Rare Element Reports March 31, 2013 Financial Results

May 8, 2013 - Lakewood, Colorado - Rare Element Resources Ltd. (NYSE MKT: REE and TSX: RES) (the "Company") reports that it has filed its unaudited, consolidated interim financial statements on Form 10-Q for the three months ended March 31, 2013 on www.sec.gov and www.sedar.com.

"The first quarter of 2013 is marked by some major milestones. During the first quarter, we not only substantially expanded the Measured and Indicated (M&I) resource at the Bear Lodge Critical Rare Earth Project but also identified the first-ever Indicated resource at the heavy rare earth-enriched (HREE) Whitetail deposit," stated Randall J. Scott, President and Chief Executive Officer. "Further, we have significantly improved the concentrate grade to over 90% in bench scale testing through the use of our proprietary oxalate process. This continues to position us to be the next rare earth mine in production in the Western Hemisphere," concluded Mr. Scott.

Financial Results (Please note that financial results published by the Company are all stated in U.S. Dollars.)

For accounting purposes the Company is classified as an exploration company and, as such, does not have production-related revenues at this time. The net loss for the first quarter ended March 31, 2013, totaled $4.4 million, or $0.10 per share, compared to a net loss of $5.3 million, or $0.12 per share, for the same period in 2012. The $0.9 million positive variance in net loss between the periods was due to the following:

• Reduced exploration spending of $0.7 million at the Bear Lodge property;

• Positive variance in stock-based compensation of $2.3 million due primarily to a lower share price and smaller number of options granted;

• Negative variance of $2.3 million in foreign exchange due to the impacts on the Company's Canadian dollar cash balances related to exchange rate fluctuations in the US dollar on the balance sheet date; and

• Miscellaneous positive variances of $0.2 million in other non-operating income and expenses.

Strong Cash Position
As of March 31, 2013, the Company had cash and cash equivalents and short-term investments of $33.8 million. It is expected that this amount is sufficient to finance the Bear Lodge Feasibility Study, anticipated to commence in mid-2013. The decrease in cash and investments in the quarter was $6.3 million and was primarily due to the expense associated with assay and metallurgical work on core acquired from the 2012 exploration program, third-party evaluation of the oxalate process in preparation for the upcoming pilot plant test, ongoing permitting, engineering and environmental costs, as well as foreign exchange losses related to our Canadian cash balances.

"We continue to focus our efforts on developing the data necessary for permitting and advancing the feasibility study with the goal of optimizing and expediting the Bear Lodge Project," said David P. Suleski, Chief Financial Officer. "Because 2012 drilling significantly increased the size of the Bull Hill high-grade zones, we are studying an option that initially focuses on the development of that high-grade, at a lower initial capital cost and production rate, that would then allow us to ramp-up production as market conditions warrant. Additionally, the 90+% rare earth oxide grade bulk concentrate expected to be generated by our oxalate process significantly de-risks the marketability of our concentrate and gives us more options for separation of the rare earth products. Both of these factors are expected to have positive impacts on the economics of the project," he added.

The unaudited financial statements are available through the Canadian securities regulatory authorities at www.sedar.com, and with the U.S. Securities and Exchange Commission at www.sec.gov. They are also available on the Company's website at www.rareelementresources.com.

Project Highlights

• Updated the M&I resource estimate to 14.7 million tons with an average grade of 3.22% rare earth oxide (REO) at 1.5% cutoff grade. The related National Instrument 43-101 ("NI 43-101") report was filed on May 2, 2012, and can be found under the Company's SEDAR profile at www.sedar.com or at www.rareelementresources.com.

• Identified a high-grade M&I resource of 6 million tons with an average grade of 4.72% REO at a 3% cutoff.

• Confirmed HREE-enriched zoning at the Whitetail Ridge resource and the nearby Carbon exploration target, both of which contain generally higher abundances of Critical Rare Earth Elements (CREE), those higher-valued elements that we expect to experience more scarcity as well as better demand growth and price support over the longer term.

• Completed confirmatory bench-scale metallurgical processing tests on our proprietary oxalate process technology that improved the grade of the bulk concentrate from approximately 45% to 90+% REO.

Rare Element defines Critical Rare Earth Elements (CREE) as Neodymium (Nd), Praseodymium (Pr), Europium (Eu), Terbium (Tb), Dysprosium (Dy) and Yttrium (Y), based on their projected future demand and generally higher per kilogram price.

Rare Element Resources Ltd. is a publicly traded mineral resource company focused on exploration and development of rare-earth elements (REEs), with a significant distribution of critical rare earths (CREEs). In addition to the REE exploration and evaluation efforts, the Company controls the Sundance gold project, which is located on the same property in Wyoming.

For information please refer to the Company's website at www.rareelementresources.com or contact Robbin Lee, 720-278-2462.

Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.