Rare Element (REE) Reports Improved Estimates from Recent PFS for Bear Lodge

Rare Element Resources Ltd. (AMEX: REE) reports revised results of the previously announced positive Preliminary Feasibility Study for the Bear Lodge Rare-Earth Project, Wyoming.

This revision supersedes the previous announcement made March 1, 2012. After consultation with Roche Engineering, Inc., the independent engineering company that completed the PFS on behalf of Rare Element, several changes were made, including revised and improved estimates of both capital and operating costs. The revised and improved estimates are now based on an optimally-sized hydrometallurgical plant, and the recalibrated upside production sensitivity case is now based on 150% of the production rate of the Base Case.

Sensitivity analyses are also presented utilizing a lower long-term price assumption. The PFS was commissioned to provide a technical report with the following: the mineral reserve and resource model, the technical activities of the rare-earth exploration program, an open pit mine plan, a detailed description of mineral concentration and hydrometallurgical processing plans, and an economic analysis of the rare- earth project. The revised results of the PFS indicate that the Bear Lodge Project is technologically feasible with robust returns on invested capital.

Highlights of the PFS

• Net Present Value at a 10% discount rate ("NPV-10") of $1,271M after state taxes but before federal income taxes;
  
  
• Internal rate of return ("IRR") of 47.8% with 2-year payback of initial capital;
  
  
• Robust economics at the 25% lower price assumptions (NPV-10 of $790M);
  
  
• Average annual production rate of 20,962 metric tonnes (23,111 tons) bulk mixed rare-earth carbonate concentrates containing 9,433 tonnes (10,400 tons) total rare earth oxide;
  
  
• Nineteen year mine life based on mineable mineral reserves of 5.7M tonnes at an average grade of 3.6% TREO
  
• Average metallurgical recovery rate of 81.4%;
  
  
• Initial capital cost of $334M and life-of-mine ("LOM") capital of $404M;
  
  
• Average price of $17.36/kilogram ("kg") of concentrates based on 3-year trailing average "basket price" FOB China, 45% concentrate grade and 40% discount;
  
  
• Average annual operating cost of $61.8M and operating costs of $194/tonne mined and $2.94/kg of bulk mixed RE carbonate concentrate;
  
• Substantial upside potential to increase reserves and resources as exploration continues at Bull Hill, Whitetail Ridge, East Taylor and Carbon areas;
  
  
• Exploration potential exists in the district to delineate resources of heavy rare earth elements; and
  
  
• Definitive Feasibility Study is starting in the second quarter of 2012 with a mid-year 2013 planned completion date.

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