Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 09, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | Rare Element Resources Ltd | ||
Entity Central Index Key | 0001419806 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
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 | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | A1 | ||
Entity File Number | 001-34852 | ||
Entity Public Float | $ 16,300 | ||
Entity Common Stock, Shares Outstanding | 103,966,880 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 5,664 | $ 2,523 |
Prepaid expenses | 40 | 37 |
Total current assets | 5,704 | 2,560 |
Equipment, net | 56 | 61 |
Investment in land | 600 | 600 |
Total assets | 6,360 | 3,221 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued liabilities | 470 | 386 |
Total current liabilities | 470 | 386 |
Reclamation obligation | 132 | 132 |
Deferred intellectual property license income (Note 6) | 0 | 706 |
Option liability (Note 6) | 0 | 331 |
Repurchase option (Note 5) | 600 | 600 |
Total liabilities | 1,202 | 2,155 |
Commitments and contingencies | ||
SHAREHOLDERS' EQUITY: | ||
Common shares, no par value - unlimited shares authorized; shares outstanding December 31, 2019 103,966,880 and 2018 - 79,591,880 | 112,208 | 106,494 |
Additional paid in capital | 23,831 | 23,763 |
Accumulated deficit | (130,881) | (129,191) |
Total shareholders' equity | 5,158 | 1,066 |
Total liabilities and shareholders' equity | $ 6,360 | $ 3,221 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | Unlimited | Unlimited |
Common stock, shares outstanding | 103,966,880 | 79,591,880 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating income and (expenses): | ||
Exploration and evaluation | $ (1,146) | $ (1,268) |
Corporate administration | (979) | (1,066) |
Depreciation | (5) | (14) |
Total operating expenses | (2,130) | (2,348) |
Non-operating income: | ||
Interest income | 40 | 58 |
Recognized deferred income on the sale of intellectual property (Note 6) | 650 | 257 |
Gain on revaluation of option liability (Note 6) | 19 | 285 |
Other expense | (12) | (16) |
Total non-operating expenses | 697 | 584 |
Net loss | $ (1,433) | $ (1,764) |
LOSS PER SHARE - BASIC AND DILUTED | $ (0.02) | $ (0.02) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 84,633,798 | 79,591,880 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss for the period | $ (1,433) | $ (1,764) |
Adjustments to reconcile loss for the period to net cash and cash equivalents used in operations: | ||
Depreciation | 5 | 14 |
Unrealized (gain)/loss on derivatives | (19) | (285) |
Recognized deferred income on the sale of intellectual property | (650) | (257) |
Stock-based compensation | 68 | 104 |
Total adjustments | (2,029) | (2,188) |
Changes in working capital: | ||
Prepaid expenses and other | (3) | 4 |
Accounts payable and accrued liabilities | 97 | 347 |
Net cash and cash equivalents used in operating activities | (1,935) | (1,837) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Net cash and cash equivalents provided by investing activities | 0 | 0 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Stock option exercise | 36 | 0 |
Financing transaction, net (Note 6) | 5,040 | 0 |
Net cash and cash equivalents provided by financing activities | 5,076 | 0 |
Increase/(decrease) in cash and cash equivalents | 3,141 | (1,837) |
Cash and cash equivalents - beginning of the period | 2,523 | 4,360 |
Cash and cash equivalents - end of the period | $ 5,664 | $ 2,523 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2017 | 79,591,880 | |||
Beginning balance, amount at Dec. 31, 2017 | $ 106,494 | $ 23,659 | $ (127,427) | $ 2,726 |
Stock option exercises, shares | 0 | |||
Stock-based compensation | 104 | $ 104 | ||
Net loss for the period | (1,764) | (1,764) | ||
Ending balance, shares at Dec. 31, 2018 | 79,591,880 | |||
Ending balance, amount at Dec. 31, 2018 | $ 106,494 | 23,763 | (129,191) | 1,066 |
Adjustment January 1, 2019 (Note 2) | $ 313 | (257) | 56 | |
Common shares issuance, shares | 24,175,000 | |||
Common shares issuance, amount | $ 5,365 | $ 5,365 | ||
Stock option exercises, shares | 200,000 | 200,000 | ||
Stock option exercises, amount | $ 36 | $ 36 | ||
Stock-based compensation | 68 | 68 | ||
Net loss for the period | (1,433) | (1,433) | ||
Ending balance, shares at Dec. 31, 2019 | 103,966,880 | |||
Ending balance, amount at Dec. 31, 2019 | $ 112,208 | $ 23,831 | $ (130,881) | $ 5,158 |
1. NATURE OF OPERATIONS
1. NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2019 | |
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 a historical inferred mineral resource primarily composed of three gold targets within the area of the Bear Lodge property. During the year ended December 31, 2019, the Company focused on (i) continuing the confirmation and enhancement of our proprietary technology for rare earth processing and separation through piloting, and (ii) updating and supplementing environmental baseline data in anticipation of the potential resumption of permitting efforts. Further, in 2019, the Company monitored U.S. government actions regarding securing a domestic, non-Chinese, rare earth supply chain and participated in certain discussions with government officials. As a result of the Company’s current focus on the Bear Lodge REE Project and in light of ongoing volatile economic conditions for gold, no drilling or exploration on the Sundance Gold Project has been conducted since the end of 2011. Further exploration will be required in order to define the extent of the gold occurrences. The financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business beyond the next 12 months following the filing date of this Annual Report on Form 10-K. The Company previously reported substantial doubt about its ability to continue as a going concern in its financial statements for the year ended December 31, 2018 and subsequent quarterly financial statements in 2019. Due to the transaction with Synchron (Note 6), management no longer believes there is substantial doubt as to its ability to continue as a going concern. However, even with the transaction with Synchron, we do not have sufficient funds to fully complete feasibility studies, permitting, licensing, development and construction of the Bear Lodge REE Project. Therefore, the achievement of these activities will be dependent upon future financings, off-take agreements, joint ventures, strategic transactions, or sales of various assets. There is no assurance, however, that we will be successful in completing any such financing, agreement or transaction. |
2. BASIS OF PRESENTATION
2. BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | Principles of Consolidation These consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) and are inclusive of the accounts of Rare Element Resources Ltd. and its directly and indirectly held wholly owned subsidiaries, which consist of its wholly owned subsidiary Rare Element Holdings Ltd. (“Holdings”) and Holdings’ wholly owned subsidiary, Rare Element Resources, Inc. Correction of immaterial error – valuation of the Synchron option liability During October 2019, we identified an error to the consolidated financial statements for the years 2017 and all quarterly periods through September 30, 2019 related to the valuation of the Synchron option liability (see Note 6 for complete discussion of the transaction). We were utilizing an incorrect estimated number of common shares to be issued upon Synchron’s exercise of its Option. The valuation utilized approximately 14,600,000 common shares estimated to be issued upon exercise of the Option, The Company disclosed in its annual report on Form 10-K for the years ended December 31, 2018 and 2017, this amount was potentially dilutive to its shareholders. In each of its interim quarterly disclosures on Form 10-Q, the Company disclosed the number of common shares to be issued would be equivalent to approximately an additional 15.49% of the Company’s fully diluted outstanding common shares immediately after the exercise of the Option. However, the Company issued 24,175,000 common shares upon exercise of the Option which is consistent with certain other public disclosures and the intention of the parties under the Option Agreement. The Company had properly disclosed the potential issuance of 24,175,000 common shares in its 2018 proxy statement and the Form 8-K filing announcing the term sheet for the transaction filed with the Securities and Exchange Commission (the “SEC”) on August 21, 2017. Synchron additionally disclosed 24,175,000 beneficial ownership shares in its Schedule 13D filed with the SEC on October 19, 2017. The effect of correcting this error as of January 1, 2019 to consolidated financial statements was to decrease Deferred intellectual property license income by $56, increase Common shares by $313 and increase Accumulated deficit by $257. Management evaluated the materiality of the error described above from a qualitative and quantitative perspective. Based on such evaluation, we have concluded that while the accumulation of this error was significant to the year ended December 31, 2017, the correction would not be material to any individual prior period, nor did it have a material effect on the trend of financial results, taking into account the requirements of the SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. Accordingly, we are correcting this error as of January 1, 2019 and have correctly stated the amounts for the year ended December 31, 2019 Consolidated Financial Statements included in this Form 10-K. This error and correction was disclosed in the Company’s quarterly financial statements on Form 10-Q for the nine months ended September 30, 2019 as filed with the SEC on November 18, 2019. |
3. SUMMARY OF SIGNIFICANT ACCOU
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The amounts which involve significant estimates include reclamation obligations, stock-based compensation, valuation of the option liability, valuation of deferred income and impairments. Cash and Cash Equivalents Cash and cash equivalents consist of cash and liquid investments with an original maturity of three months or less. At December 31, 2019 and 2018, cash and cash equivalents consisted of $5,664 and $2,523, respectively, of funds held in bank accounts with financial institutions in both Canada and the United States. Mineral Properties and Exploration and Evaluation Costs Mineral property acquisition costs, including indirectly related acquisition costs, are capitalized when incurred. Acquisition costs include cash consideration and the fair market value of common shares issued as consideration. Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are capitalized as mineral property acquisition costs at such time as the payments are made. Exploration costs are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves under SEC Industry Guide 7, development costs related to such reserves and incurred after such determination will be considered for capitalization. The establishment of proven and probable reserves is based on results of feasibility studies. Upon commencement of commercial production, capitalized costs will be amortized over their estimated useful lives or units of production, whichever is a more reliable measure. Capitalized amounts relating to a property that is abandoned or otherwise considered uneconomic for the foreseeable future will be written off. Reclamation Obligations Our mining and exploration activities are subject to various laws and regulations, including legal and contractual obligations to reclaim, remediate, or otherwise restore properties at the time the property is removed from service. Reclamation obligations are recognized when incurred and recorded as liabilities at fair value. The reclamation obligation is based on when spending for an existing disturbance will occur. We reclaim the disturbance from our exploration programs on an ongoing basis; therefore, the portion of our reclamation obligation corresponding to our exploration programs will be settled in the near term and is classified as a current liability. The remaining reclamation associated with environmental monitoring programs is classified as a long-term liability; however, because we have not declared proven and probable reserves as defined by SEC Industry Guide 7, the timing of these reclamation activities is uncertain as the reclamation areas will only be utilized once the Project is operating. For exploration stage properties that do not qualify for asset capitalization, the costs associated with the obligation are charged to operations. For development and production stage properties, the costs are added to the capitalized costs of the property and amortized using the units-of-production method. We review, on a quarterly basis, unless otherwise deemed necessary, the reclamation obligation in connection with the Bear Lodge Property. Reclamation obligations are secured by surety bonds held for the benefit of the state of Wyoming in amounts determined by applicable federal and state regulatory agencies. Our reclamation obligation was $132 as of December 31, 2019 and 2018. Common Shares Common shares issued for non-monetary consideration are recorded at fair market value based upon the trading price of our shares on the share issuance date. Common shares issued for monetary consideration are recorded at the amount received, less issuance costs. Depreciation Depreciation is computed using the straight-line method. We depreciate computer equipment, furniture and fixtures and geological equipment over a period of three years. We depreciate vehicles over a period of five years. Option Liability Valuation Due to the variability in the number of common shares that could have been issued upon exercise of the Option Agreement (Note 6), the Option Agreement was considered a derivative liability. As a result the Company revalued the option liability at the end of each reporting period, until the Option was exercised in October 2019. The fair value of the option liability was calculated using the Black-Scholes option valuation model. The incremental difference between the estimated value of an exclusive and non-exclusive IP Rights Agreement was added to the value from the Black-Scholes model to arrive at the total value of the Option. Any gains or losses from the revaluation were recorded to the income statement. Upon exercise of the Option, the liability was reclassified to common shares on the Consolidated Balance Sheet. As noted previously, an error for the Synchron option liability was discovered in October 2019 and the appropriate adjustments to correct the error have been made. Stock-based Compensation The fair value of stock-based compensation awards is measured at the date of grant and amortized over the requisite service period, which is generally the vesting period, with a corresponding increase in additional paid-in capital. The Company uses the Black-Scholes option valuation model to calculate the fair value of awards granted. In the case of a share-based compensation award that is either cancelled or forfeited prior to vesting, the amortized expense associated with the unvested awards is reversed. Income Taxes The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that the entire or some portion of the deferred tax asset will not be recognized. Loss per Share The loss per share is computed using the weighted average number of shares outstanding during the period. To calculate diluted loss per share, the Company uses the treasury stock method and the if-converted method. Diluted loss per share is not presented, as the effect on the basic loss per share would be anti-dilutive. At December 31, 2019 and 2018, we had 3,450,000 and 3,385,400 of potentially dilutive securities, respectively related to outstanding stock options. Fair Value of Financial Instruments Our financial instruments may at times consist of cash and cash equivalents, short-term investments, accounts receivable, restricted cash, accounts payable and accrued liabilities. GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and establishes a fair-value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority): - Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. - Level 2 — Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. - Level 3 — Prices or valuation techniques requiring inputs that are both significant to the fair-value measurement and unobservable. The Company continually monitors its cash positions with, and the credit quality of, the financial institutions with which it invests. The Company maintains balances in various U.S. financial institutions in excess of U.S. federally insured limits. The following table presents information about financial instruments recognized at fair value on a recurring basis as of December 31, 2019 and 2018, and indicates the fair value hierarchy: December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 5,664 $ — $ — $ 5,664 Option liability (Note 6) $ — $ — $ — $ — December 31, 2018 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2,523 $ — $ — $ 2,523 Option liability (Note 6) $ — $ — $ 331 $ 331 |
4. MINERAL PROPERTIES
4. MINERAL PROPERTIES | 12 Months Ended |
Dec. 31, 2019 | |
Extractive Industries [Abstract] | |
MINERAL PROPERTIES | Bear Lodge Property, Wyoming, USA The Company, through its indirectly held, wholly owned subsidiary, Rare Element Resources, Inc., holds a 100% interest in 499 unpatented mining claims located on land administered by the USFS and a repurchase option (see Note 5 for discussion) on approximately 640 acres (257 hectares) of fee property, together which contain (1) the Bear Lodge REE Project that contains REE mineralization; and (2) the Sundance Gold Project that contains gold mineralization. The property is situated in the Bear Lodge Mountains of Crook County, in northeast Wyoming. |
5. EQUIPMENT AND LAND
5. EQUIPMENT AND LAND | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT AND LAND | At December 31, 2019 and 2018, equipment consisted of the following: December 31, 2019 December 31, 2018 Cost Accumulated depreciation Net book value Cost Accumulated depreciation Net book value Computer equipment $ 1 $ 1 $ — $ 1 $ 1 $ — Furniture 13 13 — 13 13 — Geological equipment 346 292 54 346 288 58 Vehicles 87 85 2 87 84 3 $ 447 $ 391 $ 56 $ 447 $ 386 $ 61 Depreciation expense for the year ended December 31, 2019 and 2018 was $5 and $14, respectively. We evaluate the recoverability of the carrying value of equipment when events and circumstances indicate that such assets might be impaired. During the year ended December 31, 2018, we impaired certain assets with a net book value of $13, resulting in an impairment charge of $13 as the assets were no longer in use. There was no such impairment charge for the year ended December 31, 2019. On October 26, 2016, we sold approximately 640 acres of non-core real property to Whitelaw Creek LLC, a Wyoming limited liability company (“Whitelaw Creek”), for net proceeds of $595 in cash (the “Land Sale”). We have the right to repurchase the land 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. For accounting purposes, we are utilizing the profit-sharing method for real estate transactions under U.S. GAAP as it is unlikely we will repurchase the land in the near term. Under this method, we have classified our value in the land as an asset on our Consolidated Balance Sheet titled “Investment in land” and the value of the Repurchase Price as a liability on our Consolidated Balance Sheet titled “Repurchase option”. |
6. SHAREHOLDERS' EQUITY
6. SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | Transaction with Synchron On October 2, 2017, the Company and Synchron, an affiliate of General Atomic Technologies Corporation (“Synchron”), completed a transaction in accordance with the following terms. Pursuant to an investment agreement (the “Investment Agreement”), the Company (i) issued to Synchron 26,650,000 common shares of the Company, which constituted approximately 33.5% of the issued and outstanding common shares of the Company; (ii) received gross proceeds of $4,752 in cash, less a $500 preliminary payment received in August 2017; and (iii) granted Synchron an option (the “Option”) to purchase approximately an additional 15.49% of the Company’s fully diluted common shares for an aggregate exercise price of an additional $5,040. Synchron’s ownership percentage, immediately after giving effect to such exercise, is limited to 49.9% of the Company’s common shares issued and outstanding. Pursuant to an option agreement (the “Option Agreement”), the Option term was for a period of up to four years from the initial investment. Additionally, the parties executed an intellectual property rights agreement (the “IP Rights Agreement”), whereby Synchron received rights to use and improve the Company’s intellectual property relating to the Company’s patents-pending and related technical information. The Company retains the right to use any such improvements. On October 16, 2019, Company issued to Synchron 24,175,000 common shares of the Company for a purchase price of $5,040 in connection with the exercise by Synchron of the Option. Accordingly, (i) Synchron’s ownership of outstanding common shares of the Company increased from approximately 33.5% to approximately 49%, and Synchron (ii) obtained the right to nominate an additional board member and (iii) the intellectual property rights granted to pursuant to the IP Rights Agreement became exclusive for a perpetual term, free from a licensing fee. The Company retains the right to use the intellectual property and any improvements made by Synchron, The Company engaged a third-party valuation firm to determine the fair value of each component of the Synchron transaction: the Investment Agreement, the Option Agreement and the IP Rights Agreement. As of the 2017 closing date of the Synchron transaction, the gross value of each component was determined to be as follows: $2,900 for the Investment Agreement, $825 for the Option Agreement and $1,027 for the IP Rights Agreement. The costs incurred to complete the transaction were allocated to each component based on relative fair value to cost of equity, operating expenses and reduction to deferred income as they related to each component, respectively. The value of the common shares was determined using a probability-weighted expected return method (“PWERM”) analysis, which included six different probability-weighted scenarios based on the calculated enterprise value of the Company utilizing assumptions from the pre-feasibility study completed in 2014 and trailing five-year average rare earth pricing in a discounted cash flow analysis. Due to the variability in the number of common shares that could have been be issued upon exercise, the Option was considered a derivative liability. As a result, we revalued the option liability at the end of each reporting period, until the Option was exercised. Any gains or losses from the revaluation are recorded to the Consolidated Statements of Operations. There was no option liability as of December 31, 2019, as Synchron exercised the Option in October 2019. The fair value of the option liability as of December 31, 2018 was $331. The gain on the revaluation of the Option liability was $19 and $285 for the years ended December 31, 2019 and 2018, respectively. The Option was valued utilizing the Black-Scholes valuation model on December 31, 2018. The significant assumptions are as follows: December 31, 2018 Risk-free interest rate 2.46 % Expected volatility 75 % Expected dividend yield Nil Expected term in years 2.8 Estimated forfeiture rate Nil Estimated exercise price $ 0.34 Estimated enterprise value per common share $ 0.00 The estimated enterprise value is primarily due to the five-year trailing average of the market price of rare earth elements, which is utilized for accounting purposes but not necessarily indicative of current or future trading values of the common shares of the Company. The incremental difference between the estimated value of an exclusive and non-exclusive IP Rights Agreement was added to the value from the Black-Scholes model to arrive at the total value of the Option. As discussed in Note 2, an error for the Synchron option liability was discovered in October 2019 and the appropriate adjustments to correct the error have been made. Because Synchron and its affiliates would obtain exclusive rights to the intellectual property upon exercise the Option, the value of the IP Rights Agreement was considered deferred income as the Company retains exclusive title to the intellectual property until Synchron exercises the Option. We amortized the deferred income using the straight-line method over the term of the Option Agreement as this was the period of the Company’s performance obligation related to the IP Rights Agreement. During the years ended December 31, 2019 and 2018, we amortized $650 and $257, respectively, of deferred intellectual property income. The value of the IP Rights Agreement at the transaction date was determined using a PWERM analysis for six different probability weighted scenarios using the relief from royalty method based on market royalty rates for similar agreements. Stock-based Compensation We have options outstanding and exercisable that were issued under the . The terms of the RSOP were approved by our shareholders at the annual meeting of shareholders on December 2, 2011. The RSOP established the maximum number of common shares which may be issued under the RSOP as a variable amount equal to 10% of the issued and outstanding common shares on a non-diluted basis. Under the RSOP, our Board of Directors may from time to time grant stock options to individual eligible directors, officers, employees or consultants. The maximum term of any stock option is 10 years. The exercise price of a stock option is not less than the closing price on the last trading day preceding the grant date. The Board retains the discretion to impose vesting periods on any options granted The fair value of stock option awards granted to directors, officers, employees and/or consultants of the Company are estimated on the grant date using the Black-Scholes option valuation model and the closing price of our common shares on the grant date. There were no options granted during the year ended December 31, 2018. The significant assumptions used to estimate the fair value of 850,000 stock option awards granted during the year ended December 31, 2019 using the Black-Scholes option valuation model are as follows: Risk-free interest rate 2.50 % Expected volatility 141 % Expected dividend yield Nil Expected term in years 5.0 Estimated forfeiture rate Nil The following table summarizes stock option activity for each of the years ended December 31, 2019 and 2018: For the years ended December 31, 2019 2018 Number of Stock Options Weighted Average Exercise Price Number of Stock Options Weighted Average Exercise Price Outstanding, beginning of period 3,385,400 $ 0.24 4,031,400 $ 0.44 Granted 850,000 0.07 — — Exercised (200,000 ) 0.18 — — Cancelled/Expired (585,400 ) 0.27 (646,000 ) 1.50 Outstanding, end of period 3,450,000 $ 0.16 3,385,400 $ 0.24 Exercisable, end of period 2,600,000 $ 0.19 3,010,400 $ 0.24 A summary of stock option activity as of December 31, 2019 and changes during the year then ended are presented below. Non-vested Stock Options Number Outstanding Weighted Average Grant Date Fair Value Non-vested at December 31, 2018 375,000 $ 0.25 Granted 850,000 Vested (375,000 ) Non-vested at December 31, 2019 850,000 $ 0.07 The stock-based compensation cost recognized in our Consolidated Statements of Operations for the years ended December 31, 2019 and 2018 was $68 and $104, respectively. As of December 31, 2019, there was $18 of unrecognized compensation cost related to 850,000 unvested stock options. This cost is expected to be recognized over a weighted-average remaining period of approximately one year. At December 31, 2019, the intrinsic value of outstanding and exercisable stock options was $2,647. |
7. INCOME TAX
7. INCOME TAX | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | We recognize future tax assets and liabilities for each tax jurisdiction based on the difference between the financial reporting and tax bases of assets and liabilities using the enacted tax rates expected to be in effect when the taxes are paid or recovered. A valuation allowance is provided against net future tax assets for which we do not consider the realization of such assets to meet the required “more likely than not” standard. Our future tax assets and liabilities at December 31, 2019 and 2018 include the following components: As of December 31, As of December 31, 2019 2018 Deferred tax assets: Non-current: Accrued vacation and deferred revenue $ 3 $ 141 Noncapital loss carryforwards, Canada 2,462 2,824 Capital loss carryforwards, Canada 6 7 Net operating loss carryforwards, U.S. 18,824 14,247 Mineral properties 3,325 4,563 Reclamation provision 28 28 Equipment 148 150 Share based compensation 23 75 Research and development 982 1,192 Deferred tax assets 25,211 23,227 Valuation allowance (25,211 ) (23,099 ) Net $ — $ 128 Deferred tax liabilities: Non-Current: Option liability $ — $ (128 ) Deferred tax liabilities $ — $ (128 ) Net deferred tax asset/(liability) $ — $ — The composition of our valuation allowance by tax jurisdiction is summarized as follows: As of December 31, 2019 2018 Canada $ 2,897 $ 3,211 United States 22,314 19,888 Total valuation allowance $ 25,211 $ 23,099 In December 2017, the United States enacted comprehensive tax reform legislation known as the “Tax Cuts and Jobs Act” that, among other things, reduces the U.S. federal corporate income tax rate from 35% or 21% and implements a territorial tax system, but imposes an alternative base erosion and anti-abuse tax (“BEAT”), and an incremental tax on global intangible low tax foreign income (“GILTI”) effective January 1, 2018. Since, we have selected an accounting policy with respect to both the new BEAT and GILTI rules to compute the related taxes in the period we become subject to these rules. There were no inclusions of either taxes during the year. Because we are unable to determine whether it is more likely than not that the net deferred tax assets will be realized, we continue to record a 100% valuation against the net deferred tax assets. The valuation allowance increased $2,112 from the year ended December 31, 2018 to the year ended December 31, 2019. There was a decrease in the net deferred tax assets, primarily net operating loss carryforwards (“NOL’s”). The decrease in net deferred tax assets resulted primarily from amortization of capitalized exploration and research and development costs and decrease in net deferred tax asset for share based compensation resulting from expirations and cancellations. At December 31, 2019, we had U.S. NOL carryforwards of approximately $76,329, which expire from 2020 to 2037. As a result of the TCJA, US NOLs generated in years ending after 2017 have an indefinite carryforward rather than the previous 20-year carryforward. This does not affect losses incurred in years ended in 2017 or earlier. In addition, we had Canadian non-capital loss carryforwards of approximately C$11,846, which expire from 2020 to 2040. As of December 31, 2019, there were Canadian capital loss carryforwards of C$59. A full valuation allowance has been recorded against the tax effected US and Canadian loss carryforwards as we do not consider realization of such assets to meet the required 'more likely than not' standard. Section 382 of the Internal Revenue Code could apply and limit our ability to utilize a portion of the U.S. NOL carryforwards. No Section 382 study has been completed; therefore, the actual usage of U.S. NOL carryforwards has not been determined. For financial reporting purposes, income/(loss) from continuing operations before income taxes consists of the following components: For the years ended December 31, 2019 2018 Canada $ (63 ) $ (80 ) United States (1,370 ) (1,684 ) $ (1,433 ) $ (1,764 ) A reconciliation of expected income tax on net income at statutory rates is as follows: As of December 31, As of December 31, 2019 2018 Net income (loss) $ (1,433 ) $ (1,764 ) Statutory tax rate 27 % 26 % Tax expense (recovery) at statutory rate (387 ) (459 ) State taxes (312 ) — Foreign rate differential 61 — Change in tax rates (119 ) (61 ) Share issuance costs amortization (24 ) (23 ) Stock-based compensation 94 708 Expired net operating loss carryovers 18 30 Prior year true-up (1,304 ) (10 ) Change in valuation allowance 1,973 (185 ) Income tax expense (recovery) $ — $ — We do not have any unrecognized income tax benefits. Should we incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of the interest expense and operating expense, respectively. Rare Element and its wholly owned subsidiary, Rare Element Holdings Ltd., file income tax returns in the Canadian federal jurisdiction and provincial jurisdictions, and its wholly owned subsidiary, Rare Element Resources, Inc., files in the U.S. federal jurisdiction and various state jurisdictions. The years still open for audit are generally the current year plus the previous three. However, because we have NOLs carrying forward, certain items attributable to closed tax years are still subject to adjustment by applicable taxing authorities through an adjustment to tax losses carried forward to open years. |
8. COMMITMENTS AND CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Potential Environmental Contingency Our exploration and development 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 have become more restrictive. The Company conducts its operations to protect public health and the environment and believes that 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. Contract Commitment – Related Party On April 24, 2018, the Company executed an agreement with UIT, an affiliate of General Atomic Technologies Corporation and Synchron, to validate the Company’s rare earth processing technology, as well as, progress the Company’s intellectual property. Because Synchron is a significant shareholder of the Company, the two directors of Rare Element appointed by Synchron abstained and the remaining members of the Board of Directors of Rare Element approved the UIT engagement on April 17, 2018. The UIT agreement was for an amount not to exceed $600 and the work was concluded in early 2019. On February 14, 2019, the Company executed a technology test work agreement with UIT to further validate the Company’s rare earth processing technology at pilot plant scale. Because Synchron is a significant shareholder of the Company, the two members of the Board of Directors of Rare Element who were appointed by Synchron abstained, and the remaining members of the Board approved the UIT engagement. The UIT pilot plant agreement was for an amount not to exceed $700. Additionally, on September 9, 2019, the Company entered into an agreement to amend the scope terms and conditions related to the February 2019 agreement which resulted in additional estimated costs of $70. The UIT pilot plant test work was completed in December 2019, with test work reports subsequently provided to the Company. Further piloting is planned for 2020 to include economic optimization of certain process steps, developing scale-up design criteria for a demonstration plant, and confirmation of operating and capital cost estimates. Since the execution of the UIT agreements, the Company has incurred approximately $1,234 in costs related thereto, $403 of which is included in Accounts payable and accrued liabilities as at December 31, 2019. See Note 11 for discussion regarding an agreement entered into with UIT during March 2020. |
9. SUPPLEMENTAL DISCLOSURE WITH
9. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS | The Company did not have any significant non-cash transactions during the years ended December 31, 2019 or 2018. |
10. SEGMENT INFORMATION
10. SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | The Company operates in a single reportable operating segment, being the exploration of mineral properties. |
11. SUBSEQUENT EVENT
11. SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | On March 9, 2020, the Board of Directors approved the engagement of UIT for further pilot plant test work in an amount not to exceed $650. Under the 2020 engagement, UIT will optimize certain process steps, develop scale-up design criteria for a demonstration plant, and confirm operating and capital cost estimates. Consistent with the prior Board action engaging UIT, the three directors of Rare Element appointed by Synchron abstained because Synchron is a significant shareholder of the Company and is an affiliate of UIT. In early March 2020, there was a global outbreak of COVID-19 that has resulted in changes in global supply and demand of certain mineral and energy products. These changes, including a potential economic downturn and any potential resulting direct and indirect negative impact to the Company cannot be determined, but they could have a prospective material impact to the Company’s project development activities, cash flows and liquidity. |
3. SUMMARY OF SIGNIFICANT ACC_2
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of estimates | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The amounts which involve significant estimates include reclamation obligations, stock-based compensation, valuation of the option liability, valuation of deferred income and impairments. |
Cash and cash equivalents | Cash and cash equivalents consist of cash and liquid investments with an original maturity of three months or less. At December 31, 2019 and 2018, cash and cash equivalents consisted of $5,664 and $2,523, respectively, of funds held in bank accounts with financial institutions in both Canada and the United States. |
Mineral properties and exploration and evaluation costs | Mineral property acquisition costs, including indirectly related acquisition costs, are capitalized when incurred. Acquisition costs include cash consideration and the fair market value of common shares issued as consideration. Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are capitalized as mineral property acquisition costs at such time as the payments are made. Exploration costs are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves under SEC Industry Guide 7, development costs related to such reserves and incurred after such determination will be considered for capitalization. The establishment of proven and probable reserves is based on results of feasibility studies. Upon commencement of commercial production, capitalized costs will be amortized over their estimated useful lives or units of production, whichever is a more reliable measure. Capitalized amounts relating to a property that is abandoned or otherwise considered uneconomic for the foreseeable future will be written off. |
Reclamation obligations | Our mining and exploration activities are subject to various laws and regulations, including legal and contractual obligations to reclaim, remediate, or otherwise restore properties at the time the property is removed from service. Reclamation obligations are recognized when incurred and recorded as liabilities at fair value. The reclamation obligation is based on when spending for an existing disturbance will occur. We reclaim the disturbance from our exploration programs on an ongoing basis; therefore, the portion of our reclamation obligation corresponding to our exploration programs will be settled in the near term and is classified as a current liability. The remaining reclamation associated with environmental monitoring programs is classified as a long-term liability; however, because we have not declared proven and probable reserves as defined by SEC Industry Guide 7, the timing of these reclamation activities is uncertain as the reclamation areas will only be utilized once the Project is operating. For exploration stage properties that do not qualify for asset capitalization, the costs associated with the obligation are charged to operations. For development and production stage properties, the costs are added to the capitalized costs of the property and amortized using the units-of-production method. We review, on a quarterly basis, unless otherwise deemed necessary, the reclamation obligation in connection with the Bear Lodge Property. Reclamation obligations are secured by surety bonds held for the benefit of the state of Wyoming in amounts determined by applicable federal and state regulatory agencies. Our reclamation obligation was $132 as of December 31, 2019 and 2018. |
Common shares | Common shares issued for non-monetary consideration are recorded at fair market value based upon the trading price of our shares on the share issuance date. Common shares issued for monetary consideration are recorded at the amount received, less issuance costs. |
Depreciation | Depreciation is computed using the straight-line method. We depreciate computer equipment, furniture and fixtures and geological equipment over a period of three years. We depreciate vehicles over a period of five years. |
Option liability valuation | Due to the variability in the number of common shares that could have been issued upon exercise of the Option Agreement (Note 6), the Option Agreement was considered a derivative liability. As a result the Company revalued the option liability at the end of each reporting period, until the Option was exercised in October 2019. The fair value of the option liability was calculated using the Black-Scholes option valuation model. The incremental difference between the estimated value of an exclusive and non-exclusive IP Rights Agreement was added to the value from the Black-Scholes model to arrive at the total value of the Option. Any gains or losses from the revaluation were recorded to the income statement. Upon exercise of the Option, the liability was reclassified to common shares on the Consolidated Balance Sheet. As noted previously, an error for the Synchron option liability was discovered in October 2019 and the appropriate adjustments to correct the error have been made. |
Stock-based compensation | The fair value of stock-based compensation awards is measured at the date of grant and amortized over the requisite service period, which is generally the vesting period, with a corresponding increase in additional paid-in capital. The Company uses the Black-Scholes option valuation model to calculate the fair value of awards granted. In the case of a share-based compensation award that is either cancelled or forfeited prior to vesting, the amortized expense associated with the unvested awards is reversed. |
Income taxes | The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that the entire or some portion of the deferred tax asset will not be recognized. |
Loss per share | The loss per share is computed using the weighted average number of shares outstanding during the period. To calculate diluted loss per share, the Company uses the treasury stock method and the if-converted method. Diluted loss per share is not presented, as the effect on the basic loss per share would be anti-dilutive. At December 31, 2019 and 2018, we had 3,450,000 and 3,385,400 of potentially dilutive securities, respectively related to outstanding stock options. |
Fair value of financial instruments | Our financial instruments may at times consist of cash and cash equivalents, short-term investments, accounts receivable, restricted cash, accounts payable and accrued liabilities. GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and establishes a fair-value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority): - Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. - Level 2 — Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. - Level 3 — Prices or valuation techniques requiring inputs that are both significant to the fair-value measurement and unobservable. The Company continually monitors its cash positions with, and the credit quality of, the financial institutions with which it invests. The Company maintains balances in various U.S. financial institutions in excess of U.S. federally insured limits. The following table presents information about financial instruments recognized at fair value on a recurring basis as of December 31, 2019 and 2018, and indicates the fair value hierarchy: December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 5,664 $ — $ — $ 5,664 Option liability (Note 6) $ — $ — $ — $ — December 31, 2018 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2,523 $ — $ — $ 2,523 Option liability (Note 6) $ — $ — $ 331 $ 331 |
3. SUMMARY OF SIGNIFICANT ACC_3
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Financial instruments recognized at fair value on a recurring basis | December 31, 2019 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 5,664 $ — $ — $ 5,664 Option liability (Note 6) $ — $ — $ — $ — December 31, 2018 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 2,523 $ — $ — $ 2,523 Option liability (Note 6) $ — $ — $ 331 $ 331 |
5. EQUIPMENT AND LAND (Tables)
5. EQUIPMENT AND LAND (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Equipment and land | December 31, 2019 December 31, 2018 Cost Accumulated depreciation Net book value Cost Accumulated depreciation Net book value Computer equipment $ 1 $ 1 $ — $ 1 $ 1 $ — Furniture 13 13 — 13 13 — Geological equipment 346 292 54 346 288 58 Vehicles 87 85 2 87 84 3 $ 447 $ 391 $ 56 $ 447 $ 386 $ 61 |
6. SHAREHOLDERS' EQUITY (Tables
6. SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Assumptions used | December 31, 2018 Risk-free interest rate 2.46 % Expected volatility 75 % Expected dividend yield Nil Expected term in years 2.8 Estimated forfeiture rate Nil Estimated exercise price $ 0.34 Estimated enterprise value per common share $ 0.00 |
Fair value assumptions | Risk-free interest rate 2.50 % Expected volatility 141 % Expected dividend yield Nil Expected term in years 5.0 Estimated forfeiture rate Nil |
Stock option activity | For the years ended December 31, 2019 2018 Number of Stock Options Weighted Average Exercise Price Number of Stock Options Weighted Average Exercise Price Outstanding, beginning of period 3,385,400 $ 0.24 4,031,400 $ 0.44 Granted 850,000 0.07 — — Exercised (200,000 ) 0.18 — — Cancelled/Expired (585,400 ) 0.27 (646,000 ) 1.50 Outstanding, end of period 3,450,000 $ 0.16 3,385,400 $ 0.24 Exercisable, end of period 2,600,000 $ 0.19 3,010,400 $ 0.24 |
Non-vested Stock option activity | Non-vested Stock Options Number Outstanding Weighted Average Grant Date Fair Value Non-vested at December 31, 2018 375,000 $ 0.25 Granted 850,000 Vested (375,000 ) Non-vested at December 31, 2019 850,000 $ 0.07 |
7. INCOME TAX (Tables)
7. INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Deferred tax assets and liabilities | As of December 31, As of December 31, 2019 2018 Deferred tax assets: Non-current: Accrued vacation and deferred revenue $ 3 $ 141 Noncapital loss carryforwards, Canada 2,462 2,824 Capital loss carryforwards, Canada 6 7 Net operating loss carryforwards, U.S. 18,824 14,247 Mineral properties 3,325 4,563 Reclamation provision 28 28 Equipment 148 150 Share based compensation 23 75 Research and development 982 1,192 Deferred tax assets 25,211 23,227 Valuation allowance (25,211 ) (23,099 ) Net $ — $ 128 Deferred tax liabilities: Non-Current: Option liability $ — $ (128 ) Deferred tax liabilities $ — $ (128 ) Net deferred tax asset/(liability) $ — $ — |
Valuation allowance by tax jurisdiction | As of December 31, 2019 2018 Canada $ 2,897 $ 3,211 United States 22,314 19,888 Total valuation allowance $ 25,211 $ 23,099 |
Income/(loss) from continuing operations before income taxes | For the years ended December 31, 2019 2018 Canada $ (63 ) $ (80 ) United States (1,370 ) (1,684 ) $ (1,433 ) $ (1,764 ) |
Income tax reconciliation | As of December 31, As of December 31, 2019 2018 Net income (loss) $ (1,433 ) $ (1,764 ) Statutory tax rate 27 % 26 % Tax expense (recovery) at statutory rate (387 ) (459 ) State taxes (312 ) — Foreign rate differential 61 — Change in tax rates (119 ) (61 ) Share issuance costs amortization (24 ) (23 ) Stock-based compensation 94 708 Expired net operating loss carryovers 18 30 Prior year true-up (1,304 ) (10 ) Change in valuation allowance 1,973 (185 ) Income tax expense (recovery) $ — $ — |
3. SUMMARY OF SIGNIFICANT ACC_4
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Cash and cash equivalents | $ 5,664 | $ 2,523 | $ 4,360 |
Option liability | 0 | 331 | |
Level 1 | |||
Cash and cash equivalents | 5,664 | 2,523 | |
Option liability | 0 | 0 | |
Level 2 | |||
Cash and cash equivalents | 0 | 0 | |
Option liability | 0 | 0 | |
Level 3 | |||
Cash and cash equivalents | 0 | 0 | |
Option liability | $ 0 | $ 331 |
3. SUMMARY OF SIGNIFICANT ACC_5
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 5,664 | $ 2,523 | $ 4,360 |
Reclamation obligation | $ 132 | $ 132 | |
Potentially dilutive securities | 3,450,000 | 3,385,400 |
5. EQUIPMENT AND LAND (Details)
5. EQUIPMENT AND LAND (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Cost | $ 447 | $ 447 |
Accumulated depreciation | 391 | 386 |
Net book value | 56 | 61 |
Computer Equipment | ||
Cost | 1 | 1 |
Accumulated depreciation | 1 | 1 |
Net book value | 0 | 0 |
Furniture | ||
Cost | 13 | 13 |
Accumulated depreciation | 13 | 13 |
Net book value | 0 | 0 |
Geological Equipment | ||
Cost | 346 | 346 |
Accumulated depreciation | 292 | 288 |
Net book value | 54 | 58 |
Vehicles | ||
Cost | 87 | 87 |
Accumulated depreciation | 85 | 84 |
Net book value | $ 2 | $ 3 |
5. EQUIPMENT AND LAND (Details
5. EQUIPMENT AND LAND (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 5 | $ 14 |
6. SHAREHOLDERS' EQUITY (Detail
6. SHAREHOLDERS' EQUITY (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Directors, Officers or Employees | ||
Risk free interest rate | 2.50% | |
Expected volatiility | 141.00% | |
Expected dividend yield | 0.00% | |
Expected term in years | 5 years | |
Estimated forfeiture rate | 0.00% | |
Synchron | October 2, 2017 | ||
Risk free interest rate | 2.46% | |
Expected volatiility | 75.00% | |
Expected dividend yield | 0.00% | |
Expected term in years | 2 years 9 months 18 days | |
Estimated forfeiture rate | 0.00% | |
Estimated exercise price | $ 0.34 | |
Estimated enterprise value per common share | $ 0 |
6. SHAREHOLDERS' EQUITY (Deta_2
6. SHAREHOLDERS' EQUITY (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Options | ||
Outstanding, beginning | 3,385,400 | 4,031,400 |
Granted | 850,000 | 0 |
Exercised | (200,000) | 0 |
Cancelled/Forfeited/Expired | (585,400) | (646,000) |
Outstanding, ending | 3,450,000 | 3,385,400 |
Exercisable | 2,600,000 | 3,010,400 |
Weighted Average Exercise Price | ||
Outstanding, beginning | $ .24 | $ .44 |
Granted | .07 | .00 |
Exercised | .18 | .00 |
Cancelled/Forfeited/Expired | .27 | 1.50 |
Outstanding, ending | .16 | .24 |
Exercisable | $ .19 | $ .24 |
6. SHAREHOLDERS' EQUITY (Deta_3
6. SHAREHOLDERS' EQUITY (Details 2) | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
Number Outstanding | |
Non-vested, beginning | shares | 375,000 |
Granted | shares | 850,000 |
Vested | shares | (375,000) |
Non-vested, ending | shares | 850,000 |
Weighted Average Grant Date Fair Value | |
Non-vested, beginning | $ / shares | $ .25 |
Granted | $ / shares | .00 |
Vested | $ / shares | .00 |
Non-vested, ending | $ / shares | $ .07 |
6. SHAREHOLDERS' EQUITY (Detai
6. SHAREHOLDERS' EQUITY (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Option liability | $ 0 | $ 331 |
Gain on revaluation of option liability (Note 6) | $ 19 | $ 285 |
Options granted | 850,000 | 0 |
Stock-based compensation cost | $ 68 | $ 104 |
Unrecognized compensation cost | $ 18 | |
Unvested stock options | 850,000 | |
Period for recognition of compensation cost | 1 year | |
Total intrinsic value of options outstanding and exercisable | $ 2,647 |
7. INCOME TAX (Details)
7. INCOME TAX (Details) $ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CAD ($) | Dec. 31, 2018USD ($) |
Deferred Tax Assets (Non-Current): | |||
Accrued vacation and deferred revenue | $ 3 | $ 141 | |
Capital loss, carryforwards | $ 59 | ||
Mineral properties | 3,325 | 4,563 | |
Reclamation provision | 28 | 28 | |
Equipment | 148 | 150 | |
Share based compensation | 23 | 75 | |
Research and development | 982 | 1,192 | |
Deferred tax assets | 25,211 | 23,227 | |
Valuation allowance | (25,211) | (23,099) | |
Net | 0 | 128 | |
Deferred Tax Liabilities (Non-Current): | |||
Option liability | 0 | (128) | |
Deferred tax liabilities | 0 | (128) | |
Net deferred tax asset/(liability) | 0 | 0 | |
Canada | |||
Deferred Tax Assets (Non-Current): | |||
Noncapital loss carryforwards | 2,462 | 2,824 | |
Capital loss, carryforwards | 6 | 7 | |
US | |||
Deferred Tax Assets (Non-Current): | |||
Net operating loss carryforwards | $ 18,824 | $ 14,247 |
7. INCOME TAX (Details 1)
7. INCOME TAX (Details 1) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Canada | $ 2,897 | $ 3,211 |
United States | 22,314 | 19,888 |
Total valuation allowance | $ 25,211 | $ 23,099 |
7. INCOME TAX (Details 2)
7. INCOME TAX (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Canada | $ (63) | $ (80) |
United States | (1,370) | (1,684) |
Net loss | $ (1,433) | $ (1,764) |
7. INCOME TAX (Details 3)
7. INCOME TAX (Details 3) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Net income (loss) | $ (1,433) | $ (1,764) |
Statutory tax rate | 27.00% | 26.00% |
Tax expense (recovery) at statutory rate | $ (387) | $ (459) |
State taxes | (312) | 0 |
Foreign tax rates | 61 | 0 |
Change in tax rates | (119) | (61) |
Share issuance costs amortization | (24) | (23) |
Stock based compensation | 94 | 708 |
Expired net operating loss carryovers | 18 | 30 |
Prior year true-up for loss carryovers | (1,304) | (10) |
Change in valuation allowance | 1,973 | (185) |
Income tax expense (recovery) | $ 0 | $ 0 |
7. INCOME TAX (Details Narrativ
7. INCOME TAX (Details Narrative) - 12 months ended Dec. 31, 2019 $ in Thousands, $ in Thousands | USD ($) | CAD ($) |
Income Tax Disclosure [Abstract] | ||
Increase in valuation allowance | $ 2,112 | |
Net operating loss carryforwards | $ 76,329 | |
Capital carryforward | $ 59 |