Mr. David Suleski reports

RARE ELEMENT FILES MARCH 31, 2012 THIRD QUARTER FINANCIAL RESULTS

Rare Element Resources Ltd.'s unaudited consolidated financial statements and Form 10-Q for the third quarter ended March 31, 2012, have been filed on SEDAR and the U.S. Securities and Exchange Commission website.

All dollar amounts stated in this news release are in United States dollars.

Financial highlights for the third quarter ended March 31, 2012

The net loss for the third quarter ended March 31, 2012, totalled $5.3-million or 12 cents per share, as compared with a net loss of $1.6-million or four cents per share for the same period in 2011. The $3.7-million negative variance in net loss between the periods was due to the following:

• Increased exploration spending at the Bear Lodge property ($1.5-million);
• Reduced foreign exchange gain due to the impacts on the company's Canadian-dollar cash balances related to exchange rate fluctuations in the U.S. dollar on the balance sheet date ($900,000);
• Increased corporate administrative expenses due to more employees ($700,000);
• Increased stock-based compensation expenses due to increased number of options outstanding as a result of an increase in employees ($200,000);
• Negative variances in non-operating income and expenses amounted to $400,000, and were the result of mark-to-market losses on purchase warrants ($300,000) and decreased interest income ($100,000).

Cash and cash equivalents, and short-term investments at March 31, 2012, were $56.0-million, compared with $59.5-million as of Dec. 31, 2011. The $3.5-million decrease in cash and cash equivalents was primarily due to exploration, and general and administrative, spending.

Rare Element currently has 44.4 million common shares, and 4.6 million options and warrants, outstanding.

The unaudited financial statements are available through the Canadian securities regulatory authorities on SEDAR and with the U.S. Securities and Exchange Commission. They are also available on the company's website.

Update on the Bear Lodge project

On April 12, 2012, the company announced revised results of a preliminary feasibility study (PFS) for the Bear Lodge project. This revision supersedes the previous announcement made March 1, 2012. Several changes were made to optimize the Bear Lodge project, including revised and improved estimates of both capital and operating costs. The revised and improved estimates are now based on an optimally sized hydrometallurgical (hydromet) plant. The Bull Hill mine is planned as a conventional truck and shovel open-pit operation that will extract near-surface proven and probable mineral reserves consisting of a diluted 6.3 million tons averaging 3.6 per cent total rare-earth oxide (TREO), plus 1.6 million tons of lower-grade stockwork material averaging 1.1 per cent TREO. The mineral reserve is derived from a measured and indicated (M&I) mineral resource of 6.8 million tons averaging 3.75 per cent TREO. Located within the pit is another 4.5 million tons of high-grade oxide inferred mineral resource that will be the subject of further drilling in 2012, with a goal to upgrade the resource category. An additional 12 million tons of near-surface, high-grade inferred resources occurs outside the pit area, plus there is considerable exploration potential in the district for more of the HREE-enriched oxidized types of resources.

The company completed the PFS during the first quarter of 2012. Work has begun developing and confirming the design criteria for the definitive feasibility study. During 2012, the company plans to begin the formal National Environmental Policy Act environmental impact study process followed by the 2013 start of the formal mine permitting process with Wyoming Department of Environmental Quality. Mine construction will commence immediately upon the successful completion of the definitive feasibility study, detailed engineering, receipt of a positive record of decision, Wyoming mine permit and project financing.

Dahlman Rose & Co. rare-earth elements executive forum

Randall J. Scott, president and chief executive officer, will be a presenter at the Dahlman Rose & Company rare-earth elements executive forum in New York on Wednesday, May 16, 2012, at 3:45 p.m. EST. This presentation link is available on the company website.

We seek Safe Harbor.