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By Rose Ragsdale
For Mining News 

Junior: Time to advance New Polaris

After 24 years of exploration, Canarc Resource Corp. envisions bringing gold project on line in wake of neighboring development

 

Last updated 4/29/2012 at Noon



Prospects for developing the New Polaris gold mine project located in northwestern British Columbia near the Alaska border are looking better and better.

Though it last worked on the property in 2007, owner Canarc Resource Corp. is refocusing its efforts on bringing the advanced-stage project into production.

Cheered by higher gold prices, the Vancouver-based junior is reviewing several new expressions of interest in the project from mining companies seeking an option or joint venture agreement.

"This is the first time that we've marketed the company in five years," Canarc President Garry Biles told Mining News April 23. "People seem to be interested."

With its stock currently trading at about C16 cents a share, Canarc will need a partner to help finance advancing the 1.1-million-ounce (NI 43-101) New Polaris project through mine development and a bankable feasibility study, Biles said.

Recent progress in development of the neighboring Tulsequah Project also bodes well for New Polaris.

"Given that gold prices continue to rise, and the company (Chieftain Metals Inc.) holding the Tulsequah Chief property adjacent to New Polaris has already received its government environmental permit, signed an MOU with the local Native band and is expecting to receive shortly its revised feasibility study and financing commitments to build (its) 2,000-tonne-per-day polymetallic mine, the time is right for Canarc to move forward with New Polaris," Canarc Chairman and CEO Bradford Cooke said March 26 in an update for 2012.

Historic gold production

New Polaris is located in northwestern British Columbia about 100 kilometers (62 miles) south of Atlin and 60 kilometers (37 miles) east of Juneau, Alaska, near the confluence of the Tulsequah and Taku rivers. The property consists of 61 contiguous Crown-granted mineral claims and one modified grid claim covering 1,196 hectares (2,956 acres). All claims are held by New Polaris Gold Mines Ltd., a wholly owned subsidiary of Canarc, and are subject to a 15 percent net profit interest held by Rembrandt Gold Mines Ltd., which can be reduced to a 10 percent net profit interest for 150,000 shares of Canarc.

The New Polaris deposit is an early Tertiary, mesothermal gold mineralized vein system occupying shear zones cross-cutting late Paleozoic andesitic volcanic rocks. Discovered by prospectors in 1929, the deposit was mined by underground methods off and on for nine years until 1951, producing some 245,000 ounces of gold from 740,000 metric tons of ore at an average grade of 10.3 grams per metric ton gold based on a historic cutoff grade of around 4.5 g/t gold. In 1951, a barge loaded with gold concentrate from the mine sank off the coast of British Columbia in a violent storm. The mine then closed.

Substantial underground development has been completed at New Polaris, with the deepest work 187 meters below sea level. The three main veins - AB, C and Y - that were mined are still open for expansion.

The mine lay dormant for 30 years until Canarc began exploration in 1988 and later purchased the property in 1992. In 2007, the junior released an NI 43-101-compliant updated in 2010. Using a 7 g/t gold cut-off grade, the measured and indicated in-situ resources at New Polaris total of 1,143,000 metric tons grading 13.3g/t gold (489,000 oz. contained gold), plus an inferred in-situ resource estimated at 1,473,000 metric tons grading 12.7 g/t gold (603,000 oz. contained gold).

In a preliminary economic assessment completed in 2011, Canarc envisioned building a 600-metric-ton-per-day, high-grade, underground gold mine at New Polaris that would produce about 72,000 ounces per year over a 10-year mine life. At US$1,400 per oz. gold and a $1.00 CA/$US exchange rate, the discounted net present value (5 percent) would equal US$195 million, the internal rate of return would total 42.8 percent, and the payback period would be 1.85 years. Capital costs for the project were estimated at US$75 million and cash operating costs were a relatively low US$481 per ounce.

Big advantages, major challenges

In addition to New Polaris, its flagship project, Canarc brings to the table several important advantages, including other promising properties in central B.C. and Yukon Territory and impressive management.

Cooke is also CEO of Endeavour Silver Corp. a successful mid-cap silver producer with reserves and resources in Mexico. Since start-up in 2004, Endeavour Silver has posted seven consecutive years of aggressive silver production and resource growth and had market capitalization exceeding $723 million on April 25.

Cooke is applying the same business model at Canarc and recently launched a marketing promotion to bring the junior to the attention of investors.

Meanwhile, New Polaris must conquer its transportation challenge. Situated on the western bank of the Taku

River, it has no road access but can be reached by aircraft and by river barge in summer.

Chieftain Metals' plan to build an access road to its Tulsequah project is "one of the big breakthroughs for us," said Biles. "There are a lot of details to be worked out, but with (access to) a road, we could truck concentrates from the mine to Skagway, (Alaska) and ship them from there."

Biles also a new B.C. land use plan for the area will help with advancing New Polaris. "The Tulsequah Valley is designated for mining, which is good news for us," he said.

 

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