CANADA RARE EARTHS BEGINS DRILLING AT GOELAND RARE EARTH PROJECT, QUEBEC

Canada Rare Earths Inc. ("Canada Rare Earths" or the "Company") (TSX Venture: V.CJC) is pleased to announce that it has successfully mobilized a drill rig and crew to its 100% owned Goeland Rare Earth Project located at Montviel, Quebec, and drilling is now underway.

This late summer diamond drill program has two key objectives: to confirm and expand historic drilling and to test the true dimensions and rare earth element potential of the PMTV 5 carbonatite unit. Canada Rare Earths' claims at Montviel neighbor those of Geomega Resources' (TSX-V: GMA) whose recent and ongoing rare earth discoveries have also been the focus of drilling on the PMTV 5 carbonatite unit. Canada Rare Earths and Geomega's Montviel holdings currently contain the only two known PMTV 5 carbonatite bodies at Montviel. Worldwide, carbonatite-related deposits are a major host for rare earths elements ("REE"). The world's most advanced and prolific REE deposits in production or development, Bayan Obo (China), Molycorp's Mountain Pass (USA), Lynas's Mount Weld (Aus), and Rare Earth Element Resource's Bear Lodge project, are all hosted by carbonatites.

President & CEO, Chad McMillan, comments that "With drilling underway, we are now very close to determining the true potential of our first rare earth target at Montviel; an important low magnetic area of approximately 4 square kilometers within the Company's West claims, which could be the most consistent of the whole Montviel complex. As such we believe this is a very exciting time for the international mining community to pay close attention to Canada Rare Earths."

Initially, the Company plans to drill approximately 3500 to 5000 meters through 10 holes in this Phase 1 program. The first three holes, holes GO-1, GO-2, GO-3 have been spotted to test the potential carbonatite over a distance of 1 (one) kilometre. Hole GO-1 is located approximately 500 meters northeast of the historical hole 93-MO-03, aiming to transect a major fault as it appears on the airborne survey with cross-cut magnetic low signatures on both sides of this structural feature. Hole GO-2 will be positioned very near the previous 93-MO-03 hole and Hole GO-3 is approximately 500 meters southwest of GO-2, all targeting this magnetic low signature.

More information on this drill program will be provided when available.

Meanwhile, the Company wishes to announce that it has re-allocated 1,765,000 stock options granted to directors, officers, employees and consultants of the Company as disclosed in its press release dated August 5, 2011. As a result of the re-allocation, only 1,500,000 stock options are being granted by the Company. The options are exercisable for a period of five years at a price of $0.50 per share, subject to regulatory approval.

Mr. Benoit Moreau, Geo and P. Eng., Vice President of Exploration for the Company, is a Qualified Person for the purpose of NI 43-101 and has reviewed the geological information disclosed herein.

ABOUT CANADA RARE EARTHS INC.

Canada Rare Earths is a growth company focused on the exploration and development of rare earth elements led by its 100% owned Goeland Rare Earths Project within the Montviel carbonatite complex, Montviel Township Quebec, immediately adjacent to Geomega's (TSX-V: GMA) recent rare earth discovery. The Goeland property, located 215 km north of Val-d'Or, is road accessible and consists of 47 claims totaling approximately 2,600 hectares. Since the acquisition of the Goeland Project, the Company, in a short period of time, has successfully established itself in one of the largest Carbonatite complexes in North America.