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

Review of First Quarter

During Q1, 2005, management focused on following up on expressions of interest from several major gold mining companies with regard to possible strategic financings or joint ventures on Canarc’s two principal gold projects, New Polaris and Benzdorp.  At this time, the process of facilitating due diligence and pursuing discussions with these companies is still underway.

Because the gold price entered into a correction in Q1, 2005, Canarc’s share price has also been soft.  Management has therefore focused on attracting buyers for Canarc’s two other gold projects, Bellavista and Sara Kreek, so as to generate cash without selling equity.  This process is also a work in progress.

On the New Polaris project, the Phase 1 in-fill drilling program on the C veins successfully returned high grade gold intercepts in each of the 11 drill holes.  Individual drill intercepts returned assays such as 0.93 opt (31.9 gpt) gold over 26.4 ft (8.05m) in the lower C vein and 0.45 opt (15.3 gpt) over 29.5 ft (9.0 m) in the Upper C vein.  The weighted average of all 22 vein intercepts graded 0.42 opt (14.4 gpt) over a 12.4 ft (3.78m) core length.

The Company also completed additional metallurgical testing and successfully increased the overall gold recoveries up to the 95% level by optimizing the grinding, flotation, autoclaving and leaching processes.  Two alternatives are currently being considered for the final processing of New Polaris gold concentrates; onsite construction of an autoclave, and shipping of the concentrates to an existing offsite autoclave facility.

On the Benzdorp project, the 2004 drilling program at the JQA prospect successfully returned bulk tonnage gold intercepts over an initial 200 m by 200 m area in each of the 13 drill holes.  Individual drill intercepts returned assays such as 0.48 gpt gold over 400.81 m, 0.55 gpt gold over 256.03 m, 0.60 gpt gold over 169.00 m and 1.14 gpt gold over 120.40 m.

Preliminary metallurgical testing was completed on bedrock mineralization and successfully recovered 80% of the copper and 57% of the gold into a rougher flotation concentrate and the remainder of the gold through cyanide leaching of the rougher tails.  Because of the high gold solubilities in cyanide, additional metallurgical testing is recommended to assess the potential for both heap leaching and CIL leaching of both saprolite and bedrock mineralization.

Regarding the Bellavista project, the majority owner and operator, Glencairn Gold, is on track to complete mine construction and commence gold production in Q2, 2005.  Canarc owns a strategic net profit interest in Bellavista that pays Canarc 5.67% of net profits during the first payback period, rising to 10.40% during the second payback period and 20.24% of net profits thereafter.  Canarc received its annual pre-production cash payment (US $120,000) from Glencairn in January.

Outlook for Second Quarter

To complement management’s discussions with major gold companies on Benzdorp and New Polaris, the Company plans to initiate additional exploration work on both projects in Q2, 2005.  Canarc will also continue to pursue the monetization of its Bellavista and Sara Kreek projects as a means of building up its working capital.

An office program of relogging all the drill core at Benzdorp and compiling all of the historic data will help to generate a better understanding of gold mineralization on the property and guide a field program of more detailed geological mapping and saprolite sampling in some of the many other gold prospect areas so as to prepare them for drilling.

The Phase 2 in-fill drilling program at New Polaris is scheduled to commence in Q2, 2005, subject to working capital, 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.

The development of Canarc’s main assets, perhaps coupled with some strategic acquisitions, will ultimately create substantial value for all shareholders.  Even though this is a trying time in the Company’s stock price, our underlying value will ultimately prevail.

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.

On Behalf of the Board of Directors
CANARC RESOURCE CORP.

/s/ Bradford J. Cooke

Bradford J. Cooke
President 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 Exchange has neither approved nor disapproved the contents of this news release.

Sep 14, 2006

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