Drill results continue to demonstrate that the Bear Lodge Rare Earth Project is a growing world-class source of critical rare earth elements

Results confirm:

• High abundances of Critical Rare Earth Elements (CREEs) which include Nd, Pr, Eu, Tb, Dy and Y in all deposits
• Heavy Rare Earth (HREE)-enrichment at Whitetail and Carbon
• Continuity and grade of the Bull Hill deposit

Lakewood, Colorado- Rare Element Resources Ltd. (NYSE MKT: REE; TSX: RES) (the "Company") is pleased to announce rare earth element (REE) assay results from the final core holes completed during the 2012 drilling program at the Company's 100% owned Bear Lodge property, located in northeastern Wyoming, USA. The drilling results confirm that the Bear Lodge deposits contain high grades of total rare earth oxide (TREO), including high abundances of combined Critical Rare Earth Oxides (CREOs).

Dr. James Clark, Vice President of Exploration for Rare Element Resources, states "Assay results are now in from all of the development and exploration core holes drilled during our 2012 program. We are extremely pleased with the results as most recent drill results confirm and further expand the quality and continuity of the Bull Hill REE deposit and the Whitetail Ridge resource area. We expect to significantly increase the Measured and Indicated resources in those deposits in preparation for the upcoming definitive Feasibility Study (dFS). Further, the results confirm the zones of HREE-enrichment (Eu, Tb, Dy, and Y) at Whitetail Ridge and Carbon and illustrate the significance of this world class source of CREOs."

Critical Rare Earth Oxides (CREO)

Critical rare earth elements (CREEs) are those with the highest value, and for which the strongest future growth is projected. We refer here to the oxides of Nd, Pr, Eu, Tb, Dy, and Y as Critical Rare Earth Oxides (CREO). In 2011, the Company identified significant HREEs (Eu, Tb, Dy, and Y) in leached FMR (F (FeOx)-M (MnOx)-R (REE minerals)) and oxide-carbonate dikes at the Whitetail Ridge resource area, and at the East Taylor and Carbon target areas (see news releases dated 4 August and 27 October 2011, and 10 December 2012). The current set of assay results from the Whitetail Ridge resource area and Carbon target confirm those important observations. Examination of aggregate significant intercepts from past drill results and the current set of drill assay results indicate that there is a district-wide zonation in which the strongest TREO enrichment occurs within a central zone focused on the Bull Hill and Bull Hill Northwest deposits, while the strongest HREE (Eu, Tb, Dy and Y) enrichment is found in mineralization peripheral to the central zone and focused at the Whitetail Ridge deposit, and at the Carbon and Taylor REE target areas (Table 1 and Figure 2). The peripheral enrichment zone is ascribed to a late-stage, low-temperature hydrothermal event.

Objectives of the 2012 Drill Program

The objectives of the 2012 drilling program were to expand and upgrade the district's resource categories at the Bull Hill and Whitetail Ridge oxide deposits, and to further delineate the HREE (Eu, Tb, Dy, and Y) enrichment at the Whitetail Ridge resource area and Carbon target area. The drill results emphasize a Bear Lodge district-wide REE zonation, with a central zone of strong TREO enrichment that gives way to a peripheral zone with significant TREO and strong Eu, Tb, Dy, and Y enrichment.

The assay results from 35 core holes are announced in this release and include assays from 15 core holes at the Bull Hill REE deposit, 18 holes from the Whitetail Ridge resource area, and 2 holes from the Carbon REE target area.

Other highlights of the current drill program include the following intercepts:

The host for rare earth mineralization in the Bear Lodge Mountains is an alkaline igneous complex that forms the core of the mountain range. Rare earth mineralization intersected in the 35 holes is primarily contained within the near-surface oxidized and leached FMR and oxidized and incompletely leached (oxide carbonate/OxCa) equivalents of carbonatite dikes that are widespread in the district and concentrated in dike swarms and stockwork zones associated with a series of diatreme breccias at Bull Hill, Whitetail Ridge, and Carbon Hill (Figure 1). The host rocks at Bull Hill and Whitetail Ridge consist largely of heterolithic intrusive breccia, while the host rocks west of Bull Hill are predominantly trachyte, phonolite, and subordinate breccia. FMR refers to the major constituents of the highly oxidized, former carbonatite dikes that occur in the depth range from the surface to 300-800 feet beneath the surface. Significant assay results for TREO, CREO, Eu2O3, Dy2O3, and Y2O3 for the current set of drill holes are listed in Tables 2 through 5. Drill hole collar locations are given in Figure 1.

Twelve of the current set of 15 core holes in the Bull Hill Resource Area were drilled along a prescribed NE-SW grid, at an azimuth of 045º as infill holes in the main Bull Hill SW deposit. The remaining three holes were drilled at azimuths of 090°, 015°, and 225° to test subordinate groups of mineralized structures with orientations that differ from the main Bull Hill trend. The resource evaluation grid was established for the Bull Hill deposit in conjunction with Ore Reserves Engineering, the Company's resource estimation consultant. The bearing, inclination, and significant assay intercepts from the Bull Hill area drill holes are summarized in Table 2 below.

The tables use the following abbreviations for the ore types: Oxide (Ox); Oxide Carbonate (OxCa); Transition (Trans); Unoxidized (UnOx).

Rare earth mineralization in and adjacent to the Whitetail Ridge Resource area is associated with the Whitetail Ridge diatreme. The REE mineralization occurs in north- and NW-trending dikes, veins, and stockwork zones. Twelve of the 18 core holes were drilled along an azimuth of 270º on an E-W resource grid to test northerly trending mineralized structures, and 6 holes were drilled at azimuths of 225° to 233° to test northwesterly mineralized structures. The bearing, inclination, and significant assay intercepts from the Whitetail Ridge area drill holes are summarized in Table 3 below.

Table 3. Significant drill assay results from the Whitetail Ridge REE deposit.

The 2012 drilling at the Whitetail Ridge resource area also identified significant gold mineralization. The gold mineralization occurs both coincident with, and outboard of, the HREE-enriched FMR dikes and veins. Significant gold intercepts from core holes drilled at Whitetail Ridge in 2012 are listed in Table 4.

REE assay results from drill holes RES12-52 and RES12-53 were reported in a news release dated 26 September 2012, and REE assay results from drill hole RES12-56 were reported in a news release dated 10 December 2012. The REE assay results from the rest of the Whitetail Ridge core holes with significant gold intervals are reported here. The gold mineralization is attributed to the same late, low-temperature hydrothermal event responsible for the HREE-enrichment. The results represent the second highest Thickness X Grade zone of gold mineralization ever intersected in the Bear Lodge district over a period spanning at least the last 30 years.

The Carbon REE target is located about 1200 feet (370 m) northwest of the Whitetail Ridge deposit along an apparent northwest-trending zone of mineralization. Two reverse-circulation drill holes (SUN-076 and SUN-079) completed during the 2010 Sundance gold exploration program cut significant REE mineralization in FMR and unoxidized carbonatite vein material. Assays from drill holes at the Carbon target in 2010 and 2011 were reported in previous news releases (10 December, 26 September, and 26 March 2012, and 4 August 2011). The REE mineralization can be interpreted as either the northwestern extension of the Whitetail Ridge system or, alternatively, a distinct FMR/carbonatite mineralized system. Significant REE-bearing intercepts from the 2 core holes drilled at the Carbon target area in 2012 are summarized in Table 5.

Table 5. Significant drill assay results from the Carbon REE exploration target (all RC drill holes).

Assays, Quality Control, and Standard Certification

Assays for REE and other selected elements in the 2012 drill program holes reported here were conducted by Activation Laboratories Ltd. of Ancaster, Ontario, Canada (ActLabs) in their Ontario assay facility. ActLabs is accredited to ISO 9001 and ISO 17025 methods. The samples were prepared and subjected to lithium metaborate fusion, followed by ICP analysis and a mass spectroscopy finish (Code UT-1-0.5g Aqua Regia ICP/MS analytical package). Gold assays for each sample were conducted using ActLabs Code 1A2 Au method (fire assay/AA finish).

For the 2012 drill hole assays, analytical quality is monitored through the use of randomly inserted quality control samples, including standards, blanks, and duplicates, which are blinded to the analytical laboratory. Results from the analyses at ActLabs are evaluated continuously by Dr. Jeffrey Jaacks, the Company's QA/QC consultant, who is a Qualified Person according to National Instrument 43-101. The results from the current data set of 2012 drill hole assays indicate acceptable accuracy and precision. Blank analyses also indicate no issues with carry-over contamination. For the re-assay of intervals from historic gold exploration drill holes, only internal quality control data from Actlabs and ALS Chemex were used to monitor the quality of the assay data, and those assay data are deemed to be of acceptable accuracy and precision.

Bulk Sample Drilling

The Company conducted a bulk sampling drill program in 2012 to provide additional mineralized material for the upcoming pilot plant test program that will be part of the definitive Feasibility Study, scheduled to commence mid-year 2013. The program consisted of 14 drill holes totaling 6,853.5 feet of large-diameter core. The holes were PQ-sized (85mm inside diameter) or PQ with HQ tails (HQ has 63.5mm inside diameter). The drill hole material is being combined with material from the 2011 bulk sample drilling program (38 PQ and HQ drill holes, totaling 5,821.5 feet) and trench samples to provide more than 21 short tons of mineralized material to the 2013 pilot plant.

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

Rare Element Resources Ltd. 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.

Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

Forward Looking Statements
This news release contains forward-looking statements within the meaning of securities legislation in the United States and Canada. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including "will", "believes", "may", "expects", "should", "seeks", "anticipates", "has potential to", or "intends' or by discussions of strategy or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company's business model; future operations, products and services; the impact of regulatory initiatives on the Company's operations; the size of and opportunities related to the market for the Company's products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance

Cautionary Statement
John T. Ray, MS, Rare Element's qualified person under Canadian NI 43-101, supervised the preparation of the scientific and technical information concerning the Company's mineral project contained in this news release. For a description of the key assumptions, parameters and methods used to estimate mineral reserves and resources, as well as data verification procedures and a general discussion of the extent to which the estimates may be affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors, please see the Technical Reports for our project as filed on SEDAR at www.sedar.com.

Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We may use certain terms in public disclosures, such as "measured," "indicated," "inferred" and "resources," that are recognized by Canadian regulations, but that SEC guidelines generally prohibit U.S. registered companies from including in their filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K which may be secured from us, or from the SEC's website at http://www.sec.gov.

Figure 1. Drill hole locations referenced in this press release.

Figure 2. LREE-HREE zonation in the Bear Lodge REE district as expressed by the abundance ratio of Y/La+Ce.