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EXCHANGE CONTROLS
Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or
earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange
restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident
holders of Rare Element’s securities, except as discussed in “Certain Canadian Federal Income Tax Considerations
for U.S. Residents” below.
Restrictions on Share Ownership by Non-Canadians: There are no limitations under the laws of Canada or in the
organizing documents of Rare Element on the right of foreigners to hold or vote securities of Rare Element, except
that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain
acquisitions of “control” of Rare Element by a “non-Canadian.” The threshold for acquisitions of control is
generally defined as being one-third or more of the voting shares of Rare Element. “Non-Canadian” generally
means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is
ultimately controlled by non-Canadians.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. RESIDENTS
The following is a summary of the principal Canadian federal income tax considerations that apply to the holding
and disposition of our common shares. This summary only applies to a holder who is for Canadian income tax
purposes not resident in Canada, is resident in the United States of America under the provisions of the Canada-
United States Income Tax Convention (1980) (the “Treaty”) and holds our common shares as capital property.
This summary is based on the current provisions of the Income Tax Act (Canada) and the regulations thereunder
(the “Tax Act”) and all amendments to the Tax Act publicly proposed by the Government of Canada to the date
hereof. This summary is also based on the current provisions of the Treaty and our understanding of the current
publicly available administrative and assessing practices published in writing by the Canada Revenue Agency.
It is assumed that each proposed amendment will be enacted as proposed and there is no other relevant change in
any governing law, although no assurance can be given in these respects. This summary does not otherwise take into
account any change in law or administrative practice, whether by judicial, governmental, legislative or
administrative action, nor does it take into account provincial, territorial or foreign income tax consequences, which
may vary from the Canadian federal income tax considerations described herein.
A particular U.S. resident person may not be entitled to benefits under the Treaty if the “limitations of benefits”
provisions of the Treaty apply to the particular U.S. resident person. The limitations of benefit provisions under the
Treaty are complex, and U.S. residents are advised to consult their own tax advisors in this regard.
Under the Treaty, members of a limited liability corporation created under the limited liability company legislation
in the U.S. and treated as a partnership or disregarded entity under U.S. tax law (“LLC”) (and holders of interests in
similarly fiscally transparent U.S. entities) may be entitled to benefits under the Treaty in certain circumstances
provided that the members of the LLC are taxed in the United States on any income, profits or gains earned through
the LLC in the same way they would be if they had earned it directly.
Special rules, which are not discussed in this summary, may apply if you are an insurer carrying on business in
Canada and elsewhere, or a financial institution as defined by section 142.2 of the Tax Act. If you are in any doubt
as to your tax position, you should consult with your tax advisor.
This summary is of a general nature only and it is not intended to be, nor should it be construed to be, legal or tax
advice to any holder of the common shares and no representation with respect to Canadian federal income tax
consequences to any holder of common shares is made herein.
ACCORDINGLY, SHAREHOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISERS AS TO THE INCOME AND OTHER TAX CONSEQUENCES
ARISING IN THEIR PARTICULAR CIRCUMSTANCES
.
