Rare Element Resources Reports Year-End 2013 Financial Results

Rare Element Resources Ltd. (NYSE MKT: REE and TSX: RES) (the “Company”), a mineral resources company advancing development of the Bear Lodge Critical Rare Earth Project (the “Project”), reported today that it has filed its audited consolidated financial statements on Form 10-K for the twelve-month period ended December 31, 2013 on www.sec.gov and www.sedar.com.

“2013 was a year of great progress for the Company. We grew our Measured and Indicated Resource by 85%, advanced and patented our innovative rare earth recovery process and progressed permitting of the Bear Lodge Project,” said Randall J. Scott, President and Chief Executive Officer. “We plan to continue this momentum in 2014. Our geologists have shifted their focus to support planned mining activities while continuing to evaluate the upside opportunities in this world-class rare earth district. To optimize our processing technology, some additional test work is currently underway that will then allow us to move into detailed engineering. Work continues on the Environmental Impact Statement, and on a parallel track, we will pursue the state and federal permits necessary for operations. We are integrating the results of our 2013 efforts and recently completed trade-off studies into revised economics for the Project, which should be available in the second quarter. And, we are evaluating the cost/benefit of downstream rare earth element separation, given the high purity of our concentrate, as well as mineral byproduct recovery. All these efforts support our goal, subject to timely permitting, of commissioning the Bear Lodge Project in late 2016.”

Highlights of 2013

• Expanded the contained total rare earth oxide (TREO) in the Measured and Indicated (M&I) Resource at the Bear Lodge Project by over 85%, from 571 million pounds (260M kg) at May 2013, to 1.08 billion pounds (490M kg) at December 31, 2013. The current M&I Resource has a 3.11% TREO grade, using a 1.5% cut-off grade.
• Completed drilling on the high-grade zone at the Bull Hill deposit providing additional information for mine planning purposes and expanding the high-grade portion of the M&I Resource for the Project from 6.0M tons (5.4M tonnes) at an average grade of 4.72% TREO, to 6.5M tons (5.9M tonnes) at an average grade of 4.70% TREO, using a 3.0% cut-off grade. Revised economics are being developed around mining this subset of the M&I Resource first to accelerate cash flows and enhance project economics.
• Identified and advanced an innovative rare earth recovery process that delivered a 97%-pure, near thorium-free concentrate in pilot plant testing, leading the Company to file a patent application on both the recovery and thorium isolation processes. The benefits of this technology include an overall average rare earth element recovery of 85% and the ability to recycle and regenerate the major reagents used in the process, helping to lower operating costs and supporting our goal of being a “zero discharge” project.
• Initiated studies on potential areas of opportunity identified during pilot plant testing, including mineral byproduct recovery to generate additional revenue streams and downstream rare earth element separation.
• In May 2013, the U.S. Forest Service (USFS) accepted the Company’s Plan of Operations on the Bear Lodge Project, and in September, the entities entered into a Memorandum of Understanding to initiate the National Environmental Policy Act (NEPA) process. In December, the USFS assigned a project manager and selected the prime contractor for preparation of the Environmental Impact Statement (EIS) for the Project. Work on the EIS commenced in early February 2014.
• Filed a shelf registration in June, both in the United States and Canada, and in September, completed an equity placement for net proceeds of $7.4 million.
• Evolved the composition of the Company’s Board as the Bear Lodge Project moves toward development by adding three new members with past and present executive-level experience with successful operating mining companies. During the year, two former directors left the Board.

2014 Activities

• Integrate the results of our 2013 work programs into a revised economic study on the Project. The result of this work is expected in the second quarter of 2014.
• Start a definitive feasibility study, once additional test work is completed and the process flow sheet is finalized. This is expected in the second half of the year.
• Distribute some of the 97% pure, near thorium-free concentrate produced in pilot plant tests to potential off-take partners and separation facilities as well as to national laboratories interested in restoring a viable domestic rare earth industry. Advance discussions with the entities.
• Progress permitting with the USFS, completing or advancing 1) notice in the Federal Register of the EIS, 2) the public involvement plan, 3) public scoping, and 4) preparation of the draft EIS.
• On a parallel course with preparation of the EIS, file a mine permit application with the Wyoming Department of Environmental Quality and a license-to-possess application with the U.S. Nuclear Regulatory Commission.
• Advance studies on the cost/benefit of mineral byproduct recovery and further rare earth element separation.
• Evaluate existing geological data to support the initiation of mining and further our understanding of several adjacent exploration targets identified on the Project.

Quarter-End December 31, 2013 Financial Results (Please note that financial results published by the Company are all stated in U.S. Dollars.)

For accounting purposes, the Company is classified as an exploration stage company and, as such, does not have production-related revenues at this time. The net loss for the quarter ended December 31, 2013, totaled $5.7 million, or $0.12 per share, compared to a net loss of $9.6 million, or $0.22 per share, for the same period in 2012. The $3.9 million positive variance in net loss between the two quarters was due almost exclusively to a smaller exploration and evaluation program in 2013, the goal of which was to upgrade known resources at the Project.

Year-End December 31, 2013 Financial Results

The net loss for the year ended December 31, 2013 totaled $22.2 million, or $0.48 per share, compared to a net loss of $29.4 million, or $0.66 per share, for the same period in 2012. The $7.2 million positive variance in net loss between the two periods was primarily due to the following:

• A decrease in corporate administrative expense, primarily stock-based compensation due to lower stock price, of $5.3 million;
• A decrease in exploration and evaluation expense of $4.2 million resulting from decreased drilling and evaluation work partially offset by increased metallurgical and process test work;
• A decrease in the write-down of mineral properties of $0.9 million;
• A reduction in the unrealized loss on derivatives of $0.2 million; and
• An increase in the loss on currency translation and a decline in interest income totaling $3.4 million.

Year-End Cash Balance

As of December 31, 2013, the Company had cash and cash equivalents and short-term investments of $23.9 million, compared with $40.1 million at the end of the prior year. Cash and cash equivalents used in 2013 were $23.6 million and were partially offset by $7.4 million in net proceeds from an offering of common shares and warrants in a registered direct offering completed in September 2013.

Work funded during the year included drilling and evaluation on both the Bull Hill and Whitetail Ridge deposits; metallurgical work for both resource evaluation and process testing, including third-party pilot plant testing of processing technology; numerous engineering and economic trade-off studies; and ongoing permitting efforts and related environmental monitoring costs.

Cash and cash equivalents at December 31, 2013 are sufficient to conduct our current exploration and development plans through the end of 2014.

“The Company remains committed to advancing the Bear Lodge Project toward development as quickly as possible,” said Paul H. Zink, Senior Vice President and Chief Financial Officer. “In 2013, we further defined our resource, advanced our patent-pending recovery process and progressed our Project’s permitting. We believe that these impressive accomplishments set us apart in the rare earth space and support our goal of being the next domestic rare earth producer.”

The audited financial statements are available through the Canadian securities regulatory authorities at www.sedar.com, and with the U.S. Securities and Exchange Commission at www.sec.gov. They are also available on the Company’s website at www.rareelementresources.com.

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 to estimate mineral reserves and resources, 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 timing and expected results of a revised economic study, processing test work and expected results, drilling program anticipated 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; results from geological evaluations and programs, 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 in our Annual Report on Form 10-K for the twelve months ended December 31, 2013. 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