RARE ELEMENT EARLY ADOPTS INTERNATIONAL FINANCIAL REPORTING STANDARDS

TSX-V: RES

AMEX: REE

VANCOUVER, Sept. 17 /PRNewswire-FirstCall/ - Rare Element Resources Ltd. (TSX-V: RES andAMEX: REE) announces that its application to early adopt International Financial Reporting Standards ("IFRS") under National Instrument 52-107 has been approved by the applicable Canadian Securities Administrators. The Company has chosen to early adopt IFRS and will commence reporting under these standards for the period beginning July 1, 2010, with a July 1, 2009 date of transition (the "Transition Date"). Comparative periods for fiscal 2010 will also be restated under IFRS.

As background, in February 2008, the Canadian Accounting Standards Board confirmed that IFRS will replace Canadian generally accepted accounting principles ("GAAP") for all publicly accountable enterprises for financial periods beginning on and after January 1, 2011, with the option available for enterprises to early adopt upon receipt of approval from the Canadian Securities regulatory authorities. The United States Securities and Exchange Commission has also authorized foreign private issuers to file financial statements using IFRS without having to include a US GAAP reconciliation.

Adoption of IFRS will result in a single accounting standard whereas currently the Company reports under Canadian GAAP with a US GAAP reconciliation. The use of a single accounting standard will reduce costs and streamline financial reporting by developing common reporting systems and consistency across its subsidiaries.

The Company's comprehensive IFRS conversion plan addresses changes in accounting policies, restatement of comparative periods, organization, internal controls and any required changes to business processes. The management of the Company has reviewed its accounting system, its internal controls and its disclosure control processes and believes they will not need significant modification as a result of the conversion to IFRS.

    IFRS Conversion
    ---------------

The Company's comprehensive IFRS conversion plan addresses changes in accounting policies, restatement of comparative periods, organization, internal controls and any required changes to business processes. To facilitate this process and ensure the full impact of the conversion is understood and managed reasonably, the Company had external consultants, including the Company's auditors DeVisser Gray, Chartered Accountants, assisting as needed. The accounting staff has also attended several training courses on the adoption and implementation of IFRS. Through in-depth training and the reconciliation of historical GAAP financial statements to IFRS, the Company believes that its accounting personnel have obtained a thorough understanding of IFRS.

The Company has reviewed its accounting system, its internal controls and its disclosure control processes and believes they do not need significant modification as a result of the conversion of IFRS.

    Initial adoption of IFRS
    ------------------------

IFRS 1 "First-time Adoption of International Financial Reporting Standards" sets forth guidance for the initial adoption of IFRS. Under IFRS 1, the standards are applied retroactively at the Transition Date with all adjustments to assets and liabilities taken to retained earnings unless certain exemptions are applied. The Company will be applying the following exemptions to its opening balance sheet dated July 1, 2009:

    (a) Business combinations

           IFRS 1 indicates that a first-time adopter may elect not to apply
           IFRS 3 Business Combinations retrospectively to business
           combinations that occurred before the date of transition to IFRS.
           The Company takes advantage of this election and applies IFRS 3 to
           business combinations that occurred on or after July 1, 2009.
           There is no adjustment required to the July 1, 2009's statement of
           financial position on the Transition Date.

    (b) IFRS 2 - Share-based payment transactions

           IFRS 2 Share-based Payment has not been applied to equity
           instruments that were granted on or before November 7, 2002, nor
           has it been applied to equity instruments granted after
           November 7, 2002 that vested before July 1, 2009.

    (c) IAS 27 - Consolidated and Separate Financial Statements

           In accordance with IFRS 1, if a company elects to apply IFRS 3
           Business Combinations retrospectively, IAS 27 Consolidated and
           Separate Financial Statements must also be applied
           retrospectively. As the Company elected to apply IFRS 3
           prospectively, the Company has also elected to apply IAS 27
           prospectively.

    (d) IAS 23 - Borrowing Costs

           IAS 23 Borrowing costs has not been applied to borrowing costs
           relating to qualifying assets for which the commencement date for
           capitalization is on or after July 1, 2009.

    (e) IAS 16 - Property, plant and equipment

           IAS 16 Property, plant and equipment allows for property, plant
           and equipment to continue carried at cost less depreciation, same
           as under GAAP.


    Impact of IFRS
    --------------

IFRS employs a conceptual framework that is similar to Canadian GAAP. The adoption of IFRS will not have any material impact on the financial information previously disclosed under Canadian GAAP. The Company identified the following adjustments as a result of the adoption of IFRS:

    (a) "Contributed surplus" versus various reserves in equity

           IFRS requires an entity to present for each component of equity, a
           reconciliation between the carrying amount at the beginning and
           end of the period, separately disclosing each change. The Company
           examined its "contributed surplus" account and concluded that as
           at the Transition Date, the entire amount of US$876,046 relates to
           "Equity settled employee benefit reserve". As a result, the
           Company believes that a reclassification would be necessary in the
           equity section between "Contributed surplus" and the "Equity
           settled employee benefit reserve" account.

           For comparatives, as at September 30, 2009, the entire US$871,524
           "contributed surplus" account was reclassified into "Equity
           settled employee benefit reserve". Furthermore, as at June 30,
           2010, US$1,477,734 "contributed surplus" account was broken down
           into US$1,166,746 "Equity settled employee benefit reserve" and
           US$310,988 "Reserves for agents' options".

    (b) Share-based payment transactions

           IFRS 2, similar to Under Canadian Generally Accepted Accounting
           Principles ("Canadian GAAP"), requires the Company to measure
           share-based compensation related to share purchase options granted
           to employees at the fair value of the options on the date of grant
           and to recognize such expense over the vesting period of the
           options. However, under IFRS 2, the recognition of such expense
           must be done with a "graded vesting" methodology as opposed to the
           straight-line vesting method allowed under Canadian GAAP. In
           addition, under IFRS, forfeitures estimates are recognized in the
           period they are estimated, and are revised for actual forfeitures
           in subsequent periods; while under Canadian GAAP, forfeitures of
           awards are recognized as they occur.

           Under IFRS graded vesting methodology, during the three months
           ended September 30, 2009, the Company would have recorded
           US$123,218 as share-based payment versus US$112,670 stock-based
           compensation under Canadian GAAP. As a result, US$10,548 would be
           adjusted in the share-based payment expense in the statement of
           operations and the same amount would be adjusted in the equity
           settled employee benefit reserve in the statement of equity.

           During the year ended June 30, 2010, the Company would have
           recorded US$537,061 as share-based payment versus US$524,497
           stock-based compensation under Canadian GAAP. As a result,
           US$12,564 would be adjusted in the share-based payment expense in
           the statement of operations and the same amount would be adjusted
           in the equity settled employee benefit reserve in the statement of
           equity.

    (c) Cumulative Translation differences

           IFRS requires that the functional currency of each entity of the
           Company be determined separately and record the foreign exchange
           resulting from the consolidation in equity rather than in the
           statement of operations. IFRS 1 provides an exemption and allows
           for such adjustments to be made as of the transition date,
           resulting in no change to the June 30, 2009 financial statements
           on the transition date.

           For the three months ended September 30, 2009, the foreign
           exchange resulting from the consolidation amounted to a gain of
           US$144,324, resulting in increasing the current period's loss in
           the statement of operations and recording an "Exchange reserve" in
           the Statement of Equity.

           For the year ended June 30, 2010, the foreign exchange resulting
           from the consolidation amounted to a loss of US$30,670, resulting
           in decreasing the current year's loss in the statement of
           operations and recording an "Exchange reserve" in the Statement of
           Equity.

In order to allow the users of the financial statements to better understand other changes between IFRS and GAAP that do not have any quantitative effect or adjustments to the Company's financial statements, the following qualitative explanation of the differences between GAAP and IFRS is provided:

    (a) Income tax

    Income tax expense is calculated in the same manner in accordance with
    GAAP and IFRS. Future income tax asset/liability is also calculated in
    the same manner in accordance with GAAP and IFRS.

    (b) Property, plant and equipment

    GAAP and IFRS allow the use of original cost less depreciation as the
    cost base. IFRS requires separate depreciation rate for components that
    depreciate differently.

    (c) Exploration for and Evaluation of Mineral Resources

    GAAP and IFRS allow the capitalization of costs associated with the
    exploration for and evaluation of mineral resources.

On Behalf of the Board of Directors

        "Mark T. Brown"

    ----------------------------
    Mark T. Brown, CA
    CFO and Director
    Rare Element Resources Ltd.

This news release was prepared by Company management, which takes full responsibility for content. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Rare Element Resources Ltd.