Mr. Tracy Moore reports

CANADA RARE EARTH CORP. FILES AUDITED ANNUAL FINANCIAL STATEMENTS AND MANAGEMENT DISCUSSION AND ANALYSIS

Canada Rare Earth Corp. has filed its audited annual financial statements for the year ended March 31, 2015, and related management discussion and analysis on its website and on SEDAR. The company encourages readers to review both documents and, in the interim, is pleased to provide the following highlights.

Overview

Canada Rare Earth is a Canadian development-stage company developing a vertically integrated business within the global rare earth industry. Historically, the company was engaged solely in the exploration and development of precious metal and base metal mineral properties. More recently, the company's focus has been directed to properties with the potential to host rare earth elements, with a view to ultimately develop a vertically integrated rare earth business.

Outlook for rare earths and Canada Rare Earth's focus

With greater awareness of the global supply chain and, in particular, China's dominance in the processing of rare earth concentrate, the company, starting in September, 2012, expanded its business focus to include the downstream processing of rare earth products.

Rare earth raw materials and value-added products are essential to many green technologies, such as hybrid vehicles and wind power devices, and the company believes that the global efforts to reduce reliance on fossil fuels in favour of alternative energy sources present an extremely attractive opportunity for producers of rare earth elements. In addition to the emerging green technology sector, there continues to be an increased demand for rare earths in the traditional markets, including applications in the military and electronics sectors.

China is host to the vast majority of rare earth concentrate processing and without a viable alternative, the company, along with most, if not all, rare earth mines and sources situated outside of China are currently forced to sell, directly or indirectly, to the Chinese-dominated industry which, under the Chinese national government's direction, is being consolidated into six major state-owned organizations.

The supply of rare earth oxides has been largely dominated by China, with approximately 86 per cent of the world's production in 2014, although China has only approximately 42 per cent of the known reserves of rare earths. Accordingly, the introduction of new high-quality rare earth sources situated outside of China, and very importantly, the proven ability to process the rare earths into individual rare earth elements to exacting specifications outside of China, will be critical to alleviating the Chinese dominance angst suffered by the world's largest manufacturing companies.

The company's goal has evolved to developing a mine to market vertically integrated business model by becoming a fully integrated rare earth producer. Over the past two years, the company has taken a number of steps to effect its transformation from a narrowly focused rare earth exploration company to become a mine to market rare earth business involved in all of the various stages, from exploration, mining and concentrating, to producing oxides, metals and alloys. Each facet of the business model is interrelated with the others, and the development must be organized in a simultaneous, synchronized and planned manner.

Next steps in the company's plans include financing, planning and development activities for rare earth properties, and establishing separation capacity for rare earth concentrates by one or more refineries set up outside of China. If commercially advantageous and possible, the company will participate in the ownership of such refineries established outside of China.

Simultaneously, the company intends to establish sales channels between available rare earth concentrate suppliers and customers in China.

The company has established a business relationship with CEC Rare Earth Corp. (REC), a private British Columbia corporation that is an affiliate of Canada Rare and an Asia-based group of companies. The Asian group owns one fully operational refinery in China and owns another in Laos that is fully constructed, but which is not yet operational as permitting is pending.

The venture partners have more than 10 years of engineering experience directly related to rare earth refinery design, construction and importantly to operations. In particular, the Asian group has been instrumentally involved with the design and construction of more than 10 rare earth refineries. REC is controlled by one of the company's directors and the Asian group is controlled by a relative of that director. The venture partners and the company are evaluating a number of rare earth refinery initiatives, with the goal of pursuing one or more projects.

The company believes that by virtue of access to rare earth sources, and most importantly access to rare earth separation capacity with extensive design, build and operating experience, it is well positioned to become a leading business within the global rare earth industry.

Corporate developments -- highlights

The company's objective is the development of an integrated rare earth business with rare earth properties in Canada, South America and elsewhere, and refining and processing capabilities in various jurisdictions, including Asia, the Caribbean and South America. Other initiatives include:

• Maintaining and preparing the company's core resource properties;
• Arranging for the sale of non-core resource properties;
• Establishing necessary and complementary downstream business relationships;
• Devoting considerable time, energy and focus on raising funds for the company's core properties, related downstream business interests, and overhead expenses.

Some of our specific developments and initiatives include:

• From mid-September, 2014, to date, the company has assisted with the permitting, and strategic planning and financing of a completed, full-spectrum rare earth refinery situated in Laos for a monthly fee of $25,000 (U.S.), and the opportunity to purchase or earn an interest in the refinery;
• Based on test results and the design of the Laos refinery, the prospective rare earth concentrate from the Mata Azul property would be suitable feedstock;
• The company has entered into a number of agreements relating to the Mata Azul prospective rare earth property in Brazil:
  • A joint venture agreement to advance exploration, and establish mining and concentration operations for rare earth and other mineral rights;
  • The right but not the obligation to purchase all of the rare earth concentrate to be produced from the Mata Azul property for 20 years;
  • Two letters of intent to sell 10,000 metric tons annually of rare earth concentrate sourced from the Mata Azul property to two affiliated full-spectrum rare earth separation refineries situated in Asia. The minimum selling prices exceed the maximum purchase prices of the rare earth concentrate;
• The company has been active in selling off non-core properties:
  • In September, 2014, we optioned the Hinton Coal property for $1.02-million, payable over three years, and we are entitled to a royalty of 15 cents per ton on future production. We have received $40,000 of payment toward the purchase price, plus have recouped certain property taxes. The due diligence period has been extended because of the weak market for coal, but the optionee continues to be interested in the property;
  • In February, 2015, the company completed the sale of the Manitouwadge graphite property. The company generated $159,000 of proceeds and is entitled to receive a 2-per-cent royalty on future production;
  • The company has listed for sale the surface rights for the Springer property, and has taken steps to list the surface and mineral rights for one of its other properties.
• The company has been interacting with the privately owned Delaware company that owns several properties in Haiti to discuss financing prospects for continuing exploration and possibly mining on the property, on which the company has the 25-year lease for a potential refinery site. Development of the property would provide cost advantages for the company's prospective refinery project.

Financial results for the year ended March 31, 2015 -- highlights:

• Generated $392,000 of positive cash flow from the sale and optioning of non-core properties, and from consulting services;
• Spent $37,000 of property-related expenses to maintain and develop the company's property portfolio (down from $124,000 in the previous year), and incurred $952,000 of other cash-based expenses, including about $200,000 relating to the Mata Azul property (an increase from $904,000 in the previous year);
• At year-end, the company has $691,000 of net working capital (a reduction of $625,000 compared with the balance of $1,316,000 at the previous year-end). The company's plans do not include an equity raise within the next year. Rather, it will continue efforts to sell off non-core assets and recoup funds from projects such as Mata Azul once funded. Additionally, the company anticipates charging management fees to various initiatives.

Commenting on the company's financial statements and the various corporate initiatives of the company over the past year, Tracy A. Moore, chief executive officer, said, "The company is sufficiently well capitalized and strategically positioned to allow it to develop several industry relationships in the rare earth sector to enable the company to achieve its corporate goals."

We seek Safe Harbor.