Rare Element Resources Announces Scoping Study Results for Bear Lodge Project

Rare Element Resources Ltd. (TSX-V: RES and AMEX: REE) has announced that the Preliminary Economic Assessment ("PEA") report on the Bear Lodge Rare Earth Elements Project is to be filed.

The results of the PEA or "Scoping Study" (the "Study") (an NI 43-101 compliant "Preliminary Economic Assessment" or "PEA") on the rare-earth resources delineated on its 100% owned Bear Lodge project, located in northeastern Wyoming, USA were announced on September 28th, 2010 in news release 24-2010.

"The preliminary economic assessment completed on Rare Element's Bear Lodge rare-earths deposit demonstrates a potentially robust case, without any government support or incentives," stated Don Ranta, Rare Element's President & CEO.  "The Bear Lodge Project is expected to significantly contribute to employment, revenues, and the economy of the State of Wyoming. Work is continuing to advance the project towards a production decision and a number of opportunities to further enhance the already robust project economics are being evaluated."

Bear Lodge - Rare Earth Prices and Markets

The prices used in this study are based on historic three-year average concentrate prices. It is important to note that the current prices are much higher that these historic prices. In the news release announcing the results of the PEA, it was noted that a 10% change in the price of REO concentrate would change the Base Case NPV of the project on an after-tax basis by approximately $58 million at a 10% discount rate, and $42 million at a 15% discount rate.

The price assumptions used by Boyd for the REO concentrates are based on compilations of the past three years that range from US$4.59 (2008), to $3.65 (2009), to $7.54/kg (2010). These concentrates contain approximately 43.5% REO and were derived from deposits that have a similar, but slightly less valuable, REO distribution compared to the Bear Lodge deposits.

A recent price quote for REE concentrates on an FOB China basis, as reported on November 4, 2010 by Metal-Pages.com, is $37.50/kg. The elements needed for high-strength permanent REE magnets include neodymium, praseodymium, dysprosium and terbium; prices were quoted by Metal-Pages (November 4, 2010) at US$75.00, $84.00, $385 and $595/kg, respectively for those elements. Current REE producers seek to increase production of neodymium, praseodymium, dysprosium and terbium to meet the growing demand from magnet manufacturers. This underlines the need for new producers with mineral resources having an REE distribution that is more reflective of current market demand, such as that indicated for the bastnasite-group minerals at Bear Lodge.

Bear Lodge - PEA Summary

The results of the Scoping Study (PEA) demonstrate that the Bear Lodge REE project can achieve acceptable after-tax returns on invested capital and therefore warrants further investment to advance the project to a prefeasibilty level of analysis. Increased rates of return are potentially achievable through any combination of higher prices, increased product sales, higher resource/reserve grades, lower operating costs, or higher metal recoveries.

Boyd recommends that the Bear Lodge project proceed to a Preliminary Feasibility level analysis. The recommended work includes completion of bulk sampling, pilot plant testing, further drilling of the Bull Hill SW and NW deposits to upgrade more of the REE resources to Measured or Indicated categories of confidence, REO extraction and separation testwork on both the Bull Hill SW and NW deposits, environmental studies, mine permitting, and continuing community engagement.

The estimated cost of this work program is $15 million with the work to be conducted in two phases. Phase 1 is comprised of preparation of an updated mineral resources estimate that includes 2010 drilling results, continued metallurgical testing, and a pilot plant test, which is anticipated to start in the spring of 2011. Phase 1 would include work to be conducted on samples and analyses from the 2010 drilling program. Phase 2 will include another drilling program for further resource expansion, resource definition, and collection of metallurgical samples that will be used in a subsequent full feasibility study. The Phase 2 program will then proceed to more detailed metallurgical testwork and engineering studies, leading to final process design and commercial testing, market studies, environmental studies and mine permitting, community consultation, engineering design, and economic modeling. Phase 2 work is planned to commence in the late spring of 2011, subject to positive results from Phase 1 and arranging additional financing for the project.

Qualified Persons

Michael P. Richardson, P.E. is the independent qualified person from John T. Boyd Company responsible for the Scoping Study (Preliminary Economic Assessment) as well as mine planning, capital and operating cost estimation, and developing the economic models. He also reviewed and approved this news release as well as all sections of the Scoping Study. Alan C. Noble, P.E. of Ore Reserves Engineering, is the independent qualified person responsible for resource estimation. Dr. Ron Roman, P.E. of Mountain State R&D International is the metallurgical engineer and an independent qualified person responsible for the metallurgy, process development, and estimation of the mill capital and operating costs. Dr. James G. Clark, L.Geo., who has direct experience with the project dating back to 1986, is responsible for the geologic, drilling, and sampling data on behalf of the Company; these data and descriptions were reviewed and approved by Mr. Richardson.

Source: Rare Element Resources Ltd.

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