Mr. Randall Scott reports

RARE ELEMENT RESOURCES REPORTS ON SIGNIFICANT PROGRESS IN 2014 AND PLANS FOR 2015

Rare Element Resources Ltd. is summarizing key accomplishments achieved in 2014 and outlining its planned activities for 2015.

"The progress the company made in 2014 confirmed our confidence in the value of the Bear Lodge project and our commitment to continue to move the project toward production," stated Randall Scott, president and chief executive officer. "Not only did we complete a preliminary feasibility study that showed a long-life project with strong economics, but we also progressed the permitting process by helping the U.S. Forest Service advance the environmental impact statement on the project. These accomplishments, in combination with the advancements we made during the year on both our proprietary rare earth recovery technology and the initial test work on rare earth separation, resulted in an exceptional year for the company."

Highlights of 2014:

• Initiated the environmental impact statement under National Environmental Policy Act process. The United States Forest Service, with support from the company, started the process in February, 2014, and held public scoping meetings in April. Since that time, the USFS has completed the public scoping comment process and has been working with co-operating agencies on alternatives identification and analysis.
• Finalized the preliminary feasibility study on the Bear Lodge project. The study indicates a 45-year project life, 29-per-cent after-tax internal rate of return, $330-million net present value (10-per-cent discount rate) and a 2.9-year payback period. The strong economics reflect the benefits of the project's location in northeast Wyoming and the deposit's rich concentration of those rare earth elements essential to critical magnet materials and high-value phosphor applications. For more details, please see the technical report filed with the regulatory agencies and available on the company's website.
• Significantly improved patent-pending, recovery process technology and initiated test work on downstream elemental separation. Process improvements resulted in the filing of two additional patent applications. Advancements included:
  • Bench-scale tested a postrecovery process on the concentrate that effectively separated the concentrate into light and heavy rare earth fractions;
  • In January, 2014, announced the ability to selectively isolate and economically remove a significant portion of the low levels of naturally occurring thorium in the ore;
  • In November, 2014, completed test work on improvements to this thorium-elimination technology while greatly reducing the amount of cerium, the lowest-value rare earth, in the concentrate. This advancement resulted in improved purity (99.999 per cent in bench-scale testing) and substantially reduced the mass of material requiring further separation, which is expected to reduce the costs associated with that process.
• Completed a trench on the Bull Hill mineralization that confirmed the location and trending of the high-grade zone that will be the source of initial feed for the project. Gathered a 1,000-ton (907-tonne) bulk sample to be used for large-scale test work. Bulk samples excavated from the main body of the trench had an average total rare earth grade that exceeded 10 per cent.
• Accepted an invitation to join the Critical Materials Institute, a major initiative sponsored by the U.S. Department of Energy and committed to ensuring a secure supply of the rare earths necessary to support evolving green technologies.
• Initiated studies on areas of potential optimization identified in the PFS, including reagent optimization and assessment of materials of construction alternatives.

"In the new year, we continue to advance the programs we had under way at year-end, including additional test work, to expand on the positive results achieved on downstream elemental separation," said Jaye Pickarts, chief operating officer. "We continue to support the USFS in its efforts on the EIS, providing supporting data when requested. In the coming months, we will progress a number of studies and undertake additional test work to generate data necessary for the next stage of engineering for inclusion in the feasibility study. All of these efforts will move us closer to accomplishing our goal of becoming the next North American rare earth producer."

2015 planned activities:

• Continue to support the USFS's efforts to finish the alternatives assessment and complete the draft and final EIS documents. The USFS has indicated that it is preparing an updated EIS schedule, and the company anticipates receiving a copy in the next few weeks.
• Submit applications for mine and industrial siting permits to the Wyoming Department of Environmental Quality and for a possession licence to the U.S. Nuclear Regulatory Commission. These tasks are dependent upon completion of the alternatives assessment portion of the EIS.
• Confirm positive results of separation test work completed to date in larger-scale pilot plant testing. Test additional elemental separation methods directed at creating product baskets that meet end-users' specifications and maximize product value to the company.
• Initiate additional studies, including rheology studies and final geotechnical confirmation of waste rock and tailing characteristics, to support the next phase of engineering for inclusion in the feasibility study.
• Exercise responsible cash management to ensure continued progress toward project construction.
• Continue to cultivate relationships with potential off-take partners, including supplying upgraded product samples and providing project updates.
• Design and construct planned demonstration plant. The company continues to evaluate potential third party financing options.

Programs undertaken in 2015 will depend upon progress on the EIS, permitting and financing and are therefore subject to change.

We seek Safe Harbor.