News

SHAREHOLDER UPDATE: Second Quarter Review 2006

Bradford Cooke, Chairman and CEO of Canarc Resource Corp. (CCM: TSX and CRCUF: OTC-BB) provides the following review of the Second Quarter 2006 and the outlook for the Third Quarter.

Second Quarter Review

During Q2 2006, Canarc commenced a 65 hole, 20,000 m (65,000 ft) Phase 3 in-fill drilling program at its New Polaris gold property located 60 km south of Atlin in northwest British Columbia.  The objective is to bring 600,000 to 650,000 ounces contained within 1.2 to 1.6 million tons grading 0.4 to 0.5 oz per ton (1.1 to 1.5 million tonnes grading 13.7 to 17.2 grams per tonnes gold) of the historical 1.3 million ounce resource to a NI 43–101 compliant measured, indicated and inferred gold resource.

Two diamond drill rigs are active on the site and to date a total of 27 holes totalling 9,254.5 m (30,364 ft) have been completed.  Highlights of the drill program include: 22.4 gpt gold over 4.80 m (0.65 opt gold over 15.7 ft) in hole 1615E-8, 15.5 gpt gold over 7.20 m (0.45 opt gold over 23.6 ft) in hole 1646E-6, 23.0 gpt gold over 3.8 m (0.67 opt over 12.5 ft) in hole 1676E-7, and 15.3 gpt gold over 5.5 m (0.45 opt over 18.0 ft) in hole 1676E-4.

Especially encouraging is the intersection of significant gold grades and thickness in the lower most line of drill holes including 240SW-8, 1676E-7 and 1615E-8.  These holes confirm the C vein is wide open to depth.  For drill hole locations and results refer to the C Veins Longitudinal Section on Canarc’s website www.canarc.net.

Results from the drilling program will be released approximately every two weeks until September.  After completing a new resource estimate, Canarc plans to refine the conceptual mine plan, complete an initial economic evaluation and enter into the provincial mine development permitting process in the fourth quarter of 2006.  The New Polaris project should then move to a full feasibility study and final permitting in 2007.

Canarc reached an agreement in the second quarter to transfer its interest in the Sara Kreek property, Suriname, 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 received an immediate cash payment of US$400,000 and will receive 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 are being used for exploration of the Benzdorp property, Canarc’s main Suriname asset.

During the second quarter, a low level, high-resolution airborne magnetic and radiometric survey was completed over the favourable western greenstone area of the Benzdorp property.  A grid-auger sampling program designed to identify gold anomalous areas is ongoing.

A number of new gold acquisition opportunities were reviewed in Mexico and Peru some of which are of sufficient interest to justify continued due diligence and discussions with the owners.

Third Quarter Outlook

Canarc will continue its three pronged growth strategy focusing on New Polaris, Benzdorp and a material new gold acquisition in 2006 to enhance shareholder value in the Third Quarter. 

Canarc will complete its Phase 3 in-fill drilling program at New Polaris that will result in a new resource estimate ready in Q 4.  Preliminary mine planning and environmental studies will also begin in this quarter.

Auger sampling on the Benzdorp project will be completed by late August.  Together with the magnetic survey, the auger results will be used to define additional drill targets to add to those already identified on the van Heemstra, Eureka and Pinchivin grids.

Efforts to identify and acquire a major gold project will continue in the next quarter.  The focus of the search will remain in the Americas.

Finally, management will continue working on the sale of Canarc’s other non-core asset, the Bellavista mine royalty.  An independent evaluation of the Bellavista royalty is expected in Q3.

As of June 30, 2006, Canarc held cash and marketable securities totalling CA $5.5 million, of which CA $3 million is reserved for New Polaris.  The Company is well financed to fund the current work program at New Polaris, Benzdorp and for the evaluation of acquisition opportunities out of working capital.

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 principle assets are its 100% interest in the New Polaris gold deposit located in northwestern British Columbia and its option on the large Benzdorp gold property in Suriname.  Major shareholders include Barrick Gold Corp. and Kinross Gold Corp.

For more information, please contact Gregg Wilson, 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.