indicated mineral resources above the 500-foot elevation (approximately 1,060 feet below surface.)

In addition to inferred mineral resources, the ongoing environmentalresource envelope remains open along strike and permitting work we completed 42,000down dip. The DFS observes that, in addition to the measured, indicated and inferred mineral resources, there is another 75-100 million tons of “potential material” above the 500-foot elevation captured by extending the area of influence assumed for each sample and that historic drilling as much as 2,500 feet below surface (nearly 1,500 feet below the 500-foot elevation) has encountered mineralization with a grade comparable to or better than nearer-surface resources.

Within the mineral resource, PolyMet has established an initial proven and probable reserve.

July 2006 Mineral Resource and Reserve Estimate

Mineral Resources

Reserves

f)      Geology and Mineralization

The geology of large diameter core drillingnortheastern Minnesota is predominantly Precambrian in age. Approximately 1.1 billion years ago, intra-continental rifting resulted in mafic volcanics and associated intrusions along a portion of the Midcontinent Rift System, which extends through the Lake Superior Region to Kansas. The Midcontinent Rift consists of three parts: thick lava flows, intrusive rock and overlying sedimentary rock. There are three major intrusive complexes: the Coldwell Complex of Ontario, the Mellen Complex along the south shore of Lake Superior and the Duluth complex along the north shore.

The Duluth Complex hosts the NorthMet mineralization. The Complex extends in an arcuate belt from Duluth to the northeastern tip of Minnesota. Emplacement of the intrusion appears to have been along a system of northeast-trending normal faults that form half-grabens stepping down to the southeast. The magma was intruded as sheet-like bodies along the contact between the Early Proterozoic sedimentary rocks of the Animikie Group and the basaltic lava flows of the North Shore Volcanic Group.

The Duluth Complex is represented by the Partridge River Intrusion which overlays the Biwabik Iron Formation – the Partridge River Intrusion can be sub-divided into seven lithologic units:

• Unit 7 and Unit 6 – texturally homogeneous plagioclase-rich troctolite, each with a persistent ultramafic base. Unit 6 contains a mineralized horizon in the southwestern portion of NorthMet which is relatively enriched in PGM’s relative to copper. Units 6 and 7 are each about 400 ft. thick and form the shallowest units.

• Unit 5 – coarse grained anorthositic troctolite (300 ft.) grading down to Unit 4.

• Unit 4 – homogeneous augite troctolite and troctolite, with a less persistent ultramafic horizon. The contact between 4 and 5 is difficult to establish and the two units may actually be a single unit.

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• Unit 3 – the most easily recognized unit because of its mottled appearance due to olivine oikocrysts. It is fine grained troctolitic anorthosite to anorthositic troctolite. Average thickness is 250 ft. but locally can be up to 500 ft.

• Unit 2 – homogeneous troctolite with abundant ultramafic units and a generally persistent basal ultramafic. This unit shows the most variation in thickness and may be absent entirely.

• Unit 1 – the most heterogeneous unit, both texturally and compositionally. Grain size is generally coarser at the top of the unit and fines downward. The unit contains abundant inclusions of the footwall rock and is noritic towards the base. This is the main sulfide bearing unit. Two ultramafic layers are generally present. Unit 1 is probably the result of multiple pulses of magma injection. Average thickness is about 450 ft.

The general trend of the sedimentary rocks at the NorthMet Project.deposit is to strike to the east-northeast and to dip to the southeast about 15-25°, and the Partridge River Intrusion appears to follow this general trend. Two east-northeast trending faults have been identified through the construction of cross sections. The faults are steeply dipping and normal in character; offset ranges from negligible to 600 ft. down to the southeast. A third major fault has been identified in the western portion of the area and can be traced to the Northshore Mine in the north. Movement on this fault is down to the east. Numerous other faults can be identified in the cross-sections, but offset is small and they lack continuity. The cross-sectional view shows considerable offset in the more southerly fault, and less offset on the more northerly fault. This relationship can vary over the strike of the deposit.

There are two types of mineralization related to the rift system: hydrothermal and magmatic. The hydrothermal deposits include native copper in basalts and sedimentary interbeds, such as on the Keewenaw Peninsula, sediment-hosted copper sulfide and native copper, represented by the White Pine Mine of Michigan, copper sulfide veins in volcanics and polymetallic veins (silver-nickel-cobalt) in volcanics. The magmatic deposits include copper-nickel-PGM mineralization and titanium-iron mineralization in the Duluth complex, uranium and rare earth elements in carbonatites and Cu-Mo in breccia pipes. More locally the magmatic deposits lie along the northwestern contact of the Duluth Complex with the underlying sediments and Giants Range Batholith. NorthMet and the Babbit (or Minnamax) deposits are the largest of the copper-nickel- PGM mineralization.

The majority of the rock at NorthMet is unaltered, with a minor alteration found along fractures and micro-fractures, consisting of serpentine, chlorite and magnetite replacing olivine, uralite and biotite replacing pyroxene, and sausserite and sericite replacing plagioclase. Sulfide mineralization does not appear to be directly related to the alteration.

The metals of interest at NorthMet are copper, nickel, cobalt, platinum, palladium, gold and lesser amounts of rhodium and ruthenium. In general, the metals are positively correlated with copper mineralization, cobalt being the main exception. Mineralization occurs in four horizons throughout the NorthMet property. Three of these horizons are within basal Unit 1 and in some drill holes the horizons are indistinguishable from each other. The thickness of each of the three horizons varies from 5 to more than 200 feet. Unit 1 mineralization is found throughout the deposit. A less extensive mineralization zone is found in Unit 6 and it is relatively enriched in PGM’s compared to Unit 1.

Sulfide mineralization consists of chalcopyrite, cubanite, pyrrhotite and pentlandite with minor bornite, violarite, pyrite, sphalerite, galena, talnakhite, mackinawite and valleriite. Sulfide minerals occur mainly as blebs interstitial with plagioclase, olivine and augite grains, but also occur within plagioclase and augite grains, as intergrowths with silicates, or as fine veinlets. The percentage of sulfides varies from trace to about 5%. Palladium, platinum and gold are associated with the sulfides.

The NorthMet deposit has been identified over a length of approximately 2.5 miles, has been found to a depth of more than 1,000 feet, and is several hundred feet thick. It is covered by a thin layer of glacial till but otherwise reaches to the subsurface.

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(g)       Development Plans

Since the previous Technical Report was published in July 2004, there have been numerous changes to the scope of the project. Most notably, the processing rate has been expanded by nearly 20% to 32,000 tons of ore per day. In addition, PolyMet is commitment to exceeding Minnesota’s environmental standards, which are amongst the most stringent in the world, resulting in additional costs.

Other scope changes, including construction of additional facilities to house the hydrometallurgical and metallurgical plants, have added to project capital. Total scope changes, including the expanded processing rate, account for approximately $90 million of the increase in capital costs since the previous estimate in 2004.

Capital Cost Estimate
($’000)

Saleable Products
The DFS describes three products from NorthMet:

• High grade copper cathode that can be sold on the LME or COMEX markets or shipped directly to copper fabricators. Such product could potentially capture a premium price that has not been included in the economic analysis.
• A mixed hydroxide of nickel and cobalt that will be shipped to a third-party processor to produce nickel and cobalt metals. PolyMet is in advanced discussions with potential buyers for the product. In conjunction with these negotiations, PolyMet is continuing to analyze the economics of producing separate nickel- and cobalt-hydroxides at site.
• A precious metals precipitate that will be shipped to a third-party refiner for production of palladium, platinum and gold – PolyMet is in advanced discussions with potential buyers.

The copper metal will be electrowon from a copper sulfate solution from the hydrometallurgical plant – electrowinning is a well established, low-cost and low-energy process that eliminates the need for traditional smelting of sulfidic concentrates. Other metals will be shipped off site for final processing.

Key Data and Economic Analysis
The economics reported in the DFS reflect the initial mine plan which in turn is based on the permit application for a processing rate of 32,000 tons per day for an initial period of 20 years. As previously described, the pit plan is not fully optimized and the 20-year permit application covers significantly less than half of the measured and indicated resources already defined.

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The table below sets out Base Case metal price assumptions and process recovery and key operating data for the average of the first five years of full-scale production. These data comprise metal content of the three products described above, the contribution to net revenue after third-party processing costs, estimates of cash costs for each metal using a co-product basis whereby total costs are allocated to each metal according to that metal’s contribution to the net revenue, cash costs on a by-product basis whereby revenues from other metals are offset against total costs and those costs divided by production – this analysis is included for copper and for nickel. The final columns show the increase or decrease in the EBITDA with a change in the price of each metal.

Base Case Price and Operating Assumptions and Key Production Numbers

Note: Costs are for Low Case metal price assumptions
The final table sets out key financial statistics – the internal rate of return on the future capital investment and the present value of the future cash flow (including capital costs) using a 5% and 7.5% discount rate on both a pre-tax and an after-tax basis. The bottom section of the table shows the average over the first five years of full-scale production for gross revenue (before royalties and third-party processing fees), net revenues (after those costs) and EBITDA.

The price assumptions include recent actual prices (July 2006), our Base Case described previously, and a Low Case that is comparable to but slightly more conservative than the SEC-standard for reserve calculation, namely the three-year trailing average to the end of July 2006. Finally, the table shows a sensitivity analysis of a ± 10% change in the Base Case metal price assumptions.

Economic Projections on a Range of Metal Price Assumptions

We believe that we have completed exploration work required for the initial phases of production at NorthMet, however, we may need to conduct further in-fill drilling during the anticipated life of the project. The exploration work is being compiled in the DFS which is partconsidering the commercial viability of an open-pit mine. The DFS is contemplating construction of a much larger drilling program scheduled for this year, provides metallurgical sampleproject mining an average of approximately 70,000 tons of rock per day and processing approximately 32,000 tons per day through the Erie Plant. The finely ground material for pilot-plant metallurgical test work at SGS Lakefield commencing in August 2005. The drill program, which totals 90,000 feet is integralfrom the Erie Plant would then be processed through a new hydrometallurgical plant to the completion of the definitive feasibility studyproduce copper metal, nickel-cobalt concentrates, and will allow resource definition, detailed mine planning, waste rock characterization and other important aspects for the environmental permitting program. The pilot plant planned for August 2005 is intended to demonstrate the process, provide product sample for off-take agreements and to allow the engineer Bateman to provide process guarantees. The metallurgical results of the pilot plant will add new information to our ongoing bankable feasibility study that is aimed at commercial development of the NorthMet deposit in 2007.a precious metals precipitate.

(h)       Regulations and Government Rules

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

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

(a)       Operating Results

This discussion and analysis should be read in conjunction with the Company'sour consolidated financial statements. Our reportingfunctional currency is the United States dollar and our financial statements 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 thewith regard to our 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 ResultsEvents During the Fiscal Year Ended January 31, 2007

During the year ended January 31, 2007, and through the date of the filing of this Annual Information Form / Annual Report on Form 20-F, the Company continued to advance its NorthMet Project including the activities noted below.

The Company reported the results of its pilot plant testing of flotation and hydrometallurgical extraction of metals from NorthMet ore samples. The test program was completed at SGS Lakefield Research (Canada) under the supervision of Bateman Engineering (Australia). The pilot plant program confirmed the technical feasibility of the NorthMet flotation and hydrometallurgical treatment process. Copper, nickel, cobalt, gold, platinum and palladium were successfully concentrated from three ore composites and extracted via the autoclave process. The extracted precious metals were recovered in a precipitate for off-site delivery to a refinery for treatment. Copper was recovered as LME grade-A copper cathode by conventional solvent extraction and electro-winning. Nickel and cobalt were recovered as either a combined "mixed hydroxide precipitate" or as separate purified nickel and cobalt hydroxide precipitate products for off-take/refinery treatment. The pilot plant provided engineering data for completion of the Definitive Feasibility Study. The pilot plant also provided environmental data for permitting of the NorthMet metallurgical facility.

On 25 September 2006 PolyMet announced that the Definitive Feasibility Study (“DFS”) prepared by Bateman Engineering (Pty) Ltd. (“Bateman”) confirms the economic and technical viability of the Company’s NorthMet copper-nickel-precious metals project. The executive summary of the DFS has

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been summarized in a Technical Report that confirms to National Instrument 43-101 and has been filed on PolyMet’s website (www.polymetmining.com) and on SEDAR.

The DFS describes measured and indicated mineral resources of 422.1 million tons grading 0.28% copper, 0.08% nickel and 0.01 ounces per ton (“opt”) of precious metals (palladium, platinum and gold). In addition, the DFS reports inferred mineral resources of 120.6 million tons grading 0.25% copper, 0.07% nickel, and 0.01 opt of precious metals. Mineral resources are not reserves and do not have demonstrated economic viability.

The DFS also established proven and probable mineral reserves. This material, contained within the measured and indicated mineral resources, totals 181.7 million tons grading 0.31% copper, 0.09% nickel, and 0.01 opt of precious metals. These mineral reserves are based on copper at $1.25 per pound, nickel at $5.60 per pound, and precious metal prices of $210, $800, and $400 per ounce respectively for palladium, platinum and gold.

The DFS is based on processing of 32,000 tons of ore per day, which is the size of operation being permitted.

Initial direct capital costs, including contingency, are estimated at approximately $312 million. Indirect costs including engineering and construction management, project insurance, the anticipated cost of environmental insurance related to reclamation and closure guarantees, and other owner’s costs are estimated at $68 million, for a total capital cost of approximately $380 million. Sustaining capital is projected at $72 million for the first 20 years.

The DFS estimates that the project will provide full-time employment for at least 400 people.

On 20 December 2006 we acquired extensive additional infrastructure associated with our NorthMet Project from Cliffs. We recordedobtained a lossrailroad connection linking the mine development site and the existing crushing and grinding plant that we acquired from Cliffs in 2005 as well as a 120-railcar fleet, locomotive fueling and maintenance facilities, water rights and pipelines, large administrative offices on site and approximately 6,000 acres to the east and west of $3,776,337 ($0.07 per share) comparedthe mine development site and contiguous to a lossour existing tailing facilities.

The purchase price for this additional infrastructure consisted of $146,800 ($0.00 per share) in 2004 and a loss of $471,679 ($0.01 per share) in 2003. The loss in 2005 was attributed to a non-cash stock based compensation expense of $992,658 and pre-feasibility costs of $1,622,983.

During 2005 we expended $1,228,970 (net of stock based compensation expense of $992,658) in general and administrative costs compared to $233,658 (net of stock based compensation expense of $55,048) in 2004 and $331,886 in 2003. During 2005 we also expended $1,622,983 in exploration, pre-feasibility and lease payments compared to $91,616 in 2004 and $112,318 in 2003. The substantial increase was a result2 million of our direct participationcommon shares and US$15 million in cash to be issued and paid in four tranches:

• 2 million shares of PolyMet;
• US$1 million in cash was paid at closing;
• US$7 million in cash is payable in quarterly installments of US$250,000 commencing 31 December 2006 with the balance payable upon receipt of commercial financing. Interest on the outstanding amount is payable quarterly from 31 December 2006 at theWall Street Journal Prime Rate; and
• US$7 million in cash is payable in quarterly installments of US$250,000 commencing on 31 December 2009. Interest will begin to accrue on the outstanding amount beginning on 31 December 2009 after which it will be payable quarterly at theWall Street JournalPrime Rate.

PolyMet has indemnified Cliffs for ongoing reclamation and remediation associated with the property.

With a total of 9,200,547 shares, Cliffs is now the beneficial owner of approximately 7.6% of the Company’s issued and outstanding common shares. Cliffs continues to have the right to participate on a pro-rata basis in future equity financings. PolyMet has the first right of refusal to place or acquire Cliff’s shares should Cliffs wish to dispose of its interest.

In January 2007, the Company submitted its NorthMet Project Description to state and federal regulators. The Project Description lays out the Company’s development plans and proposed environmental safeguards. Independent environmental contractors are preparing the Environmental Impact Statement (“EIS”) for the project. PolyMet and the regulatory authorities are discussing a revised schedule for

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completion and publication of the draft EIS. All parties recognize that it is imperative that the published document fully reflects PolyMet’s commitment to meet or exceed Minnesota’s environmental regulations and that a thorough and complete draft EIS should properly address concerns of interested parties. In view of these considerations, the draft EIS will not be published during the second quarter of 2007 as previously expected. PolyMet will report a revised schedule as soon as it becomes available.

Following publication of the draft EIS there will be a public comment period following which the final EIS is expected to be published for public comment. The issuance of a final EIS would allow PolyMet to apply for environmental and operating permits. Prior to receipt of these permits, the Company intends to secure production debt financing that would be available upon receipt of key permits, with construction slated to start upon availability of finance.

The final operational mine plan is currently being developed and is expected to include the results from a highly selective drill campaign which is focused on converting mineral resources into proven and probable mineral reserves as well as completion of pit optimization that is expected to reduce the strip (waste:ore) ratio, optimize equipment selection and mine scheduling and lower the mining costs. The optimized mine plan is scheduled for completion in the environmentalthird quarter of 2007.

In March 2007, PolyMet appointed key operating and permitting advancement atconstruction staff for the development of the NorthMet Project.

Change in Accounting Policy

We 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 The Company also engaged URS Corporation (“URS”) as lead contractor for the recognition, measurementEngineering, Procurement 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 we enacted prospectively early adoptionConstruction Management of the fair value based method of accounting for awards issuedNorthMet Project. PolyMet expects to employeesbenefit from URS’ International purchasing group as well as its project control systems that will provide cost and schedule monitoring for the fiscal year beginning 1 February 2003.Company and the anticipated project finance lenders. It is planned that Bateman will continue as the Owner’s Engineer and the DFS team will remain as the Process Design group. To optimize the construction phase of the project, Bateman has commenced developing detailed process packages in conjunction with the completion of the DFS.

The new standard requiresSince completing the DFS in 2006, PolyMet’s construction team has been focused on optimizing the construction timeline and logistics, including assessing the possibility of achieving earlier sales of some products, as well as deferring substantial capital expenditures. Should this be practicable, PolyMet would not anticipate any significant change in the schedule for achieving initial revenues in late 2008 or early 2009.

Construction of NorthMet is expected to be made up of four major components:

In addition to the aforementioned developments relating to the NorthMet Project, PolyMet completed the following corporate related activities.

On 10 April 2006 the Company announced that it was accelerating the expiry of all stock-based awards madeof the then outstanding share purchase warrants raising $14.31 million.

In June 2006, PolyMet commenced trading on the American Stock Exchange under the symbol PLM.

On 31 October 2006 the Company entered into an agreement with BNP Paribas (“BNPP”) whereby BNPP will advise and assist the Company in all aspects of preparation for construction financing. BNPP was issued warrants to employeespurchase 600,000 common shares of PolyMet at $4.00 per share at any time prior to October 30, 2010 and, non-employees be measured and recognized usingupon delivering a fair value based method.bona fide offer of project financing, warrants to purchase an additional 500,000 common shares of PolyMet at $4.00 per share at any time prior to October 30, 2010 will vest. 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 acceptableMarch 2007, BNPP, acting in its construction financing advisor capacity, retained Micon International Limited (“Micon”) as Independent Engineer in connection with construction finance for awards made to employees.the NorthMet Project. Micon is undertaking a detailed review of the DFS.

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During fiscal year 2003, we changed our accounting policyIn February 2007, PolyMet graduated from the TSX Venture Exchange to the Toronto Stock Exchange (“TSX”) and commenced trading on the TSX under the symbol POM.

On 8 March 2007, the Company announced that William D. Corneliuson had agreed to join its Board of Directors.

On 17 April 2007, PolyMet announced that it had closed a private placement financing of 15 million units, at US$2.75 per unit with respecteach unit comprising one common share and one-half of one warrant. Each, whole warrant is exercisable into a common share at a price of US$4.00 at any time until October 13, 2008 subject to accounting for exploration expenditures. In 2002 and prior periods, acquisition and exploration expenditures were capitalized to mineral properties. Underan early trigger if 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 increased20-day volume weighted average price of the deficit as at January 31, 2000 by $2,876,565 and increasedcommon shares is US$6.00 or more. After paying cash finders’ fees totaling US$1.43 million, the loss for the year ended 2002 by $606,162.financing raised $39.82 million.

Summary of Operating Results

As atof January 31, 2005, the Company2007, we operated in one segment, the exploration and development of the base and precious metals at its NorthMet Project in Minnesota, United States. Other reconciling adjustments compriseHead office comprises 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.

Fiscal 2005 versus Fiscal 200426

Year ended January 31, 2007 compared with the year ended January 31, 2006

Overall.Our focus for the currentfiscal year ended January 31, 2007 was to complete the Definitive Feasibility Study, complete our drill program and pilot plant testing and further advance the environmental and permitting process and to commence a diameter core drill program at the NorthMet Project. We continued to expand our operations in Minnesota by retaining more key consultants to assist in the environmental impact statement and permitting work as well as plan for the development of the project.

Loss for the year. We recorded a loss in the year ended January 31, 2007 of $17.893 million ($0.16 loss per share) compared to a loss of $15.929 million ($0.22 loss per share) in 2006 and $4.416 million ($0.09 loss per share) in 2005. The increase in the net loss for the year was primarily attributable to: the increased level of work; and an increase in general and administrative costs including non-cash stock compensation expense of $4.723 million (2006 - $3.523 million) and non-cash consulting fees expense of $1.289 million (2006 - $Nil). This was partially offset by lower pre-feasibility costs as the DFS was completed effective October 1, 2006 and site costs from that date were capitalized.

During 2007 we expended $8.844 million in exploration, pre-feasibility and lease payments compared to $11.120 million in 2006 and $1.623 million in 2005. The decrease in 2007 was a result of the completion of the DFS during the third quarter and the subsequent capitalizing of site costs.

General and Administrative expense for the year ended 31 January 2007 excluding non-cash stock based compensation expenses was $4.251 million compared with $1.655 million for the year ended 31 October 2006. The Company reported an increase in expenditures for:

• Consulting fees were $1,621,000 (2006 - $388,000) as a result of increased activity at both the corporate and project level and the issuance of bonus shares for successful completion of Milestone 3 (completion of a DFS which indicates that commercial production from the NorthMet Project is viable);
• Professional fees totaled $790,000 (2006 - $151,000) owing to increased legal, audit and other advisory fees as a result of increased corporate activity; and
• Transfer agent and filing fees were $272,000 (2006 - $65,000) as a result of listing on the Toronto Stock Exchange and the American Stock Exchange during the period.

Net interest income during the year ended 31 January 2007 was $428,000 compared with $148,000 in the year ended 31 January 2006. This increase was the result of higher cash balances on deposit and higher interest rates. Foreign exchange translation losses were $536,000 for the year ended 31 January 2007 (2006 – gain of $221,000). This increase was the result of changes in exposure and fluctuations in foreign exchange rates.

During the year, the Company re-examined its accounting for warrants and the share bonus program. As a result of this re-examination, the Company determined that share capital and contributed surplus were inappropriately measured and recognized during the year ended 31 January 2006. Furthermore, the Company determined that consulting fees charged to the consolidated statement of loss for the year ended 31 January 2005 under the share bonus program were understated by $638,000.

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The company has restated its financial statements for the items above and the impacts on certain line items of the financial statements with significant changes were as follows:

Year ended January 31, 2006 compared with the year ended January 31, 2005 (restated)

Overall. Our focus for the fiscal year ended January 31, 2006, was to advance the feasibility study, to complete a drill program, conduct pilot plant testing, and advance the environmental and permitting process at the NorthMet Project. We expanded our operations in Minnesota by retaining several key consultants to assist in the completion of the environmental study and permitting requirements of the project. In additionWe raised $22.2 million in new equity and we initiated negotiationsacquired the Cliffs Assets from Cliffs.

Loss for the year. We recorded a loss for the fiscal year ended January 31, 2006 of $15,929,000 ($0.22 loss per share) compared to secure off take partnership agreements.

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Fiscal 2004 versus Fiscal 2003

Our primary objectivea loss of $4,416,000 ($0.09 loss per share) in 2005. The increase in the net loss for 2004the year was primarily attributable to achieve certain milestones with respectthe increased level of work, the Company’s accounting policy of expensing the costs of pre-feasibility work related to the NorthMet project. We were successfulProject of $11,120,000 (2005 – $1,623,000), and an increase in obtaininggeneral and administrative costs including non-cash stock compensation expense of $3,523,000 (2005 -$993,000) and non-cash consulting fees expense of $nil (2005 – $872,000).

During 2006 we expended $11,120,000 in exploration, pre-feasibility and lease payments compared to $1,623,000 in 2005. The substantial increase was a result of our direct participation in the option to acquire the Cliffs-Erie facility, which if exercised 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 facilityenvironmental 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. 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 June 30, 2006.

With our focus on the NorthMet project, we reached an agreement for the sale of Marathon leases and related land for proceeds of $250,000.

Fiscal 2003 versus Fiscal 2002

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

The only work performed on-sitepermitting advancement at the NorthMet Project consisted of environmental mitigation of drill holes andProject.

Stock-based compensation expense for the disposal of drill cuttings from previous drilling campaigns. All such work has now been completed.

Liquidity And Capital Resources

Working Capital

As atyear ended January 31, 2005, we had working capital2006 was $3,523,000 representing an increaseof approximately 255% compared to stock-based compensation expense of $1,273,660, with approximately $510,871 in cash and restricted cash, $807,200 in term deposits and $286,601 in miscellaneous receivables and prepaid expenses and accounts payable of $331,012. In addition we had $229,320 in other assets and 15,838 in property, plant and equipment expenditures.

We rely principally on equity financing to fund our projects and expenditures. We have no internal source of funding and thus we depend on our ability to finance by raising funds by the sale of shares.

Planned Exploration Activities

Our current available cash and working capital will be adequate to maintain our property lease, summarized in Item 4, of this Annual Report, and administrative costs$993,000 for the next 12 months. In orderyear ended January 31, 2005. The stock-based compensation expense incurred during the fiscal year ended January 31, 2006 is the result of issuing 3,580,000 options to advancedirectors, officers, consultants, and employees, which is 1,035,000 more options than the NorthMet project further additional funding will be required and there are no assurances that we will be able to complete the necessary financings or obtain a joint venture in order to carry out any further work. See Risk Factors.

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Operating Cash Flow

For2,545,000 options issued during the year ended January 31, 2005, net cash inflows of $3,414,090 exceeded cash outflows of $3,398,770 resulting in a positive cash flow of $15,320, which when combined with a greater value per option based on the $495,551 cash balanceBlack-Scholes calculation. These additional incentive options were part of our overall plan to align corporate development and shareholder value.

(b)       Liquidity And Capital Resources

Financing Activities

During the year ended 31 January 2007 the Company issued:

• 14,662,703 common shares upon the exercise of warrants for proceeds of $14.310 million;

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• 2,193,000 common shares upon the exercise of options for proceeds of $765,000, and

• 2,350,000 common shares under the Company’s Bonus Share Plan for deemed proceeds of $1,289,000.

During the year ended January 31, 2006, we completed:

• a non-brokered private placement for 3,544,657 units at a price of CDN$1.40 per unit. Each unit consisted of one common share and one half of one share purchase warrant. One full warrant entitles the holders, on exercise, to purchase one additional common share of ours at a price of CDN$2.00 per warrant share at any time until the close of business on the day which is 18 months from the date of closing, provided that if the closing price of the our shares as traded on the Toronto Stock Exchange (the “Exchange”) is over CDN$2.50 per share for 20 consecutive trading days, the Warrants will terminate 30 days thereafter;

• a non brokered private placement for 6,672,219 units at a price of CDN$0.90 per unit. Each unit consisted of one common share and one half of one share purchase warrant. One full warrant entitles the holders, on exercise, to purchase one additional common share of ours at a price of CDN$1.25 per warrant share at any time until the close of business on the day which is 30 months from the date of closing, provided that if the closing price of our shares as traded on the Exchange is over CDN$2.50 per share for 20 consecutive trading days, the warrants will terminate 30 days thereafter;

• a brokered private placement for 9,277,777 units at a price of CDN$0.90 per unit. Each unit consisted of one common share and one half of one share purchase warrant. One full warrant entitles the holders, on exercise, to purchase one additional common share of ours at a price of CDN$1.25 per warrant share at any time until the close of business on the day which is 30 months from the date of closing, provided that if the closing price of our shares as traded on the Exchange is over CDN$2.50 per share for 20 consecutive trading days, the warrants will terminate 30 days thereafter; and

• a non brokered private placement for 9,000,000 units at a price of CDN$0.55 per unit. Each unit consisted of one common share and one half of one share purchase warrant. One full warrant entitles the holders, on exercise, to purchase one additional common share of ours at a price of $0.70 per warrant share at any time until the close of business on the day which is 24 months from the date of closing, provided that if the closing price of the our shares as traded on the Exchange at or exceed $1.00 per share for 30 consecutive trading days, the Warrants will terminate 30 days thereafter.

In addition to the financings during the year end 2004 resultsended January 31, 2006, we also issued:

• 5,700,628 common shares pursuant to the exercise of 5,700,628, share purchase warrants for total proceeds of $3,296,143; and

• 1,795,852 common shares pursuant to the exercise of stock options for total proceeds of $196,988.

During the year ended January 31, 2005, we issued:

• 5,277,574 common share purchase warrants were exercised at exercise prices between CDN$0.10 - CDN$0.25 for proceeds of $828,554;

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• stock options in an ending cash positionthe amount of $510,871. The cash inflows1,088,400 were a result of two private placements for a total of 2,800,000 sharesexercised at CDN $0.80prices between CDN$0.08 - CDN$0.13 per share for proceeds of $1,733,894. $81,383; and

• a private placement for 1,550,000 units at a price of CDN$0.80 per unit and a private placement for 1,250,000 units at a price of CDN$0.80 per unit for total proceeds of $1,733,984.

Year Ended January 31, 2007

Our operating activities used cash of $12,228,000 during the fiscal year ended January 31, 2007 as compared to using cash of $10,846,000 during the fiscal year ended January 31, 2006 and $2,576,000 in the fiscal year ended January 31, 2005. The cash used for operations during the fiscal year ended January 31, 2007 was primarily due to our loss of $17,893,000, consulting fees of $1,289,000 paid with bonus shares and stock-based compensation paid of $4,723,000.

Cash outflows comprised principallyused in investing activities was $4,171,000 the fiscal year ended January 31, 2007 as compared to using cash of general$203,000 during the fiscal year ended January 31, 2006 and administrative$823,000 in the fiscal year ended January 31, 2005. The cash used for investing activities during the fiscal year ended January 31, 2007 was primarily due to capitalization of site related costs subsequent to the completion of $1,228,970 (net non-cash stock based compensation expense)the DFS late in September 2006 and pre-feasibility costsa payment of $1,622,983.$1,000,000 made to Cliffs in connection with the acquisition of the additional property and associated rights near the Erie Plant.

Financing Activities

The following outlines ourWe generated cash of $13,625,000 in financing activities during the fiscal year ended January 31, 2007 as compared to generating cash of $22,209,000 during the fiscal year ended January 31, 2006 and $3,414,000 in the fiscal year ended January 31, 2005. Cash from financing activities for the periodyear ended January 31, 2005 included:

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There were no shares or financing activities for the fiscal periodyear ended January 31, 2003.2006 was from the proceeds of four private placements, the exercise of share purchase warrants and stock options, and proceeds from share subscriptions.

RequirementsTotal cash for the year ended 31 January 2007 decreased by $2.774 million for a balance of Financing$8.897 million compared to the year ended 31 January 2006 where cash increased $11.160 million to a balance of $11.671 million.

DevelopmentSubstantially all cash and equivalents are held in Canadian currency.

As at 31 January 2007 the Company had working capital of $5.650 million compared with $9.070 million at 31 January 2006 consisting primarily of cash of $8.897 million (31 January 2006 - $11.671 million), accounts payable of $1.518 million (31 January 2006 - $1.717 million) and the current portion of the notes to Cliffs of $2.000 million (31 January 2006 - $1.000 million). The Company expects to pay the remaining balance of $11.853 million (31 January 2006 - - $1.420 million) long term notes to Cliffs from working capital, additional financing and funds from operations once commercial production has commenced.

On 17 April 2007, the Company closed a non-brokered private placement financing of 15 million units at US$2.75 per unit, with each unit comprising one common share and one-half of one warrant. Each whole warrant is exercisable into a common share at a price of US$4.00 at any time until 13 October 2008, subject to an early trigger if the 20-day volume weighted average price of the common shares is US$6.00 or more. In connection with the private placement, the Company has paid finders’ fees totaling US$1.43 million in cash, 150,000 shares and 520,000 broker warrants having the same terms as the warrants described above.

As a result of the private placement as described above, the Company is able to meet its current obligations through to permitting and to service and repay its debt to Cliffs due in the next year.

Should the Company wish to continue to further advance the NorthMet projectProject to feasibilitycommercial production PolyMet will require additional funds. As the Company has no operating revenues, the only source of

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liquidity consists primarily of cash flows from proceeds of equity issues and possible debteventual project financing. The Company has entered into an agreement with BNP Paribas (“BNPP”) whereby BNPP will advise and assist PolyMet in all aspects of preparation for construction finance. As part of this agreement, BNPP was issued warrants, subject to regulatory approval, to purchase 600,000 shares of PolyMet common stock at $4.00 at any time prior to October 30, 2010 and, upon delivering a bona fide offer of project financing, warrants to purchase an additional 500,000 shares of PolyMet at $4.00 at any time prior to October 30, 2010 will vest.

There can be no assurance that the Company will be able to continue to raise funds, in which involve significant risks some of which have been referredcase it may be unable to previously in this document. As we arecontinue to advance the NorthMet Project. Should PolyMet be unable to realize on its assets and discharge its liabilities in the exploration stage, we do not have revenuesnormal course of business, the realizable value of its assets may be materially less than the amounts recorded on the balance sheets. See Risk Factors.

Debt

Pursuant to Asset Purchase Agreements the Company’s wholly owned subsidiary Poly Met Mining, Inc. signed three notes payable to Cliffs in the amounts of $2,400,000, $7,000,000 and $7,000,000, respectively. The first note is interest bearing at the annual simple rate of four percent (4%) and shall be paid in quarterly instalments equal to $250,000 for total repayment of $2,500,000. The second note is interest bearing at theWall Street JournalPrime Rate and shall be paid in quarterly instalments equal to $250,000 commencing 31 December 2006, with the balance repayable upon receipt of commercial financing, for total repayment of $7,000,000. The third note is interest bearing at theWall Street JournalPrime Rate and shall be paid in quarterly instalments equal to $250,000 commencing on 31 December 2009 for total repayment of $7,000,000. No interest will be payable on the third note until 31 December 2009, accordingly it has been fair valued, for balance sheet purposes, by discounting it at theWall Street JournalPrime Rate. As at 31 January 2007 the outstanding long term debt was as follows:

We anticipate using working capital, additional financing and funds 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.once commercial production has commenced to meet the above payment obligations to Cliffs

(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 our 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 our 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”).Not applicable.

(e)       Off-Balance Sheet Arrangements

Not applicable.

(f)       Tabular Disclosure of Contractual Obligations

The following table lists as of 31 January 2007 information with respect to the Company’s known contractual obligations:

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ByLong-term debt obligations (including the current portion) are set out in this table on an agreement datedundiscounted basis and include anticipated interest. Asset retirement obligation represents the undiscounted obligation at 31 January 4, 1989 and a subsequent amendment, we entered into a lease agreement with USX Corporation (“USX”) on certain lands in St. Louis County, Minnesota. 2007.

(g)       Critical Accounting Policies

The termconsolidated financial statements of the lease is 20 years and calls for total annual lease payments of $1,475,000. All lease paymentsCompany. have been paid or accruedprepared in accordance with accounting principles generally accepted in Canada that require management to January 31, 2005. The agreement requires future annual lease paymentsmake assumptions and estimates that affect the reported amounts of $150,000assets and liabilities and disclosures of contingent assets and liabilities as at the date of the financial statements. Significant estimates used in the preparation of these consolidated financial statements include, amongst other things, expected economic lives of plant and equipment, anticipated costs of asset retirement obligations including the reclamation of mine site, valuation of options and share purchase warrants, and the assessment of impairment in value of long lived assets.

Mineral Property, Plant and Equipment

Mineral property costs, aside from January 4, 2006mineral property acquisitions costs, incurred prior to 2009.

We can, at our option, terminatedetermination of the lease at any time by giving written noticeDFS are expensed as incurred and expenditures incurred subsequent to the lessor not less than 90 days priorDFS and mineral property acquisition costs are deferred/capitalized until the property is placed into production, sold, allowed to lapse or abandoned.

Acquisition costs include cash and fair market value of common shares.

As a result of the Definitive Feasibility Study on the NorthMet Project, the Company has now entered the development stage and has elected to defer mineral property development expenditures related to the NorthMet Project effective termination1 October 2006.

Plant and equipment are recorded at cost and depreciated over the estimated life of the related assets calculated on a unit of production or straight-line basis, as appropriate. Mineral property, plant and equipment related to the NorthMet Project will begin to be amortized at the time the project commences operations.

Stock-Based Compensation and Share Purchase Warrants

All stock-based awards made to employees and non-employees are measured and recognized using a fair value based method. For employees, the fair value of the options is measured at the date of the grant. For non-employees, the fair value of the options is measured on the earlier of the date at which the counterparty performance is complete or can extend the 20-year term by continuingdate the performance commitment is reached or the date at which the equity instruments are granted if they are fully vested and non-forfeitable. For employees and non-employees, the fair value of the options is accrued and charged to make $150,000 annual lease paymentsoperations, with the offsetting credit to contributed surplus, on each successive anniversary date.a straight-line basis over the vesting period. If and when the stock options are ultimately exercised, the applicable amounts of contributed surplus are transferred to share capital.

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The Company issues share purchase warrants in connection with certain equity transactions. The fair value of the warrants, as determined using the Black-Scholes option pricing model, is credited to contributed surplus. The recorded value of share purchase warrants is transferred to share capital upon exercise.

Asset Retirement Obligations

The lease payments are considered advance royalty payments and shall be deducted from future production royalties payablerecommendations of Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3110,Asset Retirement Obligations(“CICA 3110”), became effective on 1 February 2004. This section requires the recognition of a legal liability for obligations relating to the lessor,retirement of property, plant and equipment and obligations arising from the acquisition, construction, development, or normal operation of those assets. Such asset retirement costs must be recognized at fair value, when a reasonable estimate of fair value can be estimated, in the year in which range from 3%the liability is incurred. A corresponding increase to 5% based on the net smelter return received. Our recoverycarrying amount of the advance royalty paymentsrelated asset, where one is identifiable, is recorded and amortized over the life of the asset. Where a related asset is not easily identifiable with a liability, the change in fair value over the course of the year is expensed. The amount of the liability is subject to re-measurement at each reporting year-end. The estimates are based principally on legal and regulatory requirements. It is possible that the lessor receiving an amount not less thanCompany’s estimates of its ultimate reclamation and closure liabilities could change as a result of changes in regulations, changes in the amountextent of environmental remediation required, changes in the means of reclamation or changes in cost estimates.

The operations of the annual lease payment dueCompany may in the future be affected from time to time in varying degrees by changes in environmental regulations, including those for that year.

Duringfuture removal and site restoration costs. Both the year ended January 31, 2005, USX assignedlikelihood of new regulations and their overall effect upon the lease to RGGS Land & Minerals Ltd., L.P.Company may vary greatly and are not predictable.

(g)      Safe Harbour

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Not applicable.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.       Directors and Senior Management

Each Director serves until the next annual general meeting of shareholders or until his/her successor is duly elected, unless his/her office is vacated in accordance with the Articlesour Certificate 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.Incorporation.

Casual vacanciesVacancies on the Board of Directors are filled by election from nominees chosen by the remaining Directors and the persons filling those vacancies will hold office until the next Annual General Meeting,annual general meeting of shareholders, at which time they may be re-elected or replaced. (For more details on the process for nominating directors, see our Nominations Committee Charter, attached hereto as Exhibit 11.2. )

The following table sets out the nameis a list of the names and ages of our directors and executive officers:

William Murrayhas served as our President and Chief Executive Officer and as director since March 2003. Mr. Murray is an engineer in the mining industry with 37 years of experience in construction

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management and project evaluation in North America and Africa. He became involved with our operations in March 2003 as a principal of Optimum Project Services Ltd., a consulting firm whose work with us led to technical improvements and large capital cost reductions on the NorthMet Project. Prior to that, Mr. Murray was employed by at July 15, 2005,Fluor Daniel, a large U.S. Engineering & Construction contractor, as the countryDirector of New Business from October 1989 to April 1993. From September 1981 to May 1987, Mr. Murray was a Director of Project Services at Denison Mines where he participated in which each is ordinarily a resident, all officesthe construction of the $1.2 billion Quintette Coal project. From September 1970 to August 1981, Mr. Murray held a number of positions at Anglo American Corp in South Africa, principally in the Gold Division, where he was eventually promoted to the rank of Chief Engineer. Mr. Murray is also a Director of Baja Mining Corp. Mr. Murray resides in Canada.

Douglas J. Newbyhas served as our Chief Financial Officer since November 2005. Mr. Newby has approximately 26 years of experience in the evaluation and financing of mining companies and projects around the world. Before coming to PolyMet, Mr. Newby served variously as a Director, Executive Vice President, interim Chairman, President and Chief Executive Officer Western Goldfields, Inc. a US-based gold mining company. Mr. Newby has also been President of Proteus Capital Corp., a corporate advisory firm that specializes in the natural resource industries, since July 2001. Mr. Newby served as Managing Director of Proteus Consultants Ltd. from January 1991 to July 2001 and Managing Partner of Moyes Newby & Co., Inc. from April 1994 to December 1998, both of which provided corporate advisory services primarily to the international energy and mining industries. Since January 2004, Mr. Newby has served as Vice-President of Cadence Resources Corporation, an oil and gas exploration and development company. Before forming Proteus Consultants Ltd., Mr. Newby held senior positions with the investment banking firms of S.G. Warburg & Co., Inc., Morgan Grenfell & Co., and James Capel & Co. His primary responsibility with us is to structure and arrange financing to place our NorthMet Project into production.

Joseph Scipionihas served as Vice-President – Operations and Construction since July 2006 and as Chief Operating Officer since March 2007. Mr. Scipioni has more than 30 years experience with United States Steel Corporation where he worked in a number of progressively senior positions in operations. His last position was Plant Manager at the Keewatin Taconite plant in Minnesota. In addition, Mr. Scipioni has served in leadership positions with the Iron Mining Association of Minnesota, Central Iron Range Initiative, United Way of Northeastern Minnesota and Hibbing Chamber of Commerce.

Niall Moore has served as our Corporate Secretary since December 2006 and as our Group Controller since September 2007. Mr. Moore has over 20 years of experience with public companies in the resource sector. Most recently, he worked fulltime as Director, Corporate Reporting for Placer Dome Inc. and as a consultant to Barrick Gold, Inc. Prior to that was an audit partner at Ernst & Young LLP. He has extensive experience in financial reporting, compliance and valuation work. His primary responsibilities with the Company nowinclude legal and regulatory compliance, financial reporting and internal controls.

Dr. David Dreisingerhas served as a member of our board of directors since October 2003. Dr. Dreisinger also serves on our audit, compensation, and corporate governance committees. Dr. Dreisinger is currently a member of the faculty at the University of British Columbia in the Department or Metal and Material Engineering. He has published over 100 papers and has been extensively involved as a process consultant in industrial research programs with metallurgical companies. Dr. Dreisinger has participated in 11 U.S. patents for work in areas such as pressure leaching, ion exchange removal of impurities from process solutions, use of thiosulfate as an alternative to cyanide in gold leaching, and leach-electrolysis treatment of copper recovery from sulfide ores and the Sepon Copper Process for copper recovery from sulfidic-clayey ores. He will work closely with our feasibility consultant to design and complete all aspects of the testwork.

W. Ian L. Forresthas served as a member of our board of directors since October 2003. Mr. Forrest also serves on our audit, compensation, and corporate governance committees. Mr. Forrest is a members of the Institute of Chartered Accountants of Scotland and continues to practice as a public accountant in Geneva, Switzerland. Mr. Forrest has 30 years of experience with public companies in the resource sector. His experience encompasses the areas of promotion, financing, exploration, production and company management. He has also participated in several notable projects including Gulfstream's

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North Dome gas discovery, Qatar, Reunion Mining's Scorpion zinc, Namibia, which was subsequently developed by Anglo American, and Ocean Diamond Mining which pioneered the independent diamond dredging industry off the west coast of southern Africa. He also serves as a director on the boards two Canadian public companies, Caledonian Mining Corporation and Mengold Resources Inc. Having played an important role in the revival of PolyMet Mining Corporation in 2003, he was appointed Chairman in May 2004. Mr. Forrest resides in Switzerland.

George Molyviatis has served as a member of our board of directors since March 2003. Mr. Molyviatis also serves on our audit and compensation committees. Mr. Molyviatis has approximately 20 years experience as an investment banker and businessman. He started his career with BNP Paribas in Geneva in 1986 where held by each of them, their principal occupations,increasingly senior positions, ultimately becoming a Senior Vice-President. In 1994 he joined the period of time for which eachCredit Suisse group as a Senior Vice-President and left in 1996 to join Pegasus Securities, S.A., a Greek investment bank that he ran until 1999, when it was sold. Since then Mr. Molyviatis has been a directorprivate investor in several natural resource companies and owns several large forestry and timber processing facilities in Georgia and Russia. Mr. Molyviatis resides in Greece.

James Swearingenhas served as a member of our board of directors since January 2005. Mr. Swearingen formerly managed the largest mining operation in North America, US Steel's Minntac mine and plant along Minnesota's Mesabi Iron Range, serving as General Manager of Minnesota Ore Operations. He currently serves as co-chair of the Company,Governor's Committee on Minnesota's Mining Future. Mr. Swearingen is also active with other groups that bring new technology to northeastern Minnesota to develop non-ferrous mines and new, value added, projects in steel making. He is also an active advisor to the numberUniversity of common sharesMinnesota's Natural Resources Research Institute based in Duluth, Minnesota. Mr. Swearingen resides in the United States.

William Corneliusonhas served as a member of our board of directors since March 2007.Mr. Corneliuson is founder, President and Chief Investment Officer of B.C. Holdings. He has over 30 years of investment experience in a range of asset management positions including managing large institutional portfolios, mutual funds and a private investment fund. Prior to founding B.C. Holdings, Mr. Corneliuson co-founded Strong Capital Management in 1976, which became Strong/Corneliuson Capital Management, where he served as the Company beneficially owned by each, directly or indirectly, or over which control or direction is exercised, as atfirm's president and raised and managed several billion dollars of institutional assets and a variety of mutual funds that achieved superior ratings. Mr. Corneliuson received a B.A. in Political Science and subsequently an MBA from Michigan State University. He served in the date hereof.U.S. Marine Corps where he achieved the rank of Captain.

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STATEMENT OF EXECUTIVE COMPENSATION

During the fiscal year ended January 31, 2005,2007, the Company had two Named Executive Officers (for the purposes of applicable securities legislation), namely:

The Chief Executive Officer is a shareholder in a private British Columbia company which is entitled under a management agreement to receive compensation of CDN$192,000 per year. The following table sets forth, for the periods indicated, the compensation of the Named Executive Officers.

Summary Compensation Table35

Long Term Incentive Plan (LTIP) Awards(1) February 1 to January 31.

We do not have a LTIP, pursuant to which cash or non-cash compensation intended to serve as an incentive for performance (whereby performance is measured(2) Includes the dollar value (net of consideration paid by reference to financial performance or the NEO) calculated by multiplying the closing market price of the Company’s securities) was paidfreely trading shares on the date of grant by the number of stock or distributed tostock units awarded.

(3) Perquisites and other personal benefits, securities or property for the Named Executive Officer during thethree most recently completed financial year.years do not exceed the lesser of CDN $50,000 and 10% of the total annual salary and bonus.

19(4) Including, but not limited to, amount paid, payable or accrued upon resignation, retirement or other termination of employment or change in control and insurance premiums with respect to term life insurance.

(5) On November 14, 2005 Douglas Newby replaced Terese Gieselman as the Company’s CFO.

(6) Comprising of management fees payable to Group 4 Ventures Ltd. (“Group 4”), a non-reporting company owned by William Murray in the amount of CDN $11,000 per month for the period February 1, 2005 to September 30, 2005 and thereafter at a rate of CDN $17,000 per month and management fees paid to William Murray in the amount of CDN $5,000 per month, commencing February 1, 2005.

(7) Comprising of management fees payable to Group 4 in the amount of CDN $17,000 per month and management fees paid to William Murray in the amount of CDN $5,000 per month.

(8) Pursuant to the Bonus Share Incentive Plan, 600,000 common shares were accrued at a deemed price of (CDN) $0.19 per share. By treasury order dated March 8, 2005 and amended March 23, 2005, the shares were issued to Group 4.

(9) 250,000 of these options are held in the name of Proteus Capital Corp. a non-reporting company owned by Douglas Newby.

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Option/Stock Appreciation Rights (“SAR”)SAR Grants
During the Most Recently Completed Financial Year

(1) Reflected as a percentage of the total number of options to purchase common shares granted (4,500,000) during the Financial Period.

Aggregated Options/Aggregate Option/SAR Exercises in LastDuring the Most Recently Completed Financial Year and

and Financial Year-End Option/SAR ValuesValues”

(1) "In-the-money" means the excess of the market value of the common shares of the Company on January 31, 2007 (CDN$3.58), over the base price of the options. In the case of Mr. Murray, the base price was $0.13 with respect to the above exercised options.

(2) “Aggregate Value Realized" means the market value at exercise less the exercise price at the date of exercise.

Pension Plan

The following table (presentedCompany does not have a pension plan.

Compensation of Directors

During the Financial Period, no compensation was paid or is payable by the Company to the directors of the Company, other than the Named Executive Officers (the “Other Directors”), or the Company’s subsidiaries, if any, for their services:

(a) in accordancetheir capacity as directors, including any amounts payable for committee participation or special assignments pursuant to any standard or other arrangements; or

(b) as consultants or experts, except to David Dreisinger and James Swearingen.

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The Company has no pension plan or other arrangement for non-cash compensation to the Other Directors, except as follows:

⁽¹⁾Pursuant to the Bonus Plan, 250,000 common shares were issued to each of the above directors at a deemed price of Cdn$0.75 per share.

⁽²⁾ Consulting Fees paid in connection with the Rules) sets forth details of all exercises of stock options duringCompany’s NorthMet Project 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.

Defined Benefit or Actuarial Plan Disclosure

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

Termination of Employment, Change in Responsibilities and Employment Contracts

The Company and its subsidiaries do not have a compensatory plan, contract or arrangement where a Named Executive Officer is entitled(February 1, 2006 to receive more than $100,000 to compensate such executive officers in the event of resignation, retirement or other termination, a change of control ofJanuary 31, 2007) (the "Financial Period"), the Company or a change in responsibilitiesgranted the following a change of control except pursuantincentive stock options to an agreement dated March 17, 2004 whereby in the event of a take over bid as defined in Section 13 of theSecurities Act(British Columbia),its Other Directors and where it shall require that the offeror takes up and pays for more than 50% of the issued shares of the Company, Mr. William Murray shall have the right to receive a severance allowance. The severance allowance shall be based on the implied market capitalization of the Company under the take-over-bid, calculated multiplying the price actually paid under the take-over-bid by the number of issued shares of the Company on a fully diluted basis at the time of the take-over-bid (“Severance Allowance”, as follows:insiders:

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Reference is made to the section captioned "Election of Directors" for further details with respect to the present positions of the aforesaid persons and number of shares held in the Company.

The Company has formalized stock option plan for the grantingfollowing are particulars of incentive stock options toexercised by the officers, employeesOther Directors 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 granted to directorsinsiders of the Company during the most recently completed financial year:Financial Period:

21⁽¹⁾ Aggregate net value represents the market value at exercise less the exercise price at the date of exercise.

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Other RemunerationSummary of Bonus Plan

On November 5, 2003, we adopted a bonus share incentive plan (the “Bonus Plan”) for our directors and key employees. The Bonus Plan was initially approved at our Annual General and Special Meeting held on May 28, 2004. Thereafter the Bonus Plan was submitted in a revised form in response to comments received from the TSX-VE and approved thereafter by the Company’sour shareholders at its Extra Ordinarytheir Extraordinary General Meeting held on November 4, 2004.

The issuance of bonus shares is seen to be a true incentive to key members of the management team as opposed to the granting of more conventional stock options. If the milestones are not accomplished, the bonus shares are not granted.

We have determined to limit the aggregate number of shares that may be issued under the Bonus Plan and our incentive stock option plan to not more than 20% of the Company’sour issued shares from time to time. Accordingly, we received approval for the issuance of up to a total of 2,890,000 shares of the Companyour common stock with respect to Milestones 1 and 2 as per the following:

Milestone 1:1: Execution of an option agreement with Cleveland Cliffs for the use or purchase of what is referred to as the Cliffs-Erie Facility. This consists of real property located near Hoyt Lakes, Minnesota (the “Erie Site”), on which are located various ore processing facilities formerly operating 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 our NorthMet property, in nearby Babbitt, Minnesota. This Milestone was negotiated in September 2003 and a final agreement was signed in February 2004. Accordingly, the number of shares issuable was 1,590,000 shares of which 1,500,000 were designatedissued to the following directors:directors on March 15, 2005:

Milestone 2:Negotiation and completion of an off-take agreement with one or more senior metals producers for the purchase of the nickel hydroxide concentrate produced from the NorthMet Property, and/or an equity investment in the Companyus by such a producer or producers.

Upon achievement of the Milestone, 1,300,000 shares will be issued, of which 900,000 have been designated to the following directors:

and an additional 400,000 shares will be issued to certain Key Employees as more fully set forth below:

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Gaston Reymenants has been retained as a specialist in metal sales to assist with off-take negotiations and project financing.

As at January 31, 2007, Warren Hudelson was a director of our U.S. subsidiary, Poly Met Mining, Inc., and was involved in the permitting process. Subsequent to that date, he retired from his full-time capacity and continues as a consultant to the president of the Company.

Jim Scott is responsible for the permitting process and is involved in the project environmental statement.

Don Hunter was the project manager for the NorthMet Project and was responsible for the overall completion of the bankable feasibility study. Mr. Hunter is now Area Manager – Geology & Mining for the Company.

As at the date of this Annual Report the Bonus Shares under Milestone 2 have been allotted but have not been earned or issued.

We received approval of Milestones 3 and 4 of the Bonus Plan at the Company’sour Annual and Special Meeting held on June 24, 2005 which provides for the issuance of up to a total of 5,990,000 shares as outlined below:

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Milestone 3: Completion of a bankable feasibility study which indicates that production from the NorthmetNorthMet Property is commercially feasible.

Upon The milestone was achieved on September 25, 2006 and therefore, during the achievement of Milestone 3, 1,500,000year ended January 31, 2007, the Company issued 2,350,000 shares will be issuedas to the Directors and Key Employees as a group, as more fully set forth below:follows:

Gaston Reymenants has been retained as a specialist in metal sales to assist with off-take negotiations and project financing.

As at January 31, 2007, Warren Hudelson iswas a director of the Company’sour U.S. Subsidiary, PolyMetsubsidiary, Poly Met Mining, Inc., and will bewas involved in the permitting process. Subsequent to that date, he retired from his full-time capacity and continues as a consultant to the president of the Company.

Jim Scott is responsible for the permitting process and involved in the project environmental statement.

Don Hunter iswas the project manager for the NorthMet Project and was responsible for the overall completion of the bankable feasibility study. Mr. Hunter is now Area Manager – Geology & Mining for the Company.

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Milestone 4: Commencement of Commercial Production of the NorthmetNorthMet Property.

Upon the achievement of Milestone 4, 2,400,000 shares will be issued to the Directors as a group follows:

and an additional 2,400,0001,240,000 shares will be issued to thecertain Key Employees.Employees as follows:

As atof the date of this Annual Report the Bonus Shares under Milestone 3 and 4 have been allotted but have not been earned or issued.

We have a formalized stock option plan for the granting of incentive stock options to the employees, officers, and directors. The purpose of granting such options is to assist in compensating, attracting, retaining and motivating our directors and to closely align the personal interests of such persons to that of the shareholders.

C.       Board Practices

Term

All of our directors hold office until the next annual meeting of shareholders and until their successors have been elected and qualified. Our officers are elected by the shareholders at each annual meeting of shareholders and hold office until death, resignation, removal from office, or upon a successor having been elected. For the periods each person has served in his respective office, see Item 6(A) Directors and Senior Management.

Employment Agreements

Under an employment agreement between us and Mr. William Murray, dated February 1, 2005, Mr. Murray has the right to receive a severance allowance in the event of a take-over bid as defined in Section 13 of theSecurities Act(British Columbia), and where the rule requires that the offeror take up and pay for more than 50% of our issued shares. The severance allowance was based on our implied market capitalization under the take-over-bid, calculated by multiplying the number of shares outstanding on a fully diluted basis by the take-over bid price per share. This severance allowances have been terminated pursuant to an oral amendment to this contract and will be replaced by a termination agreement representing three times the average annual compensation, including cash bonuses, if any, in the three years prior to change of control.

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Report on Executive Compensation

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

See “Report on Executive Compensation Table” for more information on remunerationStatement of the Named Executive Officers.

STATEMENT OF CORPORATE GOVERNANCE PRACTICESCorporate Governance Practices

Corporate governance relates to the activities of the Board,board, the members of which are elected by and are accountable to the shareholders, and takes into account the role of the individual members of management who are appointed by the Boardboard and who are charged with themanaging our day-to-day management of the Company. The Boardbusiness. Our board is committed to sound corporate governance practices, which are both in the interestinterests of itsour shareholders and contribute to effective and efficient decision making.decision-making. As a Tier 1 company listed on the TSX-V,TSX, we are required to comply with the guidelines for improved corporate governance in Canada as

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adopted by the TSX (the “Exchange Guidelines”). Our approach to corporate governance in the context of 14 specific Exchange Guidelines is set out in the attached Exhibit 711.2.

AUDIT COMMITTEE

Audit Committee Charter

Our audit committee Charter is attached as Appendix 1 of the attached Exhibit "7" to this Annual Report.

Composition of the Audit Committee

The following are the members of the Committee:

⁽¹⁾ As defined by Multilateral Instrument 52-110 ("MI 52-110").

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D.       Employees

As atof January 31, 20052007 we had one employee. From August 2002 to March 17, 2003, the Company utilized the services of a consultant for the majority of the administrativethree full-time employees, our president and chief executive officer, corporate secretary and group controller and an office manager, all financial/accounting activities, during this relatively dormant period. located in our Vancouver office.None of our employees are covered by a collective bargaining agreement. Subsequent to

During the changefiscal year ended January 31, 2007, we employed an average of management the President was paid as a consultant along with an independent consultant for administrative10 consultants working out of our Vancouver and accounting activities. From January 2002 to the end of July 2002, we had one employee.Minnesota offices.

E.       Share Ownership

See B. Compensation.For the shareholdings of our directors and executive officers see Item 7(A).

We have two arrangements by which we encourage our employees to acquire ownership interests in us: (1) the Stock Option Plan, and (2) the Bonus Share Plan. For a description, see footnote 1, under Item 6B.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.       Major Shareholders

ToThe following table sets forth, as of May 23, 2007, certain information regarding the bestownership of our voting securities by each stockholder known to our management to be (i) the knowledgebeneficial owner of the directors and senior officers of the Company there were no shareholders of the Company that beneficially owned, directly or indirectly, or exercises control over, shares carrying more than 5% of our outstanding common stock, (ii) our directors, (iii) our current executive officers identified under Item 6(A), and (iv) all executive officers and directors as a group. We believe that, except as otherwise indicated, the beneficial owners of the common stock listed below, based on information furnished by such owners, have sole investment and voting power with respect to such shares.

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Our shareholders who beneficially own more than 5% of our common shares outstanding do not have voting rights attached to the Company's Common Shares as at July 18, 2005.different from any other shareholders of common shares.

As at July 18, 2005,of May 23, 2007, there were 384379 holders of record of the Company's Common Sharesour common shares of which 287278 were U.S. residents owning 10,449,178 (15.53%40,662,475 (29.78%) of the Company'sour outstanding common 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

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

Paidand paid or accrued amounts as follows:

C.      InterestThe amounts charged to the Company for the services provided have been determined by negotiation among the parties and, in certain cases, are covered by signed agreements. These transactions were in the normal course of expertsoperations and counselwere measured at the exchange value, which is the amount of consideration established and agreed to by the related parties.

Not applicable.

ITEM 8. FINANCIAL INFORMATION

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A. Consolidated Statements and Other Financial Information

See Item 17 17.

Legal Proceedings

GARY K. NORGAARD, AS ASSIGNEE OF THE ASSETS OF CROWN HOLDINGS, INC. AND CROWN FINANCIAL GROUP INC. has filed suit in the UNITED STATES DISTRICTCOURT, DISTRICT OF NEW JERSEY against us claiming that it held 225,000 options to acquire our stock. We believe that this claim has no merit and do not know ofbelieve we have any material active or pending legal proceedings against us; nor are we involved as a plaintiffliability in any material proceeding or pending litigation. We know of no active or pending proceedings against anyone that might materially adversely affect an interest of the Company.matter.

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Dividend Policy

Since its incorporation, we have not declared or paid, and have no present intention to declare or to pay in the foreseeable future, any cash dividends with respect to our Common Shares.common shares. Earnings will be retained to finance further growth and development of our business. However, if the Boardboard of Directorsdirectors declares dividends, all Common Sharescommon shares will participate equally, in the dividends, and, in the event of liquidation, in theour net assets, of the Company.assets.

B.       Significant Changes

Subsequent to January 31, 2005:2007:

We completedOn 17 April 2007, the Company closed a non-brokered private placement for 9,000,000financing of 15 million units at a price of CDN$0.55US$2.75 per unit, for total proceeds of CDN$4,950,000 ($3,945,978). Eachwith each unit consists ofcomprising one common share and one-half of one warrant. Each whole warrant is exercisable into a common share purchase warrant at a price of CDN$0.70 for two years from closing, provided thatUS$4.00 at any time until 13 October 2008, subject to an early trigger if the closing20-day volume weighted average price of the Company’scommon shares as traded onis US$6.00 or more. In connection with the Exchange exceeds CDN$1.00 per share for 30 consecutive trading days,private placement, the Company has paid finders’ fees totalling US$1.43 million in cash, 150,000 shares and 520,000 broker warrants having the same terms as the warrants will terminate 30 days thereafter. described above.

The Company issued 444,950 common shares and paid CDN$124, 823 in cash ($99,209) in relation to a finders’ fee on a portion of the financing.

We issued 341,052 common shares pursuant to the exercise of stock options at a price of CDN$0.10 for total proceeds of approximately of $27,107.

We issued 40,000 common shares pursuant to the exercise of stock options at a price of CDN$0.40 for total proceeds of approximately $13,120.

On March 30, 2005 we granted 765,0001,950,000 stock options to various directors, officers, consultants and consultantsemployees at a priceprices ranging from US$2.88 to $2.99. Of these options, 475,000 vested immediately and 1,475,000 are scheduled to vest at future dates or upon future events.

On 25 April 2007, the Company’s agreement with Minnesota Power, whereby Minnesota Power will provide all of CDN$0.65.PolyMet’s electric service needs at its NorthMet Project through 2018 was approved by the Minnesota Public Utilities Commission.

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:years:

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: