Media Coverage Archive
J. Taylor’s Gold Report
Traded Toronto: (CCM)
Initial Recommendation: 2/27/89 - $1.19
Price 9/6/02: $0.30
Approx. Shares Outstanding: 45,800,000
Quality Rating: “B” (Advanced Stage Projects)
We first recommended this company back in Feb. 27, 1989. As such it is the longest standing recommendation on our list. Not only did we recommend this to our subscribers a long time ago at $1.19, its current price puts us still underwater although there were two good opportunities for investors to cash out at around $5.50 in the intervening years. With 20/20 hindsight we must acknowledge that our timing could have been much better. The big question is where does Canarc go from here.
We sat with this company all these years for two basic reasons. They have excellent gold projects and because I have a very high opinion of the company’s President & CEO, geologist Brad Cooke. Like most gold mining companies, Canarc went into virtual hibernation during the long bear market years. But because it has been out of sight and because of a news release last week, I think Canarc could be one of the most undervalued stocks in the junior gold sector today.
More on last week’s news announcement but first, for the sake of those who may not be familiar with Canarc, here is an overview of the company’s properties:
· The New Polaris is the principal asset of Canarc. This gold property contains a 1.3 million oz. gold resource. Canarc holds a 100% interest in this property which is located in northwestern British Columbia. A high grade, past producing underground mine, New Polaris is one of the largest gold deposits in Western Canada. Development of the neighbouring Tulsequah Chief base metal mine and road should significantly enhance the economics for advancing the New Polaris project.
· The Bellavista Gold Deposit in Costa Rica. This is Canarc’s most advanced project, though its holding is limited to an 18% carried interest after payback. The operator her is Wheaton River Minerals, who has identified a 550,000 oz. higher grade, proven mineable reserve that is amenable to heap leach operations. Operating costs are estimated to be around US$ 156 per oz.
· The Sara Kreek gold mine is a small open pit placer operation (80% Canarc) in the Republic of Suriname. Production was approximately 10,000 oz. and the mine operated at about break-even in 2001. A second, small, high grade, open pit lode mine at Sara Kreek with an estimated US$62 operating cost per oz. also is planned, subject to financing.
· The Company also holds an option to acquire a 100% interest in the Clara high sulphidation, gold-silver property in the prolific Sierra Madre Belt in Mexico through its subsidiary company, Aztec Silver.
· The Benzdorp property in Suriname is what most excites me about Canarc. Although some of the other projects are more advanced, I believe it is the Benzdorp that could catapult Canarc in a household name gold company. The target here is a large gold porphyry system with the potential for several million ounces.
Its been quite a while since we gave Canarc any major amount of space in monthly newsletter. But with the press release dated September 4th, the new life was breathed into the Benzdorp property. That was why I feel compelled to call this company to your attention. Why am I so excited about the Benzdorp? Simply put, given assays to date and the size of the gold bearing structures, the Benzdorp appears to have the potential to become a truly great world-class gold deposit
The New Agreement with Grassalco
The new agreement with its partner, Grassalco the state mining company of Suriname, allows Canarc to earn up to a 100% operating interest in the property by spending $3 million on exploration, making US$300,000 in cash payments and delivering a positive feasibility study. Grassalco retains the rights to small scale placer mining and a net revenue interest, either a floating net smelter return of 1.5% to 6% based on the price of gold or a 20% net profits share after Canarc recovers all of its capital investment with interest.
World Class Potential at Benzdorp
The Benzdorp property, which measures 1,380 square km, is one of the largest mineral properties in the country. The Benzdorp property is also the most prolific gold producing region in all of Suriname, having produced over 1 million ounces of gold historically, including 500,000 ounces from bucket-in line dredging and 500,000 by porknocking (small scale hydraulic mining) of the extensive, gold rich alluvial placer deposits.
The project has huge upside exploration potential. From 1996 to 1997, Canarc explored the easternmost 5% of the property, and discovered several large and/or high-grade gold prospects within a semi-continuous, gold mineralized belt 20 km long. Virtually every creek draining this gold mineralized belt has been mined for gold. Canarc has now confirmed twelve gold soil anomalies, indicating the presence of multiple large lode gold sources areas within the volcanic, sedimentary and intrusive rocks of the favorable Guyana Shield greenstone belt.
Follow-up deep auger drill holes in four gold prospect areas have confirmed large gold mineralized zones now ready for trenching and drilling. The first target, JQA, averages almost 1 gram (0.032 oz/) gold per ton over a 750 meter long by 250 meter wide area. This zone is open in all directions. Geological mapping confirms the JQA zone consists of intense quartz veins and stockworks in a diorite intrusion, indicating a “gold porphyry” style of mineralization. Gold porphyries can contain very large, lower grade gold mineralization.
Bulldozer trenching in the JQA zone 1 km south of the JQA anomaly has also confirmed strong gold mineralization in saprolitic rocks. Trench JQS-1 recently returned 2.68 grams (0.086 oz.) gold per ton over a 19 meter width along the eastern edge of the JQS zone.
On another area 700 meter west of the JQA zone across Pointu Creek, deep auger results in the JQW zone have identified gold mineralizatoin and grades in diorite similar to the JQA zone. Whether the JQW mineralization is a separate body or simply a western extension of the JQA zone can only be tested by diamond drilling, as the intervening ground is covered by creek gravels.
Recent deep augering at the JQB target 1.5 km southeast of JQA has intersected very high grade, shear zone gold mineralization in quartz veins. One 2 meter interval assayed 788 grams gold/ton or 25.3 oz. per ton (duplicated by repeat assays) followed by 2 meters grading 38 grams/ton or 1.22 oz./ton in the next interval. Another hole bottomed in 2 meters running 55 grams/ton gold or 1.76 oz./ton and several holes returned 2 meter intervals exceeding 5 grams or 0.16 oz. gold/ton. These shear zones represent another exciting target that has not yet been tested.
The top 60 meters of gold mineralization at JQA should be soft saprolite ore that need not be drilled, blasted or crushed and should have a very low strip ratio, thereby resulting in low operating costs. Management suggested in its press release that a good example of such mineralization is the type of gold mine mineralization at the Brasilia Mine of Rio Tinto and TVX Newmont in Brazil. That deposit is very huge. It contains 320 million tonnes of very low grade – only about 0.013 oz./ton, but the cost of production in 2001 was only $191 per ounce.
Canarc now plans to conduct a $100,000 grid-trenching program on the JQ gold prospects over the next 3 months. The purpose of that work will be to better define targets for drilling. An aggressive drill program is planned to start early next year using Canarc’s own Longyear 38 diamond drill currently located in Suriname.
In addition to the poor gold markets, a major problem for Canarc with respect to the Benzdorp project has been the legal structure in Suriname. Earlier this year when I spoke to President Brad Cooke, he advised me that there were some positive movements in the legal and political arenas in Suriname. Canarc’s move to restructure its agreement with its Suriname government partner was contingent on changes in law that would accommodate the needs of foreign investors. In Canarc’s press release, the company said the following with respect to new mining legislation. “Suriname has new mining legislation designed to attract foreign investors in the mining sector. Some attractive features of the new policy include a 35% tax rate, 2.25% NSR royalty, minimal import duties, full repatriation of capital and profits and an accelerated depreciation rate.”
I think it is also important to note that major gold producer, Cambior announced on August 28th that they have now committed to make a $95 million investment in Suriname to build the Gros Rosebel gold mine starting before year-end. This suggests a growing level of confidence that the Suriname government is serious about providing an environment favorable to the gold mining industry.
Your editor has known President, CEO and Director Brad Cooke since the early to mid 1980’s. Nothing is more important than management and I believe Brad is about as capable as any junior mining company CEO you will find. Not only does he himself possess solid geological skills but he also has good business sense and people skills. As such he as assembled a team of competent folks around him.
Brad is a professional geologist, with more than 20 years of experience in geology and mineral exploration. He holds two university degrees in geology and has worked with the Ontario Department of Mines, Noranda, Shell and Chevron. Between 1983 and 1987 he owned and operated Cooke Geological Consultants, which found and developed several gold vein deposits for clients, and effectively reactivated interest in the Bralorne gold district -- historically, the largest gold producing region in British Columbia. In 1987, with the private management company ARC Resource Group, he founded Canarc and has overseen the growth of the company since that time, participating hands-on in the acquisition and exploration of strategic gold properties throughout the Americas.
Summary & Recommendation
President Brad Cooke rightly pointed out to me earlier today that at Canarc’s current price, the market is valuing the company’s 1.3 million ounces (Not NI43-101 Compliant) of gold at the New Polaris property at around $10. That means everything else the company owns – including the Benzdorp is effectively a zero cost bonus. Indeed, with the great upside potential of the Benzdorp, it is my view that Canarc represents one of the best junior gold mining share opportunities you will find at the present time. Not only does this company have the goods, but unlike some other firms on our list, it is my view Brad Cooke can raise the requisite capital, in this market environment to keep the company moving forward.
In sense, Canarc offers speculative gold share investors the best of both worlds when it comes to junior mining companies. It has holds some advanced stage projects, which provides the basis for a “B” quality rating on our list. And it also holds some very exciting exploration targets, most notably the Benzdorp.
Last but not least, Canarc is served by a solid management team. For all of these reasons, we think Canarc provides speculative investors with an opportunity to play what appears to be a gold bull market in its very early stages. With successful exploration companies like Canarc, you not only ride the stock higher on the basis of rising gold prices, but the really big though more speculative boost can come from the discovery and delineation of gold resources and ultimately reserves in the ground. We have waited a long time for Canarc to make money for our subscribers. We think the time may now be near not only for people who buy the stock at current levels, but even for those of us who paid around $1.19 about 12 ˝ years ago, to see our patience rewarded. For additional information, contact Canarc at (604) 685-9744 or visit the company’s web site at www.canarc.net.
J Taylor’s Gold & Technology Stocks, (formerly J Taylor’s Gold & Gold Stocks) is published monthly as a copyright publication of Taylor Hard Money Advisors, Inc. (THMA), Box 770871, Woodside, N.Y. Tel.: (718) 457-1426. Website: www.miningstocks.com. THMA provides investment advice solely on a paid subscription basis. Under copyright law, from time-to-time, THMA receives a standard fee of $250 per page from companies whose shares are discussed in this publication in exchange for the right to reproduce reports written herein. However buy or sell recommendations are never made in exchange for fees paid to THMA or anyone associated with THMA. Information contained herein is obtained from sources believed to be reliable, but we do not guarantee its completeness or its accuracy. The management of Taylor Hard Money Advisors, Inc. may, from time to time buy and sell shares of the companies recommended herein. Any stocks held at the time of publication are denoted by an asterisk next to the name of the security in the chart above. However, no statement or expression of any opinion expressed herein constitutes an offer to buy or sell the securities mentioned herein. Subscription rates: Fax: US - $150; Direct mail US $99. E-mail $99 (13 mo.) -E-mail weekly hotline - $24/ (13 mos.) (formerly J Taylor’s Gold & Gold Stocks) is published monthly as a copyright publication of , Box 770871, Woodside, N.Y. Tel.: (718) 457-1426. Website: