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Options an Additional 564 Square Kilometers of Quebec Based Graphite Prospective Lands and will Change Name to Canada Strategic Metals Inc.

Vancouver, British Columbia - July 19th, 2012 - Canada Rare Earths Inc. ("Canada Rare Earths" or "the Company") (TSX.V: CJC; FSE: YXEN; OTC-BB: CJCFF) is pleased to introduce Mr. Ron MacDonald as the Company's new Executive Chairman and Director, Mr. Jean Sebastien Lavallee, P.Geo, as incoming President and CEO and Mr. Mark Baggio as a new Director of the Company. In addition, the Company announces it has optioned an additional 564 square kilometers of graphite prospective lands in Quebec, amended the terms of the Company's option to acquire the Champagne graphite project and begun procedures to change the name of the Company to "Canada Strategic Metals Inc."

New Directors

Both Mr. MacDonald and Mr. Baggio are well known for their interest in, and focus on, the emerging clean technology and energy sectors, with a specific interest in Asian battery markets. They are intimately familiar with the demand drivers in these markets and, as discussed below, have been involved with companies working to secure the key components required to feed this growing demand; lithium (with Critical Elements Corporation TSX.V: CRE), vanadium (with American Vanadium Corp. TSX.V: AVC), and now graphite (with Canada Rare Earths Inc. TSX.V: CJC). The close and growing relationship that Mr. MacDonald and Mr. Baggio have with Asian consumers of these commodities in particular is a unique trait that the Company expects will provide it a distinct advantage in advancing its large Quebec based graphite portfolio.

Mr. Ron MacDonald, a graduate of Dalhousie University in Halifax, Nova Scotia, has extensive experience in the mining sector and is a regular presenter at conferences in Canada, Asia, and the United States on critical, strategic and rare earth markets. He spent two years as Senior Assistant to the Canadian Minister of Foreign Affairs and Deputy Prime Minister and two years as Chief of Staff to the Leader of the Government in the Senate of Canada. From 1988 to 1997, Mr. MacDonald was the Member of Parliament for Halifax, Nova Scotia, during which time he was appointed by the Prime Minister of Canada as Parliamentary Secretary of International Trade. In 2006, Mr. MacDonald became President and CEO of Cansource International Ltd., a natural resource-focused international marketing and strategic management consultancy. He currently acts in the capacity of Executive Chairman and Director of American Vanadium Corp. (tsx.v: AVC), Director of Critical Elements Corporation (tsx.v: CRE), Strategic Political Advisor to Western Potash Corp. (tsx.v: WPX), and Senior Council Global Markets for Commerce Resources Ltd. (tsx.v: CCE). Further, Mr. MacDonald has been a contributing member of the OECD Committee developing international guidelines for tantalum end-users, as well as a member of the EICC committee developing guidelines for their global tantalum smelter verification program.

Along with Mr. MacDonald, the Company also welcomes Mr. Mark Baggio to the Board of the Directors. As the founder of Cansource Marketing Corp., Mr. Baggio has provided global strategic advice and marketing services to natural resource companies with the aim of building international markets and international product-expansion initiatives. In the last four years, Mr. Baggio has worked extensively in the rare and critical resource space, developing and implementing global market and financing programs for Canadian mining companies. As an independent consultant and representative of companies with unique assets, Mr. Baggio has introduced, presented and negotiated for clients in international forums, symposiums, and to the Asian financial community, assisting in arranging investment capital. He has also been a member of the OECD committee that developed the new international due diligence guidelines, as well as contributing to the Electronic Industry Citizenship Coalition (EICC) committee dealing with ethical sourcing of materials used in their product production.

The North Shore Option Agreement

Meanwhile, the Company has signed an option agreement (the "North Shore Option Agreement") to acquire approximately 564 square kilometers of prospective graphite bearing lands with a particular focus on the Quebec North Shore. This land package, which is broken down into 11 (eleven) distinct properties, includes historical exploration work that suggests significant graphite resource bearing potential exists across these lands.

North Shore Property Descriptions

Grand Prix and Grand Prix North

The Grand Prix and Grand Prix North graphite properties consist of two large blocks consisting of 273 mineral claims totalling approximately 14,976 hectares (150 square kilometers) and 15 mineral claims totalling approximately 829 hectares (8 square kilometers) respectively, both located approximately 110 kilometres and 130 kilometers north-west of Baie-Comeau, Quebec.

The Grand Prix and Grand Prix North properties were originally explored by Outokumpu Mines Inc. ("Outokumpu") in 1998 for base metal mineralization. An advanced helicopter borne geophysical survey consisting of 2,600 kilometers of flight path in the region was performed at that time. The airborne survey revealed multiple electro-magnetic (EM) anomalies in the area, outside of or coinciding with magnetic anomalies. In a 30 kilometer long trend across the Grand Prix property, the survey revealed multiple EM target anomalies and off-set structures, including several zones of parallel conductors each measuring as much as 10 kilometers long. This suggests an apparent strike length of EM conductors associated with known graphite occurrences of approximately 20 kilometers and the total of all EM structure length close to 35 kilometers long. This helicopter borne geophysical survey was followed by ground exploration on approximately half of the major conductors only. The program was abandoned midway when it was concluded that all anomalies visited were related to graphite mineralization and that the base metal sulphides of interest were nearly absent. This historical ground work also confirmed the presence of graphite on surface, coincident with at least several of these conductors.

Some of the graphite occurrences seem to be associated to the contact (shear zone) between the different geological units. The geology is consistent with the Central Metasedimentary Belt of the Grenville Province and includes quartzofeldspathic rocks, quartzite, biotite gneiss, marble and locally pegmatitic quartzofeldspathic rocks, and intrusive rock as anorthosite and gabbro. EM Anomalies associated with graphite on surface indicate an apparent strike length of approximately 20 kilometers, providing a large prospective area to explore for a graphite resource on both Grand Prix properties.

The properties logistics are excellent with nearby power and road access via the main lumber haul road which originates in Baie-Comeau and Labrieville leading to numerous tertiary/forest roads that transect the property.

Butterfly Graphite

The Butterfly property consists of three claim blocks of 261 minerals claims totalling approximately 14,084 hectares (141 square kilometres) located approximately 102 kilometres north-west of Sept-Iles, Quebec. The property is accessible via paved and logging roads.

The property was previously explored by Soquem following up on airborne electromagnetic anomalies. Historical groundwork identified the presence of graphite over the property but was not given any focus at the time.

The property contains a graphitic paragneiss formation. The formation consists of quartz, graphite, biotite and sulphides. The sulphides are in veinlets or disseminated in the paragneiss while the graphite is in disseminated flakes. The formation is intercalated with bands of quartzite.

Paradise North and Paradise South

The Paradise North and Paradise South graphite properties consist of two large blocks respectively of 17 mineral claims totalling approximately 924 hectares (9 square kilometers) and 112 mineral claims totalling approximately 6102 hectares (61 square kilometers) respectively, both located approximately 190 kilometres and 170 kilometres north of Baie-Comeau, Quebec.

The two blocks cover a large paragneiss band containing multiple EM anomalies and Graphite occurrences. The paragneiss containing the graphite is part of the extension of the Gueret formation from the Gagnon group, particularly in the Paradise North Block. Many of the EM anomalies have been visited on the Paradise property by Soquem in 1996 for Copper and Nickel but were instead deemed largely associated with graphite. More work will be necessary to evaluate the graphite grade in the paragneiss.

Marble North and Marble South

The Marble North and Marble South graphite properties consists of two blocks consisting of 13 mineral claims totalling approximately 723 hectares (7 square kilometers) and 25 mineral claims totalling approximately 1392 hectares (14 square kilometers) respectively, located approximately 100 kilometres north-west of Baie-Comeau, Quebec.

The Marble properties cover the same group of paragneiss from the suite of Bourdon but also cover Marble band of few kilometers long containing graphite in flakes with visual grades around 5% graphite. The marble are more favorable units to contain large graphite flakes, due to the recrystallization during the metamorphism.

Properties logistics are excellent with nearby power and road access via the main lumber haul road which originates in Baie-Comeau and Labrieville leading to numerous tertiary/forest roads that transect the property.

Tetepisca

The Tetepisca graphite property consists of one large contiguous block of 78 mineral claims totalling approximately 4,206 hectares (42 square kilometers) located approximately 230 kilometres north of Baie-Comeau, Quebec.

The Tetepisca property covers a part of the Ulameen formation, a structure parallel to the formation of the Lac Gueret graphite deposit. The Ulameen formation host paragneiss band containing graphite in flakes. Graphite occurrences have already been identified on the property. More work will be necessary to evaluate the graphite grade in the paragneiss.

Mardi Gras Graphite

The Mardi Gras graphite property consists of one contiguous block of 21 mineral claims totalling approximately 1122 hectares (11 square kilometers) located approximately 160 kilometres north-west of Sept-Iles, Quebec.

The property has been explored in 2000-2001 by Soquem with airborne EM survey and ground prospecting. The property contains paragneiss and Quartzite with a 5-10% recorded graphite occurrence associated with EM anomalies of over a few hundred meters long.

White Graphite

The White graphite property consists of one contiguous block of 10 mineral claims totalling approximately 557 hectares (5 square kilometers) located approximately 50 kilometres north of Baie-Comeau, Que.

The White property covers the same group of paragneiss from the suite of Bourdon (Same as Grand Prix, Champagne and Marble properties) and has been covered by EM airborne survey in past work. The EM reveals some interesting EM anomalies associated with graphite, visually identified as high as 10%.

Lion Graphite

The Lion graphite property consists of one large contiguous block of 120 mineral claims totalling approximately 6,553 hectares (65 square kilometers) located approximately 110 kilometres north of Matagami, Quebec.

According to geological maps from the Ministere des Ressources Naturelles et de la Faune du Quebec, the property covers an intrusion that is around 9 kilometers long by 4 kilometers wide and has been identified as a graphite bearing granite system. More work will be necessary to evaluate the grade of graphite in the intrusion. Based on the size of the intrusion, the Lion property provides a large prospective area to explore for a graphite resource.

North Shore Option Agreement Terms

In order to exercise its option to acquire a 100% interest in these properties, the Company is required to:

-make the following cash payments:

$30,000 on the date of TSX.V acceptance of the agreement (the "Approval Date")

$45,000 within 6 months of the Approval Date

-issue the following common shares:

3,000,000 common shares on the Approval Date

1,500,000 common shares on or before 15 months from the Approval Date

1,500,000 common shares on or before 24 months from the Approval Date; and

-complete a minimum of $250,000 in aggregate exploration related expenditures on any of the properties subject to the North Shore Option Agreement and/ or the Champagne graphite properties within 18 months from the Approval Date.

In addition, if the Company files a National Instrument 43-101 compliant resource estimate with 200,000 tonnes or more of graphite content (at cut-off of 5%) on any of these properties the Company will make a one-time payment to the Optionors consisting of aggregate consideration of $150,000 and 3,000,000 common shares, provided that this obligation will terminate if a similar bonus payment is made under the Champagne Option Agreement. The Optionors will also collectively maintain a 2% Net Smelter Returns Royalty, of which the Company can buy back 1/2 (1%) for $1,000,000. The Company has also agreed that, during the period which is 24 months from the Approval Date, the Company will retain Consul-Teck Mineral Exploration Consultants, of Val-d'Or, Quebec, a company owned by the Optionors, as the sole operator with respect to the exploration of the properties at commercially acceptable terms.

Amendment of the Champagne Option Agreement

The Company has also successfully renegotiated the terms of its option of the Champagne graphite project. Please see the Company's April 19, 2012 news release for a description of the original terms. Under the revised option terms, in order to exercise its option to acquire a 100% interest, the Company is required to:

-make the following cash payments:

$60,000 on signing of the LOI (paid)

$60,000 within 6 months of the date of TSX.V acceptance (the "Approval Date")

$135,000 on or before 15 months from the Approval Date

$135,000 on or before 24 months from the Approval Date

-issue the following common shares:

3,000,000 shares on the Approval Date

1,500,000 common shares on or before 15 months from the Approval Date

1,500,000 common shares on or before 24 months from the Approval Date; and

-complete a minimum of $250,000 in aggregate exploration related expenditures on any of the Champagne properties and/ or the properties subject to the North Shore Option Agreement within 18 months from the Approval Date.

In addition, if the Company files a National Instrument 43-101 compliant resource estimate with 200,000 tonnes or more of graphite content (at cut-off of 5%) on any of the Champagne properties the Company will make a one-time payment to the Optionors consisting of aggregate consideration of $150,000 and 3,000,000 common shares, provided that this obligation will terminate if a similar bonus payment is made under the North Shore Agreement. The Optionors will also collectively maintain a 2% Net Smelter Returns Royalty, of which the Company can buy back 1/2 (1%) for $1,000,000. The Company has also agreed that, during the period which is 24 months from the Approval Date, the Company will retain Consul-Teck Mineral Exploration Consultants, of Val-d'Or, Quebec, a company owned by the Optionors, as the sole operator with respect to the exploration of the properties at commercially acceptable terms.

Champagne Property Description

The Champagne graphite property consists of one large contiguous block of 88 mineral claims totaling approximately 4,870 hectares (48 square kilometers) located approximately 120 km north of Baie-Comeau, Quebec.

The Champagne graphite property was originally explored by Outokumpu in 1998 for base metal mineralization. According to Outokumpu's historical reports filed with the Ministere des Resources Naturelles et de la Faune du Quebec, an advanced helicopter borne geophysical survey consisting of 2,600 kilometers of flight path in the region was performed at that time. The airborne survey revealed multiple electro-magnetic (EM) anomalies in the area, outside or coinciding with magnetic anomalies. In a 15 kilometer long trend across the property, the survey revealed multiple EM target anomalies and off-set structures, including several zones of parallel conductors each measuring as much as 3-5 kilometers long. This suggests an apparent strike length of EM conductors associated with known graphite occurrences of approximately 11 kilometers and the total of all EM structure length close to 20 kilometers long providing a large prospective area to explore for a graphite resource on the Champagne property.

This helicopter borne geophysical survey was followed by ground exploration on approximately half of the major conductors only. The program was abandoned midway when it was concluded that all anomalies visited were related to graphite mineralization and that the base metal sulphides of interest were nearly absent. This historical ground work also confirmed the presence of graphite on surface, coincident with at least several of these conductors. Four of the EM conductors have been identified as 'strong' and are considered as potentially pod style targets averaging in size between 250 meters by 500 meters to 1.8 kilometers by 250 meters, with moderate EM signatures seemingly connecting them along the length of this trend. Seen as these areas were also identified as hosting graphite mineralization they are early high priority targets on the property.

Some of the graphite occurrences seem to be associated with the contact (shear zone) between the different geological units. The geology is consistent with the Central Metasedimentary Belt of the Grenville Province and includes quartzofeldspathic rocks, quartzite, biotite gneiss, marble and locally pegmatitic quartzofeldspathic rocks, and intrusive rock as anorthosite and gabbro.

Property logistics are excellent with nearby power and road access via the main lumber haul road which originates in Baie-Comeau and Labrieville leading to numerous tertiary/forest roads that transect the property.

Given the advanced historical pre-drilling exploration work on the Champagne property, and subject to confirmatory reconnaissance of the historical reporting, the project is near ready to be trenched and drilled.

New President and CEO

It is intended that Mr. Jean-Sebastien Lavallee, P.Geo, will become the new President and CEO of the Company following TSX.V approval of these option agreements instead of joining the Board of Directors as was previously intended and indicated in the Company's news release on April 17th, 2012. Becoming President and CEO will provide Mr. Lavallee greater authority in the management and execution of the Company's exploration and development programs in his home province of Quebec. Mr. Lavallee is a Quebec based Professional Geologist and has been active in mining exploration since 1994. He is the vice president of Consul-Teck Exploration Inc., a geological consulting firm headquartered in Val-d'Or that specializes in Quebec mining exploration and development as well as the President and CEO of Critical Elements Corporation (tsx.v: CRE). He has also previously acted as a geologist for many resource companies, including Eloro Resources Ltd., Uracan Resources Ltd., Agnico-Eagle Mines Ltd., Noranda Minerals Inc., Champion Minerals Inc., Matamec Explorations Inc. and Atlanta Gold Inc. Having been responsible for the planning and execution of many exploration programs in recent years, Mr. Lavallee has solid experience in exploration project development and the junior resource markets, with a primary focus on Quebec specifically.

As these management moves relate to current management, Dave McMillan has stepped down from the Board of Directors though will continue to act as an Advisor to the Company, while Chad McMillan will remain a Director. Kelsey Chin will continue to act as Chief Financial Officer while Harold Forzley and Bob Krause will remain independent Directors and members of the Audit Committee.

Corporate Name Change

Finally, the Company also announces that, subject to TSX.V approval, it will change its name from Canada Rare Earths Inc. to Canada Strategic Metals Inc. to better reflect its diversified interest in the critical and strategic metals sector.

Management Comments

Mr. Chad McMillan, current President and CEO of the Company, comments that management "is very excited to welcome Mr. MacDonald, Mr. Baggio, and soon Mr. Lavallee to the executive management team. Their collective experience significantly enhances the profile and potential of this Company to execute our near and long term objectives, while the acquisition of this large portfolio of Quebec based graphite focused assets significantly enhances our potential to become a world-class graphite player."

Jean-Sebastien Lavallee, incoming President and CEO suggests that "Quebec is one of the top mining exploration and development jurisdictions in the world. A large and high potential graphite portfolio based in Quebec, including a Quebec based team working on the ground in these areas bodes very well for the future resource development potential of these assets. I am excited about the opportunity to work with this team."

Ron MacDonald, incoming Executive Chairman, adds that "it is clear through our experience that overseas demand will continue to grow in the clean technology and renewable energy sectors. We continue to encounter great interest in the graphite sector and are excited about the potential to advance such a large and promising portfolio of Canadian based graphite assets for both domestic use, and our colleagues overseas."

Conference Call

To introduce new management and elaborate on the developments announced today, the Company is scheduling a conference call for the morning of Tuesday, July 24th, 2012. The Company will provide further detail on timing and access instructions as soon as they are available.

About Graphite

Natural graphite comes in several forms: flake, amorphous and lump. Graphite has many important new applications including its use in lithium ion batteries, fuel cells and nuclear and solar power that have the potential to significantly increase the demand for this critical element. For instance, there is between 10 and 30 times more graphite required by weight to produce a lithium-ion battery than there is lithium. In addition, the recent discovery of a new material called graphene, which is actually derived from graphite, has also heightened interest. International research is now underway into a number of its potential applications including enhancing the speed and processing power of many modern electronic devices. This has also increased the interest in graphite.

Meanwhile, global consumption of natural graphite has increased from ~600,000 in 2000 to 1.2 MM t in 2012. Demand for graphite has been increasing by approximately 5% per year since 2000 due to the ongoing modernization of China, India and other emerging economies, resulting in strong demand from traditional end uses such as the steel and automotive industries. Of the 1.2 million tons of graphite produced annually, approximately 40% is of the most desirable flake type. China, which produces about 73% of the world's graphite, is seeing production and export growth leveling and export taxes and a licensing system have been instituted. A recent European Commission study regarding the criticality of 41 different materials to the European economy included graphite among the 14 materials high in both economic importance and supply risk (Critical Raw Materials for the EU, July 2010). As a function of these fundamentals, demand for graphite and thereby prices are expected to rise as electric vehicles and lithium battery technology continue to be adopted and while the material performs a greater role in new technology applications. Graphite prices have been increasing in recent months and over the last couple of years and prices for large flake, high purity graphite (+80 mesh, 0.2mm, 94-97% Carbon) have more than doubled.

The Company cautions that neither it, nor the Qualified Person named below have verified the quality and accuracy of the historic exploration results reported in this news release, and cautions readers not to rely upon them. The results were generated from sources believed to be reliable; however, they have not yet been confirmed.

Jean-Sebastien Lavallee P.Geo, geologist, a Qualified Person as defined by National Instrument 43-101, has reviewed and approved the content of this release.

The proposed acquisitions, appointments and name change described herein are subjective to TSX Venture Exchange approval.

Neither the 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.

For more information on the Company, please visit www.canadarareearths.com.

On Behalf of the Board,

"Ron MacDonald"

Executive Chairman, Director

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