PolyMet Mining Corp.: Exhibit 99.2 - Filed by newsfilecorp.com

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

The following information, prepared as at August 5, 2021 should be read in conjunction with the unaudited condensed interim consolidated financial statements of PolyMet Mining Corp. and its subsidiaries (together "PolyMet" or the "Company") as at June 30, 2021 and for the three and six months ended June 30, 2021 and related notes attached thereto, which are prepared in accordance with IAS 34, Interim Financial Reporting and in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). All amounts are expressed in United States ("U.S.") dollars unless otherwise indicated.

This Management Discussion and Analysis ("MD&A") contains "forward-looking statements" within the meaning of applicable Canadian securities legislation and Section 27A of the United States Securities Act of 1933 and Section 21E of the United States Securities Exchange Act of 1934.

Forward-looking statements are not, and cannot be, a guarantee of future results or events. Forward looking statements are based on, among other things, opinions, assumptions, estimates and analyses that are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking statement.

All statements in this MD&A that address events or developments that PolyMet expects to occur in the future are forward-looking statements and are generally, although not always, identified by words such as "expect", "plan", "anticipate", "project", "target", "potential", "schedule", "forecast", "budget", "estimate", "intend" or "believe" and similar expressions or their negative connotations, or that events or conditions "will", "would", "may", "could", "should" or "might" occur. These forward-looking statements include, but are not limited to, PolyMet's objectives, strategies, intentions, expectations, production, costs, capital and exploration expenditures, including estimated economics of future financial and operating performance. All forward-looking statements in this MD&A are qualified by this cautionary note.

The material factors or assumptions applied in drawing the conclusions or making forecasts or projections set in the forward-looking statements include, but are not limited to:

The risks, uncertainties, contingencies and other factors that may cause actual results and events to differ materially from those expressed or implied by the forward-looking statement may include, but are not limited to, risks generally associated with the mining industry, such as: economic factors (including future commodity prices, currency fluctuations, inflation rates, energy prices and general cost escalation); uncertainties related to the development of the NorthMet Project; dependence on key personnel and employee relations; risks relating to political and social unrest or change, operational risk and hazards, including unanticipated environmental, industrial and geological events and developments and the inability to insure against all risks; failure of plant, equipment, processes, transposition and other infrastructure to operate as anticipated; compliance with governmental and environmental regulations, including permitting requirements; the outcome of ongoing litigation in connection with PolyMet's permits for the NorthMet Project; the potential impact of COVID-19 on PolyMet, as well as other factors identified and as described in more detail under the heading "Risk Factors" in Item 5 of the Annual Information Form. The list is not exhaustive of the factors that may affect the forward-looking statements. There can be no assurance that such statements will prove to be accurate, and actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. Accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits or liabilities PolyMet will derive therefrom. The forward-looking statements reflect the current expectations regarding future events and operating performance and speak only as of the date hereof and PolyMet does not assume any obligation to update the forward-looking statements if circumstances or management's beliefs, expectations or opinions should change other than as required by applicable law. For the reasons set forth above, undue reliance should not be placed on forward-looking statements.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

Cautionary Note to United States Readers Regarding Resource and Reserve Estimates

Mineral reserves and mineral resources presented in this MD&A have been estimated in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), as required by Canadian securities regulatory authorities. In accordance with NI 43-101, the Company uses the terms mineral reserves and resources as they are defined in accordance with the CIM Definition Standards on mineral reserves and resources ("CIM") adopted by the Canadian Institute of Mining, Metallurgy and Petroleum.

The United States Securities and Exchange Commission ("SEC") has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the U.S. Securities Exchange Act of 1934, as amended. These amendments became effective February 25, 2019 (the "SEC Modernization Rules") with compliance required for the first fiscal year beginning on or after January 1, 2021. The SEC Modernization Rules replace the historical property disclosure requirements for mining registrants that were included in SEC Industry Guide 7 ("Guide 7"), which will be rescinded from and after the required compliance date of the SEC Modernization Rules. As a foreign private issuer that files its annual report on Form 40-F with the SEC pursuant to the multi-jurisdictional disclosure system ("MJDS"), the Company is not required to provide disclosure on its mineral properties under the SEC Modernization Rules and will continue to provide disclosure under NI 43-101. However, if the Company either ceases to be a "foreign private issuer" or ceases to be entitled to file reports under the MJDS and the CIM Definition Standards, then the Company will be required to provide disclosure on its mineral properties under the SEC Modernization Rules. Accordingly, United States investors are cautioned that the disclosure the Company provides on its mineral properties in this annual report on Form 40-F and under its continuous disclosure obligations under the Exchange Act may be different from the disclosure that the Company would otherwise be required to provide as a U.S. domestic issuer or a non-MJDS foreign private issuer under the SEC Modernization Rules.

The SEC Modernization Rules include the adoption of terms describing mineral reserves and mineral resources that are substantially similar to the corresponding terms under the CIM. As a result of the adoption of the SEC Modernization Rules, the SEC now recognizes estimates of "measured", "indicated" and "inferred" mineral resources. In addition, the SEC has amended its definitions of "proven mineral reserves" and "probable mineral reserves" to be substantially similar to the corresponding CIM definitions, as required by NI 43-101.

United States investors are also cautioned that while the SEC will now recognize "measured mineral resources", "indicated mineral resources" and "inferred mineral resources", investors should not assume that any part or all of the mineral deposits in these categories will ever be converted into a higher category of mineral resources or into mineral reserves. These terms have a great amount of uncertainty as to their economic and legal feasibility. Accordingly, United States investors are cautioned not to assume that any "measured mineral resources", "indicated mineral resources", or "inferred mineral resources" of PolyMet are or will be economically or legally mineable. Further, "inferred mineral resources" have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. In accordance with Canadian rules, estimates of "inferred mineral resources" cannot form the basis of feasibility or other economic studies, except in limited circumstances where permitted under NI 43-101.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

PolyMet is a TSX and NYSE American listed Issuer engaged in the exploration and development of natural resource properties. The Company's primary mineral property and principal focus is the commercial development of its NorthMet Project ("NorthMet" or "Project"), a polymetallic project in northeastern Minnesota, United States of America, which hosts copper, nickel, cobalt, gold, silver and platinum group metal mineralization.

The NorthMet ore body is at the western end of a series of known copper-nickel-precious metals deposits in the Duluth Complex, one of the largest undeveloped mineral resources in the world. An updated technical report and feasibility study published in March 2018 confirmed the technical and economic viability, positioning NorthMet as the most advanced of the four large scale deposits in the Duluth Complex: namely, from west to east, NorthMet, Mesaba owned by Teck Resources Limited, Serpentine owned by Encampment Resources and Maturi owned by Twin Metals Minnesota, a wholly owned subsidiary of Antofagasta plc.

The Company acquired a former taconite processing facility in 2005 which is located about six miles west of the NorthMet ore body and comprises a crushing and milling facility, railroad and access rights connecting the plant site to the NorthMet ore body, tailings storage facilities, locomotive fueling and maintenance facilities, water rights and pipelines, administrative offices and lands to the east and west of the existing tailings storage facilities.

PolyMet completed a land exchange with the U.S. Forest Service ("USFS") on June 28, 2018 and now controls approximately 30 square miles of contiguous surface rights stretching from west of the processing facility to east of the proposed East Pit at NorthMet.

PolyMet received its Permit to Mine from the State of Minnesota on November 1, 2018, a crucial permit for construction and operation of the Project. The Minnesota Department of Natural Resources ("MDNR") also issued all other permits for which the Company applied including dam safety, water appropriations, endangered and threatened species takings, and public waters work permits, along with Wetlands Conservation Act approval. In addition, PolyMet received air and water permits from the Minnesota Pollution Control Agency ("MPCA") on December 18, 2018. Further, PolyMet received the federal Record of Decision ("ROD") and Section 404 Wetlands Permit from the U.S. Army Corps of Engineers ("USACE") on March 21, 2019, which was the last key permit or approval needed to construct and operate the Project. Legal challenges contesting various aspects of the MDNR, MPCA, and USACE decisions are ongoing and have led to court rulings that have delayed the Project timeline. Those legal challenges that have reached a final determination have been in favor of the Company.

The Company has been issued more than 20 permits in all. Except in those cases mentioned in the "Environmental Review and Permitting" section below, all other permits which the Company has received remain active.

During 2021, the Minnesota Supreme Court ruled in the Company's favor on the most significant legal issues in separate cases related to the Company's Permit to Mine and air permit. Both cases were returned to the Minnesota Court of Appeals for further proceedings as summarized in the "Environmental Review and Permitting" section below.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

The Company continued to fulfill its safety and environmental obligations, remaining injury-free and complying with the permit requirements for the NorthMet site. The Project design continued to be assessed for optimization opportunities within the permit criteria.

Net cash used in operating and investing activities during the six months ended June 30, 2021 was $7.551 million. Primary activities during the period related to studies and evaluation of the Project, maintaining existing infrastructure, site monitoring and compliance, legal defense of permits, obtaining interim financing and general corporate purposes.

The Company is in discussions with various sources of debt and equity financing sufficient to fund ongoing permit litigation, Project optimization and construction. Construction and ramp-up to commercial production is anticipated to take approximately thirty months from receipt of construction funding. As noted in the "Environmental Review and Permitting" section below, legal challenges contesting various aspects of the MDNR, MPCA, and USACE decisions are ongoing and have led to court rulings which adversely affect the Project timeline; however, the Company continues to make preparations to act on those permits as appropriate and assuming positive legal outcomes.

In November 2005, the Company acquired from Cliffs Erie LLC, a subsidiary of Cleveland-Cliffs Inc. (together "Cliffs"), a former taconite processing facility located approximately six miles west of the NorthMet deposit which includes crushing and milling equipment, plant site buildings, real estate, tailings storage facilities and mine workshops, as well as access to extensive mining infrastructure including roads, rail, water and power.

Plans are to refurbish, reactivate and, as appropriate, update the crushing, concentrating and tailings storage facilities to produce concentrates containing copper, nickel, cobalt and precious metals - platinum, palladium, gold and silver. Once commercial operations are established, the Company may install an autoclave to upgrade nickel concentrates to produce a nickel-cobalt hydroxide and a precious metals precipitate.

In December 2006, additional property and associated rights were acquired from Cliffs sufficient to provide a railroad connection linking the NorthMet deposit and processing facilities. The transaction also included railcars, locomotive fueling and maintenance facilities, water rights and pipelines, administrative offices and land to the east and west of the existing tailings storage facilities.

PolyMet indemnified Cliffs for reclamation and remediation associated with the property under both transactions and long-term mitigation plans are included in the Company's environmental rehabilitation provision.

In June 2018, the Company acquired surface rights over the NorthMet deposit through a land exchange with the USFS using land the Company previously owned. With the exchange, PolyMet has total surface rights, including ownership and other use and occupancy rights, to approximately 30 square miles of land including the land at the mine and processing sites, the transportation corridor connecting those sites and buffer lands.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

Mineral rights in and around the NorthMet orebody are held through mineral leases with RGGS Land & Minerals Ltd., L.P. ("RGGS") and LMC Minerals ("LMC"). The RGGS lease covers 5,123 acres. Provided the Company continues to make annual lease payments, the lease period continues until June 12, 2048 with an option to extend the lease for up to five additional ten-year periods on the same terms and further extend as long as there are commercial mining operations. The LMC lease covers 120 acres that are encircled by the RGGS property. Provided the Company continues to make annual lease payments, the lease period continues until December 1, 2028 with an option to extend the lease for up to four additional five-year periods on the same terms. Lease payments to both lessors are considered advance royalty payments and will be deducted from future production royalties payable to the lessor, which range from 3% to 5% based on the net smelter return per ton received by the Company.

PolyMet published an updated Technical Report under NI 43-101 on the NorthMet Project dated March 26, 2018 (the "Technical Report") incorporating process improvements, project improvements and environmental controls described in the Final Environmental Impact Statement ("FEIS") and draft permits. The update also included detailed capital costs, operating costs and economic valuations for the mine plan being permitted. Preliminary economic assessments for higher production scenarios were also presented. Proven and Probable mineral reserves were estimated to be 254.7 million short tons grading 0.294% copper, 0.084% nickel, 80 ppb platinum, 268 ppb palladium, 39 ppb gold, 74.42 ppm cobalt, and 1.06 ppm silver. These mineral reserves lie within Measured and Indicated mineral resources of an estimated 649.3 million short tons grading 0.245% copper, 0.074% nickel, 65 ppb platinum, 221 ppb palladium, 33 ppb gold, 71 ppm cobalt, and 0.91 ppm silver. See additional details in the Company's most recent Annual Information Form or the Technical Report, both filed on SEDAR and EDGAR.

In November 2019, PolyMet published an updated Mineral Resource and Reserve statement which increased Proven and Probable mineral reserves by 14% to 290 million short tons grading 0.288% copper, 0.083% nickel, 75 ppb platinum, 264 ppb palladium, 39 ppb gold, 73.95 ppm cobalt and 1.06 ppm silver. These mineral reserves lie within Measured and Indicated mineral resources of an estimated 795.2 million short tons grading 0.234% copper, 0.071% nickel, 62 ppb platinum, 214 ppb palladium, 31 ppb gold, 69 ppm cobalt and 0.87 ppm silver. The mineral reserve estimates are based on metal prices of $2.91 per pound copper, $5.54 per pound nickel, $28.82 per pound cobalt, $1,058 per ounce palladium, $889 per ounce platinum, $1,274 per ounce gold and $16.19 per ounce silver. The mineral resource estimates are based on metal prices of $3.34 per pound copper, $6.37 per pound nickel, $33.14 per pound cobalt, $1,216 per ounce palladium, $1,023 per ounce platinum, $1,465 per ounce gold and $18.62 per ounce silver. Metal recovery factors were applied to each metal based on recovery curves developed. The net smelter return cutoff was set at $7.98 per ton for mineral reserves and $6.34 per ton for mineral resources and include processing, general and administrative, and water treatment costs.

In November 2015, the MDNR, USACE, and USFS published the FEIS and in March 2016, the MDNR issued its decision that the FEIS met the requirements under the Minnesota Environmental Policy Act.

In November 2018, the Company received all final MDNR permits for which the Company had applied, including the Permit to Mine, dam safety, water appropriations, endangered and threatened species takings, and public waters work permits, along with Wetlands Conservation Act approval.

In December 2018, the Company received all final MPCA permits for which the Company had applied, including the water quality permit, air emission quality permit, and Section 401 Certification.

In March 2019, the Company received the federal ROD and Section 404 Wetlands Permit from the USACE, which was the last key permit or approval needed to construct and operate the Project.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

A number of legal challenges were filed in U.S. District Court and the Minnesota Court of Appeals contesting various aspects of USFS, USACE, MDNR and MPCA decisions and permits. PolyMet is a co-respondent in all suits. Six of the cases have reached final judgments, all in PolyMet's favor.

Following is a summary of the remaining cases challenging PolyMet permits or agency decisions, most of which are in latter stages of litigation:

Three lawsuits were filed against the MDNR in December 2018 in the Minnesota Court of Appeals challenging the Permit to Mine. Three lawsuits challenging the dam safety permits also were filed during this period. The court subsequently consolidated all six lawsuits into one and later remanded the Permit to Mine back to the MDNR for an open-ended contested case hearing. In April 2021, the Minnesota Supreme Court overturned the lower court's decision, and instead limited the contested case hearing to one narrow issue, regarding the effectiveness of bentonite clay capping for eventual closure of the tailings basin. While the Supreme Court decision cleared all issues related to the dam safety permits, the Permit to Mine remains on hold pending the outcome of the contested case hearing, which has yet to be scheduled by the MDNR.

Three legal challenges were filed against the MPCA in early 2019 in the Minnesota Court of Appeals challenging the NPDES/SDS permit. The court subsequently consolidated these cases and later transferred challenges to the permit to Ramsey County District Court for an evidentiary hearing. In September 2020, the District Court found that PolyMet's water discharge permit was issued with proper procedures; the ruling will be incorporated into the broader challenge to that permit currently pending before the Court of Appeals. The case is expected to be heard during the third quarter of 2021. The water discharge permit is stayed pending the Court of Appeals' outcome.

Two lawsuits were filed against the MPCA in 2019 in the Minnesota Court of Appeals challenging the air permit. The court subsequently consolidated these cases and later remanded the air permit back to the MPCA with instructions to provide more information in support of its decision to issue the permit. In February 2021, the Minnesota Supreme Court ruled in the Company's favor on the most significant legal issue but returned the case to the Court of Appeals to resolve a limited number of items the lower court had not specifically addressed in its original decision. In July 2021, the Court of Appeals remanded the air permit to the MPCA for more explanation to explicitly decide whether the Company intends to build a larger project under its existing permits. The permit remains on hold in the meantime. PolyMet anticipates the MPCA will expeditiously provide the supporting explanation requested by the court.

Two lawsuits were filed in U.S. District Court in Minnesota associated with the section 404 permit issued by the USACE. In connection with one case, the EPA concluded in June 2021 that PolyMet's proposed Project "may affect" downstream waters on the Fond du Lac reservation and in the State of Wisconsin. The MPCA certified in 2018 that the Project would not affect in-state water quality under section 401 of the Clean Water Act. The EPA did not disagree with that finding at the time. A section 401(a)(2) hearing was requested and will be scheduled for PolyMet to present the evidence on which the MPCA relied to the USACE who will then make a final decision on the Project's downstream water quality effects.

In the other case, opponents are challenging the section 404 permit alleging violations of the National Environmental Policy Act (NEPA) and the Clean Water Act. The USACE has suspended the wetlands permit pending the outcome of the section 401(a)(2) hearing referenced above.

The Company has been issued more than 20 permits in all. Except in those cases mentioned above, all other permits which the Company has received remain active.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

In January 2017, the USFS issued its Final ROD authorizing the land exchange. In June 2018, the Company and USFS exchanged titles to federal and private lands, completing the land exchange giving the Company control over both surface and mineral rights in and around the NorthMet ore body and consolidating the Superior National Forest's land holdings in northeast Minnesota. All legal challenges related to the land exchange were dismissed in October 2019 and stand as final.

Since October 2008, the Company and Glencore have entered into a series of financing agreements resulting in the following financial interests as at June 30, 2021:

On July 15, 2021, the Company issued to Glencore an unsecured convertible debenture in the amount of $10.0 million. The debenture is due on the earlier of March 31, 2023 or upon US$100 million of project financing. Interest will accrue on the unsecured debenture at 4% per annum and the principal amount of the debenture is convertible into common shares of the Company at a conversion price equal to $3.4550.

⁽¹⁾ Loss per share amounts may not reconcile due to rounding differences and share issuances during the year.

June 30, 2021 - $0.459 million
March 31, 2021 - $0.400 million
December 31, 2020 - $0.361 million
September 30, 2020 - $0.322 million

June 30, 2020 - $0.648 million
March 31, 2020 - $0.511 million
December 31, 2019 - $0.140 million
September 30, 2019 - $0.120 million

Results fluctuate from period to period based on NorthMet development, corporate activities, and non-cash items. See additional discussion below.

Focus during the current year period was on legal defense of Project permits, engineering and optimization opportunities, site monitoring and permit compliance, and maintenance of existing infrastructure.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

During the current year period, the Company incurred a loss of $5.128 million ($0.05 per share) compared to a loss of $6.051 million ($0.06 per share) during the prior year period. The decreased loss was primarily due to lower spend on Project related studies and evaluation of the mineral resource partially offset by a one-time charge to transition directors and officers liability insurance.

Cash used in operating activities during the current year period was $2.242 million compared to cash used during the prior year period of $6.156 million. The decrease was primarily due to lower spend on Project related studies and further evaluation of the mineral resource and changes in working capital.

Cash provided by financing activities during the current year period was $nil compared to cash provided during the prior year period of $6.915 million. The decrease was due to convertible debenture funding in the prior year period.

Cash used in investing activities during the current year period was $1.427 million compared to cash used during the prior year period of $2.450 million. The decrease was primarily due to lower capitalized spend following receipt of permits in March 2019 as the Company awaits resolution of legal challenges to permits.

Including the effect of foreign exchange, cash decreased during the current year period by $3.669 million to $2.794 million compared to the prior year period where cash decreased by $1.690 million to $6.473 million.

During the current year period, mineral property, plant, and equipment costs were capitalized in the amount of $1.898 million which was consistent with capitalization of $1.898 million during the prior year period.

Focus during the six months ended June 30, 2021 was on was on legal defense of Project permits, engineering and optimization opportunities, site monitoring and permit compliance, maintenance of existing infrastructure and financing.

During the current year period, the Company incurred a loss of $8.825 million ($0.09 loss per share) compared to a loss of $13.460 million ($0.13 loss per share) during the prior year period. The decreased loss was primarily due to lower spend on Project related studies and evaluation of the mineral resource and gains on financial asset fair value partially offset by a one-time charge to transition directors and officers liability insurance.

Cash used in operating activities during the current year period was $4.366 million compared to cash used during the prior year period of $9.725 million. The decrease was primarily due to lower spend on additional studies and evaluation of the mineral resource as noted above and changes in working capital.

Cash provided by financing activities during current year period was $6.791 million compared to cash provided during the prior year period of $13.803 million. The decrease was due to lower expenditures requiring less funding during 2021.

Cash used in investing activities during the current year period was $3.185 million compared to cash used during the prior year period of $5.003 million. The decrease was primarily due to lower capitalized spend following receipt of permits in March 2019 as the Company awaits resolution of legal challenges to permits.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

Including the effect of foreign exchange, total cash on hand decreased during the current year period by $0.760 million to $2.794 million compared to the prior year period where cash decreased $0.928 million to $6.473 million.

During the current year period, mineral property, plant, and equipment costs were capitalized in the amount of $3.648 million as compared to $4.806 million during the prior year period. The decrease was primarily due to lower expenditure as noted above.

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they become due and arises through the excess of financial obligations over financial assets due at any point in time.

In the normal course of business, the Company enters into contracts that give rise to firm commitments for future minimum payments. In addition to items described elsewhere in these financial statements, as at June 30, 2021, the Company had firm commitments of approximately $0.436 million with approximately $0.064 million due over the next year and the remainder due over the following three years.

The Company is involved in various claims, litigation and other matters arising in the ordinary course and conduct of business. While it is not possible to determine the ultimate outcome of such actions at this time, and inherent uncertainties exist in predicting such outcomes, it is the Company's belief that the ultimate resolution of such actions is not reasonably likely to have a material adverse effect on its consolidated financial position or results of operations. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. As a result of the assessment, no significant contingent liabilities were recorded as at June 30, 2021.

Given the ongoing development of the Project, the Company has experienced recurring losses from operations and net cash outflows for operating and investing activities, which are expected to continue until the Project is constructed and operational. As at June 30, 2021, the Company had cash of $2.794 million and a working capital deficiency of $20.148 million, primarily due to the $17.153 million promissory note with Glencore being due December 31, 2021. Subsequent to June 30, 2021, the Company issued to Glencore an unsecured convertible debenture in the amount of $10.0 million. See additional discussion in the "Glencore Financing" section above.

The Company believes it is probable it will continue to receive funding from Glencore or other financing sources allowing the Company to satisfy future financial obligations, complete development of the Project and to conduct future profitable operations. Management's belief is based upon the underlying value of the Project, progress on obtaining and maintaining permits, ongoing discussions with potential financiers and the majority shareholder relationship with Glencore. Glencore has committed to provide financial support to enable the Company to continue its business operations for the next twelve months from the date of these consolidated financial statements.

The Company is in discussions with various sources of debt and equity finance sufficient to fund ongoing permit litigation, Project optimization and construction. Construction and ramp up to commercial production is anticipated to take approximately thirty months from receipt of construction funding.

In late December 2019, a novel coronavirus ("COVID-19") was identified and subsequently spread worldwide. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic creating an unprecedented global health and economic crisis. COVID-19's impact on global markets has been significant. The duration and magnitude of COVID-19's effects on the economy, movement of goods and services, the copper market, and on the Company's financial and operational performance remains uncertain at this time. As of the date of these statements, there has not been any direct impact on the Company's operations as a result of COVID-19.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

The Company will continue to closely monitor the potential impact of COVID-19 on its business. Should the duration, spread or intensity of the COVID-19 pandemic deteriorate in the future, there could be a potentially material and negative impact on the Company's business, including the market for its securities, the ability to raise capital, and the valuation of its non-financial assets including mineral property, plant and equipment and intangibles due to sustained decreases in metal prices. Impacts from COVID-19 could also include a temporary cessation of operations due to a localized outbreak amongst Company personnel or in the Company's supply chain.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 - Inputs for the asset or liability that are not based on observable market data.

Financial instruments measured at fair value subsequent to recognition include restricted deposits measured at fair value through profit or loss using Level 1 inputs resulting in a carrying value of $13.362 million (December 31, 2020 - $12.401 million), amounts receivable measured at fair value through profit or loss using Level 3 inputs resulting in a carrying value of $2.114 million (December 31, 2020 - $2.382 million) and accruals for expected payments to settle restricted share units measured at fair value through profit or loss using Level 2 inputs resulting in a carrying value of $0.987 million (December 31, 2020 - $0.772 million).

The fair values of the convertible debt and promissory note approximate the carrying amount at amortized cost using the effective interest method. The fair values of other financial assets and other financial liabilities approximate their carrying amounts due to their short-term nature.

Liquidity risk is the risk the Company will not be able to meet its financial obligations as they become due and arises through the excess of financial obligations over available financial assets due at any point in time. The Company's objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at any point in time and is achieved by maintaining sufficient cash and managing debt. While in the past the Company has been successful in closing financing agreements, there can be no assurance it will be able to do so in the future. See additional discussion in the "Liquidity and Capital Resources" section above.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

The Company conducted transactions with senior management, directors and persons or companies related to these individuals, and paid or accrued amounts as follows:

⁽¹⁾ Six months ended June 30, 2021 includes Directors (Nathan Bullock, Jonathan Cherry, David Dreisinger, David Fermo, Alan Hodnik, Roberto Huby and Stephen Rowland) and senior management (Jonathan Cherry, Patrick Keenan and Richard Lock).

⁽²⁾ Six months ended June 30, 2020 includes Directors (Jonathan Cherry, David Dreisinger, W. Ian L. Forrest, Peter Freyberg, Helen Harper, Alan Hodnik, Hilmar Rode, Stephen Rowland and Michael Sill) and senior management (Jonathan Cherry, Patrick Keenan, Bradley Moore and Richard Lock).

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

Agreements with senior management contain severance provisions in certain circumstances, including for example, for termination without cause by the Company, termination by the employee for good reason (as defined in the agreement) or in connection with a change of control. Other than Jonathan Cherry, no PolyMet director has an agreement providing for benefits upon termination.

As a result of Glencore's ownership and majority shareholder relationship, it is also a related party. In addition to the transactions described elsewhere in these financial statements, the Company is a party to a Technical Services Agreement with Glencore whereby the Company reimburses Glencore for Project technical support costs requested under an agreed scope of work, primarily in detailed Project design and mineral processing. During the six months ended June 30, 2021, the Company recorded $0.050 million (June 30, 2020 - $0.169 million) for services under this agreement.

There are no proposed asset or business acquisition/disposal transactions that will materially affect the performance of the Company.

The Company's significant accounting policies as well as significant judgment and estimates are presented in Note 2 of the audited consolidated financial statements for the year ended December 31, 2020.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. This requires management to make estimates that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as at the date of the financial statements.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

Critical accounting estimates used in the preparation of the consolidated financial statements are as follows:

Reserves are estimates of the amount of product that can be economically and legally extracted from the Company's property. In order to estimate reserves, estimates are required about a range of geological, technical and economic factors, including quantities, production techniques, production costs, capital costs, transport costs, metal prices and exchange rates. Estimating the quantity of reserves requires the size, shape and depth of deposits to be determined by analyzing geological data. This process may require complex and difficult geological judgments to interpret the data. In addition, management will form a view of forecast prices for its products, based on current and long-term historical average price trends. Changes in the proven and probable reserve estimates may impact the carrying value of property, plant and equipment, rehabilitation provisions, deferred tax amounts and depreciation, depletion and amortization.

Provisions for environmental rehabilitation costs associated with mineral property, plant and equipment, are recognized when there is a present legal or constructive obligation that can be estimated reliably, and it is probable an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax risk-free rate reflecting current market assessments of the time value of money. The provision for environmental rehabilitation obligations represents management's best estimate of the present value of the future cash outflows required to settle the liability.

The estimates of environmental rehabilitation liabilities could be affected by changes in regulations, changes in the extent of environmental rehabilitation required, changes in the means of rehabilitation, changes in the extent of responsibility for the financial liability, changes in operating plans, or changes in cost estimates. Operations may in the future be affected from time to time in varying degrees by changes in environmental regulations, including those for future removal and site restoration costs. The likelihood of new regulations and overall effect upon the Company may vary greatly and are not predictable.

The following table summarizes the outstanding share information as at July 30, 2021:

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

As at June 30, 2021, the Company had obligations to issue up to 364,000 shares under the Company's bonus share incentive plan upon achievement of Milestone 4 representing commencement of commercial production at NorthMet. At the Company's Annual General Meeting of shareholders held in June 2008, the disinterested shareholders approved issuance of these shares upon achievement of Milestone 4. Regulatory approval is also required prior to issuance of these shares.

An investment in the Company's common shares is highly speculative and subject to a number of risks and uncertainties. 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 in PolyMet's Annual Information Form for the year ended December 31, 2020 and other information filed with both the Canadian and United States securities regulators before investing in the Company's common shares. The risks described in PolyMet's Annual Information Form are not the only ones faced. Additional risks that the Company currently believes are immaterial may become important factors that affect the Company's business. If any of the risks described in PolyMet's Annual Information Form for the year ended December 31, 2020 occur, the Company's business, operating results and financial condition could be seriously harmed and investors could lose all of their investment.

The information provided in this report and the accompanying Consolidated Financial Statements are the responsibility of management. The Consolidated Financial Statements have been prepared by management in accordance with IFRS as issued by the IASB and include certain estimates that reflect management's best judgments.

The Board of Directors has approved the information contained in the Consolidated Financial Statements. The Board of Directors fulfills its responsibilities regarding the Consolidated Financial Statements mainly through its Audit Committee, which has a written mandate that complies with current requirements of Canadian securities legislation, United States securities legislation, and the United States Sarbanes-Oxley Act of 2002. The Audit Committee meets at least on a quarterly basis.

The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13(a)-15(e) and 15(d)-15(e) under the US Exchange Act and the rules of the Canadian Securities Administrators as at December 31, 2020 (the "Evaluation Date"). Based on such evaluation, such officers concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective. Such disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company in reports that it files or submits to the US Securities and Exchange Commission and the Canadian Securities Administrators is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and includes controls and procedures designed to ensure information relating to the Company required to be included in reports filed or submitted under Canadian and United States securities legislation is accumulated and communicated to the Company's management to allow timely decision regarding disclosure.

There have been no changes in the Company's disclosure controls and procedures during the six month period ended June 30, 2021 that have materially affected, or are reasonably likely to material affect, its disclosure controls and procedures.

PolyMet Mining Corp.

Management Discussion and Analysis

As at June 30, 2021 and for the three and six months ended June 30, 2021

Tabular amounts in thousands of U.S. Dollars, except for shares and per share amounts

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Consolidated Financial Statements for external reporting purposes in accordance with IFRS as issued by the IASB.

Internal control over financial reporting, no matter how well designed, has inherent limitations. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There have been no changes in the Company's internal control over financial reporting during the six month period ended June 30, 2021 that have materially affected, or are reasonably likely to material affect, its internal control over financial reporting.

Additional information related to the Company is available on SEDAR and EDGAR, respectively, at www.sedar.com and at www.sec.gov, and on the Company's website www.polymetmining.com.

	Jun 30, 2021		Mar 31, 2021		Dec 31, 2020		Sep 30, 2020		Jun 30, 2020		Mar 31, 2020		Dec 31, 2019		Sep 30, 2019
Loss from operations	(5,081	)	(3,576	)	(3,992	)	(4,296	)	(6,582	)	(5,207	)	(2,818	)	(1,287	)
Other income (expense)	47		121		(37	)	955		531		(2,202	)	(46,779	)	(291	)
Loss for the period	(5,128	)	(3,697	)	(4,029	)	(3,341	)	(6,051	)	(7,409	)	(49,597	)	(1,578	)
Loss for the period ($/share) ⁽¹⁾	(0.05	)	(0.04	)	(0.04	)	(0.03	)	(0.06	)	(0.07	)	(0.50	)	(0.02	)
Cash (used in) provided by operating activities	(2,242	)	(2,124	)	(4,239	)	(3,976	)	(6,156	)	(3,569	)	(2,393	)	(1,415	)
Cash (used in) provided by financing activities	-		6,791		(119	)	9,000		6,915		6,888		-		14,997
Cash used in investing activities	(1,427	)	(1,758	)	(1,907	)	(1,682	)	(2,450	)	(2,553	)	(5,189	)	(4,749	)

		Six months ended
		June 30, 2021 ⁽¹⁾		June 30, 2020 ⁽²⁾
Salaries and other short-term benefits	$	1,356	$	1,729
Other long-term benefits		33		40
Share-based payment ⁽³⁾		505		1,018
Total	$	1,894	$	2,787

Type of Security	Number Outstanding	Weighted Average Exercise Price
Issued and outstanding common shares ⁽¹⁾	100,877,320	$ -
Restricted share units	1,014,408	$ -
Share options	1,935,300	$ 7.19
Share purchase warrants	3,137,918	$ 8.04