Review of 2007 and Outlook for 2008

Vancouver, Canada – January 23, 2008 - Bradford Cooke, Chairman and CEO of Canarc Resource Corp. (TSX: CCM, OTC-BB: CRCUF, DBFrankfurt: CAN), is pleased to provide the following review of Canarc’s accomplishments in 2007 and its plans for 2008.

2007 Highlights

• Appointed new senior management, including Bruce Bried, P.Eng., as President and COO and Garry Biles, P.Eng., as Vice President, Mining
• Announced new NI 43-101 resource estimate for New Polaris gold mine project, including 519,000 oz gold in measured and indicated resources and 636,000 oz gold in inferred resources at a 6 gpt gold cutoff grade or 342,096 oz measured and indicated and 361,209 oz inferred at a 9 gpt gold cutoff – see Feb 1, 2007 and Aug 20, 2007 news releases)
• Released positive results of preliminary economic assessment for New Polaris at US$ 650 gold, including after-tax undiscounted NPV of CA$40.9 million and IRR of 11.1% (see Aug 20, 2007 news release)
• Received outstanding reclamation award for New Polaris from Mining Association of BC and BC Ministry of Energy, Mines and Resources
• Initiated Mexican acquisitions program with options to acquire 100% interests in the Providencia and Los Arrastres gold-silver properties in Guanajuato State
• Expanded Mexican gold portfolio with options to acquire the Santiago and Exmin Fraction gold properties in Chihuahua State
• Closed CA $1.1 million private placement financing to complete Phase 1 exploration programs in Mexico and for working capital
• Announced plans to “spin-out” the Mexican gold projects to subsidiary company, Caza Gold Corp. and distribute shares of Caza Gold to Canarc shareholders

The Year In Review

The price of gold bullion enjoyed another steller year in 2008, rising 32% from US$636 per oz to close the year at US$837 per oz, a 27 year high. Rising investment demand, flat mine supply and the weakening US dollar continued to be the main fundamentals behind the move in precious metals.  In US dollar terms, gold remains locked in a now 7 year-old uptrend, although this is only the third year of the gold bull market denominated in other major currencies.

Junior gold stocks followed gold higher in Q1, 2007, then corrected in the now familiar annual spring-summer sell-off.  This down-trend was aggravated into a precipitous fall in Q3 due to the mortgage-backed securities crisis in August but the junior gold shares started rebounding by year-end.  Canarc’s share price opened 2007 at CA$0.78 per share but tailed off to close at CA$0.38 per share, down 51% on the year.

In 2007, Canarc set out a two-pronged strategy to create shareholder value. The primary goal was to advance our core asset, the New Polaris gold mine project, through a new NI 43-101 resource estimate and complete an initial economic evaluation to build an 80,000 oz per year gold mine. In addition, we launched a new acquisitions program to build an attractive portfolio of gold projects in Mexico.

New Polaris

Canarc launched 2007 with the appointment of two seasoned mining professionals to its senior management team, Mr. Bruce Bried, P. Eng. as the new President and Chief Operating Officer, and Garry Biles, P. Eng., as the new Vice President, Mining.  Bruce and Garry joined Canarc to help facilitate Canarc’s move from exploration to economic assessment to mine development at New Polaris.

In February, the Company released an updated NI 43-101 resource estimate for New Polaris that outlined measured and indicated resources of 519,000 oz gold contained in 1,288,000 tonnes grading 12.5 gpt gold (measured resource of 271,000 tonnes grading 11.89 gpt and indicated resource of 1,017,000 tonnes grading 12.71 gpt) and inferred resources totaling 636,000 oz gold contained in 1,628,000 tonnes grading 12.2 gpt gold, using a 6 gpt gold cutoff grade, still open for expansion in other veins and at depth. 

As a result, Canarc commenced a CA$3 million pre-feasibility work program for the project, including dewatering, mapping and sampling the lowermost underground mine workings, completing additional metallurgical testwork to optimize gold recoveries, continuing the site-related environmental studies, developing a conceptual mine plan and completing the preliminary economic assessment. 

In Q3, 2007, Canarc was awarded a “Citation for Outstanding Achievement for Reclamation at a Mineral Exploration Site" from the British Columbia Technical and Research Committee on Reclamation, (the Mining Association of BC and BC Ministry of Energy, Mines and Resources) in recognition of Canarc’s proactive reclamation program at New Polaris.

Canarc also released positive results from a preliminary economic assessment of New Polaris for the base case model of constructing of an 80,000 oz per year gold mine. At a US$650 per oz gold price and using a 9 gpt gold cutoff grade to revise the NI 43-101 resource to 342,096 oz gold measured and indicated in 806,000 tonnes grading 13.2 gpt gold and 361,209 oz gold inferred in 944,000 tonnes grading 11.9 gpt gold, the project generates an after-tax undiscounted NPV of CA$40.9 million and an after-tax IRR of 11.1%.  The base case production model showed positive potential so further work was recommended to optimize the project and complete a feasibility study. 

However, given the modestly positive economics at US$650 gold and a CA$0.90 dollar, and the fact the next phase of underground mine development and bulk sampling required a CA$20 million budget, and with the share price trading at multi-year lows, Canarc elected to not to proceed with a large equity financing that would have caused massive shareholder dilution.  Instead, management plans to reassess the economics in 2008 based on higher gold prices and CA$ exchange rates and seek strategic alternatives such as a joint venture in order to create shareholder value at New Polaris.

Mexico

In Q1, Canarc announced it had acquired options to purchase 100% interests in the Providencia and Los Arrastres gold-silver projects located near the town of San Felipe in the state of Guanajuato, Mexico.  The 8 km by 10 km Providencia and Los Arrastres properties cover the entire Providencia mining district, which is located about 45 km north of the famous Guanajuato silver-gold mining district.

The 112 hectare Providencia and San Felix mine properties cover two small but high grade vein silver-gold mines that produced an estimated 8.8 million oz silver from 300,000 tonnes ore grading around 1000 gpt silver and 1 gpt gold (30.6 oz per ton Ag equivalents at a 50 silver: 1 gold ratio) until closure in 1934. The 7,638 hectare Los Arrastres properties that surround Providencia and San Felix were staked by Grupo Mexico to explore these mineralized structures on a district scale.

The Company subsequently acquired an option to purchase a 100% interest in a second strategic gold property, the Santiago project, located near the town of Batopilas in Chihuahua State, Mexico. Santiago covers a swarm of high grade gold veins that occupy a large alteration zone adjacent to a granodiritic intrusion only 10 kilometres east of the famous Batopilas silver district.

The SGM (Mexican Geological Survey) carried out a rock sampling program of the North Zone at Santiago and reported a 200 m long by 100 m wide  by 70 m deep mineralized zone with potential to host 3.78 million tonnes grading 1.0 gpt gold and 20 gpt silver. Even though North Zone alteration has been traced for over 400 m in length, the better potential might be the high grade veins contained within it such as the Veta Blanca that grades 30.3 gpt gold over 2.3 m in a channel sample.

At the Providencia and Santiago gold projects, the Phase 1 exploration programs of geological mapping, geochemical soil sampling, rock sampling and hand trenching were carried out during the 3rd Quarter. Canarc also announced a new option to acquire up to a 75% interest in a 791 hectare portion of EXMIN’s Huimayvo concession which surrounds the 171 hectare Santiago Gold Project.

To fund exploration on its Mexican gold projects, including Santiago and Providencia, Canarc closed a private placement totalling $1.1 million. The funds were also to be used to acquire additional attractive gold properties in Mexico and for working capital.

At the Benzdorp gold project in Suriname, additional geochemical soil and porknocker pit sampling programs were completed and applications to renew these exploration concessions were submitted to the Minister of Natural Resources.  No further work is contemplated at Benzdorp until the new concession titles are issued to Benzdorp Gold NV, the local company owned by Canarc and its partner Grassalco, the state mining company for Suriname.

In Costa Rica, Glencairn Gold (now Central Sun Mining) elected to close the Bellavista gold mine due to ground movement caused by heavy rains that negatively impacted the heap leach pad and damaged the process plant.

Both of Canarc’s growth strategies in 2007, to evaluate the economics of building an 80,000 oz per year gold mine at New Polaris and to initiate the acquisition of an attractive gold project portfolio in Mexico, were successfully executed.  Unfortunately, it would appear that these accomplishments are not yet reflected in Canarc’s share price.

That is why, in Q4, 2007, Canarc announced plans to spin-out its Mexican gold projects to a wholly-owned subsidiary company, Caza Gold Corp., and distribute approximately 80% of its shares of Caza Gold pro rata to Canarc shareholders.  By effectively issuing a “dividend in kind”, management anticipates the spin-out should help to unfold the full value of our Mexican gold portfolio for the benefit of Canarc shareholders.  Canarc expects to release further details of the spin-out in January 2008.

The Outlook For 2008

The outlook for gold and gold stocks in 2008 continues to be robust, as evidenced by the recent run in the gold price to the US$900 range.  Some forecasters are calling for US$1000 gold this year, which should bode well for Canarc, specifically in rewarding our patience in regard to New Polaris.

Canarc plans three strategic initiatives to create value for shareholders in 2008. 

Firstly, management intends to evaluate the economics of New Polaris on an ongoing basis and consider strategic alternatives such as a joint venture or other means to advance this high grade gold mine project to pre-production mine development and a full feasibility study.

Secondly, the spin-out of the Mexican gold projects to subsidiary company, Caza Gold Corp., and the distribution of Caza Gold shares pro rata to Canarc shareholders will allow Caza to finance the acquisition and exploration of additional and more advanced gold projects in Mexico for the benefit of Canarc shareholders but without diluting Canarc shares.

Thirdly, Canarc is now evaluating opportunities to acquire attractive gold projects in the USA where management’s exploration and mining experience can add value.

Although the gold markets have recently pulled back from their early year highs, management is still quite bullish that the gold price will seek new highs in 2008. And due to a looming inflationary period, this should be the year that the precious metals start to separate from and outperform the base metals. 

We appreciate the support of our many shareholders, and we can all look forward to a more rewarding year of growth for the Company.

James Moors, B.Sc., P.Geo, Vice President, Exploration, is the Qualified Person who reviewed the technical disclosures for this shareholder update. 

Canarc Resource Corp. is a growth-oriented, gold exploration company listed on the TSX (CCM) and the OTC-BB (CRCUF).  Canarc is currently focused on advancing its New Polaris gold mine project in north-western British Columbia to the feasibility stage, exploring the large Benzdorp gold belt and acquiring attractive gold exploration and mining projects in North America.  Barrick Gold Corp. is a shareholder.

CANARC RESOURCE CORP.
Per:

/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: [email protected] or visit our website, www.canarc.net.  The TSX has neither approved nor disapproved the contents of this news release.

CAUTIONARY DISCLAIMER – FORWARD LOOKING STATEMENTS

Certain statements contained herein regarding the Company and its operations constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995.  All statements that are not historical facts, including without limitation statements regarding future estimates, plans, objectives, assumptions or expectations of future performance, are “forward-looking statements”.  We caution you that such “forward looking statements” involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements.  Such risks and uncertainties include fluctuations in precious metal prices, unpredictable results of exploration activities, uncertainties inherent in the estimation of mineral reserves and resources, fluctuations in the costs of goods and services, problems associated with exploration and mining operations, changes in legal, social or political conditions in the jurisdictions where the Company operates, lack of appropriate funding and other risk factors, as discussed in the Company’s filings with Canadian and American Securities regulatory agencies.  The Company expressly disclaims any obligation to update any forward-looking statements.