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We likely were a “passive foreign investment company” (“PFIC”) for the year ended December 31, 2015, and
may be a PFIC in subsequent years, which could have adverse U.S. federal income tax consequences for U.S.
shareholders.
Investors in our common shares that are U.S. taxpayers (referred to as a U.S. shareholder) should be aware
that we believe that we were likely a “passive foreign investment company” (a “PFIC”) for the period ended
December 31, 2015, and based on current business plans and financial expectations, we expect that we will be a
PFIC for the year ending December 31, 2016, and may be a PFIC in subsequent years. We will use commercially
reasonable efforts to provide information regarding our status as a PFIC and the PFIC status of any subsidiary in
which the Company owns more than 50% of such subsidiary’s total aggregate voting power to U.S. shareholders
who make a written request for such information. Adverse rules apply to U.S. shareholders who own our common
shares if we are a PFIC and have a non-U.S. subsidiary that is itself a PFIC. Each U.S. shareholder should consult
its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, and
U.S. state and local tax consequences of the PFIC rules and the acquisition, ownership, and disposition of our
common shares if we are or become a PFIC. For additional information regarding PFIC tax consequences, see Part
II, Item 5 “Passive Foreign Investment Company Rules”.
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM
2. PROPERTIES
BEAR LODGE PROPERTY (Wyoming, USA)
The Bear Lodge Property contains two projects, the Bear Lodge REE Project and the Sundance Gold
Project. The Bear Lodge REE Project consists of the Bull Hill Mine, inclusive of the Bull Hill and Whitetail Ridge
deposits and the exploration targets of East Taylor and Carbon, all of which are located near Sundance, Wyoming.
The Bear Lodge REE Project also includes the proposed hydrometallurgical plant site to be located on private
property in Upton, Wyoming that the Company currently has an option to purchase. Additional details on each of
these areas are set forth below under the heading “Bear Lodge REE Project” and in the Technical Report (as defined
below). We hold our interest in the Bear Lodge Property through our indirect wholly owned subsidiary, Rare
Element Resources, Inc., a Wyoming corporation.
The Bear Lodge Property is located in central Crook County, northeast Wyoming, and is approximately 19
kilometers northwest of Sundance, Wyoming. The Bear Lodge Property is accessible by paved and well-maintained
gravel roads. The Bear Lodge Property lies within the Black Hills National Forest along the crest of the northern
part of the Bear Lodge Mountains, a narrow northwest-trending range. Physiographically, it is the northwest
extension of the Black Hills in western South Dakota and is characterized by rolling grass and pine-covered
mountains that reach elevations of 1,950 meters within the Bear Lodge Property. The mountains have moderate
slopes covered by western yellow pine forest interspersed with dense thickets of brush. Narrow grassy meadows
cover the upper reaches of seasonal drainages. The lowest point within the Bear Lodge Property is about 1,768
meters in elevation. The climate during the summer is warm and relatively dry, followed by cold winters with
variable amounts of snow.
We control 100% of the mineral rights at the Bear Lodge Property, consisting of both unpatented mining
claims and adjacent property owned in fee by the Company. We hold 499 unpatented mining claims located on land
administered by the USFS and own 257 hectares (634 acres) of fee property for a total of approximately 3,642
hectares (9,000 acres). The Bear Lodge Property is located within parts of Sections 5, 7 through 9, Sections 14
through 23 and Sections 26 through 35 in Township 52 North and Range 63 West, Sixth Principal Meridian, Crook
County, Wyoming. All of the public property mining claims are unpatented, such that the paramount title to the
land is held by the United States of America. To be valid, an unpatented mining claim must contain a discovery of
valuable mineral deposit. In addition, claim maintenance payments must be timely paid on an annual basis and
related documents must be filed annually with the Wyoming State Office of the U.S. Bureau of Land Management
and recorded with the Crook County, Wyoming Clerk and Recorder to keep the claims from terminating by
operation of law, and the claims can be maintained in good standing so long as those requirements are met. All of
our Mineral Resources are located on mining claims that we hold.