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 Canarc Resource Corp. (CCM: TSX and CRCUF: OTC-BB) announces it has reached an agreement to transfer its interest in the Sara Kreek property to its partner in the project, Suriname Wylap Resource Company NV, in exchange for repayment of monies previously advanced for exploration of the property. Canarc will receive an immediate cash payment of US$400,000 and the greater of US$50,000 per year or 1.5% royalty on annual gold production from the property over the next 6 years.

Proceeds from the disposal of Sara Kreek will be used for exploration of the Benzdorp property, Canarc’s principal Suriname asset. Canarc recently completed an 1800 km low level, high resolution airborne geophysical survey at Benzdorp and currently a 30 man crew is carrying out grid auger sampling over the same area. Results from these surveys will be used to identify drill targets for testing in the third quarter of 2006.

Canarc also announces that the 2006 infill drilling program is now underway at the New Polaris property located in northwestern British Columbia. A total of approximately 20,000 m of infill drilling in about 65 holes using two diamond drill rigs will be completed with the objective of bringing 600,000 ounces of the historical 1.3 million ounce resource to a 43 – 101 compliant measured and indicated status for mine planning, initial economic analysis and the commencement of the permitting process. The 1.3 million ounce historical resource is not 43 – 101 compliant, should not be relied upon and is for information purposes only.

Canarc Resource Corp. is a growth-oriented, gold exploration and mining company listed on the TSX (symbol CCM) and the OTC-BB (symbol CRCUF). The Company’s principal assets are its 100% interest in the New Polaris gold deposit, British Columbia and its 80% option on the Benzdorp gold property in Suriname. Major shareholders include Barrick Gold Corp. and Kinross Gold Corp.

On Behalf of the Board of Directors
CANARC RESOURCE CORP.

/s/ Bradford J. Cooke

Bradford J. Cooke
Chairman and C.E.O.

For more information, please contact Gregg Wilson at Toll Free: 1-877-684-9700,  tel: (604) 685-9700, fax: (604) 685-9744, email: invest@canarc.net or visit our website, www.canarc.net.  The TSX Exchange has neither approved nor disapproved the contents of this news release.

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