Mr. Peter Cashin reports

QUEST RARE MINERALS STRENGTHENS ITS CAPITAL STRUCTURE

Quest Rare Minerals Ltd. has provided an update. It has made several developments that strengthen its capital structure and provide the financial resources needed to proceed with the environmental impact assessment of Quest's rare earths project.

Private placement of secured convertible notes

Quest has accepted a committed private placement financing offer from Ekagrata Inc., a Canadian private investor, to purchase secured convertible notes in an amount of $2.5-million. The notes will be purchased directly by Ekagrata or one of its affiliates. They will mature at the earlier of Dec. 31, 2016, and the date on which Quest receives payment from the government of Quebec of resource tax credits and mining duty credits for Quest's 2013 and 2014 fiscal years. The notes will bear interest at a rate of 7 per cent per year, payable semi-annually in cash and, at the holder's option, can be converted at maturity into Quest common shares at a price of 13 cents per share. The notes will be secured by a first-priority security interest in, and lien upon, Quest's rights in and to Quebec resource tax credits and mining duty credits for Quest's fiscal years 2013 and thereafter.

In connection with the private placement, Quest will issue 2.5 million warrants to the subscriber for the notes, each of which will entitle the holder to acquire one additional common share of Quest at a price of 15 cents for four years. In addition, Ekagrata will have the right to nominate two directors to the board of directors of Quest, subject to prior approval by the board.

In order to comply with the applicable policies of the Toronto Stock Exchange, it is expected that the private placement with Ekagrata will be completed in two tranches. The first closing is expected to be held on or about Feb. 27, 2015, at which Quest will issue notes in a principal amount of $2-million plus an equivalent number of warrants. The issuance of the balance of $500,000 principal amount of notes and an equivalent number of warrants will be subject to shareholder approval, which Quest intends to seek at its annual meeting of shareholders to be held on April 20, 2015. Closing of this additional amount of $500,000, if approved, would take place immediately after the annual meeting.

Investissement Quebec equity investment

On Jan. 29, 2015, Quest was notified that the government of Quebec had adopted a decree authorizing Investissement Quebec, directly or through its subsidiary Ressources Quebec, to invest $600,000 in Quest, as described in Quest's short-form prospectus dated July 9, 2014. The investment will consist of common shares and an equivalent number of common share purchase warrants. The pricing and other terms and conditions of the private placement are expected to be finalized shortly.

Under the applicable policies of the Toronto Stock Exchange, the private placement to Investissement Quebec will also be subject to shareholder approval, which Quest intends to seek at the annual meeting to be held on April 20, 2015. Closing of the private placement, if approved, would take place immediately after the annual meeting.

Refund of Quebec tax credits

On Feb. 11, 2015, Quest received payment of the refundable Quebec resource tax credits and mining duty credits for its fiscal years 2010 to 2012 in an amount of $3,044,818.

"These are positive developments for Quest, since, when completed, they will provide close to $6.2-million in additional financial resources, necessary to undertake the permitting process as Quest moves the Strange Lake rare earths project forward," said Pierre Lortie, chairman of the board of Quest. "We particularly welcome the participation of Ressources Quebec in the capital of the corporation, which is a tangible indication of the importance the government of Quebec places on the development of a rare earths industry. Moreover, we are establishing a close association with Ekagrata, which has committed to work closely with our team to support the efficient completion of Quest's rare earths project and facilitate financial and product offtake arrangements with global strategic partners."

Prashant Pathak, chief executive officer of Ekagrata, said: "We invest in and work with companies which have potential to be significant players in their particular industry. Ekagrata and our key potential strategic collaborators will work with Quest to build Quest into a major supplier of rare earths oxides to the permanent magnet industry. We recognize the fact that China is, by far, the dominant producer of rare earths oxides while a significant demand for this material is from non-China economies."

The proceeds described in this news release will be used by Quest primarily toward completion of a feasibility study on its Strange Lake rare earths project in northeastern Quebec, and for working capital.

The closings of the private placement of the notes and that of Ressources Quebec's investment are subject to a number of conditions, including completion of satisfactory due diligence, signing of definitive agreements, normal closing conditions and conditional approval by the Toronto Stock Exchange.

We seek Safe Harbor.