Third Quarter Review

Vancouver, British Columbia, Canada,
October 4, 1999

Bradford J. Cooke, President and C.E.O. of Canarc Resource Corp. is pleased to provide this review of the 3rd Quarter and outlook for the 4th Quarter, 1999.

Summary

During the 3rd Quarter, Canarc completed a positive feasibility study on the Sara Kreek property in Suriname recommending the construction of a second, small, high grade, open pit gold mine with low capital costs (US$1.5 million) and very low operating costs (US$62 per oz.). The Mexican silver joint ventures with both Noranda and Far West were successful in discovering several strong drill targets, suggesting that at least one major new mineral discovery is a distinct possibility here. Last but not least, Wheaton River received preliminary approval on permitting the Bellavista gold mine in Costa Rica.

Gold Market Commentary

Over the past two weeks, the price of gold bullion has jumped 20% to US$300 + per oz., the sharpest short-term gain in 20 years! In the words of market commentator Dennis Gartman, this move "has changed the dynamic of the market completely, ending the bear market and beginning the bull" in gold.

If the tide has indeed turned in the gold market, it is worth reflecting for a moment on the possible reasons and timing for the turnaround and what we can look for going forward. Remember also that big market moves are often followed by pullbacks and consolidation prior to resuming upward momentum.

The trigger for the recent gold price surge seems to have been the Bank of England gold auction on September 20, where 200 tonnes were bid but only 25 tonnes offered for sale. The surprise buyer turned out to be Goldfields, narrowly outbidding Anglo, two of the largest gold producers in the world. Less than one week later, there was a meeting of the G7 finance ministers, followed by a surprise announcement by the European Central Bank of an agreement to cap their gold sales at 400 tonnes per year for 5 years (including the previously announced 1300 tonnes sale proposed but not yet approved by the Swiss and the 400 tonnes proposed by England), and cease any additional gold leasing above current levels. Gold subsequently rocketed to $328 intraday before pulling back to the $300 range.

Several conclusions can be drawn from this announcement:

• A cap on European bullion sales should immediately reintroduce demand/supply fundamentals to the gold market. In recent years, the several 100 tonnes per year of excess jewelry demand over mine supply was consistently filled by central bank sales (mostly European). Reducing bank supply means demand should once again exert its influence on the gold price over time.

• A cap on European bullion loans means the speculative short sellers have nowhere to go outside of the bullion market to cover their shorts. That may explain the panic buying seen last week. More importantly, the dynamics that favoured shorting gold are now history because of the lack of bank supply. Lease rates on borrowed gold are currently going through the roof.

• The G7 meeting may have precipitated the ECB announcement. It seems that after years of deflation, the G7 is moving towards global reflation to increase liquidity, especially in Japan. That means inflation which would conveniently explain the ECB about face on gold.

• The Bank of England, Goldfields and Anglo must have known about the pending ECB announcement?!!! 25 tonnes = 800,000 oz. x $50 gain = $40 million profit!

Looking ahead, the gold price trend is upward but volatile. Investor interest has returned with a bang to the large cap gold producers. We are already seeing it trickle down to the small cap gold companies.

Canarc is in a unique position amongst junior gold companies in that we not only have growing gold production, we also have large development-stage gold projects and several exciting exploration properties about to be drilled in the 4th Quarter. Those shareholders who own Canarc shares at higher prices might wish to consider averaging down at this time.

Highlights - 3rd Quarter

July

• Noranda Minerals found a strong geophysical anomaly covering a large area on Aztec's Lobo 6 property in Mexico that they interpret to be a buried metal sulfide body.

• Far West Mining discovered several pronounced geochemical and geophysical anomalies on Aztec's Lobo 10 and 14 properties in Mexico that they interpret to be potentially large, buried silver-lead-zinc mineral deposits.

August

• A positive feasibility study was completed on the Sara Kreek (DP mine) project in Suriname - a small, high grade, open pit lode gold mine is recommended to produce 13,600 oz. over an 8 month period, generating a 150% internal rate of return on US$1.5 million in capital costs and a remarkably low US$62 per oz. operating cost! The ore body is open in all directions.

• At least three other high grade prospects on the Sara Kreek property, EB, WP and PP, each have the potential to match or exceed the production potential of the proposed DP mine, based on past exploration results that include trenches assaying up to 13.6 gpt over 10 m and drill holes grading up to 7.0 gpt over 13.5 m.

September

• Wheaton River received preliminary approval on permitting for the Bellavista Mine in Costa Rica - Now that the gold price is back above US$300, Bellavista is a go subject to financing.

• The Benzdorp property will be drilled once the agreement is back in good standing.

Outlook - 4th Quarter

• Five significant exploration programs are set to commence in the 4th Quarter, three of which are fully funded by our joint venture partners.

• Homestake Mining is drilling two wildcat drill holes on the GNC property adjacent to their high grade Eskay Creek Mine.

• Noranda Minerals will drill several holes on the Lobo 6 property.

• Far West plans a large drill program to test several anomalies on the Lobo properties.

• Aztec has identified a strong geochemical anomaly on a gold-silver property acquisition in Mexico that is suitable for applying for an exchange listing.

• Canarc plans to continue trenching of the EB, WP and PP prospects on the Sara Kreek property to expand the high grade, low cost mineable gold reserves.

For further information contact Robert Carriere, Investor Relations at (604) 685-9700 or visit our website: www.canarc.net.

ON BEHALF OF THE BOARD OF DIRECTORS
CANARC RESOURCE CORP.

Bradford J. Cooke
President and CEO

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