Canarc Resource Corp. (TSX: CCM, OTC-BB: CRCUF, Frankfurt: CAN) (“Canarc” or the “Company”) announces that the Company has signed a non-binding letter of intent (the “LOI”) dated July 6, 2020 with Minkap Resources Inc. (“MinKap”) whereby MinKap (TSX-V: KAP) can acquire a 100% undivided interest in the Lightning Tree property (the “Property”) located in Lemhi County, Idaho, USA under a definitive option agreement (the “Agreement”) from Canarc.

Lightning Tree is one of 11 mineral properties in the American Innovative Minerals (“AIM”) USA gold package acquired by Canarc in 2017.  It is also the fourth AIM property optioned out to third parties wanting to explore and earn interests in Canarc’s Nevada/Idaho portfolio.  Canarc continues to receive expressions of interest in the remaining 7 AIM USA properties as well as the Corral Canyon project in Nevada.

Canarc is focused on creating shareholder value by advancing its attractive Canadian gold projects and acquiring new gold properties with exciting discovery potential. The Company is fully funded to drill its district scale Windfall Hills and Hard Cash gold exploration projects over the next three months.

Scott Eldridge, Canarc’s CEO, stated: “I look forward to working with Minkap as they conduct exploration on Lightning Tree and the surrounding properties they have optioned from another party. The consolidation of this low sulfidation epithermal gold system represents an exciting exploration opportunity.  Lightning Tree hosts historic high grade mine workings but has not to Canarc’s knowledge ever seen systematic exploration or been drilled in modern times.”

“This transaction allows Canarc to realize value on Lightning Tree while we focus on two upcoming drilling campaigns on our large gold properties in Nunavut and British Columbia over the next couple of months. It also makes room in our portfolio for additional strategic gold property acquisitions.”

Terms of the Agreement under the LOI:

Under the terms of the LOI, MinKap may enter into the Agreement with the Canarc to acquire a 100% undivided interest in the Lightning Tree Property by completing, among other things, the following:

• Issuing Canarc an aggregate 2,500,000 common shares and 2,500,000 common share purchase warrants over 2 years;
• Paying Canarc C$137,500 in total, including C$12,500 upon receipt of final approval from the TSX Venture Exchange of the Agreement (the “Approval Date”);
  • C$25,000 due on the first anniversary from the Approval Date;
  • C$50,000 due on the second anniversary from the Approval Date;
  • C$50,000 due on the third anniversary from the Approval Date;
• Spending an aggregate $2,000,000 in exploration over 3 years, commencing on the date MinKap receives an exploration drill permit for the Property (the “Permit Date”)
• Issuing to Canarc a 2.5% net smelter return royalty (“Canarc NSR”) in respect of the Property, subject to MinKap retaining an option to acquire 1% of the Canarc NSR for a cash payment of C$1,000,000;
• Publicly file a mineral resource estimate in compliance with National Instrument 43-101 (“NI 43-101”) on the Property within 3 years of the Permit Date; and
• Pay a one-time bonus payment of C$1.00 per ounce of gold or gold equivalent, up to a maximum of $1,000,000, upon the filing on SEDAR of a NI 43-101 compliant resource of 1,000,000 ounces of gold or gold equivalent on a pro-rate basis between Canarc and an additional vendor.

About the Lightning Tree Property, Idaho

The property consists of 4 unpatented claims in section 34 of 08/T20N/R18E, 38 km SW of Salmon in Lemhi County, Idaho. The lands are administered by the US Forest Service.

The claims lie along the regional, northeast-trending Trans-Challis structural zone and mineral belt adjoining the south side of the Musgrove gold deposit (~300k oz Au @ 1.22 g/t Au, Bravura Ventures), approximately 25 km southwest of Beartrack deposit (~650k oz Au @ 1.02 g/t Au, 1994-2000 production, Meridian Gold) and 70 km northeast of Grouse Creek deposit (~250k oz Au @ 1.44 g/t, Hecla Mining).

The property contains northwest-striking epithermal quartz-adularia veins along the Meadows fault zone separating the Apple Creek Formation siltstones to northeast from the Challis volcanics to the southwest.  Historic gold production during the 1930’s and 1940’s came from one adit and at least three other workings that are located on the property.  Rock-chip samples previously collected across the old workings in 2010 returned high-grade gold assay results, including 15 g/t Au over 1.7 m.  There is no evidence of historic drilling on the claims.

“Scott Eldridge”