Rare Element Resources Announces Results of Oversubscribed Rights Offering of Common Shares

Rare Element Resources Ltd. (the “Company” or “RER”) (OTCQB: REEMF) is pleased to report that its previously announced rights offering of common shares was oversubscribed and generated approximately US$25.4 million in gross proceeds.

Because the rights offering, which expired on December 8, 2021, was oversubscribed, the shares available for issuance will be allocated proportionately among shareholders who exercised their oversubscription privileges based on the number of shares each shareholder subscribed for under its basic subscription privilege. Any excess subscription payments received by the subscription agent will be returned by the subscription agent to investors, without interest or deduction.

Preliminary results indicate that, pursuant to the rights offering, the Company will be issuing approximately 105.8 million common shares (including approximately 85.0 million common shares to be issued to holders who exercised their basic subscription privilege) at US$0.24 per share. Of the total shares to be issued, approximately 65.5 million common shares are expected to be issued to the Company’s significant shareholder, Synchron, which exercised its basic subscription and oversubscription privileges in full. The Company will effectively be issuing all of the common shares that were available for subscription under the rights offering. It is expected that the new common shares will be issued by December 16, 2021. Following the issuance of new common shares pursuant to the rights offering, it is expected that Synchron will own approximately 54.8% of the common shares outstanding.

Net proceeds from the offering, after deducting estimated fees and expenses, are expected to be approximately US$25.1 million. The Company plans to use the net proceeds for the permitting, licensing, engineering, construction and operation of a rare earth separation and processing demonstration plant near the Company’s Bear Lodge Project and other general corporate purposes, with a portion to be used for the prepayment of outstanding indebtedness of approximately US$1 million. The previously announced US$21.9 million financial award from the U.S. Department of Energy (“DoE”) will fund approximately one-half of the expected total cost of the demonstration plant, with the balance of the required funding being provided by the Company.

In the United States, the rights offering was made pursuant to the shelf registration statement on Form S-3 that was previously filed with the U.S. Securities and Exchange Commission (the “SEC”) and the prospectus supplement and accompanying prospectus meeting the requirements of the Securities Act of 1933, as amended, which were filed with the SEC as part of the shelf registration statement. In Canada, the rights offering was made on a private placement basis that was exempt from the prospectus requirements of applicable Canadian securities laws.

The results of the rights offering are subject to finalization and verification by the subscription agent. This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Rare Element Resources Ltd. is a publicly traded, strategic materials company focused on delivering rare earth products for technology, energy and defense applications by advancing the Bear Lodge Critical Rare Earth Project in northeast Wyoming. Bear Lodge is a significant mineralized district containing many of the less common, more valuable, critical rare earths that are essential for high-strength permanent magnets, electronics, fiber optics, laser systems for health and defense, as well as many technologies like electric vehicles, solar panels and wind turbines.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of securities legislation in the United States and forward-looking information within the meaning of securities legislation in Canada (collectively, “forward-looking statements”). 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” (including negative and grammatical variations thereof), or by discussions of strategy or intentions. Such forward-looking statements include statements regarding the rights offering, the expected proceeds from the rights offering, the number of shares to be issued in the rights offering and the expected timing for such issuance, Synchron’s expected ownership percentage of the outstanding common shares and the expected use of proceeds from the rights offering. Factors that could cause actual results to differ materially include, but are not limited to, the finalization and verification of the rights offering results by the subscription agent, the ability to obtain demonstration plant licensing, successful further permitting activities for the Bear Lodge Project, the availability of sufficient capital for the future development and operations of the Company, and other matters discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and our other periodic and current reports filed with the SEC and available on www.sec.gov and with the Canadian securities commissions available on www.sedar.com. 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 uncertainties and risk factors set out in our filings made from time to time with the SEC and the Canadian regulators, including, without limitation, our reports on Form 10-K and Form 10-Q. Any forward-looking statement made by us in this news release is based only on information currently available to us and speaks only as of the date on which it is made. While we may elect to update our forward-looking statements at any time, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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