Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 10, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Rare Element Resources Ltd | |
Entity Central Index Key | 1,419,806 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 52,941,880 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 2,300 | $ 3,881 |
Interest receivable | 0 | 0 |
Accounts receivable | 11 | 10 |
Prepaid expenses | 110 | 162 |
Total Current Assets | 2,421 | 4,053 |
Equipment, net | 161 | 227 |
Land | 980 | 980 |
Mineral properties | 27 | 27 |
Total assets | 3,589 | 5,287 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 1,014 | 909 |
Asset retirement obligation, current portion | 152 | 152 |
Total Current Liabilities | 1,166 | 1,061 |
Asset retirement obligation, non-current portion | 205 | 205 |
Total liabilities | 1,371 | 1,266 |
SHAREHOLDERS' EQUITY: | ||
Common shares, no par value - unlimited shares authorized; shares outstanding March 31, 2016 - 52,941,880, December 31, 2015 - 52,941,880 | 103,640 | 103,640 |
Additional paid in capital | 23,562 | 23,529 |
Accumulated deficit | (124,984) | (123,148) |
Total Shareholders' Equity | 2,218 | 4,021 |
Total Liabilities and Shareholders' Equity | $ 3,589 | $ 5,287 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 | |
Statement of Financial Position [Abstract] | |||
Common Stock, Par Value | $ 0 | $ 0 | |
Common Stock, Shares Authorized | [1] | 0 | 0 |
Common Stock, Shares Issued | 52,941,880 | 52,941,880 | |
Common Stock, Shares Outstanding | 52,941,880 | 52,941,880 | |
[1] | unlimited shares authorized |
CONSOLIDATED UNAUDITED STATEMEN
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating income (expenses): | ||
Exploration and evaluation | $ (127) | $ (1,118) |
Corporate administration | (1,747) | (1,010) |
Depreciation | (13) | (45) |
Total operating expenses | (1,887) | (2,173) |
Non-operating income (expenses): | ||
Interest income | 1 | 9 |
Gain/(loss) on currency translation | 17 | (311) |
Gain on sale of equipment | 33 | 0 |
Total non-operating income (expense) | 51 | (302) |
Net loss | $ (1,836) | $ (2,475) |
LOSS PER SHARE - BASIC AND DILUTED | $ (0.03) | $ (0.05) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 52,941,880 | 47,707,216 |
CONSOLIDATED UNAUDITED STATEME5
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss for the period | $ (1,836) | $ (2,475) |
Adjustments to reconcile net loss for the period to net cash and cash equivalents used in operating activities: | ||
Depreciation | 13 | 45 |
Gain on sale of equipment | (33) | 0 |
Stock-based compensation | 33 | 73 |
Changes in non-cash working capital | ||
Accounts receivable | (1) | (4) |
Interest receivable | 0 | (8) |
Prepaid expenses | 52 | 133 |
Accounts payable and accrued liabilities | 105 | (398) |
Net cash and cash equivalents used in operating activities | (1,667) | (2,634) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of equipment | 86 | 0 |
Net cash and cash equivalents used in investing activities | 86 | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Decrease in cash and cash equivalents | (1,581) | (2,634) |
Cash and cash equivalents - beginning of the period | 3,881 | 10,139 |
Cash and cash equivalents - end of the period | $ 2,300 | $ 7,505 |
1. NATURE OF OPERATIONS
1. NATURE OF OPERATIONS | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | Rare Element Resources Ltd. (collectively, we, us, Rare Element or the Company) was incorporated under the laws of the Province of British Columbia, Canada, on June 3, 1999. Rare Element has historically been focused on advancing the Bear Lodge Rare Earth Element (REE) Project located near the town of Sundance in northeast Wyoming. The Bear Lodge REE Project consists of several large disseminated REE deposits and a proposed hydrometallurgical plant to be located near Upton, Wyoming. The Company previously announced extensive cost cutting measures and the placement of the Project on care-and-maintenance to position us to be able to move the Project forward when market conditions improve, while allowing us in the interim to pursue potential strategic alternatives like off-take agreements, joint ventures or mergers. The financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception and further losses are anticipated in the development of its business, raising substantial doubt about the Companys ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs with existing cash on hand, asset sales and potential issuances of common stock. There can be no assurance that we will be able to raise the necessary financing or complete a strategic transaction on acceptable terms or at all. If we are unable to continue as a going concern or in order to preserve shareholder value, we may have to liquidate our assets. If the Company decides to sell its assets, the sale proceeds may be less than the value at which those assets are carried on our consolidated financial statements. As a result, investors may lose part or all of their investment. |
2. BASIS OF PRESENTATION
2. BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | In accordance with U.S. GAAP for interim financial statements, these consolidated financial statements do not include certain information and note disclosures that are normally included in annual financial statements prepared in conformity with U.S. GAAP. Accordingly, these unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of December 31, 2015, which were included in our Annual Report on Form 10-K for the period ended December 31, 2015. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (which are of a normal, recurring nature) necessary to present fairly in all material respects our financial position as of March 31, 2016, and the results of our operations and cash flows for the three months ended March 31, 2016 and 2015 in conformity with U.S. GAAP. Interim results of operations for the three months ended March 31, 2016 may not be indicative of results that will be realized for the full year ending December 31, 2016. 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 Entitys Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 is intended to define managements responsibility to evaluate whether there is substantial doubt about an organizations 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. Although we have not yet adopted ASU 2014-15,we plan to do so timely. |
3. EQUIPMENT
3. EQUIPMENT | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT | March 31, 2016 December 31, 2015 Cost Accumulated depreciation Net book value Cost Accumulated depreciation Net book value Computer equipment $ 76 $ 70 $ 6 $ 186 $ 178 $ 8 Furniture 103 72 31 106 72 34 Geological equipment 437 334 103 488 371 117 Vehicles 87 66 21 221 153 68 $ 703 $ 542 $ 161 $ 1,001 $ 774 $ 227 |
4. SHAREHOLDERS' EQUITY
4. SHAREHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | Common Shares Number of shares issued Common shares ($) As of December 31, 2015 52,941,880 $ 103,640 Exercise of stock options - cash - - Exercise of stock options - fair value - - Issued during the three months ended March 31, 2016 - - As of March 31, 2016 52,941,880 $ 103,640 Warrants Each outstanding warrant is exercisable for one of the Companys common shares and was issued to investors in connection with registered direct offerings of the Company that closed on September 27, 2013 and April 29, 2015. In addition, the Company issued warrants to a placement agent in connection with each offering, under the same terms as those issued to investors. The exercise price and exercise period are outlined below: Financing Investor Warrants Placement Agent Warrants Total Warrants Exercise Price Expiration Date September 27, 2013 offering 1,338,688 133,869 1,472,557 $4.15 9/27/16 April 29, 2015 offering 2,615,385 261,539 2,876,924 $0.85 4/29/18 Total Warrants Outstanding as of March 31, 2016 4,349,481 The value of the warrants issued to the placement agent (non-employee) for its services in connection with the April 29, 2015 offering was offset against the proceeds of the financing. The Company used a Black-Scholes option pricing model with inputs including a market price of the Companys stock of $0.72, an exercise price of $0.85, a three-year term, volatility of 81.0%, a risk-free rate of 0.91% and no assumed dividends. The value of the warrants issued to the placement agent for its services in connection with the April 29, 2015 offering was estimated at $91. |
5. ADDITIONAL PAID IN CAPITAL
5. ADDITIONAL PAID IN CAPITAL | 3 Months Ended |
Mar. 31, 2016 | |
Additional Paid in Capital [Abstract] | |
ADDITIONAL PAID IN CAPITAL | Stock-based compensation We have options outstanding and exercisable that were issued under two plans, the Fixed Stock Option Plan (FSOP) and the 10% Rolling Stock Option Plan (RSOP). The FSOP was originally approved by shareholders on December 11, 2002, and subsequently approved by shareholders on December 7, 2009 following certain amendments to the FSOP. The FSOP expired upon the adoption of the RSOP that was approved by shareholders on December 2, 2011, and as such, we may no longer grant options under the FSOP. However, the terms of the FSOP continue to govern all prior awards granted under such plan until such awards have been cancelled, forfeited or exercised in accordance with the terms thereof. As of March 31, 2016, we had 210,000 options outstanding under our FSOP, as amended, and 3,127,400 options outstanding under our RSOP. The fair value of each employee stock option award is estimated at the grant date using a Black-Scholes option pricing model and the price of our common shares on the date of grant. The Company did not issue any stock option awards during the three months ended March 31, 2016. The significant assumptions used to estimate the fair value of stock options awarded during the three months ended March 31, 2015, using a Black-Scholes option pricing model are as follows: March 31, 2016 2015 Risk-free interest rate n/a 1.0% Expected volatility n/a 73% Expected dividend yield n/a nil Expected term in years n/a 3.4 Estimated forfeiture rate n/a 3.6% The compensation expense recognized in our consolidated financial statements for the three months ended March 31, 2016 and 2015 for stock option awards was $33 and $73, respectively. As of March 31, 2016, there was $39 of total unrecognized compensation cost related to 408,400 unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of 0.5 years. The following table summarizes our stock option activity for each of the three-month periods ended March 31, 2016 and 2015: 2016 2015 Number of Stock Options Weighted Average Exercise Price Number of Stock Options Weighted Average Exercise Price Outstanding, beginning of period 4,578,700 $ 3.99 4,345,500 $ 5.16 Granted - - 399,000 0.32 Cancelled/Expired (1,241,300) 7.88 (132,700) 6.73 Exercised - - - - Outstanding, end of period 3,337,400 $ 2.76 4,611,800 $ 4.43 Exercisable, end of period 2,929,000 $ 3.08 4,012,000 $ 5.00 Weighted-average fair value per share of options granted during period n/a $ 0.16 |
6. COMMITMENTS AND CONTINGENCIE
6. COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Our commitments and contingencies include the following items: Potential environmental contingency Our mining and exploration activities are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive over time. The Company conducts its operations so as to protect public health and the environment and believes its operations are materially in compliance with all applicable laws and regulations. We have made, and expect to make in the future, expenditures to comply with such laws and regulations. The ultimate amount of reclamation and other future site-restoration costs to be incurred for existing mining interests is uncertain. |
3. EQUIPMENT (Tables)
3. EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF EQUIPMENT | March 31, 2016 December 31, 2015 Cost Accumulated depreciation Net book value Cost Accumulated depreciation Net book value Computer equipment $ 76 $ 70 $ 6 $ 186 $ 178 $ 8 Furniture 103 72 31 106 72 34 Geological equipment 437 334 103 488 371 117 Vehicles 87 66 21 221 153 68 $ 703 $ 542 $ 161 $ 1,001 $ 774 $ 227 |
4. SHAREHOLDERS' EQUITY (Tables
4. SHAREHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
SCHEDULE OF OPTION ACTIVITY | Number of shares issued Common shares ($) As of December 31, 2015 52,941,880 $ 103,640 Exercise of stock options - cash - - Exercise of stock options - fair value - - Issued during the three months ended March 31, 2016 - - As of March 31, 2016 52,941,880 $ 103,640 |
SCHEDULE OF WARRANT ACTIVITY | Financing Investor Warrants Placement Agent Warrants Total Warrants Exercise Price Expiration Date September 27, 2013 offering 1,338,688 133,869 1,472,557 $4.15 9/27/16 April 29, 2015 offering 2,615,385 261,539 2,876,924 $0.85 4/29/18 Total Warrants Outstanding as of March 31, 2016 4,349,481 |
5. ADDITIONAL PAID-IN CAPITAL (
5. ADDITIONAL PAID-IN CAPITAL (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Additional Paid in Capital [Abstract] | |
Fair value assumptions | March 31, 2016 2015 Risk-free interest rate n/a 1.0% Expected volatility n/a 73% Expected dividend yield n/a nil Expected term in years n/a 3.4 Estimated forfeiture rate n/a 3.6% |
Stock option activity | 2016 2015 Number of Stock Options Weighted Average Exercise Price Number of Stock Options Weighted Average Exercise Price Outstanding, beginning of period 4,578,700 $ 3.99 4,345,500 $ 5.16 Granted - - 399,000 0.32 Cancelled/Expired (1,241,300) 7.88 (132,700) 6.73 Exercised - - - - Outstanding, end of period 3,337,400 $ 2.76 4,611,800 $ 4.43 Exercisable, end of period 2,929,000 $ 3.08 4,012,000 $ 5.00 Weighted-average fair value per share of options granted during period n/a $ 0.16 |
3. EQUIPMENT (Details)
3. EQUIPMENT (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Cost | $ 703 | $ 1,001 |
Accumulated depreciation | 542 | 774 |
Net book value | 161 | 227 |
Computer equipment | ||
Cost | 76 | 186 |
Accumulated depreciation | 70 | 178 |
Net book value | 6 | 8 |
Furniture | ||
Cost | 103 | 106 |
Accumulated depreciation | 72 | 72 |
Net book value | 31 | 34 |
Geological equipment | ||
Cost | 437 | 488 |
Accumulated depreciation | 334 | 371 |
Net book value | 103 | 117 |
Vehicles | ||
Cost | 87 | 221 |
Accumulated depreciation | 66 | 153 |
Net book value | $ 21 | $ 68 |
4. SHAREHOLDERS' EQUITY (Detail
4. SHAREHOLDERS' EQUITY (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Equity [Abstract] | ||
Number of shares issued, beginning | 52,941,880 | |
Shares issued amount, beginning | $ 103,640 | |
Exercise of stock options - cash, shares | 0 | 0 |
Exercise of stock options - cash, amount | $ 0 | |
Exercise of stock options - fair value, shares | 0 | |
Exercise of stock options - fair value, amount | $ 0 | |
Shares issued, shares | 0 | |
Shares issued, amount | $ 0 | |
Number of shares issued, ending | 52,941,880 | |
Shares issued amount, ending | $ 103,640 |
5. ADDITIONAL PAID-IN CAPITAL17
5. ADDITIONAL PAID-IN CAPITAL (Details) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Risk free interest rate | 0.00% | 1.00% |
Expected volatility | 0.00% | 73.00% |
Expected dividend yield | 0.00% | 0.00% |
Expected term in years | 3 years 4 months 24 days | |
Estimated forfeiture rate | 0.0% | 3.6% |
5. ADDITIONAL PAID-IN CAPITAL18
5. ADDITIONAL PAID-IN CAPITAL (Details 1) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Number of Stock Options | ||
Outstanding, beginning of period | 4,578,700 | 4,345,500 |
Granted | 0 | 399,000 |
Cancelled/expired | (1,241,300) | (132,700) |
Exercised | 0 | 0 |
Outstanding, end of period | 3,337,400 | 4,611,800 |
Exercisable, end of period | 2,929,000 | 4,012,000 |
Weighted Average Exercise Price | ||
Outstanding, beginning of period | $ 3.99 | $ 5.16 |
Granted | 0 | 0.32 |
Cancelled/expired | 7.88 | 6.73 |
Exercised | 0 | 0 |
Outstanding, end of period | 2.76 | 4.43 |
Exercisable, end of period | 3.08 | 5 |
Weighted-average fair value per share of options granted during period | $ 0 | $ 0.16 |
5. ADDITIONAL PAID IN CAPITAL (
5. ADDITIONAL PAID IN CAPITAL (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Additional Paid in Capital [Abstract] | ||
Compensation Expense | $ 33 | $ 73 |
Unrecognized compensation cost related to unvested stock options | $ 39 | |
Unvested stock options | 408,400 | |
Unrecognized compensation cost, Period for Recognition | 6 months |