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| PART I – FINANCIAL INFORMATION | 3 | |
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| ITEM 1. | FINANCIAL STATEMENTS | 3 |
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 15 |
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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 19 |
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| ITEM 4. | CONTROLS AND PROCEDURES | 19 |
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| PART II – OTHER INFORMATION | 20 | |
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| ITEM 1. | LEGAL PROCEEDINGS | 20 |
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| ITEM 1A. | RISK FACTORS | 20 |
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| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 20 |
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| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 20 |
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| ITEM 4. | MINE SAFETY DISCLOSURES | 20 |
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| ITEM 5. | OTHER INFORMATION | 20 |
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| ITEM 6. | EXHIBITS | 21 |
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| SIGNATURES | 22 | |
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ii
Reporting Currency, Financial and Other Information
All amounts in this report are expressed in thousands of United States (“U.S.”) dollars, unless otherwise indicated.
Financial information is presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
References to “RER,” the “Company,” “we,” “our,” and “us” mean Rare Element Resources Ltd., our predecessors and consolidated subsidiary, or any of them, as the context requires.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Quarterly Report”), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report, contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “forward-looking information” within the meaning of Canadian securities laws (collectively, “forward-looking statements”). Any statements that express or involve discussions with respect to business prospects, predictions, expectations, beliefs, plans, intentions, projections, objectives, strategies, assumptions, future events, performance or exploration and development efforts using words or phrases (including negative and grammatical variations) such as, but not limited to, “expects,” “anticipates,” “plans,” “estimates,” “intends,” “forecasts,” “likely,” “projects,” “believes,” “seeks,” or stating that certain actions, events or results “may,” “could,” “would,” “should,” “might” or “will” be taken, occur or be achieved, are not statements of historical fact and may be forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in these forward-looking statements are reasonable, we cannot be certain that these plans, intentions, and expectations will be achieved. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this Quarterly Report. Forward-looking statements in this Quarterly Report include, but are not limited to, statements regarding the following:
| ● | our business, prospects, and overall strategy; |
| ● | our ability to successfully operate the Demonstration Plant (as defined below), and the timing and cost to complete operating activities; |
| ● | planned or estimated expenses and capital expenditures, including the Demonstration Plant’s expected costs of operation, and decommissioning; |
| ● | availability of funds and capital required to fund our planned activities; |
| ● | our ability to achieve the full committed amount of funding from the Department of Energy (the “DoE”) through the remainder of the Demonstration Plant project; |
| ● | our ability to secure, and the timing of, an amendment to the Cost Share Agreement (as defined below), if required, between the Company and General Atomics, whose affiliate, Synchron, is the Company’s majority shareholder; |
| ● | our ability to complete a novation of the Demonstration Plant funding agreement with the DoE and replace General Atomics as the prime contractor, and the timing for completion of such novation; |
| ● | our ability to secure additional funding (in addition to previously awarded or obtained funding) relating to any expansions or extensions of the Demonstration Plant project; |
| ● | our ability to meet Demonstration Plant project objectives within our available funding and estimated timeline; |
| ● | our estimates regarding the source, quality, costs, and timing of materials, equipment, supplies and resources, including human resources, for the operation and decommissioning of the Demonstration Plant, as well as for the production and quality of rare earth oxides and other products from the Demonstration Plant; |
| ● | the Sundance Gold Project remaining on hold for the foreseeable future and, if advanced, our ability to develop or monetize it; |
| ● | plans for our projects or other interests, operations or rights; |
| ● | our plans and strategies during and following the completion of operations of the Demonstration Plant, including with respect to developing a mine and/or a commercial plant; |
| ● | our ability to successfully complete the licensing and permitting of the Bear Lodge REE Project (as defined below); |
| ● | our plans, strategies and timing relating to the advancement of the Bear Lodge REE Project; |
| ● | our plans and strategies to secure further funding for our longer-term business plans, including, if feasible, ultimate construction and operations of a commercial mine and plant for sourcing, processing and separation of rare earth elements; |
| ● | the potential impact of governmental policies, directives, laws, and regulations; and |
| ● | our success in obtaining, and the timing for receipts of, necessary governmental permits and approvals for our business and current or planned projects. |
Forward-looking statements are based on our current expectations and assumptions that are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. Factors that could cause actual results to differ from those implied by the forward-looking statements in this Quarterly Report are more fully described within Part II, Item 1A, “Risk Factors” in this Quarterly Report and “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. Such risks are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.
In addition, statements of belief, expectation, intention, and opinion are based upon information available to us, as applicable, as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information, including information of or generated by third parties. Accordingly, these statements are inherently uncertain, and you are cautioned not to unduly rely upon them.
Except as required by law, we disclaim any obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.We qualify all of the forward-looking statements contained in this Quarterly Report by the foregoing cautionary statements. We advise you to carefully review the reports and documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC”) and with the Canadian securities regulatory authorities, particularly our Annual Report on Form 10-K for the year ended December 31, 2025. The reports and documents filed by us with the SEC are available at www.sec.gov and with the Canadian securities regulatory authorities are available under the Company’s profile at www.sedarplus.ca.
