[10-Q] RARE ELEMENT RESOURCES LTD Quarterly Earnings Report
Rare Element Resources Ltd. reported a small Q3 profit while advancing its rare earth Demonstration Plant. Net income was $1,106 for the quarter, with a nine‑month net loss of $2,469. Operating cash use totaled $4,857 for the first nine months. Cash and equivalents were $21,713 and working capital was $22,205 as of September 30, 2025.
The Company targets plant commissioning in late 2025 and operations in Q1 2026. Cumulative Demonstration Plant spend reached $56,699. The DoE has paid $20,455 toward a $24,189 commitment, leaving $3,734 outstanding. The WEA grant totals $4,400, with $4,000 received and $400 tied to future milestones. The Company estimates Demonstration Plant construction cost from inception of about $60,000 and expects $1,500 per month in operating costs during 2026.
In September 2025, the Company requested a novation to transfer the DoE agreement from General Atomics; completion would name the Company as award recipient. Management notes additional funding will be needed in 2026 to support a full operations period and related initiatives.
- None.
- None.
Insights
Q3 turns profitable; funding and execution remain key.
RER posted Q3 net income of
The Demonstration Plant’s cumulative spend reached
Commissioning is expected in late
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Commission file number: |
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(Exact Name of Registrant as Specified in its Charter)
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(State of other jurisdiction of incorporation or organization) |
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(Address of principal executive offices) |
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( | Not Applicable | |
(Registrant’s telephone number, including area code) | (Former name, former address and former fiscal year, if |
Securities registered pursuant to Section 12(b) of the Act:
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.
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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). ⌧
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 ◻ | 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).
Number of issuer’s common shares outstanding as of October 31, 2025:
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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 | 16 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 21 |
ITEM 4. | CONTROLS AND PROCEDURES | 21 |
PART II – OTHER INFORMATION | 21 | |
ITEM 1. | LEGAL PROCEEDINGS | 21 |
ITEM 1A. | RISK FACTORS | 21 |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 22 |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 22 |
ITEM 4. | MINE SAFETY DISCLOSURES | 22 |
ITEM 5. | OTHER INFORMATION | 22 |
ITEM 6. | EXHIBITS | 23 |
SIGNATURES | 24 | |
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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 in the development of our Demonstration Plant (as defined below) and the timing of that progress; |
| ● | our ability to successfully complete the design review and any rework activities on the Demonstration Plant, and the timing and cost to complete any rework activities; |
| ● | planned or estimated expenses and capital expenditures, including the Demonstration Plant’s expected costs of commissioning, operation, decommissioning, and the sources of funds to pay for such costs; |
| ● | availability of funds and capital resources; |
| ● | our Demonstration Plant team’s ability to achieve the full amount of funding support from the Department of Energy (“DoE”) through the remainder of the Demonstration Plant project; |
| ● | the securing and timing of an amendment to the Cost Share Agreement (as defined below), if required, between the Company and General Atomics, whose affiliate Synchron is the Company’s majority shareholder; |
| ● | our ability to complete a potential novation of the Demonstration Plant funding agreement with the DoE and replacing General Atomics as the prime contractor to ensure the full DoE committed funding is realized (as described below); |
| ● | our ability to secure additional funding (in addition to the previously awarded or obtained funding) relating to the Demonstration Plant project or any further initiatives or advancements that may be undertaken relating to the Demonstration Plant; |
| ● | our ability to receive the remaining uncollected funds in connection with the Wyoming Energy Authority (the “WEA”) grant for the Demonstration Plant; |
| ● | our ability to operate the Demonstration Plant, including in a manner to meet the project objectives within our funding capacity and estimated timeline; |
| ● | 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 strategies during and following the completion of operations of the Demonstration Plant, including the potential for further operation of the Demonstration Plant to meet additional objectives and advancement opportunities; |
| ● | our plans and strategies relating to the advancement of the Bear Lodge REE Project (as defined below), including the restart of the permitting and licensing process; |
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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 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 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 10-Q are more fully described within Part II, Item 1A, “Risk Factors” in this Quarterly Report and “Part I, Item 1A. Risk Factors” in our Form 10-K. 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. 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 30, 2025 | December 31, 2024 | ||||||
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ASSETS: |
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CURRENT ASSETS |
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Cash and cash equivalents | $ | | $ | | |||
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Prepaid expenses and other |
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Total Current Assets |
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Building, net | | — | |||||
Equipment, net |
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Restricted cash | | | |||||
Right of use asset (Note 6) | | | |||||
Land |
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Total Assets | $ | | $ | | |||
LIABILITIES: |
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CURRENT LIABILITIES |
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Accounts payable and accrued liabilities | $ | | $ | | |||
— | | ||||||
Lease liability, current (Note 6) | | | |||||
Total Current Liabilities |
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Reclamation obligation |
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Lease liability, long-term (Note 6) | | | |||||
Other long-term liabilities | | | |||||
Total Liabilities |
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Commitments and Contingencies (Note 8) |
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SHAREHOLDERS’ EQUITY: |
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Common shares, |
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Additional paid-in capital |
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Accumulated deficit |
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Total Shareholders’ Equity |
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Total Liabilities and Shareholders’ Equity | $ | | $ | | |||
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 30, | Nine Months Ended September 30, | ||||||||||||
| 2025 |
| 2024 |
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Operating income (expense): |
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Exploration and evaluation (See Note 4 for related party costs) | $ | | $ | ( | $ | ( | $ | ( | |||||
Corporate administration |
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Depreciation and amortization |
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Total operating income (expense) |
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Non-operating income (expense): |
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Interest income |
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Grant income | — | | — | | |||||||||
Accretion expense |
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Interest expense |
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Gain on sale of equipment |
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Total non-operating income |
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Net income (loss) | $ | | $ | ( | $ | ( | $ | ( | |||||
Loss per share - basic | $ | | $ | ( | $ | ( | $ | ( | |||||
Loss per share - diluted | $ | | $ | ( | $ | ( | $ | ( | |||||
Weighted average common shares - basic |
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Effect of employee/director stock-based awards | | n/a | n/a | n/a | |||||||||
Weighted average common shares - diluted | | | | | |||||||||
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 months ended September 30, | ||||||
2025 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and accretion expense |
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Right of use asset amortization |
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Lease liability |
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Stock-based compensation |
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Other | ( | | ||||
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Changes in working capital: |
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Due from related party | ( | | ||||
Prepaid expenses and other |
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Accounts payable and accrued liabilities |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Proceeds from the sale of equipment | — | | ||||
Purchase of equipment | ( | ( | ||||
Net cash used in investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Financing transaction, net |
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Net cash provided by financing activities |
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Net change in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash- beginning of the period |
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Cash, cash equivalents and restricted cash- end of the period | $ | | $ | | ||
Supplemental cash flow disclosures: | ||||||
Cash paid for taxes | $ | — | $ | — | ||
Cash paid for interest | $ | — | $ | — | ||
As of September 30, | ||||||
2025 |
| 2024 | ||||
Reconciliation of amounts in the Balance Sheet to amounts in the Cash Flow Statement | ||||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash, long-term | | | ||||
Total of cash, cash equivalents and restricted cash - end of period | $ | | $ | | ||
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 |
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| Capital |
| Deficit |
| Total | |||||
Balance, June 30, 2024 |
| | $ | | $ | | $ | ( | $ | | ||||
Stock-based compensation |
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Net loss |
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Balance, September 30, 2024 |
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Balance, June 30, 2025 | | | | ( | | |||||||||
Net income |
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Balance, September 30, 2025 |
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Paid in | Accumulated | |||||||||||||
| Number of Shares |
| Amount |
| Capital |
| Deficit |
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Balance, December 31, 2023 |
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2024 Rights Offering |
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Stock option exercise | | — | — | — | — | |||||||||
Stock-based compensation | — | — | ( | — | ( | |||||||||
Net loss |
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| ( |
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Balance, September 30, 2024 |
| | $ | | $ | | $ | ( | $ | | ||||
Balance, December 31, 2024 | | $ | | $ | | $ | ( | $ | | |||||
Stock option exercises |
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Stock-based compensation |
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Net loss |
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| ( |
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Balance, September 30, 2025 |
| | $ | | $ | | $ | ( | $ | | ||||
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 30, 2025
(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 holds a
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
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 process already stockpiled high-grade sample materials from the Bear Lodge REE Project.
In January 2021, a consortium of companies, of which the Company is a part, received notice from the Department of Energy (“DoE”) that the consortium had been selected for negotiation of a potential financial award for the engineering, construction and operation of a rare earth separation and processing demonstration plant, which is now the Demonstration Plant project. The 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. The Company, as a subrecipient of the award, along with the other consortium members, commenced work on the planning and design of the Demonstration Plant project in November 2021, with the Company’s contractual arrangement with General Atomics finalized in December 2021.
To address the Company’s funding needs, including the funding required for the non-federal share of the Demonstration Plant costs, the Company completed rights offerings in December 2021 (the “2021 Rights Offering”) and March 2024 (the “2024 Rights Offering”) for gross proceeds of approximately $
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 $
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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)
The Company currently estimates the construction cost of the Demonstration Plant from inception to be approximately $
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 $
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 $
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, which were included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. 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 30, 2025, and the results of its operations and cash flows for the three and nine months ended September 30, 2025 and 2024 in conformity with U.S. GAAP on a going concern basis. These interim results of operations for the nine months ended September 30, 2025 may not be indicative of the results that will be realized for the full year ending December 31, 2025.
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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)
Research & Development (“R&D”) Expenditures
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 $
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 30, 2025 and December 31, 2024 are presented in the following table:
Fair value at September 30, 2025 | ||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: |
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Money market funds | $ | | $ | | $ | — | $ | — | ||||
Fair value at December 31, 2024 | ||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||
Assets: |
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Money market funds | $ | | $ | | $ | — | $ | — | ||||
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 30, 2025 and December 31, 2024.
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.
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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)
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 $
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
On March 17, 2022, the Company executed a subcontract purchase order in the amount of $
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 $
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 $
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 is underway and is expected to be completed by the end of 2025. 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.
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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)
The DoE has allowed the novation process to progress even 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 be terminated, and final disposition of the assets would be negotiated with the DoE. Although the Company expects the novation process to be completed in late 2025, there is no assurance of the process progressing in a timely manner or being completed at all.
Since inception, the Company has advanced $
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 | $ | | $ | ( | ||
Funds transferred to General Atomics during the period | — | ( | ||||
Funds returned by General Atomics during the period | — | | ||||
The Company's share of Demonstration Plant project costs incurred during the period (1) | ( | | ||||
Balance of funds owing to (due from) General Atomics as a related party balance at end of period | $ | ( | $ | | ||
| (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 $ |
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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 $
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 $
6. LEASES
The Company accounts for leases in accordance with ASC 842 – Leases. This accounting standard requires all lessees to record the impact of leasing contracts on the balance sheet as a right to use asset and corresponding liability. This is measured by taking the present value of the remaining lease payments over the lease term and recording a right to use asset and corresponding lease obligation for lease payments. Rent expense is realized on a straight-line basis and the lease obligation is amortized based on the effective interest method. The amounts recognized reflect the present value of the remaining lease payments for all leases that have a lease term greater than 12 months. The discount rate used is an estimate of the Company’s incremental borrowing rate based on information available at lease commencement in determining the present value of lease payments.
In considering the lease asset value, the Company considers fixed or variable payment terms, prepayments, and
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
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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)
On May 14, 2024, the Company entered into a second lease agreement for modular office units for use at its Demonstration Plant site in Upton, Wyoming (the “Office Lease”). The Office Lease, which was for an initial
For purposes of the following table, payments under the Property Lease and Office Lease are assumed to run through September 30, 2026 and December 31, 2026, respectively. If the 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.
Total future lease payments under the Company’s leases as of September 30, 2025 are as follows:
2025 | $ | ||
2026 | |||
Total lease payments | |||
Less interest | ( | ||
Present value of lease payments(1) | $ |
(1) As of September 30, 2025, $
For the nine months ended September 30, 2025, $
As of September 30, 2025 the weighted average lease term for the Company’s operating leases was year (including expected renewal options) and the weighted average discount rate was estimated at
7. SHAREHOLDERS’ EQUITY
Stock-based compensation
As of September 30, 2025, the Company had
The 2011 Plan was replaced in 2022 by the 2022 Plan and, as such,
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
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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)
The following table summarizes the Company’s stock option activity for each of the nine months ended September 30, 2025 and 2024:
Nine Months Ended September 30, | |||||||||||
2025 | 2024 | ||||||||||
Weighted | Weighted | ||||||||||
Average | Average | ||||||||||
Number of Stock | Exercise | Number of Stock | Exercise | ||||||||
| Options |
| Price |
| Options |
| Price | ||||
Outstanding, beginning of period |
| | $ | |
| | $ | | |||
Exercised |
| ( | $ | |
| ( | $ | | |||
Cancelled/Expired |
| ( | $ | |
| ( | $ | | |||
Outstanding, end of period |
| | $ | |
| | $ | | |||
Exercisable, end of period |
| | $ | |
| | $ | | |||
Non-vested, end of period |
| — | $ | — |
| | $ | | |||
The
The following table summarizes the intrinsic value and weighted average remaining life for stock options as of September 30, 2025:
Weighted | |||||
Average | |||||
Remaining | |||||
As of September 30, 2025: |
| Intrinsic Value (1) | Life (Years) | ||
Stock options outstanding | $ | | |||
Stock options exercisable | $ | |
| (1) | Intrinsic value is a measure of the value of those in-the-money stock options at September 30, 2025, where (i) in-the-money value is determined by comparing the option’s exercise price to the Company’s closing share price on September 30, 2025 and (ii) only options having an exercise price less than the Company’s closing share price on September 30, 2025 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 30, 2025, the Company recognized stock-based compensation expense of $
As of September 30, 2025, all outstanding stock options are fully vested and exercisable.
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
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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)
with such laws and regulations. The ultimate amount of reclamation and other future site-restoration costs to be incurred for existing mining interests is uncertain and may exceed the Company’s estimates of these costs, which at September 30, 2025 and 2024 were estimated at $
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, if required, and 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
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 30, 2025, has been prepared based on information available to us as of November 5, 2025. 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, and the related notes thereto filed with our Annual Report on Form 10-K, 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. 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 been and continues to be the engineering, permitting, licensing, construction, and operation of the Demonstration Plant. If successful, the Demonstration Plant will show that our proprietary extraction technology is able to process and separate certain REEs from high grade sample materials extracted from our Bear Lodge REE Project in a more efficient and economical manner than traditional REE processing methods and will serve as a precursor to inform the design and estimated cost for a future full-scale production facility.
In September 2024, the DoE issued its final Project Continuation Notice, confirming the Demonstration Plant’s readiness for operations. This notice, along with the NRC’s 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 REE from the already stockpiled high-grade sample materials from the Bear Lodge REE Project to follow the completion of construction and pre-operation activities. During the first nine months of 2025, the Company, along with the other consortium members, continued their work on the Demonstration Plant project as described below, and this work is expected to continue until the completion of the project’s operations.
In early 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. During the production phase, the Demonstration Plant is expected to produce up to 10 tons of NdPr oxide.
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. This award, along with funds contributed by the Company and the DoE, is being used to fund the Demonstration Plant’s construction and operating costs. 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 2026.
Since inception, the General Atomics-led consortium has seen increases in the Demonstration Plant 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 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 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 DoE approved 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.
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Through September 30, 2025, the DoE had made payments totaling $20,455 towards its commitment of $24,189, leaving a balance of $3,734 to be collected from the DoE under the current cost share award.
To fund the Company’s share of these cost increases, in March 2024, the Company completed a rights offering (the “2024 Rights Offering”) for gross proceeds of approximately $35,800, in which each holder of the Company’s common shares as of the record date of December 15, 2023, was eligible to participate. The proceeds from the 2024 Rights Offering are being used to progress the Company’s business strategy, which includes the rework of the Demonstration Plant and its initial operation to provide the information to support a commercialization decision, as well as for other general corporate purposes.
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, 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 and Administrative Critical Mineral Initiatives
On January 20, 2025, President Trump issued the “Unleashing American Energy” Executive Order, which included: (1) several urgent critical mineral and rare earth directives, 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 the processing of critical minerals, 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.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.
In March 2025, President Trump issued the “Immediate Measures to Increase American Mineral Production” Executive Order. In this Executive Order, President Trump directed the federal agencies, including the EXIM Bank, to unlock the permitting, funding and issuance of off-take agreements for critical minerals, including REEs. The Executive Order includes near-term actions to be determined and implemented by the federal agencies to fast-track permits, mobilize capital for mineral producers and create off-take agreements for the strategic stockpiling of minerals critical to the United States’ defense, technology and energy.
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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 the three and nine months ended September 30, 2025, we reported a net income of $1,106 ($0.00 per share) and a net loss of $2,469 ($0.00 per share), respectively, compared with net losses of $4,734 ($0.01 per share) and $14,539 ($0.03 per share) for the three and
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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 the three and nine months ended September 30, 2025, our exploration and evaluation expenses decreased by $7,949 and $13,978, respectively, over the comparative 2024 periods. These decreases were largely attributable to (i) the activities associated with our Demonstration Plant as activities shifted from the more expensive equipment acquisition and installation activities during 2024 to the less expensive plant rework and equipment upgrades in 2025, and (ii) the decision to include certain past Demonstration Plant expenses (formerly excluded from our billings under the Cost Share Agreement) in our billings to the DoE under the Cost Share Agreement. 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 costs remained relatively constant at $578 and $569 for the three months ended September 30, 2025 and 2024, respectively, and $1,896 and $1,891 for the nine months ended September 30, 2025 and 2024, respectively. The majority of these expenses relate to costs associated with our public company compliance and reporting obligations.
Interest Income
Our interest income decreased by $169 from $414 for the three months ended September 30, 2024 to $245 for the three months ended September 30, 2025 and decreased by $76 from $866 for the nine months ended September 30, 2024 to $790 for the nine months ended September 30, 2025. These changes were largely attributable to our 2024 Rights Offering, which closed in March 2024, and its impact on our excess cash balances available for investment pre- and post-closing.
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 $4,857 for the nine months ended September 30, 2025, compared with $9,177 for the same period in 2024. This reduction of $4,320, partially offset by the collection in 2024 of $2,000 in WEA grant funds, was largely attributable to the decrease in our exploration and evaluation expenditures as activities shifted from Demonstration Plant equipment acquisitions and installation during 2024 to plant rework activities and equipment upgrades in 2025. Absent the $2,000 in WEA grant offset funds, net cash used in operating activities for the nine months ended September 30, 2024 would have been $11,177.
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Investing Activities
Net cash used in investing activities of $157 and $52 for the nine months ended September 30, 2025 and 2024, respectively, were for the purchase of equipment. The 2024 total was partially offset by $12 in proceeds from the sale of equipment.
Financing Activities
Net cash provided by financing activities of $35,286 for the nine months ended September 30, 2024 stemmed from the receipt of the net proceeds from the 2024 Rights Offering. There were no similar transactions during the nine months ended September 30, 2025.
Financial Position, Liquidity and Capital Resources
At September 30, 2025, we had a working capital balance of $22,205 which was a decrease of $2,616 from our December 31, 2024 working capital balance of $24,821. This decrease was largely the result of the reduction in our cash and cash equivalents balance, which decreased by $5,019 from $26,732 at December 31, 2024 to $21,713 at September 30, 2025, partially offset by an increase 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.
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.
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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Contractual Obligations
Financial Assistance Agreement
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 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.
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 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.
Changes in Internal Controls
There has been no change in our internal control over financial reporting during the quarter ended September 30, 2025, 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 30, 2025, there were no material changes to the risk factors disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024, except for the risk factor discussed below.
We may not be able to complete the novation of the Demonstration Plant financial assistance agreement from General Atomics, which could adversely impact our near-term capital requirements or results of operations.
In September 2025, at the Company’s request, General Atomics and the Company formally requested a novation of the financial assistance agreement between General Atomics and the DoE, under which General Atomics’ interests under the agreement would be transferred to the Company, so that it could seek to ensure that the full DoE committed funding is realized. The DoE has allowed the novation process to progress even though the financial assistance agreement’s term expired on September 30, 2025. In addition, during the novation process, the U.S. government failed to finalize a continuing budget resolution, meaning federal workers were furloughed, delaying the novation process. Although the Company expects the novation process to be completed in late 2025, there is no assurance
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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 30, 2025, 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 30, 2025,
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ITEM 6. EXHIBITS
Exhibit |
| 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 5, 2025 |
By: | /s/ Wayne E. Rich | |
Wayne E. Rich | ||
Chief Financial Officer | ||
(Principal Financial Officer) | ||
Date: | November 5, 2025 | |
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FAQ
What were REEMF’s Q3 2025 results?
How much cash does REEMF have and what is its working capital?
What is the status of the Demonstration Plant and expected timing?
How much has been spent on the Demonstration Plant to date?
What funding has been received from the DoE and WEA?
What are projected Demonstration Plant costs in 2026?
What is the novation request involving the DoE agreement?
