• Expansion of district-wide Critical Rare Earth Elements (CREE) resource through well-defined drill program

• Improved proprietary Rare Earth concentration process tested to optimize recoveries, process parameters, recycle/regeneration and costs

• Pilot Plant testing to ensure best product to meet customer requirements

• Engineering review for best development plan to maximize project value including phased development and value added products

• Key permitting processes underway to achieve target production dates

Lakewood, Colorado – Rare Element Resources Ltd. (NYSE: REE; TSX: RES) is pleased to provide highlights of key activities underway and slated for completion during 2013. 

Accomplishments in 2012

Rare Element Resources (the "Company") ended 2012 with approximately US $40 million in cash and 45 million common shares outstanding. During 2012, additional drilling was completed to expand and upgrade the Bull Hill and Whitetail Ridge rare earth resource areas, and to expand the heavy rare earth (HREE) enrichment zones at the Taylor and Carbon exploration targets. These HREE-enrichment zones support the full district mix of those elements considered Critical Rare Earth Elements (CREEs), including Nd, Pr, Eu, Tb, Dy and Y. The Company completed a pre-feasibility study (PFS), continued significant ore reserve and process studies and made advances in optimization of the rare earths concentration process. The PFS showed a pre-tax NPV of US $1.3 billion for the portion of the project as delineated in early 2012. That resource was expanded and upgraded with additional drilling during 2012, with results expected in the second quarter of 2013.

The geological team expanded the areas on the property that are enriched in HREEs. Metallurgical testing conducted on samples from these new areas allows inclusion of the Whitetail deposit in the upcoming definitive Feasibility Study (dFS).

Plans for 2013

2013 Budget
The Board of Directors approved a budget of approximately US $25 million for 2013. The vast majority of this budget is directed at project development at Bull Hill and Whitetail Ridge. The budget also includes additional pilot plant testing of the ore from these locations and the preparation of a dFS.

Exploration Drilling – Critical Rare Earth Mineralization with Heavy Rare Earth-enrichment
The budget includes a multi-million dollar program of exploration drilling targeted at the zones of HREE-enrichment to continue to improve knowledge of these growing enriched areas, and to upgrade and expand the Whitetail Ridge resource area.

Production Process Optimization
Previous metallurgical testing of the main Bull Hill deposit resulted in a process that could produce a bulk rare earth carbonate concentrate. During 2012, work continued on process improvement, and further advances were made, including development of a proprietary process designed to produce nearly pure rare earth oxide concentrate without requiring conventional methods for impurity removal. The technology is also designed to achieve high rare earth recoveries, reduce chemical consumption and upgrade the final rare earth product. Regular updates will be provided throughout 2013 outlining the Company's continued process improvements.

Pilot Plant Testing
One key item to be completed in 2013 is additional pilot plant testing. The initial pilot plant test was completed in early 2012 at Hazen Research in Golden, Colorado. Significant improvements and modifications were made to the process flowsheet, and those improvements will be incorporated into the 2013 pilot plant test program. This data will be used to generate the design criteria to support the dFS.

Permitting and Environmental baseline data collection 
One of the first milestones in the National Environmental Policy Act (NEPA) process is the submittal of a Plan of Operations. This document was completed and submitted to the United States Forest Service (USFS), the lead NEPA agency, in November 2012. This document provides a description of the proposed project that the USFS will use to begin the environmental impact analysis. The impact assessment will begin in 2013. Additionally, other environmental and operating permit applications will be filed for federal and state requirements in 2013.

Minesite and Processing Site Design
A preliminary minesite and open pit were designed for the Bull Hill deposit, and a three dimensional "fly through" of the area was completed and is posted on the project website at www.rareelementresources.com. This video also includes a visual of the nearby site selected for the location of processing plant in Upton, WY. This visualization will be updated in 2013 to incorporate design modifications from the dFS. An option agreement to purchase the land selected for the processing site was completed in 2011 and may be exercised in 2013.

Production Rate Optimization
Rare Element Resources is also conducting engineering trade-off studies to optimize production rates and maximize profitability and efficiencies of the project. One of the models under review is an evaluation of an initial high grade, lower ore production scenario that would transition into full plant capacity. Further details will be announced on these scenarios as optimization work is completed.

Offtake Agreements
The Company continues to hold discussions with potential customers, primarily to understand the products and forms of those products with the highest demand and value. As 2013 progresses, additional potential customers will be identified and updated on the progress of the project.

The above information is a summary of the Company's 2013 planned activities, and more detailed announcements will be made as those items progress. These results will also be incorporated into a dFS, which is expected to commence mid-2013.

For information please refer to the Company's website at www.rareelementresources.com or contact David Suleski, 720-278-2468.

Rare Element Resources Ltd. (NYSE: REE and TSX: RES) is a publicly traded mineral resource company focused on exploration and development of rare-earth elements (REEs), with a significant distribution of critical rare earths (CREEs). In addition to the REE exploration and evaluation efforts, the Company controls the Sundance gold project, which is located on the same property in Wyoming.