Canada Rare Earth Corporation

October 28, 2019

Canada Rare Earth Enters Business Deal Memo for Rare Earth Source

Canada Rare Earth Corp. (“Canada Rare Earth” or the “Company”) (TSX.V: LL) is pleased to announce the signing of a business deal memo to set out and document clarifications and revisions to terms set out in a binding letter of intent (the “LOI”) announced in February (with updates provided in April and May 2019). The LOI pertains to the Company acquiring all existing tailings and all future tailings produced from a property in South America for the purpose of extracting rare earths and other commercially saleable minerals.

The Company expects to finalize the definitive agreement and funding before the end of November 2019.

The due diligence process conducted by the Company identified a number of issues. Subsequent discussions resolved the items and accordingly, the deal memo was prepared allowing for final agreement on key terms and conditions of the LOI agreement including:

• acquiring the currently existing mineral sand tailings (in excess of 40,000,000 cubic metres) produced from more than 20 years of mining operations in one area;
• acquiring all future tailings produced from over 8,500 hectares of the property on which the tailings are situated;
• access to the tailings in the current location for 25 years;
• consideration includes US$11 million with a US$600,000 deposit at the time of closing and the balance payable monthly over a nine-year period;
• no royalties are payable;
• the acquisition will be by one of the Company’s subsidiaries and financing will be arranged through the subsidiary (the “Acquiring Company”);
• the Company will participate in the acquisition and will be responsible for a minimum 20% of the funding and, as a result, will indirectly hold a minimum 20% interest in the venture after the acquisition and financing;
• the Company will have the right to appoint one person to the Acquiring Company’s board of directors and may provide at least one person to serve in a senior officer capacity;
• processing of the tailings will be performed by one or more independent operators who will provide all equipment, labour and working capital and will be compensated through a share of the commercially saleable products; the share of the saleable products will be determined at a later date based on yields;
• the tailings are situated on land for which mineral exploitation rights have been granted. The Acquiring Company will have the right of first refusal to purchase the mineral rights. In the event these mineral rights are sold to another party the Acquiring Company’s rights to the existing and future tailings will not be affected; and
• the Acquiring Company may terminate this agreement under certain circumstances without penalty.

A finder’s fee is due on the closing of the acquisition: an option to purchase 150,000 shares of the Company with the exercise price determined on the closing date, and US$50,000 payable in four equal monthly payments.

There can be no assurance that the definitive agreement will be finalized or that the funds required to finance the acquisition will be received.

ABOUT CANADA RARE EARTH CORP. 

Canada Rare Earth is developing an international supply network business based on our commodity-trading platform and existing, developing and planned processing facilities. We are generating revenues and gross profits as we develop our network 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. 

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