2005

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Shareholder Update: Overview of 2004 and Outlook for 2005

Bradford Cooke, President and CEO of Canarc Resource Corp. (CCM: TSX and CRCUF: OTC-BB) provides shareholders with the following overview of 2004 and the outlook for Canarc in 2005.

Overview of 2004

Last year saw the first significant correction of the new commodity bull market, as the gold price rose marginally but gold stocks fell in 2004. On the year, gold rose 1% to close at US$420 per oz. but the XAU dropped 15% to the 95 level at year-end.

Canarc shares finished flat for 2004, closing at CA$0.54 per share, but the share price did rise to the CA$1.10 range during the year based on the new discovery of a potentially large gold deposit on the Benzdorp property in Suriname. Investor interest was also spurred by multiple high-grade drill intercepts from the New Polaris property in BC late in the year.

In 2004, Canarc focused primarily on deep drilling at Benzdorp in order to follow up on the successful shallow drilling program in 2003. A CA$3 million financing in late 2003 provided the funds to commence a Phase 2, 10 hole diamond drilling program on the JQA prospect. By Q3, it was clear the company had a significant new gold-copper porphyry find in the JQA area.

Holes B204-41 to 50 each returned 0.4 gpt. to 0.6 gpt gold grades over 100 to 400 m core lengths, still open in all directions. In fact less than 30% of the JQA target area was drill tested and substantial potential remains to be tested. In addition, most of the other gold prospect areas along the 20 km long gold belt at Benzdorp have not yet been drilled.

Having received numerous expressions of interest from major gold companies regarding Benzdorp, management turned its focus in Q4 to seeking a strategic partner for that project. Discussions are now underway. In addition, a CA $500,000 financing was closed in order to fund a 10 hole Phase 1 infill drilling program on the New Polaris property.

Each hole returned high grade gold intercepts over significant widths, such as 0.93 opt Au (31.9 gpt Au) over 26.4 feet (8.05 m) and 0.34 opt Au (11.7 gpt Au) over 47.0 feet (14.3 m). The drilling clearly established the presence of shallow, thick, high grade zone immediately below the lowest mine level 600 within the C veins that should provide a quick payback on capital investment.

Outlook for 2005

Although a slow down of economic growth in China and a post-election honeymoon for the $US dollar have held gold back in recent months, the prevailing US policy of monetary expansion to manage their record trade and budget deficits will ultimately drive the gold price higher in 2005.

In the same way, the current correction in small-cap gold shares will likely come to an end in 2005. However, to ensure that Canarc shares continue to appreciate, management not only plans to further advance the Benzdorp and New Polaris projects this year, we will also pursue strategic new opportunities for growth in the gold sector, including the possibility of a major new acquisition.

Canarc is currently assessing the possible strategic opportunities to finance the New Polaris and Benzdorp projects in 2005. Projects such as the Bellavista mine and the Sara Kreek mine are under review to determine how best to realize value from these smaller, non-core assets.

A 50 to 70 hole in-fill drilling program is being considered for New Polaris in order to establish a 600,000 oz. reserve suitable for a feasibility study to build a 65,000 oz. per year high grade, underground gold mine. A 10 to 20 hole exploration drilling program is being assessed for Benzdorp in order to establish an initial gold resource at JQA and to test other gold targets.

Given our moderately bullish outlook for gold in 2005, and managements’ new strategic plan to create shareholder value, the coming year should be very rewarding for Canarc shareholders. We thank you for your continued support.

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.

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