Canarc takes plunge into Mexico (March 21, 2007)

Vancouver – Making good on its stated acquisition agenda, Canarc Resource (CCM-T, CRCUF-O) is taking an option to purchase a couple of gold-silver projects in Guanajuato State, Mexico.

The Providencia project (which includes the San Felix property) covers about 112 hectares and encompasses a pair of past producing mines with historic output of about 8.8 million oz. of silver from high-grade vein structures.

Mexican government reports indicate the operations mined about 800,000 tonnes of ore grading around 1,000 grams silver per tonne and one gram gold per tonne. Mining ceased in the mid-1930s due to conflict issues arising from the Mexican Revolution.

Additionally, Canarc also plans to purchase the 7,638-hectare Los Arrastres property that encompasses the two small past producing mines. The project was staked by Grupo Mexico (GMBXF-O) in 1990 to give the major a district-scale footprint to explore for extensions of the high-grade veins.

The Providencia mining district hosts classic low sulphidation, epithermal vein systems. Veins are hosted in a suite of sedimentary rocks and volcanics with precious metal mineralization consisting of native gold, silver and silver sulphosalts.

The projects are located in heart of the Faja de Plata (the Mexican Silver Belt) about 45 km north of the Guanajuato silver-gold mining district where a couple of past producing mines have recently been redeveloped back into production.

Canarc plans to evaluate three main structures identified on the project area:

• Providencia – Purisima is a silver-rich quartz vein system traced for over 2 km along strike. Two parallel veins (0.5-to-3 metres wide) about 15-metres apart were developed in the Providencia mine. Workings include 12 separate shafts and a dozen mine levels.
• San Felix – Zamorana is a gold-rich chalcedony vein system mapped for more than 1.5-km along strike. Mineral zonation shows mercury veinlets occurring in the north transitioning to a gold-chalcedony stockwork up to 20-metres wide at San Felix and to a chalcedonic-argillic-iron oxide alteration zone extending southwards. The past producing San Felix mine consisted of eight shafts up to 150-metres deep accessing three levels.
• El Payan is also a gold-rich chalcedony vein system that averages 2-metres thick and is exposed over a strike of 1.2 km. Grupo Mexico drilling in 1991 also identified a blind, flat-lying gold-silver chalcedony replacement zone up to 48-metres thick.

The company also intends to evaluate the potential of re-processing old mine dump material and tailings at local plants.

Historic estimates (non-NI43-101) at Providencia reviewed about 124,000 tonnes of mine dump material averaging 90 grams silver and 0.3 gram gold. Additionally, about 15,000 tonnes of mill tailings were estimated grading 165 grams silver and 0.7 gram gold. Should Canarc have any material re-processed the vendor will receive 30% of the net profits.

The vendor also reports receiving a term-sheet to deliver about 100 tonnes of gold-bearing chalcedony vein material monthly from the San Felix mine for use as flux at Grupo Mexicos smelter at San Luis Potosi. An historic estimate of 70,000 tonnes grading 4.4 grams gold and 8 grams silver was previously tabled in the projects stockwork zone. The vendor retains rights to mine up to 2,000 tonnes monthly during the option period with Canarc holding the right to 50% interest in the venture.

Canarc can acquire Providencia for 30,000 shares plus payments of US$2 million over two-and-a-half years. A 2.5% net smelter return royalty (NSR) retained by the vendor can be reduced to 1.5% for a payment of US$750,000 and an option to purchase 250,000 Canarc shares.

Separately, the Los Arrastres property can be acquired for payments of US$2.5 million plus US$2 million in exploration expenditures over 3 years. Grupo Mexico will retain a 2% NSR that Canarc can reduce to 1% by paying US$1 million.