NATURE OF OPERATIONS	3 Months Ended
Mar. 31, 2026
NATURE OF OPERATIONS
NATURE OF OPERATIONS	1. NATURE OF OPERATIONS Rare Element Resources Ltd. (“we,” “us,” “RER” or the “Company”) was incorporated under the laws of the Province of British Columbia, Canada, on June 3, 1999. The Company holds a 100% interest in the Bear Lodge rare earth elements project (the “Bear Lodge REE Project”) located near the town of Sundance in northeast Wyoming. The Bear Lodge REE Project consists of several large, disseminated rare earth elements (“REE”) deposits having a favorable distribution of neodymium-praseodymium (NdPr), as well as a number of other critical REEs. Additionally, the Company has developed and enhanced, along with General Atomics and its affiliates, innovative and proprietary REE processing and separation capabilities, currently being tested at the Demonstration Plant (as defined below), for the processing of the Bear Lodge REE Project feed material and possibly feed materials from other sources. If and when developed, the Bear Lodge REE Project will likely consist of a mine and a separation plant to produce a commercial NdPr product. As market conditions dictate, the Company will decide whether it is prudent to develop and put into production the mine and separation plant independent of each other or whether linking the two production processes into a single project is the more prudent path. The Company also holds a 100% interest in the Sundance Gold Project that is adjacent to the Bear Lodge REE Project and contains a historical inferred mineral resource primarily composed of three gold targets within the area of the Bear Lodge property (the “Bear Lodge Property”). The Sundance Gold Project has been on hold since 2011 and will likely remain so for the foreseeable future, although with the rise in the price of gold, the Company may explore options to advance or monetize this asset. The Company is currently focused on the advancement of a rare earth processing and separation demonstration-scale plant (the “Demonstration Plant”). The Demonstration Plant will initially process already stockpiled high-grade sample materials from the Bear Lodge REE Project, and this may be expanded to the processing of feed materials from other sources at some future date. The Company is also focused on advancing the permitting and licensing of the Bear Lodge REE Project, specifically the mine and commercial processing facility. In January 2021, a consortium of companies, of which the Company is a part, received notice from the Department of Energy (the “DoE”) that the consortium had been selected for negotiation of a potential financial award for the engineering, construction and operation of the Demonstration Plant. The financial award was finalized in October 2021. The Company’s contractual arrangement with General Atomics, an affiliate of Synchron, the Company’s majority shareholder, with respect to the DoE award, was entered into in December 2021. See Note 4 for additional details regarding the consortium arrangement, the Cooperative Agreement, and the Cost Share Agreement with General Atomics. To address the Company’s funding needs, including the funding required for completion of the Demonstration Plant, the Company completed a third rights offering in March 2026 for gross proceeds of $30,968 (the “2026 Rights Offering”). See Note 7 for additional details regarding the terms of the 2026 Rights Offering and the planned use of proceeds. Previous rights offerings were completed by the Company in December 2021 (the “2021 Rights Offering”) and March 2024 (the “2024 Rights Offering”) for gross proceeds of approximately $25,400 and $35,800, respectively. Since inception, the General Atomics-led consortium has experienced rising project costs for the Demonstration Plant, including increased final equipment costs, due to inflation, among other factors. The Company currently estimates the total cost of the Demonstration Plant, from inception, to be approximately $77,500, inclusive of projected cost through completion of the Demonstration Plant’s operation phase as discussed below. See Note 4 for additional details regarding the Demonstration Plant budget, DoE funding commitments, and the Cost Share Agreement. In December 2022, the Demonstration Plant achieved its final engineering design milestone, marking the DoE’s first go/no-go decision point. A second go/no-go gating milestone was achieved in December 2023 with the issuance by the DoE of a Project Continuation Notice, allowing for the construction of the Demonstration Plant. In September 2024, the DoE issued its final Project Continuation Notice following its approval of the revised project budget of $53,600 and confirmation of readiness for the operations phase of the Demonstration Plant. This notice, along with the U.S. Nuclear Regulatory Commission’s (the “NRC”) operations approval under its previously issued license (received by the Company in October 2024), allowed for the commencement of Demonstration Plant operations. Early in 2025, the Company identified several design and equipment issues during the Demonstration Plant’s operational acceptance testing phase, which followed the completion of construction activities. After identifying these issues, the Company assumed full control of the management of the project and initiated a complete design review in April 2025, which identified further operational and safety concerns. The implementation of corrective actions and upgrades commenced immediately thereafter and continued into early 2026. As a result, Demonstration Plant operations did not formally commence until March 2026. The Company has incurred losses since its inception, and further losses are anticipated in the development of its business. As of March 31, 2026, the Company had cash and cash equivalents of $47,141. During the three months ended March 31, 2026, the Company consumed cash of $2,725 in its operating activities, primarily associated with the Demonstration Plant project activities and for the payment of the Company’s general and administrative expenses and other ongoing costs of sustaining its properties. The Company currently estimates that with (i) the net proceeds of approximately $30,478 from the 2026 Rights Offering, (ii) the funds on hand prior to the closing of the 2026 Rights Offering, and (iii) the funds it still expects to receive from the DoE and WEA, that it will have sufficient funds to complete the operations stage of the Demonstration Plant, as currently planned, and the licensing and permitting for the Bear Lodge REE Project. Longer-term, in the event the Company cannot secure additional financial resources or complete a strategic transaction, the Company may need to curtail or suspend the development and commercialization of its Bear Lodge REE Project or other initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.

NATURE OF OPERATIONS

3 Months Ended

Mar. 31, 2026

1. NATURE OF OPERATIONS

Rare Element Resources Ltd. (“we,” “us,” “RER” or the “Company”) was incorporated under the laws of the Province of British Columbia, Canada, on June 3, 1999.

The Company holds a 100% interest in the Bear Lodge rare earth elements project (the “Bear Lodge REE Project”) located near the town of Sundance in northeast Wyoming. The Bear Lodge REE Project consists of several large, disseminated rare earth elements (“REE”) deposits having a favorable distribution of neodymium-praseodymium (NdPr), as well as a number of other critical REEs. Additionally, the Company has developed and enhanced, along with General Atomics and its affiliates, innovative and proprietary REE processing and separation capabilities, currently being tested at the Demonstration Plant (as defined below), for the processing of the Bear Lodge REE Project feed material and possibly feed materials from other sources.

If and when developed, the Bear Lodge REE Project will likely consist of a mine and a separation plant to produce a commercial NdPr product. As market conditions dictate, the Company will decide whether it is prudent to develop and put into production the mine and separation plant independent of each other or whether linking the two production processes into a single project is the more prudent path.

The Company also holds a 100% interest in the Sundance Gold Project that is adjacent to the Bear Lodge REE Project and contains a historical inferred mineral resource primarily composed of three gold targets within the area of the Bear Lodge property (the “Bear Lodge Property”). The Sundance Gold Project has been on hold since 2011 and will likely remain so for the foreseeable future, although with the rise in the price of gold, the Company may explore options to advance or monetize this asset.

The Company is currently focused on the advancement of a rare earth processing and separation demonstration-scale plant (the “Demonstration Plant”). The Demonstration Plant will initially process already stockpiled high-grade sample materials from the Bear Lodge REE Project, and this may be expanded to the processing of feed materials from other sources at some future date. The Company is also focused on advancing the permitting and licensing of the Bear Lodge REE Project, specifically the mine and commercial processing facility.

In January 2021, a consortium of companies, of which the Company is a part, received notice from the Department of Energy (the “DoE”) that the consortium had been selected for negotiation of a potential financial award for the engineering, construction and operation of the Demonstration Plant. The financial award was finalized in October 2021. The Company’s contractual arrangement with General Atomics, an affiliate of Synchron, the Company’s majority shareholder, with respect to the DoE award, was entered into in December 2021. See Note 4 for additional details regarding the consortium arrangement, the Cooperative Agreement, and the Cost Share Agreement with General Atomics.

To address the Company’s funding needs, including the funding required for completion of the Demonstration Plant, the Company completed a third rights offering in March 2026 for gross proceeds of $30,968 (the “2026 Rights Offering”). See Note 7 for additional details regarding the terms of the 2026 Rights Offering and the planned use of proceeds. Previous rights offerings were completed by the Company in December 2021 (the “2021 Rights Offering”) and March 2024 (the “2024 Rights Offering”) for gross proceeds of approximately $25,400 and $35,800, respectively.

Since inception, the General Atomics-led consortium has experienced rising project costs for the Demonstration Plant, including increased final equipment costs, due to inflation, among other factors. The Company currently estimates the total cost of the Demonstration Plant, from inception, to be approximately $77,500, inclusive of projected cost through completion of the Demonstration Plant’s operation phase as discussed below. See Note 4 for additional details regarding the Demonstration Plant budget, DoE funding commitments, and the Cost Share Agreement.

In December 2022, the Demonstration Plant achieved its final engineering design milestone, marking the DoE’s first go/no-go decision point. A second go/no-go gating milestone was achieved in December 2023 with the issuance by the DoE of a Project Continuation Notice, allowing for the construction of the Demonstration Plant.

In September 2024, the DoE issued its final Project Continuation Notice following its approval of the revised project budget of $53,600 and confirmation of readiness for the operations phase of the Demonstration Plant. This notice, along with the U.S. Nuclear Regulatory Commission’s (the “NRC”) operations approval under its previously issued license (received by the Company in October 2024), allowed for the commencement of Demonstration Plant operations.

Early in 2025, the Company identified several design and equipment issues during the Demonstration Plant’s operational acceptance testing phase, which followed the completion of construction activities. After identifying these issues, the Company assumed full control of the management of the project and initiated a complete design review in April 2025, which identified further operational and safety concerns. The implementation of corrective actions and upgrades commenced immediately thereafter and continued into early 2026. As a result, Demonstration Plant operations did not formally commence until March 2026.

The Company has incurred losses since its inception, and further losses are anticipated in the development of its business. As of March 31, 2026, the Company had cash and cash equivalents of $47,141. During the three months ended March 31, 2026, the Company consumed cash of $2,725 in its operating activities, primarily associated with the Demonstration Plant project activities and for the payment of the Company’s general and administrative expenses and other ongoing costs of sustaining its properties.

The Company currently estimates that with (i) the net proceeds of approximately $30,478 from the 2026 Rights Offering, (ii) the funds on hand prior to the closing of the 2026 Rights Offering, and (iii) the funds it still expects to receive from the DoE and WEA, that it will have sufficient funds to complete the operations stage of the Demonstration Plant, as currently planned, and the licensing and permitting for the Bear Lodge REE Project. Longer-term, in the event the Company cannot secure additional financial resources or complete a strategic transaction, the Company may need to curtail or suspend the development and commercialization of its Bear Lodge REE Project or other initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.