Canarc Resources Corp. TSX-V:CCM - OTC-BB:CRCUF


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Review of the First Quarter and Outlook for Second Quarter of 2011

Vancouver, Canada – Bradford Cooke, Chairman and CEO of Canarc Resource Corp. (TSX: CCM, OTC-BB: CRCUF, DB-Frankfurt: CAN), is pleased to provide the following review of Canarc’s progress in the first quarter and its plans for the second quarter of 2011.

Q1 Review

  • Management elected not to proceed with the acquisition of the Relief Canyon Gold Mine but did complete the purchase of the assay laboratory associated with the Nevada project
  • An updated Preliminary Economic Assessment of the New Polaris gold mine project was completed to reflect the higher gold price
  • Canarc received its Yukon Tay-LP project back from Cap-Ex Ventures in order for them to focus on their iron ore properties
  • Management’s pursuit of new opportunities resulted in the acquisition of the Windfall Hills gold project in central British Columbia

Canarc decided not to proceed with acquisition of the Relief Canyon gold mine project in Nevada. The main issues related to the facts were that the known gold resource is only an inferred resource, it was not yet fully permitted for mining, and it partly occupied the property adjacent to the subject property and Canarc was unable to acquire that property on commercially acceptable terms.

The Company did however complete the purchase of a fully built, permitted and operating commercial assay laboratory located near the Relief Canyon mine-site. The lab purchase included 5 acres of zoned commercial land, certain water rights, two industrial buildings including a large warehouse/storage facility, and a fully furnished 300 sample per day analytical laboratory. Canarc has received expressions of interest from other mining companies regarding the future use, expansion and ownership of the lab.

Based on higher precious metal prices Canarc commissioned and received an updated NI 43-101 preliminary economic assessment report by Moose Mountain Technical Services for the New Polaris gold mine project in northwestern British Columbia. The estimated project economics for Canarc to build and operate a 600 tonne per day gold mine, averaging 72,000 ozs gold per year, at New Polaris appear to be very robust thanks to a lower cut-off grade and a higher gold price.

Using updated parameters in the base case economic model for the gold price (US$1200 per oz), $CA/$US exchange rate (1.00), cash costs (US$481 per oz) and cut-off grade (7 grams per tonne), the updated Moose Mountain PEA generates a discounted (5%) after-tax Net Present Value (“NPV”) of CA$129.8 million with an after-tax Internal Rate of Return (“IRR”) of 31.4% and a 2.5 year pay-back period. On a pre-tax basis, the undiscounted life-of-mine cash flow totals CA$280.8 million with a 38.1% IRR and a 2.4 year pay-back period. Given the conceptual nature of the PEA, there is no certainty that the preliminary economic assessment will be realized. However, Moose Mountain concludes that “The Updated Preliminary Economic Assessment indicates that the New Polaris base case has potential for positive results and therefore further work is recommended to optimize the project and complete a feasibility study”.

Cap-Ex Ventures Ltd. cancelled their option to earn a 50% interest in the Tay LP property, located within the Tintina Gold Belt in the Yukon Territory, to focus on their iron ore properties. Canarc holds an option to earn up to a 100% interest in Tay LP from Ross River Minerals Inc. The property enjoys good road access, favourable gold geology, multiple exploration targets, and strong potential to make new gold discoveries The Tay–LP property consists of 413 claims covering a 20 km-long by 4 km-wide belt of gold prospects (8,000 hectares) on which several million dollars have been spent on exploration since 1984.

Q2 Outlook

Canarc’s recent acquisition of two adjacent gold properties in the Windfall Hills area, located 65 kilometers (km) south of Burns Lake and 90 km northwest of Richfield Ventures’ Blackwater gold discovery in central BC will be a focus of management in order to define the 2011 exploration program and budget, which will include diamond drilling to test several high priority geochemical and geophysical targets.

These properties, together called the “Windfall Hills” gold project, are situated within the same geological belt of Tertiary volcanic rocks as Richfield’s Blackwater gold discovery. Richfield Ventures is currently the subject of a friendly take-over bid by New Gold for $10.38 per share, valuing the company at more than $550 million.

Additionally, with the return of Canarc’s Tay-LP project, management plans a thorough review of the historic data including the results from the 470 kilometer airborne geophysical survey that Cap-Ex completed last summer. That survey successfully identified several new EM conductors and magnetic anomalies within prospective geological settings.

Gold mineralization at Tay-LP shares some geological similarities with other recent gold discoveries within the Tintina Gold Belt, such as the Rau property of Atac Resources (ATC: TSX-V) and the Ketza River gold deposit of Yukon-Nevada Gold (YNG: TSX), which is located only 18 km east of Tay-LP.

Management continues to seek strategic alternatives such as a joint venture or other means to advance the New Polaris high grade gold project to mine development and a full feasibility study.  Discussions are currently underway with several interested parties.

Canarc Resource Corp.

“Bradford J. Cooke”

Bradford Cooke
Chairman and CEO

About Canarc Resource Corp.

Canarc Resource Corp. is a growth-oriented, gold exploration company listed on the TSX (CCM) and the OTC-BB (CRCUF). Canarc is currently focused on exploring its Tay LP gold property in south-central Yukon and seeking a partner to advance its 1.1 million oz, high grade, underground, New Polaris gold mine project in north-western British Columbia to the feasibility stage.

Contact Information

Gregg Wilson
Investor Relations
Toll Free: 1-877-684-9700
(604) 685-9700
Fax: (604) 685-9744
[email protected]