Mr. Randall Scott reports

RARE ELEMENT RESOURCES REPORTS SECOND QUARTER RESULTS

Rare Element Resources Ltd. has filed its unaudited consolidated financial statements on Form 10-Q for the three and six months ended June 30, 2014, on EDGAR and SEDAR.

"The second quarter was a period of ongoing evaluation and analysis in support of our pending prefeasibility study, which is expected in the next several weeks," said Randall Scott, president and chief executive officer. "During the quarter, we identified a number of key ways to optimize our mine plan that not only improved the project's economics but also reduced its environmental footprint. These improvements, along with additional data collected to support our proprietary process technology, are being incorporated into the analysis that is the foundation of the forthcoming PFS. Additionally, the work of the U.S. Forest Service on the environmental impact statement for the project is progressing nicely. Scoping was completed in April, and the public scoping summary report was published in July. This information is being used to identify and evaluate alternatives and conduct the environmental analysis, which are currently under way, with the draft EIS anticipated for early in 2015. We believe we are the only rare earth project in North America that not only has a significant resource that can support a 40-plus-year mine life, at a very high initial grade, but also a recovery process that produces a 97-plus-per-cent total-rare-earth-oxide concentrate that is near thorium free. In addition, the project is well advanced in the environmental assessment and permitting process."

Financial results (please note that financial results published by the company are all stated in United States 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 June 30, 2014, totalled $3.1-million, or six cents per share, compared with a net loss of $5.3-million, or 12 cents per share, for the same period in 2013. The key drivers behind the lower year-over-year expenses were primarily:

• A decrease in exploration and evaluation expenses of $900,000, the result of a shift to technical and economic evaluation with a related reduction in exploration expenses, offset slightly by an increase in expenses for metallurgical and engineering test work;
• Lower corporate administrative cost of $500,000, primarily due to lower stock-based compensation expense;
• A favourable variance in currency translation of $900,000.

Cash balance

As of June 30, 2014, the company had cash and cash equivalents of $16.1-million, compared with $19.8-million at March 31, 2014. The net cash used of $3.7-million during the quarter was spent primarily on engineering and economic evaluation work essential to the development of the prefeasibility study, expected to be available in the next several weeks, and general corporate expenses. Cash and cash equivalents at June 30, 2014, are believed to be sufficient to conduct the company's currently planned 2014 work programs.

During the remainder of the year, the company expects to:

• Deliver the results of the pending prefeasibility study and file the related National Instrument 43-101 technical report, as well as update guidance and project timing;
• Initiate work on a definitive feasibility study, pending board approval, which will incorporate the results of the coming prefeasibility study, project budgets, schedules and other factors;
• Continue to support efforts by the U.S. Forest Service and the third party contractor for timely preparation of the draft EIS on the project;
• Apply for other permits and licences concurrent with development of the EIS, where appropriate;
• Complete limited condemnation drilling and excavate a small trench to provide bulk samples for larger-scale metallurgical testing and to provide additional geological and structural data for detailed pit design and engineering;
• Advance the company's analysis of the merits of further downstream separation, including identifying potential technology partners;
• Continue the company's discussions with potential offtake partners based on the quality of its plus-97-per-cent-pure, near-thorium-free total-rare-earth-oxide concentrate.

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

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