Advantages of Proprietary Processing Technology Validated in Pilot Plant Tests

Rare Element Resources Ltd. (NYSE MKT: REE and TSX: RES), a mineral resources company advancing development of the Bear Lodge Critical Rare Earth Project, is pleased to announce that its pilot plant test program, conducted at SGS Lakefield Canada, validated the significant benefits of the Company’s proprietary processing technology and identified the opportunity for additional Project improvements.

“Our pilot plant testing was an unqualified success not only in demonstrating on a larger scale the benefits of our process in the critical metrics of achieving high bulk concentrate purity, excellent recoveries and substantially reducing reagent costs but also in identifying additional opportunities for improved efficiencies and cost savings,” stated Jaye Pickarts, Chief Operating Officer. “The testing also confirmed the effectiveness of an innovative process to isolate the Thorium and Uranium, which are usually associated with rare earth deposits, making for safe, controlled disposal. Equally significant, it was recognized that because of the purity of the concentrate, downstream elemental separation should be evaluated for the additional value it could bring to the project. We will begin work on evaluating the technology alternatives for separation and assessing end-user needs to determine the most attractive product mix.”

The test work confirmed the following key advancements:

• The ability of the Company’s proprietary technology, under optimized pilot plant conditions, to separate rare earths from base metals by selective precipitation, in a single step process, producing a 97% pure bulk total rare earth element (REE) concentrate.
• The tests of various REE mineral types responded well to acid digestion, resulting in leach efficiencies averaging 95%. This contributed to high overall REE recoveries that averaged 85% in a combined physical upgrade (PUG) and hydrometallurgical (Hydromet) process.
• The capacity to regenerate and recycle the major acid reagents used in the process, leading to an anticipated reduction in related raw material costs of approximately 50%. The recycle process resulted in the elimination of process effluents, reconfirming that there will be “zero-discharge” from the facility.
• The effectiveness of a newly identified process to isolate Thorium (Th) and Uranium (U) from the residual solids and final REE bulk concentrate to allow for easy 3^rd party disposal. This represents a significant advancement in the treatment of radionuclides in rare earth mining, and as such, the Company has secured a provisional patent for the process.
• The opportunity to beneficiate certain naturally occurring, potentially valuable by-products, representing the opportunity for additional revenue streams and reduced waste.

The pilot plant test work was conducted at SGS Lakefield under the supervision and oversight of Dr. Henry Kasaini, Director of Science and Technology for Rare Element Resources. The pilot test work focused on confirming the flow sheets for both the PUG and Hydromet process. The plant tested four different ore types, with total rare earth oxide (TREO) head grades averaging 4.8% from Bull Hill and 2.7% from Whitetail Ridge. The work was conducted over a four week period at a production scale of 240kg/day.

Feasibility Study

Activities in support of the upcoming Feasibility Study began in mid-2013, with the start of the pilot plant test program and several engineering-related trade-off studies. Along with the multiple advantages of the Company’s proprietary processes, pilot plant testing and engineering trade-off studies identified a possible modification to the PUG process that, if proven successful, would significantly reduce capital and operating costs without significantly impacting recoveries. Engineering and bench-scale testing will begin immediately on this potential change with additional pilot plant studies anticipated in early 2014. To ensure consideration of the results of this work and the multiple trade-off studies undertaken by the Company over the last six months, as well as the results of the recent drill campaigns, the detailed design and economic analysis portion of the Feasibility Study is now expected to start in the first half of 2014.

Proprietary Recovery Process

As currently proposed, mined ores would be beneficiated using some combination of crushing, screening, gravity and magnetic separation at a PUG plant to be located adjacent to the mine. During pilot plant testing, the developed PUG flow sheet was optimized to reduce feed mass from Bull Hill ore by 20% and from Whitetail ore by 45%. This resulted in a final PUG concentrate with average REE recoveries of 95% and 86%, respectively.

The resulting mineral pre-concentrate was then subjected to the Hydromet process which employs a hot chloride solution to extract the REEs into a pregnant leach solution (PLS). Using closed reactor vessels, the PLS reacted with oxalate reagents under optimized conditions to facilitate selective precipitation of REEs with impurities remaining in solution. During testing, approximately 97% of total REEs were selectively separated in the oxalate precipitation process, with about 98 to 99% of the total base metals and silica remaining in the barren solution. Because of the base metal concentration, it should be possible using a crystallization acid distillation process to beneficiate base metals separately. The potential value of these byproducts to the Company will be evaluated.

A significant amount of HCl remained in the PLS. Testing confirmed that at elevated temperatures, the addition of oxalic acid helped to generate HCl after precipitation of the REEs. As a result, the waste solution had a significant amount of free acid and water that was recoverable. Approximately 80% of total free acid was recovered by distillation and re-constituted through a rectifier as azeotropic HCl (20% strength). This is expected to result in a 50% reduction in required fresh HCl at the leach step. Water recycling of between 80 to 90% was accomplished, which would significantly reduce fresh water needs as well.

Thorium Isolation and Removal

During the acid digestion portion of the process, between 82 and 90% of the total Th and low level U associated with the ore was digested along with the REEs and subsequently transferred to the PLS. This resulted in a leach residue, with Th and U concentrations significantly lower than background, that could be disposed of safely in a controlled tailings storage facility.

As the PLS continues through oxalate precipitation, the REEs and Th are sequestered in a bulk oxalate precipitate, leaving base metal impurities and U in the now barren PLS. The next step in the process recovers significant amounts of oxalate and acid reagents from the barren PLS by crystallization, reducing raw materials costs, while the base metals and U remained in the final distillation residue. They can be treated further for potential economic recovery or disposed of in a tailings storage facility.

The new Provisional Patent applies to the innovative process where all Th is selectively removed from the REE concentrate, resulting in a 97% pure final bulk concentrate product. At this stage, additional oxalate reagents are also recovered, further improving the economics of the project. The Th could then be transferred to an off-site licensed disposal facility.

Rare Element Resources Ltd. is a publicly traded mineral resource company focused on exploration and development of rare-earth element deposits, specifically those with significant distribution of critical rare earths. The Company is advancing development of the Bear Lodge Project, located in northeast Wyoming. Bear Lodge is a significant mineralized district containing many of the less common, more valuable critical rare earths that are essential for electronics, fiber optics, laser systems for health and defense, as well as many evolving green technologies, like hybrid cars, solar panels and wind turbines. Permitting and feasibility work on the Project is currently underway.

For additional information, please visit the Company’s website at www.rareelementresources.com or contact Robbin Lee at 720-278-2462 or rlee@rareelementresources.com.

Jaye T Pickarts, P.E., Rare Element's internal, qualified person under Canadian NI 43-101, supervised the preparation of the scientific and technical information concerning the Company's mineral project and process contained in this news release. For a description of the key assumptions, parameters and methods used in the testing discussed in this release, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, please see the Technical Reports for our project as filed on SEDAR at www.sedar.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward-looking statements are usually identified by our use of certain terminology, including "will", "believes", "may", "expects", "should", "seeks", "anticipates", "plans", "has potential to", or "intends" or by discussions of strategy or intentions. Such forward looking statements include statements regarding the processing test work and expected results, permitting process and progress, and project development plans for the future. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the progress of our Bear Lodge Project, fluctuations in demand for, and price of, rare earth products; success of process technology under testing; timing of and unexpected events at the Bear Lodge property; delay or failure to receive government approvals and permits; changes in U.S. and Canadian securities markets; and general economic conditions. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors set out in our filings made from time to time with the SEC and Canadian regulators, including but without limitation, our reports on Form 10-K and Form 10Q. We expect that the above estimates as to development plans, technology and other processes, time frames and financial needs will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event. Investors and others should not assume that any forecasts in this press release represent management's estimate as of any date other than the date of this press release.

Rare Element Resources Ltd.
Robbin Lee, 720-278-2462
rlee@rareelementresources.com