RARE ELEMENT RESOURCES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of U.S. Dollars, except share and per share amounts, unless otherwise noted)
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1. DESCRIPTION OF BUSINESS
Rare Element Resources Ltd. (collectively referred to as “Rare Element,” the “Company,” “our,” “we” or “us”)
operates in the mining industry and is focused on advancing its Bear Lodge REE Project. Currently, the Company is
undertaking advanced engineering and technical studies while working towards obtaining the necessary operating
permits that will allow the Company to develop the Bear Lodge REE Project and begin commercial rare earth
production at some time in the future.
Our continuing operations and the recoverability of the carrying values of our mineral property interests are
dependent upon the existence of economic reserves being developed at the Bear Lodge REE Project, the ability of
the Company to obtain the necessary operating permits to mine the Bear Lodge REE Project and on future profitable
production at the Bear Lodge REE Project or proceeds from the disposition of any of our mineral property interests.
Development of and/or commencement of commercial production at the Bear Lodge REE Project is dependent upon
our ability to obtain the necessary financing and permitting to complete the exploration, development and/or
construction of the Bear Lodge REE Project. Although we have been successful in raising such capital necessary to
sustain our operations in the past, there can be no assurance that we will be able to do so in the future.
2. BASIS OF PRESENTATION
Principles of consolidation
These consolidated financial statements have been prepared in accordance with U.S. GAAP and are inclusive of the
accounts of Rare Element Resources Ltd. and its directly and indirectly held wholly-owned subsidiaries, which
consist of its wholly-owned subsidiary Rare Element Holdings Ltd. (“Holdings”) and Holdings’ wholly-owned
subsidiary, Rare Element Resources, Inc. Certain comparative figures have been reclassified to conform to the
financial statement presentation adopted for the current year. Rare Element Resources Ltd. was incorporated under
the laws of the Province of British Columbia on June 3, 1999.
Fiscal year-end change
On September 7, 2012, our Board of Directors approved a change in our fiscal year-end from June 30 to December
31, with the change to the calendar year reporting cycle beginning January 1, 2013. Consequently, on March 18,
2013, we filed a Transition Report on Form 10-K for the six-month transition period ended December 31, 2012. The
intent of the change was to align the reporting of our financial results more closely with that of our peers and to
better synchronize our management processes and budget cycles with financial reporting. References in this report
to fiscal 2012 and 2011 indicate the twelve-month periods ended June 30, 2012 and 2011, respectively. Financial
information in these notes with respect to the year ended December 31, 2012 is unaudited.
Recent Accounting Pronouncements
In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of
Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). ASU 2014-15 is
intended to define management’s responsibility to evaluate whether there is substantial doubt about an
organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in
this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We
are currently assessing the impact the adoption of ASU 2014-15 will have on our financial statements and related
disclosures.
