1st Quarterly Report 1997

Vancouver, British Columbia, Canada,
June 5, 1997

Vancouver, British Columbia, Canada, June 5, 1997.....Canarc Resource Corp. is pleased to announce its Quarterly Report for the period ending March 31, 1997.

HIGHLIGHTS

New Polaris - Underground drill program at New Polaris boosts geological resources 10% to 1.6 million oz. gold, drilling and feasibility work to continue to year-end.
Sara Kreek - 13 km of prospective strike length in two principal mineralized shear zones confirmed by surface sampling and deep augering at Sara Kreek, drilling underway in 2nd quarter.
Benzdorp - Large bulk tonnage, open pit gold targets discovered at Benzdorp by surface sampling and deep augering, drilling proposed this summer.
Management - Mr. Pierre Masse, B. Eng. Mining, C.A., joined the Senior Management team as V.P. Finance and C.F.O., bringing to Canarc over 22 years of industry experience Shares - Canarc's shares listed on the Frankfurt and Berlin Stock Exchange, in order to enhance investor awareness of the Company overseas.
Expenditures - Canarc recorded property expenditures of US$1.8 million, including a US$559,000 net loss for the quarter and a US$300,000 writedown on the Company's indirect interest in Indonesian properties.
Working Capital - Cash and cash equivalents totaled US$3.5 million at March 31.

DISCUSSION

In keeping with management's theme of focusing on the development of Canarc's main assets, the First Quarter ending March 31, 1997 saw the Company continue to make strong progress on the New Polaris feasibility project in northwestern British Columbia and the Benzdorp and Sara Kreek exploration projects in Suriname, South America.

In contrast, Canarc's share price dropped sharply in reaction to the Bre-X fiasco. Even though management successfully attracted joint venture partners to acquire a large prospective landholding in the Kalimantan Gold Belt on Canarc's behalf, the stock has been unduly punished due to a selloff in the junior mining sector. Notwithstanding negative investor sentiment at this time, management feels Canarc's assets deserve a higher market valuation. Ongoing work programs at New Polaris and in Suriname should provide the material developments to support a positive market re-rating.

FINANCIAL ANALYSIS

At March 31, 1997 the Company had cash of US$3.5 million available to fund its exploration activities and overhead. This compares with US$3.7 million at December 31, 1996. In the first quarter, the Company raised US$1.6 million for use in exploration programs in Indonesia through its Subsidiary Company, IndoAsia Gold Ltd. IndoAsia issued US$1.2 million worth of shares and borrowed US$400,000 from merchant bankers, which loans have since been repaid. Exploration and property acquisition costs in the first quarter totaled US$1.8 million, the majority of which was spent on the New Polaris property. The loss for the three months ended March 31, 1997 was US$559,000 as compared to US$170,000 for the comparable period in 1996. The increase in cost of US$389,000 is mainly due to the US$300,000 property write-down and higher general administrative costs related to increased management activities and madditional listing fees on the German stock exchange.

MARKETABLE SECURITIES

At January 1, Canarc owned 845,000 shares of Consolidated Magna Ventures Ltd. and 1,000,000 shares of Levelland Energy and Resources Ltd. Both Companies made significant progress on advancing their mineral projects in Q1, 1997.

Magna acquired several attractive gold-silver and copper-iron properties in Mexico, including the Reyna d Oro project in Batopilas State, 18 km northwest of the El Sauzal gold discovery of Francisco Gold. Recent sampling, both on surface and in underground workings, by Magna and other companies returned economic grades over mineable widths, such as 4.52 gpt over 57.0 m, 2.99 gpt over 62.0 m, 2.51 gpt over 45.0 m and 3.45 gpt over 27.0 m. During and after the quarter, Canarc elected to sell 500,000 shares of Magna to pay for a 650,000 unit private placement in Magna, thereby increasing Canarc's holdings to approximately 1,000,000 shares and 325,000 warrants, or 5.7% on a fully diluted basis.

Levelland acquired prospective diamond properties in the Buffalo Hump play in Alberta, to complement their Olympic-Dam type prospects in NWT and gold properties in Nevada. Levelland intends to drill the latter two projects as soon as possible. During and after the quarter, Canarc elected to sell 360,000 shares of Levelland in order to pay for a 350,000 unit private placement in Levelland. Canarc's holdings will thereby be increased to 990,000 shares and 350,000 warrants, or 9.6% on a fully diluted basis.

NEW POLARIS, B.C. (100% Canarc)

The feasibility program at New Polaris continues on schedule with over 25,000 feet of underground diamond drilling in 54 holes completed to March 31. The Company intersected significant new gold mineralization in many holes, including intercepts such as 0.21 oz./ton over 29.4 feet and 0.49 oz./ton over 17.4 feet. Our new estimate for the geological resource is now 1.6 million ounces gold up 10% from 1.44 million oz., one year ago. The Company also announced this Quarter that the Polaris Taku property has been renamed the New Polaris project to reflect the evolution of this small, high grade, past producing gold mine into one of the largest gold deposits now under active development in Western Canada.

SARA KREEK, SURINAME (80% Canarc)

As a result of some very favorable results from our trenching and deep augering program on the Breakfast and Parbo anomalies, Canarc commenced a Phase 2 drill program in order to further delineate these mineralized zones. Some of the better auger holes returned assays of 12.6 gpt over 10 meters and 4 meters of 11.0 gpt. These mineralized zones will see further drilling in 1997.

BENZDORP, SURINAME (80% Canarc)

Canarc's extensive deep augering and geochemical soil sampling programs have delineated several large gold anomalies that are drill ready. The first of twelve gold zones to be tested, JQA, measures 200 m long x 300 m wide and averages almost 1 gpt in saprolite to 15 m depth. This target has the potential to contain 1 million oz. gold for each 60 m of vertical depth! Drilling is expected to commence in June-July.

Canarc Resource Corp. is a growth-oriented, international gold exploration and mining company with active projects worldwide. Major shareholders include Barrick Gold Corp. and Echo Bay Mines Ltd. The Company's common shares trade under the symbol "CCM" on the Toronto Stock Exchange as well as on the following exchanges: Vancouver: Vista-CCM, Frankfurt: Third Market Segment-CAN, Berlin: Over the Counter-CAN, NASD: Electronic Bulletin Board-CRCUF.