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CEO: Good day. This is Michael
Wachs with CEOcast. I am here today with Bradford Cooke; Brad is President and
Chief Executive Officer of Canarc Resource
Corp., a company
with a dual listing, trading over-the-counter on the Bulletin Board, symbol
CRCUF and also on the Toronto Stock Exchange, symbol CCM. Canarc is a Canadian
based gold exploration and mining company. Thanks for joining CEOcast today
Brad.
BC: Yes, thank you
for having me on again.
CEO: I thought perhaps you could
begin with an overview of the company, and then we will get into some of the
opportunities in greater detail, including the capital you recently raised to
proceed to the next phase of exploration work at the Benzdorp
property.
BC: By way of
history, Canarc is a junior gold mining and exploration company I founded with
some partners back in 1987/1988. We have been listed on the Toronto Stock
Exchange since the early 1990s as well as on the OTC Bulletin Board. Our company
has enjoyed a number of successes over the last decade. We started off in
northwest British Columbia developing claims that ended up surrounding the very
high grade Eskay Creek gold and silver mine, currently owned and operated by
Barrick, who is also our partner on the surrounding claims that we own. Our
second success was in the early 90�s when we acquired what was a small
high-grade underground gold mine that was basically mined out but had some
interesting geological possibilities. Over the last several years this has
become our principal asset, the New Polaris project in northern B.C. We have
invested over US$12 million on exploration and development at New Polaris and
discovered a 1.5 million ounce extension to that old mine below and beyond the
old mine workings. Our geologists were absolutely correct in their
interpretation of the potential of that mine. We are now in the process of
determining the economic viability of what we have found so that we can make a
development decision by the end of the 2nd quarter of this year. The
third and quite possibly the largest success is an early stage exploration
discovery in South America called Benzdorp, where we have invested over US$2
million to date and we are just about to launch into the first large drilling
program of this discovery. In a nutshell, Benzdorp affords us a target that
could be anywhere from 2 to 20 million ounces in size.
CEO: Let�s start if we could with
the Benzdorp property in Suriname, what is it located near and why is this so
promising?
BC: Benzdorp is so
exciting for us because for US$ 2million of surface exploration work we have
found perhaps the largest gold target in my geological career. It is a porphyry
type discovery that appears to have very large tonnage potential, typical of
porphyries which are some of the biggest gold and copper deposits in the world.
When we say it is a 2 to 20 million ounce target, what we mean is that based on
all the surface sampling and other surveys completed to date we have identified
gold mineralization over a very broad area measuring over 500 metres in width (5
football fields in size), and some 1� kilometres (or 15 football fields) in
length, open in all directions. This is just the size of the mineralization at
surface and when you get such a large area of mineralization exposed at surface
it certainly suggests the presence of a very large gold mineralized ore body. We
haven�t proven it to depth yet, because we haven�t drilled it so we are not sure
how deep it goes. However, we have ascertained the size and grade at surface and
we are very bullish about the opportunity to drill this surface target and turn
it into a multi-million ounce gold deposit. It is certainly of the size, grade
and characteristics to be of interest to the largest gold companies in the
world.
CEO: Brad as you look at the work
you are doing, you have an aggressive trenching and sampling program underway at
the JQA prospect area at Benzdorp, what are you doing there and what are you
hoping to find?
BC: This large gold
target I have mentioned is the JQA prospect area where just in the last few
months we completed additional surface trenches. These are big long cuts in the
earth that expose saprolite enabling us to get good samples of gold
mineralization contained in the rock. We do this using a bulldozer working in
tandem with a back hoe to get down as deep as 10 metres or 33 feet deep which
gives us a very good representative sample of the gold mineralization within
those rocks. We have completed enough of these trenches to establish a minimum
width and a minimum length, the � kilometre in width and the 1� kilometre in
length previously mentioned. We hope to dig some more of those trenches to fill
in the gaps and then move to diamond drilling, or core drilling to penetrate the
surface targets and see how deep the ore goes and to see if the gold grade
continues at depth. That would create material value over the near term for our
stockholders, effectively a major discovery if we find in the drilling what we
have already found in the trenching.
CEO: As you look at the work
planned on the drilling side, how big a drilling program will this be relative
to the size of the property?
BC: The first phase
of drilling is a fairly modest 30 holes, which will typically be 100 metres
deep. We are trying to get what we call �fences� of drill holes across the
entire width of the structure in at least three locations. So the 30 hole
drilling program should accomplish that and on that basis if we get in the
drilling what we found in the trenching we will have every justification to be
very aggressive on drilling out this discovery. So we could see moving from 1
drill to 2 drills to 4 drills to 8 drills fairly quickly if we have success here
in order to drill out the discovery.
CEO: The other opportunity in
Canarc is at New Polaris, where is this located and why is it so
promising?
BC: The New Polaris
gold mine site is located in north-western British Columbia, Canada and it is
the biggest success in the Company so far. We started to tackle it in the early
1990s where we simply interpreted an extension below and beyond the old
underground mine workings. Having completed well over 150 drill holes and having
opened up the old mine and dewatered the workings, there are some 11 miles of
underground workings that we have examined and sampled, we have been able to
determine a geological resource estimated at 1� million ounces plus or minus,
still open in all directions for more drilling. So the ore body could certainly
be much larger, especially considering we have not found the bottom of it. When
we talk about a 1� million ounce resource that it from the surface down to about
2,000 feet in depth, but these types of high grade vein mines typically go to 1
mile deep or more. So we have yet to determine the overall size but we certainly
have determined that we have enough of a gold resource to move to the
development of a mine there and that is the focus of the current program there,
culminating in a development decision by the end of June.
CEO: As you look at that decision,
what kinds of input will you have by June and what are you looking
for?
BC: Right now we have
geologists doing a recalculation of the resource based on some new
interpretations of the vein geology. We have an engineer, who was actually the
mine manager at Eskay Creek, not far away from New Polaris, and he is doing an
economic and engineering evaluation of the project to determine just how we
would mine it, who would we sell the gold concentrates to, what will it cost to
get those gold concentrates out to the buyer, what will the buyer charge us,
basically the economics of the mine. We should have that, what we call a scoping
study completed on the project economics by the end of
June.
CEO: How much might it cost to
take the project to the next step and might you bring in a
partner?
BC: We of course have
some initial estimates on the economics at Polaris and Benzdorp based on our
existing database. At Polaris, assuming a 1� million ounce deposit and economics
as established by the drilling work already completed, we are looking at about a
$30 million development capital construction cost to build a 500 tonne per day
mine and mill, that would produce about 70,000 ounces of gold per year for 20
years. However, because it has such a long mine life and the ore body is still
open, it would probably be a two phase development where after three years of
production at the smaller scale we would then consider an expansion up to 1,000
tonnes per day, or doubling the output at a small additional cost of $10 to $15
million. Currently the operating cost per ounce is assumed to be in the order of
$180 per ounce of gold produced, which again in our business is considered to be
low. It would basically be half of the assumed revenues and our net operating
margins would be a very healthy 20% to 30% if not higher.
CEO: Brad, what events should
investors look for
over the coming quarters?
BC: In terms of
events for the 2nd quarter, we are looking forward to announcing the
commencement of diamond drilling at Benzdorp shortly. Of course the drilling
news throughout May and June will create interest in the stock presuming we have
the same success at drilling we have already had at trenching. By the end of
June we hope to have created enough market awareness of this discovery to bring
in a second drill and expand the discovery drilling program. Also newsworthy is
the work being done at New Polaris between now and the end of June, specifically
the new resource estimates and the new engineering and costing work done under
the scoping study. Those are the main benchmarks we expect to put out to
shareholders over the next two and a half months.
CEO: We have been speaking today
with the Chief Executive Officer of Canarc Resource Corp. under the leadership
of Bradford Cooke. The company trades on both the Toronto Stock Exchange under
the symbol CCM and also on the Bulletin Board under the symbol CRCUF. It is a
company that gives investors the opportunity to invest in a junior mining and
exploration company with several significant events transpiring over the coming
months. Brad thanks for joining CEOcast today.
BC: Thank you
Michael. If I may have the last word, I would like to highlight for your
listeners the fact that it is unusual for a small company like Canarc to have
both a development stage asset like New Polaris and an exciting new discovery
like Benzdorp. In fact, if you look at the valuation of the share price the
current price puts the value of the Polaris reserves at about $US9 per ounce in
the ground and therefore investors are not paying anything for the potentially
large discovery at Benzdorp. Thanks again Michael for having me
on.
CEO: Brad, thanks for joining us today. This has been Michael Wachs for CEOcast...where Wall Street listens.