Mr. Alain Wilson reports

QUEST OBTAINS SHAREHOLDER APPROVAL EXEMPTION FROM TSX FOR PRIVATE PLACEMENT OF SPECIAL WARRANTS

The Toronto Stock Exchange has confirmed that Quest Rare Minerals Ltd.'s previously announced private placement of special warrants in a maximum amount of $8-million is exempt from the requirement that it be approved by Quest's shareholders.

Under Section 607(g)(i) of the TSX Company Manual, the private placement would be subject to shareholder approval in that the maximum number of Quest common shares issuable in the private placement is greater than 25 per cent of the number of Quest's issued and outstanding shares (86,429,011 shares). Quest is relying on the exemption from shareholder approval provided in Section 604(e) of the TSX Company Manual, in light of the serious financial difficulties faced by Quest. The private placement, which is intended to improve Quest's financial situation, has been approved by Quest's board of directors, all of which members are free from any interest, and unrelated to investors, in the private placement. Quest's board of directors has determined that the private placement is reasonable for Quest in the circumstances. It is not expected that any of Quest's directors or officers will participate in the private placement.

The terms and conditions of the private placement were negotiated at arm's length between Quest and Secutor Capital Management Corp., lead agent for the private placement. The issue price of 20 cents per special warrant represents a discount of 17.53 per cent to the volume-weighted average trading price of Quest's shares on the TSX for the five trading days ended Jan. 25, 2017 (24.25 cents), the trading day prior to the date of Secutor's engagement as agent.

In the event of a private placement in a maximum amount of $8-million, Quest will issue 40 million special warrants, which may be exchanged for an aggregate of 40 million shares and 40 million common share purchase warrants. Each of the warrants will entitle its holder to acquire one share at a price of 27.5 cents for three years. In the event of a maximum private placement, Quest will also issue two million compensation warrants to the agents for the private placement, each of which will entitle its holder to acquire one share at a price of 27.5 cents for three years. The 82 million shares, which will be issuable in the event of a maximum private placement, represent in the aggregate 94.86 per cent of Quest's currently issued and outstanding shares.

If Quest does not obtain a receipt in respect of a final prospectus filed in Quebec, Ontario, British Columbia and Alberta qualifying the distribution of the shares and warrants underlying the special warrants within 30 days of the closing date of the private placement, each special warrant will entitle its holder to purchase, for no additional consideration, 1.25 shares and 0.75 warrant (in lieu of one share and one warrant), representing an aggregate of 50 million shares and 30 million warrants. In that event, each full warrant will entitle its holder to purchase one share at a price of 27.5 cents for a period of four years from the closing date of the private placement (in lieu of three years). The discount for the 1.25 shares per special warrant, which will be issued at a deemed price of 16 cents per share, exceeds the maximum discount of 25 per cent from the market price for Quest's shares set out in Section 607(e) of the TSX Company Manual and is therefore subject to shareholder approval. Quest is relying on the exemption from shareholder approval provided in Section 604(e) of the TSX Company Manual, as described above, with respect to this provision of the TSX Company Manual as well. Quest understands that as a result of its use of this exemption, it will be placed under delisting review under the policies of the TSX.

The private placement is not expected to have an effect on control of Quest, and Quest is not aware that any investor in the private placement will become a control person of Quest.

The closing of the private placement is expected to take place on Feb. 9, 2017, subject to customary conditions and regulatory approval, including that of the TSX.

About Quest Rare Minerals Ltd.

Quest is a Canadian-based company focused on becoming an integrated producer of rare earth metal oxides and a significant participant in the rare earth elements (REE) material supply chain. Quest is led by a management team with in-depth experience in chemical and metallurgical processing. Quest's objective is the establishment of major hydrometallurgical and refining facilities in Becancour, Que., to separate and produce strategically critical rare earth metal oxides. These industrial facilities will process mineral concentrates extracted from Quest's Strange Lake mining properties in Northern Quebec and recycle lamp phosphors utilizing Quest's efficient, eco-friendly "Selective Thermal Sulphation (STS)" (1) process.

(1) Patent pending.

We seek Safe Harbor.