UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
For the quarterly period ended March 31, 2026
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 001-34852

RARE ELEMENT RESOURCES LTD.

(Exact Name of Registrant as Specified in its Charter)


British Columbia		N/A
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

P.O. Box 80
Firestone, Colorado		80520
(Address of principal executive offices)		(Zip Code)

(720) 278-2460		Not Applicable
(Registrant’s telephone number, including area code)		(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

⌧ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻	Accelerated filer ◻	Non-accelerated filer ⌧	Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ⌧ No

Number of issuer’s common shares outstanding as of ~~October~~May 318, ~~2025~~2026: ~~516~~645,~~134~~368,~~712~~390.

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TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION		3
ITEM 1.	FINANCIAL STATEMENTS	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1615
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2118
ITEM 4.	CONTROLS AND PROCEDURES	2118
PART II – OTHER INFORMATION		2119
ITEM 1.	LEGAL PROCEEDINGS	2119
ITEM 1A.	RISK FACTORS	2119
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2219
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	2219
ITEM 4.	MINE SAFETY DISCLOSURES	2219
ITEM 5.	OTHER INFORMATION	2219
ITEM 6.	EXHIBITS	2320
SIGNATURES		2421

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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 one or more 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;

● ~~progress~~our inability ~~the~~to ~~development~~successfully ofoperate ~~our~~the Demonstration Plant (as defined below), and the timing ofand ~~that~~cost ~~progress~~to complete operating activities;

● ~~our~~planned ~~ability~~or toestimated ~~successfully~~expenses ~~complete~~and ~~the~~capital ~~design~~expenditures, ~~review~~including ~~and~~the ~~any~~Demonstration ~~rework~~Plant’s ~~activities~~expected oncosts ~~the~~of ~~Demonstration~~operation, ~~Plant~~decommissioning, and the ~~timing~~sources ~~and~~of ~~cost~~funds to ~~complete~~pay ~~any~~for ~~rework~~such ~~activities~~costs;

● ~~planned~~availability orof ~~estimated~~funds ~~expenses~~ and capital ~~expenditures,~~resources ~~including the Demonstration Plant’s expected costs of commissioning, operation, decommissioning, and the sources of funds~~ to ~~pay~~fund ~~for~~our ~~such~~planned ~~costs~~activities;

● ~~availability~~our ability to achieve the full committed amount of ~~funds~~funding ~~and~~from ~~capital~~the ~~resources~~Department of Energy (the “DoE”) through the remainder of the Demonstration Plant project;

● ~~our~~the ~~Demonstration~~securing ~~Plant~~and ~~team’s~~timing ~~ability~~of toan ~~achieve~~amendment to the ~~full~~Cost ~~amount~~Share ofAgreement ~~funding~~(as ~~support~~defined ~~from~~below), if required, between the ~~Department~~Company ofand ~~Energy~~General ~~(“DoE”)~~Atomics, ~~through~~whose ~~the~~affiliate, ~~remainder~~Synchron, ofis the ~~Demonstration~~Company’s ~~Plant~~majority ~~project~~shareholder;

● ~~the~~our ~~securing~~ability ~~and~~to ~~timing~~complete ofa annovation ~~amendment~~of to the ~~Cost~~Demonstration ~~Share~~Plant ~~Agreement~~funding ~~(as~~agreement ~~defined~~with ~~below), if required, between~~ the ~~Company~~DoE and replace General Atomics, ~~whose~~as ~~affiliate~~the ~~Synchron~~prime iscontractor, and the ~~Company’s~~timing ~~majority~~for ~~shareholder~~completion of such novation;

● our ability to ~~complete~~secure aadditional ~~potential~~funding ~~novation~~(in ofaddition to the ~~Demonstration~~previously ~~Plant~~awarded or obtained funding) ~~agreement~~relating ~~with~~to the ~~DoE~~Demonstration ~~and~~Plant ~~replacing~~project, ~~General~~if ~~Atomics~~and as ~~the~~may ~~prime~~be ~~contractor~~required, toor ~~ensure~~any ~~the~~further ~~full~~initiatives ~~DoE~~or ~~committed~~advancements ~~funding~~that ismay ~~realized~~be ~~(as~~undertaken ~~described~~relating ~~below)~~to the Demonstration Plant;

● our ability to ~~secure~~receive ~~additional~~the ~~funding~~remaining (uncollected funds in ~~addition~~connection towith the ~~previously~~Wyoming ~~awarded~~Energy orAuthority ~~obtained~~(the ~~funding~~“WEA”) ~~relating~~grant tofor the Demonstration Plant ~~project~~and ~~or any further initiatives or advancements that may be undertaken relating to~~ the ~~Demonstration~~timing ~~Plant~~thereof;

● our ability to ~~receive~~meet ~~the~~Demonstration ~~remaining~~Plant ~~uncollected~~project ~~funds~~objectives inwithin ~~connection~~our ~~with~~available ~~the~~funding ~~Wyoming~~and ~~Energy~~estimated ~~Authority (the “WEA”) grant for the Demonstration Plant~~timeline;

● our ~~ability~~estimates toregarding ~~operate~~ the ~~Demonstration~~source, ~~Plant~~quality, costs, and timing of materials, equipment, supplies and resources, including inhuman aresources, ~~manner~~for tothe ~~meet~~operation, and decommissioning of the ~~project~~Demonstration ~~objectives~~Plant, ~~within~~as ~~our~~well ~~funding~~as ~~capacity~~for production and ~~estimated~~quality ~~timeline~~of rare earth oxides and other products from the Demonstration Plant during the operations phase;

● our estimates regarding the source, quality, costs, and timing of materials, equipment, supplies and resources, including human resources, for the commissioning, operation, and decommissioning of the Demonstration Plant;

●

the Sundance Gold Project remaining on hold for the foreseeable future and our ability to advance or monetize it in the future;

● ~~our~~ plans ~~and~~for ~~strategies~~our ~~during~~projects ~~and~~or ~~following~~other ~~the~~interests, ~~completion of~~ operations ofor ~~the Demonstration Plant, including the potential for further operation of the Demonstration Plant to meet additional objectives and advancement opportunities~~rights;

● our plans and strategies ~~relating~~during toand following the ~~advancement~~completion of ~~the~~operations ~~Bear~~of ~~Lodge~~the ~~REE~~Demonstration ~~Project (as defined below)~~Plant, including ~~the~~with ~~restart~~respect ofto ~~the~~developing ~~permitting~~a mine and/or ~~licensing~~a ~~process~~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;

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● our plans and strategies to secure further funding for our longer-term business plans, including ~~the advancement of the Bear Lodge REE Project through permitting and licensing, and,~~ if feasible, ultimate construction and operations of a commercial mine and plant for sourcing, processing and separation of rare earth elements;

● the ~~prospects and~~ 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 ~~Form~~Quarterly ~~10-Q~~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 and similar statements reflect our beliefs and opinions on the relevant subject. These statements 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. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

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, ~~2024~~2025. The reports and documents filed by us with the SEC are available at www.sec.gov and with the Canadian securities regulatory authorities under the Company’s profile at www.sedarplus.ca.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RARE ELEMENT RESOURCES LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of U.S. dollars, except shares outstanding)


	~~September~~March 3031, ~~2025~~2026		December 31, ~~2024~~2025
	(unaudited)		(audited)
ASSETS:
CURRENT ASSETS
Cash and cash equivalents	$	2147,~~713~~141	$	2619,~~732~~315
Due from related party (Note 4)		12,~~614~~277		—1,614
Prepaid expenses and other		~~293~~288		~~215~~230
Total Current Assets		2349,~~620~~706		2621,~~947~~159

Building, net		80203		—209
Equipment, net		~~120~~104		65112
Restricted cash		~~200~~204		~~195~~202
Right of use asset (Note 6)		~~176~~170		~~238~~198
Land		2,240		2,240
Total Assets	$	2652,~~436~~627	$	2924,~~685~~120

LIABILITIES:
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	1,~~234~~455	$	1,~~059~~340
Due to related party (Note 4)		—		895
Lease liability, current (Note 6)		149		153
Lease liability, current (Note 6)		181		172
Total Current Liabilities		1,604		1,493
Total Current Liabilities		1,415		2,126

Reclamation obligation		185		185
Lease liability, long-term (Note 6)		2537		9861
Other long-term liabilities		92		92
Total Liabilities		1,~~717~~918		21,~~501~~831

Commitments and Contingencies (Note 8)

SHAREHOLDERS’ EQUITY:
Common shares, no par value – unlimited shares authorized; shares outstanding at September 30, 2025 and December 31, 2024 of 516,134,712 and 516,111,557, respectively		174,173		174,173
Common shares, no par value – unlimited shares authorized; shares outstanding at March 31, 2026 and December 31, 2025 of 645,368,390 and 516,134,712, respectively		204,726		174,173
Additional paid-in capital		29,106		29,~~102~~106
Accumulated deficit		(~~178~~183,~~560~~123)		(~~176~~180,~~091~~990)
Total Shareholders’ Equity		2450,~~719~~709		2722,~~184~~289

Total Liabilities and Shareholders’ Equity	$	2652,~~436~~627	$	2924,~~685~~120

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

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RARE ELEMENT RESOURCES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in thousands of U.S. dollars, except share and per share amounts)

(unaudited)


	Three Months Ended ~~September~~March 3031,				~~Nine Months Ended September 30,~~
	~~2025~~2026		~~2024~~2025		~~2025~~		~~2024~~
Operating income (expense):
Operating expenses:
Exploration and evaluation (See Note 4 for related party costs)	$	(1,~~494~~719)	$	(61,~~455~~877)	$	~~(1,201)~~	$	~~(15,179)~~
Corporate administration		(~~578~~580)		(~~569~~750)		~~(1,896)~~		~~(1,891)~~
Depreciation and amortization		(5041)		(45)		~~(144)~~		~~(111)~~
Total operating income (expense)		866		(7,069)		(3,241)		(17,181)
Total operating expenses		(2,340)		(2,672)

Non-operating income (expense):
Interest income		~~245~~213		~~414~~284		~~790~~		~~866~~
Grant income		—		2,000		—		2,000
Interest expense		(6)		(7)
Accretion expense		—		(70)		—		(212)
Total non-operating income		207		277
Interest expense		(5)		(9)		(18)		(24)

Gain on sale of equipment		—		—		—		12
Net loss	$	(2,133)	$	(2,395)
Total non-operating income		240		2,335		772		2,642


Loss per share - basic and diluted	$	(0.00)	$	(0.00)
Net income (loss)	$	1,106	$	(4,734)	$	(2,469)	$	(14,539)


Weighted average number of shares outstanding (See Note 7)		623,924,888		586,505,290
Loss per share - basic	$	0.00	$	(0.01)	$	(0.00)	$	(0.03)

Loss per share - diluted	$	0.00	$	(0.01)	$	(0.00)	$	(0.03)

Weighted average common shares - basic		516,134,712		511,111,557		516,131,196		480,133,103
Effect of employee/director stock-based awards		1,020,000		n/a		n/a		n/a
Weighted average common shares - diluted		517,154,712		511,111,557		516,131,196		480,133,103

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

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RARE ELEMENT RESOURCES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of U.S. dollars)

(unaudited)


	For the ~~nine~~three months ended ~~September~~March 3031,
	~~2025~~2026		~~2024~~2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,~~469~~133)	$	(142,~~539~~395)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and accretion expense		23		221
Depreciation expense		13		5
Right of use asset amortization		~~121~~28		~~102~~40
Lease liability		(123)		(92)
Stock-based compensation		—		4
Stock-based compensation		4		(42)
Other		13		—
Other		(12)		245
		(2,079)		(2,346)
		(2,456)		(14,105)

Changes in working capital:
Due from related party		(2,509)		44
Due to (from) related party		(663)		375
Prepaid expenses and other		(6770)		~~3,600~~40
Accounts payable and accrued liabilities		~~175~~115		~~1,284~~(296)
Net cash used in operating activities		(4,857)		(9,177)
Lease liability		(28)		(42)
Net cash used in operating activities		(2,725)		(2,269)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of equipment		—		12
Purchase of equipment		—		(59)
Purchase of equipment		(157)		(64)
Net cash used in investing activities		—		(59)
Net cash used in investing activities		(157)		(52)

CASH FLOWS FROM FINANCING ACTIVITIES:
Financing transaction, net		—30,478		~~35,286~~—
Net cash provided by financing activities		—		35,286
Stock option exercise		75		—
Net cash provided by financing activities		30,553		—

Net change in cash, cash equivalents and restricted cash		(527,~~014)~~828		26(2,~~057~~328)
Cash, cash equivalents and restricted cash- beginning of the period		2619,~~927~~517		326,~~819~~927
Cash, cash equivalents and restricted cash- end of the period	$	2147,~~913~~345	$	2924,~~876~~599

Supplemental cash flow disclosures:
Cash paid for taxes	$	—	$	—
Cash paid for interest	$	—	$	—

	As of ~~September~~March 3031,
	~~2025~~2026		~~2024~~2025
Reconciliation of amounts in the Balance Sheet to amounts in the Cash Flow Statement
Cash and cash equivalents	$	2147,~~713~~141	$	2924,~~683~~402
Restricted cash, long-term		~~200~~204		~~193~~197
Total of cash, cash equivalents and restricted cash - end of period	$	2147,~~913~~345	$	2924,~~876~~599

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

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RARE ELEMENT RESOURCES LTD.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Expressed in thousands of U.S. dollars, except share amounts)

(unaudited)


							Additional
							Paid in			Accumulated
		Number of Shares		Amount			Capital			Deficit			Total
Balance, December 31, 2024		516,111,557		$	174,173		$	29,102		$	(176,091)		$	27,184
Stock option exercise		23,155			—			—			—			—
Stock-based compensation		—			—			4			—			4
Net loss		—			—			—			(2,395)			(2,395)
Balance, March 31, 2025		516,134,712		$	174,173		$	29,106		$	(178,486)		$	24,793

Balance, December 31, 2025		516,134,712		$	174,173		$	29,106		$	(180,990)		$	22,289
2026 Rights Offering		129,033,678			30,478			—			—			30,478
Stock option exercises		200,000			75			—			—			75
Net loss		—			—			—			(2,133)			(2,133)
Balance, March 31, 2026		645,368,390		$	204,726		$	29,106		$	(183,123)		$	50,709


				Additional
				Paid in		Accumulated
	Number of Shares	Amount		Capital		Deficit		Total
Balance, June 30, 2024	511,111,557	$	172,223	$	29,094	$	(167,445)	$	33,872
Stock-based compensation	—		—		4		—		4
Net loss	—		—		—		(4,734)		(4,734)
Balance, September 30, 2024	511,111,557	$	172,223	$	29,098	$	(172,179)	$	29,142

Balance, June 30, 2025	516,134,712		174,173		29,106		(179,666)		23,613
Net income	—		—		—		1,106		1,106
Balance, September 30, 2025	516,134,712	$	174,173	$	29,106	$	(178,560)	$	24,719


				Additional
				Paid in		Accumulated
	Number of Shares	Amount		Capital		Deficit		Total
Balance, December 31, 2023	212,968,451	$	136,937	$	29,140	$	(157,640)	$	8,437
2024 Rights Offering	298,106,831		35,286		—		—		35,286
Stock option exercise	36,275		—		—		—		—
Stock-based compensation	—		—		(42)		—		(42)
Net loss	—		—		—		(14,539)		(14,539)
Balance, September 30, 2024	511,111,557	$	172,223	$	29,098	$	(172,179)	$	29,142

Balance, December 31, 2024	516,111,557	$	174,173	$	29,102	$	(176,091)	$	27,184
Stock option exercises	23,155		—		—		—		—
Stock-based compensation	—		—		4		—		4
Net loss	—		—		—		(2,469)		(2,469)
Balance, September 30, 2025	516,134,712	$	174,173	$	29,106	$	(178,560)	$	24,719

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2025~~2026

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

1. NATURE OF OPERATIONS

Rare Element Resources Ltd. (“we,” “us,” “RER” or the “Company”) was incorporated under the laws of the Province of British Columbia, Canada, on June 3, 1999.

~~RER~~The Company 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 having a favorable distribution of neodymium-praseodymium (NdPr), as well as a number of other critical REEs. Additionally, the Company has developed and enhanced, along with General Atomics and its affiliates, innovative and proprietary REE processing and separation capabilities, currently being tested at the Demonstration Plant (as defined below), for the processing of the Bear Lodge REE Project feed material and possibly feed materials from other sources.

If and when developed, the Bear Lodge REE Project will likely consist of a mine and a separation plant to produce a commercial NdPr product. As market conditions dictate, the Company will decide whether it is prudent to develop and put into production the mine and separation plant independent of each other or whether linking the two production processes into a single project is the more prudent path.

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 (the “Bear Lodge Property”). The Sundance Gold Project has been on hold since 2011 and will likely remain so for the foreseeable future, although with the ~~recent~~ rise in the price of gold, the Company may explore options to advance or monetize this asset.

The Company is currently focused on the advancement of a rare earth processing and separation demonstration-scale plant (the “Demonstration Plant”) ~~project~~. The Demonstration Plant will initially process already stockpiled high-grade sample materials from the Bear Lodge REE Project, and this may be expanded to the processing of feed materials from other sources at some future date. The Company is also focused on advancing the permitting and licensing of the Bear Lodge REE Project, specifically the mine and commercial processing facility.

In January 2021, a consortium of companies, of which the Company is a part, received notice from the Department of Energy (the “DoE”) that the consortium had been selected for negotiation of a potential financial award for the engineering, construction and operation of athe ~~rare~~Demonstration ~~earth~~Plant. ~~separation~~The ~~and~~financial ~~processing~~award ~~demonstration~~was ~~plant,~~finalized ~~which~~in isOctober ~~now the Demonstration Plant project~~2021. The ~~consortium~~Company’s ofcontractual ~~companies~~arrangement iswith ~~led by~~ General Atomics, an affiliate of Synchron, the Company’s majority shareholder, ~~and~~with ~~includes~~respect ~~certain~~to ~~of General Atomics’ affiliates, as well as~~ the ~~Company~~DoE ~~and LNV~~award, anwas ~~Ardurra~~entered ~~Group,~~into ~~Inc.~~in ~~company,~~December ~~as engineering and construction subcontractor~~2021. ~~The~~See ~~Company,~~Note as4 afor ~~subrecipient~~additional ofdetails ~~the~~regarding ~~award, along with~~ the ~~other~~ consortium ~~members~~arrangement, ~~commenced work on~~ the ~~planning~~Cooperative ~~and design of the Demonstration Plant project in November 2021~~Agreement, ~~with~~and the ~~Company’s~~Cost ~~contractual~~Share ~~arrangement~~Agreement with General Atomics ~~finalized in December 2021~~.

To address the Company’s funding needs, including the funding required for completion of the Demonstration Plant, the Company completed a third rights offering in March 2026 for gross proceeds of $30,968 (the “2026 Rights Offering”). See Note 7 for additional details regarding the terms of the 2026 Rights Offering and the planned use of proceeds. Previous rights offerings were completed by the Company in December 2021 (the “2021 Rights Offering”) and March 2024 (the “2024 Rights Offering”) for gross proceeds of approximately $25,400 and $35,800, respectively.

ToSince ~~address~~inception, the ~~Company’s~~General ~~funding~~Atomics-led ~~needs,~~consortium ~~including~~has ~~the~~experienced ~~funding~~rising ~~required~~project costs for the ~~non-federal share of the~~ Demonstration Plant ~~costs~~, ~~the~~including ~~Company~~increased ~~completed~~final ~~rights~~equipment ~~offerings~~costs, indue ~~December~~to ~~2021 (the “2021 Rights Offering”) and March 2024 (the “2024 Rights Offering”) for gross proceeds of approximately $25~~inflation,~~400~~ ~~and~~among ~~$35,800,~~other ~~respectively~~factors. The ~~original~~Company ~~$21,900~~currently ~~financial~~estimates ~~award from~~ the ~~DoE was expected to fund approximately one-half of the originally expected~~ total cost of the Demonstration Plant ~~project~~, ~~with~~from ~~the~~inception, ~~balance~~to ofbe ~~the~~approximately ~~required~~$77,500, ~~funding~~inclusive ~~being~~of ~~provided~~projected bycost ~~the~~through ~~Company~~completion ~~utilizing~~of the ~~proceeds~~Demonstration ~~from~~Plant’s ~~the~~operation ~~2021~~phase ~~Rights~~as ~~Offering,~~discussed ~~the~~below. ~~$4,400~~See ~~grant~~Note ~~from~~4 ~~the~~for ~~Wyoming~~additional ~~Energy~~details ~~Authority~~regarding (the ~~“WEA”)~~Demonstration asPlant ~~discussed~~budget, inDoE ~~Note~~funding 5commitments, and ~~other~~the ~~funding~~Cost ~~sources,~~Share ~~as necessary~~Agreement.

Since inception, the General Atomics-led consortium has seen increases in the Demonstration Plant’s project costs, including final equipment costs, due to, among other factors, inflation. As a result of these cost pressures, General Atomics, on behalf of the consortium, submitted to the DoE an updated Demonstration Plant construction and operations budget in 2024 of approximately $53,600, which is approximately 22% higher than the original budget of approximately $43,800. In response, the DoE pledged an additional commitment of $2,400 (increasing its total commitment to approximately $24,200) in September 2024 to help fund a portion of this budget increase, with the balance to be funded by the Company utilizing the proceeds from the 2024 Rights Offering, including any amounts in excess of the $53,600 revised budget total.

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2025~~2026

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

The Company currently estimates the construction cost of the Demonstration Plant from inception to be approximately $60,000, including the design review, upgrades and rework through 2025. Once in operation, the Company expects on-going costs of approximately $1,500 per month during 2026.

In December 2022, the Demonstration Plant achieved its final engineering design milestone, marking the DoE’s first go/no-go decision point. A second go/no-go gating milestone was achieved in December 2023 with the issuance by the DoE of a Project Continuation Notice, allowing for the construction of the Demonstration Plant.

In September 2024, the DoE issued its final Project Continuation Notice following its approval of the revised project budget of $53,600 and confirmation of readiness for the operations phase of the Demonstration Plant. This notice, along with the U.S. Nuclear Regulatory Commission’s (the “NRC”) operations approval under its previously issued license (received by the Company in October 2024), allowed for the commencement of Demonstration Plant operations.

Early in 2025, the Company identified several design and equipment issues during the Demonstration Plant’s operational acceptance testing phase, which followed the completion of construction activities. After identifying these issues, the Company assumed full control of the management of the project and initiated a complete design review in April 2025, which identified further operational and safety concerns. The implementation of corrective actions and upgrades commenced immediately thereafter and continued into early 2026. As a result, Demonstration Plant operations did not formally commence until March 2026.

The Company has incurred losses since its inception, and further losses are anticipated in the development of its business. As of March 31, 2026, the Company had cash and cash equivalents of $47,141. During the three months ended March 31, 2026, the Company consumed cash of $2,725 in its operating activities, primarily associated with the Demonstration Plant project activities and for the payment of the Company’s general and administrative expenses and other ongoing costs of sustaining its properties.

The Company currently estimates that with (i) the net proceeds of approximately $30,478 from the 2026 Rights Offering, (ii) the funds on hand prior to the closing of the 2026 Rights Offering, and (iii) the funds it still expects to receive from the DoE and WEA, that it will have sufficient funds to complete the operations stage of the Demonstration Plant, as currently planned, and the licensing and permitting for the Bear Lodge REE Project. Longer-term, in the event the Company cannot secure additional financial resources or complete a strategic transaction, the Company may need to curtail or suspend the development and commercialization of its Bear Lodge REE Project or other initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.

During the early part of 2025, several design and equipment issues were identified during the Demonstration Plant’s equipment testing phase, which followed the completion of construction activities. As a result of these issues, an as-built design review commenced in April 2025 and continues today. The Company now expects plant commissioning to start in late 2025 and commencement of plant operations to begin in the first quarter of 2026.

The Company has incurred losses since its inception, and further losses are anticipated in the development of its business. As of September 30, 2025, the Company had cash and cash equivalents of $21,713. During the nine months ended September 30, 2025, the Company consumed cash of $4,857 in its operating activities, primarily associated with the Demonstration Plant project activities and for the payment of the Company’s general and administrative expenses and other ongoing costs of sustaining its properties. The Company currently estimates the construction cost of the Demonstration Plant from inception to be approximately $60,000, including the design review, upgrades and rework through 2025. Once in operation, the Company expects ongoing cost of approximately $1,500 per month during 2026.

The funds raised by the Company in the 2024 Rights Offering are expected to support the initial operations of the Demonstration Plant as the Company gathers the information necessary for a commercialization decision. However, even with these funds and the expected receipt of the remaining WEA grant monies and DoE funds, the Company will still require additional funding in 2026 to support a full 12-month optimal operation period and to advance other key technology initiatives, including recycle and waste minimization, processing feed from other sources, and heavy rare earth element (“HREE”) separation. Additionally, substantial additional funds will be required to complete the permitting and licensing, and ultimate construction and operation of a commercial mine and plant for the Bear Lodge REE Project. Ultimately, in the event the Company cannot secure additional financial resources, or complete a strategic transaction in the longer term, the Company may need to curtail or suspend the development and commercialization of its Bear Lodge REE Project or other initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.

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 the Company’s audited consolidated financial statements as of December 31, ~~2024~~2025, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025. 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~~March 3031, ~~2025~~2026, and the results of its operations and cash flows for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025 in conformity with U.S. GAAP on a going concern basis. These interim results of operations for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 may not be indicative of the results that will be realized for the full year ending December 31, ~~2025~~2026.

Loss per Share

Loss per share is computed using the weighted average number of shares outstanding during the period. In March 2026, the Company completed the 2026 Rights Offering (see Note 7) whereby the Company offered existing shareholders the right to purchase additional common shares at $0.24 per share (the “Offer Price”). Because the Offer Price was significantly lower than the market trading price of the common shares at that time, the discounted Offer Price was considered a bonus element, similar to a stock dividend. As a result, the loss per share calculations for the three months ended March 31, 2026 and 2025 have been adjusted retroactively to include the impact of the bonus element.

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2025~~2026

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

~~Research~~As &of ~~Development~~March ~~(“R&D”)~~31, ~~Expenditures~~2026 and 2025, 820,000 and 1,020,000, respectively, potentially dilutive stock options were considered anti-dilutive and excluded from the Company’s loss per share calculations because the Company was in a net loss position for those periods.

Materials, equipment, and facilities acquired or constructed for R&D activities associated with the Company’s Demonstration Plant project are expensed as incurred. These materials, equipment and facilities are not expected to have an alternative future use beyond the end of the current Demonstration Plant project.

Restricted Cash

The Company periodically maintains cash deposits that are held and earmarked for a specific purpose. At September 30, 2025, the Company had $200 in restricted cash for amounts held by a third party as security for a surety bond for the Demonstration Plant.

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~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025 are presented in the following table:


Fair value at September 30, 2025
Fair value at March 31, 2026
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	2117,~~623~~229	$	2117,~~623~~229	$	—	$	—
U.S. Treasury bills		29,853		29,853		—		—

Fair value at December 31, 2024
Fair value at December 31, 2025
	Total		Level 1		Level 2		Level 3
Assets:
Money market funds	$	2619,~~449~~315	$	2619,~~449~~315	$	—	$	—

Money market funds are valued at cost, which approximates fair value. These amounts are included on the balance sheet in cash and cash equivalents at ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025.

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. This consortium of companies is led by General Atomics, an affiliate of Synchron (the Company’s majority shareholder). 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. Under this original proposal, the DoE’s share of the Demonstration Plant project funding was estimated at $21,900 and represented approximately one-half of the total originally estimated costs for the project. The DoE agreement was executed by the DoE’s grants/agreement officer on September 27, 2021, with an effective 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

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2025~~2026

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

This consortium of companies is led by General Atomics, an affiliate of Synchron (the Company’s majority shareholder), and includes certain of General Atomics’ affiliates, as well as the Company 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~~. Under this original proposal, the DoE’s share of the Demonstration Plant project funding was estimated at $21,900 and represented approximately one-half of the total originally estimated costs for the project. The DoE agreement was executed by the DoE’s grants/agreement officer on September 27, 2021, with an effective 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~~ provided that up to approximately $43,800 in allowable costs for the Demonstration Plant were to 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 the 50% of the non-federal funds incurred by, and on behalf of, General Atomics for the design, construction, and operation of the Demonstration Plant under the Cooperative Agreement. The Demonstration Plant will process already stockpiled high-grade sample materials from the Bear Lodge REE Project.

On March 17, 2022, the Company executed a subcontract purchase order in the amount of $5,318 with General Atomics under which the Company agreed to provide certain services and materials to the Demonstration Plant project, including, but not limited to, providing the plant’s sample materials, engaging in site location leases and other logistics, providing operational support, and providing decommissioning, bonding and other Demonstration Plant support activities (the “Subcontract Purchase Order”). In connection with the Subcontract Purchase Order, the Company submitted monthly invoices to General Atomics for the subcontracted services performed, which were reimbursed by General Atomics with one-half of the funds coming from funds advanced by the Company under the Cost Share Agreement and, up to the original Demonstration Plant budget, one-half of the funds from the DoE.

Due to inflationary cost pressures on labor, equipment, and consumables, as well as cost increases associated with certain optimized plant engineering and design parameters, General Atomics, on behalf of the consortium, submitted to the DoE an updated Demonstration Plant project budget of approximately $53,600, which iswas approximately 22% higher than the original budget of approximately $43,800. In response, the DoE pledged an additional cost-share funding commitment of $2,400 to fund a portion of the budget increase, with the balance coming from the Company, including any amounts in excess of the $53,600 revised budget total. The Company currently estimates the ~~construction~~total cost of the Demonstration Plant, from inception, to be approximately $6077,~~000~~500, ~~including~~inclusive ~~the~~of ~~design~~cost ~~review,~~estimates ~~upgrades and rework~~ through ~~2025.~~completion ~~Once~~of ~~in operation,~~ the ~~Company~~Demonstration ~~expects~~Plant’s ~~ongoing~~operations ~~cost of approximately $1,500 per month during 2026~~phase.

On May 16, 2024, the Company and General Atomics entered into an extension agreement to the Cost Share Agreement (the “Extension Agreement”) under which the Company agreed to make additional cash advances, of up to $2,500, to General Atomics while the parties progressed an amended project funding agreement covering the Company’s share of the additional non-federal project funding needed for the project’s completion. Pursuant to the terms of the Cost Share Agreement and Extension Agreement, the Company had advanced payments to General Atomics, as leader of the consortium, totaling $24,200 through October 31, 2024, the maximum amount of advances authorized under these agreements. In November 2024, General Atomics subsequently returned approximately $3,811 of the amounts previously funded by the Company under the Cost Share Agreement, which were used by the Company, in part, to make payments to certain other contractors for work under the Cost Share Agreement. The payments to these other contractors, all made in November 2024 and on General Atomics’ behalf, totaled to $4,746. The Company and General Atomics expect to enter into an amended Cost Share Agreement in the fourth quarter of 2025, if necessary, to cover the non-federal portion of the DoE approved project budget of $53,600.

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. The novation process, which is underway and is expected to be completed during 2026, will not change the intellectual property rights held by Synchron and its affiliates in the ~~end~~Company’s ofintellectual ~~2025~~property. Once the novation process is complete, 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 of the Demonstration Plant under an amended or separate financial assistance agreement.

The DoE has allowed the novation process to progress even though the financial assistance agreement’s term expired on September 30, 2025. If a novation is not completed, the DoE award to General Atomics could be terminated, and final disposition of the assets and decommissioning activities would be negotiated with the DoE. Although the Company expects the novation process to be completed in 2026, there is no assurance of the process progressing in a timely manner or being completed at all.

Since inception, the Company has (i) advanced $20,389 in funds to General Atomics under the Cost Share Agreement, (ii) paid an additional $4,746 on General Atomics’ behalf to certain contractors for work performed under the Cost Share Agreement and (iii) paid

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2025~~2026

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

directly another $13,908 in Demonstration Plant project costs. Inclusive of all amounts incurred since project inception, a total of $59,498 has been expended by the Company on the Demonstration Plant through March 31, 2026.

The ~~DoE~~following ~~has~~table ~~allowed~~summarizes the ~~novation~~related ~~process~~party toreceivable ~~progress~~activity ~~even~~with though the financial assistance agreement’s term expired on September 30, 2025. During the novation process, the U.S. government failed to finalize a continuing budget resolution, meaning federal workers were furloughed, delaying the novation process. If a novation is not completed, the DoE award to General Atomics ~~could~~for bereimbursable ~~terminated,~~costs ~~and~~incurred ~~final~~by ~~disposition of~~ the ~~assets~~Company ~~would~~under ~~be negotiated with~~ the ~~DoE.~~Cost ~~Although~~Share ~~the~~Agreement ~~Company~~for ~~expects~~ the ~~novation~~three ~~process~~months toended beMarch ~~completed in late 2025~~31, ~~there is no assurance of the process progressing in a timely manner or being completed at all.~~ 2026:


Balance of receivables due from General Atomics at beginning of period	$	1,614
Reimbursable costs invoiced by the Company during the period		663
Balance of receivables due from General Atomics at end of period	$	2,277

Since inception, the Company has advanced $20,389 in funds to General Atomics under the Cost Share Agreement, has paid an additional $4,746 on General Atomics’ behalf to certain contractors for work performed under the agreement and has paid directly another $8,990 in Demonstration Plant project costs. Inclusive of all amounts incurred since project inception, a total of $56,699 has been expended on the Demonstration Plant through September 30, 2025.

The following table summarizes the transactions under the Cost Share Agreement during the nine months ended September 30, 2025 and the year ended December 31, 2024:


	Nine Months Ended September 30, 2025		Year Ended December 31, 2024
Balance of funds owing to (remaining on deposit with) General Atomics as a related party balance at beginning of period	$	895	$	(3,435)
Funds transferred to General Atomics during the period		—		(8,500)
Funds returned by General Atomics during the period		—		3,811
The Company's share of Demonstration Plant project costs incurred during the period (1)		(2,509)		9,019
Balance of funds owing to (due from) General Atomics as a related party balance at end of period	$	(1,614)	$	895

(1) The total for the nine months ended September 30, 2025 is negative due to the Company’s invoicing to General Atomics under the Cost Share Agreement during the nine-month period of certain prior period Demonstration Plant expenses. Formerly, these expenses were excluded from the Company’s billings under the Cost Share Agreement. The Company’s earlier decision to exclude these otherwise eligible costs from its billings to the Demonstration Plant project reflected the Company’s belief at the time that these costs would cause the original Cost Share Agreement award of $43,800 being exceeded, and therefore not recoverable. The subsequent increase in the Cost Share Agreement award to $53,600 led to the re-evaluation of this earlier decision and the decision to invoice the project for certain of these prior period expenses, which it did in the third quarter of 2025, and which resulted in the Company’s share of the Demonstration Plant project costs for the nine months ended September 30, 2025 being negative.

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2025

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

5. WYOMING ENERGY AUTHORITY GRANT

In June 2023, the Company, and the WEA entered into a Funding Agreement (the “WEA Funding Agreement”) pursuant to which the WEA agreed to fund, subject to certain conditions, a $4,400 grant to the Company, the proceeds of which are to be used for the Demonstration Plant. Pursuant to the WEA Funding Agreement, the grant is to be paid upon the WEA’s receipt of invoices from the Company detailing its actual expenses relating to the Demonstration Plant (half of which funds will be allocated to two milestone periods during the development process), less a 10% retainer, the payment of which is conditioned upon the WEA’s receipt, following the commencement of the Demonstration Plant’s operations, of an invoice and the Company’s final executive summary report in a form to be approved by the WEA. Pursuant to the WEA Funding Agreement, the funding for the Demonstration Plant will be provided to the WEA from the Energy Resources Council (the “ERC”) and is further conditioned upon the availability of government funds that are appropriated or allocated for the payment of the grant and which may be limited for any reason, including congressional, legislative, gubernatorial, or administration action.

The WEA Funding Agreement will terminate when the funding has been fully disbursed, but no later than June 30, 2026, unless terminated sooner by either party in accordance with the terms of the WEA Funding Agreement. The WEA Funding Agreement may be terminated (i) by either party if the WEA does not receive the requested funding from the ERC or if the grant funds are not allocated or available for the continued performance of the WEA Funding Agreement, or (ii) by the WEA immediately for cause if the Company fails to perform in accordance with the terms of the WEA Funding Agreement.

As of December 31, 2023, the Company had met the conditions allowing for the invoicing of $2,000 of the $4,400 WEA grant total. This $2,000 was subsequently received on January 31, 2024. By September 30, 2024, the Company had met the conditions allowing for the invoicing of an additional $2,000, which was subsequently received in November 2024. The remaining $400 of the $4,400 grant total, which is conditioned on the achievement of other, future milestones, will be invoiced to the WEA once those final milestones have been achieved, which are currently expected to occur in ~~early~~ mid-2026.

6. LEASES

~~The~~Effective ~~Company~~September ~~accounts~~21, ~~for~~2021, ~~leases~~the inCompany ~~accordance~~entered ~~with~~into ~~ASC 842~~a ~~– Leases. This~~lease ~~accounting~~agreement ~~standard requires all lessees to record~~ (the ~~impact~~“Property ofLease”) ~~leasing~~for ~~contracts~~real onproperty, ~~the~~including ~~balance~~land ~~sheet as a right to use asset~~ and ~~corresponding~~buildings ~~liability.~~in ~~This~~Upton, isWyoming ~~measured~~for ~~by taking~~ the ~~present~~Demonstration ~~value~~Plant. ofThe ~~the~~Property ~~remaining~~Lease, ~~lease~~which ~~payments~~had ~~over~~an ~~the~~initial ~~lease~~12-month term, ~~and~~allows ~~recording~~for aannual ~~right~~renewals, towhich ~~use~~at ~~asset~~the ~~and~~Company’s ~~corresponding~~option ~~lease~~can ~~obligation~~be renewed for ~~lease~~as ~~payments.~~long ~~Rent~~as ~~expense is realized on a straight-line basis and~~ the ~~lease~~facility ~~obligation~~ is ~~amortized based on the effective interest method~~needed. ~~The~~In ~~amounts~~June ~~recognized~~2025, ~~reflect~~ the ~~present~~Property ~~value~~Lease ofwas ~~the~~renewed, ~~remaining~~extending ~~lease~~the ~~payments~~termination ~~for~~date ~~all~~to ~~leases~~September ~~that~~30, ~~have~~2026 aand ~~lease~~another ~~term greater than~~ 12-month ~~months.~~extension ~~The~~is ~~discount~~expected ~~rate~~in ~~used~~June is2026 anextending ~~estimate of~~ the ~~Company’s incremental borrowing rate based on information available at~~ lease ~~commencement~~through inSeptember ~~determining~~30, ~~the present value of lease payments~~2027.

InThe ~~considering~~Property ~~the~~Lease, ~~lease~~which ~~asset~~is ~~value,~~classified ~~the~~as ~~Company~~an ~~considers~~operating ~~fixed~~lease, orgenerally ~~variable~~provides ~~payment~~for ~~terms,~~base ~~prepayments~~rent, and ~~options~~requires the Company to ~~extend~~pay all insurance, ~~terminate~~personal orproperty ~~purchase.~~taxes ~~Renewal,~~on ~~termination,~~any structure or ~~purchase~~improvements ~~options~~made ~~affect~~by the ~~lease~~Company ~~term~~and ~~used~~other maintenance costs. The Property Lease provides for ~~determining~~an ~~lease~~annual ~~asset~~cost of living adjustment but contains no residual value ~~only~~guarantees ifor restrictive covenants. Pursuant to the ~~option~~Property Lease, the Company is ~~reasonably~~obligated to remove certain toCompany completed property improvements, though those items requiring removal, if any, will be ~~exercised.~~confirmed with the lessor prior to the termination of the Property Lease.

Effective September 21, 2021, the Company entered into a lease agreement (the “Property Lease”) for real property, including land and buildings in Upton, Wyoming for the Demonstration Plant. The Property Lease is a 12-month lease with annual renewal terms, which at the Company’s option can be renewed for as long as the facility is needed. In June 2025, the Property Lease was renewed, extending the termination date to September 30, 2026. The Property Lease, which is classified as an operating lease, generally provides for base rent, and requires the Company to pay all insurance, personal property taxes on any structure or improvements made by the Company and other maintenance costs. The Property Lease provides for an annual cost of living adjustment, but contains no residual value guarantees or restrictive covenants. Pursuant to the Property Lease, the Company is obligated to remove certain Company completed property improvements, though those items requiring removal, if any, will be confirmed with the lessor prior to the termination of the Property Lease.11

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2025~~2026

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

OnFor ~~May~~purposes ~~14,~~of ~~2024,~~ the ~~Company~~following ~~entered into a second lease agreement for modular office units for use at its Demonstration Plant site in Upton~~table, ~~Wyoming~~payments (under the ~~“Office~~Property Lease~~”).~~ ~~The~~are ~~Office~~assumed ~~Lease,~~to ~~which~~run ~~was~~through ~~for~~September ~~an initial 12-month term and provides for monthly extension options thereafter~~30, is2027. If ~~classified~~the ascompletion anof ~~operating lease, and generally provides for base rent, and requires~~ the ~~Company~~Demonstration toPlant ~~pay~~operations ~~all~~dictates ~~insurance,~~further ~~property~~extensions ~~taxes~~beyond ~~and~~this ~~other applicable costs~~date, ~~including~~ the ~~transportation~~Company ~~charges~~may toextend ~~return~~ the ~~units~~term ~~to their original point~~ of ~~origin~~the inProperty ~~an amount not to exceed $7~~Lease.

~~For~~Total ~~purposes~~future ofminimum ~~the~~lease ~~following table,~~ payments under the Property Lease ~~and~~as ~~Office~~of ~~Lease~~March ~~are assumed to run through September 30, 2026 and December~~ 31, 2026, ~~respectively. If~~were ~~the~~as ~~completion of the Demonstration Plant operations dictates further extensions beyond these dates, the Company may seek to extend the term of one or both lease agreements accordingly.~~ follows:

Total future lease payments under the Company’s leases as of September 30, 2025 are as follows:


2025	$	57
2026	$	101
2026		161
2027		101
Total lease payments		~~218~~202
Less interest		(1216)
Present value of lease payments(1)	$	~~206~~186

(1) As of ~~September~~March 3031, ~~2025~~2026, $~~181~~149 was included in current liabilities and $2537 was included in non-current liabilities.

For the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, $~~123~~28 was included in operating cash flows for amounts paid for operating leases.

As of September 30, 2025 the weighted average lease term for the Company’s operating leases was one year (including expected renewal options) and the weighted average discount rate was estimated at 12%.

For the three months ended March 31, 2026, the Company incurred interest expense on lease liabilities of $6 and right of use asset amortization expense of $28.

As of March 31, 2026, the weighted average lease term for the Company’s operating lease was 1.5 years (including expected renewal options) and the weighted average discount rate was estimated at 12%.

7. SHAREHOLDERS’ EQUITY

Stock-based compensation

As of ~~September~~March 3031, ~~2025~~2026, the Company had 2,685,000 issued and outstanding stock options that were issued under the 10% Rolling Stock Option Plan, as amended and restated (the “2011 Plan”) and 1820,~~020,~~000 issued and outstanding stock options that were issued under its 2022 Equity Incentive Plan (the “2022 Plan”).

The 2011 Plan was replaced in 2022 by the 2022 Plan and, as such, no additional stock options can be granted under the 2011 Plan. The maximum term of any stock option grant under the 2011 Plan was 10 years.

Under the 2022 Plan, as approved by the Company’s shareholders at the annual meeting of shareholders on August 23, 2022, the Board of Directors (the “Board”) is authorized to grant stock options, stock appreciation rights, restricted stock units, performance stock units and other cash and share-based awards to eligible directors, officers, employees, or consultants up to a maximum of 17,236,689 common shares. The maximum term of any grant under the 2022 Plan is 10 years.

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2025~~2026

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

The following table summarizes the Company’s stock option activity for each of the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025:


	~~Nine~~Three Months Ended ~~September~~March 3031,
	~~2025~~2026			~~2024~~2025
		Weighted			Weighted
		Average			Average
	Number of Stock	Exercise		Number of Stock	Exercise
	Options	Price		Options	Price
Outstanding, beginning of period	43,~~405~~705,000	$	1.2432	4,~~725~~405,000	$	1.1824
Exercised	(~~400~~200,000)	$	0.8338	(50400,000)	$	0.0783
Cancelled/Expired	~~(300,000)~~—	$	~~0.83~~—	(~~270~~300,000)	$	0.4283
Outstanding, end of period	3,~~705~~505,000	$	1.3237	43,~~405~~705,000	$	1.2432

Exercisable, end of period	3,~~705~~505,000	$	1.3237	43,~~363~~705,~~333~~000	$	1.2432
Non-vested, end of period	—	$	—	~~41,667~~—	$	~~1.20~~—

~~The~~On ~~400~~January 28,~~000~~ ~~options~~2026, ~~exercised~~being ~~during~~ the ~~nine~~exercise ~~months ended September 30~~date, ~~2025, resulted in~~ the ~~issuance of 23~~200,~~155~~000 ~~common~~options ~~shares~~exercised onduring athe ~~net~~three ~~settlement~~months ~~basis.~~ended ~~On February 13~~March 31, ~~2025~~2026, ~~being the exercise date, these 400,000 options~~ had an intrinsic value of $20108.

The following table summarizes the intrinsic value and weighted average remaining life for stock options as of ~~September~~March 3031, ~~2025~~2026:


			Weighted
			Average
			Remaining
As of September 30, 2025:		Intrinsic Value (1)	Life (Years)
As of March 31, 2026:		Intrinsic Value (1)	Life (Years)
Stock options outstanding	$	~~510~~320	65.48
Stock options exercisable	$	~~510~~320	65.48

(1) Intrinsic value is a measure of the value of those in-the-money stock options at ~~September~~March 3031, ~~2025~~2026, where (i) in-the-money value is determined by comparing the option’s exercise price to the Company’s closing share price on ~~September~~March 3031, ~~2025~~2026 and (ii) only options having an exercise price less than the Company’s closing share price on ~~September~~March 3031, ~~2025~~2026 are deemed to have an intrinsic or inherent value.

Stock-based compensation expense is included in corporate administration expenses within the Company’s interim condensed consolidated statements of operations. For the three ~~and nine~~ months ended ~~September~~March 3031, 2026 and 2025, the Company recognized stock-based compensation expense of $nil and $4, respectively. For the three and nine months ended September 30, 2024, the Company recognized stock-based compensation expense of $4 and $(42), respectively. The negative expense for the nine months ended September 30, 2024 was due to the forfeiture of certain stock options that resulted in the reversal of previously recognized stock-based compensation expense.

As of ~~September~~March 3031, ~~2025~~2026, all outstanding stock options are fully vested and exercisable.

2026 Rights Offering

On March 4, 2026, the Company completed the 2026 Rights Offering for gross proceeds of $30,968 in which each holder of the Company’s common shares as of the record date of January 30, 2026, was eligible to participate. Terms of the 2026 Rights Offering included the issuance of twenty-five hundredths (or 0.25) of a subscription right for each common share owned by each 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”). For any holder exercising its Basic Subscription Privilege in full, the holder could also exercise an oversubscription privilege to purchase additional common shares that were unsubscribed for at the expiration of the 2026 Rights Offering, subject to availability and pro rata allocation of shares among persons exercising the oversubscription privilege. The 2026 Rights Offering, which generated $30,478 in net proceeds after deducting $490 in transactions costs, resulted in the issuance of 129,033,678 common shares of the Company.

8. COMMITMENTS AND CONTINGENCIES

Potential environmental contingency

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RARE ELEMENT RESOURCES LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2025~~2026

(all amounts stated in thousands of U.S. dollars except share and per share amounts)

(unaudited)

~~with~~The ~~such~~net ~~laws~~proceeds ~~and~~from ~~regulations.~~the ~~The~~2026 ~~ultimate~~Rights ~~amount~~Offering ofwill ~~reclamation~~be ~~and~~used ~~other~~to ~~future~~support ~~site-restoration~~(i) ~~costs~~the tocontinued beoperation ~~incurred~~of the Demonstration Plant; (ii) the advancement of projects for ~~existing~~the ~~mining~~as-constructed ~~interests~~Demonstration isPlant ~~uncertain and~~beyond ~~may~~the ~~exceed~~current neodymium/praseodymium (Nd/Pr) separation objectives, including applying the ~~Company’s~~technology ~~estimates~~to the separation of ~~these~~heavy ~~costs,~~REEs ~~which~~(“HREEs”) atand ~~September~~to ~~30,~~third-party ~~2025~~feed sources; (iii) the completion of federal and ~~2024~~state ~~were~~permitting ~~estimated~~and atlicensing ~~$185~~for the Bear Lodge REE Project; and ~~$182,~~(iv) ~~respectively~~for other general corporate purposes.

Loss per Share

After adjustment for the bonus element included in the 2026 Rights Offering (see Note 2), the weighted average number of shares outstanding used in the Company’s loss per share calculations for the three months ended March 31, 2026 increased from 553,548,886 shares to 623,924,888 shares and for the three months ended March 31, 2025 from 516,114,475 shares to 586,505,290 shares.

8. COMMITMENTS AND CONTINGENCIES

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 associated with the Company’s existing mining interests is uncertain and may exceed current estimates. As of March 31, 2026 and December 31, 2025, these costs were estimated at $185 for each respective period.

Contract commitment – related party

Pursuant to the Cost Share Agreement between the Company and General Atomics, as extended and as expected to be amended in ~~the fourth quarter of 2025~~2026, if required, ~~and~~(see ~~as discussed in~~ Note 4), the Company has agreed to assume and pay for certain allowable costs under the DoE-approved Demonstration Plant budget incurred by General Atomics and the other consortium members for the design, construction, operation, and decommissioning of the Demonstration Plant.

9. GEOGRAPHIC AND SEGMENT INFORMATION

The Company ~~has~~operates ~~one~~in a single reportable operating segment: that segment being minerals exploration and development. The Company’s ~~seeks~~sole tominerals ~~advance~~exploration ~~and~~property ~~develop~~is its Bear Lodge ~~REE Project~~Property, ~~which~~located ~~could~~near ~~lead~~the totown ~~the~~of ~~future~~Sundance ~~production~~in the state of ~~REEs~~Wyoming. orThe ~~other~~segment, ~~value-adding~~which ~~strategic~~includes ~~transactions. These~~the ~~activities~~Demonstration ~~are~~Plant ~~currently~~project, ~~focused~~does innot ~~the~~presently ~~State~~generate ofany ~~Wyoming~~revenues and is not in commercial operation. The Company’s ~~reported~~chief noexecutive ~~revenues~~officer, ~~during~~who is the ~~three~~chief ~~and~~operating ~~nine~~decision ~~months~~maker, ~~ended~~reviews ~~September~~financial ~~30,~~information ~~2025~~on ~~and~~an ~~2024.~~aggregate ~~The~~basis ~~operating~~for ~~segment’s~~evaluating ~~chief~~financial ~~decision~~performance. All ~~maker~~of is the Company’s ~~Chief~~long-lived ~~Executive~~assets ~~Officer~~are ~~(“CEO”)~~associated with its Bear Lodge Property and are located in the United States.

10. SUBSEQUENT EVENTS

None.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of the consolidated financial results and condition of Rare Element Resources Ltd. (collectively, “we,” “us,” “our,” “RER” or the “Company”) for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026, has been prepared based on information available to us as of ~~November~~May 513, ~~2025~~2026. This discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included herewith and the audited Consolidated Financial Statements of RER for the year ended December 31, ~~2024~~2025, and the related notes thereto filed with our Annual Report on Form 10-K for the year ended December 31, 2025, which have been prepared in accordance with U.S. GAAP. This discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results, performance, or achievements may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth elsewhere in this ~~report~~Quarterly Report. See “Cautionary Note Regarding Forward-Looking Statements.”

All currency amounts are expressed in thousands of U.S. dollars, unless otherwise noted.

Overview and Outlook

Our primary focus ~~has~~is ~~been~~on ~~and continues to be~~ the ~~engineering, permitting, licensing, construction, and~~ operation of the Demonstration Plant~~. If successful~~, ~~the~~and ~~Demonstration~~as ~~Plant~~of ~~will~~late ~~show~~2025, ~~that~~the ~~our~~resumption ~~proprietary~~of ~~extraction~~licensing ~~technology is able to process~~ and ~~separate~~permitting ~~certain~~activities ~~REEs~~for ~~from high grade sample materials extracted from~~ our Bear Lodge REE Project. inThe alicensing ~~more efficient~~ and ~~economical~~permitting ~~manner~~efforts ~~than~~are ~~traditional~~expected ~~REE processing methods and will serve as a precursor~~ to ~~inform~~continue ~~the~~into ~~design~~early ~~and estimated cost for a future full-scale production facility~~2028.

InIf ~~September 2024~~successful, the ~~DoE issued its final Project Continuation Notice, confirming the~~ Demonstration Plant’s ~~readiness~~will ~~for~~show ~~operations.~~that ~~This~~our ~~notice,~~proprietary ~~along~~extraction ~~with~~technology ~~the~~is ~~NRC’s~~able ~~approval of operations received in October 2024, cleared the path for operations of the Demonstration Plant~~ to ~~formally commence, with operations to~~ process and separate ~~the~~certain ~~REE~~REEs from ~~the already stockpiled~~ high- grade sample materials extracted from ~~the~~our Bear Lodge REE Project toin ~~follow~~a ~~the~~more ~~completion~~efficient ~~of construction~~ and ~~pre-operation~~economical ~~activities.~~manner ~~During~~than ~~the~~traditional ~~first~~REE ~~nine~~processing ~~months~~methods ofand ~~2025,~~will ~~the~~serve ~~Company,~~as ~~along~~a ~~with~~precursor ~~the~~to ~~other~~inform ~~consortium members, continued their work on~~ the ~~Demonstration~~design ~~Plant project as described below,~~ and ~~this~~estimated ~~work~~cost isfor ~~expected~~a tofull-scale ~~continue~~production ~~until the completion of the project’s operations~~facility.

In ~~early~~September ~~2025~~2024, ~~several~~the ~~design~~DoE ~~and~~issued ~~equipment~~its ~~issues~~final ~~were~~Project ~~identified~~Continuation ~~during~~Notice, confirming the Demonstration Plant’s ~~equipment~~readiness ~~testing~~for ~~phase~~operations. This notice, ~~which~~along ~~followed~~with the ~~completion~~NRC’s approval of ~~construction~~operations ~~activities.~~received Asin aOctober ~~result of these issues~~2024, ancleared ~~as-built~~the ~~design~~path ~~review~~for ~~was~~operations ~~commenced~~of inthe ~~April~~Demonstration ~~2025.~~Plant ~~The~~to ~~Company~~formally ~~now~~commence, ~~expects~~with ~~plant~~operations ~~commissioning~~ to ~~start~~process inand ~~late~~separate ~~2025~~REEs ~~and~~from ~~commencement~~the ofpreviously ~~plant~~stockpiled ~~operations~~high-grade tosample ~~begin~~materials infrom the ~~first~~Bear ~~quarter~~Lodge ofREE ~~2026~~Project. During the ~~production~~three ~~phase~~months ended March 31, 2026, the Company continued work on the Demonstration Plant project as described below, and this work is expected to ~~produce~~continue upuntil tothe 10completion ~~tons~~ of ~~NdPr~~the ~~oxide~~Demonstration Plant’s operations.

In ~~June~~early ~~2023~~2025, ~~the~~several ~~Company~~design entered into the WEA Funding Agreement for its previously announced award of a $4,400 grant from the WEA to be used toward the advancement of the Demonstration Plant. This award, along with funds contributed by the Company and ~~the~~equipment ~~DoE,~~issues iswere ~~being~~identified ~~used~~during ~~to fund~~ the Demonstration Plant’s ~~construction~~equipment ~~and~~testing ~~operating costs~~phase. As a result of ~~December 31,~~these ~~2023~~issues, ~~the~~we ~~Company~~initiated ~~had~~an ~~met~~as-built ~~the~~design ~~conditions~~review ~~allowing~~in ~~for~~April ~~the~~2025. ~~invoicing~~Following ~~of $2,000 of~~ the ~~$4,400~~review ~~WEA~~and ~~grant~~related ~~total.~~project ~~This $2~~rework,~~000~~ ~~was~~Demonstration ~~subsequently~~Plant ~~received~~operations onformally ~~January 31,~~commenced ~~2024.~~in ByMarch ~~September~~2026 ~~30,~~and ~~2024,~~are ~~the~~expected ~~Company~~to ~~had~~continue ~~met the conditions allowing~~ for ~~the~~up ~~invoicing~~to of12 ~~an additional $2,000, which was subsequently received in November 2024~~months. ~~The~~During ~~remaining $400 of~~ the ~~$4,400~~operations ~~grant total~~phase, ~~which is conditioned on~~ the ~~achievement~~Demonstration ofPlant ~~other,~~is ~~future~~expected ~~milestones, will be invoiced~~ to ~~the~~produce ~~WEA~~up ~~once those final milestones have been achieved, which are currently expected~~ to ~~occur~~10 intons ~~early~~of ~~2026~~NdPr oxide.

~~Since~~In ~~inception~~June 2023, the ~~General~~Company ~~Atomics-led~~entered ~~consortium~~into ~~has~~the ~~seen~~WEA ~~increases~~Funding inAgreement ~~the~~for ~~Demonstration~~a ~~Plant project costs~~$4,400 ~~including~~grant ~~final~~from ~~equipment~~the ~~costs,~~WEA ~~due~~ to, ~~among~~be ~~other~~used ~~factors,~~toward ~~inflation.~~the Asadvancement ~~a result~~ of ~~these cost pressures, General Atomics, on behalf of~~ the ~~consortium, submitted to the DoE an updated~~ Demonstration Plant. ~~construction~~As ~~and operations budget~~ of ~~approximately~~March 31, ~~$53~~2026,~~600,~~ ~~which is approximately 22% higher than~~ the ~~original~~Company ~~budget~~had ofreceived ~~approximately~~ $434,~~800.~~000 Inof ~~response,~~ the ~~DoE pledged an additional commitment of~~ $24,400 toWEA ~~help~~grant ~~fund~~total. aThe ~~portion~~remaining of$400 ~~this budget increase, with the balance to be funded by the Company, including any amounts in excess~~ of the $534,~~600~~400 ~~revised~~grant ~~DoE~~total, ~~approved~~which ~~budget~~is ~~total.~~conditioned ~~The~~on ~~Company~~Demonstration ~~currently~~Plant ~~estimates~~operations ~~the~~and ~~construction~~a ~~cost~~report ofto the ~~Demonstration~~WEA, ~~Plant~~is ~~from~~currently ~~inception~~expected to be ~~approximately~~invoiced ~~$60,000,~~in ~~including the design review, upgrades and rework through 2025~~mid-2026. ~~Once~~See inNote ~~operation,~~5 to the ~~Company~~Condensed ~~expects~~Consolidated ~~ongoing~~Financial ~~cost~~Statements offor ~~approximately~~additional ~~$1,500~~details ~~per~~regarding ~~month~~the ~~during~~WEA ~~2026~~Funding Agreement.

16As discussed in Note 4 to the Condensed Consolidated Financial Statements, the Demonstration Plant’s project costs, have increased since inception, due to inflation and other factors. The Company currently estimates the total cost of the Demonstration Plant from inception, inclusive of operating cost estimates through completion of the Demonstration Plant’s operations phase, to be approximately $77,500.

Through March 31, 2026, the DoE had made payments totaling approximately $20,500 towards its commitment of approximately $24,200, leaving a balance of approximately $3,700 to be collected from the DoE under the current cost share award.

To fund the Company’s share of these cost increases, in March 2026, the Company completed the 2026 Rights Offering for gross proceeds of $30,968. See Note 7 to the Condensed Consolidated Financial Statements for additional details regarding the terms of the 2026 Rights Offering. The 2026 Rights Offering closed on March 4, 2026, generating net proceeds of $30,478. These funds, in conjunction with the funds already on hand and those funds still expected to be received from the DoE and WEA, will be used to progress the Company’s business strategy, which includes (i) the continued operation of the Demonstration Plant for a sufficient time to provide

Table of Contents

~~Through~~the ~~September~~information ~~30,~~to ~~2025~~support a commercialization decision, (ii) the ~~DoE~~advancement ~~had~~of ~~made~~projects ~~payments~~for ~~totaling~~the ~~$20,455~~as-constructed ~~towards~~Demonstration ~~its~~Plant ~~commitment~~beyond ofthe ~~$24~~current NdPr separation objectives,~~189,~~ ~~leaving~~including aapplying ~~balance~~the technology to the separation of ~~$3,734~~HREEs and possibly to bethird ~~collected~~party ~~from~~feed sources, (iii) the ~~DoE~~completion ~~under~~of federal and state permitting and licensing for the ~~current~~Bear ~~cost~~Lodge ~~share~~REE ~~award.~~Project, and (iv) other general corporate purposes.

ToEven ~~fund~~with the ~~Company’s~~funds ~~share~~already ofon ~~these cost increases~~hand, ~~in March 2024,~~ the ~~Company~~funds ~~completed~~raised ain ~~rights offering (~~the ~~“2024~~2026 Rights Offering~~”) for gross proceeds of approximately $35~~,~~800,~~ inand ~~which~~the ~~each~~expected ~~holder~~receipt of the ~~Company’s~~remaining ~~common~~WEA ~~shares~~grant asmonies ofand ~~the~~DoE ~~record date of December 15~~funds, ~~2023, was eligible to participate. The proceeds from~~ the ~~2024~~Company ~~Rights~~will ~~Offering~~still ~~are~~require ~~being~~additional ~~used~~funding to ~~progress~~design, ~~the Company’s business strategy~~construct, ~~which includes the rework of the Demonstration Plant~~ and ~~its~~operate ~~initial operation to provide~~ the ~~information~~Bear toLodge ~~support~~REE ~~a commercialization decision, as well as for other general corporate purposes~~Project.

~~Even~~Ultimately, ~~with~~in ~~these~~the ~~funds~~event ~~and~~ the ~~expected~~Company ~~receipt~~cannot ofsecure ~~the~~additional ~~remaining~~financial ~~WEA~~resources ~~grant~~or ~~monies~~complete ~~and~~a ~~DoE~~strategic ~~funds~~transaction, the Company ~~will~~may ~~still~~need ~~require~~to ~~additional~~curtail ~~funding~~its inplans ~~2026~~for tothe ~~support~~Demonstration aPlant, ~~full~~suspend ~~12-month~~permitting ~~optimal~~and ~~operation~~development ~~period~~of ~~and~~the toBear ~~advance~~Lodge ~~other~~REE ~~key~~Project ~~technology~~or other initiatives, ~~including~~or ~~recycle~~potentially ~~and~~liquidate ~~waste~~its ~~minimization~~business interests, ~~processing~~and ~~feed~~investors ~~from~~may ~~other~~lose ~~sources,~~all ~~and~~or ~~heavy~~part ~~rare~~of ~~earth~~their ~~element (“HREE”) separation~~investment.

Additionally, the Company intends to restart the permitting and licensing for the Bear Lodge REE Project, which includes the mine and commercial plant. We plan on the formal restart of the permitting process in the fourth quarter of 2025 and are exploring the timely options available under the current U.S. Administration’s critical minerals initiatives. As a result, substantial additional funds will be required to complete the permitting and licensing, and ultimate construction and operation of a commercial mine and plant for the Bear Lodge REE Project. The Company is reviewing its options regarding potential funding sources, which include, but are not limited to, off-take agreements, joint ventures, government grants and loans, equity and debt financings and other project financing opportunities. One potential opportunity for project financing is through the Export-Import Bank of the United States (“EXIM Bank”). In March 2025, the Company received a non-binding Letter of Interest from the EXIM Bank to provide debt financing of up to $553,000 for the Bear Lodge REE Project’s development. Notwithstanding, there can be no assurance that sufficient funding from any source can be secured by Company on reasonable terms or at all.

Ultimately, in the event the Company cannot secure additional financial resources or complete a strategic transaction in 2026, the Company may need to curtail operations at the Demonstration Plant, advancement of permitting and development of the Bear Lodge REE Project or other initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.

Current External Factors Impacting our Business

During the first nine months of 2025, we continued to monitor the general U.S. political climate and actions taken by the U.S. government to secure a domestic rare earth supply chain. Due to the dominance of China over the REE supply chain, the U.S. federal government has issued several Presidential Executive Orders, under the Biden Administration and the first and second Trump Administrations, to encourage and support the establishment of a domestic REE supply chain and to strengthen the defense industrial base with respect to critical minerals, including REEs.

~~Presidential~~During the first three months of 2026, we continued to monitor the U.S. political climate and ~~Administrative~~federal ~~Critical~~actions ~~Mineral~~aimed ~~Initiatives~~at securing a domestic REE supply chain. The Trump Administration has sustained and expanded initiatives from prior years to reduce reliance on China-dominated REE supply chains and strengthen the U.S. defense industrial base.

Key developments in 2025 and early 2026 include:

On● ~~January~~Multiple ~~20,~~Executive ~~2025,~~Orders ~~President~~directing ~~Trump~~federal ~~issued~~agencies ~~the~~to ~~“Unleashing~~fast-track ~~American~~permitting, ~~Energy” Executive Order~~funding, ~~which included: (1) several urgent critical mineral~~ and ~~rare~~offtake ~~earth~~agreements ~~directives,~~for ~~including the immediate review of all agency actions that potentially burden the development of~~ domestic ~~energy resources with particular attention to~~ critical ~~minerals; (2) directing the Secretary of Energy to ensure that critical~~ mineral projects, ~~including~~with ~~the~~specific ~~processing~~emphasis ofon ~~critical~~REE ~~minerals,~~processing ~~receive consideration for federal support; (3) directing the Secretary of Defense to consider the needs of the U.S. in supplying~~ and ~~maintaining the~~ national defense ~~stockpile to provide a robust supply of critical minerals; and (4) establishing the U~~stockpiles.S. position as the leading producer and processor of REEs, which will create jobs and prosperity at home, strengthen supply chains for the U.S. and its allies, and reduce the global influence of malign and adversarial states.

● The April 2025 Section 232 investigation into imports of processed critical minerals (focused on REEs), which culminated in a January 2026 Presidential Proclamation declaring current import levels a national security threat and directing negotiations for “Critical Mineral Trade Agreements” with allies.

In● ~~March~~The ~~2025,~~DoE’s ~~President~~December ~~Trump~~2025 ~~issued~~announcement ~~the~~of ~~“Immediate Measures to Increase American Mineral Production” Executive Order. In this Executive Order~~$134,000 ~~President~~in ~~Trump~~targeted ~~directed the federal agencies, including the EXIM Bank, to unlock the permitting,~~ funding ~~and issuance of off-take agreements~~ for ~~critical~~REE ~~minerals~~separation, ~~including~~refining ~~REEs.~~(particularly ~~The Executive Order includes near-term actions to be determined and implemented by the federal agencies to fast-track permits~~HREEs), ~~mobilize capital for mineral producers~~ and ~~create~~permanent ~~off-take~~magnet ~~agreements for the strategic stockpiling of minerals critical to the United States’ defense, technology and energy~~production.

● In January 2026, the Administration’s proposed G7-level price floor mechanism for neodymium-praseodymium (NdPr) and other magnet-related rare earths designed to protect domestic producers from price volatility.

17● In February 2026, President Trump’s “Project Vault,” a $12,000,000 U.S. Strategic Critical Minerals Reserve structured as a public-private partnership with $10,000,000 in EXIM Bank backing was announced. The program is designed to serve as a “buyer of last resort” for U.S.-processed REEs, providing guaranteed offtake and shielding domestic producers from foreign export restrictions and predatory pricing.

In October 2025, China announced enhanced export controls covering 12 of 17 REEs, including extraterritorial requirements for foreign-produced items containing even 0.1% Chinese-origin REEs or manufactured using Chinese refining equipment, as well as a prohibition on REE exports for military applications. Following a meeting between President Trump and Chinese President Xi Jinping on October 30, 2025, China agreed to suspend these enhanced controls, along with certain other related curtailments, for one year as part of a broader trade truce. As of March 2026, no new Chinese restrictions have been announced, and REE export volumes from China have increased following streamlined licensing. The Company continues to monitor these developments, as ongoing geopolitical tensions and U.S. tariffs/trade measures could affect REE supply chains and our project economics.

The U.S. government has also accelerated direct financial support for domestic REE and critical minerals projects throughout 2025 and early 2026, including equity or warrant participation and infrastructure funding. The Company continues to evaluate opportunities to participate in these programs.

Other external factors, including the lingering effects of the COVID-19 pandemic, the Russia/Ukraine conflict, and Middle East conflict, including the Iran War, have reinforced the U.S. focus on secure domestic supply chains for REEs and critical minerals. The ultimate impact of these evolving U.S. and Chinese government actions on the REE supply chain and our business operations remains uncertain.

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In April 2025, President Trump directed the U.S. Department of Commerce to initiate a Section 232 investigation into whether imports of processed critical minerals and derivative products threaten national security, with a focus on REEs essential for defense and technology applications. This action was aimed at enhancing economic resilience and reducing reliance on foreign supplies.

In August 2025, the DoE announced new initiatives to secure the American critical minerals and materials supply chain, including the establishment of a Critical Minerals and Materials Accelerator program to support domestic production and processing.

Tariffs and Trade Restrictions for Critical Minerals

Since early 2025 and continuing into the third quarter of 2025, the Trump Administration has announced several potential new and/or increased tariffs and other trade restrictions on imports to the United States in response to China’s export and licensing restrictions. China, in December 2023, announced it had banned the export of technology to make rare earth magnets, adding to its previous export ban of critical material extraction and separation technology. In December 2024, China further banned the export of certain critical minerals, including gallium, germanium, and antimony, which have widespread military applications. In February 2025, China expanded its export licensing requirements to include five additional minerals: tungsten, indium, bismuth, tellurium, and molybdenum. In April 2025, China imposed export restrictions on an additional seven REEs (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium) as well as related magnets and processing technologies used in defense, energy, and automotive sectors, requiring exporters to obtain licenses from China’s Ministry of Commerce. As U.S.-China trade negotiations continued, including a temporary 90-day suspension of non-tariff countermeasures in May 2025, and a June 2025 framework agreement to expedite shipments and create a "green channel" for trusted U.S. companies, these restrictions were partially eased for non-military uses. However, a Chinese REE licensing system remains in place, controlling the export of REEs and related technologies. In October 2025, China announced further expansions to cover five additional REEs (holmium, erbium, thulium, europium, and ytterbium), bringing the total to 12 out of 17 REEs under restriction, along with extraterritorial requirements for foreign-produced items containing even 0.1% Chinese-origin REEs or made using Chinese refining equipment, originally set to become effective December 1, 2025, and prohibiting exports for military applications. Following a meeting between President Trump and Chinese President Xi Jinping on October 30, 2025, China agreed to suspend these latest October 2025 export controls, along with certain other related curtailments, for one year as part of a broader trade truce, providing a pause on further escalations. The impact of the Trump Administration tariffs and other trade restrictions, and China’s continued use of export controls and restrictions, is currently unknown and could have an impact on the REE supply chain and/or our business operations.

U.S. Government Critical Mineral Investments

In response to China’s control of the REEs market, the U.S. government, in 2025, increased its investment into the critical minerals and REE supply chain. During the second half of 2025, the U.S. government made direct investments, including taking equity positions, in critical minerals companies, including MP Materials, Lithium Americas and Trilogy Metals, among other companies, in an effort to shore up the U.S.’s position in REEs and other strategic minerals. Additionally, in late October 2025, the U.S. signed a framework agreement with Japan to secure supplies of critical minerals and REEs through joint mining and processing projects, and President Trump announced REE supply deals with four Asian nations to counter China's dominance. Also in October 2025, the U.S. and Australia signed the Framework for Securing Supply in the Mining and Processing of Critical Minerals and Rare Earths, committing to mobilize at least $1,000,000 in financing within six months for joint projects in mining, separation, and processing. This agreement aims to enhance supply chain resilience, protect against unfair trade practices, and support the defense and technology sectors by prioritizing REEs.

Other External Factors

The impacts of the COVID-19 pandemic and other external influences, such as the Russia/Ukraine war and conflicts in the Middle East, have further focused the U.S. government on the importance of implementing secure domestic supply chains, including for REEs.

Results of Operations

Summary

~~For~~Our ~~the~~consolidated ~~three~~net ~~and~~loss ~~nine~~for the three months ended ~~September 30~~March 31, ~~2025,~~ we2026 ~~reported~~was ~~a net income of~~ $12,~~106~~133, (or $0.00 per share), ~~and~~compared awith our consolidated net loss of $2,~~469~~395, (or $0.00 per share), ~~respectively~~for the three months ended March 31, ~~compared~~2025. ~~with~~See ~~net~~our ~~losses~~discussion below for the primary drivers of ~~$4,734~~this ~~($0~~change.01 ~~per~~As ~~share)~~an ~~and~~exploration ~~$14~~stage company,~~539~~ ~~($0.03~~we ~~per~~had ~~share)~~no ~~for~~properties ~~the~~in ~~three~~production and generated no revenues during either period.

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nine months ended September 30, 2024, respectively. See our discussion below for the primary drivers of these changes. As an exploration stage company, we had no properties in production and generated no revenues during either period.

Exploration and Evaluation

~~For~~Our ~~the~~exploration ~~three~~ and ~~nine~~evaluation ~~months~~costs ~~ended~~totaled ~~September 30~~$1,719 ~~2025,~~for ~~our~~the ~~exploration~~three ~~and~~months ~~evaluation~~ended ~~expenses~~March ~~decreased~~31, ~~by $7~~2026,~~949~~ ~~and~~compared with $131,~~978,~~877 ~~respectively,~~for ~~over~~ the ~~comparative~~three ~~2024~~months ~~periods~~ended March 31, 2025. ~~These~~This ~~decreases~~decrease ~~were~~of $158 was largely attributable to ~~(i)~~ the activities associated with our Demonstration Plant as ~~activities~~we shifted from ~~the~~final ~~more~~construction ~~expensive equipment acquisition~~ and ~~installation~~testing activities during ~~2024 to~~ the ~~less~~quarter ~~expensive~~ended ~~plant~~March ~~rework~~31, ~~and equipment upgrades in~~ 2025, ~~and (ii) the decision~~ to ~~include~~plant ~~certain~~rework ~~past~~and ~~Demonstration~~operations ~~Plant~~start-up ~~expenses~~activities ~~(formerly~~during ~~excluded from our billings under~~ the ~~Cost~~quarter ~~Share~~ended ~~Agreement)~~March in31, ~~our billings to the DoE under the Cost Share Agreement~~2026. This change to include certain previously excluded costs from the Cost Share Agreement reduced the Company’s share of these costs as partial reimbursement is now expected to be received from the DoE. See Note 4 to the Consolidated Financial Statements for a discussion of the Cost Share Agreement.

Corporate Administration

Our corporate ~~administrative~~administration costs ~~remained~~decreased ~~relatively~~by ~~constant~~$170 aton ~~$578~~a ~~and~~comparative year-over-years basis, decreasing from $~~569~~750 for the three months ended ~~September~~March 3031, 2025 ~~and~~to ~~2024, respectively, and~~ $~~1,896~~580 ~~and $1,891~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026. ~~and~~This ~~2024,~~decrease ~~respectively.~~was ~~The~~largely ~~majority~~attributable ofto ~~these~~the ~~expenses~~additional ~~relate~~costs toincurred ~~costs~~in ~~associated~~the ~~with~~filing of our ~~public~~Form ~~company~~S-3 ~~compliance~~registration ~~and~~statement ~~reporting~~during ~~obligations~~the three months ended March 31, 2025.

Interest Income

~~Our~~For ~~interest income decreased by $169 from $414 for~~ the three months ended ~~September~~March 3031, ~~2024~~2026 toand ~~$245~~2025, ~~for~~ the ~~three~~Company ~~months~~generated ~~ended~~interest ~~September~~income ~~30,~~of ~~2025~~$213 and ~~decreased by~~ $76284, ~~from~~respectively, ~~$866~~on ~~for~~investments ~~the~~of ~~nine~~its ~~months~~cash ~~ended~~holdings. ~~September~~This ~~30,~~decrease ~~2024~~of to $~~790~~71 ~~for~~was ~~the~~primarily ~~nine~~due ~~months ended September 30, 2025. These changes were largely attributable~~ to ~~our~~the ~~2024~~lower ~~Rights~~rates ~~Offering,~~of ~~which~~interest ~~closed~~earned ~~in March 2024, and its impact~~ on our ~~excess~~invested cash balances ~~available~~during ~~for~~the ~~investment~~quarter ~~pre-~~ended ~~and~~March ~~post-closing.~~31, 2026.

Grant Income

During September 2024, the Company recognized grant income of $2,000 with the achievement of the second milestone under the WEA Funding Agreement. There were no such transactions for the nine months ended September 30, 2025. See Note 5 to the Consolidated Financial Statements for a discussion of the WEA Funding Agreement.

Accretion Expense

For the three and nine months ended September 30, 2025, we recorded accretion expense of nil (in each period) compared to $70 and $212 for the three and nine months ended September 30, 2024, respectively, with the accretion expense recorded during 2024 being related to the Company’s option to repurchase approximately 640 acres (257 hectares) of real property in Wyoming. With the Company’s repurchase of this land in October 2024, the Company discontinued its recording of accretion expense and will not incur further accretion expense in future periods related to this repurchase option.

Financial Position, Liquidity and Capital Resources

Operating Activities

Net cash used in operating activities was $42,~~857~~725 for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, compared with $92,~~177~~269 for the same period in ~~2024~~2025. This ~~reduction~~increase of $~~4,320,~~456 ~~partially offset by the collection in 2024 of $2,000 in WEA grant funds,~~ was largely attributable to ~~the~~changes ~~decrease~~ in our ~~exploration~~working ~~and~~capital ~~evaluation~~that ~~expenditures~~consumed as$646 ~~activities~~of ~~shifted~~cash ~~from Demonstration Plant equipment acquisitions and installation~~ during ~~2024~~the tothree ~~plant~~months ~~rework~~ended ~~activities~~March ~~and equipment upgrades in 2025. Absent the $2~~31,~~000~~ ~~in WEA grant offset funds~~2026, ~~net~~while generating cash ~~used~~of in$77 ~~operating~~during ~~activities for~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2024 would have been $11,177~~2025.

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Investing Activities

Net cash used in investing activities of $~~157~~59 ~~and $52~~ for the ~~nine~~three months ended ~~September~~March 3031, 2025 ~~and~~was ~~2024, respectively, were~~ for the purchase of equipment. ~~The~~There ~~2024~~were ~~total~~no ~~was~~similar ~~partially~~transactions ~~offset~~during ~~by $12 in proceeds from~~ the ~~sale~~comparative of2026 ~~equipment~~period.

Financing Activities

Net cash provided by financing activities of $3530,~~286~~553 for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2026 stemmed from the receipt of ~~the~~$30,478 in net proceeds from the ~~2024~~2026 Rights Offering and $75 from the exercise of stock options. There were no similar transactions during the ~~nine~~three months ended ~~September~~March 3031, 2025.

Financial Position, Liquidity and Capital Resources

At ~~September~~March 3031, ~~2025~~2026, we had a working capital balance of $2248,~~205~~102, which was aan ~~decrease~~increase of $228,~~616~~436 from our December 31, ~~2024~~2025 working capital balance of $2419,~~821~~666. This ~~decrease~~increase was largely the result of the ~~reduction~~net inproceeds ~~our~~received ~~cash and cash equivalents balance, which decreased by $5,019~~ from ~~$26,732~~the at2026 ~~December~~Rights 31Offering, ~~2024 to $21,713 at September 30, 2025,~~ partially offset by anoperating ~~increase~~cash ~~of $2,509 in our related party balance which changed from a $895 liability at December 31, 2024 to an asset of $1,614 at September 30, 2025~~flows.

In June 2023, the Company entered into the WEA Funding Agreement for its previously announced award of a $4,400 grant from the WEA to be used toward the advancement of the Demonstration Plant. Following the achievement of the first milestone under the WEA Funding Agreement, the Company received in January 2024 the first $2,000 of the $4,400 grant. In September 2024, a second funding request of $2,000 was submitted to the WEA with the achievement of the second milestone under the WEA Funding Agreement. The collection of this second $2,000 tranche was received in November 2024, with the remainder, or the $400 retainer, forecasted for collection in early 2026.17

Due to inflationary cost pressures on labor, equipment, and consumables, as well as cost increases associated with certain optimized plant engineering and design parameters, General Atomics, on behalf of the consortium, submitted to the DoE an updated Demonstration Plant project budget of approximately $53,600, which is approximately 22% higher than the original budget of approximately $43,800. In response, the DoE pledged an additional commitment of $2,400 (increasing its total commitment to approximately $24,200) in September 2024 to help fund a portion of this budget increase, with the balance to be funded by the Company, including any amounts in excess of the $53,600 revised budget total. The Company currently estimates the construction cost of the Demonstration Plant from inception to be approximately $60,000, including the design review, upgrades and rework through 2025. Once in operation, the Company expects ongoing cost of approximately $1,500 per month during 2026.

Through September 30, 2025, the DoE has paid a total of approximately $20,500 towards its commitment of approximately $24,200, leaving a balance of approximately $3,700 to be invoiced and collected from the DoE under the current cost share award.

In the first months of 2025, several design and equipment issues were identified during the Demonstration Plant’s equipment testing phase, which followed the completion of construction activities. As a result of these issues, an as-built design review was commenced in April 2025. The Company now expects plant commissioning to start in late 2025 and commencement of plant operations to begin in the first quarter of 2026. As of September 30, 2025, the rework activities were still in progress.

The funds raised by the Company in the 2024 Rights Offering are expected to support the initial operations of the Demonstration Plant for a sufficient period of time to gather the information necessary for a commercialization decision. However, even with these funds and the expected receipt of the remaining WEA grant monies and DoE funds, the Company will still require substantial additional funds to complete the permitting and licensing, and ultimate construction and operation of a commercial mine and plant for the Bear Lodge REE Project. Ultimately, in the event the Company cannot secure additional financial resources, or complete a strategic transaction in 2026, the Company may need to curtail operations at the Demonstration Plant, advancement of permitting and development of the Bear Lodge REE Project or other initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.

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As discussed in Note 5 to the Condensed Consolidated Financial Statements, the Company entered into the WEA Funding Agreement in June 2023 for a $4,400 grant. As of March 31, 2026, the Company had received $4,000 of the $4,400 grant total, with the remaining $400 forecasted for collection in mid-2026.

As discussed in Note 4 to the Condensed Consolidated Financial Statements and in “Overview and Outlook” above, the Demonstration Plant’s project costs have increased since inception. The DoE pledged an additional commitment of $2,400 (increasing its total commitment to approximately $24,200) in September 2024 to help fund a portion of this budget increase, with the balance to be funded by the Company, including any amounts in excess of the $53,600 revised budget total. The Company currently estimates the total Demonstration Plan project cost to be approximately $77,500, inclusive of cost estimates through the Demonstrations Plant’s operations phase.

Through March 31, 2026, the DoE has paid a total of approximately $20,500 towards its commitment of approximately $24,200, leaving a balance of approximately $3,700 to be invoiced and collected from the DoE under the current cost share award.

As discussed in Note 1 to the Condensed Consolidated Financial Statements and in “Overview and Outlook” above, design and equipment issues identified in early 2025 led to a complete design review and the implementation of corrective actions and upgrades that continued into 2026, with Demonstration Plant operations formally commencing in March 2026.

The funds raised by the Company in the 2026 Rights Offering (see Note 7 to the Condensed Consolidated Financial Statements), in conjunction with the funds already on hand and those funds expected to be received from the DoE and WEA, will be used to progress the Company’s business strategy as described in “Overview and Outlook” above. However, even with these funds, the Company will still require substantial additional funds to complete the design, construction, and operation of a commercial mine and plant for the Bear Lodge REE Project.

Ultimately, in the event the Company cannot secure additional financial resources or complete a strategic transaction, the Company may need to curtail its plans for the Demonstration Plant, suspend permitting and/or development of the Bear Lodge REE Project or other initiatives, or potentially liquidate its business interests, and investors may lose all or part of their investment.

Contractual Obligations

Financial Assistance Agreement

InAs discussed in Note 4 to the Condensed Consolidated Financial Statements, 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~~. ~~Once~~If ~~the novation process is complete~~completed, the Company ~~will~~would be named the recipient of the award under the novated agreement and certain conditions are expected to be confirmed, including the potential for additional DoE funding support for further advancements of the Demonstration Plant.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision of, and with the participation of the Chief Executive Order (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the CEO and the CFO have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) information required to be disclosed by us in the reports that we ~~file or submit under the Exchange Act is accumulated and communicated to our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.~~

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file or submit under the Exchange Act is accumulated and communicated to our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There has been no change in our internal control over financial reporting during the quarter ended ~~September~~March 3031, ~~2025~~2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not aware of any material pending or threatened litigation or of any proceedings known to be contemplated by governmental authorities that are, or would be, likely to have a material adverse effect upon us or our operations, taken as a whole.

ITEM 1A. RISK FACTORS

During the three months ended ~~September~~March 3031, ~~2025~~2026, 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~~2025.

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

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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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

We consider health, safety, and environmental stewardship to be a core value for RER.

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities under the regulation of the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). During the three months ended ~~September~~March 3031, ~~2025~~2026, the Company was not subject to regulation by MSHA under the Mine Act.

ITEM 5. OTHER INFORMATION

Insider Trading Arrangements and Policies

During the quarter ended ~~September~~March 3031, ~~2025~~2026, none of our directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (as those terms are defined in Item 408 of Regulation S-K).

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ITEM 6. EXHIBITS

ExhibitNumber		Description
31.1+		Certification of Chief Executive Officer pursuant to Rule 13a-14 promulgated under the Securities and Exchange Act of 1934, as amended
31.2+		Certification of Chief Financial Officer pursuant to Rule 13a-14 promulgated under the Securities and Exchange Act of 1934, as amended
32.1++		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2++		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS+		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH+		XBRL Schema Document
101.CAL+		XBRL Calculation Linkbase Document
101.DEF+		XBRL Definition Linkbase Document
101.LAB+		XBRL Label Linkbase Document
101.PRE+		XBRL Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

+	Filed herewith.

++	Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	RARE ELEMENT RESOURCES LTD.


	By:	/s/ Ken Mushinski
		Ken Mushinski
		President, Chief Executive Officer and Director
		(Principal Executive Officer)

	Date:	~~November~~May 513, ~~2025~~2026

	By:	/s/ Wayne E. Rich
		Wayne E. Rich
		Chief Financial Officer
		(Principal Financial Officer)

	Date:	~~November~~May 513, ~~2025~~2026

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Filing Compare · RARE ELEMENT RESOURCES LTD