RARE ELEMENT RESOURCES LTD

During the three months ended September 30, 2025, there were no material changes to the risk factors disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024, except for the risk factor discussed below.

We may not be able to complete the novation of the Demonstration Plant financial assistance agreement from General Atomics, which could adversely impact our near-term capital requirements or results of operations.

In September 2025, at the Company’s request, General Atomics and the Company formally requested a novation of the financial assistance agreement between General Atomics and the DoE, under which General Atomics’ interests under the agreement would be transferred to the Company, so that it could seek to ensure that the full DoE committed funding is realized. The DoE has allowed the novation process to progress even though the financial assistance agreement’s term expired on September 30, 2025. In addition, during the novation process, the U.S. government failed to finalize a continuing budget resolution, meaning federal workers were furloughed, delaying the novation process. Although the Company expects the novation process to be completed in late 2025, there is no assurance

of the process progressing in a timely manner or being completed at all. If the novation process is completed, the Company will be named the recipient of the award under the agreement and certain conditions are expected to be confirmed, including the potential for additional DoE funding support for further advancements at the Demonstration Plant. If a novation is not completed, the Company would continue not to have direct control over the DoE relationship, invoicing, or the disposition of equipment post-operations, the DoE award to General Atomics could be terminated, and final disposition of the assets would need to be negotiated with the DoE, any of which could adversely impact our near term capital requirements or results of operations.