News
Third Quarter Review 2007
October 9, 2007
Bradford Cooke, Chairman and CEO of Canarc Resource Corp. (CCM: TSX, CRCUF: OTC-BB, CAN: DBFrankfurt), provides the following review of the 3rd quarter 2007 and the outlook for Q4, 2007.
Third Quarter Highlights
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Announced positive results from an independent preliminary economic assessment of the New Polaris gold mine project in northwestern BC;
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Received an award from the MAC and the BC government in recognition of outstanding reclamation work of an exploration property at New Polaris;
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Closed a CA$1.1 million private placement financing for the acquisition and exploration of strategic gold properties in Mexico;
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Completed Phase 1 exploration work at its Providencia and Santiago gold projects in the states of Guanajuato and Chihuahua respectively;
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Expanded its landholdings surrounding the Santiago properties in Chihuahua, and
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Wrapped up the geochemical soil and poknokker pit sampling program at the Benzdorp gold exploration project in Suriname.
In Q3, 2007, Canarc announced 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, 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 and financial model have additional positive potential so further work is recommended to optimize the project and complete a feasibility study.
Capital costs were estimated to include CA$19 million for underground development, bulk sampling, final metallurgical testing and a feasibility study, followed by CA$71.5 million to purchase equipment, further develop the mine and construct the plant and site infrastructure. Cash costs estimated at US$327 per oz include all site related costs but offsite costs for concentrate transportation and processing are treated as deductions against sales.
The New Polaris gold mine project is very sensitive to both the price of gold and the $US/CA exchange rate but the recent increase in the gold price is partly offset by the recent rise in the $US/CA exchange rate. At a US$750 gold price and a $1.00 exchange rate, the after-tax undiscounted NPV jumps to CA$61 million and the after-tax IRR increases to 16%.
During Q3, 2007, Canarc was pleased to accept an award for excellence in environmental reclamation at New Polaris from the Technical and Research Committee on Reclamation of the Mining Association of BC and the BC Ministry of Energy, Mines and Petroleum Resources. The Company also granted two CA$4,000 scholarships for post-secondary education to two bright young students from Atlin, BC.
Canarc closed a non-brokered private placement financing during the quarter that consisted of 2,200,000 units priced at CA$0.52 each for gross proceeds of CA$1,144,000. Each unit consisted of one common share and one half of a share purchase warrant. Each full warrant is exercisable to purchase an additional common share at an exercise price of CA$0.65 for a one year period. Net proceeds will be used for the acquisition and exploration of strategic gold properties in Mexico.
At the Providencia gold project in Guanajuato, the Phase 1 exploration program of geological mapping, geochemical soil sampling and hand trenching concluded in August, and the Company is now awaiting assays in order to select top priority targets for the initial drilling program. At the Santiago gold project in Chihuahua, the Phase 1 exploration program of geological mapping and rock sampling was completed in September and like Providencia, assays are pending prior to the selection of initial drill targets.
Canarc also announced a new option to acquire land surrounding the Santiago properties. The Company can acquire up to a 75% interest in a 791 hectare portion of EXMIN’s Huimayvo concession (hereafter termed the “Santiago Fraction”), which surrounds the 171 hectare Santiago Gold Project, by issuing 15,000 common shares (subject to regulatory approvals), paying US$25,000 after 1 year and spending up to US$1 million over up to 5 years. After vesting, Canarc and EXMIN will form a joint venture to continue the exploration and development of the Santiago Fraction.
In Suriname, the geochemical soil and poknokker pit sampling program at Benzdorp was completed but no new high priority gold prospect areas were identified. Benzdorp Gold NV, the joint venture company held by Canarc and our partner, Grassalco, the state mining company of Suriname, has applied to the Minister of Natural Resources of Suriname for a three year extension to the Company’s exploration concessions at Benzdorp.
Fourth Quarter Outlook
With New Polaris now on standby for higher gold prices, and Benzdorp awaiting an extension of the property titles, management is now focused on expanding and exploring its gold project portfolio in Mexico.
Several new properties are currently being evaluated and once the assay results from Providencia and Santiago are received, Canarc can review its alternatives for advancing these projects and maximizing shareholder value.
As of September 30, 2007, Canarc held cash and marketable securities of approximately CA$0.65 million. The Company also has a significant shareholding in a non-reporting affiliated company, Aztec Metals Corp., which is focused on the acquisition and exploration of strategic base metal projects in Latin America.
James Moors, B.Sc., P.Geo, Vice President, Exploration, is the Qualified Person who reviewed the exploration data and visited the properties reported herein.
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 British Columbia, exploring the large Benzdorp gold property in Suriname and acquiring attractive gold exploration and mining projects in Mexico. 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.