Exhibit 99.1
  Quest Rare Minerals Ltd.
     Balance Sheets
    
    1Statements of Operations, Comprehensive Loss and Deficit
    
    2Statement of Shareholders Equity
    
    3Statements of Cash Flows
    
    4Notes to the Financial Statements
    
    5  19
 NOTICE TO READER




---



##### 



Quest Rare Minerals Ltd.
 BALANCE SHEETS
 April 30
    
    October 312011
    
    2010$
    
    $ASSETSCurrentCash (note 3)
    
    
    25,818,694
    
    
    
    50,449,202Investments (note 4)
    
    
    16,360,439
    
    
    
    31,600Commodity taxes receivable
    
    
    556,436
    
    
    
    885,997Prepaid expenses and deposits
    
    
    948,069
    
    
    
    362,682Tax credits receivable
    
    
    3,332,884
    
    
    
    3,352,712Total current assets
    
    
    47,016,522
    
    
    
    55,082,193Investments  long-term (note 4)
    
    
    8,775,302
    
    
    
    Tax credits receivable  long-term
    
    
    522,279
    
    
    
    522,279Mining properties and deferred costs (note 6)
    
    
    14,474,434
    
    
    
    9,980,30470,788,537
    
    
    
    65,584,776LIABILITIES AND SHAREHOLDERS EQUITYCurrentAccounts payable and accrued liabilities (note 5)
    
    
    1,481,323
    
    
    
    2,332,957Shareholders equityShare capital (note 7(a))
    
    
    63,534,110
    
    
    
    55,110,324Warrants (note 7(c))
    
    
    9,393,437
    
    
    
    11,234,987Contributed surplus
    
    
    11,732,206
    
    
    
    3,640,448Deficit
    
    
    (15,352,539
    )
    
    
    (6,733,940
    )Total shareholders equity
    
    
    69,307,214
    
    
    
    63,251,81970,788,537
    
    
    
    65,584,776
 (notes 1, 11 and 12)
 See accompanying notes
  (Signed) Peter J. Cashin
    
    (Signed) Ronald KayDirector
    
    Director
 1




---



##### 



Quest Rare Minerals Ltd.
 STATEMENTS OF OPERATIONS,  COMPREHENSIVE LOSS AND DEFICIT
 Three month period
    
    Six month periodended April 30
    
    ended April 302011
    
    2010
    
    2011
    
    2010$
    
    $
    
    $
    
    $INCOMEInterest (note 4)
    
    
    167,812
    
    
    
    1,137
    
    
    
    321,116
    
    
    
    6,163EXPENSESProfessional fees
    
    
    333,346
    
    
    
    69,744
    
    
    
    552,865
    
    
    
    113,044Investor relations
    
    
    456,746
    
    
    
    189,862
    
    
    
    747,766
    
    
    
    334,842Administration expenses (note 7(b))
    
    
    412,870
    
    
    
    1,264,736
    
    
    
    7,309,051
    
    
    
    1,518,676Interest expense
    
    
    
    
    
    
    6,029
    
    
    
    
    
    
    
    6,029Write-down of mining properties and
deferred costs (note 6)
    
    
    31,633
    
    
    
    162,993
    
    
    
    327,833
    
    
    
    162,993Unrealized loss on investments held
for trading (note 4)
    
    
    1,100
    
    
    
    27,000
    
    
    
    2,200
    
    
    
    17,0001,235,695
    
    
    
    1,720,364
    
    
    
    8,939,715
    
    
    
    2,152,584Net loss and comprehensive loss for the period
    
    
    (1,067,883
    )
    
    
    (1,719,227
    )
    
    
    (8,618,599
    )
    
    
    (2,146,421
    )Deficit, beginning of period
    
    
    (14,284,656
    )
    
    
    (3,465,149
    )
    
    
    (6,733,940
    )
    
    
    (3,037,955
    )Deficit, end of period
    
    
    (15,352,539
    )
    
    
    (5,184,376
    )
    
    
    (15,352,539
    )
    
    
    (5,184,376
    )Net loss per shareBasic and fully diluted
    
    
    (0.02
    )
    
    
    (0.04
    )
    
    
    (0.15
    )
    
    
    (0.05
    )Weighted average number of outstanding sharesBasic and fully diluted
    
    
    58,567,942
    
    
    
    40,816,839
    
    
    
    58,251,414
    
    
    
    40,454,212
 See accompanying notes
 2




---



##### 



Quest Rare Minerals Ltd.
 STATEMENT OF SHAREHOLDERS EQUITY
 ContributedShare capital
    
    Warrants
    
    Surplus
    
    Deficit
    
    Total#
    
    $
    
    #
    
    $
    
    $
    
    $
    
    $Balance  October 31, 2009
    
    
    39,938,319
    
    
    
    11,539,429
    
    
    
    5,065,251
    
    
    
    1,055,690
    
    
    
    725,518
    
    
    
    (2,061,497
    )
    
    
    11,259,140Issuance of shares for warrants (note 7(a)(iii))
    
    
    788,635
    
    
    
    372,024
    
    
    
    (788,635
    )
    
    
    (56,571
    )
    
    
    
    
    
    
    
    
    
    
    315,453Issuance of shares for stock options (note 7(a)(iv))
    
    
    8,000
    
    
    
    1,033
    
    
    
    
    
    
    
    
    
    
    
    (233
    )
    
    
    
    
    
    
    800Stock based compensation (note 7(b))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    183,029
    
    
    
    
    
    
    
    183,029Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (427,194
    )
    
    
    (427,194
    )Balance  January 31, 2010
    
    
    40,734,954
    
    
    
    11,912,486
    
    
    
    4,276,616
    
    
    
    999,119
    
    
    
    908,314
    
    
    
    (2,488,691
    )
    
    
    11,331,228Issuance of shares for warrants (note 7(a)(iii))
    
    
    1,616,765
    
    
    
    1,013,479
    
    
    
    (1,616,765
    )
    
    
    (192,418
    )
    
    
    
    
    
    
    
    
    
    
    821,061Issuance of shares for stock options (note 7(a)(iv))
    
    
    110,188
    
    
    
    56,327
    
    
    
    
    
    
    
    
    
    
    
    (29,032
    )
    
    
    
    
    
    
    27,295Stock based compensation (note 7(b))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,448,966
    
    
    
    
    
    
    
    1,448,966Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,719,227
    )
    
    
    (1,719,227
    )Balance  April 30, 2010
    
    
    42,461,907
    
    
    
    12,982,292
    
    
    
    2,659,851
    
    
    
    806,701
    
    
    
    2,328,248
    
    
    
    (4,207,918
    )
    
    
    11,909,323Balance  October 31, 2010
    
    
    57,568,506
    
    
    
    55,110,324
    
    
    
    6,814,995
    
    
    
    11,234,987
    
    
    
    3,640,448
    
    
    
    (6,733,940
    )
    
    
    63,251,819Issuance of shares for warrants (note 7(a)(i))
    
    
    319,094
    
    
    
    1,934,105
    
    
    
    (319,094
    )
    
    
    (495,774
    )
    
    
    
    
    
    
    
    
    
    
    1,438,331Issuance of shares for stock options (note 7(a)(ii))
    
    
    316,666
    
    
    
    245,752
    
    
    
    
    
    
    
    
    
    
    
    (115,420
    )
    
    
    
    
    
    
    130,332Stock based compensation (note 7(b))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,374,216
    
    
    
    
    
    
    
    7,374,216Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,550,716
    )
    
    
    (7,550,716
    )Balance  January 31, 2011
    
    
    58,204,266
    
    
    
    57,290,181
    
    
    
    6,495,901
    
    
    
    10,739,213
    
    
    
    10,899,244
    
    
    
    (14,284,656
    )
    
    
    64,643,982Issuance of shares for warrants (note 7(a)(i))
    
    
    1,309,434
    
    
    
    6,141,943
    
    
    
    (1,309,434
    )
    
    
    (1,345,776
    )
    
    
    
    
    
    
    
    
    
    
    4,796,167Issuance of shares for stock options (note 7(a)(ii))
    
    
    43,333
    
    
    
    101,986
    
    
    
    
    
    
    
    
    
    
    
    (47,519
    )
    
    
    
    
    
    
    54,467Stock based compensation (note 7(b))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    880,481
    
    
    
    
    
    
    
    880,481Net loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,067,883
    )
    
    
    (1,067,883
    )Balance  April 30, 2011
    
    
    59,557,033
    
    
    
    63,534,110
    
    
    
    5,186,467
    
    
    
    9,393,437
    
    
    
    11,732,206
    
    
    
    (15,352,539
    )
    
    
    69,307,214
 3




---



##### 



Quest Rare Minerals Ltd.
 STATEMENTS OF CASH FLOWS
 Three month period
    
    Six month periodended April 30
    
    ended April 302011
    
    2010
    
    2011
    
    2010$
    
    $
    
    $
    
    $OPERATING ACTIVITIESNet loss for the period
    
    
    (1,067,883
    )
    
    
    (1,719,227
    )
    
    
    (8,618,599
    )
    
    
    (2,146,421
    )Items not affecting cashInterest income
    
    
    (94,371
    )
    
    
    
    
    
    
    (104,837
    )
    
    
    Write-down of mining properties
and deferred costs (note 6)
    
    
    31,633
    
    
    
    162,993
    
    
    
    327,833
    
    
    
    162,993Stock-based compensation (note 7(b))
    
    
    307,001
    
    
    
    1,226,610
    
    
    
    7,120,933
    
    
    
    1,404,175Unrealized loss on investments held for trading
for trading (note 4)
    
    
    1,100
    
    
    
    27,000
    
    
    
    2,200
    
    
    
    17,000(822,520
    )
    
    
    (302,624
    )
    
    
    (1,272,470
    )
    
    
    (562,253
    )Changes in non-cash working capital items
related to operating activities (note 9)
    
    
    932,116
    
    
    
    (170,214
    )
    
    
    (1,087,632
    )
    
    
    (249,322
    )Cash flows related to operating activities
    
    
    109,596
    
    
    
    (472,838
    )
    
    
    (2,360,102
    )
    
    
    (811,575
    )INVESTING ACTIVITIESAcquisition of investments
    
    
    (1,505
    )
    
    
    
    
    
    
    (25,001,505
    )
    
    
    Mining properties and deferred costs (note 9)
    
    
    (2,450,105
    )
    
    
    (643,446
    )
    
    
    (3,688,198
    )
    
    
    (1,104,014
    )Cash flows related to investing activities
    
    
    (2,451,610
    )
    
    
    (643,446
    )
    
    
    (28,689,703
    )
    
    
    (1,104,014
    )FINANCING ACTIVITIESExercise of stock options
    
    
    54,467
    
    
    
    27,295
    
    
    
    184,799
    
    
    
    28,095Exercise of warrants
    
    
    4,796,167
    
    
    
    821,060
    
    
    
    6,234,498
    
    
    
    1,136,514Cash flows related to financing activities
    
    
    4,850,634
    
    
    
    848,355
    
    
    
    6,419,297
    
    
    
    1,164,609Net decrease in cash during the period
    
    
    2,508,620
    
    
    
    (267,929
    )
    
    
    (24,630,508
    )
    
    
    (750,980
    )Cash, beginning of period
    
    
    23,310,074
    
    
    
    4,739,397
    
    
    
    50,449,202
    
    
    
    5,222,448Cash, end of period
    
    
    25,818,694
    
    
    
    4,471,468
    
    
    
    25,818,694
    
    
    
    4,471,468
 See accompanying notes
 4




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  1. NATURE OF OPERATIONS
 Canada Business Corporations Act
  2. ACCOUNTING POLICIES
  3. CASH
  5




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  4. INVESTMENTS
  April 30, 2011
    
    October 31, 2010Fairvalue
    
    Carrying
    
    
    
    
    
    CarryingClassification
    
    level
    
    value
    
    Fair value
    
    value
    
    Fair value$
    
    $
    
    $
    
    $Canadian stocks
    
    Held-for-trading
    
    I
    
    
    29,400
    
    
    
    29,400
    
    
    
    31,600
    
    
    
    31,600Corporate bonds
    
    Held-to-maturity
    
    II
    
    
    3,963,824
    
    
    
    3,965,832
    
    
    
    
    
    
    
    Provincial bonds
    
    Held-to-maturity
    
    II
    
    
    21,142,517
    
    
    
    21,159,149
    
    
    
    
    
    
    
    25,135,741
    
    
    
    25,154,381
    
    
    
    31,600
    
    
    
    31,600Less: current portion
    
    
    
    
    
    
    (16,360,439
    )
    
    
    
    
    
    
    (31,600
    )Investments  long-term
    
    
    
    
    
    
    8,775,302
    
    
    
    
    
    
    
    
   5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 April 30,
    
    October 31,2011
    
    2010$
    
    $Trade
    
    
    1,426,697
    
    
    
    2,025,552Due to related parties (note 8)
    
    
    54,626
    
    
    
    307,4051,481,323
    
    
    
    2,332,957
 6




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  6. MINING PROPERTIES AND DEFERRED COSTS
  October 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    April 30,2010
    
    Expenditures
    
    Tax credits
    
    Write-down
    
    2011$
    
    $
    
    $
    
    $
    
    $QuebecStrange LakeAcquisition
    
    
    94,516
    
    
    
    30,031
    
    
    
    
    
    
    
    (262
    )
    
    
    124,285Exploration
    
    
    5,436,412
    
    
    
    3,397,613
    
    
    
    
    
    
    
    (26,624
    )
    
    
    8,807,401Misery LakeAcquisition
    
    
    1,779,363
    
    
    
    16,692
    
    
    
    
    
    
    
    
    
    
    
    1,796,055Exploration
    
    
    1,457,208
    
    
    
    113,977
    
    
    
    
    
    
    
    
    
    
    
    1,571,185Stewart LakeAcquisition
    
    
    42,113
    
    
    
    
    
    
    
    
    
    
    
    (42,113
    )
    
    
    Exploration
    
    
    33,285
    
    
    
    
    
    
    
    
    
    
    
    (33,285
    )
    
    
    NanukAcquisition
    
    
    50,594
    
    
    
    214
    
    
    
    
    
    
    
    (22,525
    )
    
    
    28,283Exploration
    
    
    262,224
    
    
    
    135
    
    
    
    
    
    
    
    (117,556
    )
    
    
    144,803OtherAcquisition
    
    
    3,031
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,031Exploration
    
    
    
    
    
    
    5,568
    
    
    
    
    
    
    
    (5,568
    )
    
    
    9,158,746
    
    
    
    3,564,230
    
    
    
    
    
    
    
    (247,933
    )
    
    
    12,475,043
 7




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  6. MINING PROPERTIES AND DEFERRED COSTS (Contd)
 October 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    April 30,2010
    
    Expenditures
    
    Tax credits
    
    Write-down
    
    2011$
        $
        $
        $
        $Newfoundland
and LabradorStrange LakeAcquisition
    
    
    155,889
    
    
    
    (2,700
    )
    
    
    
    
    
    
    
    
    
    
    153,189Exploration
    
    
    189,276
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    189,281Misery LakeAcquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration
    
    
    479
    
    
    
    
    
    
    
    
    
    
    
    (320
    )
    
    
    159Alterra  Strange
LakeAcquisition
    
    
    13,870
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,870Exploration
    
    
    11,695
    
    
    
    124,773
    
    
    
    
    
    
    
    
    
    
    
    136,468OtherAcquisition
    
    
    3,480
    
    
    
    1,080
    
    
    
    
    
    
    
    (2,460
    )
    
    
    2,100Exploration
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    374,689
    
    
    
    123,158
    
    
    
    
    
    
    
    (2,780
    )
    
    
    495,067New BrunswickPlaster RockAcquisition
    
    
    90,450
    
    
    
    810
    
    
    
    
    
    
    
    (53,737
    )
    
    
    37,523Exploration
    
    
    41,411
    
    
    
    
    
    
    
    
    
    
    
    (23,383
    )
    
    
    18,028131,861
    
    
    
    810
    
    
    
    
    
    
    
    (77,120
    )
    
    
    55,551Properties
    
    
    9,665,296
    
    
    
    3,688,198
    
    
    
    
    
    
    
    (327,833
    )
    
    
    13,025,661Stock-based
compensation (note
7(b))
    
    
    315,008
    
    
    
    1,133,765
    
    
    
    
    
    
    
    
    
    
    
    1,448,7739,980,304
    
    
    
    4,821,963
    
    
    
    
    
    
    
    (327,833
    )
    
    
    14,474,434
 8




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  6. MINING PROPERTIES AND DEFERRED COSTS (Contd)
  October 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    April 30,2009
    
    Expenditures
    
    Tax credits
    
    Write-down
    
    2010$
        $
        $
        $
        $QuebecStrange LakeAcquisition
    
    
    24,580
    
    
    
    53,114
    
    
    
    
    
    
    
    
    
    
    
    77,694Exploration
    
    
    1,377,172
    
    
    
    702,056
    
    
    
    (304,255
    )
    
    
    
    
    
    
    1,774,973Misery LakeAcquisition
    
    
    1,738,661
    
    
    
    44,182
    
    
    
    
    
    
    
    
    
    
    
    1,782,843Exploration
    
    
    657,805
    
    
    
    212,166
    
    
    
    (91,948
    )
    
    
    
    
    
    
    778,023Stewart LakeAcquisition
    
    
    42,113
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,113Exploration
    
    
    27,953
    
    
    
    9,408
    
    
    
    (4,078
    )
    
    
    
    
    
    
    33,283NanukAcquisition
    
    
    19,300
    
    
    
    19,524
    
    
    
    
    
    
    
    
    
    
    
    38,824Exploration
    
    
    258,025
    
    
    
    7,411
    
    
    
    (3,212
    )
    
    
    
    
    
    
    262,224OtherAcquisition
    
    
    3,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,600Exploration
    
    
    115,687
    
    
    
    5,381
    
    
    
    (2,332
    )
    
    
    (80,563
    )
    
    
    38,1734,264,896
    
    
    
    1,053,242
    
    
    
    (405,825
    )
    
    
    (80,563
    )
    
    
    4,831,750
 9




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  6. MINING PROPERTIES AND DEFERRED COSTS (Contd)
 October 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    April 30,2009
    
    Expenditures
    
    Tax credits
    
    Write-down
    
    2010$
        $
        $
        $
        $Newfoundland
and LabradorStrange LakeAcquisition
    
    
    155,889
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,889Exploration
    
    
    186,368
    
    
    
    2,894
    
    
    
    
    
    
    
    
    
    
    
    189,262Misery LakeAcquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration
    
    
    
    
    
    
    478
    
    
    
    
    
    
    
    
    
    
    
    478OtherAcquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration
    
    
    41
    
    
    
    8,704
    
    
    
    
    
    
    
    (8,745
    )
    
    
    342,298
    
    
    
    12,076
    
    
    
    
    
    
    
    (8,745
    )
    
    
    345,629OntarioKenora NorthAcquisition
    
    
    62,644
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,644Exploration
    
    
    106,889
    
    
    
    4,545
    
    
    
    
    
    
    
    
    
    
    
    111,434Snook LakeAcquisition
    
    
    16,284
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,284Exploration
    
    
    19,618
    
    
    
    497
    
    
    
    
    
    
    
    
    
    
    
    20,115OtherAcquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration
    
    
    71,380
    
    
    
    940
    
    
    
    
    
    
    
    (72,320
    )
    
    
    276,815
    
    
    
    5,982
    
    
    
    
    
    
    
    (72,320
    )
    
    
    210,477New BrunswickPlaster RockAcquisition
    
    
    89,662
    
    
    
    788
    
    
    
    
    
    
    
    
    
    
    
    90,450Exploration
    
    
    14,515
    
    
    
    26,706
    
    
    
    
    
    
    
    3,855
    
    
    
    45,076OtherAcquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exploration
    
    
    
    
    
    
    1,365
    
    
    
    
    
    
    
    (1,365
    )
    
    
    104,177
    
    
    
    28,859
    
    
    
    
    
    
    
    2,490
    
    
    
    135,526Properties
    
    
    4,988,186
    
    
    
    1,100,159
    
    
    
    (405,825
    )
    
    
    (159,138
    )
    
    
    5,523,382Stock-based
compensation (note
7(b))
    
    
    78,033
    
    
    
    227,820
    
    
    
    
    
    
    
    
    
    
    
    305,8535,066,219
    
    
    
    1,327,979
    
    
    
    (405,825
    )
    
    
    (159,138
    )
    
    
    5,829,235
 10




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  6. MINING PROPERTIES AND DEFERRED COSTS (Contd)
  Three-month period
    
    Six-month periodended April 30,
    
    ended April 302011
    
    2010
    
    2011
    
    2010$
        $
        $
        $Balance, beginning of period
    
    
    11,482.480
    
    
    
    5,366,308
    
    
    
    9,980,304
    
    
    
    5,066,219Expenditures incurred during the periodGeochemical
    
    
    3,267
    
    
    
    21,478
    
    
    
    3,267
    
    
    
    42,890Geophysical
    
    
    
    
    
    
    4,500
    
    
    
    
    
    
    
    4,500Geological
    
    
    543,062
    
    
    
    293,135
    
    
    
    915,695
    
    
    
    472,768Drilling
    
    
    1,468,518
    
    
    
    55,517
    
    
    
    2,055,665
    
    
    
    203,082Prospecting
    
    
    
    
    
    
    2,418
    
    
    
    7,209
    
    
    
    13,430Excavation and Trenching
    
    
    5,886
    
    
    
    15,150
    
    
    
    11,770
    
    
    
    17,238Mining and Metallurgical
    
    
    61,679
    
    
    
    107,605
    
    
    
    168,477
    
    
    
    110,128Prefeasibility Studies
    
    
    239,183
    
    
    
    
    
    
    
    273,710
    
    
    
    Mining properties  administration
    
    
    98,710
    
    
    
    63,084
    
    
    
    206,279
    
    
    
    118,515Mining properties  acquisitions
    
    
    29,801
    
    
    
    76,704
    
    
    
    46,127
    
    
    
    117,608Stock-based compensation (note 7(b))
    
    
    573,481
    
    
    
    222,356
    
    
    
    1,133,764
    
    
    
    227,8203,023,587
    
    
    
    861,947
    
    
    
    4,821,963
    
    
    
    1,327,979Tax credits
    
    
    
    
    
    
    (239,882
    )
    
    
    
    
    
    
    (405,825
    )Write-down of mining properties and deferred costs
    
    
    (31,633
    )
    
    
    (159,138
    )
    
    
    (327,833
    )
    
    
    (159,138
    )2,991,954
    
    
    
    462,927
    
    
    
    4,494,130
    
    
    
    763,016Balance  end of period
    
    
    14,474,434
    
    
    
    5,829,235
    
    
    
    14,474,434
    
    
    
    5,829,235
  Strange Lake Project, Quebec
  11




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  6. MINING PROPERTIES AND DEFERRED COSTS (Contd)
 Stewart Lake Project, Quebec
  Nanuk Uranium Project, Quebec
  Misery Lake Rare Earth Project, Quebec and Newfoundland and Labrador
  Ramusio Lake Project, Newfoundland and Labrador
  Plaster Rock Uranium and Copper Project, New Brunswick
  7. SHARE CAPITAL
 (a) Share capital
 Authorized
 Common
  Preferred
  12




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  7. CAPITAL STOCK (Contd)
 Issuances during the three and six-month periods ended April 30, 2011
 (i)
    
    During the three-month period ended April 30, 2011, the Corporation issued 1,309,434
common shares at an average price of $3.66 per share for a total cash amount of $4,796,167 for
warrants exercised resulting in $1,345,776 being transferred from warrants to share capital.
During the six-month period ended April 30, 2011, the Corporation issued 1,628,528 common
shares at an average price of $3.83 per share for a total cash amount of $6,234,498 for
warrants exercised resulting in $1,841,550 being transferred from warrants to share capital.(ii)
    
    During the three-month period ended April 30, 2011, the Corporation issued 43,333 common
shares at an average price of $1.26 per share for a total cash amount of $54,467 for stock
options exercised and an amount of $47,519 related to exercised stock options was transferred
from contributed surplus to share capital. During the six-month period ended April 30, 2011,
the Corporation issued 359,999 common shares at an average price of $0.51 per share for a
total cash amount of $184,799 for stock options exercised and an amount of $162,939 related to
exercised stock options was transferred from contributed surplus to share capital.
 Issuances during the three and six-month periods ended April 30, 2010
 (iii)
    
    During the three-month period ended April 30, 2010, the Corporation issued 1,161,765
common shares at an average price of $0.51 per share for a total cash amount of $821,061 for
warrants exercised resulting in $192,418 being transferred from warrants to share capital.
During the six-month period ended April 30, 2010, the Corporation issued 2,405,400 common
shares at an average price of $0.47 per share for a total cash amount of $1,136,514 for
warrants exercised resulting in $248,989 being transferred from warrants to share
capital.(iv)
    
    During the three-month period ended April 30, 2010, the Corporation issued 110,188 common
shares at an average price of $0.25 per share for a total cash amount of $27,295 for stock
options exercised and an amount of $47,519 related to exercised stock options was transferred
from contributed surplus to share capital. During the six-month period ended April 30,
2011, the Corporation issued 118,188 common shares at an average price of $0.24 per share for
a total cash amount of $28,095 for stock options exercised and an amount of $29,265 related
to exercised stock options was transferred from contributed surplus to share capital.
 13




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  7. CAPITAL STOCK (Contd)
 (b) Stock option plan
  April 30, 2011
    
    April 30, 2010Weighted
    
    
    
    
    
    WeightedNumber of
    
    average
    
    Number of
    
    averageoptions
    
    exercise price
    
    options
    
    exercise price#
        $
        #
        $Outstanding,
beginning of period
    
    
    3,260,002
    
    
    
    1.50
    
    
    
    3,466,668
    
    
    
    0.36Granted
    
    
    2,275,000
    
    
    
    4.72
    
    
    
    590,000
    
    
    
    2.57Exercised
    
    
    (359,999
    )
    
    
    0.51
    
    
    
    (118,188
    )
    
    
    0.24Outstanding, end of
period
    
    
    5,175,003
    
    
    
    2.98
    
    
    
    3,938,480
    
    
    
    0.70
 The following options are outstanding and exercisable as at April 30, 2011.
 Options outstandingWeightedaverageremaining
    
    Weighted
    
    
    
    
    
    WeightedRange of
    
    Number
    
    contractual
    
    average
    
    Number
    
    averageexercise price
    
    outstanding
    
    life
    
    exercise price
    
    exercisable
    
    exercise price$
    
    #
        (in years)
        $
        #
        $0.10 to 0.15
    
    
    821,667
    
    
    
    2.32
    
    
    
    0.12
    
    
    
    821,667
    
    
    
    0.120.305
    
    
    140,002
    
    
    
    3.17
    
    
    
    0.31
    
    
    
    140,002
    
    
    
    0.310.75
    
    
    750,000
    
    
    
    3.24
    
    
    
    0.75
    
    
    
    750,000
    
    
    
    0.751.79 to 2.60
    
    
    698,334
    
    
    
    7.93
    
    
    
    2.44
    
    
    
    698,334
    
    
    
    2.444.43 to 4.69
    
    
    2,390,000
    
    
    
    9.52
    
    
    
    4.50
    
    
    
    1,689,999
    
    
    
    4.495.53 to 5.72
    
    
    275,000
    
    
    
    9.24
    
    
    
    5.70
    
    
    
    250,000
    
    
    
    5.727.00
    
    
    100,000
    
    
    
    1.84
    
    
    
    7.00
    
    
    
    
    
    
    
    0.00
 14




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  7. CAPITAL STOCK (Contd)
 (b) Stock option plan
  Three-month period
    
    Six-month periodended April 30
    
    ended April 302011
        2010
        2011
        2010Risk-free interest rate
    
    
    1.64
    %
    
    
    2.26
    %
    
    
    1.88
    %
    
    
    2.26
    %Expected volatility
    
    
    150
    %
    
    
    150
    %
    
    
    150
    %
    
    
    150
    %Dividend yield
    
    Nil
    
    Nil
    
    Nil
    
    NilExpected life (in years)
    
    
    2.00
    
    
    
    5.00
    
    
    
    4.87
    
    
    
    5.00Fair value at grant date
    
    $
    3.83
    
    
    $
    2.35
    
    
    $
    4.19
    
    
    $
    2.35
  (c) Warrants
  April 30, 2011
    
    April 30, 2010Weighted
    
    
    
    
    
    WeightedNumber of
    
    average
    
    Number of
    
    average exercisewarrants
    
    exercise price
    
    warrants
    
    price#
        $
        #
        $Outstanding,
beginning of period
    
    
    6,814,995
    
    
    
    4.56
    
    
    
    5,065,251
    
    
    
    1.30Exercised
    
    
    (1,628,528
    )
    
    
    3.83
    
    
    
    (2,405,400
    )
    
    
    0.47Outstanding, end of
period
    
    
    5,186,467
    
    
    
    4.79
    
    
    
    2,659,851
    
    
    
    2.47
 15




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  7. CAPITAL STOCK (Contd)
  Weighted averageRange of
    
    Number
    
    remaining contractual
    
    Weighted averageexercise price
    
    outstanding
    
    life
    
    exercise price$
    
    #
        (in years)
        $2.30 to 3.25
    
    
    500,000
    
    
    
    0.84
    
    
    
    3.254.25 to 5.00
    
    
    4,686,467
    
    
    
    0.98
    
    
    
    4.95
  8. RELATED PARTY TRANSACTIONS
  (a)
    
    During the three and six-month periods ended April 30, 2011 and 2010, the Corporation
retained the services of a company owned by an officer and director of the Corporation to
carry out exploration work on its projects and for administrative services. For the
three-month period ended April 30, 2011, the total amount for such services provided was $Nil
($38,525- 2010) of which $Nil ($25,875  2010) was recorded in mining properties and deferred
costs and $Nil ($12,650  2010) in administration expenses. For the six-month period ended
April 30, 2011, the total amount for such services provided was $52,800 ($75,550  2010) of
which $30,400 ($48,525  2010) was recorded in mining properties and deferred costs and
$22,400 ($27,025  2010) in administration expenses.(b)
    
    During the three and six-month periods ended April 30, 2011, the Corporation incurred fees
to a law firm of which an officer and director of the Corporation is a partner. For the
three-month period ended April 30, 2011, the total for such services was $152,151 ($61,018 
2010) and was recorded in professional services. For the six-month period ended April 30,
2011, the total for such services was $200,773 ($74,192  2010) and was recorded in
professional services. As at April 30, 2011, an amount of $54,626 ($307,405  October 31,
2010) owing to this law firm was included in accounts payable and accrued liabilities.
 16




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  9. STATEMENTS OF CASH FLOWS
 Non-cash working capital items related to operating activities
 Three-month periodended April 302011
    
    2010$
        $Non-cash working capital items are as follows:Commodity taxes receivable
    
    
    231,011
    
    
    
    (53,659
    )Prepaid expenses and deposits
    
    
    (370,722
    )
    
    
    (365,277
    )Tax credits receivable
    
    
    19,828
    
    
    
    Accounts payable and accrued liabilities
    
    
    1,051,999
    
    
    
    248,722Changes in non-cash working capital items related
to operating activities
    
    
    932,116
    
    
    
    (170,214
    )
 Six-month periodended April 302011
    
    2010$
        $Non-cash working capital items are as follows:Commodity taxes receivable
    
    
    329,561
    
    
    
    (13,953
    )Prepaid expenses and deposits
    
    
    (585,387
    )
    
    
    (356,318
    )Tax credits receivable
    
    
    19,828
    
    
    
    Accounts payable and accrued liabilities
    
    
    (851,634
    )
    
    
    120,949Changes in non-cash working capital items related
to operating activities
    
    
    (1,087,632
    )
    
    
    (249,322
    )
 17




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  9. STATEMENTS OF CASH FLOWS (Contd)
 Mining properties and deferred costs
 Three-month periodended April 302011
    
    2010$
    
$Total additions to mining properties and deferred costs
(note 6)
    
    
    3,023,587
    
    
    
    865,802Stock-based compensation (note 7(b))
    
    
    (573,482
    )
    
    
    (222,356
    )Cash flows related to mining properties and deferred costs
    
    
    2,450,105
    
    
    
    643,446
 Six-month periodended April 302011
    
    2010$
        $Total additions to mining properties and deferred costs
(note 6)
    
    
    4,821,963
    
    
    
    1,331,834Stock-based compensation (note 7(b))
    
    
    (1,133,765
    )
    
    
    (227,820
    )Cash flows related to mining properties and deferred costs
    
    
    3,688,198
    
    
    
    1,104,014
 10. INCOME TAXES
 (note 3)
 11. CONTINGENCIES
  18




---



##### 



Quest Rare Minerals Ltd.
 NOTES TO FINANCIAL STATEMENTS
  12. COMMITMENTS
   $2011
    
    
    261,6272012
    
    
    404,3582013
    
    
    180,5032014
    
    
    41,9442015
    
    
    13,560901,992
 13. COMPARATIVE INTERIM FINANCIAL STATEMENTS
  19