Canarc Acquires Options to Purchase Providencia and Los Arrastres Gold-Silver Projects In Guanajuato State, Mexico
Vancouver, Canada – March 20, 2007 - Canarc Resource Corp. (TSX: CCM, OTC-BB: CRCUF, DBFrankfurt: CAN) announces that it has acquired options to purchase the Providencia and Los Arrastres gold-silver projects located near the town of San Felipe in the state of Guanajuato, Mexico.
The 112 hectare Providencia and San Felix mine properties cover two small but high grade vein silver-gold mines that produced an estimated 8.8 million oz silver from 300,000 tonnes ore grading around 1000 gpt silver and 1 gpt gold (30.6 oz per ton Ag equivalents at a 50 silver: 1 gold ratio) according to a CRM report in 1968 (now SGM, the Mexican Geological Survey). The mines closed in 1934 as a result of conflicts related to the Mexican Revolution, and have been dormant ever since.
The 7,638 hectare Los Arrastres properties surround the past producing Providencia and San Felix mine properties and were staked by Grupo Mexico in 1990 to explore these mineralized structures on a district scale. In addition to identifying extensions of the Providencia and San Felix mineralized zones, Grupo Mexico discovered a third mineralized gold prospect area, El Payan, by drilling in 1991 but no work has been done on Los Arrastres since that time.
The 8 km by 10 km Providencia and Los Arrastres properties cover the entire Providencia mining district, which is located in the heart of the “Faja de Plata” (the Mexican Silver Belt) about 45 km north of the famous Guanajuato silver-gold mining district where the El Cubo (now Gammon Lake) and Valenciana (now Great Panther) mines have recently been redeveloped into production. It is readily accessible by a new state highway that passes within 3 km of the old mines.
The Cerro San Pedro gold mine project (now Metallica Resources) lies about 100 km to the northeast, and the Pinos gold mine project (now Romarco Minerals) is situated approximately 110 km to the north of Providencia. The Providencia and San Felix mines were first worked by the Spanish in the 1700’s, they were mentioned by Humboldt in his 1936 treatise on gold-silver mines of the New World, but most of the historic production was from 1889 until the mines closed in 1934.
There are three main mineralized gold-silver structures:
- Providencia - Purisima, which includes the principal past-producing Providencia mine, is a silver-rich quartz vein system that has been traced for more than 2.0 km along strike, consisting of two parallel veins each 0.5 m to 3.0 m wide but only 15 m apart, marked by 12 separate shafts including the main shaft 6 m wide and 365 m deep, that accesses one main stope measuring 250 m long and 150 m vertical as well as 12 mine levels.
- San Felix - Zamorana, which includes the only other significant past-producer, the San Felix mine, is a gold-rich chalcedony vein system that has been mapped for more than 1.5 km along strike, comprising mercury veinlets towards the north, a gold chalcedony stockwork up to 20 m wide at San Felix and a chalcedonic-argillic-iron oxide alteration zone extending well to the south, marked by 8 separate shafts up to 150 m deep and accessing 3 mine levels at San Felix.
- El Payan, another gold-rich chalcedony vein system, averages 2 m thick, is exposed for 1.2 km along strike and covers the 100 m deep El Payan shaft and a blind, flat-lying gold-silver chalcedony replacement zone up to 48 m thick that was found by the Grupo Mexico drilling.
Geologically, the Providencia mining district is a classic, low sulfidation, epithermal vein camp located along the northwest edge of the Villa de Reyes graben (a major extensional fault structure) adjacent to a rhyodacite porphyry intrusion. The veins are hosted by deformed, thin bedded, Mesozoic lutites, limestones and andesites and undeformed Tertiary andesites and rhyolites. Mineralization consists of native gold, silver and silver sulfosalts associated with quartz-chalcedony veins and related argillic-pyritic alteration.
In 2004, the CRM (now SGM) completed four short drill holes into the San Felix stockwork zone over a 116 m strike length as part of their research program to assist small miners. Each drill hole intersected old workings (open stopes) approximately 2 m wide followed by footwall stockwork mineralization that ranged from 1.38 gpt gold over 2.5 m in hole BSF1 up to 2.30 gpt gold over 8.8 m in hole BSF3.
In 1999, consulting company Minera Cascabel estimated the exploration potential to be 828,000 tonnes grading 0.8 gpt gold and 550 gpt silver within the Providencia mine and 3,625,000 tonnes grading 2.0 gpt gold and 28 gpt silver within the San Felix mine. These estimates of potential should not be taken as NI 43-101 compliant resources, they are simply an indication of the initial exploration upside on the properties based on Minera Cascabel and historic sampling data. All three mineralized zones remain open along strike and at depth.
Starting in 1991, Grupo Mexico mapped 870 hectares on the Los Arrastres property surrounding the Providencia and San Felix mines, collected 588 samples from the mineralized structures and 654 geochemical rock samples on a 100 m spaced grid, completed 20 km of IP-Resistivity geophysical surveys at San Felix and El Payan and drilled 11 holes mostly at El Payan. Four drill holes at El Payan intersected a blind, flat-lying, gold-silver chalcedony replacement zone within Tertiary rhyolites that averaged 0.3 gpt gold and 20 gpt silver over a 30 m thickness.
Grupo Mexico recommended a 100 hole, 9500 m drill program to test the three main mineralized structures but this work was never carried out. Canarc plans to better define these drill targets through a Phase 1 exploration program of data compilation and re-interpretation, geochemical soil sampling, and backhoe trenching. Canarc will also assess the potential for near-term small scale production and cashflow by re-sampling the old mine dumps and tailing for re-processing at local plants.
Canarc can acquire 100% interest in the Providencia (including San Felix) mine properties by issuing 30,000 common shares to the Vendors on signing a formal agreement within 30 days and making US$2 million in cash payments over a 2 ˝ year period, including US$30,000 on signing. The Vendor will retain a 2 ˝ % net smelter return royalty (“NSR”), and Canarc has the right to reduce the royalty to 1 ˝ % at any time by paying US$750,000 and issuing an option to the vendor to purchase 250,000 common shares of Canarc at the five day closing share price average on the Toronto Stock Exchange prior to the royalty reduction.
In addition, the agreement recognizes two opportunities for near-term, small scale production and cashflow, as follows:
- In 1968, the CRM estimated 124,000 tonnes within the two main Providencia mine dumps, grading 90 gpt silver and 0.32 gpt gold based on their surveying, trenching and sampling of the dumps. In 1980, the vendor estimated 15,000 tonnes of old Providencia mill tailings grading 165 gpt silver and 0.7 gpt gold based on systematic pit sampling of the tailings. They subsequently built a small heap leach operation, leached a few hundred tonnes of old tailings and recovered about 70% of the gold and silver. Both of these resources are considered historic and not compliant with NI 43-101, Canarc has not yet verified them, and therefore they should not be relied upon. However, Canarc has the right to re-sample and then truck the mine dumps and mill tailings for toll milling to local plants in the Guanajuato district. The vendor will retain a 30% net profit interest from the re-processing of old mine dumps and mill tailings.
- The vendor has received a term sheet to deliver 100 tonnes per month of gold bearing chalcedony vein material from the San Felix mine to the Grupo Mexico smelter in San Luis Potosi, located 100 km away to the northeast, for use as smelter flux. Luismin (now Goldcorp) previously estimated 70,000 tonnes in the San Felix stockwork zone at a low strip ratio grading 4.42 gpt gold and 8 gpt silver based on systematic sampling of the stockwork. This resource is considered historic and not compliant with NI 43-101, has not been verified and should not be relied upon. The vendor has the right to mine up to 2000 tonnes per month during Canarc’s option period and Canarc has the right to participate for a 50% interest in this venture.
Canarc can separately acquire a 100% interest in the Los Arrastres properties by making US$2.5 million in cash payments and spending US$2 million on exploration over a 3 year period. Grupo Mexico will retain a 2% NSR and Canarc has the right to reduce the NSR to 1% by paying US$1 million at any time.
Bradford Cooke, Chairman and CEO commented, “The Providencia and Los Arrastres properties represent the first positive result of the acquisition program launched last year to diversify Canarc’s property portfolio. This famous Mexican gold-silver district offers Canarc not only the potential for attractive new gold discoveries but also for near-term small scale gold production and cashflow.”
Mr. Cooke, M.Sc., P. Geo., is the Qualified Person who reviewed the historic data reported herein.
Canarc Resource Corp. is a growth-oriented, gold exploration and mining company listed on the TSX (symbol CCM), OTC-BB (symbol CRCUF) and DBFrankfurt (symbol CAN). The Company’s New Polaris gold project in north-western British Columbia is one of the largest undeveloped high grade gold deposits in Western Canada. Canarc’s focus is now on advancing New Polaris to the feasibility stage, exploring its Benzdorp gold project in Suriname and acquiring attractive gold exploration and mining projects in Mexico. Barrick Gold Corp. is a shareholder.
CANARC RESOURCE CORP.
/s/ Bradford J. Cooke
Bradford J. Cooke
Chairman and C.E.O.
For more information, please contact Gregg Wilson at Toll Free: 1-877-684-9700, tel: (604) 685-9700, fax: (604) 685-9744, email: [email protected] or visit our website, www.canarc.net. The TSX has neither approved nor disapproved the contents of this news release.
CAUTIONARY DISCLAIMER – FORWARD LOOKING STATEMENTS
Certain statements contained herein regarding the Company and its operations constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. All statements that are not historical facts, including without limitation statements regarding future estimates, plans, objectives, assumptions or expectations of future performance, are “forward-looking statements”. We caution you that such “forward looking statements” involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Such risks and uncertainties include fluctuations in precious metal prices, unpredictable results of exploration activities, uncertainties inherent in the estimation of mineral reserves and resources, fluctuations in the costs of goods and services, problems associated with exploration and mining operations, changes in legal, social or political conditions in the jurisdictions where the Company operates, lack of appropriate funding and other risk factors, as discussed in the Company’s filings with Canadian and American Securities regulatory agencies. The Company expressly disclaims any obligation to update any forward-looking statements. We seek safe harbour.