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Third Quarter Review 2006 October 25, 2006 Vancouver, Canada


October 25, 2006

Bradford Cooke, Chairman and CEO of Canarc Resource Corp. (CCM: TSX and CRCUF: OTC-BB) provides the following review of the Third Quarter 2006 and the outlook for Q4, 2006.

Third Quarter Review

During Q3 2006, Canarc reported consistently positive drill results, including some exceptional gold intercepts, from the first 35 drill holes of the 60 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.

Two diamond drill rigs were active on the site, 24 hours per day, 7 days per week, during the third quarter. To September 30, 2006, a total of 65 holes totalling 23,695 m (77,740 ft) had been completed with many drill cores still out for assay. Q3 drilling highlights included numerous high-grade gold intercepts over robust vein widths, a selection of which are as follows:

Hole 1615E-8 44.7 gpt (1.30 opt) 6.2 m (20.3 ft)
Hole 1768E-1A 23.1 gpt (0.67 opt) 16.5 m (54.1 ft)
Hole 1646E-6 15.5 gpt (0.45 opt) 7.2 m (23.6 ft)
Hole 1676E-5B 10.9 gpt (0.32 opt) 14.0 m (45.9 ft)
Hole 300SW-8 8.9 gpt (0.26 opt) 35.0 m (114.8 ft)

Of special note are the drill results from holes 300SW-8 and 1615E-8.

Drill hole 300SW-8 intersected moderately high gold grades (8.9 gpt gold) over the broadest C vein thickness (35.0 m core length) yet reported from the property. This hole is located at the bottom, north-eastern margin of the C vein drill grid at an approximate depth of 250 m and indicates a significant thickening of the C vein system in this area.

Drill hole 1615E-8 intersected the first-ever occurrence of visible gold in drill core over a moderate vein width (6.2 m) carrying some of the highest gold grades (44.7 gpt gold) yet intersected in the C vein system. This hole is located at the bottom, south-western margin of the C vein drill grid at a depth of approximately 300 m and indicates a very different style of gold-stibnite mineralization in this area compared to the arsenopyrite-pyrite mineralization more commonly found at New Polaris.

As a result of these positive drill results, the 2006 work program was expanded to:

To fund the expanded work program, Canarc announced and closed on two private placement financings totaling CA$4.05 million, including CA$3.5 million in flow-through financing for the New Polaris gold project in northwestern B.C. and CA$0.5 million in non-flow-through financing for working capital.
During the third quarter, the low level, high-resolution airborne magnetic and radiometric survey completed over the favourable western greenstone area of the Benzdorp property was modelled and interpreted and the grid-auger sampling program designed to identify gold anomalous areas was completed. Canarc is now awaiting the assay results for over 8,000 auger samples.

The Bellavista gold mine in Costa Rica continued to expand production to its rated capacity. Canarc is entitled to receive its 5.67 % net profit royalty as soon as Glencairn Gold, the owner/operator, commences cash distributions after receiving repayment of certain pre-production royalty payments.

Fourth Quarter Outlook

Canarc plans to continue its three-pronged growth strategy focusing on advancing the New Polaris and Benzdorp projects and pursuing material new acquisitions in 2006 to enhance shareholder value in the Fourth Quarter.

The Phase 3 in-fill drilling program at New Polaris should be completed in Q4 and the Phase 4 dewatering and development program will get underway, running until the end of Q1, 2007. Canarc has commissioned a new NI 43-101 resource study, related mine planning and an initial economic assessment, to be completed by year-end 2006. At that time, the Company should be in a position to determine when to enter into the provincial mine permitting process.

The auger geochemical sampling results and airborne geophysical survey data on the Benzdorp project will be compiled and interpreted to help define drill targets in addition to those already identified on the van Heemstra, Eureka and Pichivin grids.

As of October 19, 2006, Canarc held cash and marketable securities totalling CA$6.4 million, of which CA$3.5 million is reserved for New Polaris. The Company is well financed for the current work programs at New Polaris and Benzdorp and for the evaluation of possible acquisitions.

Canarc Resource Corp. is a growth-oriented, gold exploration company listed on the TSX (symbol CCM) and the OTC-BB (symbol CRCUF). The Company is currently focused on advancing its principal asset, the New Polaris gold project in northwest British Columbia, towards development and on growing through acquisitions. Shareholders include Barrick Gold and Kinross Gold.

CANARC RESOURCE CORP.
Per:

/s/ Bradford J. Cooke

Bradford J. Cooke
Chairman and C.E.O.

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.

Sep 14, 2006

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