Big Picture – A Deep Dive Examination of Canarc Resource Corp.
Canarc Resource Corp. Snapshot
CANARC is a TSX listed company focused on advanced Gold and Silver assets located in the Americas. The company is well funded with over $10M in cash and is lead by a proven team with the ability to raise capital and advance projects from exploration to production. Canarc has projects with significant gold resources located in British Columbia, Canada as well as prime drill ready exploration targets.
The company has a planned growth strategy aimed to increase the current the gold silver resource base and acquire advanced producing or near term producing assets with upside potential.
Canarc is a growth-oriented, gold exploration and mining company listed on the TSX (CCM) and the OTC-BB (CRCUF). The Company is currently focused on exploring its gold properties in north and central BC. Canarc is also seeking a partner to advance its high grade, underground, New Polaris gold mine project in British Columbia to the feasibility stage. Canarc is also seeking to acquire an operating or pre-production gold mine in the Americas.
Canarc’s core asset is the 100% owned, past-producing, high-grade, 1.1 million oz New Polaris gold mine project located in north-western British Columbia.Location and Access:
The New Polaris project is situated in northwestern British Columbia, 100 km south of Atlin, B.C., and 60 km east of Juneau, Alaska, on the west bank of the Tulsequah River near the B.C. - Alaska border.Small aircraft carrying personal and/or supplies can reach the site from Atlin or Juneau. Heavier mine equipment and supplies can be barged to the minesite via the Taku River.
Ownership:Canarc holds a 100% interest in 61 crown granted mineral claims and 1 modified grid claim totaling 2,956 acres. The project is subject to a 15% net profits interest to Rembrandt Gold Mines, which can be reduced to 10% NPI. For 150,000 shares.
Current Status:Canarc is now considering a feasibility work program to include 15000 meters of infill drilling to upgrade inferred resources, to measured and indicated resources, mine and plant engineering, environmental permitting and completing a feasibility study at an estimated cost of CA$9 million, subject to financing.
Economics:Canarc updated its positive preliminary economic assessment of New Polaris in April 2011 for the construction of 72,000 oz per year high grade, underground gold mine. Click here to view.
In the new base case preliminary economic model, higher gold prices appear to have a significant positive impact on the New Polaris gold mine project economics. Using new parameters for the gold price ($US 1,400 per oz), $CA /$US exchange rate (1.00) and cash costs (US$481 per oz), the updated Moose Mountain PEA generates a discounted (5%) after-tax Net Present Value ("NPV") of CA$195 million with an after-tax Internal Rate of Return ("IRR") of 42.8% and a 1.9 year pay-back period. On a pre-tax basis, the undiscounted life-of-mine cash flow totals $272 million.Mining History:
Prospectors discovered gold at New Polaris in 1929. The mine, then known as Polaris Taku, was built in 1937 and commissioned a year later. It operated until 1942, shut down due to World War II, and then restarted in 1946 and operated until 1951. In 1951, a barge loaded with gold concentrate sunk off of the coast of BC in a violent storm. As a result the mine closed. Cominco owned and operated the nearby Tulsequah Chief and Big Bull deposits and in 1952 leased the site Polaris-Taku site and upgrade the mill to process ores mined from these deposits. This continued until 1957. During the mines operation, a total of 232,000 oz. gold was produced from 691,000 tonnes of ore grading 11.9 grams per tonne (0.35 oz./ton). Gold concentrates were shipped to a smelter in Tacoma, Washington for refining. About 15,796 m of under-ground development on 10 levels, and 3,747 m of raise development were completed at New Polaris. The deepest level of the mine is 187 m below sea level. A 250 m internal winze was used to haul ore to the main haulage access level. Mining methods included long-hole, shrinkage and resuing.New Polaris then lay dormant for 30 years until exploration resumed in 1988. Canarc acquired New Polaris in 1992 and since has drilled 241 holes totaling 64,000 m of core, outlining significant new ore below and beyond the old mine workings.
Resource (NI 43-101 compliant)
Updated February 1st 2007, and using a 6 gram per tonne cutoff (0.17 oz per ton), the total resource at New Polaris is 1,155,000 oz gold contained within 2,916,000 tonnes of mineralized vein material at an average grade of 12.3 grams per tonne (0.36 oz. per ton). Greater than 95% of the measured and indicated resources are located within the C vein system where infill drilling programs were conducted over the past three years. Approximately 75% of the inferred resources are also located within the C vein system, with the remainder attributable to the Y19 and Y20 veins. See the tables below for the breakdown of the resource categories.
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Canarc owns a 100% interest in the prospective Windfall Hills gold exploration project, located in the same geological belt as and 90 kilometers (km) northwest of the Blackwater-Davidson gold discovery in central BC. Richfield Ventures made the discovery in 2009 and was taken over by Newgold in 2011 for $10.38 per share, valuing the company at more than $550 million. Newgold is now conducting a feasibility study to build a 500,000 oz per year open pit gold mine based on their updated resource estimate for Blackwater-Davidson contain 10 million oz gold and 65 million oz silver.Location and Access
The Windfall Hills gold project is located 65 km south of Burns Lake, readily accessible by gravel logging roads and a lake ferry crossing in the summer-time, or by charter aircraft year-round. The project consists of the “Atna” properties, comprised of 2 mineral claims totalling 959 hectares and the “Dunn” properties, comprised of 8 mineral claims totalling 2820 hectares. These properties are situated within the same geological belt of Tertiary volcanic rocks as the Blackwater-Davidson gold discovery.Exploration History
During the 1980’s and 1990’s, various junior exploration companies carried out more detailed geological, geochemical and geophysical surveys to define a broad, northeast-trending anomalous zone 2 km long by 1 km wide, marked by elevated gold and multi-element soil geochemistry, and several conductive or resistive IP geophysical targets. A 5 hole, 383 meter (m) drill program in 1988 returned assays up to 1 gram per tonne (gpt) gold and a 6 trench, 424 m rock sampling program in 1994 returned assays of 1.4 gpt gold over 6 m and 0.41 gpt over 42 m, still open for expansion.In 1997, Atna Resources Ltd. completed a 44 km 3D-IP resistivity survey. They outlined three highly resistive zones that correlate well with three known soil geochemical anomalies and were interpreted to be large silicified zones within the host rhyolite volcanic rocks. Atna proposed a diamond drill program to test these IP targets but never carried it out. The properties lay idle until Canarc acquired them in 2011 and conducted further soil geochemical sampling to refine the initial drill targets.
Geology and Gold MineralizationEarly reconnaissance mapping and sampling identified a large zone of clay alteration and quartz stock-works carrying anomalous gold values within rhyolite to dacite volcanic flows, breccias, tuffs, sediments and hypabyssal intrusions of the Ootsa Lake Group. Gold mineralization is associated with quartz stock-works and alteration zones of silica, pyrite, K-feldspar, sericite and clay. Anomalous gold, silver, and arsenic values appear to be associated with areas of more intense multiple-stage silicification and brecciation. Rock-chip samples have returned values up to 5.7 gpt gold and numerous samples assayed over 1.0 gpt gold.
Current StatusCanarc completed a phase 1 exploration program in 2011 to re-establish geological and geochemical controls provided from previous work and conduct focused geochemical sampling to better define the known target areas. Canarc has outlined two gold-silver geochemical soil anomalies on the properties within the area of previously defined IP-resistivity anomalies to help define the initial drill targets. Canarc is seeking a partner to conduct a Phase 1 drill program at Windfall Hills and test for “Blackwater” type bulk tonnage epithermal gold-silver mineralization.
Garry Biles, P. Eng, President & COO for Canarc Resource Corp, is the Qualified Person who reviewed and approved the contents of this section.
On August 25, 2016 – Canarc has signed an agreement with Eureka Resources Inc. (TSX-V: EUK) (“Eureka”) which grants Canarc an exclusive option (the “Option”) to acquire up to a 75% interest in the FG Gold Property (the “Property”) located approximately 100 kilometres east of Williams Lake in central British Columbia.
The AgreementThe Option is to be exercised in two stages, with the first stage giving Canarc the right to earn a 51% interest in the Property and the second stage giving Canarc the right to earn an additional 24% interest for a total 75% interest in the Property.
In consideration for the grant of the Option, subject to the approval of the Toronto Stock Exchange (the “TSX”) and the TSX Venture Exchange (the “TSXV”), Canarc will issue to Eureka 250,000 common shares, and participate in Eurkea’s planned private placement, by acquiring 750,000 units of Eureka (each a “unit”) at a price of $0.14 per Unit, at an aggregate cost of $105,000. Each Unit will be comprised of one common share of Eureka and one-half of one common share purchase warrant (a “Warrant”). Each Warrant is exercisable to acquire one additional common share of Eureka at an exercise price of $0.20 for a period of two years after issuance.Under the terms of the Option Agreement, Canarc can earn the initial 51% interest in the Property by making the following expenditures, share issuances and payments to Eureka:
aggregate property expenditures of $1,500,000, of which at least $500,000 is to be incurred in or before 2017, at least $500,000 is to be incurred during 2018 and the balance is to be incurred during 2019;
share issuances of 250,000 Canarc common shares on or before each of the first, second and third anniversary, for a total of 750,000 Canarc common shares;
annual cash payments equal to 50% of the British Columbia mining exploration tax credit paid to, or credited to the account of, Canarc with respect to the Property (the “METC”) for expenditures incurred by Canarc (to an aggregate maximum of $1,500,000 in expenditures during the first option period) during the prior year.
Upon the exercise of the initial stage of the Option, Canarc will have the option to earn an additional 24% interest for a total 75% interest in the Property by making the following expenditures, share issuances and payments to Eureka:
share issuances of 750,000 Canarc common shares on or before each of the fourth and fifth anniversary, for a total of 1,500,000 Canarc common shares;
annual cash payments equal to the greater of: (i) $75,000 and (ii) 50% of the METC for expenditures incurred by Canarc (to an aggregate maximum of $1,500,000 in expenditures during the second option period) during the prior year.
Upon exercise of the Option by Canarc, Canarc and Eureka will form a joint venture with respect to the further development of the Property.
Transaction Rationale for CanarcCanarc entered into the Option Agreement as a result of the following considerations:
Prior third party exploration expenditures on the Property totalling $15 million have yielded a good understanding of the geology of the Property.
Eureka reports an NI 43-101 total measured and Indicated resource of 376,000 ounces gold (“Au”), at an average grade of 0.776 g/t Au, comprised of measured resource of 5,600,000 tonnes at 0.812 Au g/t containing 145,000 oz Au and indicated resource of 9,570,000 tonnes at 0.755 Au g/t containing 231,000 oz Au and an Inferred resource of 634,900 ounces Au at an average grade of 0.718 g/t Au comprised of 27,493,000 tonnes at 0.718 Au g/t . This is considered a historical estimate.
Main zone resource area is open down dip and along strike for expansion, targets are drill ready.
A total of 49,691 meters of exploration drilling in 402 holes has been completed to date.
Recent geophysical and geochemical work has identified several other prospective targets with potential for a significant increase in resources.
Laboratory flotation testing has yielded excellent recoveries.
The Property is easily accessible by paved and all weather logging roads.
The Option diversifies Canarc’s portfolio of BC gold properties.
Exercise of the Option could add substantial additional gold resources at an attractive cost.
The Property consists of 33 contiguous mineral claims totalling 10,400 hectares.Eureka has held the Property (formerly called Frasergold) since 1982. To date over $15.0 million of exploratory work has been completed on the Property.
Through drilling, soil sampling, induced polarization (“IP”) geophysical surveys and surface exploration mineralization has been defined over a strike length of 3 kilometres, and has indicated potential for additional mineralization that could extend along an interpreted strike length of over 10 kilometers.An airborne geophysical survey was completed in 2007 covering a large portion of the Eureka Syncline. To cover the area of the airborne survey over the southern limb of the syncline new claims were acquired in June, 2016. A detailed geophysical interpretation was completed on the area of these new claims by SJ Geophysics Ltd. of Surrey, B.C. in July, 2016. The results of this work has revealed three conductive / resistive horizons of the sedimentary package that makes up the favorable lithologies of gold mineralization in the Property Main Zone.
In the Main Zone, the favorable horizon is interpreted at the contact of the upper resistive zone (Knotted phyllite) and the middle conductive zone (black banded phyllite). This same sequence appears at elevations ranging 1700 – 2000 meters (asl) at the South Limb. Only limited prospecting by geochemistry has been completed in this area of the Property.In July 2016 soil sampling was completed collecting 114 samples in the area of the northwest extension referred to as the northwest “offset” zone. Mapping, sampling and prospecting the “offset” zone was also completed to note similar lithologies to the Main Zone. Results indicate a strong correlation of gold anomalies in soil to the favorable electromagnetic horizon. Soil sample assays ranged from <5 ppb (detection limit) to 1100 ppb gold, the high value coinciding with the interpreted offset zone.
PlansPrior to conducting additional fieldwork, Canarc plans to complete a detailed review of the historic exploration information and results in order to define the priority targets for the next exploration program.
A priority target will be follow-up work to test the recently delineated targets in the northwest extension “offset” area. This would require a minimum of five diamond drill holes, each 200 – 300 meters in length, and totaling 1,250 meters.Details of the gold resource can be found in “NI 43-101 Technical Report, Frasergold Exploration Project, Cariboo Mining Division, dated July 27, 2015” available on SEDAR or at the Eureka’s website. The resource is calculated using a cut-off grade of 0.5 g/t. This resource is an historical estimate and a qualified Canarc person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves. A more detailed review of the data used in the resource estimate is needed to verify the historical estimate as current mineral resources or mineral reserves. As a result the historical estimate is not being treated as a current mineral resource.
Garry Biles, P. Eng, President & COO for Canarc Resource Corp, is the Qualified Person who reviewed and approved the contents of this section.
- Professional geologist with 36 years experience in the mining industry, specializing in the discovery and development of mineral deposits.
- B.Sc. Geology degree (Honors), Queens University, Kingston ON, 1976
- M.Sc. Geology degree, University of British Columbia, Vancouver BC, 1984.
- From 1976 to 1982, worked as project geologist managing mineral exploration programs for uranium, base metals and precious metals across Canada for Noranda Mines, Shell Minerals and Chevron Minerals.
- Between 1983 and 1987, owned and operated Cooke Geological Consultants Ltd., discovering and developing several high grade gold vein deposits for clients in British Columbia.
- In 1988, launched Canarc Resource Corp. and has overseen its growth since that time, acquiring, financing, exploring and developing gold mining properties throughout North, Central and South America.
- Participated in several grass roots gold discoveries over the past 27 years.
- Published several geological/geochemical papers in leading technical journals.
- Member in good standing of the Association of Professional Engineers and Geoscientists of British Columbia, The Canadian Institute of Mining and Metallurgy, The Prospectors and Developers Association of Canada, the B.C.- Yukon Chamber of Mines, and a Fellow of the Geological Association of Canada.
- PhD in Mineral Economics and a Metallurgical Engineer and Mineral Economist with over 40 years experience.
- Wealth of knowledge and expertise in metallurgical research, process development for new properties, plant troubleshooting, plant audits, detailed engineering, and overall business management, developed while working for over 50 gold projects throughout the world.
- Worked with various financial institutions like International Finance Corporation (IFC) and other investment funds.
- President and Principal of Resource Development Inc, a diversified mining consulting services company located in Colorado, US.
- Involved the first Albion Process Gold recovery plant that is currently operating at Canarc's joint venture partner, Panterra Gold in the Dominican Republic.
- Significant experience with refractory ores that will be beneficial for Canarc as it advances the New Polaris Gold Project
CA, CBV, Director
- Chartered Accountant and Chartered Business Valuator with over eighteen years of investment banking experience.
- Extensive knowledge and expertise in corporate finance and advisory services, including M&A in mineral exploration and mining.
- Managing Director of Investment Banking at Haywood Securities Inc. from 2010 until mid-2013, prior to which he served as President of Bolder Investment Partners from 2009 until its merger with Haywood Securities in 2010.
- Graduated with a Bachelor of Commerce degree from the University of British Columbia in 1986 and obtained his Chartered Accountant and Chartered Business Valuator designations while working with KPMG.
Metallurgical Engineer, Director
- Professional engineer with 50 years experience in all aspects of mineral processing and mining operations world wide, including the construction of the Yanacocha gold mine in Peru.
- Metallurgy diploma, Mount Morgan Technical College, Queensland, AU, 1949.
- From 1943 to 1974, acted as metallurgist in various mining operations in Australia, Ghana and Peru, with Mount Morgan, MIM, Radium Hill, Tarkwa and Aboso Mines, Cerro de Pasco, Texada and Cerro Corp.
- Between 1974 and 1995, was senior executive with Newmont Mining including VP, Research and Development, VP Metallurgical Operations, VP Newmont Latin America and President, Newmont Peru, responsible for the construction and operation of the Yanacocha Gold Mine, which is today one of the largest gold mines in the world.
- Since 1995, consultant and Director of several small cap mining companies including Glamis Gold, Solitario Resources, Alamos Minerals, Corriente Resources, Cardero Resources, Canarc Resource Corp. and Endeavour Silver Corp.
B.Com. Chief Executive Officer, CEO
- Professional economist with 20 years of experience in business development, mergers and acquisitions, corporate finance, communications, governance and sustainability in Canada, US, Europe and Asia.
- Graduated from the Academy of Economic Studies in Bucharest, Romania with a B.Com. Degree in Business Administration and Economics in 1997 and has since completed several professional programs in capital markets, business strategy and corporate governance.
- Prior to joining Canarc was Director of Corporate Communications with Aurcana Corporation from 2012-2014 and served in a similar role for Selwyn Resources Corporation from 2010-2012
- From 2001-2012 worked as an industry analyst with a $3.5 Billion investment fund.
- He was instrumental in raising over CA$175 million in joint venture, equity and debt financings for mineral resource projects since 2010.
P. Eng., President and COO
- Mr. Biles is a professional engineer with more than 38 years experience, including 16 years as General Manager of 4 producing mines
- Bachelor of Metallurgical Engineering, Technical University of Nova Scotia, 1972
- From 1975 to 1994 held Superintendent and General Manager positions for a number of Canadian mining operations including Falconbridge, Cypress Anvil, Corona and Claude Resources
- From 1994 to 2002 started as Mine Manager eventually becoming General Manager of Barrick's rich Eskay Creek mine in Smithers, BC
- From 2003-2006 was the General Manager of the Bellavista gold mine in Costa Rica for Glencairn Gold, where he supervised the development from start-up through to commercial production in 2006.
- Has excelled at maximizing gold mining operations, achieving production and cost targets and establishing excellent track records for safety first, environmental leadership and strong relations with employees and First Nations.
M.B.A., C.P.A., CFO
- Professional accountant with MBA and MEng (Mining) degrees and with over 24 years of experience in corporate management, regulatory reporting, accounting, auditing and taxation.
- BComm degree, University of British Columbia
- MBA degree, City University
- MEng (Mining) degree, University of Arizona
- Achieved professional qualifications as CPA, CGA, CMA, CMC, CIA, CFE and MAusIMM.
- From 1988 to 1997, acted as controller, treasurer and/or associate for Canadian Connection Group, Can-Chi Group and Corporate House, responsible for all accounting, reporting and management functions for private and public companies.
- From 1997 to 2003 acted as Controller for Augusta Group, overseeing all accounting and reporting activities for publicly-listed mineral exploration companies.
- Has acted as Chief Financial Officer, Vice-President (Finance) and/or Controller for Canarc Resource Corp. (since 2003), Aztec Metals Corp. (since 2003), Endeavour Silver Corp. (from 2003 to 2007) and Parallel Resources Ltd. (from 2009 to 2011).
- Member of AICPA, WSBCPA, CGABC, CMABC, CAMC, IIA, ACFE, SME, and AusIMM.
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