Improved Economic Outlook for New Polaris Gold Mine Project

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Improved Economic Outlook for New Polaris Gold Mine Project

posted on Jan 08, 2009 01:47AM

January 7, 2009

Canarc Announces Improved Economic Outlook for New Polaris Gold Mine Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 7, 2009) - Canarc Resource Corp. (TSX:CCM)(OTCBB:CRCUF)(DBFrankfurt:CAN) announces that recent optimization work on the preliminary assessment of the New Polaris gold mine project in northwestern British Columbia has improved the project economics.

The combination of new off-site treatment terms, an increased gold price and a decreased Canadian dollar exchange rate have a positive impact on the economics for the New Polaris gold mine project. At a $US 750 per oz gold price and a $US /$CA exchange rate of 0.80, the project generates a pre-tax Net Present Value ("NPV") of CA$131.2 and a pre-tax Internal Rate of Return ("IRR") of 28.8%.

This compares to a pre-tax NPV of CA$60.4 million and a pre-tax IRR of 14.9% at a US$650 per oz gold price and a $US/$CA exchange rate of 0.90 when the preliminary assessment study was completed in 2007 (click here to view: www.canarc.net/news/2007/index.php?&... ).

The base case model is summarized below:

-------------------------------------------------------------------------
Scheduled Resources              806,000 tonnes measured and indicated
                                 grading 13.2 gpt Au (after dilution) and
                                 944,000 tonnes inferred grading 11.9 gpt
                                 Au (after dilution) and a 9 gpt cutoff
Production Rate                  600 tonnes per day
Grade                            12.5 grams per tonne (diluted 20%)
Recoveries                       91% gold into concentrate
Output                           80,000 oz gold per year
Mine life                        8 years
-------------------------------------------------------------------------

The revised financial parameters are:

-------------------------------------------------------------------------
Gold Price                       US$ 750 per oz
Exchange Rate                    US$ 0.80 equals CA$ 1.00
Capital Cost                     CA$90.5 million
Cash Cost                        US$ 329 per oz (excluding off-sites)

                                 Pre-Tax
                                 -------
Net Present Value (NPV) (0%)     CA$131.2 million
NPV (5%)                         CA$87.5 million
NPV (8%)                         CA$67.8 million
NPV (10%)                        CA$56.8 million

                                 Pre-Tax
                                 -------
Internal Rate of Return          28.8%
Payback Period                   3.8 years
-------------------------------------------------------------------------

The preliminary assessment was based on resources, not reserves, and a portion of the modeled resources to be mined are in the inferred resource category. Resources are considered too speculative geologically to have economic considerations applied to them so the project does not yet have proven economic viability.

The New Polaris current resources were previously disclosed in a news release dated February 1, 2007 (click here to view: www.canarc.net/news/2007/index.php?&... ) and in a NI 43-101 technical report filed on SEDAR in March, 2007. The Preliminary Assessment report, completed by Moose Mountain Technical Services, was filed with SEDAR in October, 2007.

Cash costs include site-related costs prior to the shipping and sale of concentrates. Offsite costs for concentrate transportation and processing were treated as deductions against sales.

The Net Present Values are life of mine net cash flows shown at various discount rates. The Internal Rates of Return assume 100% equity financing.

The revised economic model has been reviewed by Moose Mountain Technical Services who completed the preliminary assessment for New Polaris Gold Mine in 2007. The QP for the update is Jim Gray, P. Eng.

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 advancing its New Polaris gold mine project in British Columbia and acquiring attractive gold exploration and mining projects in North America. Barrick Gold Corp. is a shareholder.

CANARC RESOURCE CORP.

Bradford J. Cooke, Chairman and C.E.O.

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