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New Polaris Project – British Columbia

Location and Access:

The New Polaris project is situated in northwestern British Columbia, 100 km south of Atlin, B.C., and 60 km east of Juneau, Alaska, on the west bank of the Tulsequah River near the B.C. - Alaska border.

Small aircraft carrying personal and/or supplies can reach the site from Atlin or Juneau. Heavier mine equipment and supplies can be barged to the minesite via the Taku River.

Ownership:

Canarc holds a 100% interest in 61 crown granted mineral claims and 1 modified grid claim totaling 2,956 acres. The project is subject to a 15% net profits interest to Rembrandt Gold Mines, which Canarc can reduce to 10% NPI.

Current Status:

Canarc is now considering a feasibility work program to include driving a decline from surface down to the 1050 mine level (1000 feet below surface), developing one or more drifts and raises within the C vein, trial mining to extract a bulk sample, shipping and processing of a representative portion of the bulk sample for final metallurgical testing, finalizing the process flow sheet and completing a feasibility study at an estimated cost of CA$18.7 million, subject to financing.

During Q3, 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 BC and the BC Ministry of Energy, Mines and Petroleum Resources.  The Company also granted two CA$4,000 scholarships for post-secondary education to two bright young students from Atlin, BC.

Economics:

Canarc completed a positive preliminary economic assessment of New Polaris for the base case model of constructing of an 80,000 oz per year gold mine. At a US$650 per oz gold price, the project generates an after-tax undiscounted net present value (NPV) of CA$40.9 million and an after-tax IRR of 11.1%.  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 CA$19 million for underground development, bulk sampling, final metallurgical testing and a feasibility study, followed by CA$71.5 million to purchase equipment, further develop the mine and construct the plant and site infrastructure. Cash costs estimated at US$327 per oz include all site related costs but offsite 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 $US/CA exchange rate but the recent increase in the gold price is partly offset by the recent rise in the $US/CA exchange rate.  At a US$750 gold price and a $1.00 exchange rate, the after-tax undiscounted NPV jumps to CA$61 million and the after-tax IRR increases to 16%.

August 20, 2007: Preliminary Assessment Indicates Positive Results for New Polaris Gold Mine Project, BC

Mining History:

Prospectors discovered gold at the mine site in 1929. The New Polaris mine, then known as Polaris Taku mine, was built in 1936 and commissioned a year later. It operated until 1942, shut down due to World War II, and then restarted in 1946 and operated until 1951. In 1951, a barge loaded with gold concentrate sunk off of the coast of BC in a violent storm. Polaris Taku was subsequently shut down.

During the mines operation, a total of 232,000 oz. gold was produced from 691,000 tonnes of ore grading 11.9 grams per tonne (0.35 oz./ton). Gold concentrates were shipped to a smelter in Tacoma, Washington for refining. 15,796 m of under-ground development on 10 levels, and 3,747 m of raise development were completed at New Polaris. The deepest level of the mine is 187 m below sea level. A 250 m internal winze was used to haul ore to the main haulage access level. Mining methods included long-hole, shrinkage and resuing.

Cominco owned and operated the nearby Tulsequah Chief and Big Bull deposits and in 1952 leased the site Polaris-Taku site and upgrade the mill to process ores mined from these deposits. This continued until 1957.

New Polaris lay dormant for 30 years until exploration resumed in 1988. Canarc acquired New Polaris in 1992 and since has drilled 241 holes totaling 64,000 m of core, outlining significant new ore below and beyond the old mine workings.

Resource (NI 43-101 compliant)

Updated February 1^st 2007, and using an 8 gram per tonne cutoff (0.23 oz per ton), the total resource at New Polaris is 1,028,000 oz gold contained within 2,349,000 tonnes of mineralized vein material at an average grade of 13.56 grams per tonne (0.4 oz. per ton). Greater than 95% of the measured and indicated resources are located within the C vein system where infill drilling programs were conducted over the past three years. Approximately 75% of the inferred resources are also located within the C vein system, with the remainder attributable to the Y19 and Y20 veins. See the tables below for the breakdown of the resource categories.

MEASURED UNDILUTED RESOURCE
Cutoff  Grade		Mineralized Tonnage		Average Grade		Contained Gold
(g/tonne)	(oz/ton)*	(tonnes)	(tons)	(g/tonne)	(oz/ton)	Au (oz)
2	0.058	390,000	429,902	9.48	0.277	119,000
4	0.117	330,000	363,763	10.62	0.310	113,000
6	0.175	271,000	298,727	11.89	0.347	104,000
8	0.233	203,000	223,769	13.54	0.395	88,000

INDICATED UNDILUTED RESOURCE
Cutoff  Grade		Mineralized Tonnage		Average Grade		Contained Gold
(g/tonne)	(oz/ton)*	(tonnes)	(tons)	(g/tonne)	(oz/ton)	Au (oz)
2	0.058	1,280,000	1,410,960	10.97	0.320	451,000
4	0.117	1,180,000	1,300,728	11.65	0.340	442,000
6	0.175	1,017,000	1,121,052	12.71	0.371	416,000
8	0.233	806,000	888,464	14.22	0.415	368,000

MEASURED PLUS INDICATED UNDILUTED RESOURCE
Cutoff  Grade		Mineralized Tonnage		Average Grade		Contained Gold
(g/tonne)	(oz/ton)*	(tonnes)	(tons)	(g/tonne)	(oz/ton)	Au (oz)
2	0.058	1,670,000	1,840,861	10.62	0.310	570,000
4	0.117	1,510,000	1,664,491	11.42	0.333	555,000
6	0.175	1,288,000	1,419,778	12.54	0.366	519,000
8	0.233	1,009,000	1,112,233	14.08	0.411	457,000

INFERRED UNDILUTED RESOURCE
Cutoff  Grade		Mineralized Tonnage		Average Grade		Contained Gold
(g/tonne)	(oz/ton)*	(tonnes)	(tons)	(g/tonne)	(oz/ton)	Au (oz)
2	0.058	2,060,000	2,270,763	10.5	0.307	697,000
4	0.117	1,925,000	2,121,951	11.0	0.322	683,000
6	0.175	1,628,000	1,794,564	12.2	0.354	636,000
8	0.233	1,340,000	1,477,098	13.3	0.387	571,000

*             ton equals short dry ton

February 1, 2007: Canarc Reports Updated NI 43-101 Resource Estimate For New Polaris Gold Project, British Columbia

Geology and Gold Mineralization

Gold is occluded in finely disseminated arsenopyrite that permeates the silica/sericite/fuchsite-altered wall rocks of almost barren quartz-carbonate veins. The white quartz-carbonate veins developed late in the mineralizing hydrothermal system and are a dilutant. Rare free gold occurs in some late quartz/stibnite veins and is likely the result of the scavenging of gold from the earlier arsenopyrite mineralization during stibnite deposition.

The mineralized veins are hosted within Paleozoic-aged mafic volcanic rocks and are developed along three principal vein sets adjacent to a major crustal break. Gold mineralization is late Cretaceous to Early Tertiary, and is very similar in terms of wallrock alteration, style of mineralization and host rock material to that of well-known Archean lode gold deposits such as Goldcorp’s multi-million ounce Red Lake deposit.

Gold mineralization occurs along three major vein sets:

1.      AB shear veins - trending northwest/southeast,

2.      Y shear veins - trending north/south,

3.      C dilatational veins - trending east/west

C-veins generally link with the AB and with the Y veins at “junction arcs”. Gold values within the veins show excellent continuity and uniformity, with very little nugget effect. Individual zones pinch, swell, and overlap en echelon. Width of gold mineralization ranges from 0.3 to 15 m in thickness, but tends to average about 3 m.

Metallurgy:

Historically, the mine operated at a rate of 200 tons per day. Ore was crushed through primary and secondary crushers, and ground in a ball mill. A standard flotation circuit was used to concentrate the ore prior to being shipped off site. Historical gold recoveries averaged 90% and concentrate grades ranged from 3.5 - 5.0 oz per ton gold.

Canarc performed preliminary metallurgical test work that utilized flotation, cyanidation of the flotation tailings, and pressure oxidation (autoclaving) of the flotation concentrate.  These tests achieved an average recovery of 94%. Additional metallurgical test work is planned to optimize the process.

Site Infrastructure:

Canarc constructed a new office complex at the New Polaris mine site and the camp is now capable of supporting 35 people. Several existing buildings have been refurbished and serve as both sleeping quarters and the kitchen facility. The machine shop has also been maintained as a maintenance facility.

Dislaimer

Cautionary Note to US Investors- The United States Securities and Exchange Commission limits disclosure for US reporting purposes to mineral deposits that a company can economically and legally extract or produce. We use certain terms on this web site, such as "reserves, " "resources," "geologic resources," "proven", "probable", "measured", "indicated," or "inferred," which may not be consistent with the reserve definitions established by the SEC. U.S investors are urged to consider closely the disclosure in our Form 20-F, File No. 000-18860. You can review and obtain copies of these filings from the SEC's website at www.sec.gov/edgar.shtml.

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