Mr. Randall Scott reports

RARE ELEMENT RESOURCES REPORTS FIRST QUARTER RESULTS

Rare Element Resources Ltd. has filed its unaudited consolidated financial statements on Form 10-Q for the three months ended March 31, 2015.

"We started to see growing interest in the rare earth space in the first quarter with renewed attention to our Bear Lodge project and increased media focus on the sector," said Randall J. Scott, president and chief executive officer. "The project received statements of support from both the Wyoming legislature and the state's economic development branch recognizing its importance to not only Wyoming but to the nation. The U.S. Forest Service also provided an updated schedule that indicates they will have the draft environmental impact statement available early this fall. We were encouraged by the rise in magnet-related rare earth oxide prices, given their significant contribution to Bear Lodge's projected revenues. These factors were complemented by the attention generated by a segment on the CBS program 60 Minutes that highlighted the importance of rare earth elements in our high-tech world."

Financial results (financial results published by the company are all stated in United States dollars)

The company does not have production-related revenues at this time. The net loss for the quarter ended March 31, 2015, totalled $2.5-million, or five cents per share, compared with a net loss of $4.4-million, or nine cents per share, for the same period in 2014. The year-over-year decrease in net loss was primarily driven by: lower exploration and evaluation spending of $1.7-million, as the company shifted its focus from the preliminary feasibility study (PFS) and pilot plant metallurgical work to continuing permitting and separation studies; and lower corporate administrative cost of $300,000, primarily due to the continued focus on cost containment.

Cash balance

As of March 31, 2015, the company had cash and cash equivalents of $7.5-million, compared with $10.1-million at Dec. 31, 2014. The net cash used of $2.6-million during the quarter was spent primarily on additional testwork to confirm recovery process enhancements and initial elemental separation studies, as well as efforts to support progress on the environmental impact statement (EIS) being generated for the project, and gathering the information and preparing the applications necessary for certain state and federal permits.

On April 29, 2015, the company announced the closing of a $3.4-million direct registered offering, which generated net proceeds of approximately $3.2-million. These proceeds, when combined with the cash and cash equivalents at March 31, 2015, are believed to be sufficient to conduct the company's current planned activities through the end of 2015.

Those activities include:

• Continuing to support the U.S. Forest Service's efforts to prepare an EIS on the project;
• Submitting the mine permit application to the Wyoming Department of Environmental Quality, as well as the application for a licence to possess source material (naturally occurring radioactive materials) to the U.S. Nuclear Regulatory Commission, and other federal permits;
• Continuing elemental separation tests directed at creating advanced purification of rare earth baskets that meet end-users' specific needs and maximize product value to the company;
• Initiating engineering studies, including geotechnical confirmation and condemnation drilling within the proposed physical upgrade plant (PUG) site to support the feasibility study (FS);
• Continuing to cultivate relationships with potential offtake partners, including supplying upgraded product samples and project updates.

The company has a number of other programs it plans to undertake, subject primarily to securing additional financing. These would include: larger-scale pilot plant testing to build on the positive results of individual element separation testwork completed to date; certain technical work, relating to waste rock and tailings characterization for inclusion in the FS; and a demonstration plant to generate key information, such as materials of construction and material sizing, as well as larger-scale product samples for potential customers.

Evolving rare earths market

"Changing regulations and controls on rare earth supplies from China would appear to bode well for non-Chinese producers. With export tariffs and quotas being replaced with strict licensing practices and resource taxes, we expect to see the cost of mining rare earths in China continue to rise," said Paul H. Zink, senior vice-president and chief financial officer. "Rising Chinese costs should be supportive of higher prices and encourage end-users to look to companies like ours to secure offtake agreements to guarantee a steady, reliable future source of the rare earths critical to so many of our modern conveniences."

Since October, certain rare earths, particularly magnet materials, have experienced rising prices. This benefits the Bear Lodge because over 60 per cent of the anticipated revenues, as contemplated in the 2014 PFS, will be generated from the four elements most commonly used in high-intensity, permanent magnets -- neodymium, dysprosium, praseodymium and terbium. According to Asianmetal website, the domestic Chinese price for terbium is up 39 per cent, dysprosium is up 15 per cent and neodymium has risen more than 10 per cent. In response to a ruling in 2014 by the World Trade Organization, China eliminated their system of export quotas and tariffs, but has replaced quotas with a licensing program that, according to some industry analysts, will be even less transparent than the old system. To replace tariffs, the country has announced that they will be levying a new, value-based resources tax on the rare earth sector starting May 1. These taxes, as well as rising wages and increased environmental costs, are expected to push production costs up and help support continued rising prices for certain rare earths.

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

We seek Safe Harbor.