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SHAREHOLDER UPDATE

Review of 2001 and Outlook for 2002

Vancouver, British Columbia, Canada, February 4, 2002

Introduction

In summary, the past year was one of consolidation and retrenchment in the gold mining industry. Large gold companies like Newmont, Franco Nevada and Normandy merged and some small gold companies folded. Canarc grew smaller as all staff were laid off but we have survived and are stronger for it.

The gold price remained close to its 20 year low, although it has moved up 6% in the last three months, part of a solid 12% uptrend in the past year. Gold stocks have also shown renewed life recently – most major gold stocks are up 30 to 60% from their year lows and selected junior resource stocks have more than doubled.

Canarc is now well positioned to reap the benefits of better gold and resource markets in 2002. Our main gold property assets are all intact, we have no significant debt, our burn rate is low and the company holds over $800,000 in marketable securities. Management also hopes to finally resolve the Benzdorp property situation in Suriname early this year so Canarc can get back to work developing this large gold prospect.

Projects

Benzdorp, Suriname

In 2001, the new government of Suriname slowly but surely took measures to reactivate the gold mining sector of their economy. Early in the year, a new Board of Directors was appointed to Grassalco, the state mining company and Canarc’s partner at Benzdorp. By year-end, the government concluded that a new state gold mining company should be formed to assume Grassalco’s gold property portfolio.


Grassalco’s operating agreement with Cambior was amended to reduce the government’s participating interest in Gros Rosebel to 5%, reduce the tax rate to 30% and provide cheap hydroelectric power so that Cambior can commence construction of the Gros Rosebel mine in 2002.

Canarc anticipates that the new state gold mining company will also be Canarc’s new partner for the Benzdorp project. Amendments to the existing Benzdorp operating agreement are needed in order to allow Canarc to get back to work at Benzdorp in 2002.

Last but not least, the government finally passed into law the foreign investment legislation that had been pending for 10 years. This is indeed good news for both foreign investors as well as the Republic of Suriname.

Sara Kreek, Suriname

The Sara Kreek placer mine continues to operate at break even under current gold prices. The proposed new DP lode mine still requires financing or a partner in order to proceed.

Bellavista, Costa Rica

Canarc was approached by Wheaton River last year to reduce the annual pre-production cash payments they pay us. We elected to accept part of this year’s payment and all of next year’s payment in shares of Wheaton River at $0.50 per share. Canarc now holds over 500,000 Wheaton River shares for short-term investment purposes. The shares are up 80% to $0.90 at this time.

Clara, Mexico

Canarc’s 65% owned subsidiary, Minera Aztec Silver Corporation, holds an option to earn a 100% interest in the Clara high sulphidation gold – silver prospect in Jalisco, Mexico. Aztec intends to seek additional financing or a joint venture partner in order to drill this large attractive target.

GNC, British Columbia

Homestake did not carry out any exploration work in 2001 on our 33% owned GNC claims adjacent to their Eskay Creek mine in northwestern B.C.

New Polaris, British Columbia

The New Polaris project has been on care and maintenance since 1997 pending higher gold prices. Our neighbour, Redfern Resources, completed a feasibility study on their Tulsequah Chief copper-zinc-gold-silver orebody in 1998 and has been seeking permitting to proceed with mine and road development since that time.


Most recently, The B.C. Supreme Court came down with a decision setting aside Redfern’s requirement for a new Environmental Review. Instead, the Court directed the new B.C. government to deal directly with native concerns about development and Redfern’s application for their project permits. This should accelerate Redfern’s government approval, which would also be very good news for Canarc’s New Polaris project.

Conclusion

Management’s survival strategy for 2001 has worked. One year ago, we predicted that gold would bottom and Canarc should be well positioned to participate in the next rally. It would appear that a new gold uptrend is now underway.

At Canarc, we remain focused on developing our gold projects as the principal means of creating shareholder value. I would like to thank all of our shareholders for their support over the past four difficult years. As always, you are invited to contact us for updates, comments or questions.

ON BEHALF OF THE BOARD OF DIRECTORS
CANARC RESOURCE CORP.


Bradford J. Cooke
President and CEO





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