Rare Element Resources (REEMF) 10-Q9 Nov 222022 Q3 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2022	Nov. 07, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2022
Entity File Number	001-34852
Entity Registrant Name	Rare Element Resources Ltd
Entity Incorporation, State or Country Code	A1
Entity Tax Identification Number	00-0000000
Entity Address, Address Line One	P.O. Box 271049
Entity Address, City or Town	Littleton
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80127
City Area Code	720
Local Phone Number	278-2460
Title of 12(b) Security	None
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Central Index Key	0001419806
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		212,466,889
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
CURRENT ASSETS
Cash and cash equivalents	$ 18,805	$ 22,247
Restricted cash (Note 4)		2,700
Due from related party (Note 4)	127	106
Prepaid to related party (Note 4)	1,496
Prepaid expenses and other	201	75
Total Current Assets	20,629	25,128
Equipment, net	15	16
Right of use asset	298	372
Investment in land	600	600
Total Assets	21,542	26,116
CURRENT LIABILITIES
Accounts payable and accrued liabilities	466	407
Due to related party (Note 4)		712
Lease liability, current	124	124
Total Current Liabilities	590	1,243
Reclamation obligation	132	132
Lease liability, long-term	191	253
Repurchase option	1,235	1,047
Total Liabilities	2,148	2,675
Commitments and Contingencies (Note 7)
SHAREHOLDERS' EQUITY:
Common shares, no par value - unlimited shares authorized; shares outstanding at September 30, 2022 and December 31, 2021 - 212,466,889	136,906	136,906
Additional paid in capital	28,233	25,753
Accumulated deficit	(145,745)	(139,218)
Total Shareholders' Equity	19,394	23,441
Total Liabilities and Shareholders' Equity	$ 21,542	$ 26,116

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
CONDENSED CONSOLIDATED BALANCE SHEETS
Common shares, par value	$ 0	$ 0
Common shares, authorized	Unlimited	Unlimited
Common shares, outstanding	212,466,889	212,466,889

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Operating expenses:
Exploration and evaluation	$ (770)	$ (383)	$ (2,267)	$ (1,307)
Corporate administration	(925)	(829)	(4,072)	(2,177)
Depreciation and amortization	(25)	(2)	(75)	(4)
Total operating expenses	(1,720)	(1,214)	(6,414)	(3,488)
Non-operating income (expense):
Interest income	78	0	100	0
Accretion expense	(71)	(20)	(213)	(60)
Other income	8
Total non-operating income (expense)	15	(20)	(113)	(60)
Net loss	$ (1,705)	$ (1,234)	$ (6,527)	$ (3,548)
LOSS PER SHARE - BASIC (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.02)
LOSS PER SHARE - DILUTED (in dollars per share)	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.02)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING BASIC	212,466,889	168,187,413	212,466,889	168,043,640
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DILUTED	212,466,889	168,187,413	212,466,889	168,043,640

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,705)	$ (1,234)	$ (6,527)	$ (3,548)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			1	4
Accretion expense	71	20	213	60
Right of use asset amortization			74
Lease liability			(62)
Stock-based compensation	452	535	2,480	1,060
Other			(25)
Total adjustments to reconcile net loss to net cash used in operating activities			(3,846)	(2,424)
Changes in working capital
Receivables			(21)
Prepaid expenses and other			(1,622)	(57)
Accounts payable and accrued liabilities			(653)	212
Net cash used in operating activities			(6,142)	(2,269)
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock option exercise				10
Net cash and cash equivalents provided by financing activities				10
Decrease in cash, cash equivalents and restricted cash			(6,142)	(2,259)
Cash, cash equivalents and restricted cash - beginning of the period			24,947	2,706
Cash, cash equivalents and restricted cash - end of the period	$ 18,805	$ 447	$ 18,805	447
Supplemental cash flow disclosure:
Right of use asset - operating lease capitalized				$ 397

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Additional Paid in Capital	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2020	104,895,245
Beginning balance at Dec. 31, 2020	$ 111,823	$ 24,217	$ (133,816)	$ 2,224
Stock option exercise, shares	413,200			425,000
Stock option exercise, amount	$ 10			$ 10
Stock-based compensation		1,060		1,060
Net loss			(3,548)	(3,548)
Ending balance, shares at Sep. 30, 2021	105,308,445
Ending balance at Sep. 30, 2021	$ 111,833	25,277	(137,364)	(254)
Beginning balance, shares at Jun. 30, 2021	105,308,445
Beginning balance at Jun. 30, 2021	$ 111,833	24,742	(136,130)	445
Stock-based compensation		535		535
Net loss			(1,234)	(1,234)
Ending balance, shares at Sep. 30, 2021	105,308,445
Ending balance at Sep. 30, 2021	$ 111,833	25,277	(137,364)	(254)
Beginning balance, shares at Dec. 31, 2021	212,466,889
Beginning balance at Dec. 31, 2021	$ 136,906	25,753	(139,218)	23,441
Stock-based compensation		2,480		2,480
Net loss			(6,527)	(6,527)
Ending balance, shares at Sep. 30, 2022	212,466,889
Ending balance at Sep. 30, 2022	$ 136,906	28,233	(145,745)	19,394
Beginning balance, shares at Jun. 30, 2022	212,466,889
Beginning balance at Jun. 30, 2022	$ 136,906	27,781	(144,040)	20,647
Stock-based compensation		452		452
Net loss			(1,705)	(1,705)
Ending balance, shares at Sep. 30, 2022	212,466,889
Ending balance at Sep. 30, 2022	$ 136,906	$ 28,233	$ (145,745)	$ 19,394

NATURE OF OPERATIONS

NATURE OF OPERATIONS	9 Months Ended
NATURE OF OPERATIONS	Sep. 30, 2022
NATURE OF OPERATIONS
NATURE OF OPERATIONS	1. 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 holds a 100% interest in the Bear Lodge rare earth elements project (the “Bear Lodge REE Project”) located near the town of Sundance in northeast Wyoming. The Bear Lodge REE Project consists of several large, disseminated rare earth elements (“REE”) deposits that comprise one of the highest-grade REE deposits identified in North America. In addition, to neodymium-praseodymium (“Nd/Pr”), the Bear Lodge REE Project has a favorable distribution for a number of other critical rare earth elements. The Company also holds a 100% interest in the Sundance gold project (the “Sundance Gold Project”) that is adjacent to the Bear Lodge REE Project and contains a historical inferred mineral resource primarily composed of three gold targets within the area of the Bear Lodge property. Given the Company’s longstanding focus on the Bear Lodge REE Project and the current interest in REE, the advancement of the Sundance Gold Project has been on hold since 2011 and will likely remain so for the foreseeable future. The Company is currently focused on the advancement of a rare earth processing and separation demonstration plant (the “Demonstration Plant”) project. In January 2021, a consortium of companies, of which the Company is a part, received notice from the United States Department of Energy (“DoE”) that the consortium had been selected for negotiation of a potential financial award for the engineering, construction, and operation of a Demonstration Plant. The consortium of companies is led by General Atomics, an affiliate of Synchron, the Company’s largest and majority shareholder, and includes certain of General Atomics’ affiliates, and LNV, an Ardurra Group, Inc. company, as engineering and construction subcontractor. A formal proposal was submitted by the consortium in response to a published Funding Opportunity Announcement in mid-2020 for the construction and operation of the Demonstration Plant utilizing proprietary technology to produce commercial grade products. The DoE finalized the award, and an agreement was executed by the DoE’s grants/agreement officer on September 27, 2021, with an effective date of October 1, 2021. The Company, as a subrecipient of the award, along with the other consortium members, commenced work on the planning and design of the Demonstration Plant project in November 2021, with the Company’s contractual arrangement with General Atomics finalized in December 2021. The DoE’s share of the Demonstration Plant project funding is $21,900 and represents approximately one To address the Company’s funding needs, during December 2021, the Company completed a rights offering for gross proceeds of approximately $25,400. The Company is using the net proceeds from the rights offering for the permitting, licensing, engineering, construction, and operation of the Demonstration Plant near the Company’s Bear Lodge Project. The previously noted $21,900 financial award from the DoE will fund approximately one During 2022, the Company has continued its work on the Demonstration Plant project. This work is expected to continue over the remainder of 2022 and through the Demonstration Plant project’s expected completion date in the early part of 2025 (see Note 4 for a complete discussion). As of September 30, 2022, the Demonstration Plant project had achieved the 60% plant design milestone. It is now anticipated that the Demonstration Plant’s design will be complete by the end of 2022, followed by the completion of permitting activities in the second quarter of 2023 and the completion of the plant’s construction within a period of twelve months thereafter. Operations to process and separate the rare earth elements from the stockpiled sample will follow for an additional eight Originally scheduled for later in the Demonstration Plant project’s timeline, the procurement of certain long-lead equipment has been moved earlier in the schedule due to price inflation and supply chain concerns. This scheduling change, in turn, necessitated a contract modification with the DoE. This modification, which was negotiated between General Atomics and the DoE, was completed during September 2022. While not impacting the Demonstration Plant project’s overall timeline of 40 months, the modification changed the DoE’s first project continuation decision point from October 2022 to December 2022 upon final engineering and design, a second continuation decision point was moved to May 2023 to coincide with the expected completion of the U.S. Nuclear Regulatory Commission and the DoE National Environmental Policy Act licensing and approval processes. For additional information on the Demonstration Plant project, see Item 2 in our Annual Report on Form 10-K for the year ended December 31, 2021. Over the next three months, the Company also plans to update its baseline environmental data for the Bear Lodge REE Project. The Company does not have sufficient funds to progress with longer-term development activities beyond the Demonstration Plant project, including feasibility studies, permitting and licensing, and development and construction related to the Bear Lodge REE Project. Therefore, the achievement of these longer-term activities will be dependent upon securing additional funds through financings, off-take agreements, joint ventures, strategic transactions, or sales of various assets. There is no assurance, however, that the Company will be successful in completing any such other financings or transactions. Ultimately, in the event the Company cannot secure additional financial resources, or complete a strategic transaction in the longer term, it may need to suspend its operational plans or potentially liquidate its business interests, and investors may lose all or part of their investment. The Company has incurred losses since inception, and further losses are anticipated in the development of its business. As of September 30, 2022, the Company had cash and cash equivalents of $18,805 and our cash used in operations during the nine months ended September 30, 2022 was $6,142 , of which approximately $3,600 was used for the payment of costs associated with the Demonstration Plant project while the remainder was used for the payment of the Company’s general and administrative expenses and other on-going costs of sustaining its properties and mining claims. External Factors Impact on Business In response to the COVID-19 pandemic, the Company implemented travel restrictions, both domestically and internationally, and its employee and consultants abided by government guidance and orders. As a result, the Company saw delays in the metallurgical studies conducted by Umwelt-und Ingenieurtechnik GmbH Dresden (“UIT”) that slowed the progression of the prior test work. Any continued pandemic impact or similar impacts from other external influences (such as the Russia/Ukraine war) could be material to the completion of the Demonstration Plant and could have a material adverse impact on our future activities, cash flows and liquidity. As a result of one or more of these factors, the Company has seen and continues to see higher prices for the equipment and raw materials needed for the Demonstration Plant due to shortages, commodity inflation and supply chain issues. Further, it is unknown what, if any, impact these external influences and any resulting economic effects will have on REE prices and market supply and demand fundamentals.

BASIS OF ACCOUNTING AND PRESENT

BASIS OF ACCOUNTING AND PRESENTATION	9 Months Ended
BASIS OF ACCOUNTING AND PRESENTATION	Sep. 30, 2022
BASIS OF ACCOUNTING AND PRESENTATION
BASIS OF ACCOUNTING AND PRESENTATION	2. BASIS OF ACCOUNTING AND PRESENTATION In accordance with U.S. GAAP for interim financial statements, these unaudited condensed 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 condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of December 31, 2021, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (which are of a normal, recurring nature) necessary to present fairly in all material respects the Company’s financial position as of September 30, 2022, and the results of its operations and cash flows for the three and nine months ended September 30, 2022 and 2021 in conformity with U.S. GAAP. These interim results of operations for the three and nine months ended September 30, 2022 may not be indicative of results that will be realized for the full year ending December 31, 2022. Recently Issued Accounting Pronouncements Financial Disclosures of Government Assistance In November 2021, the FASB issued ASU No. 2021-10 Government Assistance (Topic 832) Disclosures by Business Entities About Government Assistance, which requires additional footnote disclosure around material government assistance received by the entity. The disclosure includes the nature and amount of government assistance, commitments made by the Company, and significant components of the terms and conditions of the assistance. The Company is evaluating the impact of this pronouncement on its annual financial statements. The standard will be effective for the Company starting with our Annual Report on Form 10-K for the year ended December 31, 2022. Because the standard only affects footnote disclosure, it is not expected to result in a material effect on our financial statements

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
FAIR VALUE OF FINANCIAL INSTRUMENTS	Sep. 30, 2022
FAIR VALUE OF FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS	3. FAIR VALUE OF FINANCIAL INSTRUMENTS U.S. 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. Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of September 30, 2022 and December 31, 2021 are presented in the following table: Fair value at September 30, 2022 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 13,593 $ 13,593 $ — $ — U.S. Treasury bills 4,976 4,976 — — Fair value at December 31, 2021 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 22,700 $ 22,700 $ — $ —

RELATED PARTY

RELATED PARTY	9 Months Ended
RELATED PARTY	Sep. 30, 2022
RELATED PARTY
RELATED PARTY	4. RELATED PARTY Cost Share Agreement with General Atomics In January 2021, a consortium of companies, of which the Company is a part, received notice from the DoE that the consortium had been selected for negotiation of a potential financial award for the engineering, construction, and operation of the Demonstration Plant. The consortium of companies is led by General Atomics, an affiliate of Synchron (the Company’s largest and majority shareholder), and includes certain of General Atomics’ affiliates, and LNV, an Ardurra Group, Inc. company, as engineering and construction subcontractor. A formal proposal was submitted by the consortium in response to a published Funding Opportunity Announcement in mid-2020 for the construction and operation of the Demonstration Plant utilizing proprietary technology to produce commercial grade products. The DoE’s share of the Demonstration Plant project funding is $21,900 and represents approximately one date of October 1, 2021. The DoE award was finalized through a cooperative agreement dated October 1, 2021 (the “Cooperative Agreement”) that was awarded by the DoE for the Demonstration Plant. The Cooperative Agreement provides that up to approximately $43,900 in allowable costs for the Demonstration Plant would be funded on a cost-share basis, 50% by the DoE and 50% by a non-federal entity. On November 30, 2021, the Company and General Atomics entered into a Cost Share Funding Assumption Agreement (the “Cost Share Agreement”) pursuant to which the Company agreed to assume and pay for certain costs incurred by, and on behalf of, General Atomics for the design, construction, and operation of the Demonstration Plant near the Bear Lodge REE Project in Upton, Wyoming. Pursuant to the terms of the Cost Share Agreement, the Company has made payments, since inception, to General Atomics totaling $4,200 through September 30, 2022 for Company-assumed costs for the Demonstration Plant, with the number and amount of additional payments to be subject to the mutual written agreement of the parties. At December 31, 2021, the initial payment of $2,700 was classified on the Company’s balance sheet as restricted cash. The term of the Cost Share Agreement will continue until the date of completion of the Demonstration Plant, unless terminated earlier by either party. Either party may terminate the Cost Share Agreement immediately upon written notice to the other party if any of the following events occurs: (a) the Cooperative Agreement is terminated for any reason prior to the completion of the Demonstration Plant; (b) the other party commits a material breach of its obligations under the Cost Share Agreement and fails to cure such breach within 30 days; or (c) the other party makes an assignment for the benefit of its creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt, or commences any insolvency or bankruptcy proceedings. Upon any early termination of the Cost Share Agreement, the Company must pay for all costs incurred by or on behalf of General Atomics to wind down the Demonstration Plant other than any allowable costs for such wind-down paid for by the DoE. The following table summarizes transactions under the Cost Share Agreement during the nine months ended September 30, 2022: Balance of funds paid under the Cost Share Agreement at December 31, 2021 $ — Funds transferred to General Atomics through September 2022 4,200 Company's share of Demonstration Plant project costs incurred through September 30, 2022 (2,704) Balance of funds remaining on deposit with General Atomics as of September 30, 2022 $ 1,496 As of September 30, 2022 and December 31, 2021, the Company had also recorded related party payables to General Atomics of nil and $712, respectively, for amounts owing to General Atomics under the Cost Share Agreement. The following table summarizes related party receivables due from General Atomics for reimbursable costs incurred by the Company under the Cost Share Agreement during nine months ended September 30, 2022: Balance of receivables due from General Atomics as of December 31, 2021 (1) $ 106 Reimbursable costs incurred by the Company during the nine months ended September 30, 2022 646 Reimbursements received from General Atomics during the nine months ended September 30, 2022 (625) Balance of receivables due from General Atomics as of September 30, 2022 (1) $ 127 (1) Because the Company had not yet advanced any funds under the Cost Share Agreement at December 31, 2021, the amounts due from General Atomics at December 31, 2021 represented just the portion of those amounts expected to be paid from DoE sourced funds under the Cooperative Agreement whereas at September 30, 2022 the amounts owing from General Atomics included the full 100% share of all amounts billed by the Company under the Cost Share Agreement; including those amounts to be repaid from the $4,200 advanced by the Company to General Atomics during the nine months ended September 30, 2022. During October 2022, the Company received $77 from General Atomics for amounts owing under the Cost Share Agreement at September 30, 2022.

LEASES

LEASES	9 Months Ended
LEASES	Sep. 30, 2022
LEASES
LEASES	5. LEASES The Company accounts for leases in accordance with ASC 842 – Leases. In considering the lease asset value, the Company considers fixed or variable payment terms, prepayments, and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. Effective September 21, 2021, the Company entered into a lease agreement for real property including land, a facility and office space in Upton, Wyoming for the Demonstration Plant. The lease is a 12-month Total future lease payments as of September 30, 2022 are as follows: Remainder of 2022 $ 31 2023 124 2024 124 2025 93 Total lease payments 372 Less interest (57) Present value of lease payments $ 315 For the nine months ended September 30, 2022, $62 was included in operating cash flows for amounts paid for operating leases. As of September 30, 2022 the weighted average lease term for the Company’s one operating lease was 3.0 years (including renewal options) and the weighted average discount rate was estimated at 12%.

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY	9 Months Ended
SHAREHOLDERS' EQUITY	Sep. 30, 2022
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY	6. SHAREHOLDERS’ EQUITY Stock-based compensation As of September 30, 2022, the Company had 4,010,000 options outstanding that were issued under the 10% Rolling Stock Option Plan, as amended and restated (the “RSOP”). As of September 30, 2022, the Company had no outstanding awards under the 2022 Equity Incentive Plan. 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 business day prior to the grant date. There were 1,830,000 and 855,000 options granted during the nine months ended September 30, 2022 and 2021, respectively. The significant assumptions used to estimate the fair value of stock option awards using the Black-Scholes option valuation model are as follows for the nine months ended September 30, 2022 and 2021: Nine Months Ended September 30, 2022 2021 Risk-free interest rate 1.71 % 1.69 % Expected volatility 135 - 144 % 161 % Expected dividend yield Nil Nil Expected term in years 8 10 The following table summarizes our stock option activity for each of the nine months ended September 30, 2022 and 2021: Nine Months Ended September 30, 2022 2021 Weighted Weighted Average Average Number of Stock Exercise Number of Stock Exercise Options Price Options Price Outstanding, beginning of period 2,180,000 $ 1.18 3,100,000 $ 0.28 Granted 1,830,000 $ 1.40 855,000 2.25 Exercised (1) — $ — (425,000) 0.08 Outstanding, end of period 4,010,000 $ 1.28 3,530,000 $ 0.78 Exercisable, end of period 2,605,000 $ 1.08 2,300,000 $ 0.23 Non-vested, end of period 1,405,000 $ 1.65 1,230,000 $ 1.82 (1) The following table summarizes the intrinsic value and weighted average remaining life for stock options as of September 30, 2022: Weighted Average Remaining As of September 30, 2022: Intrinsic Value Life (Years) Stock options outstanding $ 195 6.7 Stock options exercisable $ 195 5.4 Stock options non-vested $ — 9.1 Stock based compensation expense is included in corporate administration expenses within the Company’s interim condensed consolidated statements of operations. For the three months ended September 30, 2022 and 2021, the Company recognized compensation expense related to stock option awards of $452 and $535, respectively. For the nine months ended September 30, 2022 and 2021, the Company recognized compensation expense related to stock option awards of $2,480 and $1,060, respectively. As of September 30, 2022, there was approximately $505 of total unrecognized compensation cost related to the 1,405,000 unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of approximately 0.5 years. The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2022 was $1.40.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2022
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	7. COMMITMENTS AND CONTINGENCIES Our commitments and contingencies include the following items: Potential environmental contingency The Company’s 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. The Company has made, and expects 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 Pursuant to the Cost Share Agreement between the Company and General Atomics and as discussed more fully in Note 4, the Company has agreed to assume and pay for approximately one-half of the costs incurred by General Atomics and the other consortium members for the design, construction, and operation of the Demonstration Plant. Asset purchase agreement On October 25, 2021, the Company and Whitelaw Creek LLC, a Wyoming limited liability company (“Whitelaw Creek”), entered into an amendment (the “Amendment”) to the previously announced asset purchase agreement dated October 20, 2016 between the Company and Whitelaw Creek (the “APA”). The Amendment modified certain provisions of the APA related to the terms and conditions of the Company’s option to repurchase (the “Repurchase Option”) 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. Pursuant to and subject to the terms of the Amendment, among other things the term of the Repurchase Option (which was to expire on October 26, 2021) was extended for up to three Amendment to Employment Agreement with Randall J. Scott On June 27, 2022, the Company entered into an amendment to its employment agreement (the “Employment Agreement Amendment”) with Randall J. Scott, the Company’s former Chief Executive Officer, to provide for certain terms of Mr. Scott’s then-planned retirement. Pursuant to this Employment Agreement Amendment and a consulting agreement (the “Consulting Agreement”) effective upon Mr. Scott’s retirement, Mr. Scott will receive a one-time, lump-sum severance payment equal to one year of his base salary as in effect on November 1, 2022 plus any other accrued benefits owed Mr. Scott on that date. The severance payment must be paid to Mr. Scott no later than December 1, 2022. As of September 30, 2022, the Company had recorded an accrued liability of $242 related to Mr. Scott’s severance pay. Pursuant to the Consulting Agreement, Mr. Scott may provide consulting services to the Company on such projects as the Chairman of the Board of Directors or the Chief Executive Officer of the Company may reasonably request related to the business of the Company, including executive transition services, periodic advice and counseling to the new Chief Executive Officer and transferring knowledge with respect to legacy items, and may additionally include advising and assisting on such other matters as may be requested by the Board of Directors or the Chief Executive Officer from time to time. As consideration for the consulting services provided under the Consulting Agreement, Mr. Scott will receive a consulting fee at a rate of $20 per month for the period commencing on November 1, 2022 and ending on December 31, 2022. Thereafter, the rate of the consulting fee will be agreed between the Company and Mr. Scott. In addition, all stock options granted to Mr. Scott pursuant to the Company’s 2011 Stock Option Plan or otherwise will remain outstanding and eligible to vest in accordance with their terms during the term of the Consulting Agreement as if Mr. Scott had remained employed by the Company through the term of the Consulting Agreement.

SUBSEQUENT EVENT

SUBSEQUENT EVENT	9 Months Ended
SUBSEQUENT EVENT	Sep. 30, 2022
SUBSEQUENT EVENT
SUBSEQUENT EVENT	8. SUBSEQUENT EVENT On October 17, 2022, Brent Berg was appointed by the Board of Directors of the Company as its President and Chief Executive Officer, effective as of November 1, 2022. Pursuant to an employment agreement (the “Employment Agreement”) between Mr. Berg and Rare Element Resources Inc., a Wyoming corporation and wholly owned subsidiary of the Company, (i) Mr. Berg’s initial annual base salary is $250; (ii) Mr. Berg will be paid by December 1, 2022 a one-time signing bonus of $60, which must be repaid to the Company if Mr. Berg terminates his employment for convenience on or before November 1, 2023; (iii) Mr. Berg will be reimbursed for up to $20 in certain actual, documented relocation expenses; (iv) Mr. Berg will be eligible to receive an annual performance bonus and such long-term incentive awards as may be determined by the Board of Directors; and (v) Mr. Berg will be eligible to participate in the employee benefit programs of the Company. Pursuant to the terms of the Employment Agreement, Mr. Berg is entitled to separation benefits in the event that his employment is terminated by the Company without “cause” (as defined in the Employment Agreement) or by Mr. Berg for “good reason” (as defined in the Employment Agreement) due to certain reasons, including a material change in title or duties, a material reduction in compensation, a material breach of the Employment Agreement by the Company or the failure by the Company to maintain reasonable directors and officers liability insurance acceptable to the Board of Directors, in each case which the Company has failed to cure. The severance payment to be received by Mr. Berg upon termination under the circumstances described above will be equal to one year of Mr. Berg’s base salary in effect on the date of termination and paid to Mr. Berg in a lump sum 60 days after the date of such termination, provided that Mr. Berg has been with the Company for at least two years. In addition, Mr. Berg’s equity incentive awards will vest as of the date of termination, provided that Mr. Berg executes a general release of claims. In connection with his appointment as President and Chief Executive Officer, Mr. Berg was granted options to purchase 250,000 common shares of the Company. The stock options have a term of ten years, and one third vest

BASIS OF ACCOUNTING AND PRESE_2

BASIS OF ACCOUNTING AND PRESENTATION (Policies)	9 Months Ended
BASIS OF ACCOUNTING AND PRESENTATION (Policies)	Sep. 30, 2022
BASIS OF ACCOUNTING AND PRESENTATION.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements Financial Disclosures of Government Assistance In November 2021, the FASB issued ASU No. 2021-10 Government Assistance (Topic 832) Disclosures by Business Entities About Government Assistance, which requires additional footnote disclosure around material government assistance received by the entity. The disclosure includes the nature and amount of government assistance, commitments made by the Company, and significant components of the terms and conditions of the assistance. The Company is evaluating the impact of this pronouncement on its annual financial statements. The standard will be effective for the Company starting with our Annual Report on Form 10-K for the year ended December 31, 2022. Because the standard only affects footnote disclosure, it is not expected to result in a material effect on our financial statements

FAIR VALUE OF FINANCIAL INSTR_2

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	9 Months Ended
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	Sep. 30, 2022
FAIR VALUE OF FINANCIAL INSTRUMENTS
Schedule of fair value of financial assets and liabilities on a recurring basis	Fair value at September 30, 2022 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 13,593 $ 13,593 $ — $ — U.S. Treasury bills 4,976 4,976 — — Fair value at December 31, 2021 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 22,700 $ 22,700 $ — $ —

RELATED PARTY (Tables)

RELATED PARTY (Tables)	9 Months Ended
RELATED PARTY (Tables)	Sep. 30, 2022
RELATED PARTY
Schedule of related party transactions	Balance of funds paid under the Cost Share Agreement at December 31, 2021 $ — Funds transferred to General Atomics through September 2022 4,200 Company's share of Demonstration Plant project costs incurred through September 30, 2022 (2,704) Balance of funds remaining on deposit with General Atomics as of September 30, 2022 $ 1,496
Schedule of related party receivables	Balance of receivables due from General Atomics as of December 31, 2021 (1) $ 106 Reimbursable costs incurred by the Company during the nine months ended September 30, 2022 646 Reimbursements received from General Atomics during the nine months ended September 30, 2022 (625) Balance of receivables due from General Atomics as of September 30, 2022 (1) $ 127 (1) Because the Company had not yet advanced any funds under the Cost Share Agreement at December 31, 2021, the amounts due from General Atomics at December 31, 2021 represented just the portion of those amounts expected to be paid from DoE sourced funds under the Cooperative Agreement whereas at September 30, 2022 the amounts owing from General Atomics included the full 100% share of all amounts billed by the Company under the Cost Share Agreement; including those amounts to be repaid from the $4,200 advanced by the Company to General Atomics during the nine months ended September 30, 2022.

LEASES (Tables)

LEASES (Tables)	9 Months Ended
LEASES (Tables)	Sep. 30, 2022
LEASES
Schedule of total future minimum lease payments	Remainder of 2022 $ 31 2023 124 2024 124 2025 93 Total lease payments 372 Less interest (57) Present value of lease payments $ 315

SHAREHOLDERS' EQUITY (Tables)

SHAREHOLDERS' EQUITY (Tables)	9 Months Ended
SHAREHOLDERS' EQUITY (Tables)	Sep. 30, 2022
SHAREHOLDERS' EQUITY
Schedule of significant assumptions used to estimate fair value	Nine Months Ended September 30, 2022 2021 Risk-free interest rate 1.71 % 1.69 % Expected volatility 135 - 144 % 161 % Expected dividend yield Nil Nil Expected term in years 8 10
Schedule of stock option activity	Nine Months Ended September 30, 2022 2021 Weighted Weighted Average Average Number of Stock Exercise Number of Stock Exercise Options Price Options Price Outstanding, beginning of period 2,180,000 $ 1.18 3,100,000 $ 0.28 Granted 1,830,000 $ 1.40 855,000 2.25 Exercised (1) — $ — (425,000) 0.08 Outstanding, end of period 4,010,000 $ 1.28 3,530,000 $ 0.78 Exercisable, end of period 2,605,000 $ 1.08 2,300,000 $ 0.23 Non-vested, end of period 1,405,000 $ 1.65 1,230,000 $ 1.82 (1)
Schedule of intrinsic value and weighted average remaining life for stock options	Weighted Average Remaining As of September 30, 2022: Intrinsic Value Life (Years) Stock options outstanding $ 195 6.7 Stock options exercisable $ 195 5.4 Stock options non-vested $ — 9.1

NATURE OF OPERATIONS (Details)

NATURE OF OPERATIONS (Details) $ in Thousands	9 Months Ended
NATURE OF OPERATIONS (Details) $ in Thousands	Sep. 30, 2022 USD ($) item	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	Oct. 01, 2021 USD ($)
Nature of Operations
Amount of potential DoE funding				$ 21,900
Percentage of total estimated cost for the project covered by DoE funding				50%
Rights offering authorized amount			$ 25,400
Achievement of plant design milestone (as a percentage)	60%
Plant construction completion period	12 months
Cash and cash equivalents	$ 18,805		$ 22,247
Cash used in operations	6,142	$ 2,269
Payments for demonstration plant project costs	$ 3,600
Minimum
Nature of Operations
Additional period for operation processes from samples	8 months
Maximum
Nature of Operations
Additional period for operation processes from samples	12 months
Sundance Gold Project
Nature of Operations
Ownership interest (as a percent)	100%
Number of gold targets \| item	3
Bear Lodge REE Project
Nature of Operations
Ownership interest (as a percent)	100%

FAIR VALUE OF FINANCIAL INSTR_3

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - Recurring - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Money market funds
Assets
Assets fair value	$ 13,593	$ 22,700
U.S. Treasury bills
Assets
Assets fair value	4,976
Level 1 \| Money market funds
Assets
Assets fair value	13,593	$ 22,700
Level 1 \| U.S. Treasury bills
Assets
Assets fair value	$ 4,976

RELATED PARTY (Details)

RELATED PARTY (Details) - USD ($) $ in Thousands	Oct. 01, 2021	Sep. 30, 2022	Dec. 31, 2021
Related Party
Amount of potential DoE funding	$ 21,900
Percentage of total estimated cost for the project covered by DoE funding	50%
Allowable costs for planned demonstration funded on cost share basis	$ 43,900
Percentage of total cost of the demonstration plant funded by DoE	50%
Percentage of total cost of the demonstration plant funded by non federal entity	50%
Restricted cash			$ 2,700
General Atomics
Related Party
Commitment Amount		$ 4,200

RELATED PARTY - Schedule of tra

RELATED PARTY - Schedule of transactions (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Related Party
Balance of funds remaining on deposit	$ 1,496
Related party payables		$ 712
General Atomics
Related Party
Funds transferred	4,200
Company's share of demonstration plant project costs incurred	(2,704)
Balance of funds remaining on deposit	1,496
Related party payables	$ 0	$ 712

RELATED PARTY - Schedule of Rel

RELATED PARTY - Schedule of Related Party Receivables (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Oct. 31, 2022	Sep. 30, 2022
Related Party
Beginning balance of receivables due	$ 127	$ 106
Ending balance of receivables due		127
General Atomics
Related Party
Beginning balance of receivables due	127	106
Reimbursable costs incurred by the Company		646
Reimbursements received from General Atomics	$ 77	(625)
Ending balance of receivables due		$ 127
Percentage of share amount billed		100%
Commitment Amount		$ 4,200

LEASES - (Details)

LEASES - (Details) $ in Thousands	9 Months Ended
LEASES - (Details) $ in Thousands	Sep. 30, 2022 USD ($)
LEASES
Option to extend	true
Term of contract	12 months
Operating lease payments	$ 62
Weighted average lease term	3 years
Weighted average discount rate	12%

LEASES - Lease Payments (Detail

LEASES - Lease Payments (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Lease payments
Remainder of 2022	$ 31
2023	124
2024	124
2025	93
Total lease payments	372
Less interest	(57)
Present value of lease payments	$ 315

SHAREHOLDERS' EQUITY (Details)

SHAREHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding	4,010,000	3,530,000	4,010,000	3,530,000	2,180,000	3,100,000
Option granted			1,830,000	855,000
Compensation expense for stock option awards	$ 452	$ 535	$ 2,480	$ 1,060
Unrecognized compensation cost	$ 505		$ 505
Unvested stock options	1,405,000	1,230,000	1,405,000	1,230,000
Unrecognized compensation cost period of recognition			6 months
Weighted average grant-date fair value of options granted (in dollars per share)			$ 1.40
Equity Incentive Plan 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding	0		0

SHAREHOLDERS' EQUITY - Fair val

SHAREHOLDERS' EQUITY - Fair value assumptions (Details)	9 Months Ended
SHAREHOLDERS' EQUITY - Fair value assumptions (Details)	Sep. 30, 2022	Sep. 30, 2021
Risk-free interest rate	1.71%	1.69%
Expected volatility		161%
Expected dividend yield
Expected term in years	8 years	10 years
Minimum
Expected volatility	135%
Maximum
Expected volatility	144%

SHAREHOLDERS' EQUITY - Stock op

SHAREHOLDERS' EQUITY - Stock option activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Number of Stock Options
Outstanding, beginning of period	2,180,000	3,100,000
Granted	1,830,000	855,000
Exercised		(425,000)
Outstanding, end of period	4,010,000	3,530,000
Exercisable, end of period	2,605,000	2,300,000
Non-vested, end of period	1,405,000	1,230,000
Common shares issued on a net settlement basis	413,200
Weighted Average Exercise Price
Outstanding, beginning of period (in dollars per share)	$ 1.18	$ 0.28
Granted (in dollars per share)	1.40	2.25
Exercised (in dollars per share)		0.08
Outstanding, end of period (in dollars per share)	1.28	0.78
Exercisable, end of period (in dollars per share)	1.08	0.23
Non-vested, end of period (in dollars per share)	$ 1.65	$ 1.82

SHAREHOLDERS' EQUITY - Intrinsi

SHAREHOLDERS' EQUITY - Intrinsic value and weighted average remaining life for stock (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
SHAREHOLDERS' EQUITY
Intrinsic value of options outstanding	$ 195
Intrinsic value of stock options exercisable	$ 195
Weighted average remaining life of stock options outstanding	6 years 8 months 12 days
Weighted average remaining life of stock options exercisable	5 years 4 months 24 days
Weighted average remaining life of unvested stock options	9 years 1 month 6 days

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands		1 Months Ended	9 Months Ended
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	Oct. 25, 2021 USD ($)	Oct. 31, 2022 USD ($)	Sep. 30, 2022 USD ($)	Oct. 20, 2016 a
Randall J. Scott
Commitments and Contingencies
Accrued liability related to severance pay			$ 242
Consulting fees per month			$ 20
Amendment to Whitelaw Creek Asset Purchase Agreement
Commitments and Contingencies
Area of non core property \| a				640
Repurchase of option extension term	3 years
Repurchase of option extension payment per annum	$ 25
Exercise price of repurchase option	1,000
Payments for repurchase option extension		$ 25
Amendment to Whitelaw Creek Asset Purchase Agreement \| Maximum
Commitments and Contingencies
Exercise price of repurchase option	1,850
Amendment to Whitelaw Creek Asset Purchase Agreement \| Minimum
Commitments and Contingencies
Exercise price of repurchase option	$ 1,200

SUBSEQUENT EVENT (Details)

SUBSEQUENT EVENT (Details) - USD ($) $ in Thousands			9 Months Ended
SUBSEQUENT EVENT (Details) - USD ($) $ in Thousands	Dec. 01, 2022	Oct. 17, 2022	Sep. 30, 2022	Sep. 30, 2021
Subsequent Event
Option granted			1,830,000	855,000
Subsequent Event \| President and Chief Executive Officer
Subsequent Event
Annual base salary		$ 250
Signing bonus	$ 60
Relocation expenses		$ 20
Base salary period		1 year
Severance payment period		60 days
Option granted		250,000
Term of stock option		10 years
Subsequent Event \| President and Chief Executive Officer \| Tranche one
Subsequent Event
Vesting percentage		33.33%
Vesting period		1 year
Subsequent Event \| President and Chief Executive Officer \| Tranche two
Subsequent Event
Vesting percentage		33.33%
Vesting period		2 years
Subsequent Event \| President and Chief Executive Officer \| Tranche three
Subsequent Event
Vesting percentage		33.33%
Vesting period		3 years
Subsequent Event \| President and Chief Executive Officer \| Minimum
Subsequent Event
Service period		2 years