ITEM 4.     INFORMATION ON THE COMPANY

The Registrant is a Canadian mineral exploration company and is subject to NI 43-101, a National Instrument adopted by all of the Securities Commissions in Canada that deals with standards of disclosure for mineral projects.  It applies to all oral statements and written disclosure of scientific or technical information, including disclosure of a mineral resource or mineral reserve, made by or on behalf of a company in respect of its mineral projects.  In addition to other matters, it sets out strict guidelines for the classification of and use of the terms ‘mineral resource’ and ‘mineral reserve’ and it requires all technical disclosure to be subject to review by a senior engineer or geoscientist in good standing with a relevant professional association.  The full text of NI 43-101 can be found at http://www.bcsc.bc.ca/instruments.asp?id=1248&cat=4&title=4%20-%20Distribution%20Requirements .  While the Registrant believes that its technical disclosure, when made, was accurate, technical disclosure prepared by the Registrant before NI 43-101 came into force in February 2001 has not been updated by the Registrant to be compliant with NI 43-101 other than as specifically disclosed herein.

4.A     History and Development of the Company

Incorporation and Reporting Status

The Registrant was incorporated under the laws of British Columbia, Canada, on January 22, 1987 under the name, “Canarc Resource Corp.”, by registration of its Memorandum and Articles with the British Columbia Registrar of Companies.

The Company was originally incorporated under the previous Company Act (British Columbia) and transitioned to the Business Corporations Act (British Columbia) in 2005;  the Business Corporations Act (British Columbia) replaced the Company Act (British Columbia) on March 29, 2004.

The Registrant is a reporting company in British Columbia, Alberta, Saskatchewan, Ontario and Nova Scotia.  The Registrant became a reporting company under the United States Securities Act of 1934 upon filing its registration statement on Form 20-F dated October 9, 1990.

Current Business Address

Suite #800, 850 West Hastings Street, Vancouver, British Columbia, Canada, V6C 1E1, tel. no.:  (604) 685 9700.

Introduction

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Canarc Resource Corp.

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The Registrant is a Canadian mineral exploation company engaged in the acquisition, exploration and, if warranted, development of precious metal properties in Canada, Costa Rica, Mexico and Suriname.  The Registrant owns or holds, directly or indirectly, interests in five precious metal properties, which are known as the New Polaris and Eskay Creek properties in British Columbia, Canada, the Bellavista property in Costa Rica, and the Sara Kreek and Benzdorp properties in Suriname.

In its consolidated financial statements prepared in accordance with CAD GAAP, the Registrant has capitalized costs, net of recoveries and write-downs, of $9,066,000 in connection with the acquisition, exploration and development on its currently held properties as at December 31, 2004 and are summarized as follows for the past three fiscal years:

Further information and details regarding Canarc’s properties contained herein this section are provided in Item 4.D.

For the three month period ended March 31, 2005, Canarc incurred further exploration expenditures of $13,000 for New Polaris, $50,000 for Benzdorp and $20,000 for Sonia II, and in January 2005, received $120,546 in pre-production payment for the Bellavista property which was applied against deferred mineral property expenditures.

Developments over the Last Three Financial Years

Canadian properties

New Polaris

The New Polaris property is located in the Atlin Mining Division in British Columbia, Canada, is 100% owned by Canarc, and is subject to a 15% net profits interest which may be reduced to a 10% net profits interest within

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one year of commercial production by issuing 150,000 common shares to Rembrandt Gold Mines Ltd. (“Rembrandt”).

In the 1990s, Canarc invested over $12 million to delineate a 1.3 million oz gold resource that is still open for expansion.  Due to the continued depressed gold markets at the time, Canarc wrote down the property by $3.2 million in 2001 and $5.5 in early 2002 to reflect management’s estimate of the property’s recoverable value, based upon CAD GAAP.

The property was dormant from 1998 to 2002.  In early 2003, metallurgical test work on a mini-bulk sample of high-grade gold ore increased the gold recoveries.  Previous metallurgical studies recovered up to 90% of the gold in the property’s ores into concentrate but new flotation tests indicated that up to 96.7% of the gold could be recovered into concentrate through standard procedures.

In May 2003, Canarc initiated new internal engineering and resource studies on the property to evaluate various mine development alternatives.  In late 2003, work commenced on a scoping study with emphasis on modelling an initial 650,000 oz. resource suitable for the first 10 year mine plan.  Metallurgical testing continued to optimise the gold recoveries (up to 97%) into a saleable sulphide concentrate grading up to 125 gpt gold.  Preliminary engineering and costing was carried out for a 600 tpd, high-grade underground mine, feeding a simple crush-grind-float process plant with seasonal shipping of the concentrates by barge and by truck or train to autoclave facilities in Nevada, USA.  In the last quarter of fiscal 2003, Canarc completed a 3-hole, 5,121 foot drilling program which was designed to test two deep targets beneath the underground mine workings.  In fiscal 2003, Canarc invested $288,000 in exploration expenditures.

In October 2004, Canarc commenced the Phase 1 in-fill drilling program for the New Polaris property which was completed by the end of fiscal 2004.  Eleven holes totaling 8,008 feet or 2,441 metres of core were drilled on 100 feet (30 metres) spacings to test the C Zones over an initial 500 feet (152 metres) strike length by 200 feet (61 metres) down dip below the deepest mine level.  All eleven drill holes intersected economically significant gold grades and vein widths in two main, sub-parallel, en-echelon, shear-veins.  In fiscal 2004, Canarc invested $461,000 in exploration expenditures.

Item 4.D provides further details.

Eskay Creek

Canarc has a one-third carried interest in the Eskay Creek property which is located in the Skeena Mining Division, British Columbia, Canada, pursuant to a joint venture with Barrick Gold Corp. (“Barrick”).  The property is subject to a 2% net smelter return royalty.

Over $3 million have been expended by Barrick and its predecessors on the Eskay Creek property since 1989.  In 1999, a drilling program intersected the same prospective rock formations on the Eskay Creek property as those hosting the Eskay Creek ore body.  Although no significant gold or silver mineralization was found, Barrick concluded that “the area remains prospective” and “further drilling is required”.

In 2003, Barrick, as operator for the Eskay Creek property, sampled a high grade gold mineralised zone and found several altered and mineralised zones in Betty Creek Formation volcanic rocks.  Barrick also carried out IP geophysical surveying on the Eskay Creek property in the 22 zone area along strike to the south of the Eskay

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Canarc Resource Corp.

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Creek mine.  Several chargeability highs were detected with represent untested anomalies within favourable rocks.  Barrick carried out a follow-up exploration mapping and sampling program in these prospect areas in 2004, but did not test these IP anomalies by drilling.  In late 2004, Barrick reported that no further work was recommended in several zones in the property.  However, Canarc’s management believes the untested IP anomalies represent additional exploration potential that should be drilled.

Canarc did not implement any exploration programs for the Eskay Creek property in the 2004, 2003 and 2002 fiscal years.

Item 4.D provides further details.

Costa Rica

Bellavista

In 1994, Canarc acquired a net profits interest in the Bellavista property located near San Jose, Costa Rica.  Canarc’s property agreement was with Wheaton River Minerals Inc. (“Wheaton River”), which sold the property to Glencairn Gold Corp. (“Glencairn”) in 2002.  The property agreement giving Glencairn the right to earn a 100% working interest in the property calls for pre-production payments to be made to Canarc in the amount of $117,750 annually up to and including the year commercial production commences.  The pre-production payments for the 2003 and 2002 fiscal years were made by the previous property holder, Wheaton River, for cash of $58,875 and the issuance of 529,000 common shares of Wheaton River.  Glencairn paid $117,500 to Canarc in the 2004 fiscal year.

Canarc has a net profits interest in Bellavista in which Canarc is entitled to 5.67% of the net profits during the first payback period, as defined, then increasing to 10.40% during the second payback period and then to 20.24% of net profits thereafter, once commercial production commences.  Thirty-five percent of this net profits interest will reduce the net profits interest to be received from Glencairn until $317,741 in advance royalty payments are repaid.

Item 4.D provides further details.

Mexico

Sonia II:

In July 2004, Canarc’s 63% owned subsidiary, Minera Aztec S.A. de C.V. (“Minera Aztec”), entered into an option agreement to earn up to a 100% interest in the Sonia II property by making cumulative cash payments of $250,000 over a four-year period subject to financing, of which $10,000 have been paid.  During fiscal 2004, Minera Aztec expended $19,303 in exploration related costs on the property.

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Clara:

In March 2001, Minera Aztec was granted an option to acquire a 100% interest in two mineral claims located in Mexico known as the “Clara” properties in consideration of incurring exploration expenditures of $500,000 on the property, issuing 500,000 shares, and paying an aggregate of $185,000 to the optionor over a four year period.  The optionor will retain a 2% net smelter return royalty of which 50% may be purchased by Minera Aztec for $1,000,000.  The agreement was subject to a due diligence review and the signing of a formal agreement.  In fiscal 2003, Minera Aztec determined not to proceed with the option and wrote off the property.  No exploration programs were implemented by Minera Aztec in the 2003 and 2002 fiscal years.

Other Mexican properties:

In July 2004, Minera Aztec entered into two option agreements to acquire up to a 100% interest in two properties in Mexico, namely the Dona Rica and the Mina La Patilla properties.  Exploration expenditures of $69,469 were incurred for these properties which were written off by the end of fiscal 2004.

Suriname

Benzdorp

In April 1996, Canarc entered into an option agreement with Grasshopper Aluminum Company N.V. (“Grassalco”) to earn up to an 80% interest in the Benzdorp property by making cumulative cash payments of $750,000 and incurring property expenditures totalling $5 million over a four-year period.  In August 2002, Canarc and Grassalco amended the option agreement.  Under the amended agreement, cash payments prior to commercial production were reduced to $300,000 and exploration expenditures of $5 million were to be incurred by April 2005.  In April 2005, the due date for the $5 million of exploration expenditures was extended to December 2005 pursuant to further amendments to the agreement, subject to a payment of $40,000 which was paid by Canarc in April 2005.

Pursuant to the amended option agreement in August 2002, Canarc will owe Grassalco an additional $250,000 payable on or before 30 days after the commencement of commercial production if a feasibility study has not been completed by October 6, 2005.  For each of the years 2006 to 2008, Canarc will owe an additional $250,000 payable on or before 30 days after the commencement of commercial production if a feasibility study has not been completed by October 6 of that year.  However, if a feasibility study has not been completed by October 6, 2008, then the annual additional cash payments of $250,000 will increase at that time to $500,000.  These additional cash payments shall be treated as advance payments against the Grassalco’s shareholder ownership interest and shall be deductible from Grassalco’s net profit share or net smelter profit from exploiting the property.

Canarc has earned a 40% interest in the Benzdorp property, and expects to exercise its right to increase its interest by making additional option payments and exploration expenditures.  During fiscal 2004, Grassalco

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transferred the Benzdorp concessions to an incorporated company in which Canarc owns 40% and Grassalco owns 60%.

The property was dormant from 1998 to mid-2002.  In fiscal 2002, Canarc incurred $126,000 in acquisition and exploration expenditures, and $868,000 in fiscal 2003 and $1,263,000 in fiscal 2004.

In the last quarter of 2002, an initial bulldozer/excavator trenching program was implemented for the JQA prospect area of the Benzdorp property, and initial results from the trenching identified a broad zone of porphyry-style gold mineralization.  A trenching and sampling program was implemented in the first quarter of 2003 to follow up on the extensive gold mineralization which was trenched in 2002.

In 2003, Canarc commenced and completed a Phase 1 drilling program involving 38 holes in 5 prospect areas:  JQA, JQW, JQS, Pointu Kreek and Roche Kreek.  The purpose of the Phase 1 drilling program was to test for gold mineralization in saprolite from surface down to bedrock.  The Phase 1 drilling program successfully discovered a large area of low grade, open pittable gold-copper porphyry mineralization in the JQA prospect.  The JQA discovery area encompasses an area 600 m by 500 m, and is still open for expansion in several directions as well as depth.

In fiscal 2004, Canarc commenced and completed the Phase 2 drilling program.  A total of 3,984 metres of diamond drilling were completed in 13 holes at the JQA prospect on the Benzdorp property.  The main goal was to test a portion of the JQA prospect and all 13 holes encountered significant porphyry gold mineralization in saprolite starting at surface.

In 2005, Canarc plans to further assess the metallurgical characteristics of saprolite and bedrock mineralization from the JQA prospect in order to determine the viability of gold recovery.  Canarc also plans to conduct a Phase 3 drilling program of about 3,000 metres in approximately 15 holes in order to extend the area of JQA mineralization in bedrock and to test other targets.  These plans are subject to financing.

Item 4.D provides further details.

Sara Kreek

The Sara Kreek property is located in the Republic of Suriname.  Canarc owns a 100% interest (subject to royalties) in the subsurface mineral rights and 80% interest (reverting to 50% after payback of Canarc’s investment) in the surface mineral rights.

Due to the lack of exploration activity on the project since 1999, Canarc wrote-down the property in 2002 by $1,717,000 to reflect management’s estimate of the property’s recoverable value.  In fiscal 2004, the Sara Kreek property was further written-down by $3,184,000 to a nominal $100,000, based upon CAD GAAP.  A loan to the vendor that was included in acquisition costs, with a principal balance of $400,000 plus accrued interest remains outstanding and continues to be owed to Canarc.  The write-down of the property for accounting purposes does not affect Canarc’s legal claim and right to recover the outstanding loan plus accrued interest owed to it, and Canarc continues with its collection efforts.

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Item 4.D provides further details.

Other developments and matters for the past three fiscal years

For the past three fiscal years ended December 31, 2004, Canarc closed the following private placements:

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In June 2002, Canarc closed a private placement for 1,080,000 units at CAD$0.18 per unit and 70,000 common shares at CAD$0.22125 per share, for gross proceeds of CAD$209,888.  Each unit was comprised of one common share and one share purchase warrant;  each share purchase warrant was exercisable to acquire one common share at CAD$0.21 until April 8, 2004;

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In November 2002, Canarc closed a private placement for 1,250,000 units at CAD$0.40 per unit for gross proceeds of CAD$500,000.  Each unit was comprised of one common share and one-half of a share purchase warrant;  each whole share purchase warrant was exercisable to acquire one common share at CAD$0.50 until September 10, 2004;

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In March 2003, Canarc closed a private placement for 1,250,000 units at CAD$0.52 per unit for gross proceeds of CAD$650,000.  Each unit was comprised of one common share and one-half of a share purchase warrant;  each whole share purchase warrant was exercisable to acquire one common share at CAD$0.63 until February 4, 2005, which expired unexercised;

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In November 2003, Canarc closed two private placements.  One private placement was for 250,000 units at CAD$1.05 per unit for gross proceeds of CAD$262,500.  Each unit was comprised of one flow-through common share and one-half of a share purchase warrant;  each whole share purchase warrant was exercisable to acquire one common share at CAD$1.25 until November 13, 2005.  A finder’s fee of 17,500 units was issued in connection with this private placement, with each unit comprised of one non-flow-through common share and one-half of a share purchase warrant;  each whole share purchase warrant was exercisable to acquire one common share at CAD$1.25 until November 13, 2005.  These funds were expended in fiscal 2003.  The second private placement was for 3,080,000 units at CAD$0.90 per unit for gross proceeds of CAD$2,772,000.  Each unit was comprised of one common share and one-half of a share purchase warrant;  each whole share purchase warrant is exercisable to acquire one common share at CAD$1.10 until November 13, 2005;

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In December 2003, Canarc closed a private placement for 100,000 units at CAD$1.05 per unit for gross proceeds of CAD$105,000.  Each unit was comprised of one flow-through common share and one-half of a share purchase warrant;  each whole share purchase warrant is exercisable to acquire one common share at CAD$1.25 until December 30, 2005.  These funds were expended in 2004;  and

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In October 2004, Canarc closed a private placement for 750,000 flow-through common shares at CAD$0.65 per share for total proceeds of CAD$487,500, which were expended in 2004.  A finder’s fee of 60,000 non-flow-through common shares was issued in connection with this private placement.

No equity financings occurred in the first quarter of fiscal 2005.

For the past three fiscal years ended December 31, 2004, the following stock options were granted:

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1,500,000 stock options with an exercise price of CAD$0.17 per share and an expiry date of January 16, 2007 were granted in January 2002;

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400,000 stock options with an exercise price of CAD$0.34 per share and an expiry date of August 28, 2007 were granted in August 2002;

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20,000 stock options with an exercise price of CAD$0.51 per share and an expiry date of February 10, 2008 were granted in February 2003;

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1,410,000 stock options with an exercise price of CAD$0.52 per share and an expiry date of June 9, 2008 were granted in June 2003;

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250,000 stock options with an exercise price of CAD$0.52 per share and an expiry date of June 12, 2008 were granted in June 2003;

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50,000 stock options with an exercise price of CAD$1.05 per share and an expiry date of November 10, 2005 were granted in November 2003;

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600,000 stock options with an exercise price of CAD$1.00 per share and an expiry date of February 17, 2009 were granted in February 2004;

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800,000 stock options with an exercise price of CAD$0.70 per share and an expiry date of September 7, 2009 were granted in September 2004;  and

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100,000 stock options with an exercise price of CAD$0.70 per share and an expiry date of October 25, 2009 were granted in October 2004;

No stock options were granted in the first quarter of fiscal 2005.

At Canarc’s annual and extraordinary general meeting held in May 2005, the following items were transacted and approved by shareholders:

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The increase in the maximum aggregate number of common shares which may be reserved under Canarc’s stock option plan (“Stock Option Plan”) from 5,696,450 shares to 11,696,450 shares.  The increase in the amount of shares reserved for issuance under the Stock Option Plan totals 6,000,000 shares although it still requires the approval of the Toronto Stock Exchange.  The increase of 6,000,000 shares effectively resets the percentage of shares in the closing reserve balance to its original percentage of approximately 20% of the number of common shares issued and outstanding;

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Shareholder Rights Plan Agreement dated April 30, 2005 between Canarc and Computershare Investor Services Inc.  Items 5.E and 10.B provide a summary of the Shareholder Rights Plan;

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The Notice of Articles is altered to remove the application of the “Pre-Existing Company Provisions” as set forth in Table 3 of the Business Corporations Regulations under the Business Corporations Act (British Columbia).  Item 10.B provides further details;

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The authorized capital has been increased from 100,000,000 common shares without par value to unlimited number of common shares without par value;  and

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Canarc Resource Corp.

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The replacement of the Articles with a new set of Articles which comply with the Business Corporations Act (British Columbia).  Item 10.B provides further details.

4.B     Business Overview

Nature of operations and principal activities

The Registrant’s principal business activities are the acquisition, exploration and development of mineral resource properties.  The Registrant is in the process of exploring and developing its mineral resource properties and has not yet determined whether these properties contain reserves.  The recoverability of amounts capitalized for mineral properties is dependent upon the existence of economically recoverable reserves in its mineral resource properties, the ability of the Registrant to arrange appropriate financing to complete further work on its properties, confirmation of the Registrant’s interest in the underlying properties, the receipt of necessary permitting and upon future profitable activities on the Registrant’s properties or proceeds from the disposition thereof.  The Registrant has incurred significant operating losses and currently has no significant source of revenue.  The Registrant has financed its activities principally by the sale of equity securities.  The Registrant’s ability to continue as a going concern is dependent on continued financial support from its shareholders and other related parties, the ability of the Registrant to raise equity financing, and the attainment of profitable operations to fund its operations.

The Registrant and its management group have previously been actively involved in the evaluation, acquisition and exploration of mineral properties in Canada, U.S.A., and Central and South America.  Starting with grass roots exploration prospects, it progressed to more advanced properties.  To date, the Registrant has not received significant revenues from its property interests.  The Registrant plans to continue exploring and developing its properties and, if appropriate, the Registrant intends to seek partners or buyers to purchase or to assist in further advancement (by way of joint venture or otherwise) of its properties.  The Registrant seeks to identify properties with significant potential and to acquire those properties on the basis of an option agreement relying on the representations and warranties of the vendor as to the state of title, with limited or no title work being performed by the Registrant.  Detailed title work is only undertaken once it has been determined that the property is likely to host a significant body of ore, which may not occur.  Consequently, there is a significant risk that adverse claims may arise or be asserted with respect to certain of the Registrant’s properties.  Items 3.D and 4.A provide further details.

Further information and details regarding the Registrant’s properties are provided in Items 4.A and 4.D.

Sales and revenue distribution, sources and availability of raw materials, and marketing channels

As of the date of this annual report, the Registrant has not generated any significant operating revenues from its mineral properties.

Competitive conditions

Canarc has no particular competitive advantage in Canada, Mexico and Costa Rica, but it enjoys a significant advantage in Suriname because there is only a few other gold mining companies which are active in the country.  

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However this advantageous position is partly offset by the increased political risk in Suriname as compared to the other jurisdictions in which Canarc is active in.  Canarc’s agreement on the Benzdorp property in Suriname was breached by its partner, the state mining company, Grassalco, in 1997 for failure to incorporate a local joint venture company, transfer the Benzdorp concession titles to that joint venture company and issue Canarc its 40% of that joint venture company’s shares.  However, after lengthy and repeated discussions with the partner, Grassalco, the breach was resolved and the agreement was returned to good standing in 2002, and in fiscal 2004, the final transfer of the Benzdorp property exploration concessions from Grassalco to Benzdorp Gold N.V., 40% of which is owned by Canarc, was completed.

Significant competition exists for natural resource acquisition opportunities.  As a result of this competition, some of which is with large, well established mining companies with substantial capabilities and significant financial and technical resources, the Registrant may be unable to compete for nor acquire rights to exploit additional attractive mining properties on terms it considers acceptable.  Accordingly, there can be no assurance that the Registrant will be able to acquire any interest in additional projects that would yield reserves or results for commercial mining operations.

Government regulations

The Registrant’s operations are subject to various governmental regulations in Canada, Costa Rica, Mexico and Suriname, where the Registrant has interests in mineral properties.

The current and anticipated future operations of the Registrant, including further exploration and/or production activities may require additional permits from governmental authorities.  Such operations are subject to various laws governing land use, the protection of the environment, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, mine safety and other matters.  Unfavorable amendments to current laws, regulations and permits governing operations and activities of resource exploration companies, or more stringent implementation thereof, could have a materially adverse impact on the Registrant and could cause increases in capital expenditures which could result in a cessation of operations by the Registrant.  To the best of its knowledge, the Registrant is operating in compliance with applicable laws.

Trends

In January 2002, the price of gold was at an average of $282 and over the past three years has slowly but steadily climbed 57% to an average of $442 in December 2004, but dipped slightly to $422 in May 2005.  Not only has this trend made the gold mining business more profitable, it has attracted investors back into the gold equities, driving up the share prices of most gold companies and providing a market for capital financing to the gold industry for the first time in years.

During the same period from January 2002 to December 31, 2004, the closing monthly market price for the Registrant’s shares increased from CAD$0.17 to CAD$0.56 – a substantial increase of 229%.  The closing monthly market price in February 2005 was CAD$0.58.  During the period from 2002 to 2004, the Registrant’s closing monthly market price reached a high of CAD$1.09 in October 2003.  In May 2005, the closing monthly market share price fell to CAD$0.36.  Management continues to foresee greater opportunities to finance the mineral exploration and development efforts on Canarc’s gold properties, and also to evaluate and consider new acquisitions in the gold arena as a result of rising gold prices.

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The Registrant has determined that the change in the provincial government in British Columbia has led to increased incentives for mineral resource development in the province.  In addition, the price of gold bullion has continued to increase, reflecting in part the continued weakening United States dollar.  These factors should make gold exploration in British Columbia increasingly attractive and should increase the opportunities for its New Polaris property.

Risk factors in Item 3.D provides further details regarding competition and government regulations.

4.C      Organizational Structure

The Registrant carries on its business in large part through its subsidiaries.  The Registrant has a number of direct or indirect wholly or majority owned subsidiaries as follows:

Benzdorp Gold N.V. was incorporated under the laws of Suriname on February 4, 2004 when Suriname presidential assent was received.  The Registrant owns 40% of the voting shares of this company with the right to acquire an additional 40%.

Canarc (Barbados) Mining Ltd. is a company duly incorporated under the laws of Barbados on July 26, 1993.  The Registrant owns 100% of the issued and outstanding shares.

Canarc Suriname (Barbados) Ltd. is a company duly incorporated under the laws of Barbados on January 26, 1994.  The Registrant owns 100% of the issued and outstanding shares.

Canarc van Suriname N.V. is a company duly incorporated under the laws of Suriname on November 10, 1995.  The Registrant owns 100% of the issued and outstanding shares.

Carib Industries Ltd. is a company duly incorporated under the laws of the Cayman Islands, B.V.I. on January 17, 1990, originally under the name of Rayrock Zar.  A name change was approved by Special Resolution dated May 15, 1992 and registered May 26, 1992.  The Registrant owns 78.5% of the issued and outstanding Class C shares.

Minera Aztec S.A. de C.V., a company duly incorporated under the Laws of Mexico on May 28, 1998.  The Registrant owns 63% of the issued and outstanding shares.

Minera Aztec Silver Corporation (formerly Aztec Silver Corporation, IndoAsia Gold Ltd. and Atec (Barbados) Ltd., name changes on January 7, 2000, March 27, 1998 and March 12, 1997) is a company duly incorporated under the Laws of Barbados on February 2, 1996 and continued into the province of British Columbia on January 7, 2000.  The Registrant owns 63% of the issued and outstanding shares.

New Polaris Gold Mines Ltd. (“New Polaris”), formerly Golden Angus Mines Ltd. (name change effective April 21, 1997), is a corporation formed through the amalgamation of 2820684 Canada Inc. (“2820684”), a former

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wholly-owned subsidiary of the Registrant incorporated under the Canada Business Corporation Act on May 13, 1992, and Suntac Minerals Inc.  The Registrant owns 100% of the issued and outstanding shares.

Sara Kreek Resource Corporation N.V. is a company duly incorporated under the laws of Suriname on January 9, 1995.  The Registrant owns 100% of the issued and outstanding shares.

In addition, the Registrant has rights to acquire interests in certain other corporations which hold, directly or indirectly, mineral rights in Suriname.

4.D     Property, Plants and Equipment

¹  subject to any royalties or other interests as disclosed below

²  previously known as “Polaris-Taku”

³   after recoveries and write-downs

⁴  100% interest can be earned by Minera Aztec, a 63% owned subsidiary of Canarc

NOTE:  All references to U.S.$ unless otherwise noted.  See below for further details on each property.  Refer to Note 11 of the consolidated financial statements as of December 31, 2004, for disclosure of differences between US GAAP and CAD GAAP.

The following is a more detailed description of some of the more material properties listed above in which the Registrant has an interest.

Item 4.A provides further details on mineral projects.

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Material Mineral Project

New Polaris Gold Project, British Columbia, Canada

The Registrant’s interest in the New Polaris Gold property is the subject of a report (the “Walton Report”), dated June 19, 2002, prepared by Godfrey Walton, PGeo, of G.J. Walton & Associates Ltd, 5463 Cortez Crescent, North Vancouver, British Columbia, Canada, V7R 4R1, a copy of which has been filed with the applicable Canadian regulatory bodies in June 2002 and which is incorporated herein by this reference.

The following description of the New Polaris Property has been summarized primarily from the Walton Report with some amendments and updates.  Figures referred to are not reproduced in this Form 20-F, and the reader is referred to the full report filed with the regulatory bodies and which is accessible at www.sedar.com.

Introduction:      A small, high grade, underground past producing gold mine, New Polaris has become one of the largest gold deposits in western Canada as a result of Canarc’s successful exploration programs.  The mineralisation is wide open along strike and at depth and the mineral resource could easily increase with further drilling.  An infill drilling program will need to be completed before a new resource estimate can be prepared suitable for NI 43-101.

Location and Access:     Northwestern British Columbia, 60 miles south of Atlin, BC, Canada, and 40 miles east of Juneau, Alaska, on the west bank of the Tulsequah River near the BC-Alaska border.  Access is available by small aircraft from Atlin or Juneau but ocean barging of equipment to the mine-site is possible during high tides in the summertime.  Redcorp Ventures Ltd. (“Redcorp”) recently received government approval to build its Tulsequah Chief mine (located only 3 miles away from New Polaris) and a 160 km access road from Atlin.  Canarc is currently evaluating a 25 km road route to Taku Inlet to facilitate year-round shipment of gold concentrates.

Description and Ownership:     Sixty-one crown granted mineral claims and one modified grid claim totalling 2,956 acres, 100% owned by Canarc subject to a 15% net profits interest (“NPI”) to Rembrandt Gold Mines Ltd, which Canarc can reduce to 10% NPI.

Current Status:     New Polaris is an advanced exploration project, requiring infill drilling to further define proven and probable ore reserves followed by a full feasibility study to determine the economic viability of the project.

Recent Work:     In fiscal 2004, the Phase 1 in-fill drilling program for the New Polaris property was completed.  The Phase 1 in-fill drilling resulted in multiple high-grade gold intercepts.  Eleven holes totalling of 8,008 feet (2,441 metres of core) were drilled in late 2004 on 100 feet (30 metres) spacings to test the C zones over an initial 500 feet (152 metres) strike length by 200 feet (61 metres) down dip below the deepest mine level.  All eleven drill holes intersected economically significant gold grades and vein widths in two main, sub-parallel, en-echelon, shear-veins, the “Upper C” and “Lower C”.

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Individual drill intercepts returned assays such as 0.93 opt (31.9 gpt) gold over 26.4 feet (8.05 metres) in the lower C vein and 0.45 opt (15.3 gpt) over 29.5 feet (9.0 metres) in the Upper C vein.  The weighted average of all 22 vein intercepts graded 0.42 opt (14.4 gpt) over a 12.4 feet (3.78 metres) core length.  True widths of the veins are estimated to be 85% to 90% of the core lengths.  The C zones are still wide open at depth and to a certain extent along strike.

Also for the New Polaris property, metallurgical testing of gold ores has improved gold recoveries to the 95% level by optimizing the grinding, autoclaving and leaching processes.  Additional detailed metallurgical testwork will be needed for any feasibility study on New Polaris.

A Phase 2 in-fill drilling program is now being planned for 2005, subject to financing, to continue defining and extending the known C zones and will also target two of the known Y zones.  The purpose of this drilling program is to outline at least a 550,000 ounce resource amenable to a feasibility study for a 65,000 ounces per year high grade, underground gold mine with a minimum 8-year mine-life.  The in-fill drilling program shall facilitate an updated resource model to be compliant with NI 43-101.

Canarc had previously reported a geological resource totalling 1.3 million oz gold based on extensive past drilling at New Polaris.  However this resource estimate is not compliant with NI 43-101.

History:     Discovered by prospectors in 1929, the mine was constructed in 1936 and operated from 1937 to 1942 and again from 1946 to 1951.  A total of 232,000 oz. of gold was produced from 760,000 tons ore grading 0.35 oz./ton.  Flotation concentrates were shipped seasonally for refining to the smelter in Tacoma, Washington.  The first barge load in 1951 sank in a storm off the B.C. coast, causing the mine to shut down.  Cominco upgraded the mill in 1952 and used it to process the nearby Tulsequah Chief ores from 1953 to 1957.  New Polaris was then dormant for 30 years until exploration resumed in 1988.  Canarc acquired New Polaris in 1992, completed 135,000 feet of core drilling in 182 drill holes to 1997 and discovered major new ore zones below and beyond the mine workings.

Geology:      Mineralization associated with disseminated arsenopyrite, pyrite, and stibnite in quartz-carbonate-fuchsite veins and stockworks, and related carbonatized and sericitized alteration zones.  Zones are developed along principal shear sets adjacent to a major crustal break.  Host rocks are Paleozoic volcanics.  Gold mineralisation is late Cretaceous to early Tertiary and epithermal or mesothermal shear vein type.  Gold is occluded in finely disseminated arsenopyrite grains that permeate the altered wall rocks and vein stockworks.  Gold mineralisation occurs along three major shear sets:  the AB zones trending northwest/southeast, Y zones trending north/south, and C zones trending east/west.  C zones generally link with the AB and with the Y zones at “junction arcs”.  Gold values in stockworks show excellent continuity and uniformity, with very little nugget effect.  Individual zones pinch, swell, and overlap en echelon.  Individual ore blocks range from less than 1,000 tons to more than 100,000 tons in size.  Widths range from 1 to 45 feet in thickness, averaging about 10 feet.

Mineral Resources – Historical:     Although the previous resource calculations reviewed herein were made prior to NI 43-101 being implemented, the estimations are useful as a guide to the potential size of the deposit.

An estimate of New Polaris reserves was made prior to mine closure in 1951, where (i) “reasonably assured” ore was projected 25 feet in the plane of the vein above and below sampled drift sections of mineable grade, and (ii) while “possible” ore was projected an additional 25 feet beyond these confines (Parliament 1949).  These

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reserves were based solely on underground sampling.  The “remaining reserves” at the time of closure were 105,000 tons grading 0.42 ounces of gold per ton including 17% dilution.

Adtec Mining Consultants (1972) recalculated these “reserves”.  These were recalculated to be 148,000 tons of 0.29 oz/ton Au based on similar definitions and existing mine drawings and assay plans.  Adtec Consultants (1983) recalculated the remaining “reserves” within the mine workings and defined these to be in the order of 223,000 tons grading 0.32 oz/ton Au (diluted) based on a 0.15 oz/ton Au cutoff and a minimum mining width of 4 feet.  These reserves were subdivided into 151,000 tons of “assured” and 72,000 tons of “reasonably assured” reserves.

The resources were recalculated by Beacon Hill in 1988 for Suntac Minerals Corporation using a minimum mining width of 5 feet (instead of 4 feet) with similar results.  Their resource estimate was “limited to those areas where continuous sampling data was available along drifts, raises and stope backs, etc, and where it appears that minimal development work would be required to access the resource”.  That calculation showed a total probable and possible resource of 244,420 tons grading 0.33 oz/ton Au with 132,210 tons grading 0.33 oz/ton Au classed as probable and 112,210 tons at 0.32 oz/ton Au classed as possible.  In 1989, Beacon Hill added further probable and possible mining resource from 27 drill holes completed by Suntac.  They estimated that the drilling had increased the resource by 380,000 tons grading 0.39 opt (probable) and 820,000 tons grading 0.39 opt (possible) which, added to their previously calculated resource, brought the overall resource potential up to 1,450,000 tons grading 0.38 opt (diluted) above the lowest worked level of the mine (600 level at elevation – 462 feet Below Sea Level ‘BSL’).

Montgomery Consultants were commissioned to conduct a geostatistical estimation of the geological resource for the Polaris-Taku Deposit in 1991.  G.H. Giroux performed this review and calculated a total resource of 2,225,000 tons grading 0.433 oz/ton based on a geostatistical approach using a cut-off grade of 0.25 oz/ton Au.  These resources were divided into 333,000 tons grading 0.437 oz/ton Au (probable) and 1,892,000 tons grading 0.432 oz/ton (possible).  The calculation discounted much of the reserves around the old workings and did not include dilution and minimum mining width provisions.  These calculations were based on both old and new drilling and extended the resource base down to roughly 1,200 feet BSL.

Watts, Griffis, and McOuat were contracted to review the previous resources in August 1992.  Their review incorporated the residual resources within the mine workings, as calculated by Beacon Hill in 1989, into their overall estimate of a total (diluted) mineral resource of 1,600,000 tons at 0.46 oz/ton Au.  Their calculations were based upon a minimum mining width of 5 feet or 15% dilution and a cut-off grade of 0.25 oz/ton Au.  The improvement in grade stems from the inclusion of new deeper holes that extend the known mineralization to a depth of 1,200 feet BSL and exclusion of lower grade material previously included in the Montgomery estimate.

Giroux was further contracted to provide resource updates throughout 1992, and in February 1995 he recalculated the resources for the deeper drilled portions of the “C” Zone.  The total resources calculated by Giroux were summarized in his updated report prepared in 1995.  His calculations were based on an in-situ estimation with a 0.25 oz/ton Au cut-off.  He did not include any of the North zone drilling.

The Giroux estimate is the most up to date externally prepared mineral inventory estimation, which includes what was left in the mine when it was closed and the new areas identified in drilling up to 1995.  Although these estimations were completed prior to the implementation of NI 43-101, its Probable Resource appears to conform

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with an Indicated Resource and its Possible Resource would be an Inferred Resource.  This was confirmed by a telephone conversation between Godfrey Walton and Gary Giroux during the preparation of the NI 43-101 report.

Although the old resources require significant modelling and in-fill drilling to confirm vein continuity, there are many vein intersections both in the old drilling and underground sampling and the new drilling that supports continuity.  The stopes from the earlier mining also suggest good continuity of the vein systems even though they appear to have focused on mining the higher grades as evidenced by what was left on the edge of some of the stopes.  The C zone is an area where significant widths have been obtained in drill holes and underground, which could develop tons quickly if continuity is demonstrated.

In 1997, Canarc prepared an internal estimate of resources including all drilling results, and concluded that the New Polaris gold deposit contained 3.6 million tons grading 0.36 oz/ton for a total of approximately 1.3 million oz.  This has not been updated to be compliant with NI 43-101.

Mining:     From 1931 to 1951, 51,825 feet of level development (on 10 levels) and 12,292 feet raise development were completed at New Polaris.  Top level, Canyon, is 580 feet above sea level.  Deepest level, 750, is 613 feet below sea level.  An 821 feet deep internal winze was used for material handling, going from the A.J. to the 750 Level.  Winze is accessed from the A.J. and Polaris Level adits, with Polaris being the main haulage and access level.  Mine dewatered in 1996, ground conditions excellent.  Historic mining methods were shrinkage and resueing.  Plans are to develop a ramp access mine.  Mining methods will include longhole, shrinkage, cut-and-fill.  Mining techniques will depend on factors such as ore body geometry, grade, dilution, etc.

Metallurgy:     Historically, the mine operated using sulphide flotation, milling at a rate of 200 tons per day.  Ore was crushed through primary and secondary crushers, and ground in a ball mill in closed circuit with a rake classifier.  Rougher and scavenger flotation was used and the sulphide concentrate is thickened and filtered for shipment off site.  Ninety percent gold recoveries were obtained, concentrate grade of 3.5-5.0 ounce per ton gold, and concentrate to ore ratio of 10:1.  Recent test work completed on a preliminary basis indicates up to 97% of the gold reports to a rougher flotation concentrate.  Cyanidation of the flotation tailings and pressure oxidation (autoclaving) of the flotation concentrate showed that up to 94 percent gold recovery was achieved.  Additional metallurgical test work is planned to optimize grind, reagent addition and type, etc.  Evaluation of direct marketing of the flotation concentrate, pressure oxidation and bio-oxidation to treat the flotation concentrate will be completed in future work.

Site Infrastructure:     A new office/dry complex was built on the site in 1996.  Several existing buildings were refurbished for bunkhouses and a kitchen facility.  Existing camp is capable of supporting 35 personnel.  Shop was refurbished for a maintenance facility, pipe shop, power-house, and compressor house.  Three 200-kilowatt generators on site can be run separately or in parallel.  Two 200 cubic feet per minute portable air compressors on site can supply compressed air for underground.  Two 10,000 gallon fuel tanks, left from previous mining activities refurbished for additional fuel storage.  Old main-street of the town-site is used as an air-strip.  Manpower, equipment, and material mobilized to site using a Shorts Skyvan, capable of carrying 4,000 pounds.

Environmental:     Canarc has been systematically eliminating all old mine buildings at the site, except those in current use.  Test work indicates rock is non-acid generating.  Water wells were installed and surface and

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ground water monitoring underway.  Discharge permit obtained for the dewatering and care and maintenance phases of the mine pumping.

Other Mineral Projects

The following project descriptions are not updated to be compliant with NI 43-101.

Bellavista Gold Project, Costa Rica

Introduction:     Bellavista is a large, low-grade development-stage epithermal gold deposit.  Glencairn Gold Corp. (“Glencairn”), the operator, has identified a smaller, higher grade, mineable reserve suitable for low cost open pit, heap leach gold production;  Canarc’s property agreement was with Wheaton River Minerals Inc. (“Wheaton River”) which sold the property to Glencairn in 2002.  Canarc owns up to a 20.24% carried interest (after payback).

Canarc has a net profits interest in Bellavista in which Canarc is entitled to 5.67% of the net profits during the first payback period, then increasing to 10.40% during the second payback period and then to 20.24% of net profits thereafter, once commercial production commences.  Thirty-five percent of this net profits interest will be retained by Glencairn until $317,741 in advance royalty payments are repaid.

Current Status:     Canarc receives pre-production advance royalty payments totaling $117,750 annually up to and including the year commercial production commences.  Thereafter Canarc will receive its share of the net profits.

Recent Work:     In 2003, Glencairn began construction of the $26 million Bellavista gold mine which was about 15% over budget and two months behind schedule by November 2004 due to heavy rainfall and delays in the delivery of goods to the site.  In December 2003, Glencairn commenced the $8 million Phase 1 program of road works, earthworks, pads and ponds for this open pit, heap leach gold mine.  By January 2005, construction of the mine was 90% complete.  Electrical power is provided to the mine site from Costa Rica’s main power grid.  All earthworks have been completed and leach pads installed.  The crushers and agglomerator are in place, the conveying and stacking system has been assembled, and all road work has been completed.  A contracted fleet of mining equipment is on site with both stripping and mining planned in February 2005.  Glencairn expects construction to be completed in early 2005 with gold production to begin in the second quarter of 2005.

According to Glencairn, the Bellavista gold mine is scheduled to produce 60,000 ounces of gold per year for 7.3 years at projected operating cash costs of $198 per oz.  Total ore reserves currently stand at 555,000 mineable oz contained in 11.2 million tonnes ore grading 1.54 gpt gold.

Location and Access:     Costa Rica, 80 km west of San Jose near the town of Miramar, accessible by truck on the Pan American highway and a mine access road.

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Description and Ownership:     Several contiguous mineral concessions covering 2,000 hectares in the Central Gold Belt, owned by Glencairn (approximately 65%) and others.  Canarc’s 18.3% interest is carried whereby Glencairn must incur all development costs to production, subject to payback from cash flow.

History:     The Bellavista and Montezuma mines produced small tonnages of gold-silver ore from underground workings at the turn of the century.  In the 1980s, Minera Rayrock acquired a controlling interest and by 1996, had completed significant exploration work, including a feasibility study.  Wheaton River bought out Rayrock’s interest in 1997 and completed additional drilling required for a new feasibility study in 1998.  Glencairn bought out Wheaton River’s interest in 2002.  A total of more than $60 million has been spent on the property to date.

Geology:     Bellavista is an epithermal gold deposit hosted by volcanic rocks where they are crosscut by a major fault zone.  Gold is associated with quartz-carbonate stockwork zones surrounded by minor quartz-sericite alteration.

Reserves:     Rayrock outlined mineable reserves and resources totaling 1.96 million oz. contained in 37.4 million tones grading 1.63 gpt, economic at $400 gold.  Wheaton River identified a smaller proven reserve of 11.2 million tones grading 1.54 gpt for 556,000 oz. (436,000 recoverable oz.) suitable for low cost open pit mining and heap leach processing.

Mining:     As disclosed by Glencairn, if mining is undertaken, all ores will be mined from one open pit, crushed to 80% minus ¼ inch, higher grade ore will be crushed to 80% minus 65 mesh and agglomerated with the lower grade ore prior to stacking on the heap leach pad.  Their metallurgical tests indicate gold recoveries of around 79%.

Production Model:     The base case production model as disclosed by Glencairn calls for 60,000 oz./year for 7.3 years at a mill rate of 5,745 tonnes/day at a strip ratio of 1.32:1.  Capital costs are estimated at $26 million and projected cash operating costs are $198 per oz.

Benzdorp Property, Suriname

Introduction:     Benzdorp is historically the most prolific gold producing region in the Republic of Suriname with alluvial production exceeding 1 million oz. gold.

Current Status:     Benzdorp is an early-stage exploration project with a new bulk tonnage, low grade porphyry gold-copper discovery zone and many other gold prospects areas that require further work.  In the first quarter of 2004, the final transfer of the Benzdorp property exploration concessions from Grassalco to Benzdorp Gold N.V., was completed, when the Articles of Incorporation for Benzdorp Gold N.V. received Suriname presidential assent.  Canarc owns 40% of the voting shares of Benzdorp Gold N.V., and holds an option to earn an additional 40% currently in escrow by paying $300,000 to Grassalco and spending at least $5 million on exploration prior to April 2005 but extended to December 2005 pursuant to amendments in April 2005, subject to a payment of $40,000 which was paid by Canarc in April 2005.  At December 31, 2004, Canarc had paid $300,000 to Grassalco and incurred approximately $4.7 million in exploration expenditures.

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Recent Work:     In the first quarter of 2004, Canarc commenced a Phase 2 exploration drilling program to estimate an initial mineral resource for the JQA discovery.  The JQA discovery area encompasses an area 600 m by 500 m, and is still open for expansion in several directions as well as depth.  In 2004, Canarc completed 3,984 metres of diamond drilling in 13 holes.  All 13 holes encountered significant porphyry gold mineralization in saprolite starting at surface.  Of the 11 holes that penetrated bedrock, 8 holes intersected strong porphyry gold-copper, stock-work mineralization over a 200 metre by 200 metre area, extending the JQA mineralized zone up to 350 metres in depth.  The porphyry gold mineralization in each of these 8 holes starts at surface, implying a very low strip ratio of waste to ore.  Higher grade gold mineralization was typically intersected in the near surface, oxidized saprolite and two of the holes bottomed in ore-grade mineralization in bedrock.  The JQA mineralized zone is wide open along strike, and to a certain extent at depth.  The deep drilling program for the JQA prospect also intersected significant copper values within the zone of mineralization.  These copper intersections are hosted by quartz stockworks confirming the porphyry nature of gold-copper mineralization at the JQA prospect.  Copper mineralization is a bit more intermittent than the gold mineralization.

In early 2005, Research Development Inc. (“RDI”) was retained to conduct flotation and leach tests on low grade, gold-copper, bedrock mineralization in the JQA prospect drill core.  Flotation tests on a relatively coarse grind size of 80% passing 65 mesh achieved 80% copper and 57% gold recoveries into the rougher concentrate without optimization.  This concentrate was then upgraded to a +20% copper concentrate in a cleaner circuit.

In 2005, Canarc plans to further assess the metallurgical characteristics of saprolite and bedrock mineralization from the JQA prospect in order to determine the viability of gold recovery, and preliminary metallurgical testing was completed in 2004.  Canarc also plans to conduct a Phase 3 drilling program, subject to financing, of about 3,000 metres in approximately 15 holes in order to extend the area of JQA mineralization in bedrock and to test other targets.

This project description is not compliant with NI 43-101.

Location and Access:     Southeastern Suriname, 300 km southeast of Parimaribo, the capital city, accessible by charter aircraft to the nearby Tabiki airstrip or by boat up the Marowijne River, then by ATV on the property roads.

Property Description:     Four exploration concessions measuring 42 km x 31 km, totaling 138,000 hectares.  Canarc holds an option to acquire an 80% interest (subject to a 20% NPI or 1½ to 6% NSR) in the subsurface mineral rights from Grassalco.

History:     Gold production was first recorded from Benzdorp in the late 1800s when English and Dutch companies exploited the alluvial deposits.  The Jungle Queen dredge produced over 500,000 oz. alone over a 40-year period.  In more recent times, hundreds of illegal small-scale miners typically produce up to 10,000 oz. gold each year by reprocessing the river gravels.  Canarc acquired its property option in 1996 and has spent $2 million on thousands of soil samples, hundreds of deep auger drill holes, and six long bulldozer trenches.

Geology:     Most of the known gold prospects occur on the easternmost 5% of the property within a northeast-trending greenstone belt of meta-volcanic and meta-sedimentary rocks intruded by dioritic plutons and crosscut by northeast north and northwest-trending structures.  Every creek for 20 km has produced or is currently producing placer gold.  Canarc has focused on four gold prospects that are now drill ready.  The JQA prospect

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alone measures 750 m long x 250 m wide averaging 1 gpt gold, open in all directions.  The exploration target here is a porphyry gold deposit of several hundred million tonnes containing 2.5 to 10 million oz. gold down to 250 m in depth.

Eskay Creek Property, British Columbia, Canada

Introduction:     The Eskay Creek property partially surrounds the high grade Eskay Creek mine of Barrick.  The property is joint ventured with Barrick (66 2/3%) and covers the favourable Eskay Creek ore horizon along strike and at depth.  Barrick explored the property systematically for Eskay Creek-type ore bodies.

Current Status:     Early stage exploration.  This project description is not compliant with NI 43-101.

Location and Access:     Northwestern British Columbia, 80 km northwest of Stewart, B.C., accessible by truck via highway 37 and the Eskay access road.

Description and Ownership:     Three modified grid claims totalling 930 hectares.  Canarc’s 33 1/3% interest is carried whereby Barrick must incur all exploration and development costs to production, subject to repayment of those costs from cash flow.

In 2003, Barrick, as operator for the Eskay Creek property, sampled a high grade gold mineralised zone and found several altered and mineralised zones in Betty Creek Formation volcanic rocks.  Barrick also carried out IP geophysical surveying on the Eskay Creek property in the 22 zone area along strike to the south of the Eskay Creek mine.  Several chargeability highs were detected with represent untested anomalies within favourable rocks.  Barrick carried out a follow-up exploration mapping and sampling program in these prospect areas in 2004, but did not test these IP anomalies by drilling.  In late 2004, Barrick reported that no further work was recommended in several zones in the property.  However, Canarc’s management believes the untested IP anomalies represent additional exploration potential that should be drilled.

History:     The Eskay Creek gold-silver deposit was discovered in 1988 and commenced production in 1994.  The ore is so high grade (>3 oz. Gold equivalent per ton) that it is simply mined, crushed and shipped directly to smelters with no milling or concentrating.  Canarc’s Eskay Creek property partially surrounds Barrick’s Eskay Creek mine and has had over $3 million in exploration completed by Barrick.  Several mineral prospects have been drilled and potential targets still remain to be drilled.

Geology:     The Eskay Creek ore bodies are strata bound, volcanogenic sulfide deposits that occur within certain favourable rock types, specifically the hanging wall mudstones and the footwall ineralis.  This “Eskay Creek horizon” has been traced across the entire Eskay Creek property and several mineralized prospects have been found.  The footwall minerals are typically altered to chlorite and sericite, and the hanging wall mudstones carry semi-massive sulfide mineralisation, including pyrite, chalcopyrite, sphalerite, and various silver minerals, encased by pervasive carbonate alteration.

Sara Kreek Property, Suriname

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Introduction:     Sara Kreek is a development property located in the Republic of Suriname, South America.  The property has a small placer gold mine on it, that had production in 2001 of approximately 10,000 oz. gold from the placer mine and gravity recovery systems.  A second high grade, open pit lode mine is also ready for development, subject to financing.  The second open pit mine is in the saprolite, a weathered bedrock and has been mined by the operator of the placer mine.  The Sara Kreek property produced over 500,000 oz. gold historically and Canarc’s management believes it has the potential for additional discoveries in the million oz. plus range.

Current Status:     In 1999, Canarc completed a feasibility study recommending commercial production from one of the several lode prospects on the property.  Management was seeking project financing for the new DP lode mine.  Due to the lack of activity on the project since 1999, Canarc wrote-down the property in 2002 by $1,717,000 to reflect management’s estimate of the property’s recoverable value.  In fiscal 2004, the Sara Kreek property was further written-down by $3,184,000 to a nominal $100,000 based upon CAD GAAP.  A loan to the vendor that was included in acquisition costs, with a principal balance of $400,000 plus accrued interest remains outstanding and continues to be owed to Canarc.  The write-down of the property for accounting purposes does not affect Canarc’s legal claim and right to recover the outstanding loan plus accrued interest owed to it, and Canarc continues with its collection efforts.

This project description is not compliant with NI 43-101.

Recent Work:     Exploration to seek out the underlying lode sources to the placer gold began in earnest in 1994.  In 1999, Canarc had completed 20,000 soil and silt samples, hundreds of deep auger holes, several kms of machine trenching and 28 diamond drill holes at a cost exceeding $4 million.  Canarc also completed a feasibility study on the DP zone that recommends commercial production from a small, high grade, open pit to produce 13,500 oz. at a cash cost of $62 per oz.  No further exploration programs were implemented since 1999, and the property was written down in 2002 to reflect management’s estimate of the property’s net recoverable value and in 2004 was further written-down by $3,184,000 to a nominal $100,000 based upon CAD GAAP.

Location and Access:     East central Suriname, 160 km south of Paramaribo, the capital city, accessible by charter aircraft to a 1,500 ft. airstrip on the property or by boat across Van Blommestein Lake (a large, man-made lake for a hydroelectric project), then by truck on the property access road.

Property Description:     One Exploitation Concession measuring 17 km x 19 km, totalling 22,500 hectares.  Canarc owns a 100% interest (subject to a 20% NPI or 1½ to 5½% NSR) in the subsurface mineral rights, as well as an 80% interest (reverting to 50% after payback of our investment) in the surface mineral rights.  Canarc’s local partner, Suriname Wylap Development Corp., currently operates the placer mine on the property.

History:     Gold production was first recorded from Sara Kreek in the late 1800s, when English and Dutch companies exploited the alluvial deposits.  At their peak, several large dredges were in operation and a 200 km long narrow gauge railway was built from Paramaribo to Sara Kreek, to service the hundreds of families living there.  The gold fields produced over 500,000 oz. gold, then fell dormant for 50 years, until Suriname Wylap Development Corp. modernized the placer mines and operated briefly in the late 1980s.  Canarc acquired its property interests in 1993 and funded the re-commencement of placer gold mining in 1995.

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Property Geology:     All of the known gold prospects fall along a north trending greenstone belt of meta-volcanic and meta-sedimentary rocks, crosscut by northeast and northwest trending structures.  Mineralization also appears to be related to late-stage quartz-feldspar porphyry or diorite intrusions.  Gold is associated with pyrite, chalcopyrite and other sulfide minerals in quartz-carbonate veins, shears and stockwork zones.

Significant Results:     Canarc found multiple soil anomalies by reconnaissance sampling, including two main mineralized shear zones that extend for 7 km and 6 km respectively.  Follow-up deep augering, machine trenching and diamond drilling has confirmed high grades over mineable widths in four gold prospect areas.  Trench results include 13.6 gpt over 10 m, 2.3 gpt over 40 m and 1.2 gpt over 160 m.  Drill intersections include 7.0 gpt over 13.5 m, 2.9 gpt over 16.6 m and 5.9 gpt over 10.7 m.

Reserves:     DP mine reserves were estimated at 16,000 oz. gold contained in 65,000 tonnes soft saprolite ore grading 7.5 gpt, still open in 3 directions.  No reserves are estimated for the placer mine but there are several kilometres of known gold-bearing creek gravels that should support many years of placer mining.

Mining:     DP mine methods were presumed to be shallow open pit truck and shovel operation, no drilling or blasting, 8:1 strip ratio, 8½ month mine life.  The placer mine is an open pit, excavator and hydraulicing operation .

Processing:     DP mine process was predicted to generate an 85%+ recovery using gravity methods.  The ore is cleaned and screened in a trommel, reduced to ¼ inch in a crusher, ground to 80%-200 mesh in a ball mill, and the gold is separated using Falcon concentrators and a shaking table.  A bulk sample for metallurgical testing consistently returned higher grades than the channel sampling.  The placer mine recovers coarse gold only with sluice boxes.

Exploration Target:     The exploration target at Sara Kreek is for shear-hosted gold deposits of several million tonnes containing up to one million oz. gold or more to 300 m depth.  The two main gold mineralized shear zones have been traced semi-continuously over 13 km of combined strike length on the property.

Production Model:     Base case production for the DP mine is 13,600 oz. over a 9 month period, with capital costs estimated at $1.25 million and total operating costs coming in at $62 per oz.  Similar positive exploration results were found at the EB, WP and PP prospects, leading management to believe that production will come from several high grade open pits.

Plants and Equipment

The Registrant has no other material tangible fixed assets other than the equipment and buildings located on the Registrant’s New Polaris Property, as described in Items 4.D, and exploration, drilling and camp equipment and general office equipment in Suriname, and general office equipment at its offices located in Canada and Suriname.