Rare Element Begins a Scoping Study on Rare-Earth-Element Potential at Bear
Lodge and Updates the Exploration Status

TSX-V: RES

VANCOUVER, Oct. 20 /CNW/ - Rare Element Resources Ltd. (TSX-V: RES) ("Rare Element" or the "Company") is pleased to announce that it has engaged the services of some of the top technical professionals in their fields of expertise with Ore Reserves Engineering (resource estimation), John T. Boyd Company (mining engineering), Knight Piesold (geotechnical engineering), Mountain States R&D International (metallurgy), and Enviroscientists (environmental and permitting). This group of technical professionals will conduct a preliminary economic assessment (Scoping Study) of the rare-earth-element (REE) development potential of the Company's Bull Hill Southwest rare-earths deposit, Wyoming, USA.

Following completion of the current drilling program, Alan C. Noble, P.E. and an Independent Qualified Person, of Ore Reserves Engineering (ORE) will update the previous estimate of REE resources in the Bull Hill Southwest deposit (see news releases of March 23 and April 15, 2009). The resource estimate will be based on a combination of historical drilling data and the Company's drilling results from 2004 through 2009. ORE is anticipating completion of this effort with release of a NI 43-101 Technical Report late in the first quarter of 2010. ORE will also identify specific areas for follow-up definition drilling with an objective to complete an NI 43-101-compliant reserve estimate following a 2010 drilling and evaluation program.

The Scoping Study will follow resource estimation and will be coordinated by Michael P. Richardson, P.E. and an Independent Qualified Person, of John T. Boyd Company with completion of a NI 43-101 preliminary assessment report scheduled for mid-year 2010. This study will include more detailed metallurgy, specifics on environmental studies, permitting requirements, and preliminary mine, plant, and geotechnical engineering. In addition it will model potential development scenarios for the deposit in order to determine preliminary estimates of operating costs and capital cost requirements to construct mine and processing facilities at the site.

Of the distribution of rare-earth elements within the Bull Hill Southwest deposit, more than 50% are those that have the widest use and the greatest projected growth potential. These include lanthanum, neodymium, praseodymium, and samarium. Lanthanum has a growing market in nickel-metal-hydride batteries, and neodymium and praseodymium are in demand because of their use in high-intensity permanent magnets, which are critical components in the electric motors and generators for hybrid cars and wind turbines. Initial work on the Scoping Study is currently underway.

2009 Fall Drilling Program

The decision to proceed with a new resource estimate and a Scoping Study evaluation of the project follows completion of a NI 43-101-compliant resource estimated this past spring and the initiation of a major drilling program in August to expand and upgrade the oxide resources of the Bull Hill Southwest deposit. All studies completed to date confirm the exceptional REE potential of the deposit because of its high grade, large size, and amenability to processing the oxide portion of the resource. Geological work this fall includes: 1) systematic sampling of unsplit portions of twelve core holes from past exploration programs, 2) REE analyses of approximately 2500 ten-foot core samples, 3) selected geophysical surveys, and 4) detailed mineralogical studies to confirm the identity and distribution of the REE-bearing mineral phases. Assaying of the samples is being conducted by Activation Laboratories of Ancaster, Ontario utilizing lithium metaborate fusion and ICP-MS (inductively-coupled plasma - mass spectroscopy) procedures. The project work is being done under the supervision of Dr. James G Clark, L.Geo., Vice President, Exploration, and a qualified person under NI 43-101. The mineralogical work has been, and continues to be, done as a collaborative effort between Dr. Clark, a widely recognized and respected rare-earth deposit geologist, and Dr. Anthony Mariano, a world renowned expert in rare-earth mineralogy.

The Bull Hill area rare-earth mineralization is very extensive and only a small portion of its known extent has been drill-tested. Soil and colluvial cover mask the bedrock geology, and the area has much less than 5% outcrop, severely hindering interpretations of structure and detailed geologic features. The total NI 43-101-compliant inferred resource within the Bull Hill Southwest deposit is estimated at 9.8 million tons averaging 4.07% rare-earth oxide (REO) (see news release of March 23, 2009). The deposit comprises sets of carbonatite dikes and intervening stockworks, and their near-surface oxidized equivalents (FMR), which occur in a swarm of steeply dipping bodies that intrude an alkalic diatreme breccia. FMR is named for its principal mineral components-iron oxides (FeOx), manganese oxides (MnOx), and REE minerals. Some dikes have true thicknesses in excess of 100 feet. The dike and vein system extends from the surface to depths of more than 1000 feet, with a strike length of more than 1000 feet along a northwesterly trend. The upper part of the deposit, ranging from surface to depths of 300 to 500 feet, is the "oxide zone". This near-surface weathered, oxidized rock contains an inferred resource of 4.5 million tons averaging 4.3% REO, plus another 1.1 million tons of partially oxidized material that averages 4.5% REO.

One of the key exploration targets being tested is Bull Hill Northwest (Figure 1), which is located approximately 1000 feet northwest of the Bull Hill Southwest deposit. Bull Hill Northwest is defined primarily by historic Hecla Mining Company angled drill-hole WP-2, which has a near-surface intercept of 186 feet assaying over 9% total REO in the depth interval from 26 to 209 feet. The orientation of the mineralized bodies encountered in drill hole WP-2 is uncertain. One interpretation is that the FMR/carbonatite diking may strike northwesterly and be the continuation of the Bull Hill Southwest dike sets. This interpretation opens up a large area between the two targets for further exploration. A second interpretation is that mineralization at Bull Hill Northwest is controlled by northeast to east-northeast structural trends that may be related to similar FMR/carbonatite-hosted REE mineralization in the recently identified Whitetail Ridge target, located west of the West Bull Hill fault. Other targets in the Bull Hill area include Bull Hill Southeast Extension, a potential deep carbonatite plug, and a potential fault offset of the Bull Hill Southwest dike system.

Figure 1. Bull Hill Southwest Resource Area and Other Exploration Targets: http://files.newswire.ca/675/RES_Figure_1.doc

Key Mineralogical Observations

Mineralogical studies of the oxide zone mineralization indicate that this higher-grade REE mineralization (4.3% REO) is contained in aggregates of fine-grained bastnasite-group minerals: synchysite (Ca(REE)(CO(3))(2)F), parisite (Ca(REE)(2)(CO(3))3F(2)), and bastnasite ((REE)CO(3)(F,OH)), listed in decreasing order of abundance. Ancylite, the principal REE mineral in the deeper unoxidized zone, has not been observed in the near-surface oxide resource. The oxide-zone REE minerals occur most often within hexagonal pseudomorphs, accompanied by microcrystalline quartz, iron oxides (FeOx), manganese oxides (MnOx), and/or minor barite. The bastnasite group minerals are very fine-grained and form polycrystalline, fasciate bundles or aggregates within the pseudomorphs. They are also found as very fine, bundled aggregates outside the pseudomorphs and intergranular to the gangue phases.

The oxide zone REE minerals are contained within FMR dikes and veins that are typically black to rusty brown in color. Most are friable and vuggy, and drill core recoveries are often poor. A combination of the loose friable character of the FMR material and the fine-grained nature of the REE minerals allows a unique metallurgical pre-concentration method of crushing, attritioning, and screening to get 90% recovery of the REE with a 13% REO grade in the minus 500 mesh (-25 micron) fraction. Additional testwork is anticipated to produce a concentrate with a significant increase in grade.

Future Exploration Work Plans

In addition to planning the Scoping Study, the Company is contemplating substantial drilling and additional exploration work on the property in 2010. A development drilling program to define NI 43-101-compliant REE resources and reserves in the deposit will be conducted on the Bull Hill Southwest deposit. Multiple other targets will be tested and resources estimated, if drilling is successful. This work will include further analysis of archived drill cores from the various targets, accompanied by detailed mineralogical studies.

The mineralogical data will also provide the basis for continuing metallurgical studies on the mineralized material from different targets to design processes for concentrating the REE mineralization. Preliminary metallurgical work done by Mountain States R & D International on samples from Bull Hill Southwest successfully produced a pre-concentrate with threefold grade increase, thus providing encouragement that further concentration of the REE mineralization will be achievable.

RES is a junior mineral exploration and development company, with a primary focus on rare-earth elements with high technology applications. The language used in this News Release may contain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's forward-looking statements and expectations.

Rare Element Resources Ltd (TSX-V:RES) is a publicly traded mineral resource company focused on rare-earth elements and gold. In addition to the REE exploration and evaluation efforts, the Company and Newmont have entered into the Sundance gold exploration joint venture on the Company's Wyoming property. Newmont has the right to earn a 65% working interest in Rare Element Resources' property, excluding any rights to the rare-earth elements and uranium but including rights to gold and other metals, by performing US$5 million in property work expenditures over a five-year period. Newmont also has the right to earn an additional 15% working interest by completing a positive project feasibility study. Gold exploration drilling began in July for the 2009 program, and rare-earth drilling began in August.

    
    ON BEHALF OF THE BOARD

    Donald E. Ranta, PhD, PGeo, President & CEO
    

Donald E. Ranta, PhD, PGeo, serves the Board of Directors of the Company as an internal, technically Qualified Person. Technical information in this news release has been reviewed by Dr. Ranta and has been prepared in accordance with Canadian regulatory requirements that are set out in National Instrument 43-101. This news release was prepared by Company management, who take 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.

For further information: For further information: For information, refer to the Company's website at www.rareelementresources.com or contact: Mark T Brown, CFO, (604) 687-3520 ext 242, mtbrown@pacificopportunity.com; Donald E Ranta, (604) 687-3520, don@rareelementresources.com

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