RARE ELEMENT RESOURCES LTD SEC 10-K Report
Rare Element Resources Ltd., a company focused on the development of rare earth element (REE) projects, has released its 2024 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces. The company is primarily engaged in the Bear Lodge REE Project in Wyoming and is advancing a Demonstration Plant to showcase its proprietary processing and separation technology.
Financial Highlights
Net Loss: The company reported a net loss of $18.451 million for the year ended December 31, 2024, an increase from $8.996 million in 2023. This increase was primarily due to higher exploration and evaluation costs associated with the Bear Lodge REE Project and the Demonstration Plant.
Loss Per Share - Basic and Diluted: The loss per share remained at $0.04, consistent with the previous year, due to a greater number of shares outstanding following the 2024 Rights Offering.
Business Highlights
Company Overview: Rare Element Resources Ltd. is focused on developing the Bear Lodge REE Project in Wyoming, which includes several large rare earth element deposits. The company is also advancing a Demonstration Plant to showcase its proprietary processing and separation technology.
Demonstration Plant Development: The company is part of a consortium led by General Atomics, working on a Demonstration Plant for rare earth separation and processing. The plant is expected to process stockpiled high-grade materials from the Bear Lodge REE Project, with operations anticipated to start in mid-2025.
Proprietary Technology: Rare Element Resources has developed proprietary rare earth processing and separation technology, which has been pilot tested and patented. This technology is a key focus for demonstrating technical and economic feasibility.
Bear Lodge REE Project: The project was placed under care-and-maintenance in 2016 due to financial constraints but is poised for recommencement pending successful Demonstration Plant operations. The project is strategically located near infrastructure and logistics centers in Wyoming.
Recent Developments: In 2021, the company received a financial award from the Department of Energy to support the Demonstration Plant. The project has seen cost increases due to inflation and design enhancements, with a revised budget of approximately $66,000.
Future Outlook: The company plans to evaluate the feasibility of mining and producing separated rare earth oxides on a commercial scale, contingent on the success of the Demonstration Plant. Additional funding will be required for the full development of the Bear Lodge REE Project.
Market Trends: The demand for rare earth elements, particularly for use in permanent magnets for electric vehicles and wind turbines, is expected to grow. The company is monitoring U.S. government actions to secure a domestic rare earth supply chain.
Environmental and Regulatory Compliance: The company is subject to extensive environmental regulations and has established surety bonds for reclamation obligations. It operates under permits from federal and state agencies, including the U.S. Forest Service and Wyoming Department of Environmental Quality.
Strategic Initiatives
Strategic Initiatives: The company is focused on the engineering, permitting, licensing, construction, and operation of a Demonstration Plant to showcase its proprietary extraction technology for rare earth elements (REEs). This initiative is part of a broader strategy to inform the design and estimated cost for a future full-scale production facility. The company is also part of a consortium led by General Atomics, which has received funding from the Department of Energy (DoE) to support the Demonstration Plant project.
Capital Management: To address funding needs, the company completed a rights offering in March 2024, raising approximately $35.8 million in gross proceeds. These funds are intended to support the operation of the Demonstration Plant and other corporate purposes. The company also received a $4.4 million grant from the Wyoming Energy Authority (WEA) to advance the Demonstration Plant. Additionally, the company has entered into a Cost Share Agreement with General Atomics to fund the non-federal share of the Demonstration Plant costs. The company has no off-balance sheet arrangements and has not repurchased any equity securities during the reported period.
Future Outlook: The company anticipates that the Demonstration Plant will commence operations in mid-2025, with the potential to produce up to 10 tons of NdPr oxide. However, the company expects that the total project costs will exceed the revised budget of $53.6 million, now estimated at approximately $66 million. The company plans to use its funds to cover costs above the DoE-approved budget and may need to secure additional financial resources or complete a strategic transaction to support the Bear Lodge REE Project. If unable to secure additional funding, the company may need to curtail or suspend its operational plans.
Challenges and Risks
Challenges and Risks: The company faces several risks related to its business operations, including the inability to operate its Demonstration Plant for a sufficient period to gather necessary data for commercialization. Inflationary pressures on wages and equipment could impact the company's ability to fund operations. The company has no revenues and expects to incur losses for a significant period, with future revenues and profits uncertain. The largest shareholder, Synchron, owns a majority of the common shares, which could influence major corporate decisions and potentially conflict with other shareholders' interests.
The company has granted exclusive intellectual property rights to Synchron, which may limit its ability to protect its intellectual property. The Bear Lodge REE Project has been on care-and-maintenance, and there is uncertainty regarding the resumption of licensing and permitting activities. The company has no history of producing mineral products, and the development of the Bear Lodge REE Project involves numerous uncertainties that could affect its feasibility or profitability.
The company may require joint ventures or partnerships to develop its projects, which could dilute its interest or affect its control over project development. The viability of the Bear Lodge REE Project is crucial, as it is the company's only rare earth project. Increased costs could affect the project's profitability, and a future pandemic could have an adverse impact on business operations.
Management has identified the need for additional capital to progress the Bear Lodge REE Project. The company completed a rights offering in March 2024, raising approximately $35.8 million, but this is insufficient for long-term activities. The company is monitoring U.S. government actions to secure a domestic rare earth supply chain, which could impact its business.
The company is exposed to market risks, including fluctuations in demand and prices for rare earth products. The dominance of China in the REE supply chain poses a significant risk, as changes in Chinese policies or increased competition could impact the company's ability to raise capital or operate profitably. The company also faces regulatory risks, as it is subject to extensive environmental laws and regulations that could impose significant costs or delays on its operations.
SEC Filing: RARE ELEMENT RESOURCES LTD [ REEMF ] - 10-K - Mar. 21, 2025