Canarc Resource Corp (C-CCM) - News Release

Canarc completes phase 1 work, evaluates Mexico claims

2007-10-09 15:12 PT - News Release
Shares issued 71,014,811
CCM Close 2007-10-09 C$ 0.54

Mr. Bradford Cooke reports

CANARC RESOURCE CORP. SHAREHOLDER UPDATE: THIRD QUARTER REVIEW 2007

Canarc Resource Corp. is providing the following review of the third quarter of 2007, and the outlook for the fourth quarter of 2007.

Third quarter highlights:

• Received positive results from an independent preliminary economic assessment of the New Polaris gold mine project in northwestern British Columbia;
• Received an award from the MAC and the B.C. government in recognition of outstanding reclamation work of an exploration property at New Polaris;
• Closed a $1.1-million (Canadian) private placement financing for the acquisition and exploration of strategic gold properties in Mexico;
• Completed phase 1 exploration work at its Providencia and Santiago gold projects in the states of Guanajuato and Chihuahua, respectively;
• Expanded its landholdings surrounding the Santiago properties in Chihuahua;
• Wrapped up the geochemical soil and poknokker pit sampling program at the Benzdorp gold exploration project in Suriname.

In the third quarter of 2007, Canarc received positive results from a preliminary economic assessment of New Polaris for the base case model of constructing of an 80,000-ounce-per-year gold mine. At a gold price of $650 (U.S.) per ounce, the project generates an after-tax undiscounted NPV (net present value) of $40.9-million (Canadian) and an after-tax IRR (internal rate of return) of 11.1 per cent. 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 $19-million (Canadian) for underground development, bulk sampling, final metallurgical testing and a feasibility study, followed by $71.5-million (Canadian) to purchase equipment, further develop the mine, and construct the plant and site infrastructure. Cash costs, estimated at $327 (U.S.) per ounce, include all site-related costs, but off-site 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 U.S.-dollar/Canadian-dollar exchange rate, but the recent increase in the gold price is partly offset by the recent rise in the U.S.-dollar/Canadian-dollar exchange rate. At a $750 (U.S.) gold price and a $1 exchange rate, the after-tax undiscounted NPV jumps to $61-million (Canadian) and the after-tax IRR increases to 16 per cent.

During the third quarter of 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 B.C., and the B.C. Ministry of Energy, Mines and Petroleum Resources. The company also granted two $4,000 (Canadian) scholarships for postsecondary education to two bright young students from Atlin, B.C.

Canarc closed a non-brokered private placement financing during the quarter that consisted of 2.2 million units priced at 52 Canadian cents each for gross proceeds of $1,144,000 (Canadian). 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 65 Canadian cents 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 entered a new option to acquire land surrounding the Santiago properties. The company can acquire up to a 75-per-cent 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 $25,000 (U.S.) after one year and spending up to $1-million (U.S.) over up to five 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 the company's 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 Sept. 30, 2007, Canarc held cash and marketable securities of approximately $650,000. 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, BSc, PGeo, vice-president, exploration, is the qualified person who reviewed the exploration data and visited the properties reported herein.

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