FEATURED COMPANY

Canarc Resource Finds Golden Opportunity In The Jungles of South America

By Marc Davis, Managing Editor

SmallCapMedia has recently been following the fortunes of a rare find among junior mineral exploration companies -- a small gold producer with positive cash flow and an excellent portfolio of gold exploration/development properties. They include the largest undeveloped gold deposit in western Canada and a potentially world-class South American gold prospect. Canarc Resource Corp. is listed on the Toronto Stock Exchange (symbol CCM) and the NASD OTC Market (symbol CRCUF).

In an era in which gold prices have lost much of their luster, the proven formula for success for mining companies is to focus on low cost operations such as open-pit mining. And that typically involves venturing much farther afield from North America's historically prolific gold belts, where all but the deepest, most inaccessible gold veins have been largely mined out. This is why Canarc's field geologists are now finding themselves rolling up their sleeves in such exotic climes as Costa Rica and Suriname.

Indeed, Canarc's main exploration focus near-term is in the small South American nation of Suriname. The company has acquired an expansive 400,000-acre property in the heart of the largest historic gold region of Suriname, which has seen over one million ounces of production from placer and alluvial deposits alone. For years, hundreds of illegal laborers have successfully mined gold in the numerous streams that drain from Canarc's Benzdorp Property. But with their scant resources and expertise, they are merely collecting the crumbs off a golden cake that Canarc's management believes could be several million ounces in size.

To date, Canarc has spent U.S. $2 million on delineating an initial gold prospect with the potential for about two million ounces. Since only about five per cent of the property has been explored so far, Canarc believes that other highly prospective gold zones could dramatically increase the size and scope of its gold discovery to as much as ten million ounces. An aggressive drill program will be undertaken throughout 2003 with the intention of better outlining the Benzdorp's Project's potential to become the next major gold find in South America.

Elsewhere in Suriname, Canarc has already established itself as a cash flow positive mining company, albeit on a very small scale. The Sara Kreek gold mine is a low-cost small open pit placer operation (in which Canarc holds an 80 per cent interest) that Canarc's local partner put into production in 1995. It produces an average of 10,000 ounces of gold per year, although it is only marginally profitable at current gold prices.

And in Costa Rica, Canarc is involved in another advanced development project, the Bellavista gold deposit, which is joint ventured with another mining junior, Wheaton River Minerals. Wheaton River, the operator, has identified a 550,000-ounce high-grade proven mineable reserve that is amenable to a heap leach operation with a low U.S. $156 per ounce operating cost. Canarc has an 18 per cent carried interest after payback and already benefits from pre-production royalty payments of U.S. $117,750 each year.

Meanwhile, Canarc's principal long-term asset is the New Polaris Property, which is currently the largest undeveloped gold deposit in western Canada. Located in northwestern British Columbia, this high-grade, past-producing underground mine (which yielded almost a quarter of a million ounces of gold) has not been worked since 1951 when its most readily accessible reserves became depleted. However, Canarc has spent over U.S. $12 million in the last decade on proving up a 1.3 million ounce gold resource that still has considerable potential to double or triple with further drilling. Nonetheless, this rich deposit remains on the 'back burner.' Prompting this decision is the lack of an access road to the mine, which would likely become a reality once a neighboring base metal mine is built within the next few years by another Canadian mining outfit, Redcorp Ventures. Also, with a targeted mining cost for New Polaris of approximately U.S. $190 an ounce, Canarc will need to see a sustained recovery in bullion prices to make this operation economically viable.

With a share price that is around Can. $0.31 (U.S. $0.20), Canarc is considerably undervalued based merely on its ownership of the New Polaris mine, alone, according to its CEO Brad Cooke.

"If you take our current market capitalization of around US$10 million and divide by Canarc's 1.3 million ounce gold resource at our New Polaris mine, which is in an advanced stage of exploration, you end up with a value of less than U.S. $8 per ounce of value in the ground. Or in other words, investors are essentially buying each $300-plus ounce of gold for approximately $8 an ounce. And this also means that all of the upside potential for a major gold find at Benzdorp is effectively free to investors at the current share price," he recently said to the SmallCapMedia.

Cooke should know what he is talking about. With over two decades of experience in the mining business, he has a proven track record with several 'household name' mining and petroleum multinationals and has been directly involved in no less than eight mineral discoveries. Indeed, he is in good company with Canarc's management team and directors who, combined, have well over a century's worth of experience in the mining business.

Unlike the vast majority of junior exploration/mining companies that trade in the same price ranging range, Canarc has a strong balance sheet with over Can. $800,000 in cash-on-hand, reliable cash flow and no significant debt. Also, with about 45 million shares outstanding, Canarc boasts some top-drawer corporate shareholders in the form of mining powerhouses Barrick Gold and Echo Bay Mines. Indeed, Canarc's share prices seems surprisingly cheap relative to its assets and prospects but this scenario merely reflects a market in gold stocks that has been badly mauled since the meltdown in gold markets that began in 1997. Moreover, Canarc did not receive clear title to its Benzdorp Project until late summer of this year. Hence, the implications of the news have yet to galvanize an investment public that is still largely sitting on the sidelines until the broader market shows clear signs of a recovery.

Meanwhile, Canarc's main focus throughout 2003 is to extensively drill the Benzdorp Property and prove up what may soon reveal itself to be a major world-class gold deposit. If successful, the prospect of a take-over bid from a major mining company could indeed provide patient investors with a golden opportunity for a home run.

For more information email: info@canarc.net
Or visit the website at www.canarc.net