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Resource Corp.s diversification as a developmental, exploration and production
Company is reducing the risk to stockholders and maximizes their upside
(CRCUF.OB - OTC: BB)
Canarc Resource Corp.
800-850 West Hastings St.
Vancouver, BC V6C1
President & CEO
Interview conducted by:
Bradford J. Cooke, President, Director and C.E.O.
A professional geologist, Mr. Cooke has more than 28 years experience in geology and
mineral exploration. He holds two university degrees in geology and has worked with the
Ontario Department of Mines, Noranda, Shell and Chevron. Between 1983 and 1987 he owned
and operated Cooke Geological Consultants, which found and developed several gold vein
deposits for clients, and effectively reactivated interest in the Bralorne gold district
-- historically, the largest gold producing region in British Columbia. In 1987, with the
private management company ARC Resource Group, he founded Canarc and has overseen the
growth of the company since that time, participating hands-on in the acquisition and
exploration of strategic gold properties throughout the Americas.
Canarc Resource Corp. (CCM -TSX & CRCUF.OB OTC: BB) is a growth-oriented, gold
exploration and mining company. The Company's principal assets are its 100% interest in
the 1.3 million oz New Polaris gold deposit located in northwestern British Columbia and
its option on the huge Benzdorp gold property in Suriname, South America. Major
shareholders include Barrick Gold Corp., Kinross Gold Corp.
The Benzdorp property where several large prospects have been found and are now ready for
drilling, may be the Companys next major gold discovery. The target here is a large
gold porphyry system with the potential for several million ounces. Canarcs most
advanced development project is the 550,000 oz. Bellavista gold deposit (18% carried
interest after payback) in Costa Rica. Glen Cairn Gold Corp., the Operator, has identified
an open pit, proven mineable reserve that is amenable to heap leach operations with low
US$ 156 per oz. operating costs.
CEOCFOinterviews: Mr. Cooke, you have been with Canarc for
quite some time; what was the vision when you started and where are you today with your
Mr. Cooke: I was a consulting geologist for many years,
so my vision for Canarc was to create a publicly listed mining company that was focused on
growth through the exploration and development part of the mining cycle. After fifteen
years in the business, Canarc has had several significant gold discoveries under its belt
and it looks like we are now looking at our largest discovery with recent work in South
CEOCFOinterviews: Will you tell us where you are now and give
us an overview of the various locations and what you are doing?
Mr. Cooke: Canarc today, is actively exploring and
developing gold projects in north, central and South America. The company is focused on
two properties at this time. One of our most successful discoveries today is the New
Polaris mine in northern British Columbia; it is in the development stage where we have
invested over twelve million dollars and have discovered a 1.3 million ounce gold resource
below and beyond what was historically a small high-grade underground goldmine. The
resource is open in all directions for expansion but our focus at this time will be to
move the project into the development part of the mining cycle, completing infill drilling
work, environmental studies, a feasibility study and then raise the capital needed to
build a small but very high-grade underground mine. The other project, which is driving
our share price at this time, our newest and perhaps our biggest discovery is on a
property called Benzdorp in South America. Last year on this property, we drove a
number of drill holes into a very large gold porphyry prospect and every hole within that
discovery area, returned gold mineralization from top to bottom. We are enthusiastic about
our opportunity to find a large deposit.
CEOCFOinterviews: What happens next in Benzdorp?
Mr. Cooke: The company is cashed up to proceed with the
next phase of drilling, which is already underway as of last week. This second phase of
drilling will focus on determining how large the discovery so we have planned
approximately 20 holes that will be drilled to at least 300 meter depth, over an area of
about 500 meters x 500 meters, between now and June. That will allow us to make an initial
resource estimate and after June we hope to triple the number of drills active on the
discovery so that by year-end we will have a definitive resource, whether it is
three million, five or seven million ounces, we dont know, but that is certainly the
size of the target.
CEOCFOinterviews: What will that decision be based upon?
Mr. Cooke: What is motivating us to focus on this
discovery is that the twelve holes we already have in the core discovery area are wholly
mineralized from top to bottom. We havent found any waste rock yet; that is a
compelling reason to drill off this discovery area. The size of the target is permissible
for a five million ounce gold discovery. We havent proven that yet, and we will have
to do that with additional drilling. With a near 100% hit rate right now, there is simply
no reason for us to hold back, we are going after this discovery as fast as we can.
CEOCFOinterviews: How did you choose the two properties and
when you look at other properties, what do you look for?
Mr. Cooke: The largest discovery in our company to date
was the New Polaris mine in British Columbia that I mentioned. We were surveying available
projects back in 1990 to find something that stood out. The corporate criteria for
acquisitions and the projects that we take on have to be either very high grade potential,
which Polaris certainly is, or very high tonnage potential, which the Benzdorp discovery
certainly appears to be, or compelling economics. As it turns out, at the current gold
price, both of the projects have very compelling economics. That is our corporate
objective. We have had New Polaris since 1990, we have drilled over 180 holes in the
Polaris site, while we only have twelve holes into the new Benzdorp discovery, we should
have an additional twenty by June and upwards of 100 by year-end.
CEOCFOinterviews: Is your funding adequate for your various
Mr. Cooke: In this bull market for gold, funding is
readily available so we are set for this year. If the results of our drilling at Benzdorp
are compelling enough, we expect that it will impact the share price and might make an
opportunity for us go to back and tap the equity markets one more time to finish the job
we started on Polaris and Benzdorp, so if we go back to the markets, it would be at a
higher share price and it would be something in the order of five to ten million dollars;
that is really all we need now to finish what we started at Polaris.
CEOCFOinterviews: Are you generating any income now?
Mr. Cooke: Yes, the company is fortunate to have a
modest amount of annual income from two separate projects. We own an 18% carried interest
in the Bellavista goldmine currently being built in Costa Rica, and Wheaton River
Minerals, the operating partner there pays us a cash payment every year of approximately
$120,000.00 dollars, so that helps to pay some bills. We also have an interest in a small
operating goldmine in South America.
seem to be spread out geographically, is that by design?
Mr. Cooke: By
design we were far more wide spread in the 1990s and really pulled in our horns to
focus on a north and south axis. When you are in three or four time zones, it is a lot
easier to manage than when you are in Asia or Africa. I found that very challenging. Our
focus is North, Central and South America.
there new technologies, or new equipment that you want to use or that you do use, which
help you in your development?
Mr. Cooke: We,
like many other entrepreneurial companies, use cutting-edge exploration technology in our
search for new gold deposits. We dont have anything proprietary that sets us apart
from the crowd, but given that we are all highly trained technically, I think that we have
an advantage over the average company, and it was our skill sets that allowed us to make
the discovery at Polaris and now Benzdorp in South America.
do you see as your challenges going forward, and how are you ready?
Mr. Cooke: Aside
from the day-to-day challenges of managing risk, and the gold mining business is a high
risk, high reward business; managing risk is one of the keys to corporate success and I
think we have done very well. We tend to avoid countries that have a high-risk profile.
The Republic of Suriname is probably the highest risk profile in our portfolio and it is a
functioning democratic republic; it used to be the Dutch Guiana, so there are many ties to
Europe. We are active in Mexico, Canada, and Costa Rica and these are not politically
risky areas. We tend to manage risk by avoiding high-risk areas where possible.
are you looking at now?
Mr. Cooke: I think
Canarc has all it needs in its property portfolio now, for a major gain in its shares, it
is through the discovery and drilling out of a gold mine in South America and through the
work and the construction of a small high grade mine in New Polaris. These two projects
alone should drive our shares significantly forward.
mentioned that the price of gold is up; what do you do that if in six months to a year
down the road it is no longer where it is today?
Mr. Cooke: We
obviously keep our eye on the commodity price and on expert opinion as to its direction.
In addition, having some sixteen years or so in the business, I then am able to formulate
my own opinions. Our view of the current gold market is that we are just completing the
first leg of a multi-year gold bull market and that means that this year is actually going
to be quite choppy for the price of gold. We dont have any expectation that it is
going to drive significantly higher; it may test a high of 450 this year and a low of 380.
Ultimately, I think it will finish the year where it started, around 420. Having said
that, my long-term views are significantly more bullish; I think that you are going to see
a new base price for gold around the four hundred dollar range with spikes upward going
forward, three to five years we may see the price of gold in the five, six, seven hundred
dollar range. That is our outlook for gold price, and at the four hundred dollar level, if
we are right in it being a new base price, thats high enough for our projects to
make a lot of money.
companies are developing gold projects; why should people be interested in Canarc?
Mr. Cooke: I think
Canarc stands out from the crowd in a unique way; Canarc is an exploration company, a
development company and a producing company. We are not just a gold explorer with a
hope and a prayer because the odds are always against you when you are a pure exploration
company. Having said that, we have huge blue sky, and huge exploration upside,
particularly with Benzdorp. And, as a development company, and we are not just developing
one mine; we have a portfolio of projects, everything from a carried interest in a mine
under construction in Costa Rica, to a 100% in a 1.3 million ounce deposit and practically
100% interest in a brand new mine in South America. As well we have production revenue. If
you surveyed the landscape of small cap gold companies, you wont find many companies
with that portfolio approach. Our diversification reduces the risk to our stockholders and
maximizes their upside.
that make it harder for people to categorize you?
Mr. Cooke: We are
purely a gold company and we are purely in North, South and Central America; thats a
fairly specific category.
should people know about Cancarc that they may not realize when they look on the surface?
Mr. Cooke: I think
that just learning what the upside is on our projects is a challenge because when people
look at a company like Canarc, what they see is a technically talented management group
and a couple of stand-out projects, none of which are in production at this time. Polaris
is a developmental stage project and Benzdorp is a discovery. The most common question we
are asked is when are you going to build your first big mine? In the
exploration and development part of the business, that is where most of the gains are made
in the stock. Once you are in operations, you are an option on the price of gold. We would
very much like to increase production, but given our successes have been so far in the
exploration and development side of the business, and that is where most of the stock
gains are, we will continue for at least the next year-and-a-half to focus on exploration
and development at Benzdorp and Polaris. We can see multiples in the current share price
just for finishing the job we started on those two projects.
CEOCFOinterviews: So you
think this is the time for people to be interested!
Mr. Cooke: I think
so and in a nutshell, the purest way to create wealth for stockholders is to
go and find a gold deposit which is what weve done.
closing, as CEO what is your focus and what skill-sets do you posses that you feel gives
you an edge?
Mr. Cooke: There is the ability to help select good projects.
I look at a many projects and reject most of them. The other thing I focus on is the
financing side, and the maximization of shareholder return. For me that means not only
picking the right projects and doing the right work to unfold the potential of those
projects, but also relating those successes and the future direction of the company to our
shareholders and the investing public.
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