For the three and six months ended June 30, 2018PolyMet Mining Corp.Condensed Interim Consolidated Balance SheetsUnaudited - All figures in thousands of U.S. DollarsASSETSCurrentCashAmounts receivable(Note 5)Prepaid expensesNon-CurrentAmounts receivable(Note 5)Mineral Property, Plant and Equipment(Notes 3 and 4)Intangible(Note 5)Total AssetsLIABILITIESCurrentAccounts payable and accruals Convertible debt(Notes 7 and 8)Non-convertible debt(Notes 7 and 9)Environmental rehabilitation provision(Note 6)Non-CurrentEnvironmental rehabilitation provision(Note 6)Total LiabilitiesSHAREHOLDERS' EQUITYShare Capital(Note 10)Share PremiumEquity Reserves DeficitTotal Shareholders' EquityTotal Liabilities and Shareholders' EquityNature of Business and Liquidity(Note 1)Commitments and Contingencies(Note 13)ON BEHALF OF THE BOARD OF DIRECTORS:/s/ Jonathan Cherry, DirectorJune 30, 2018$17,595$ 6,93142643295181118,9728,1742,4582,533409,374395,2053,1303,130433,9343,6013,63055,04049,067123,86092,2683,7801,266186,281146,23158,89764,136245,178270,561269,5161,1511,15161,93660,505(144,892)188,756$433,934/s/ Dr. David Dreisinger$, Director- See Accompanying Notes -December 31, 2017409,042210,367(132,497)198,675409,042PolyMet Mining Corp.Condensed Interim Consolidated Statements of Loss and Comprehensive LossUnaudited - All figures in thousands of U.S. Dollars, except for shares and per share amountsThree months endedJune 30, 2018Six months endedJuly 31, 2017June 30, 2018July 31, 2017General and Administrative ExpensesSalaries, directors' fees and related benefits Share-based compensation(Note 10)Professional feesRegulatory feesInvestor and public relations Office and administration DepreciationTotal General and Administration ExpensesOther Expenses (Income)Finance costs - net(Note 11)(Gain) / loss on foreign exchangeLoss on modification of debentures (Notes 7, 8 and 9)Loss on land exchange(Note 4)Gain on disposal of financial instrument(Note 5)Loss on disposal of intangible(Note 5)Loss on financial instrument fair value(Note 5)Other incomeTotal Other ExpensesLoss for the PeriodOther Comprehensive LossReclass on disposal of financial instrument(Note 5)Items that may be subsequently reclassified to profit or loss:Unrealized loss (gain) on financial instrument(Note 5)Other Comprehensive Loss for the Period$590$276845029817932494 $6724732124717211,226$ 8661,455812341608139917006183533516521,5092,0804,2793,3485671 -553 - -37(11)623 (4)-- (9)-- (2)1,44214,109553- -75(13)1,2595 - -(9)1,324 -(14)1,147 2,656- -608 2,6889 86,167 10,446- -2,565 5,9139(4)-17-5Total Comprehensive Loss for the Period - Net of Tax2,6562,70510,4465,918Basic and Diluted Loss per ShareWeighted Average Number of Shares - basic and diluted$(0.01)$320,425,860- See Accompanying Notes -(0.01) $318,708,771(0.03)$320,201,128(0.02)318,628,939PolyMet Mining Corp.Condensed Interim Consolidated Statements of Changes in Shareholders' EquityUnaudited - All figures in thousands of U.S. Dollars, except for sharesShare Capital (authorized = unlimited)Issued SharesBalance - January 31, 2017Total comprehensive loss for the periodPayment of land purchase options(Note 10)Vesting of restricted shares and RSU's(Note 10)Share-based compensation(Note 10)Bonus share cost amortization(Note 10)Balance - July 31, 2017318,545,519 - 145,203 360,963 - - 319,051,685Share CapitalShare Premium$268,895 - 100 365 - -$1,151 - - - - -$269,360Equity ReservesContributedSurplus$59,270 - -(365)928152$Accumulated Other Comp Inc / (Loss)Equity Reserves$412 (5)- - - -$ 59,682Deficit$(122,399)(5)(5,913)- (365)- -928 - 928152 - 1521,151Total Shareholders'Equity$207,329 (5,918)100 -$59,985$407$ 60,392$(128,312)$202,591Share Capital (authorized = unlimited)Issued SharesBalance - December 31, 2017Transition to IFRS 9(Note 2b)Restated - January 1, 2018319,303,098-319,303,098Share Capital$269,516-$269,516Total comprehensive loss for the periodModification of debentures(Notes 7, 8 and 9)Payment of land purchase options(Note 10)Exercise of share options and warrants(Note 10)Vesting of restricted shares and RSU's(Note 10)Share-based compensation(Note 10)Bonus share cost amortization(Note 10)--76,250215,500843,41399,308Balance - June 30, 2018-320,537,569--76240624105-Share Premium$1,151-$1,151- - - - - - -$270,561ContributedSurplus$$$1,151$- See Accompanying Notes -Equity ReservesAccumulated Other Comp Inc / (Loss)60,295-$210(210)(1,519)60,295-2,331 -1,512(624)(59)$-- - - - - - -61,936$-Equity Reserves$60,505(210)$60,295-2,331 - 2,331- - 76(59) - 181(624) 1,512 (1,519)$61,936Deficit$ (132,497)(1,949)$ (134,446)Total Shareholders'Equity$198,675(2,159)$196,516(10,446) (10,446)- - -- 1,617 (1,519)$ (144,892)$188,756PolyMet Mining Corp.Condensed Interim Consolidated Statements of Cash FlowsUnaudited - All figures in thousands of U.S. DollarsOperating ActivitiesLoss for the period Items not involving cash:DepreciationEnvironmental rehabilitation provision accretion(Note 6)Share-based compensation(Note 10)Unrealized (gain)/loss on foreign exchangeLoss on modification of debentures(Note 7, 8 and 9)Loss on land exchange(Note 4)Gain on disposal of financial instrument(Note 5)Loss on disposal of intangible(Note 5)Loss on financial instrument fair value(Note 5)Changes in non-cash working capitalAmounts receivablePrepaid expensesAccounts payable and accrualsNet cash used in operating activitiesFinancing ActivitiesShare issuance proceeds, net of costs(Note 10)Debenture funding, net of costs(Notes 7 and 9)Cash settled RSU's(Note 10)Net cash provided by financing activitiesInvesting ActivitiesProperty, plant and equipment purchases(Note 4)Land disposal proceeds(Note 4)Net cash used in investing activitiesThree months endedJune 30,2018Six months endedJuly 31,2017June 30,2018July 31,2017$(2,656)32449276(4)-553 - -37 7 15 127$(2,688)$1 481 672 2 - - (9)- - 4 (158) 241(10,446)$(5,913)6528719721,455812(4)04,109 553 - - 75 5- - (9) 1,324 - 26(140)(170)(29)(372)(1,164)(1,454)(3,486)(3,328)- 19,723 -- - -181 24,72319,723-24,527(377)- - - -(5,808)425(6,166)-(10,806)(11,103)425-(5,383)(6,166)(10,381)(11,103)Net Increase (Decrease) in Cash Effect of foreign exchange on Cash Cash - Beginning of periodCash - End of periodSupplemental information - non-cash investing and financingAccounts payable and accrualsDebt accretion and capitalized interest(Notes 7, 8 and 9)Share-based compensation(Note 10)Bonus share amortization(Note 10)Bonus share forfeiture(Note 10)Fair value of shares issued for land options (Note 10)13,176 4 4,415$17,595$4924,80554 -(1,544)$26- See Accompanying Notes -(7,620)(2) 11,865$4,243$(210)4,7855876 -$10010,660(14,431)4-6,93118,674$17,595$ 4,243$65 $ 2288,993 9,362386 11625 152$(1,544)76$- 100
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