VANCOUVER, British Columbia, April 3, 2014 (GLOBE NEWSWIRE) -- Investors don't mind investing in a promising gold play. That said, certain caveats should be present, including a great potential property, a stellar management track record, and scalable growth as the property develops, ensuring that success isn't dependent on just one play.
With the gold price bottoming in January at $1200, after a significant two-year correction, market activity has quickly returned with more M&A deals, money once again flowing into the sector and investors looking for exposure.
Canarc Resource Corp (TSX:CCM) (OTCBB:CRCUF) is such an opportunity. Besides having a great core property in its New Polaris Gold Mine in Northern BC, the Company just commenced the acquisition of Pan American Goldfields (OTCQX:MXOM) for their producing mine La Cieneguita in Mexico.
"Through organic growth and strategic acquisitions, we find, build and operate quality mines in a sustainable way to create real value for our stakeholders," stated Catalin Chiloflischi, CEO of Canarc in an exclusive interview with Financial Press. "Pending closing of the current acquisition, Canarc will, as of June 30th, have a small producing mine with a large resource in Mexico and two BC properties; New Polaris gold mine project now ready for development and Windfall Hills, gold exploration project now ready for a Phase 1 drill program."
There is another key piece to this story that should be of keen interest to junior mining investors that search out or more importantly require a quantifiable track record and good management teams.
Canarc Chairman and Founder Bradford Cooke is also CEO and Founder of Endeavour Silver, which could have a direct effect on the potential success of Canarc. Cooke took Endeavour from inception in 2003 to one of the fastest growing primary producers of silver worldwide, increasing production for nine consecutive years, with 6.8 million ounces of silver and 75,000 ounces of gold produced in 2013. Obviously repeating that scenario speaks well for the growth of Canarc especially with a producing mine soon potentially under their belt.
Given Endeavour's successes in Mexico, the recent pending agreement Canarc struck with Pan American Gold Fields for their 80% interest in the latter's 1.1M Measured and Indicated and 0.7 M Inferred oz Au Equivalent La Cieneguita Mine, appears to be a classic Cooke strategy.
After the deal closes, likely by June 2014, and La Cieneguita resources can be added to the New Polaris resources, Canarc will have M&I Au Eq of 1.65m oz and 1.34m oz Inferred. La Cieneguita produces at a current rate of 18k oz. AU Eq, generating roughly $20 million (2013 revenue).
Cooke States: "The successful business strategy we employed through building Endeavour into a $500 million-plus market cap company in less than a decade will be utilized in the growth and development of Canarc."
The DNA of Canarc provides several benefits for ongoing growth. The 2011 PEA evidenced 2.2million tonnes at a 7gpt cutoff with a grade of 11.3 gpt. Canarc plans to produce 72,000 per year following a 3-4 year development schedule. A new feasibility study will include 15,000 meters of infill diamond drilling to upgrade resources to a level suitable for feasibility study use, environmental studies, government permitting and feasibility study. Operating costs were forecast at $481 per oz.
Previous New Polaris production yielded 230,000 oz. gold grading 0.35 oz/ton. Geological intel gives the property a 2-3 million oz. gold exploration potential.
La Cieneguita is currently producing 18k oz. Au Eq with 2013 revenue of $20 million. Immediate plans are to increase production in Phase 1 to 40-50k oz Au Eq over the next year and double again during Phase 2 expansion.
What makes Canarc unique to investors is the provenance brought by Cooke and his team allowing various projects to be developed and inter-related to produce a compelling gold play. With La Cieneguita throwing off production cash flow, which can be redeployed at New Polaris and Windfall Hills as well as looking for substantive new mining opportunities. And of course, continue to source complementary deposits. With plans to have production in Mexico up to 40-50k oz AU Eq by 2015, and further potential growth planned by 2016-17, the plan seems extremely solid.
The proposed business combination will maximize Cieneguita's value for both Canarc and Pan American shareholders, with the potential to create a combined company with significant benefits.
Management has a successful track record of raising capital and recently completed the first and second tranche of a $1.96 million Private Placement.
This opportunity is not the one trick pony that is characteristic of many mining stories. Tested management brings immediate production, significant potential growth and an exploration kicker. Not to mention further expansion properties as it builds out.
And it's just getting started.
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