Rare Element Reports March 31, 2013 Financial Results

LAKEWOOD, COLORADO -- (Marketwired) -- 05/08/13 -- Rare Element Resources Ltd. (NYSE MKT: REE)(TSX: RES) (the "Company") reports that it has filed its unaudited, consolidated interim financial statements on Form 10-Q for the three months ended March 31, 2013 on www.sec.gov and www.sedar.com.

"The first quarter of 2013 is marked by some major milestones. During the first quarter, we not only substantially expanded the Measured and Indicated (M&I) resource at the Bear Lodge Critical Rare Earth Project but also identified the first-ever Indicated resource at the heavy rare earth-enriched (HREE) Whitetail deposit," stated Randall J. Scott, President and Chief Executive Officer. "Further, we have significantly improved the concentrate grade to over 90% in bench scale testing through the use of our proprietary oxalate process. This continues to position us to be the next rare earth mine in production in the Western Hemisphere," concluded Mr. Scott.

Financial Results (Please note that financial results published by the Company are all stated in U.S. Dollars.)

For accounting purposes the Company is classified as an exploration company and, as such, does not have production-related revenues at this time. The net loss for the first quarter ended March 31, 2013, totaled $4.4 million, or $0.10 per share, compared to a net loss of $5.3 million, or $0.12 per share, for the same period in 2012. The $0.9 million positive variance in net loss between the periods was due to the following:

--  Reduced exploration spending of $0.7 million at the Bear Lodge property;
--  Positive variance in stock-based compensation of $2.3 million due
    primarily to a lower share price and smaller number of options granted;
--  Negative variance of $2.3 million in foreign exchange due to the impacts
    on the Company's Canadian dollar cash balances related to exchange rate
    fluctuations in the US dollar on the balance sheet date; and
--  Miscellaneous positive variances of $0.2 million in other non-operating
    income and expenses.

Strong Cash Position

As of March 31, 2013, the Company had cash and cash equivalents and short-term investments of $33.8 million. It is expected that this amount is sufficient to finance the Bear Lodge Feasibility Study, anticipated to commence in mid-2013. The decrease in cash and investments in the quarter was $6.3 million and was primarily due to the expense associated with assay and metallurgical work on core acquired from the 2012 exploration program, third-party evaluation of the oxalate process in preparation for the upcoming pilot plant test, ongoing permitting, engineering and environmental costs, as well as foreign exchange losses related to our Canadian cash balances.

"We continue to focus our efforts on developing the data necessary for permitting and advancing the feasibility study with the goal of optimizing and expediting the Bear Lodge Project," said David P. Suleski, Chief Financial Officer. "Because 2012 drilling significantly increased the size of the Bull Hill high-grade zones, we are studying an option that initially focuses on the development of that high-grade, at a lower initial capital cost and production rate, that would then allow us to ramp-up production as market conditions warrant. Additionally, the 90+% rare earth oxide grade bulk concentrate expected to be generated by our oxalate process significantly de-risks the marketability of our concentrate and gives us more options for separation of the rare earth products. Both of these factors are expected to have positive impacts on the economics of the project," he added.

The unaudited financial statements are available through the Canadian securities regulatory authorities at www.sedar.com, and with the U.S. Securities and Exchange Commission at www.sec.gov. They are also available on the Company's website at www.rareelementresources.com.

Project Highlights

--  Updated the M&I resource estimate to 14.7 million tons with an average
    grade of 3.22% rare earth oxide (REO) at 1.5% cutoff grade. The related
    National Instrument 43-101 ("NI 43-101") report was filed on May 2,
    2012, and can be found under the Company's SEDAR profile at
    www.sedar.com or at www.rareelementresources.com.
--  Identified a high-grade M&I resource of 6 million tons with an average
    grade of 4.72% REO at a 3% cutoff.
--  Confirmed HREE-enriched zoning at the Whitetail Ridge resource and the
    nearby Carbon exploration target, both of which contain generally higher
    abundances of Critical Rare Earth Elements (CREE), those higher-valued
    elements that we expect to experience more scarcity as well as better
    demand growth and price support over the longer term.
--  Completed confirmatory bench-scale metallurgical processing tests on our
    proprietary oxalate process technology that improved the grade of the
    bulk concentrate from approximately 45% to 90+% REO.

Rare Element defines Critical Rare Earth Elements (CREE) as Neodymium (Nd), Praseodymium (Pr), Europium (Eu), Terbium (Tb), Dysprosium (Dy) and Yttrium (Y), based on their projected future demand and generally higher per kilogram price.

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.

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", "plans", "has potential to", or "intends' or by discussions of strategy or intentions. Forward-looking statements are statements that are not historical facts, and include but are not limited to, mineral resource estimates and their underlying assumptions; process technology testing outcomes and expectations; the anticipated mine life of the project and possible timing and options being considered in the Feasibility Study. 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. Factors that could cause actual results to differ materially include, but are not limited to, our estimates of mineral resources; capital costs estimates; processing technology effectiveness; fluctuations in demand for, and price of, rare earth products; timing of and unexpected events at the Bear Lodge property; delay or failure to receive government approvals and permits; timing and availability of external financing on acceptable terms; the timing of a Feasibility Study and matters that will be discussed therein; plans for pilot scale metallurgical testing; technical, permitting, mining or processing issues; changes in U.S. and Canadian securities markets; and fluctuations in input costs and general economic conditions. There can be no assurance that future developments affecting the Company will be those anticipated by management. Please refer to the discussion of these and other factors in our Transition Report on Form 10-K for the six months ended December 31, 2012. We expect that the above estimates will change as new information is received and that actual results will vary from these estimates, possibly by material amounts. While we may elect to update these estimates at any time, we do not undertake to update any estimate at any particular time or in response to any particular event. Investors and others should not assume that any forecasts in this press release represent management's estimate as of any date other than the date of this press release.

Cautionary Statement

Jaye T Pickarts, P.E., 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.

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.

Contacts:

Rare Element Resources Ltd.

Robbin Lee

720-278-2462
www.rareelementresources.com