Quest Rare Minerals Ltd. (TSX:QRM) announced a private placement of secured convertible notes for gross proceeds of CAD 2,500,000 with new investor Ekagrata Inc. on February 24, 2015. The note will mature at the earlier of December 31, 2016. The note will bear fixed interest at a rate of 7% per annum, payable semi-annually in cash and, at the holder's option, can be converted at maturity into the company common shares at a price of CAD 0.13 per share.

In connection with the transaction, the company will issue 2,500,000 warrants to the investor for the notes, each of which will entitle the holder to acquire one additional common share of the company at a price of CAD 0.15 for four years. The company will be completed the transaction in two tranches. The first closing is expected to be held on or about February 27, 2015, at which the company will issue notes in a principal amount of CAD 2,000,000 plus an equivalent number of warrants.

The issuance of the balance of CAD 500,000 principal amount of notes and an equivalent number of warrants will be subject to shareholder approval, which the company intends to seek at its annual meeting of shareholders to be held on April 20, 2015. Closing of this additional amount of CAD 500,000, if approved, would take place immediately after the annual meeting. The closings of the transaction 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.

In addition, Ekagrata Inc. will have the right to nominate two directors to the board of directors of the company, subject to prior approval by the board.