Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 04, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
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 | 105,808,445 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 447 | $ 2,706 |
Prepaid expenses and other | 104 | 47 |
Total Current Assets | 551 | 2,753 |
Equipment, net | 47 | 51 |
Right of use asset | 397 | |
Investment in land | 600 | 600 |
Total Assets | 1,595 | 3,404 |
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | 327 | 115 |
Lease liability, current | 124 | |
Total Current Liabilities | 451 | 115 |
Reclamation obligation | 132 | 132 |
Lease liability, long-term | 273 | |
Repurchase option | 993 | 933 |
Total Liabilities | 1,849 | 1,180 |
Commitments and Contingencies (Note 5) | ||
SHAREHOLDERS' EQUITY (DEFICIT): | ||
Common shares, no par value - unlimited shares authorized; shares outstanding September 30, 2021 and December 31, 2020 - 105,308,445 and 104,895,245, respectively | 111,833 | 111,823 |
Additional paid in capital | 25,277 | 24,217 |
Accumulated deficit | (137,364) | (133,816) |
Total Shareholders' Equity (Deficit) | (254) | 2,224 |
Total Liabilities and Shareholders' Equity | $ 1,595 | $ 3,404 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Balance Sheets | ||
Common shares, par value | $ 0 | $ 0 |
Common shares, authorized | Unlimited | Unlimited |
Common shares, outstanding | 105,308,445 | 104,895,245 |
CONDENSED CONSOLIDATED UNAUDITE
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Operating expenses: | ||||
Exploration and evaluation | $ (383) | $ (397) | $ (1,307) | $ (921) |
Corporate administration | (829) | (443) | (2,177) | (1,287) |
Depreciation | (2) | (1) | (4) | (4) |
Total operating expenses | (1,214) | (841) | (3,488) | (2,212) |
Non-operating income (expense): | ||||
Interest income | 0 | 1 | 0 | 26 |
Accretion expense | (20) | (20) | (60) | (60) |
Other income (expense) | 0 | 0 | 0 | 1 |
Total non-operating income (expense) | (20) | (19) | (60) | (33) |
Net loss | $ (1,234) | $ (860) | $ (3,548) | $ (2,245) |
LOSS PER SHARE - BASIC | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.02) |
LOSS PER SHARE - DILUTED | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.02) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING BASIC | 105,308,445 | 104,301,767 | 105,164,672 | 104,080,693 |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DILUTED | 105,308,445 | 104,301,767 | 105,164,672 | 104,080,693 |
CONDENSED CONSOLIDATED UNAUDI_2
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,548) | $ (2,245) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 4 | 4 |
Accretion expense | 60 | 60 |
Stock-based compensation | 1,060 | 277 |
Total adjustments to reconcile net loss to net cash used in operating activities | (2,424) | (1,904) |
Changes in working capital | ||
Prepaid expenses and other | (57) | (44) |
Accounts payable and accrued liabilities | 212 | (337) |
Net cash used in operating activities | (2,269) | (2,285) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Stock option exercise | 10 | 106 |
Net cash and cash equivalents provided by financing activities | 10 | 106 |
Decrease in cash and cash equivalents | (2,259) | (2,179) |
Cash and cash equivalents - beginning of the period | 2,706 | 5,664 |
Cash and cash equivalents - end of the period | 447 | $ 3,485 |
Supplemental cash flow disclosures: | ||
Right of use asset - operating lease capitalized | $ 397 |
CONDENSED CONSOLIDATED UNAUDI_3
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Common Stock | Additional Paid in Capital | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2019 | $ 111,662 | $ 23,831 | $ (130,588) | $ 4,905 |
Beginning balance, shares at Dec. 31, 2019 | 103,966,880 | |||
Stock option exercises | $ 106 | $ 106 | ||
Stock option exercise, shares | 334,887 | 500,000 | ||
Stock-based compensation | 277 | $ 277 | ||
Net loss | (2,245) | (2,245) | ||
Ending balance at Sep. 30, 2020 | $ 111,768 | 24,108 | (132,833) | 3,043 |
Ending balance, shares at Sep. 30, 2020 | 104,301,767 | |||
Beginning balance at Jun. 30, 2020 | $ 111,768 | 23,996 | (131,973) | 3,791 |
Beginning balance, shares at Jun. 30, 2020 | 104,301,767 | |||
Stock-based compensation | 112 | 112 | ||
Net loss | (860) | (860) | ||
Ending balance at Sep. 30, 2020 | $ 111,768 | 24,108 | (132,833) | 3,043 |
Ending balance, shares at Sep. 30, 2020 | 104,301,767 | |||
Beginning balance at Dec. 31, 2020 | $ 111,823 | 24,217 | (133,816) | 2,224 |
Beginning balance, shares at Dec. 31, 2020 | 104,895,245 | |||
Stock option exercises | $ 10 | $ 10 | ||
Stock option exercise, shares | 413,200 | 425,000 | ||
Stock-based compensation | 1,060 | $ 1,060 | ||
Net loss | (3,548) | (3,548) | ||
Ending balance at Sep. 30, 2021 | $ 111,833 | 25,277 | (137,364) | (254) |
Ending balance, shares at Sep. 30, 2021 | 105,308,445 | |||
Beginning balance at Jun. 30, 2021 | $ 111,833 | 24,742 | (136,130) | 445 |
Beginning balance, shares at Jun. 30, 2021 | 105,308,445 | |||
Stock-based compensation | 535 | 535 | ||
Net loss | (1,234) | (1,234) | ||
Ending balance at Sep. 30, 2021 | $ 111,833 | $ 25,277 | $ (137,364) | $ (254) |
Ending balance, shares at Sep. 30, 2021 | 105,308,445 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 2021 | |
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 is the 100%-holder of the Bear Lodge REE Project located near the town of Sundance in northeast Wyoming. The Bear Lodge REE Project consists of several large, disseminated REE deposits that comprise one of the highest-grade REE deposits identified in North America and one of the highest-grade europium (Eu) deposits in the world. In addition, the Bear Lodge REE Project has a favorable distribution of the remaining critical rare earth elements. The Company also holds a 100% interest in 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. During the nine months ended September 30, 2021, we continued the confirmation and enhancement of our proprietary technology for recovery and separation of rare earth elements. The work is being conducted by Umwelt-und Ingenieurtechnik GmbH Dresden (“UIT”), an affiliate of Synchron, under an agreement with the Company. The testing was completed in late September 2021, with reports expected during the fourth quarter of 2021. The results are to be incorporated into the planned demonstration plant, as described below. For the remainder of 2021, we expect to further the plans for the demonstration plant, including (i) completing further UIT test work as necessary to optimize certain process steps and scale-up design criteria, (ii) confirming operating and capital cost estimates, and (iii) proceeding with the initial demonstration project schedule consistent with the DoE-approved project work plan. Additional funding pursuant the Company’s planned rights offering (as described in Note 6) is needed to progress these plans and provide working capital for the Company. Further, throughout 2021, we continue to monitor the general U.S. political climate and actions taken by the U.S. government to secure a domestic, non-Chinese, rare earth supply chain. The U.S. federal government issued two Presidential Executive Orders in 2017 to encourage and support the establishment of a domestic rare earth supply chain and to strengthen the defense industrial base with respect to critical minerals including rare earths. In June 2019, the Department of Commerce released its report entitled “Federal strategy to ensure secure and reliable supplies of critical minerals.” This was followed by five U.S. Presidential Determinations on July 22, 2019, directed to the Secretary of Defense. One Presidential Determination declared that “the domestic production capability for Rare Earth Metals and Alloys is essential to the national defense.” These initiatives have increased the federal government’s level of interest in the rare earth industry and our potential rare earth products as a critical upstream segment of the supply chain, particularly considering Chinese dominance in the global rare earth market. In addition, COVID-19 has further focused the U.S. government on the importance of implementing secure domestic supply chains, including for rare earths, leading to a further Presidential Executive Order issued in February 2021 calling for an expedited 100-day review to address the strengthening of America’s supply chains, specifically requiring the Department of Defense to (i) submit a report identifying “risks in the supply chain of critical minerals and other strategic materials including rare earth elements” and (ii) make policy recommendations to address the risks. The 100-day review led to another Executive Order on June 8, 2021, calling for an investment in sustainable domestic and international production and processing of critical minerals, including a recommendation that Congress take actions to recapitalize and restore the National Defense Stockpile of critical minerals and materials. The Company monitors and participates in these initiatives as they are critical to the production of rare earth magnets used in the United States to support the manufacturing of, among other things, defense technologies, electric vehicles, wind turbines, consumer electronics, and oil refining equipment. In January 2021, the consortium, 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 a rare earth separation and processing demonstration plant. The consortium of companies is led by General Atomics, an affiliate of Synchron, 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 a rare earth separation and processing plant utilizing proprietary technology to produce commercial grade products. The DoE funding is in the amount of $21,900 and represents approximately one To address the Company’s funding needs, on October 14, 2021, the Company entered into a promissory note with Synchron pursuant to which Synchron made a loan to the Company in the aggregate amount of $1,000 (see Note 6 for complete discussion). Additionally, on October 5, 2021, the Company announced its intent to launch a rights offering (see Note 6 for complete discussion) to raise additional funds for the permitting, licensing, engineering, construction and operation of the rare earth separation and processing demonstration plant near the Company’s Bear Lodge REE Project and other general corporate purposes, with a portion to be used for the prepayment of outstanding indebtedness The Company does not have sufficient funds to progress with feasibility studies, licensing, permitting, development and construction related to the Bear Lodge REE Project. Therefore, the achievement of these longer-term activities will be dependent upon additional 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 other financings. Ultimately, in the event that 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 even have to 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, 2021, the Company had cash and cash equivalents of $447 and our cash used in operations during the nine months ended September 30, 2021 was $2,424 , the majority of which was related to costs associated with UIT test work and general and administrative expenses. COVID-19 Impact on Business In response to the COVID-19 pandemic, we have implemented travel restrictions, both domestically and internationally, and our employee and consultants have abided by government guidance and orders. As a result, we have seen delays in the metallurgical studies being conducted by UIT which slowed the progression of the prior test work. Additionally, any economic downturn triggered by COVID-19 and resulting direct and indirect negative impact to us could have a prospective material impact to our future activities, cash flows and liquidity. We may also experience higher prices for the equipment and raw materials for the planned demonstration plant due to shortages, commodity inflation and supply chain issues, including transportation delays as a result of COVID-19 and other economic factors. Further, it is unknown what, if any, impact COVID-19 and any resulting economic factors will have on rare earth prices and market supply and demand fundamentals. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical changes to tax depreciation methods for qualified improvement property. On March 11, 2021, President Biden signed an additional coronavirus relief package entitled the American Rescue Plan Act of 2021, which included, among other things, provisions relating to stimulus payments to some Americans, extension of several CARES Act relief programs, expansion of the child tax credit, funding for vaccinations and other COVID-19 related assistance programs. The CARES Act and the American Rescue Plan Act have not had a material impact on the Company as of September 30, 2021; however, we will continue to examine the impacts that the CARES Act and the American Rescue Plan Act, as well as any future economic relief legislation, may have on our business. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2021 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 2. BASIS OF PRESENTATION In accordance with U.S. GAAP for interim financial statements, these 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, 2020, which were included in our Annual Report on Form 10-K for the year ended December 31, 2020. 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 our financial position as of September 30, 2021, and the results of our operations and cash flows for the three and nine months ended September 30, 2021 and 2020 in conformity with U.S. GAAP. Interim results of operations for the three and nine months ended September 30, 2021 may not be indicative of results that will be realized for the full year ending December 31, 2021. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2021 | |
LEASES | |
LEASES | 3. 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 planned demonstration plant. The lease is a 12-month 6 months Total present value of lease payments as of September 30, 2021: Remainder of 2021 $ 31 2022 124 2023 124 2024 124 2025 93 Total 496 Less interest 99 Present value of lease payments $ 397 Because the lease was effective September 21, 2021, nil was included in operating cash flow for amounts paid for operating leases for the nine months ended September 30, 2021. Additionally, we obtained right-of-use assets in exchange for lease liabilities of approximately $397 upon commencement of new operating leases during nine months ended September 30, 2021. The weighted average lease term for operating leases is 4.0 years (including renewal options) and the weighted average discount rate is 12%. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2021 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 4. SHAREHOLDERS’ EQUITY Stock-based compensation As of September 30, 2021, we had 3,530,000 options outstanding that were issued under the 10% Rolling Stock Option Plan, as amended and restated (the “RSOP”). The compensation expense for stock option awards recognized in our condensed consolidated financial statements for the three months ended September 30, 2021 and 2020 was $535 and $112, respectively. The compensation expense for stock option awards recognized in our condensed consolidated financial statements for the nine months ended September 30, 2021 and 2020 was $1,060 and $277, respectively. As of September 30, 2021, there was approximately $1,041 of total unrecognized compensation cost related to 1,230,000 unvested stock options that is expected to be recognized over a weighted-average remaining vesting period of approximately one year. At September 30, 2021, the intrinsic value of outstanding and exercisable stock options was $3,730 and $3,400, respectively. 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 855,000 and 750,000 options granted during the nine months ended September 30, 2021 and 2020, 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, 2021 and 2020: Nine Months Ended September 30, 2021 2020 Risk-free interest rate 1.69 % 1.45 % Expected volatility 161 % 148 % Expected dividend yield Nil Nil Expected term in years 10.0 5.0 Estimated forfeiture rate Nil Nil The following table summarizes our stock option activity for each of the nine months ended September 30, 2021 and 2020: Nine Months Ended September 30, 2021 2020 Weighted Weighted Average Average Number of Stock Exercise Number of Stock Exercise Options Price Options Price Outstanding, beginning of period 3,100,000 $ 0.28 3,450,000 $ 0.16 Granted 855,000 2.25 750,000 0.83 Exercised (1) (425,000) 0.08 (500,000) 0.32 Outstanding, end of period 3,530,000 $ 0.78 3,700,000 $ 0.25 Exercisable, end of period 2,300,000 $ 0.23 2,525,000 $ 0.11 Weighted-average fair value per share of options granted during period $ 2.23 $ 0.75 (1) The 425,000 stock options exercised during the nine months ended September 30, 2021 resulted in 413,200 common shares being issued on a net settlement basis pursuant to the terms of the RSOP. The 500,000 stock options exercised during the nine months ended September 30, 2020 resulted in 334,887 common shares being issued on a net settlement basis pursuant to the terms of the RSOP. The following table summarized the changes in non-vested stock options for the nine months ended September 30, 2021: Weighted Average Non-vested Stock Options Number Outstanding Grant Date Fair Value Non-vested at December 31, 2020 1,175,000 $ 0.42 Granted 855,000 $ 2.23 Vested (800,000) $ 0.43 Non-vested at September 30, 2021 1,230,000 $ 1.82 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 5. COMMITMENTS AND CONTINGENCIES Our commitments and contingencies include the following items: 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 March 9, 2020, the Board of Directors approved the engagement of UIT for further test work in an amount not to exceed $650. Under the 2020 engagement, UIT optimized certain process steps, developed scale-up design criteria for a planned demonstration plant, and confirmed operating and capital cost estimates. Consistent with the prior Board of Directors’ 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. The 2020 UIT test work was completed in December 2020, and test work reports were provided to the Company in early 2021. In January 2021, the Board of Directors approved $500 for additional UIT test work in the first half of 2021 to include optimizing of certain process steps, developing scale-up design criteria for a planned demonstration plant, and confirming operating and capital cost estimates. Consistent with the prior Board of Directors’ 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. For the nine months ended September 30, 2021 and 2020, the Company paid $608 and $863, respectively, for services rendered by UIT. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 6. SUBSEQUENT EVENTS DoE Financial Award During October 2021, negotiations were finalized with the DoE for an Assistance Agreement providing approximately $21,900 of government funds for the engineering, construction and operation of the rare earth separation and processing demonstration plant to be located in Wyoming. The DoE notified General Atomics, an affiliate of Synchron, the Company’s largest shareholder, of the finalization of the award. The Company is a subrecipient to General Atomics in the demonstration project, which will incorporate the Company’s proprietary technology. Note Agreement On October 14, 2021, the Company and Synchron entered into a promissory note (the “Note”) pursuant to which Synchron made a loan to the Company in the aggregate amount of $1,000 (the “Loan Amount”). The Company is required to use the borrowed amounts for fees and expenses to be incurred in connection with the previously discussed rights offering, the permitting, engineering, construction and operation of the rare earth separation and processing demonstration plant near the Company’s Bear Lodge REE Project, and other general corporate purposes. The Note has substantially the following terms: ● Maturity Date : The Loan Amount is due and payable on the earlier of (i) October 1, 2022 or (ii) the date of consummation of an equity financing pursuant to which the Company issues and sells its common shares for aggregate gross proceeds of at least $25,000 (the “Equity Financing”), which Equity Financing the Company must use commercially reasonable efforts to consummate. ● Interest : Interest will accrue on a daily basis at a rate equal to 8% per annum on the unpaid principal balance of the Note. ● Optional Prepayment : The Company may, at its option, prepay without any premium or penalty all or any part of the unpaid principal amount of the Note (including any capitalized interest) prior to the maturity date with at least three business days’ advance notice. ● Registration Rights : As partial consideration for providing the loan pursuant to the Note, any common shares of the Company that may be acquired by Synchron from time to time will have registration rights substantially similar to those provided to Synchron in the Investment Agreement, dated as of October 2, 2017, between Rare Element and Synchron (the “Investment Agreement”) with the respect to the Acquired Shares and the Option Shares (in each case, as defined in the Investment Agreement). Rights Offering On October 5, 2021, the Company announced its intent to launch a rights offering for gross proceeds of up to $25,300 in which each holder of the Company’s common shares as of the close of business on the record date of October 19, 2021 will be eligible to participate. Terms of the rights offering are currently expected to include the issuance of one subscription right for each common share owned by any holder on the record date with each subscription right entitling the holder to purchase one common share of the Company at a subscription price of $0.24 per share (the “basic subscription privilege”). Holders of subscription rights who exercise all of their basic subscription privileges in full will be entitled to oversubscribe for additional common shares. The Company plans to use the net proceeds from the rights offering for the permitting, licensing, engineering, construction and operation of the rare earth separation and processing demonstration plant near the Company’s Bear Lodge Project and other general corporate purposes, with a portion to be used for the prepayment of outstanding indebtedness. The previously discussed $21,900 financial award from the DoE for the demonstration plant will fund approximately one Amendment to Asset Purchase Agreement with Whitelaw Creek 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 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
LEASES | |
Schedule of present value of lease payments | Remainder of 2021 $ 31 2022 124 2023 124 2024 124 2025 93 Total 496 Less interest 99 Present value of lease payments $ 397 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
SHAREHOLDERS' EQUITY | |
Fair value assumptions | Nine Months Ended September 30, 2021 2020 Risk-free interest rate 1.69 % 1.45 % Expected volatility 161 % 148 % Expected dividend yield Nil Nil Expected term in years 10.0 5.0 Estimated forfeiture rate Nil Nil |
Stock option activity | Nine Months Ended September 30, 2021 2020 Weighted Weighted Average Average Number of Stock Exercise Number of Stock Exercise Options Price Options Price Outstanding, beginning of period 3,100,000 $ 0.28 3,450,000 $ 0.16 Granted 855,000 2.25 750,000 0.83 Exercised (1) (425,000) 0.08 (500,000) 0.32 Outstanding, end of period 3,530,000 $ 0.78 3,700,000 $ 0.25 Exercisable, end of period 2,300,000 $ 0.23 2,525,000 $ 0.11 Weighted-average fair value per share of options granted during period $ 2.23 $ 0.75 (1) The 425,000 stock options exercised during the nine months ended September 30, 2021 resulted in 413,200 common shares being issued on a net settlement basis pursuant to the terms of the RSOP. The 500,000 stock options exercised during the nine months ended September 30, 2020 resulted in 334,887 common shares being issued on a net settlement basis pursuant to the terms of the RSOP. |
Non-vested stock option activity | Weighted Average Non-vested Stock Options Number Outstanding Grant Date Fair Value Non-vested at December 31, 2020 1,175,000 $ 0.42 Granted 855,000 $ 2.23 Vested (800,000) $ 0.43 Non-vested at September 30, 2021 1,230,000 $ 1.82 |
NATURE OF OPERATIONS (Details)
NATURE OF OPERATIONS (Details) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2021USD ($)item | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Nature of Operations | ||||
Cash and cash equivalents | $ 447 | $ 3,485 | $ 2,706 | $ 5,664 |
Cash used in operations | $ 2,269 | $ 2,285 | ||
Sundance Gold Project | ||||
Nature of Operations | ||||
Ownership interest (as a percent) | 100.00% | |||
Number of gold targets | item | 3 | |||
Bear Lodge REE Project | ||||
Nature of Operations | ||||
Ownership interest (as a percent) | 100.00% | |||
UIT | ||||
Nature of Operations | ||||
Cash used in operations | $ 2,424 |
NATURE OF OPERATIONS - Promisso
NATURE OF OPERATIONS - Promissory note (Details) - Subsequent Event - USD ($) $ in Thousands | Oct. 01, 2021 | Oct. 31, 2021 | Oct. 14, 2021 |
NATURE OF OPERATIONS | |||
Grants receivable | $ 21,900 | $ 21,900 | |
Percentage of total cost of the demonstration plant funded | 0.50% | 0.50% | |
Synchron Promissory Note | |||
NATURE OF OPERATIONS | |||
Debt amount | $ 1,000 |
LEASES - (Details)
LEASES - (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
LEASES | |
Option to extend | true |
Term of contract | 12 months |
Term of renewal | 6 months |
Operating lease payments | |
Right-of-use assets in exchange for lease liabilities | $ 397 |
Weighted average lease term | 4 years |
Weighted average discount rate | 12.00% |
LEASES - Lease Payments (Detail
LEASES - Lease Payments (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Lease payments | |
Remainder of 2021 | $ 31 |
2022 | 124 |
2023 | 124 |
2024 | 124 |
2025 | 93 |
Total | 496 |
Less interest | 99 |
Present value of lease payments | $ 397 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
SHAREHOLDERS' EQUITY | ||||||
Options outstanding | 3,530,000 | 3,700,000 | 3,530,000 | 3,700,000 | 3,100,000 | 3,450,000 |
Compensation expense for stock option awards | $ 535 | $ 112 | $ 1,060 | $ 277 | ||
Unrecognized compensation cost | $ 1,041 | $ 1,041 | ||||
Unvested stock options | 1,230,000 | 1,230,000 | ||||
Unrecognized compensation cost period of recognition | 1 year | |||||
Intrinsic value of options outstanding | $ 3,730 | $ 3,730 | ||||
Intrinsic value of options exercisable | $ 3,400 | $ 3,400 | ||||
Option granted | 855,000 | 750,000 |
SHAREHOLDERS' EQUITY - Fair val
SHAREHOLDERS' EQUITY - Fair value assumptions (Details) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
SHAREHOLDERS' EQUITY | ||
Risk-free interest rate | 1.69% | 1.45% |
Expected volatility | 161.00% | 148.00% |
Expected dividend yield | ||
Expected term in years | 10 years | 5 years |
Estimated forfeiture rate |
SHAREHOLDERS' EQUITY - Stock op
SHAREHOLDERS' EQUITY - Stock option activity (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Number of Stock Options | ||
Outstanding, beginning of period | 3,100,000 | 3,450,000 |
Granted | 855,000 | 750,000 |
Exercised | (425,000) | (500,000) |
Outstanding, end of period | 3,530,000 | 3,700,000 |
Exercisable, end of period | 2,300,000 | 2,525,000 |
Common shares issued on a net settlement basis | 413,200 | 334,887 |
Weighted Average Exercise Price | ||
Outstanding, beginning of period | $ 0.28 | $ 0.16 |
Granted | 2.25 | 0.83 |
Exercised | 0.08 | 0.32 |
Outstanding, end of period | 0.78 | 0.25 |
Exercisable, end of period | 0.23 | 0.11 |
Weighted-average fair value per share of options granted during period | $ 2.23 | $ 0.75 |
SHAREHOLDERS' EQUITY - Non-vest
SHAREHOLDERS' EQUITY - Non-vested stock options (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of Options | |
Non-vested, beginning | shares | 1,175,000 |
Granted | shares | 855,000 |
Vested | shares | (800,000) |
Non-vested, ending | shares | 1,230,000 |
Weighted Average Grant Date Fair Value | |
Non-vested, beginning | $ / shares | $ 0.42 |
Granted | $ / shares | 2.23 |
Vested | $ / shares | 0.43 |
Non-vested, ending | $ / shares | $ 1.82 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - UIT $ in Thousands | 9 Months Ended | |||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Jan. 31, 2021USD ($)director | Mar. 09, 2020USD ($)director | |
COMMITMENTS AND CONTINGENCIES | ||||
Payment for services rendered | $ 608 | $ 863 | ||
Pilot Plant Test Work | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Commitment Amount | $ 500 | |||
Number of directors abstained | director | 3 | 3 | ||
Pilot Plant Test Work | Maximum | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Commitment Amount | $ 650 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Oct. 01, 2021 |
Subsequent Event | ||
SUBSEQUENT EVENTS | ||
Grants receivable | $ 21,900 | $ 21,900 |
SUBSEQUENT EVENTS - Note Agreem
SUBSEQUENT EVENTS - Note Agreement (Details) - Subsequent Event - Synchron Promissory Note $ in Thousands | Oct. 14, 2021USD ($)directorD |
SUBSEQUENT EVENTS | |
Debt amount | $ 1,000 |
Number of directors abstained | director | 3 |
Gross proceeds | $ 25,000 |
Interest rate percentage | 8.00% |
Threshold business days notice | D | 3 |
SUBSEQUENT EVENTS - Rights Offe
SUBSEQUENT EVENTS - Rights Offering (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Thousands | Oct. 19, 2021 | Oct. 01, 2021 | Oct. 31, 2021 | Nov. 12, 2021 |
SUBSEQUENT EVENTS | ||||
Number of non-transferable subscription right issued | 1 | |||
Number of subscription right to purchase | 1 | |||
Subscription price | $ 0.24 | |||
Grants receivable | $ 21,900 | $ 21,900 | ||
Percentage of total cost of the demonstration plant funded | 0.50% | 0.50% | ||
Forecast | ||||
SUBSEQUENT EVENTS | ||||
Rights offering authorized amount | $ 25,300 |
SUBSEQUENT EVENTS - Asset Purch
SUBSEQUENT EVENTS - Asset Purchase Agreement with Whitelaw Creek (Details) - Subsequent Event - Amendment to Whitelaw Creek Asset Purchase Agreement $ in Thousands | Oct. 25, 2021USD ($)a |
Asset Acquisition | |
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 |
Minimum | |
Asset Acquisition | |
Exercise price of repurchase option | 1,200 |
Maximum | |
Asset Acquisition | |
Exercise price of repurchase option | $ 1,850 |