Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 02, 2017 | |
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, 2017 | |
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 | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 679 | $ 927 |
Prepaid expenses and other | 187 | 81 |
Total Current Assets | 866 | 1,008 |
Equipment, net | 101 | 106 |
Investment in land | 600 | 600 |
Total assets | 1,567 | 1,714 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 198 | 65 |
Asset retirement obligation, current portion | 152 | 152 |
Total Current Liabilities | 350 | 217 |
Asset retirement obligation, non-current portion | 205 | 205 |
Repurchase option | 600 | 600 |
Total liabilities | 1,155 | 1,022 |
Commitments and Contingencies | ||
SHAREHOLDERS' EQUITY: | ||
Common shares, no par value - unlimited shares authorized; shares outstanding March 31, 2017 and December 31, 2016 - 52,941,880 | 103,640 | 103,640 |
Additional paid in capital | 23,646 | 23,626 |
Accumulated deficit | (126,874) | (126,574) |
Total Shareholders' Equity | 412 | 692 |
Total Liabilities and Shareholders' Equity | $ 1,567 | $ 1,714 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Statement of Financial Position [Abstract] | ||
Common Stock, Par Value | $ 0 | $ 0 |
Common Stock, Shares Authorized | Unlimited | Unlimited |
Common Stock, Shares Outstanding | 52,941,880 | 52,941,880 |
CONSOLIDATED UNAUDITED STATEMEN
CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating income (expenses): | ||
Exploration and evaluation | $ 18 | $ 127 |
Corporate administration | 278 | 1,747 |
Depreciation | (5) | (13) |
Total operating expenses | 301 | 1,887 |
Non-operating income (expenses): | ||
Interest income | 0 | 1 |
Gain on currency translation | 1 | 17 |
Gain on sale of equipment | 0 | 33 |
Total non-operating income (expense) | 1 | 51 |
Net loss | $ (300) | $ (1,836) |
LOSS PER SHARE - BASIC AND DILUTED | $ (0.01) | $ (0.03) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 52,941,880 | 52,941,880 |
CONSOLIDATED UNAUDITED STATEME5
CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss for the period | $ (300) | $ (1,836) |
Adjustments to reconcile net loss for the period to net cash and cash equivalents used in operating activities: | ||
Depreciation | 5 | 13 |
Gain on sale of equipment | 0 | (33) |
Stock-based compensation | 20 | 33 |
Total adjustments | (275) | (1,823) |
Changes in working capital | ||
Prepaid expenses and other | (106) | 51 |
Accounts payable and accrued liabilities | 133 | 105 |
Net cash and cash equivalents used in operating activities | (248) | (1,667) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of equipment | 0 | 86 |
Net cash and cash equivalents provided by investing activities | 0 | 86 |
Decrease in cash and cash equivalents | (248) | (1,581) |
Cash and cash equivalents - beginning of the period | 927 | 3,881 |
Cash and cash equivalents - end of the period | $ 679 | $ 2,300 |
1. NATURE OF OPERATIONS
1. NATURE OF OPERATIONS | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | Rare Element Resources Ltd. (“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 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 Property. Because of the more recent focus on the REE deposit’s potential and volatile 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 be continuing to pursue 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. More recently, the Company has turned more of its attention to the gold potential of the Bear Lodge Property. The area with gold potential is mostly separate from the known rare earth deposits, including the Bull Hill deposit. There may be, however, significant gold occurrences in some of the identified satellite rare earth deposits. Only further exploration will define the extent of overlapping occurrences, if any. Several parties have expressed an interest in exploring the gold potential of the Bear Lodge Property, and the Company is currently considering alternative proposals. 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 within one year from the filing date of these financial statements. 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. In order to continue as a going concern and/or 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 | 3 Months Ended |
Mar. 31, 2017 | |
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, 2016, which were included in our Annual Report on Form 10-K for the period ended December 31, 2016. 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, 2017, and the results of our operations and cash flows for the three months ended March 31, 2017 and 2016 in conformity with U.S. GAAP. Interim results of operations for the three months ended March 31, 2017 may not be indicative of results that will be realized for the full year ending December 31, 2017. |
3. EQUIPMENT
3. EQUIPMENT | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT | March 31, 2017 December 31, 2016 Cost Accumulated depreciation Net book value Cost Accumulated depreciation Net book value Computer equipment $ 61 $ 61 $ — $ 61 $ 61 $ — Furniture 13 13 — 13 13 — Geological equipment 437 348 89 437 344 93 Vehicles 87 75 12 87 74 13 $ 598 $ 497 $ 101 $ 598 $ 492 $ 106 |
4. SHAREHOLDERS' EQUITY
4. SHAREHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2017 | |
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 recorded as a cost of equity. 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. |
5. ADDITIONAL PAID IN CAPITAL
5. ADDITIONAL PAID IN CAPITAL | 3 Months Ended |
Mar. 31, 2017 | |
Additional Paid in Capital [Abstract] | |
ADDITIONAL PAID IN CAPITAL | Stock-based compensation As of March 31, 2017, we have 3,844,900 options outstanding and exercisable that were issued under the 10% Rolling Stock Option Plan (“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 significant assumptions used to estimate the fair value of stock options awarded during the three months ended March 31, 2017, using a Black-Scholes option pricing model are as follows: Risk-free interest rate 0.8 % Expected volatility 133.37 % Expected dividend yield nil Expected term in years 5.0 Estimated forfeiture rate nil The compensation expense recognized in our consolidated financial statements for the three months ended March 31, 2017 and 2016 for stock option awards was $20 and $33, respectively. As of March 31, 2017, there was approximately $13 of total unrecognized compensation cost related to 306,250 unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of 0.25 years. The following table summarizes our stock option activity for each of the three months ended March 31, 2017 and 2016: 2017 2016 Number of Stock Options Weighted Average Exercise Price Number of Stock Options Weighted Average Exercise Price Outstanding, beginning of period 3,694,900 $ 0.94 4,578,700 $ 3.99 Granted 150,000 0.15 — — Cancelled/Expired — — (1,241,300 ) 7.88 Outstanding, end of period 3,844,900 $ 0.91 3,337,400 $ 2.76 Exercisable, end of period 3,538,650 $ 0.98 2,929,000 $ 3.08 Weighted-average fair value per share of options granted during period $ 0.15 n/a |
6. COMMITMENTS AND CONTINGENCIE
6. COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
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. |
3. EQUIPMENT (Tables)
3. EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF EQUIPMENT | March 31, 2017 December 31, 2016 Cost Accumulated depreciation Net book value Cost Accumulated depreciation Net book value Computer equipment $ 61 $ 61 $ — $ 61 $ 61 $ — Furniture 13 13 — 13 13 — Geological equipment 437 348 89 437 344 93 Vehicles 87 75 12 87 74 13 $ 598 $ 497 $ 101 $ 598 $ 492 $ 106 |
4. SHAREHOLDERS' EQUITY (Tables
4. SHAREHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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) | 3 Months Ended |
Mar. 31, 2017 | |
Additional Paid in Capital [Abstract] | |
Fair value assumptions | Risk-free interest rate 0.8 % Expected volatility 133.37 % Expected dividend yield nil Expected term in years 5.0 Estimated forfeiture rate nil |
Stock option activity | 2017 2016 Number of Stock Options Weighted Average Exercise Price Number of Stock Options Weighted Average Exercise Price Outstanding, beginning of period 3,694,900 $ 0.94 4,578,700 $ 3.99 Granted 150,000 0.15 — — Cancelled/Expired — — (1,241,300 ) 7.88 Outstanding, end of period 3,844,900 $ 0.91 3,337,400 $ 2.76 Exercisable, end of period 3,538,650 $ 0.98 2,929,000 $ 3.08 Weighted-average fair value per share of options granted during period $ 0.15 n/a |
3. EQUIPMENT (Details)
3. EQUIPMENT (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Cost | $ 598 | $ 598 |
Accumulated depreciation | 497 | 492 |
Net book value | 101 | 106 |
Computer equipment | ||
Cost | 61 | 61 |
Accumulated depreciation | 61 | 61 |
Net book value | 0 | 0 |
Furniture | ||
Cost | 13 | 13 |
Accumulated depreciation | 13 | 13 |
Net book value | 0 | 0 |
Geological equipment | ||
Cost | 437 | 437 |
Accumulated depreciation | 348 | 344 |
Net book value | 89 | 93 |
Vehicles | ||
Cost | 87 | 87 |
Accumulated depreciation | 75 | 74 |
Net book value | $ 12 | $ 13 |
4. SHAREHOLDERS' EQUITY (Detail
4. SHAREHOLDERS' EQUITY (Details) - April 29, 2015 offering [Member] | 3 Months Ended |
Mar. 31, 2017$ / 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 CAPITAL17
5. ADDITIONAL PAID-IN CAPITAL (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |
Risk free interest rate | 0.80% |
Expected volatility | 133.37% |
Expected dividend yield | 0.00% |
Expected term in years | 5 years |
Estimated forfeiture rate | 0.00% |
5. ADDITIONAL PAID-IN CAPITAL18
5. ADDITIONAL PAID-IN CAPITAL (Details 1) - $ / shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Number of Stock Options | ||
Outstanding, beginning of period | 3,694,900 | 4,578,700 |
Granted | 150,000 | 0 |
Cancelled/expired | 0 | (1,241,300) |
Outstanding, end of period | 3,844,900 | 3,337,400 |
Exercisable, end of period | 3,538,650 | 2,929,000 |
Weighted Average Exercise Price | ||
Outstanding, beginning of period | $ .94 | $ 3.99 |
Granted | .15 | 0 |
Cancelled/expired | 0 | 7.88 |
Outstanding, end of period | .91 | 2.76 |
Exercisable, end of period | .98 | 3.08 |
Weighted-average fair value per share of options granted during period | $ .15 |
5. ADDITIONAL PAID IN CAPITAL (
5. ADDITIONAL PAID IN CAPITAL (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Additional Paid in Capital [Abstract] | ||
Compensation Expense | $ 20 | $ 33 |
Unrecognized compensation cost related to unvested stock options | $ 13 | |
Unvested stock options | 306,250 | |
Unrecognized compensation cost, Period for Recognition | 3 months |