Canarc takes plunge into Mexico (April 02, 2007)

Vancouver — Making good on its stated acquisition agenda, Canarc Resource (CCM-T, CRCUF-O) has secured options to purchase a couple of gold-silver projects in Guanajuato state, Mexico.

The Providencia project (which includes the San Felix property) covers about 1.1 sq. km and encompasses a pair of past-producing mines with historic output of about 8.8 million oz. 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 1 gram gold. Mining ceased in the mid-1930s because of the Mexican Revolution.

Canarc can acquire Providencia for 30,000 shares plus payments of US$2 million over 2.5 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.

Canarc also plans to purchase the 76.4-sq.-km 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.

Separately, Los Arrastres can be acquired for payments of US$2.5 million plus US$2 million in exploration spending over three years. Grupo Mexico will retain a 2% NSR that Canarc can reduce to 1% with a US$1-million payment.

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 the heart of the Faja de Plata silver belt about 45 km north of the Guanajuato silver-gold mining district where a couple of past-producing mines have recently been placed back into production.

Canarc plans to evaluate three main structures — Providencia-Purisima, San Felix-Zamorana and El Payan — identified on the project area.

Providencia-Purisima, is a silver-rich quartz vein system traced for over 2 km along strike. Two parallel veins (0.5-3 metres wide) about 15 metres apart were developed in the Providencia mine. Workings include 12 separate shafts and a dozen mine levels.

The second structure, 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 southward. The past-producing San Felix mine consisted of eight shafts up to 150 metres deep accessing three levels.

Lastly, El Payan is also a gold-rich chalcedony vein system, averaging 2 metres thick and exposed over a strike length 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 reprocessing old mine dump material and tailings at local plants.

Historic estimates (not compliant with National Instrument 43-101) 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 reprocessed, 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 Mexico’s smelter at San Luis Potosi. A historic estimate of 70,000 tonnes grading 4.4 grams gold and 8 grams silver was previously tabled in the project’s stockwork zone. The vendor retains rights to mine up to 2,000 tonnes monthly during the option period with Canarc holding the right to a 50% interest in the venture.

Canarc also holds the New Polaris gold project in northwestern British Columbia, an interest in the Benzdorp gold property in southeastern Suriname and a production royalty (5.5% net profits rising to 20.3% after payback) on Glencairn Gold’s (GGG-T, GLE-X) Bellavista gold mine in Costa Rica.