Rare Element Resources

The Board of Directors (the “Board”) of Rare Element Resources Ltd. (the “Corporation”) has established an Audit Committee (the “Committee”) to fulfill the Board’s oversight responsibilities in reviewing and overseeing:

• the integrity and adequacy of the Corporation’s financial statements reporting;
• the effectiveness of the Corporation’s internal controls over accounting, computer systems, cybersecurity, and financial reporting;
• the accounting policies and procedures adopted by management;
• the Corporation’s compliance with legal and regulatory requirements related to financial reporting;
• the Corporations establishment of a Code of Ethics and procedures relating to treatment of complaints and monitor compliance thereof;
• the independent auditor’s qualifications and independence;
• assessing the performance of the Corporation’s financial management and of the independent auditor; and
• the Enterprise Risk Management (“ERM”) assessment, analysis, and tracking.

COMPOSITION

The Committee shall be comprised of at least three members of the Board, with at least two of whom shall be independent as defined in National Instrument 52-110 – Audit Committees of the Canadian Securities Administrators, and any other applicable laws and regulations. To serve, a director must be financially literate (or become so within a reasonable period of time after appointment) and a minimum of one member must qualify as an Audit Committee Financial Expert as defined by applicable laws and regulations and who shall serve as Chair of the Committee. Committee members shall serve until their successors are duly elected or upon removal, with or without cause, by the Board and any vacancy shall be filled by the Board. A majority of members shall constitute a quorum for the transaction of business.

PROCESS

The Committee shall meet at a minimum quarterly and on such other occasions as may be required. Meeting agendas shall be set by the Chair of the Committee in consultation with management. At the Committee’s discretion, the independent auditors may be invited to attend the meetings and to engage with the Committee at these meetings without management present. The Committee will undertake an annual review of this Charter and recommend such changes, amendments, and additions, as in its opinion, are required or appropriate to the Board.

In the performance of its duties and responsibilities, the Committee shall have access to any and all personnel and books and records of the Corporation and its subsidiaries necessary for the execution of the Committee’s obligations and may request from the officers of the Corporation or any of its subsidiaries such records and other matters considered appropriate. The Committee shall also have the ability to form subcommittees and delegate tasks to those subcommittees.

The Committee shall have the power and authority to conduct or authorize studies and investigations into any matter of interest or concern within the scope of its responsibilities that the Committee deems, in its sole discretion, to be appropriate and have the authority to retain independent counsel, consultants or other experts to assist in the conduct of any such study or investigation, including the authority to approve fees payable to such experts and any other terms of retention.

SPECIFIC DUTIES

The Committee, in fulfilling its oversight responsibilities, shall have the authority to and shall do the following:

Annual Duties:

a) review the annual financial statements and Management Discussion and Analysis in Form 10-K and make recommendations to the Board with respect thereto;
b) Review and approve annual reports of the Committee for inclusion in the proxy circulars for the corporation’s annual meetings;
c) review with management the Corporation’s privacy and cybersecurity risk exposure and the policies, procedures, and mitigation plans in place to protect the security and integrity of the Corporation’s information systems and data at least annually;
d) review with management the Corporation’s policies and practices respecting insurance at least annually;
e) review at least annually the Corporation’s Business Conduct Policy, and Treatment of Complaints policy, and any other code of ethics adopted;
f) review and evaluate at least annually the Corporation’s policies and procedures for maintaining and investing cash funds as detailed in the corporate investment policy and recommend changes to the Board as appropriate;
g) recommend to the Board the appointment of the independent auditors and review and approve the terms of the audit engagement and the appropriateness of the proposed fee;
h) review and approve the annual audit plan and engagement letter of the independent auditors, including the engagement of review services relating to the Company’s quarterly filings;
i) evaluate the performance of, and confirm the independence of, the independent auditors;

Quarterly Duties:

j) review and approve the quarterly financial statements and Form 10-Q for filing with the Securities and Exchange Commission;
k) meet with the Corporation’s auditors to review audit, financial reporting, and other pertinent matters and to review their recommendations to, or disagreements with, management;
l) review at least quarterly with management the Corporation’s ERM program, implementation, and assessments, including its ERM matrix or other tools used by management to assess the Corporation’s enterprise risks;
m) oversee the adequacy and accuracy of the Corporation’s financial disclosures and obligations in consultation with the independent auditors and confirm appropriate disclosures thereof are set forth in the financial statements and other documents;
n) review significant accounting policies and estimates including issues relating to asset valuations and liabilities, commitments and contingencies and review with management and the independent auditors and, if required, legal counsel, any litigation, claims or other contingencies, including tax assessments that could affect the financial position of the Corporation and the appropriate disclosure thereof in the financial statements;
o) confirm, following discussions with and/or reports from management and the independent auditors, that the Corporation’s internal controls, financial systems and procedures, and management information systems are appropriate and that internal controls are in place and operating effectively;

Other Duties:

p) consider the areas of financial risk affecting the Corporation and the effectiveness of management in response thereto, as well as any legal issues affecting financial procedures and reporting;
q) review the Corporation’s financial press releases, if any, and reports, opinions, and reviews by the independent auditors, in each case to determine that the financial statements and related disclosures are satisfactory in form and substance to be included in the Corporation’s reports filed with the regulatory bodies having jurisdiction;
r) review and monitor all related party transactions which may be entered into by the Corporation;
s) review related party engagements and disclosures and recommend action to approve, or disapprove, following any conflict review;
t) confirm that management has put into place procedures that facilitate compliance with the provisions of applicable securities laws and regulations relating to insider trading, continuous disclosure, and financial reporting;
u) establish procedures for the confidential and anonymous receipt of, and the retention and treatment of reports received regarding accounting procedures, internal accounting controls or auditing matters, including oversight of financial and other whistleblower reports; and
v) maintain representation on the Board established Investment Committee and report to the Board the actions of the Investment Committee.

REPORTING

Following each meeting of the Committee, the Chair of the Committee shall report to the Board the issues before the Committee and actions taken by the Committee or recommended to be taken by the Board.

(As Amended and Adopted December 11, 2024)

The Board of Directors (the “Board“) of Rare Element Resources Ltd. (the “Corporation“) has established a Nominating, Corporate Governance and Compensation Committee (the “Committee“) to fulfill the Board’s oversight responsibilities in reviewing and overseeing:

• the Corporation’s Board and Committees’ composition and Board and Committee performance;
• the recruitment and succession planning for the Corporation’s Board members and chair and its President and Chief Executive Officer (“CEO”);
• the integrity and adequacy of the Corporation’s corporate governance policies and procedures and its compliance with those policies to ensure legal compliance and best practices; and
• the Corporation’s compensation philosophy and policies, as well as determining Board member and CEO compensation.

COMPOSITION

The Committee shall be comprised of at least three members of the Board (“Member”), including as many independent members pursuant to the independence requirements imposed by applicable law and as deemed practicable by the Board given the Board composition overall.  If practicable, at least two of the Members will also qualify as “non-employee directors” for purposes of Rule 16b-3 under the Securities and Exchange Act of 1934, as amended. Members shall serve until their successors are duly elected or upon removal, with or without cause, by the Board and any vacancy shall be filled by the Board. A majority of Members shall constitute a quorum for the transaction of business.

PROCESS

The Committee shall meet at a minimum twice per calendar year and on such other occasions as may be required. Meeting agendas shall be set by the chair of the Committee in consultation with management. At the Committee’s discretion, an independent compensation consultant may be invited to attend the meetings and to engage with the Committee at these meetings without management present. The Committee will undertake an annual review of this Charter and recommend to the Board such changes, amendments, and additions, as, in its opinion, desired.

In the performance of its duties and responsibilities, the Committee shall have access to any and all personnel and books and records of the Corporation and its subsidiaries necessary for the execution of the Committee’s obligations and may request from the officers of the Corporation or any of its subsidiaries such records and other matters considered appropriate. The Committee shall also have the ability to form subcommittees and delegate tasks to those subcommittees.

The Committee shall have the power and authority to conduct or authorize studies and investigations into any matter of interest or concern within the scope of its responsibilities that the Committee deems, in its sole discretion, to be appropriate and have the authority to retain independent counsel, consultants or other experts to assist in the conduct of any such study or investigation, including the authority to approve fees payable to such experts and any other terms of retention.

SPECIFIC DUTIES

The Committee, in fulfilling its oversight responsibilities, shall have the authority to and shall do the following:

Nominating and Corporate Governance Related Matters

1. Recommend the size, composition and required capabilities of the Board;
2. Lead the search for, screen, evaluate and recommend to the Board qualified candidates or nominees for election or appointment as directors, consistent with criteria approved by the Board;
3. Establish and oversee a policy for considering shareholder nominees for directors, and develop the procedures that must be followed by shareholders in submitting recommendations;
4. Review periodically the overall succession planning for the chairman of the Board and recommend the appointment of the chairman annually or as required to fill a vacancy;
5. Identify and recommend to the Board the recruitment process, nominations and selection of a CEO and ensure that a CEO succession plan is in place;
6. Oversee the Corporation’s corporate governance policies and procedures, including recommended policies to be adopted by the Board to meet all applicable legal requirements and best practices;
7. Annually conduct a review of all Members’ and executives’ business activities to assure that potential conflicts are clearly understood or avoided; and
8. Annually evaluate and report to the Board the overall performance of the Board (based upon directors’ input).Compensation Related Matters
9. Develop and recommend the Corporation’s overall compensation philosophy and policies;
10. Review and recommend to the Board annually, or more frequently as required, the corporate goals and objectives relevant to the CEO;
11. Evaluate the performance of the CEO and based upon such an evaluation, recommend to the Board the approval, together with the other independent directors of the Board, the compensation of the CEO;
12. Review and approve the CEO recommendations relating to other executive officers’ compensation;
13. Review and approve all employment agreements, severance arrangements, retirement arrangements, change in control agreements and provisions, and any special or supplemental benefits for the CEO and other executive officers;
14. Review and recommend to the Board the non-executive director compensation;
15. Review and recommend to the Board any incentive-compensation plans and equity-based plans and awards;
16. Review and assess the results of the Corporation’s most recent advisory vote on executive compensation;
17. Review and discuss the Compensation Discussion and Analysis (CD&A) section proposed for inclusion in the Corporation’s annual proxy circular and approve the annual report on executive compensation for inclusion in the Corporation’s proxy circular;
18. Retain or obtain the advice of an independent compensation consultant, legal counsel or other adviser as desired; and
19. Review and make recommendations to the Board with respect to directors’ and officers’ indemnification and insurance matters.Other Duties
20. Review, at least annually, the Committee’s duties, responsibilities and performance and determine if any changes in practices of the Committee or amendments to this Charter are necessary and submit such recommendations to the Board for approval; and
21. Undertake such additional responsibilities as from time to time may be delegated to the Committee by the Board, required by the Corporation’s organizational documents, or required by applicable law.

REPORTING

Following each meeting of the Committee, the chair of the Committee shall report to the Board the issues before the Committee and actions taken by the Committee or recommended to be taken by the Board.

This Code of Business Conduct and Ethics for Directors, Officers and Employees (the “Code”) has been developed to provide guidance for all Directors, Officers and Employees of Rare Element Resources Ltd. and its subsidiary, Rare Element Resources, Inc. (collectively, the “Company”). All Company personnel are expected to maintain high ethical standards of conduct and to comply fully with applicable laws and governmental regulations. All Directors and Employees will receive or be provided with a copy of this Code and should read, understand, and comply with this Code in all of the Company’s locations, including any home office location.

Day-to-day observance of this Code will create an attractive, healthy working environment for all Directors and Employees consistent with the Company’s core values, and further project a positive image of the Company to shareholders, organizations with which the Company does business, suppliers, and the public at large.

This Code is not an employment contract. By issuing this Code, the Company has not created any contractual rights.

This Code is in addition to other policies that the Company may adopt from time to time. All Directors and Employees should read, understand, and comply with all of the Company’s applicable policies.

Interpretation

References herein to the “Company” mean Rare Element Resources Ltd. and/or its subsidiary, Rare Element Resources, Inc.; “Officers” means all named officers of the Company, including, without limitation, the Chief Executive Officer and senior officers (e.g., a Chief Financial Officer, Chief Operating Officer, principal accounting officer, controller, business development director and others serving in similar functions); “Employees” means all employees of the Company, including, where not otherwise set forth specifically, the Officers of the Company; “Director” means a director of the Company; and “Responsible Manager” means the top ranking Employee at any particular location where the Employee performs his or her duties. “Corporate Counsel” means the person or law firm serving as the corporate counsel to the Company and may be at any given time the Company’s internal General Counsel. “Compliance Officer” is the designated individual set forth in the Company’s Insider Trading Policy (the “Insider Trading Policy”).

The Nominating, Corporate Governance and Compensation Committee of the Company’s Board of Directors (the “NCG&C Committee”) is responsible for setting the standards of business conduct contained in this Code and updating these standards as it deems appropriate to reflect changes in the legal and regulatory framework applicable to the Company, the business practices within the Company’s industry, the Company’s own business practices, and the prevailing ethical standards of the communities in which the Company operates.

While this Code deals with major areas of concern, it cannot cover every situation that may arise. Directors and Employees are expected to exercise their own best judgment and discretion within the parameters of this Code, keeping in mind the high standards to which the Company is committed.

Reporting Violations and Ensuring Compliance

Except as otherwise explicitly provided in this Code, if any Director believes that this Code has been violated or the Company has or is about to violate a law or regulation, or a Director believes that he or she is being asked to violate this Code or a law or regulation in the performance of duties for the Company, the matter should be promptly reported to the Chairperson of the NCG&C Committee.

Except as otherwise explicitly provided in this Code, if any Employee believes that this Code has been violated or the Company has or is about to violate a law or regulation, or an Employee believes that he or she is being asked to violate this Code or a law or regulation in the performance of duties for the Company, the matter shall be promptly reported to the Employee’s supervisor or Responsible Manager. If for any reason the Employee is uncomfortable reporting such matter to his or her supervisor or Responsible Manager, then the matter should be promptly reported to the Corporate Counsel, who will respond as promptly and discreetly as practicable with an appropriate investigation.

Every Director and Employee shall cooperate in ensuring that any violation of this Code is brought to the attention of the appropriate person. The Company will take appropriate steps to maintain the confidentiality of the reporting a reporting person’s identity to the extent that it can do so consistent with the Company’s obligations to investigate and remedy the matter and, if appropriate, to report the matter to government officials. Any report regarding a violation of this Code can be submitted on an anonymous basis.

No retribution will be taken against a Director or Employee for reporting, in good faith, a violation or suspected violation, and any Director, supervisor or Responsible Manager intimidating or imposing sanctions or taking any other similar action on or against any person for reporting a matter in good faith will be disciplined. The NCG&C Committee is responsible for overseeing the interpretation and enforcement of this Code. Subject to the NCG&C Committee’s ultimate authority: (i) each Responsible Manager will be responsible for monitoring the enforcement of this Code as it pertains to Employees at their location and (ii) the Corporate Counsel will be responsible for monitoring (a) enforcement of this Code and these procedures as they pertain to Directors, Officers and Responsible Managers, and (b) the steps taken by each of the Directors, Officers and Responsible Managers with respect to the enforcement of this Code. If any questions regarding possible breaches or violations of this Code are not resolvable by the Corporate Counsel, such questions shall be directed to the Chairperson of the NCG&C Committee.

Upon request by the Board of Directors or promptly after an issue is raised that might constitute a breach of or require a waiver of or change in this Code, the Corporate Counsel will report to the NCG&C Committee concerning compliance with this Code and any breaches or violations or other ethical issues that may have occurred or been presented. The NCG&C Committee shall consider all issues brought before it in executive session. In instances where breaches or violations of this Code or other ethical issues may have been identified, the Corporate Counsel may make such recommendation as may be appropriate to prevent a recurrence. The ultimate decision with respect to any such action will, however, be made by the NCG&C Committee.

Only the NCG&C Committee may waive provisions of this Code with respect to Directors or Employees and only the NCG&C Committee may change any provision of this Code. All waivers of this Code, or changes to this Code, must be publicly disclosed (to the extent required) in a manner that complies with the requirements of the United States Securities and Exchange Commission, the rules of the OTCQB Venture Marketplace and other applicable laws and regulatory requirements.

A Director or Employee found to have violated this Code will be subject to appropriate disciplinary action, ranging from warnings to possible termination or removal.

Compliance With Laws and Regulations Generally

The Company insists that all of its businesses be conducted in compliance in all material respects with all applicable laws and regulations. Any illegal action will be dealt with swiftly, and violations will be reported to the proper authorities. Failure to obey fully all laws and regulations violates this Code and may expose both the Company and responsible Director or Employee to criminal or civil prosecution. If a Director or Employee has any questions on specific laws, regulations or other legal issues, he or she should contact the Corporate Counsel.

Fair Dealings With Others

Each Director and Employee should endeavor to deal fairly with the Company’s shareholders, customers, suppliers, contractors, competitors, external advisers, and Employees. No Director or Employee should take unfair advantage of others through manipulation, concealment, abuse of privileged or material non-public information, misrepresentation of material facts or any other unfair dealing.

Health, Safety and Environmental Matters

Sound environmental, health and safety performance contributes to the Company’s competitive strength and benefits its customers, shareholders and Employees. Employees are therefore expected to conduct operations on behalf of the Company with the highest regard for a safe worksite and quality of the environment. Translated into day-to-day activities, that means strict adherence to safety and health policies and procedures, reporting known or suspected unsafe working conditions, using resources efficiently, recycling as appropriate, handling any hazardous materials properly and handling and disposing of all materials and waste according to applicable laws and Company policies.

Maintaining a secure workplace safeguards Employees and the Company’s information and property. The Company intends to comply with applicable safety, health and environmental laws and standards established by appropriate federal, state, provincial and local governments, and agencies (both United States and foreign, as may be applicable) respecting discharges into water sources or the atmosphere or the disposal of solid and hazardous wastes.

Compliance with Securities Laws

The Company discloses information regarding the Company to the public on a regular basis under applicable securities laws. Directors and Employees who are aware of material information regarding the Company that has not been disclosed to the public (i.e., facts which may affect the market price or value of the Company’s securities or investors’ decisions to trade therein) must hold that information in strictest confidence and refrain from trading in, or influencing the decisions of others to trade in, the Company’s securities until such information has been publicly disclosed by the Company and a reasonable period of time (i.e., two trading days) has elapsed to allow investors to react to the information. The Company has adopted the Insider Trading Policy that applies to all Directors and Employees. A copy of the Insider Trading Policy shall be distributed annually to all Directors and Employees or upon hiring, and a copy may be obtained from the Corporate Counsel at any time.

For Directors and Employees who have regular access to material non-public information, trading in Company securities may give the appearance of impropriety. Such persons should not trade where there is a risk of the appearance of impropriety.

To ensure that Directors and Officers who may be in possession of material non-public information do not trade in Company securities, any transaction in Company securities by a Director or Officer must be pre–cleared with the Compliance Officer prior to the transaction in accordance with the Insider Trading Policy.

Any other Employee who has questions concerning the propriety of trading Company securities should address questions to the Compliance Officer before executing the trade. In addition, no Director or Employee may give “tips” by disclosing material non-public Company information to anyone, whether inside or outside of the Company, to enable or facilitate the recipient of the “tip” to trade Company securities based on such material non-public information. Directors and Employees should therefore be very careful when discussing information that could influence someone else’s decision to trade or hold Company securities. The timing of the release of information is especially important and only the Company’s Chief Executive Officer (or the Chief Financial Officer and Corporate Counsel, if delegated by the Chief Executive Officer) has the authority to determine when information should be released. Directors and Employees should assume that all Company information is internal and confidential unless the Company has authorized written public disclosure of, and has publicly disclosed, that information.

Prohibitions on trading in securities based on non-public information also extend to securities of the Company’s competitors and business associates, including any company that is engaging in or proposes to engage in any business or professional activity with the Company. Accordingly, Directors and Employees should not trade securities in another company about which they know the Company has material non-public information.

Corporate Opportunities and Conflicts of Interest

Directors and Employees owe the Company a duty to advance the Company’s business interests when the opportunity to do so arises. As a result, Directors and Employees are prohibited from taking personal advantage of certain business opportunities in which the Company may be interested. This so-called “corporate opportunity doctrine” is complicated, and it is not possible to clearly define all of the business opportunities that belong or could be of interest to the Company and what business opportunities may be taken advantage of personally by Directors and Employees. The most common types of situations falling within this corporate opportunity doctrine prohibit Directors and Employees from: (i) personally taking advantage of any business opportunity that typically would be pursued by, or would be of interest to, the Company; (ii) personally taking advantage of any other business opportunity that the Company may want to take advantage of if the opportunity is discovered using Company property, business contacts or information, or that the Employee becomes aware of because he or she works for, or during the course of working for, the Company (or that a Director becomes aware of in his or her capacity as a Director); or (iii) competing with or otherwise disadvantaging the Company. If a Director or Employee has any question regarding whether this corporate opportunity doctrine applies to any potential business opportunity, he or she should consult with the Corporate Counsel.

Although Directors and Employees are free to participate in outside activities, it is important that Directors and Employees do not engage in any activity that is (or could appear to be) a conflict between personal interests and the Company’s best interests. Additionally, Employees should not engage in other activities outside of their engagement with the Company that conflict with their time and attention required to perform their assigned duties and responsibilities.

Examples of conflicts of interest include:

Being a consultant to, or a director, officer, or employee of, or otherwise operating an outside business:

1. that markets products or services in competition with the Company’s current or potential products and services;
2. that supplies products or services to the Company; or
3. that purchases products or services from the Company.

Or, engaging in any of the following activities:

1. Having any financial interest, including stock ownership, in any such outside business that might create or give the appearance of a conflict of interest.
2. Seeking or accepting any personal loan or services from any such outside business, except from financial institutions or service providers offering similar loans or services to third parties under similar terms in the ordinary course of their respective businesses.
3. Being a consultant to, or a director, officer, or employee of, or otherwise operating an outside business if the demands of the outside business could interfere with the Director’s or Employee’s responsibilities with the Company.
4. Accepting any personal loan or guarantee of obligations from the Company, except to the extent such arrangements are legally permissible.
5. Conducting business on behalf of the Company with immediate family members, which include spouses, children, parents, siblings, and persons sharing the same home, whether or not legal relatives.
6. Using the Company’s property, information, or position for personal gain.

Actual or potential conflicts of interest (including, but not limited to, any material transaction or relationship that reasonably could be expected to give rise to a conflicting interest) must be reported to the Responsible Manager or the Corporate Counsel. Approval of potential conflicts involving Directors or Officers will be made exclusively by the NCG&C Committee.

Company Information and Company Property

Company information is a valuable asset. Company information includes all proprietary and confidential information that is not generally available to or known by the public, and it includes information in any format: written, electronic, visual, or oral. It also may include information that the Company develops, purchases or licenses, and information the Company receives from others, including its strategic partners and customers.

Employees may use Company information to the extent needed to perform their jobs properly, but Employees need to remember that they are responsible for safeguarding that information (and information provided to the Company by another person or company) from theft or misuse.

Accordingly, Employees cannot, directly or indirectly:

1. Disclose any Company information to others, including other Employees, unless they have a legitimate need to know it to perform their jobs and, if they are not Employees, have agreed to maintain its confidentiality;
2. Use Company information for any purpose other than its intended use;
3. Copy any documents containing Company information, or remove any documents or other records or copies from the work area, except as required to perform their jobs properly; or
4. Dispose of Company information inappropriately.

All Company documents, e-mail and other materials containing Company information (and all materials prepared from or incorporating those documents) are the Company’s property. If the Company so requests, or when an Employee’s employment ends, such documents and other materials must be promptly returned to the Company.

Use of Company property or services for personal benefit is prohibited. When an Employee uses Company property, it must be for valid corporate purposes and, except as described below, exclusively for the Company’s benefit.

Company property includes far more than many people realize. In addition to physical plants, equipment, computers, software, inventory, corporate funds and office supplies, Company property includes Company information, including, but not limited to: technologies, concepts, intellectual property, product development strategies and projects, business strategies and plans, customer and supplier lists, personnel data, marketing and sales plans, Company phone directories, organization charts, product cost data, product pricing, financial data and all other proprietary information about the Company’s business and Employees.

All of the Company’s information systems, including communications systems, electronic media, e-mail, voice mail, and Internet access, are the Company’s property and generally must be used only for business activities. Incidental personal use is permissible as long as it does not consume more than a trivial amount of resources, does not interfere with productivity, does not expose the Company to cybersecurity risks, does not preempt or detract from any business activity, is otherwise appropriate and reasonable and is consistent with the Company’s business values and this Code. The Company reserves the right at any time to access, read, monitor, inspect and disclose the contents of, postings to, and downloads from all of the Company’s information systems, and to delete or remove any of the foregoing at any time.

No one may use the Company’s information systems at work to access, view, post, store, transmit, download, or distribute any profane, obscene, derogatory, harassing, offensive or other inappropriate materials. Additionally, no Employee may use these systems to send Company information or copyrighted documents that are not authorized for transmittal or reproduction.

Accuracy, Retention, Propriety and Disposal of Records

Good business practice requires that certain Company records be retained for various time periods. Often, these are required by law, and it is the responsibility of each Employee to ensure that records are retained in compliance with applicable document retention policies established from time to time by the Company in compliance with applicable laws. No one may falsify or improperly alter any information contained in the Company’s records. Documents that need not be kept should be disposed of in compliance with Company policies. Where litigation or a government investigation or administrative action is likely, threatened, pending or ongoing, records may not be destroyed until the Corporate Counsel advises that the matter has been concluded. For questions about record retention, contact the Corporate Counsel, particularly if any litigation, investigation, or administrative action is (or may be) threatened, pending or ongoing.

Accounting Practices/Public Reporting

Directors and Employees must comply with the Company’s accounting rules and controls and with generally accepted accounting practices and cooperate fully with the Company’s internal or external auditors. All funds, assets, transactions and payments must be accurately reflected, and no false or misleading entries may be made, in the Company’s corporate records. Directors and Employees must act to facilitate the provision of full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, the United States Securities and Exchange Commission and the Canadian securities regulators and in other public communications made by the Company.

Business with Governments and Officials

Most countries around the world have laws that prohibit any Director or Employee from giving gifts or inducements to influence government officials, or to induce the purchase of the Company’s products or services. The term “government official” includes employees and other representatives of foreign governments or agencies thereof, candidates for political office, political parties and employees and other representatives of public international organizations. “Inducements” or “benefits” are also broadly defined to include anything of value. Even if it were not illegal in other countries, the Company does not want to obtain or retain business by giving gifts to officials of a government or a multinational organization either to influence any of their official acts, or to induce them to use their influence to affect any governmental act. In addition, Directors and Employees should never give a gift to any person or firm where he or she knows or has reason to believe that the gift will be passed on to a government official for such purposes.

Directors and Employees must never make improper gifts or payments, such as bribes or kickbacks, in any way in connection with the Company’s business. Gifts or payments to or for the personal benefit of a governmental official or to or for the personal benefit of an employee of any of the Company’s customers or suppliers are clearly improper. Indirect transactions, such as payments of commissions to a sales representative on the understanding that he or she will pay a bribe or kickback to an employee of a customer or supplier, are also prohibited. Exemplifying the severity of the legal penalties for such behavior, the U.S. Foreign Corrupt Practices Act of 1977 makes it a criminal offense to offer a bribe to a foreign government official and imposes penalties up to $2 million per violation on any business entity, and up to $100,000 and/or imprisonment up to five years per violation on any individual, that violates the Act. Under the Canadian Corruption of Foreign Public Officials Act, the Company can be fined an unlimited amount and individuals can face up to fourteen years imprisonment in respect of any such behavior.

Governmental Investigations

While it is the Company’s policy to cooperate in the administration of all laws and regulations to which it is subject, such cooperation must be conducted in a manner that does not unduly interfere with the business of the Company nor jeopardize its legitimate interests. Any Director or Employee who receives notice of any governmental investigation involving the Company or any request to testify in a legal proceeding with regard to the Company should promptly notify the Corporate Counsel or the Responsible Manager. If a governmental investigator requests an interview or information, he or she should be treated courteously but should be given no information except that which is publicly available and instead should be requested to put his or her inquiry in writing in order that it may be answered with appropriate care by proper persons, preferably acting with the advice of the Corporate Counsel.

Gratuities

Directors and Employees should avoid any relationship, activity or investment that might conflict with their responsibilities to the Company or impair their abilities to act independently in the best interests of the Company. For example, Directors and Employees should not accept significant gifts, entertainment, favors or other gratuities from persons doing business or seeking to do business with the Company. Nor should any Director or Employee have a conflicting material interest in an actual or potential competitor, supplier, or customer of the Company. No Director or Employee should give or receive gifts of cash from related businesses, entities, or persons to the Company.

Set forth below are the procedures of the Audit Committee of the Board of Directors of Rare Element Resources Ltd. (together with its subsidiary Rare Element Resources, Inc., the “Company”) relating to the receipt, retention and treatment of complaints of the Company’s employees (“Employees”) regarding accounting, internal accounting controls and auditing matters, including procedures for the confidential and anonymous submission by Employees of concerns regarding questionable accounting or auditing matters.

Any person who has a complaint relating to the Company’s accounting practices, internal accounting controls or auditing matters, or a concern regarding questionable accounting or auditing matters, may communicate the complaint or concern to the Company pursuant to these procedures. Employees may submit in good faith any such complaint or concern on a confidential and anonymous basis. Credible complaints and concerns submitted in good faith will be brought to the attention of the Audit Committee, which will oversee the treatment and investigation of the complaint or concern and the implementation of these procedures.

Receipt of Complaints and Concerns. Employees may submit their complaints and concerns, by written correspondence, telephone or e-mail, on a confidential basis to Kelli Kast, Corporate Counsel, P.O. Box 271049, Littleton, Colorado 80127 (marked “Confidential” on the outside of the envelope), phone: 720.278.2460, e-mail: kkast@rareelementresources.com.

Notice of Complaints or Concerns. These procedures relate to the submission of complaints or concerns relating to any accounting, internal accounting controls or auditing matters, including, without limitation, the following:

• Any questionable accounting or auditing practice that relates to, or results in, the preparation of financial statements of the Company that do not comply with generally accepted accounting principles;
• Any fraudulent or intentional error in the preparation or audit of the Company’s financial statements or in the recording or maintaining of the Company’s financial records;
• Any noncompliance with, or deficiencies in, the Company’s internal accounting controls;
• Any false statement, misrepresentation or failure to report material information to or by an executive officer of the Company or member of the Company’s accounting, financial or internal auditing staff regarding a matter contained in the Company’s financial records, financial statements or financial reports or in the report prepared by the Company’s independent auditor regarding the financial statements; or
• Any noncompliance by an executive or financial officer of the Company with the Company’s Code of Business Conduct and Ethics applicable to them relating to accounting, internal accounting controls or auditing matters.

Treatment of Complaints and Concerns. Upon receipt of a complaint or concern, the Counsel will determine whether it has been submitted in good faith and whether it relates to accounting, internal accounting controls or auditing matters. The “Counsel” means the person serving as the Corporate Counsel of the Company, as set forth above, or another person within an outside law firm as directed upon receipt of any complaint. If the complainant has identified himself or herself, the Counsel will acknowledge receipt of the complaint or concern to the complainant. The complaint or concern will then be reported by the Counsel to the Chairperson of the Audit Committee, with copies to all Audit Committee members, which committee will oversee the treatment of the complaint or concern. The Chairperson of the Audit Committee may assign initial responsibility for the matter to the Corporate Counsel, the Company’s external auditing firm, the retained outside counsel, one of the other members of the Audit Committee or to such other person deemed appropriate by the Chairperson of the Audit Committee. The Audit Committee Chairperson may share the reported information with the Company’s external auditing firm, or such other persons as the Audit Committee Chairperson or designated committee member determines to be appropriate. Confidentiality will be maintained to the maximum extent possible, consistent with the need to conduct an adequate review or investigation regarding the matter. Following such review or investigation, the Audit Committee will then determine the appropriate corrective action to be taken, if any. The Company will not discharge, demote, suspend, threaten, harass, constructively dismiss or in any manner discriminate against any Employee based upon the Employee’s good faith reporting of the complaint or concern in accordance with these procedures.

Anonymous Reports. Reports of alleged violations may be submitted to the Counsel anonymously if the Employee desires. Although anonymous reports may be submitted via any of the above methods, reports submitted by e-mail or telephone are less likely to remain anonymous and confidential than those submitted by way of written correspondence. All reports of alleged violations, whether or not they were submitted anonymously, will be kept in strict confidence to the extent possible, consistent with the Company’s need to conduct an adequate review or investigation regarding the matter.

Retention of Complaints or Concerns and Related Records. The Counsel will maintain a record setting forth information regarding the receipt, investigation and final disposition or resolution of all complaints and concerns and shall submit to the Audit Committee a periodic summary report of such information. Copies of complaints and concerns, if written, and the Counsel’s record relating thereto will be maintained in accordance with the Company’s document retention policies.

Compliance with these Procedures. All Employees must follow the procedures outlined herein and cooperate with any investigation initiated pursuant to these procedures. Adhering to these procedures is a condition of employment. The Company must have the opportunity to investigate and remedy any alleged violations or Employee complaints and concerns, and each Employee must ensure that the Company has an opportunity to undertake such an investigation.

These procedures do not constitute a contractual commitment of the Company. These procedures should not be construed as preventing, limiting, or delaying the Company from taking disciplinary action against any individual, up to and including termination, in circumstances (such as, but not limited to, those involving problems of performance, conduct, attitude, or demeanor) where the Company deems disciplinary action appropriate.

These procedures in no way alter an Employee’s at-will employment status. The Company or an Employee can terminate the employment relationship with the Company at any time, for any reason or no reason, with or without cause, warning, or notice, subject to compliance with the provisions set forth in a contractual arrangement or applicable laws.

Distribution of these Procedures. A copy of these procedures shall be distributed to all Employees and is available on the Company’s website at www.rareelementresources.com.