Mr. Jaye Pickarts reports

RARE ELEMENT RELEASES RARE EARTH METALLURGICAL TEST RESULTS AND BEGINS PILOT PLANT TESTING

Rare Element Resources Ltd. has completed the bench-scale metallurgical test program for near-surface, oxidized high-grade, rare-earth-mineralized vein material from the Bull Hill deposit at the Bear Lodge project, Wyoming. The test program resulted in the development of a process flowsheet that will become the basis for a pilot plant operation and a preliminary feasibility (prefeasibility) study. Additional studies are also being conducted on the high-grade oxide-carbonate mineralization type, and on the low-grade stockwork mineralization that envelops the high-grade material. The pilot plant test is currently under way to further define an economical ore process and to develop design criteria that can be used to scale up to commercial operation. Completion of the initial pilot plant testing is scheduled for the end of October, 2011. The low-grade stockwork mineralization (generally less than 1.5 per cent rare earth oxides (REO)) surrounds the resource area and is not included in the company's NI 43-101 resource estimate (see news release of June 14, 2011). Much of this material will be mined in the current pit design in order to access the high-grade areas. These tests will determine whether the low-grade rare earth element (REE) mineralization can be upgraded and recovered from these areas in a simple cost-effective manner.

Bench-scale high-grade oxide testing

Rare earth mineralized bodies occur as high-grade dikes and veins within the Bull Hill deposit. They include a well-defined, near-surface oxidized zone that has been the subject of most metallurgical testing to date. The oxide mineralization contains essentially no matrix carbonates or sulphides. The sulphides are completely oxidized to hydrous iron oxides, and the non-REE-bearing carbonate minerals (calcite and strontianite) are completely leached from the zone, which ranges from the surface to depths of about 500 feet. These conditions created a loose and friable oxide material that allows for a simple physical mineral processing method.

In parts of the high-grade zone, the sulphides are oxidized but matrix carbonate is partially and variably leached. This zone is termed the oxide-carbonate zone. A thin transitional zone occurs at the base of the oxide and/or oxide-carbonate zone at a depth of approximately 500 feet (150 metres). The transitional zone passes relatively abruptly into the sulphide-bearing zone with typical carbonatite characteristics.

Tests on the high-grade oxide mineralization indicate that recoveries of 80 to 85 per cent of REO are expected using a two-stage process. The first stage is mineral concentration, also known as physical upgrading (PUG). The second stage is a chemical leaching process using hydrochloric acid that produces a mixed rare earths leachate that is precipitated as a bulk carbonate concentrate. The series of bench-scale testing programs was completed by Mountain States R&D International (MSRDI), Vail, Ariz., under the direction of Dr. Roshan Bhappu. The test results show that 80 to 90 per cent REO can be recovered in 50 to 60 weight per cent of the original mass weight by employing a simple washing, scrubbing and screening process that produces a mineral preconcentrate of sand size and finer particles. The washing and screening process uses only water as a process media and is similar to gravel washing plants that are commonly employed throughout the United States. Using a 5- to 8-per-cent REO head grade sample, the preconcentrate can be upgraded to 16 to 19 per cent REO using this process. A parallel series of tests to verify the process has been conducted by Nagrom of Perth, Australia, under the direction of Tony Wilkinson, general manager.

     Mineral concentration by physical 
       upgrading of high-grade oxide
                 material*
                                    
  Sample              Assay     Distribution
             Weight    REO      REO (recovery)
              (%)      (%)           (%)

-500 mesh    28.60    21.68         79.10
-325 mesh    32.30    20.60         84.80
-200 mesh    35.60    19.49         88.60
-100 mesh    38.10    18.54         90.20
-48 mesh     40.10    17.83         91.10

* Using a head grade of approximately 8 
  per cent REO

The preconcentrate will be trucked to a hydrometallurgical facility located approximately 40 miles from the Bull Hill mine site. The plant site will be selected from several sites identified in the area that are located on a railway line with existing infrastructure. Such a location will help reduce the environmental impact associated with chemical processing.

The subsequent leaching process consists of dissolving the preconcentrate in a 15- to 17-per-cent hydrochloric acid leach solution at a temperature of 90 C. This updated acid concentration for leaching is a significant reduction from the 21-per-cent concentration used in modelling costs in the preliminary economic assessment filed in November, 2010. In addition, the leach temperature of 90 C is lower than many other REE leach projects and allows for lower energy consumption.

Once the rare earth minerals are dissolved, iron is precipitated using sodium carbonate and sodium hydroxide. A mixed rare earth carbonate precipitate is produced by adding sodium carbonate to the rare earth leach solution. Approximately 95 per cent of the REO in the preconcentrate is dissolved by the hydrochloric acid and recovered in the precipitate, with an upgraded concentration of approximately 40 per cent REO. Optimization of the leaching and precipitation process is under way. The hydrochloric acid is regenerated in a distillation circuit using sulphuric acid and sodium chloride. This regeneration process is commonly used in the steel industry.

          CHEMICAL CONCENTRATION RESULTS FROM BENCH-SCALE LEACHING TESTWORK
                                                                  
Sample                        Ce2O3   La2O3   Nd2O3 Pr2O3  Sm2O3   Y2O3    REO     Fe  
                                 %       %      %      %      %     %       %      %  

Leach residue                  0.35    1.06   0.63   0.19   0.11   0.01    2.35   1.81 
Iron precipitate               3.00    1.82   1.01   0.45   0.14   0.00    6.43  17.70
Mixed carbonate precipitate   18.59   11.47   6.11   2.90   0.84   0.02   39.93   0.15 

Pilot plant test program of the high-grade oxide REE bulk sample

The following data are used as the basis for the pilot scale plant that commenced in early September, 2011. Hazen Research Inc., of Golden, Colo., is contracted to conduct pilot testing of this flowsheet. Approximately 13 tons of high-grade and stockwork mineralized material will be processed over the next several months to develop data for the prefeasibility study and to support the continuing environmental permitting process.

The design criteria and flowsheet for this upcoming prefeasibility study are as follows.

High-grade feed rate, stpd                     1,000    
Grade, % REO                                   3.5-6.0
Stockwork feed rate, stpd                      1,000    
Grade, % REO                                   0.5-1.5
Mass reduction from PUG plant, %                        
High-grade                                     30-50  
Stockwork                                      80       
Feed rate to hydrometallurgical plant, stpd    400-500
Grade, % REO                                   16-19    
Hydrochloric acid concentration, %             15-17  
Carbonate precipitation rate, stpd             80-100 
Grade, % REO                                   40       

Oxide-carbonate testing

The oxidized, but incompletely leached, oxide-carbonate zone in the Bull Hill deposit generally occurs beneath the oxide zone, but may locally breach the surface in select dikes and extend downward to the transitional zone. It is characterized by an absence of sulphides, with the residual iron oxides formed during the complete oxidation of the former sulphide minerals, and by variable amounts of relict matrix carbonates (calcite and/or strontianite). As now defined, the transitional zone is relatively flat-lying and occurs at depth as a thin layer immediately above the sulphide-bearing carbonatite zone. It contains mixed iron oxides and sulphides, along with a significant amount of relict matrix carbonates. The iron oxides in this zone are derived primarily from the variable partial to complete oxidation of constituent sulphide minerals. The unoxidized sulphide-bearing carbonatite at depth has not been leached of matrix carbonates and retains all of its initial sulphide content.

Metallurgy of the oxide zone REE mineralization is well established and described above. Initial metallurgical testing of the oxide-carbonate zone resource indicates that mineral preconcentration test results are similar to those for the oxide zone mineralization. Bench-scale testwork of the oxide-carbonate mineralization is continuing at both MSRDI and Hazen Research. Preliminary results from the mineral concentration testing are encouraging with recovery similar to the oxide mineralization. The leach testwork results are expected within the next few months.

The first set of test results indicate that rare earth recoveries ranging from 85 to 93 per cent were achieved using the same leaching criteria applied to the preconcentrated high-grade and stockwork oxide materials.

PRELIMINARY METALLURGICAL RESULTS FOR THE OXIDE-CARBONATE MATERIAL

                                                                 
 Experiment         Residue analysis, %                Extraction (solids basis), %
   No.           La     Ce      Pr      Nd       Eu     La    Ce    Pr   Nd   Eu  

Experiment 1   0.166   0.261   0.046   0.186   0.006    92    93    85   89   85
Experiment 2   0.144   0.239   0.038   0.167   0.006    93    93    88   90   85
Experiment 3   0.144   0.223   0.038   0.162   0.005    92    93    87   90   88
Experiment 4   0.167   0.256   0.042   0.185   0.006    91    93    86   89   85

Stockwork (lower grade) testing

Bulk-tonnage, lower grade stockwork mineralization averages approximately 1 per cent REO and occurs as an envelope around the higher grade oxide and oxide-carbonate zones. The stockwork zone is extensive and only a small part of the potential has been tested by drill holes. Scoping metallurgical testwork was completed for the lower grade stockwork ore. Using the same upgrading and leaching parameters as previously described, the REO content in the preconcentrate was approximately doubled, with a mass reduction of nearly 80 per cent. Subsequent hydrochloric acid leaching produced favourable rare earth extractions. Further metallurgical testing may allow the addition of this material to the resource base.

MINERAL CONCENTRATION BY PHYSICAL 
UPGRADING OF STOCKWORK MINERALIZATION*
                                     
  Sample              Assay     Distribution
             Weight    REO      REO (recovery)
              (%)      (%)           (%)

-500 mesh     4.60     6.01         43.3      
-200 mesh     2.80     6.88         29.0      
-100 mesh     1.30     9.67         18.9      
-48 mesh      1.30     8.75         17.9      
-1/4 inch     9.60     4.12         62.4      

* Using a head grade of approximately 2.4 per cent REO.

Heavy rare earths testing plans

West of the Bull Hill resource area, the company discovered high grades of heavy rare earth elements in the Whitetail Ridge resource area, and in the East Taylor and Carbon target areas. All three of the mineralized zones are located in the western half of an expanding rare earth mineralized district (the Bear Lodge REE district). Preliminary characterization of the western areas indicate high grades (more than 3 per cent REO) and substantial quantities of the light rare earths, along with some of the highest grades of heavy rare earths in North American REE deposits. They are particularly enriched in europium, terbium, dysprosium and gadolinium (Eu, Tb, Dy and Gd). The East Taylor and Carbon targets also contain significant yttrium.

Metallurgical samples are being collected and testing of the heavy rare earth mineralization will begin in the fourth quarter of 2011.

Jaye T. Pickarts, PE, serves the board of directors of the company as an internal, technically qualified person. Technical information in this news release has been reviewed by Mr. Pickarts and has been prepared in accordance with Canadian regulatory requirements that are set out in National Instrument 43-101.

We seek Safe Harbor.