Canada Rare Earth Purchases Mineral Sands for Future Source of Rare Earths

Vancouver, British Columbia--(Newsfile Corp. - December 19, 2019) - Canada Rare Earth Corp. (TSXV: LL) ("Canada Rare Earth" or the "Company") is pleased to announce that CanBras Minerals Ltda., a wholly owned subsidiary of the Company's subsidiary CREC South American Holdings Corp. ("CREC SAH") closed on a multi-faceted agreement (the "Agreement") including:

• purchasing tailings produced from over 25 years of historical mining and any future mining activities (the Tailings") conducted on a 9,960-hectare property leased by the Company for 26 years (the "Leased Property");
• The existing Tailings, situated on 590 hectares of the Leased Property, contain rare earths, cassiterite, ilmenite and zircon;
• the right to utilize existing permits and licenses necessary to process the tailings;
• the right of first refusal to purchase the mining rights related to the 9,960 hectares;
• consideration to the vendors/lessors (the "Vendors") of US$11 million (the "Purchase Price") over ten years: US$600,000 in January 2020 and US$100,000 per month starting September 2020 and continuing through April 1, 2029; and
• no royalties are payable by CanBras.

Concurrently, Canada Rare Earth has arranged with two other parties (the "Investors") to provide 80% of the Purchase Price to acquire an 80% equity interest in CREC SAH which owns 100% of CanBras. CREC will be responsible for funding 20% of the Purchase Price and will retain 20% ownership of CREC SAH. Shareholders of CREC are not expected to suffer any dilution as a result of this transaction. The Investors have identified purchasers for a minimum of 48,000 MT of mixed concentrate per year from the operations.

Together, Canada Rare Earth and the Investors are negotiating with one or more groups (the "Operators") to process the tailings and produce the mixed concentrate. The Operators would provide all necessary operating working capital, all equipment and personnel and in return receive a percentage of the proceeds depending on the yield of the operations.

Current plans indicate that processing operations could commence in 10 to 12 months. Based on past processing operations on the Leased Property and discussions with two prospective Operators who have attended the site on multiple occasions to study the Tailings, .

The Company and prospective Operators have conducted due diligence, however, a qualified person as defined by NI 43-101 has not been retained to establish mineral reserves supported by a technical report and feasibility study. Historically such projects have a much higher risk of economic and technical failure. Therefore, production decisions are not based on a feasibility study of mineral reserves demonstrating economic and technical feasibility and therefore there is increased uncertainty particularly with the yields that can be achieved through the processing of the Tailings.

The Vendors have agreed to provide operational support to CanBras and its Operators, as and if requested by CanBras. The Vendors are also providing 5,000 sq. metres of land on which CanBras may construct plants, buildings and storage facilities and staging areas. The Vendors may, for a period of 18 months, process tailings on 8 hectares jointly selected by CanBras and the Vendors

In the event that the mineral rights underlying the 9,960 hectares are sold to another party CanBras' assets, lease and rights will not be affected.

With three months' notice, CanBras may terminate the Agreement, return ownership of the tailings to the Vendors, cancel the lease, and not be required to make payments beyond the notice period. After 26 years, the vendors may repurchase the Tailings and cancel the lease for nominal consideration.

Chris Goodman, Canada Rare Earth's Managing Director for South America said: "This agreement delivers a source of rare earths and other commercially traded minerals that will act as cornerstone for our South American operations and help develop an integrated supply chain. This will allow us to take our business activities to the next level."

About Canada Rare Earth Corp.

Canada Rare Earth is generating revenues and gross profits as we develop our integrated supply chain business based on the rare earth industry and with increasing attention directed to valuable by-products. Our business involves sourcing, adding value and selling rare earths and other mineral products in all stages and forms utilizing proprietary, affiliated and third party sources and facilities.

On behalf of the Board

Tracy A. Moore, CEO and Peter Shearing, COO

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. Forward-looking statements in this release are made pursuant to the 'safe harbour' provisions of the Private Securities Litigation Reform act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties.

For more information on the Company, interested parties should review the Company's filings that are available at www.sedar.com.

FOR FURTHER INFORMATION PLEASE CONTACT:

Tracy A. Moore
Chief Executive Officer
[email protected]

Peter Shearing
Chief Operating Officer
[email protected]

Tel: (604) 638-8886
Website: www.canadarareearth.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/50971