TMX group

TSX-V: RES

VANCOUVER, Sept. 21 /CNW/ - Rare Element Resources Ltd (TSX-V : RES)
announces that the non-brokered private placement, originally announced on
31 August 2006 at $840,000, is oversubscribed. Subject to the approval of
appropriate regulatory agencies, the Company has closed the offering at
$1,000,021.40. The full offering now consists of 1,666,698 units at $0.60 per
unit. Each unit comprises one common share and one-half of a non-transferable
share-purchase warrant. A whole warrant may be exercised to purchase one
additional common share of the Company, at $0.75 per share, for a period of
eighteen months from the closing date of the offering. The units have a
four-month hold period. With the completed offering, the Company's issued and
outstanding shares stand at 20,225,123 (fully diluted 24,301,069). Proceeds
from the offering increase working capital to approximately $1.4 million and
provide funding for exploration of the Company's Bear Lodge, Wyoming,
rare-earth property and funding for potential strategic-metals project
acquisitions.

Rare Element Resources Ltd (TSX-V:RES) is a publicly traded
mineral-resource company focused on gold and strategic metals such as the
rare-earth elements (REE's). The author of US Geological Survey Professional
Paper 1049D stated that what is now Rare Element Resources' Bear Lodge REE
property is the largest disseminated REE occurrence in North America. REE's,
which have been called "catalysts for high-tech living," are required for many
new technologies, including nickel-metal-hydride batteries and the motors,
generators and batteries used in hybrid cars. The US market for REE's exceeds
US$1 billion, with most supplied by China.

The Rare Element Resources Bear Lodge property also has gold-exploration
potential. Previous gold exploration has identified numerous gold geochemical
anomalies and gold occurrences in intrusive breccia bodies. The surface
geology exposes the upper levels of a mineralized alkaline-igneous intrusive
complex, which is geologically similar to the intrusive complex that hosts the
Cripple Creek, Colorado, gold deposits.

Paso Rico (USA) Inc, a wholly owned subsidiary of Rare Element Resources,
and Newmont North America Exploration Limited, a subsidiary of Newmont Mining
Corporation (Newmont), have entered into a gold-exploration venture on the
Company's Bear Lodge property. Newmont has the right to earn a 65% working
interest in Rare Element Resources' Bear Lodge 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.

ON BEHALF OF THE BOARD

Mark T Brown, CA, CFO

William H. Bird, PhD, PGeo, serves the Board of Directors of the Company
as an internal, technically Qualified Person. Technical information in this
news release has been prepared in accordance with Canadian regulatory
requirements set out in National Instrument 43-101 and reviewed by Dr Bird.
This news release was prepared by Company management, who take full
responsibility for content. The TSX Venture Exchange has not reviewed and does
not accept responsibility for the adequacy or accuracy of this release.