Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 14, 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 | Sep. 30, 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 | Q3 | |
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 697 | $ 3,881 |
Accounts receivable | 3 | 10 |
Prepaid expenses | 162 | |
Total Current Assets | 700 | 4,053 |
Equipment, net | 113 | 227 |
Land | 600 | 980 |
Mineral properties | 27 | 27 |
Total assets | 1,440 | 5,287 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 64 | 909 |
Asset retirement obligation, current portion | 152 | 152 |
Total Current Liabilities | 216 | 1,061 |
Asset retirement obligation, non-current portion | 205 | 205 |
Total liabilities | 421 | 1,266 |
Commitments and contingencies | ||
SHAREHOLDERS' EQUITY: | ||
Common shares, no par value - unlimited shares authorized; shares outstanding September 30, 2016 and December 31, 2015 - 52,941,880 | 103,640 | 103,640 |
Additional paid in capital | 23,596 | 23,529 |
Accumulated deficit | (126,217) | (123,148) |
Total Shareholders' Equity | 1,019 | 4,021 |
Total Liabilities and Shareholders' Equity | $ 1,440 | $ 5,287 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 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 | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Operating income (expenses): | ||||
Exploration and evaluation | $ (176) | $ (1,517) | $ (338) | $ (3,834) |
Corporate administration | (235) | (850) | (2,345) | (2,779) |
Depreciation | (8) | (24) | (31) | (99) |
Impairment of land | (380) | 0 | (380) | 0 |
Total operating expenses | (799) | (2,391) | (3,094) | (6,712) |
Non-operating income (expenses): | ||||
Interest income | 0 | 8 | 1 | 26 |
Gain/(loss) on currency translation | (1) | (189) | 16 | (458) |
Gain on sale of equipment | 1 | 0 | 8 | 0 |
Total non-operating income (expense) | 0 | (181) | 25 | (432) |
Net loss | $ (3,069) | $ (7,144) | $ (3,069) | $ (7,144) |
LOSS PER SHARE - BASIC AND DILUTED | $ (0.02) | $ (0.05) | $ (0.06) | $ (0.14) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 52,941,880 | 52,941,393 | 52,941,880 | 50,659,421 |
CONSOLIDATED UNAUDITED STATEME5
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss for the period | $ (3,069) | $ (7,144) |
Adjustments to reconcile net loss for the period to net cash and cash equivalents used in operating activities: | ||
Depreciation | 31 | 99 |
Asset retirement obligation | 0 | (16) |
Impairment of land | 380 | 0 |
Gain on sale of equipment | (8) | 0 |
Stock-based compensation | 67 | 202 |
Changes in non-cash working capital | ||
Accounts receivable | 7 | 5 |
Interest receivable | 0 | (20) |
Prepaid expenses | 162 | 105 |
Accounts payable and accrued liabilities | (845) | (283) |
Net cash and cash equivalents used in operating activities | (3,275) | (7,052) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of equipment | 0 | (2) |
Proceeds from sale of equipment | 91 | 2 |
Net cash and cash equivalents provided by investing activities | 91 | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Cash received for common shares, net of share issuance costs | 0 | 3,076 |
Net cash and cash equivalents provided by financing activities | 0 | 3,076 |
Decrease in cash and cash equivalents | (3,184) | (3,976) |
Cash and cash equivalents - beginning of the period | 3,881 | 10,139 |
Cash and cash equivalents - end of the period | $ 697 | $ 6,163 |
1. NATURE OF OPERATIONS
1. NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 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 and the Sundance Gold Project both 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 Sundance Gold Project contains an inferred mineral resource primarily composed of three main gold targets within the area of the Bear Lodge REE Project. Based upon prior economic conditions for gold, no drilling or exploration on the Sundance Gold Project has been conducted since the end of 2011. The Company previously announced extensive cost cutting measures and the placement of the Bear Lodge REE Project on care-and-maintenance to enable us to move the Bear Lodge REE Project forward when market conditions improve. In the interim, we have been and will continue pursuing potential financings and strategic alternatives such as off-take agreements, joint ventures and the potential sale of various assets, including all or part of the Bear Lodge REE Project or the Sundance Gold Project. We continue to pursue opportunities to further reduce corporate and administration costs, including outsourcing of certain additional administrative functions. More recently, with gold markets improving, the Company has turned its attention to the potential of its gold claims which are proximate to the claims containing rare earth deposits within the area of the Bear Lodge REE Project. Several parties have expressed an interest in exploring the gold potential and the Company is currently considering alternatives. The identified rare earth and gold resources are largely separate occurrences, but there may be overlapping potential in limited circumstances. Only further exploration will better define the gold potential and the extent of overlap, if any. 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 Company’s 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, strategic alliances 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 part or all of 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 | 9 Months Ended |
Sep. 30, 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 September 30, 2016, and the results of our operations and cash flows for the nine months ended September 30, 2016 and 2015 in conformity with U.S. GAAP. Interim results of operations for the three and nine months ended September 30, 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 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 ending after December 15, 2016, with early adoption permitted. Although we have not yet adopted ASU 2014-15, we plan to do so on a timely basis and will then determine if additional disclosures are required. We do not expect its adoption to have a material impact on our financial statements. |
3. EQUIPMENT
3. EQUIPMENT | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT | September 30, 2016 December 31, 2015 Cost Accumulated depreciation Net book value Cost Accumulated depreciation Net book value Computer equipment $ 61 $ 59 $ 2 $ 186 $ 178 $ 8 Furniture 13 13 - 106 72 34 Geological equipment 437 341 96 488 371 117 Vehicles 87 72 15 221 153 68 $ 598 $ 485 $ 113 $ 1,001 $ 774 $ 227 |
4. SHAREHOLDERS' EQUITY
4. SHAREHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | Warrants Each outstanding warrant is exercisable for one of the Company’s common shares and was issued to investors in connection with the registered direct offering of the Company that closed on April 29, 2015. In addition, the Company issued warrants to a placement agent in connection with the 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 April 29, 2015 offering 2,615,385 261,539 2,876,924 $0.85 4/29/18 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 Company’s 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. On September 27, 2016, 1,472,557 warrants that were issued as part of the September 27, 2013 registered direct offering of the Company expired unexercised. |
5. ADDITIONAL PAID IN CAPITAL
5. ADDITIONAL PAID IN CAPITAL | 9 Months Ended |
Sep. 30, 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”). As of September 30, 2016, we had 2,640,400 options outstanding under our 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. As of September 30, 2016, we had no options outstanding under our FSOP, as amended. 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 nine months ended September 30, 2016. The significant assumptions used to estimate the fair value of stock options awarded during the nine months ended September 30, 2015, using a Black-Scholes option pricing model are as follows: Risk-free interest rate 1.0% - 1.1% Expected volatility 73.4% - 79.7% Expected dividend yield nil Expected term in years 3.4 Estimated forfeiture rate 3.4% - 3.6% The compensation expense recognized in our consolidated financial statements for the three months ended September 30, 2016 and 2015 for stock option awards was $11 and $81, respectively, and $67 and $202 for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, there was $5 of total unrecognized compensation cost related to 200,040 unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of 0.2 years. The following table summarizes our stock option activity for each of the nine months ended September 30, 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 - - 999,000 0.45 Cancelled/Expired (1,938,300) 6.70 (752,000) 3.17 Exercised - - (12,600) 0.32 Outstanding, end of period 2,640,400 $ 2.25 4,579,900 $ 4.09 Exercisable, end of period 2,440,360 $ 2.39 3,702,500 $ 4.94 Weighted-average fair value per share of options granted during period n/a $ 0.24 |
6. COMMITMENTS AND CONTINGENCIE
6. COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Our commitments and contingencies include the following item: 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. |
7. IMPAIRMENT OF LAND
7. IMPAIRMENT OF LAND | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
IMPAIRMENT OF LAND | During the three months ended September 30, 2016, due to the then-pending asset purchase agreement (see Note 8), we evaluated the carrying value of our Section 16 real property at the . As a result we reduced the carrying value of the land by $380 to $600.Subsequent to the three months ended September 30, 2016, on October 26, 2016, the asset sale was consummated, and the Company received proceeds of approximately $595, representing the purchase price less closing costs and fees. |
8. SUBSEQUENT EVENT
8. SUBSEQUENT EVENT | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Event | |
SUBSEQUENT EVENT | On October 20, 2016, the Company and Whitelaw Creek LLC, a Wyoming limited liability company (“Whitelaw Creek”), executed an asset purchase agreement (the “Asset Purchase Agreement”. The Asset Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Asset Purchase Agreement, the Company will sell to Whitelaw Creek for approximately $600 in cash approximately 640 acres of non-core real property located in Crook County, Wyoming, that is under consideration for a stockpile facility for the Bear Lodge REE Project (the “Land Sale”). The Company will have a right to repurchase the land (i) for $900 within three years following the Land Sale or (ii) for $1,000 after the third anniversary following the Land Sale but on or before the fifth anniversary of the Land Sale, in each case subject to certain adjustments (the “Repurchase Price”). Payment of the Repurchase Price may be made, at Whitelaw Creek’s option, in the form of cash, common shares of the Company, or a combination of cash and common shares of the Company. Payment of any common shares of the Company is subject to a beneficial ownership limitation for Whitelaw Creek and its affiliates collectively of 9.9% of the then-current total number of outstanding common shares of the Company, and in no event may the portion of the Repurchase Price paid in common shares of the Company exceed 5 million shares. Valuation of the common shares of the Company for purposes of payment of the Repurchase Price will be based on the 10-day volume-weighted average closing price of such shares as of the closing date of the Land Sale, subject to certain conditions. The Asset Purchase Agreement was approved by the board of directors of the Company. On October 26, 2016, the parties closed the Land Sale, and the Company received proceeds from the Land Sale of approximately $595, at the closing representing the purchase price less closing costs and fees. |
3. EQUIPMENT (Tables)
3. EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF EQUIPMENT | September 30, 2016 December 31, 2015 Cost Accumulated depreciation Net book value Cost Accumulated depreciation Net book value Computer equipment $ 61 $ 59 $ 2 $ 186 $ 178 $ 8 Furniture 13 13 - 106 72 34 Geological equipment 437 341 96 488 371 117 Vehicles 87 72 15 221 153 68 $ 598 $ 485 $ 113 $ 1,001 $ 774 $ 227 |
4. SHAREHOLDERS' EQUITY (Tables
4. SHAREHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
SCHEDULE OF WARRANT ACTIVITY | Financing Investor Warrants Placement Agent Warrants Total Warrants Exercise Price Expiration Date April 29, 2015 offering 2,615,385 261,539 2,876,924 $0.85 4/29/18 |
5. ADDITIONAL PAID-IN CAPITAL (
5. ADDITIONAL PAID-IN CAPITAL (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Additional Paid in Capital [Abstract] | |
Fair value assumptions | Risk-free interest rate 1.0% - 1.1% Expected volatility 73.4% - 79.7% Expected dividend yield nil Expected term in years 3.4 Estimated forfeiture rate 3.4% - 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 - - 999,000 0.45 Cancelled/Expired (1,938,300) 6.70 (752,000) 3.17 Exercised - - (12,600) 0.32 Outstanding, end of period 2,640,400 $ 2.25 4,579,900 $ 4.09 Exercisable, end of period 2,440,360 $ 2.39 3,702,500 $ 4.94 Weighted-average fair value per share of options granted during period n/a $ 0.24 |
3. EQUIPMENT (Details)
3. EQUIPMENT (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Cost | $ 598 | $ 1,001 |
Accumulated depreciation | 485 | 774 |
Net book value | 113 | 227 |
Computer equipment | ||
Cost | 61 | 186 |
Accumulated depreciation | 59 | 178 |
Net book value | 2 | 8 |
Furniture | ||
Cost | 13 | 106 |
Accumulated depreciation | 13 | 72 |
Net book value | 0 | 34 |
Geological equipment | ||
Cost | 437 | 488 |
Accumulated depreciation | 341 | 371 |
Net book value | 96 | 117 |
Vehicles | ||
Cost | 87 | 221 |
Accumulated depreciation | 72 | 153 |
Net book value | $ 15 | $ 68 |
4. SHAREHOLDERS' EQUITY (Detail
4. SHAREHOLDERS' EQUITY (Details) - April 29, 2015 offering [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Warrants Outstanding | 2,876,924 |
Warrants Exercise Price | $ / shares | $ .85 |
Warrants Expiration Date | Apr. 29, 2018 |
Investor Warrants [Member] | |
Warrants Outstanding | 2,615,385 |
Placement Agent Warrants [Member] | |
Warrants Outstanding | 261,539 |
5. ADDITIONAL PAID-IN CAPITAL19
5. ADDITIONAL PAID-IN CAPITAL (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Expected dividend yield | 0.00% |
Expected term in years | 3 years 4 months 24 days |
Minimum | |
Risk free interest rate | 1.00% |
Expected volatility | 73.40% |
Estimated forfeiture rate | .034 |
Maximum | |
Risk free interest rate | 1.10% |
Expected volatility | 79.70% |
Estimated forfeiture rate | .036 |
5. ADDITIONAL PAID-IN CAPITAL20
5. ADDITIONAL PAID-IN CAPITAL (Details 1) - $ / shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Number of Stock Options | ||
Outstanding, beginning of period | 4,578,700 | 4,345,500 |
Granted | 0 | 999,000 |
Cancelled/expired | (1,938,300) | (752,000) |
Exercised | 0 | (12,600) |
Outstanding, end of period | 260,400 | 4,579,900 |
Exercisable, end of period | 2,440,360 | 3,702,500 |
Weighted Average Exercise Price | ||
Outstanding, beginning of period | $ 3.99 | $ 5.16 |
Granted | 0 | 0.45 |
Cancelled/expired | 6.70 | 3.17 |
Exercised | 0 | 0.32 |
Outstanding, end of period | 2.25 | 4.09 |
Exercisable, end of period | 2.39 | 4.94 |
Weighted-average fair value per share of options granted during period | $ 0 | $ 0.24 |
5. ADDITIONAL PAID IN CAPITAL (
5. ADDITIONAL PAID IN CAPITAL (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Additional Paid in Capital [Abstract] | ||||
Compensation Expense | $ 11 | $ 81 | $ 67 | $ 202 |
Unrecognized compensation cost related to unvested stock options | $ 5 | $ 5 | ||
Unvested stock options | 200,400 | 200,400 | ||
Unrecognized compensation cost, Period for Recognition | 2 months 12 days |