UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

¨

  FORM 20-F

☐

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

OR

x

☑

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended December 31, 2015

2018

OR

OR

¨

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ______

OR

OR

¨

☐

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:

Commission file number: 0-18860

  Commission file number: 0-18860


CANARC RESOURCE CORP.

(Exact name of Registrant as specified in its charter)

Province of British Columbia, Canada

(Jurisdiction of incorporation or organization)

Suite #301 - 700 West Pender#810 – 625 Howe Street, Vancouver, British Columbia, Canada, V6C 1G8

2T6

(Address of principal executive offices)

Philip Yee, Chief Financial Officer, Phone: (604) 685-9700, Fax: (604) 685-9744, e-mail:philip@canarc.net

Canarc Resource Corp., Suite #301 - 700 West Pender#810 – 625 Howe Street, Vancouver, British Columbia, Canada, V6C 1G8

2T6

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)


Securities registered pursuant to Section 12(b) of the Act:None

Securities registered pursuant to Section 12(g) of the Act:Common Shares, without par value

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None


Indicate the number of outstanding shares of each of the Registrant'sRegistrant’s classes of capital or common stock as of the close of the period covered by the annual report:191,620,557218,355,144 common shares as at December 31, 20152018

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ ☐ No x

☑

If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ ☐ No x☑

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x ☑ No ☐No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).Yes ¨ ☑ No ¨☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer or an emerging growth company. See definition of "accelerated“large accelerated filer,” “accelerated filer,” and large accelerated filer"“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer

¨

 Accelerated filer

x

Non-accelerated filer

¨

Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☑
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:

U.S. GAAP

☐

¨

International Financial Reporting Standards as issued

 Other

 ¨

Other ☐

by the International Accounting Standards Board   x☑



If "Other"“Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow: Item 17 ¨ ☐Item 18 ¨☐

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ ☐ No x

☑


TABLE OF CONTENTS

PART I

7

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

13

7

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

13

7
ITEM 3. KEY INFORMATION7

ITEM 3.

KEY INFORMATION

13

3.A

Selected Financial Data

13

7

3.B

Capitalization and Indebtedness

16

9

3.C

Reasons for the Offer and Use of Proceeds

16

9

3.D

Risk Factors

16

9

ITEM 4.

INFORMATION ON THE COMPANY

26

17

4.A

History and Development of the Company

26

18

4.B

Business Overview

35

25

4.C

Organizational Structure

36

28

4.D

Property, Plants and Equipment

37

28

ITEM 4A.

UNRESOLVED STAFF COMMENTS

62

51

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

62

51

5.A

Operating Results

62

51

5.B

Liquidity and Capital Resources

70

59

5.C

Research and Development, Patents and Licenses, etc.

73

63

5.D

Trend Information

73

63

5.E

Off-Balance Sheet Arrangements

73

63

5.F

Tabular Disclosure of Contractual Obligations

74

64

5.G

Safe Harbor

75

64
2

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

77

65

6.A

Directors and Senior Management

77

65

6.B

Compensation

Compensation

78

66

6.C

Board Practices

84

71

6.D

Employees

Employees

92

75

6.E

Share Ownership

92

76

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

96

78

7.A

Major Shareholders

96

78

7.B

Related Party Transactions

97

79

7.C

Interests of Experts and Counsel

98

81
ITEM 8. FINANCIAL INFORMATION81

ITEM 8.

FINANCIAL INFORMATION

99

8.A

Consolidated Statements and Other Financial Information

99

81

8.B

Significant Changes

100

82

ITEM 9.

THE OFFER AND LISTING

101

82

9.A

Offer and Listing Details

101

82

9.B

Plan of Distribution

103

83

9.C

Markets

Markets

103

83

9.D

Selling Shareholders

103

83

9.E

Dilution

Dilution

103

83

9.F

Expenses of the Issue

103

83
ITEM 10. ADDITIONAL INFORMATION83

ITEM 10.

10.A Share Capital

ADDITIONAL INFORMATION

104

83

10.A

Share Capital

104

10.B

Notice of Articles and Articles of Association

104

83

10.C

Material Contracts

111

86

10.D

Exchange Controls

111

87

10.E

Taxation

Taxation

112

87

10.F

Dividends and Paying Agents

117

92

10.G

Statement by Experts

117

92

10.H

Documents on Display

117

92

10.I

Subsidiary Information

117

93
3

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

118

93

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

120

96
PART II97

PART II

121

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

121

97

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

121

97

ITEM 15.

CONTROLS AND PROCEDURES

121

97

ITEM 16.

AUDIT COMMITTEE FINANCIAL EXPERT, CODE OF ETHICS AND PRINCIPAL ACCOUNTANT FEES AND SERVICES

122

98

16.A

Audit Committee Financial Expert

122

98

16.B

Code of Ethics

122

98

16.C

Principal Accountant Fees and Services

123

99

16.D

Exemptions from the Listing Standards for Audit Committees

124

99

16.E

Purchases of Equity Securities by the RegistrantCompany and Affiliated Purchasers

124

99

16.F

Change in Registrant'sCompany’s Certifying Accountant

124

99

16.G

Corporate Governance

124

100

16.H

Mine Safety Disclosure

124

100
PART III101

PART III

ITEM 17. FINANCIAL STATEMENTS

125

101
ITEM 18. FINANCIAL STATEMENTS101

ITEM 17.

FINANCIAL STATEMENTS

125

ITEM 18.

FINANCIAL STATEMENTS

125

ITEM 19.

EXHIBITS

EXHIBITS

125

101

4

CAUTION – FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F and the exhibits attached hereto contain "forward-looking statements"“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward looking statements concern the Registrant'sCompany’s anticipated results and developments in the Registrant'sCompany’s operations in future periods, planned exploration and development of its mineral property interests, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects"“expects” or "does“does not expect"expect”, "is expected"“is expected”, "anticipates"“anticipates” or "does“does not anticipate"anticipate”, "plans"“plans”, "estimates"“estimates” or "intends"“intends”, or stating that certain actions, events or results "may"“may”, "could"“could”, "would"“would”, "might"“might” or "will"“will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

·

risks related to our exploration and development activities;

·

risks related to the financing needs of our planned operations;

·

risks related to estimates of mineral deposits, resources and reserves;

·

risks related to fluctuations in mineral prices;

·

risks related to the titles of our mineral property interests;

·

risks related to competition in the mineral exploration and mining industry;

·

risks related to potential conflicts of interest with our officers and directors;

·

risks related to environmental and regulatory requirements;

·

risks related to foreign currency fluctuations;

·

risks related to our possible status as a passive foreign investment company;

·

risks related to the volatility of our common stock; and

·

risks related to the possible dilution of our common stock.

● 
risks related to our exploration and development activities;
● 
risks related to the financing needs of our planned operations;
● 
risks related to estimates of mineral deposits, resources and reserves;
● 
risks related to fluctuations in mineral prices;
● 
risks related to the titles of our mineral property interests;
● 
risks related to competition in the mineral exploration and mining industry;
● 
risks related to potential conflicts of interest with our officers and directors;
● 
risks related to environmental and regulatory requirements;
● 
risks related to foreign currency fluctuations;
● 
risks related to our possible status as a passive foreign investment company;
● 
risks related to the volatility of our common stock; and
● 
risks related to the possible dilution of our common stock.
This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled "Risk Factors"“Risk Factors” and "Information“Information on the Company"Company” of this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events other than as may be specifically required by applicable securities laws and regulations.

We qualify all the forward-looking statements contained in this annual report by the foregoing cautionary statements.

Canarc Resource Corp.

Form 20-F

5

Unless the context otherwise requires, all references to "we"“we” or "our"“our” or the "Registrant"“Company” or the "Company" or "Canarc"“Canarc” refer to Canarc Resource Corp. and/or its subsidiaries. All monetary figures are in terms of United States dollars unless otherwise indicated.

Canarc Resource Corp.
Form 20-F
1
EXPLANATORY NOTE REGARDING PRESENTATION OF FINANCIAL INFORMATION

The annual audited consolidated financial statements contained in this Annual Report on Form 20-F are reported in United States dollars. For the years ended December 31, 2015, 2014,2018, 2017 and 2013,2016, as presented in the annual audited consolidated financials contained in this Annual Report on Form 20-F, we prepared our consolidated financial statements in accordance with International Financial Reporting Standards (''IFRS''(‘‘IFRS’’) as issued by the International Accounting Standards Board ("IASB"(“IASB”). For the yearsyear ended December 31, 2012 and 2011,2014, which annual audited consolidated financials arefinancial statements is not presented in this Annual Report, we prepared our consolidated financial statements in accordance with IFRS as issued by the IASB. Statements prepared in accordance with IFRS are not comparable in all respects with financial statements that are prepared in accordance with U.S. generally accepted accounting principles ("(“US GAAP"GAAP”).

CURRENCY

Unless we otherwise indicate in this Annual Report on Form 20-F, all references to "Canadian Dollars", or "CAD$" are to the lawful currency of Canada, and all references to "U.S. Dollars" or "US $""US$" are to the lawful currency of the United States.

Canarc Resource Corp.

Form 20-F

6

2
GLOSSARY OF MINING TERMS

The following is a glossary of some of the terms used in the mining industry and referenced herein:

1933 Act means the United States Securities Act of 1933, as amended.

adit – a horizontal tunnel in an underground mine driven from a hillside surface.

Ag – silver.

alluvial mining – mining of gold bearing stream gravels using gravity methods to recover the gold, also known as placer mining.

andesite – a volcanic rock of intermediate composition, the extrusive equivalent of diorite.

arsenopyrite – an ore mineral of arsenic, iron, and sulphur, often containing gold.

assay – a precise and accurate analysis of the metal contents in an ore or rock sample.

Au – gold.

auger drill – a handheld machine that produces small, continuous core samples in unconsolidated materials.

autoclave – a mineral processing vessel operated at high temperature and pressure in order to oxidize sulfide and carbon compounds, so the contained metals can be leached and concentrated.

Banka drilling – a hand operated drill specifically designed for sampling alluvial deposits. The drill rods (10 12 centimetres in diameter) are forced into the gravel and then the core sample is extracted from the rods.

Commission – United States Securities and Exchange Commission, or S.E.C.

concentrate – a concentrate of minerals produced by crushing, grinding and processing methods such as gravity or flotation.

contained gold – total measurable gold in grams or ounces estimated to be contained within a mineral deposit. Makes no allowance for economic criteria, mining dilution or recovery losses.

Cu – copper.

cut-off grade – deemed grade of mineralization, established by reference to economic factors, above which material is considered ore and below which is considered waste.

diamond drill – a large machine that produces a continuous core sample of the rock or material being drilled.

diorite – a plutonic rock of intermediate composition, the intrusive equivalent of andesite.

dorė – bullion of gold, with minor silver and copper produced by smelting, prior to refining.

1933 Act - means the United States Securities Act of 1933, as amended.
adit – a horizontal tunnel in an underground mine driven from a hillside surface.
Ag – silver.
alluvial mining - mining of gold bearing stream gravels using gravity methods to recover the gold, also known as placer mining.
andesite - a volcanic rock of intermediate composition, the extrusive equivalent of diorite.
arsenopyrite – an ore mineral of arsenic, iron, and sulphur, often containing gold.
assay – a precise and accurate analysis of the metal contents in an ore or rock sample.
Au - gold.
auger drill – a handheld machine that produces small, continuous core samples in unconsolidated materials.
autoclave – a mineral processing vessel operated at high temperature and pressure in order to oxidize sulfide and carbon compounds, so the contained metals can be leached and concentrated.
Banka drilling - a hand operated drill specifically designed for sampling alluvial deposits. The drill rods (10-12 centimetres in diameter) are forced into the gravel and then the core sample is extracted from the rods.
Commission - United States Securities and Exchange Commission, or S.E.C.
concentrate – a concentrate of minerals produced by crushing, grinding and processing methods such as gravity or flotation.
contained gold – total measurable gold in grams or ounces estimated to be contained within a mineral deposit. Makes no allowance for economic criteria, mining dilution or recovery losses.
Cu – copper.
cut-off grade – deemed grade of mineralization, established by reference to economic factors, above which material is considered ore and below which is considered waste.
diamond drill – a large machine that produces a continuous core sample of the rock or material being drilled.
diorite – a plutonic rock of intermediate composition, the intrusive equivalent of andesite.
dorė – bullion of gold, with minor silver and copper produced by smelting, prior to refining.
epithermal – used to describe hydrothermal mineral deposits, typically in veins, formed at lower temperatures and pressures within 1 km of the earth surface.
Exchange Act – means the United States Securities Exchange Act of 1934, as amended.
feasibility study – a detailed report assessing the feasibility, economics and engineering of placing a mineral deposit into commercial production.
flotation – a mineral recovery process using soapy compounds to float finely ground metallic minerals into a concentrate.
garimpeiros – a Brazilian term used in South America referring to small scale, artisanal miners and prospectors.
gold deposit - means a mineral deposit mineralised with gold.
gold equivalent - a method of presenting combined gold and silver concentrations or weights for comparison purposes. Commonly involves expressing silver as its proportionate value in gold based on the relative values of the two metals.
gold resource – see mineral resource.
gpt - grams per tonne.
grams per cubic meter - alluvial mineralisation measured by grams of gold contained per cubic meter of material, a measure of gold content by volume not by weight.
greenstone - a field term for any compact dark-green altered or metamorphosed basic igneous rock that owes its colour to green minerals such as chlorite, actinolite or epidote.
indicated resource -means that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.Cautionary Note to U.S. Investors: Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” below.
inferred resource -means that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.Cautionary Note to U.S. Investors: Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” below.
Canarc Resource Corp.

Form 20-F

3
laterite - highly weathered residual superficial soils and decomposed rocks, rich in iron and aluminum oxides, that are characteristically developed in tropical climates.
7
lode mining – mining of ore, typically in the form of veins or stockworks.
measured resourcemeans that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.Cautionary Note to U.S. Investors: Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” below.
mesothermal – used to describe hydrothermal mineral deposits, typically in veins, formed at higher temperatures and pressures deeper than 1 km of the earth’s surface.
mineral reservemeans the economically mineable part of a measured or indicated resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined.Cautionary Note to U.S. Investors: Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” below.
mineral resource– a body of mineralized material which has not yet been determined to be ore, and the potential for mining of which has not yet been determined; categorized as possible, probable and proven, according to the degree of certainty with which their grade and tonnage are known; sometimes referred to as a “geological resource” or “mineral inventory”.Cautionary Note to U.S. Investors: Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” below.
net profits interest or NPI – a royalty based on the net profits generated after recovery of all costs.
net smelter royalty or NSR - a royalty based on the gross proceeds received from the sale of minerals less the cost of smelting, refining, freight and other related costs.
nugget effect – an effect of high variability of gold assays, due to the gold occurring in discreet coarse grains such that their content in any given sample is highly variable.
ore – a naturally occurring rock or material from which economic minerals can be extracted at a profit.
ounce or oz. - a troy ounce or 20 pennyweights or 480 grains or 31.103 grams.
opt – troy ounces per ton.
porknockers - a local term used in Guyana and Suriname to refer to small scale artisanal miners and prospectors.
porphyry – an igneous rock containing coarser crystals in a finer matrix.
probable reserve- the economically mineable part of an indicated, and in some circumstances a measured resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.Cautionary Note to U.S. Investors: Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” below.
professional association, for the purposes of the definition of a Qualified Person below, means a self-regulatory organization of engineers, geoscientists or both engineers and geoscientists that (a) has been given authority or recognition by statute; (b) admits members primarily on the basis of their academic qualifications and experience; (c) requires compliance with the professional standards of competence and ethics established by the organization; and (d) has disciplinary powers, including the power to suspend or expel a member.
prospect – an area prospective for economic minerals based on geological, geophysical, geochemical and other criteria
proven reservemeans the economically mineable part of a measured resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.Cautionary Note to U.S. Investors: Please review the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” below.
pyrite – an ore mineral of iron and sulphur.
Qualified Person means an individual who (a) is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; (b) has experience relevant to the subject matter of the mineral project and the technical report; and (c) is a member in good standing of a professional association.
quartz – a rock-forming mineral of silica and oxygen, often found in veins also.
raise – a vertical or inclined tunnel in an underground mine driven upwards from below.
ramp – an inclined tunnel in an underground mine driven downwards from surface.
reverse circulation drill – a large machine that produces a continuous chip sample of the rock or material being drilled.
saprolite - a soft, earthy, clay rich and thoroughly decomposed rock with its original textures intact, formed in place by chemical weathering of igneous, sedimentary or metamorphic rocks.

epithermal – used to describe hydrothermal mineral deposits, typically in veins, formed at lower temperatures and pressures within 1 km of the earth surface.

Exchange Act – means the United States Securities Exchange Act of 1934, as amended.

feasibility study – a detailed report assessing the feasibility, economics and engineering of placing a mineral deposit into commercial production.

flotation – a mineral recovery process using soapy compounds to float finely ground metallic minerals into a concentrate.

garimpeiros – a Brazilian term used in South America referring to small scale, artisanal miners and prospectors.

gold deposit – means a mineral deposit mineralised with gold.

gold equivalent – a method of presenting combined gold and silver concentrations or weights for comparison purposes. Commonly involves expressing silver as its proportionate value in gold based on the relative values of the two metals.

gold resource – see mineral resource.

gpt – grams per tonne.

grams per cubic meter – alluvial mineralisation measured by grams of gold contained per cubic meter of material, a measure of gold content by volume not by weight.

greenstone – a field term for any compact dark green altered or metamorphosed basic igneous rock that owes its colour to green minerals such as chlorite, actinolite or epidote.

indicated resource – means that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

inferred resource – means that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

laterite  – highly weathered residual superficial soils and decomposed rocks, rich in iron and aluminum oxides, that are characteristically developed in tropical climates.

lode mining – mining of ore, typically in the form of veins or stockworks.

measured resource means that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

Canarc Resource Corp.

Form 20-F

4
scoping study – a conceptual report assessing the scope, economics and engineering of placing a mineral deposit into commercial production.
8
shaft – a vertical or inclined tunnel in an underground mine driven downward from surface.

mesothermal – used to describe hydrothermal mineral deposits, typically in veins, formed at higher temperatures and pressures deeper than 1 km of the earth's surface.

mineral reserve – means the economically mineable part of a measured or indicated resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that may occur when the material is mined.

mineral resource – a body of mineralized material which has not yet been determined to be ore, and the potential for mining of which has not yet been determined; categorized as possible, probable and proven, according to the degree of certainty with which their grade and tonnage are known; sometimes referred to as a "geological resource" or "mineral inventory".

net profits interest or NPI – a royalty based on the net profits generated after recovery of all costs.

net smelter royalty or NSR – a royalty based on the gross proceeds received from the sale of minerals less the cost of smelting, refining, freight and other related costs.

nugget effect – an effect of high variability of gold assays, due to the gold occurring in discreet coarse grains such that their content in any given sample is highly variable.

ore – a naturally occurring rock or material from which economic minerals can be extracted at a profit.

ounce or oz. – a troy ounce or 20 pennyweights or 480 grains or 31.103 grams.

opt – troy ounces per ton.

porknockers – a local term used in Guyana and Suriname to refer to small scale artisanal miners and prospectors.

porphyry – an igneous rock containing coarser crystals in a finer matrix.

probable reserve – the economically mineable part of an indicated, and in some circumstances a measured resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

professional association – for the purposes of the definition of a Qualified Person below, means a self-regulatory organization of engineers, geoscientists or both engineers and geoscientists that (a) has been given authority or recognition by statute; (b) admits members primarily on the basis of their academic qualifications and experience; (c) requires compliance with the professional standards of competence and ethics established by the organization; and (d) has disciplinary powers, including the power to suspend or expel a member.

prospect – an area prospective for economic minerals based on geological, geophysical, geochemical and other criteria

proven reserve – means the economically mineable part of a measured resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

Canarc Resource Corp.

Form 20-F

shear – a tabular zone of faulting within which the rocks are crushed and flattened.
9
stibnite – an ore mineral of antimony and sulphur.

pyrite – an ore mineral of iron and sulphur.

Qualified Person – means an individual who (a) is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; (b) has experience relevant to the subject matter of the mineral project and the technical report; and (c) is a member in good standing of a professional association.

quartz – a rock-forming mineral of silica and oxygen, often found in veins also.

raise – a vertical or inclined tunnel in an underground mine driven upwards from below.

ramp – an inclined tunnel in an underground mine driven downwards from surface.

reverse circulation drill – a large machine that produces a continuous chip sample of the rock or material being drilled.

saprolite – a soft, earthy, clay rich and thoroughly decomposed rock with its original textures intact, formed in place by chemical weathering of igneous, sedimentary or metamorphic rocks.

scoping study – a conceptual report assessing the scope, economics and engineering of placing a mineral deposit into commercial production.

shaft – a vertical or inclined tunnel in an underground mine driven downward from surface.

shear – a tabular zone of faulting within which the rocks are crushed and flattened.

stibnite – an ore mineral of antimony and sulphur.

stock or pluton – a body of intrusive rock that covers less than 40 square miles, has steep dips and is discordant with surrounding rock.

stockwork – multiple small veins of mineralisation that have so penetrated a rock mass that the whole rock mass can be considered mineralised.

strike length – the longest horizontal dimensions of a body or zone of mineralisation.

stripping ratio – the ratio of waste material to ore that is estimated for or experienced in mining an ore body.

sulphide – an ore mineral compound linking sulphur with one or more metals.

ton – short ton (2,000 pounds).

tonne – metric tonne (2,204.6 pounds).

trenching – the surface excavation of a linear trench to expose mineralization for sampling.

vein – a tabular body of rock typically of narrow thickness and often mineralized occupying a fault, shear, fissure or fracture crosscutting another pre-existing rock.

winze – an internal shaft in an underground mine.

Canarc Resource Corp.

Form 20-F

stock or pluton – a body of intrusive rock that covers less than 40 square miles, has steep dips and is discordant with surrounding rock.
10
stockwork – multiple small veins of mineralisation that have so penetrated a rock mass that the whole rock mass can be considered mineralised.
strike length - the longest horizontal dimensions of a body or zone of mineralisation.
stripping ratio - the ratio of waste material to ore that is estimated for or experienced in mining an ore body.
sulphide – an ore mineral compound linking sulphur with one or more metals.
ton - short ton (2,000 pounds).
tonne - metric tonne (2,204.6 pounds).
trenching – the surface excavation of a linear trench to expose mineralization for sampling.
vein – a tabular body of rock typically of narrow thickness and often mineralized occupying a fault, shear, fissure or fracture crosscutting another pre-existing rock.
winze – an internal shaft in an underground mine.

For ease of reference, the following conversion factors are provided:

1 mile

= 1.609 kilometres

1 pound

= 0.4535 kilogram

1 yard

= 0.9144 meter

2,000 pounds/1 short ton

= 0.907 tonne

1 acre

= 0.405 hectare

1 troy ounce

= 31.103 grams

Canarc Resource Corp.

Form 20-F

11

5
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL RESERVE AND RESOURCE ESTIMATES

The mineral reserve and resource information in this annual report on Form 20-F has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ materially from the requirements of United States securities laws. The terms "mineral reserve"“mineral reserve”, "proven“proven mineral reserve"reserve” and "probable“probable mineral reserve"reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("(“NI 43-101"43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM"“CIM”) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ materially from the definitions in the United States Securities and Exchange Commission ("SEC"(“SEC”) Industry Guide 7 ("(“SEC Industry Guide 7"7”) under the United States Securities Act of 1933, as amended. Under SEC Industry Guide 7 standards, a "final"“final” or "bankable"“bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms "mineral resource"“mineral resource”, "measured“measured mineral resource"resource”, "indicated“indicated mineral resource"resource” and "inferred“inferred mineral resource"resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. "Inferred“Inferred mineral resources"resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of "contained ounces"“contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves"“reserves” by SEC standards as in place tonnage and grade without reference to unit measures.

Accordingly, information contained in this report and the documents incorporated by reference herein containing descriptions of our mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

thereunder, including SEC Industry Guide 7.


Canarc Resource Corp.

Form 20-F

12

6
PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3.A Selected Financial Data

The following selected financial data and information (stated in United States dollars) with respect to the last five fiscal years ended December 31, 2018, 2017, 2016, 2015 2014, 2013, 2012 and 20112014 have been derived from Canarc'sCanarc’s audited consolidated financial statements which are prepared in accordance with International Financial Reporting Standards ("IFRS"(“IFRS”) as issued by the International Accounting Standards Board ("IASB"(“IASB”). The consolidated financial statements as of December 31, 20152018 and 20142017 and for the years ended December 31, 2015, 20142018, 2017 and 20132016 are set out and included in Item 18 of this annual report on Form 20-F. The selected financial data and the information of the Company as at December 31, 20122015 and 20112014 and for the years then ended in the following table was derived from the audited consolidated financial statements of the Company which are not presented in this Annual Report on Form 20-F.

The selected historical consolidated financial information presented below is condensed and may not contain all of the information that you should consider. This selected financial data should be read in conjunction with our annual audited consolidated financial statements, the notes thereto and the sections entitled "Item“Item 3. Key Information – D. Risk Factors"Factors” and ''Item“Item 5 — Operating and Financial Review and Prospects.''

Prospects”.

Canarc Resource Corp.

Form 20-F

13
 

 

 

IFRS

Selected Financial Information

 

As at and for the years ended December 31

 

(stated in thousands of U.S. dollars, except per share amounts)

 

2015

 

 

2014

 

 

2013

 

 

2012

 

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Total revenues(1)

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)

Other incomes(2)

 

$-

 

 

$-

 

 

$-

 

 

$77

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c)

Income(loss) before extraordinary items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(i) Total

 

$(932)

 

$(1,831)

 

$(1,377)

 

$(1,206)

 

$(1,209)
(ii) Basic earnings(loss) pershare

 

$(0.01)

 

$(0.01)

 

$(0.01)

 

$(0.01)

 

$(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(d)

Net income(loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(i) Total

 

$(932)

 

$(1,831)

 

$(1,377)

 

$(1,206)

 

$(1,209)
(ii) Basic earnings(loss) pershare

 

$(0.01)

 

$(0.01)

 

$(0.01)

 

$(0.01)

 

$(0.01)
(iii) Diluted earnings(loss) pershare:

 

$(0.01)

 

$(0.01)

 

$(0.01)

 

$(0.01)

 

$(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(e)

Total assets

 

$11,941

 

 

$12,564

 

 

$12,488

 

 

$13,983

 

 

$13,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(f)

Totallong-term debt(3)

 

$117

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(g)

Shareholders'equity(net assets)

 

$10,814

 

 

$11,650

 

 

$11,412

 

 

$13,054

 

 

$12,470

 

(h)

Dividends per share

No cash dividends declared in any of these periods.

(i)

Shares:

Diluted number of common shares

234,349,675

207,901,803

141,447,195

136,945,171

108,461,171

Number of common shares

191,620,557

157,436,305

114,818,195

110,242,171

94,096,171

 

(1)

Canarc has no sources of operating revenues.

(2)

Other income includes gains from the disposition of marketable securities, if any, and investment and other income.

(3)

Canarc has no preferred shares.

7
   IFRS
Selected Financial Information As at and for the years ended December 31,
(stated in thousands of U.S. dollars, except per share amounts)20182017201620152014
  
 
 
 
 
 
 
 
 
 
 
(a)
Total revenues (1)
 $  - $  - $  - $  - $  -
            
(b)
Other (losses) incomes (2)
 $  (140) $  (293) $  3,205 $  - $  -
            
(c)(Loss) income before discontinued operations and extraordinary items: 
 
      
 (i) Total $  (1,125) $  (1,960) $  1,965 $  (927) $  (1,831)
 (ii) Basic earnings (loss) per share $  (0.01) $  (0.01) $  0.01 $  (0.01) $  (0.01)
 (iii) Diluted earnings (loss) per share $  (0.01) $  (0.01) $  0.01 $  (0.01) $  (0.01)
            
(c)Income (loss) from discontinued operations:          
 (i) Total $  - $  - $  4,826 $  (5) $  -
 (ii) Basic earnings (loss) per share $  - $  - $  0.02 $  - $  -
 (iii) Diluted earnings (loss) per share $  - $  - $  0.02 $  - $  -
            
(d)Net (loss) income:          
 (i) Total $  (1,125) $  (1,960) $  6,791 $  (932) $  (1,831)
 (ii) Basic earnings (loss) per share $  (0.01) $  (0.01) $  0.03 $  (0.01) $  (0.01)
 (iii) Diluted earnings (loss) per share $  (0.01) $  (0.01) $  0.03 $  (0.01) $  (0.01)
            
(e)Total assets $  17,511 $  19,763 $  19,708 $  11,941 $  12,564
            
(f)
Total long-term debt (3)
 $  130 $  136 $  - $  117 $  -
       
    
(g)Shareholders' equity (net assets) $  17,084 $  19,380 $  19,607 $  10,814 $  11,650
  
 
   
 
     
(h)Dividends per shareNo cash dividends declared in any of these periods.
  
 
 
 
 
 
 
 
 
 
 
(i)Shares:
 
 
 
 
 
 
 
 
 
 
 Diluted number of common shares
 
246,510,498
 
274,341,533
 
269,990,736
 
234,349,675
 
207,901,803
 Number of common shares
 
218,355,144
 
218,779,144
 
217,189,597
 
191,620,557
 
157,436,305
  
 
 
 
 
 
 
 
 
 
 
(1) 
Canarc Resource Corp.

Form 20-F

14

has no sources of operating revenues.

(2) 
Other (loss) income includes changes in the fair values of marketable securities and (losses) gains from the disposition of marketable securities, if any, and investment and other income.
(3) 
Canarc has no preferred shares.
The Company is involved with mineral exploration and does not have any sources of operating revenues.

On April 22, 2016,23, 2019, the Bank of Canada closing rate for the conversion of one United States dollar into Canadian dollars was CAD$1.2674.

1.3421.

Canarc Resource Corp.
Form 20-F
8
The following table reflects the monthly high and low exchange rates for U.S.$1.00 to the Canadian dollar for the following periods:

Month

Year

High (CAD$)

Low (CAD$)

October

2015

1.3280

1.2832

November

2015

1.3390

1.3039

December

2015

1.4003

1.3303

January

2016

1.4661

1.3873

February

2016

1.4082

1.3481

March

2016

1.3537

1.2859

April 1 to 22

2016

1.3219

1.2593

MonthYearHigh (CAD$)Low (CAD$)
October20181.31421.2803
November20181.33021.3088
December20181.36421.3191
January20191.36001.3144
February20191.32981.3095
March20191.34381.3260
April 1 to 23
2019
1.3421
1.3316
    
The following table lists the high, low, average and closing exchange rates for U.S.$1.00 to the Canadian dollar for the last five years:

Year

High (CAD$)

Low (CAD$)

Average Rate (CAD$)

Close (CAD$)

2011

1.0658

0.9407

0.9891

1.0170

2012

1.0443

0.9642

0.9996

0.9949

2013

1.0704

0.9838

1.0298

1.0617

2014

1.1672

1.0589

1.1045

1.1601

2015

1.4003

1.1679

1.2787

1.3840

2016 (January 1 to April 22, 2016)

1.4661

1.2593

1.3558

1.2674

Canarc Resource Corp.

Form 20-F

15

YearHigh (CAD$)Low (CAD$)Average Rate (CAD$)Close (CAD$)
     
20141.16721.05891.10451.1601
20151.40031.16791.27871.3840
20161.46611.24971.32481.3427
20171.37431.21281.29861.2545
20181.36421.22881.29571.3642
2019 (January 1 to April 23, 2019)1.36001.30951.33061.3421
3.B Capitalization and Indebtedness

Not applicable.

3.C Reasons for the Offer and Use of Proceeds

Not applicable.

3.D Risk Factors

The following is a brief discussion of those distinctive or special characteristics of the Registrant'sCompany’s operations and industry that may have a material impact on, or constitute risk factors in respect of, the Registrant'sCompany’s future financial performance.

Canarc Resource Corp.
Form 20-F
9
Risks Related to the Registrant'sCompany’s Business

The Registrant'sCompany’s exploration activities may not be commercially successful, which could lead it to abandon its plans to develop its mineral property interests and its investments in exploration and there is no assurance given by the RegistrantCompany that its exploration and development programs and mineral property interests will result in the discovery, development or production of a commercially viable ore body.

The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. There is no assurance that the Registrant'sCompany’s mineral exploration and development activities will result in any discoveries of bodies of commercial ore. Unusual or unexpected geological structures or formations, fires, power outages, labour disruptions, floods, explosions, cave ins,cave-ins, land slides and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs. The RegistrantCompany has relied and may continue to rely upon consultants and others for construction and operating expertise. The economics of developing gold and other mineral properties are affected by many factors including capital and operating costs, variations of the grade of ore mined, fluctuating mineral markets, costs of processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. Depending on the price of gold or other minerals produced, the RegistrantCompany may determine that it is impractical to commence or continue commercial production. Substantial expenditures are required to establish reserves through drilling, to develop metallurgical processes to extract metal from ore, and to develop the mining and processing facilities and infrastructure at any site chosen for mining. No assurance can be given that funds required for development can be obtained on a timely basis. The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond the Registrant'sCompany’s control and which cannot be accurately foreseen or predicted, such as market fluctuations, the global marketing conditions for precious and base metals, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting minerals and environmental protection. In order to commence exploitation of certain properties presently held under exploration concessions, it is necessary for the RegistrantCompany to apply for an exploitation concession. There can be no guarantee that such a concession will be granted.

Canarc Resource Corp.

Form 20-F

16

The Registrant'sCompany’s ability to continue as a going concern is in doubt and the Company’s planned operations will require future financing and there is no assurance given by the RegistrantCompany that it will be able to secure the financing necessary to explore, develop and produce its mineral property interests.

The RegistrantCompany does not presently have sufficient financial resources or operating cash flows to undertake by itself all of its planned exploration and development programs. The development of the Registrant'sCompany’s mineral property interests may therefore depend on the Registrant'sCompany’s joint venture partners, if any, and on the Registrant'sCompany’s ability to obtain additional required financing. There is no assurance the RegistrantCompany will be successful in obtaining the required financing, the lack of which could result in the loss or substantial dilution of its interests (as existing or as proposed to be acquired) in its mineral property interests as disclosed herein. In addition, the RegistrantCompany does not have sufficient experience in developing mining properties into production and its ability to do so will be dependent upon securing the services of appropriately experienced personnel or entering into agreements with other major mining companies which can provide such expertise.

As noted in its audited consolidated financial statements for the year ended December 31, 2015,2018 the RegistrantCompany has no operating revenues, has incurred significant operating losses in fiscal years prior to 2018, and has an accumulated deficit of approximately $50.9$46.7 million at December 31, 2015.2018. Furthermore, the Registrant has a working capital deficiency of approximately $574,000 as at December 31, 2015, and lackCompany lacks sufficient funds to achieve the Registrant'sCompany’s planned business objectives. The Registrant'sCompany’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 RegistrantCompany to raise equity financing, and the attainment of profitable operations, external financings and further share issuances to meet the Registrant'sCompany’s liabilities as they become payable.

The report of our independent registered public accounting firm on the December 31, 20152018 consolidated financial statements includes an additional paragraph that states the existence of material uncertainties that cast substantial doubt about the Registrant'sCompany’s ability to continue as a going concern. The consolidated financial statements do not include adjustments that might result from the outcome of this uncertainty.

The figures for the Registrant'sCompany’s resources are estimates based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated and there is no assurance given by the RegistrantCompany that any estimates of mineral deposits herein will not change.

Although all figures with respect to the size and grade of mineralized deposits included herein have been carefully prepared by the Registrant,Company, or, in some instances have been prepared, reviewed or verified by independent mining experts, these amounts are estimates only and no assurance can be given that any identified mineralized deposit will ever qualify as a commercially viable mineable ore body that can be legally and economically exploited. Estimates regarding mineralized deposits can also be affected by many factors such as permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition, the grade of ore ultimately mined may differ from that indicated by drilling results. There can be no assurance that gold recovered in small-scale laboratory tests will be duplicated in large-scale tests under on siteon-site conditions. Material changes in mineralized tonnages, grades, stripping ratios or recovery rates may affect the economic viability of projects. The existence of mineralized deposits should not be interpreted as assurances of the future delineation of ore reserves or the profitability of future operations. The refractory nature of gold mineralization at New Polaris projectand Fondaway projects may adversely affect the economic recovery of gold from mining operations.

Canarc Resource Corp.

Form 20-F

17

10
Changes in the market price of gold, silver and other metals, which in the past have fluctuated widely, will affect the profitability of the Registrant'sCompany’s planned operations and financial condition and there is no assurance given by the RegistrantCompany that mineral prices will not change.

The mining industry is competitive and mineral prices fluctuate so that there is no assurance, even if commercial quantities of a mineral resource are discovered, that a profitable market will exist for the sale of same. Factors beyond the control of the RegistrantCompany may affect the marketability of any substances discovered. The prices of precious and base metals fluctuate on a daily basis, have experienced volatile and significant price movements over short periods of time, and are affected by numerous factors beyond the control of the Registrant,Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations (specifically, the U.S. dollar relative to other currencies), interest rates, central bank transactions, world supply for precious and base metals, international investments, monetary systems, and global or regional consumption patterns (such as the development of gold coin programs), speculative activities and increased production due to improved mining and production methods. The supply of and demand for gold are affected by various factors, including political events, economic conditions and production costs in major gold producing regions, and governmental policies with respect to gold holdings by a nation or its citizens. The exact effect of these factors cannot be accurately predicted, and the combination of these factors may result in the RegistrantCompany not receiving adequate returns on invested capital or the investments retaining their respective values. There is no assurance that the prices of gold and other precious and base metals will be such that the Registrant'sCompany’s properties can be mined at a profit.

Mineral operations are subject to market forces outside of the Company’s control which could negatively impact the Company’s operations.
The marketability of minerals is affected by numerous factors beyond the control of the entity involved in their mining and processing. These factors include market fluctuations, government regulations relating to prices, taxes, royalties, allowable production, imports, exports and supply and demand. One or more of these risk elements could have an impact on costs of an operation and if significant enough, reduce the profitability of the operation and threaten its continuation.
There is no assurance given by the RegistrantCompany that it owns legal title to its mineral property interests.

The acquisition of title to mineral property interests is a very detailed and time consumingtime-consuming process. Title to any of the Registrant'sCompany’s mining concessions may come under dispute. While the RegistrantCompany has diligently investigated title considerations to its mineral property interests, in certain circumstances, the RegistrantCompany has only relied upon representations of property partners and government agencies. There is no guarantee of title to any of the Registrant'sCompany’s mineral property interests. The mineral property interests may be subject to prior unregistered agreements or transfers, and title may be affected by unidentified and undetected defects. In British Columbia and elsewhere, native land claims or claims of aboriginal title may be asserted over areas in which the Registrant'sCompany’s mineral property interests are located. To the best of the knowledge of the Registrant,Company, although the RegistrantCompany understands that comprehensive land claims submissions have been received by Indian and Northern Affairs Canada from the Taku Tlingit (Atlin) Band (which encompasses the New Polaris property) and from the Association of United Tahltans and the Nisga'aNisga’a Tribal Council (which may encompass the Eskay Creek property), no legal actions have been formally served on the RegistrantCompany to date asserting such rights with respect to mining properties in which the RegistrantCompany has an interest.

Three First Nations bands (namely, Cheslatta Carrier Band, Nee-Tahi-Buhn Band and the Skin Tyee Nation Band) have claims in the Windfall Hills property.

The RegistrantCompany competes with larger, better capitalized competitors in the mining industry and there is no assurance given by the RegistrantCompany that it can compete for mineral properties, future financings and technical expertise.

Significant and increasing competition exists for the limited number of gold acquisition opportunities available in North, South and Central America and elsewhere in the world. As a result of this competition, some of which is with large established mining companies which have greater financial and technical resources than the Registrant,Company, the RegistrantCompany may be unable to acquire additional attractive gold mining properties on terms it considers acceptable. Accordingly, there can be no assurance that the Registrant'sCompany’s exploration and acquisition programs will yield any new resources or reserves or result in any commercial mining operation.

Canarc Resource Corp.

Form 20-F

18

11
The RegistrantCompany may also encounter increasing competition from other mining companies in its efforts to hire experienced mining professionals. Competition for exploration resources at all levels is currentlycan be very intense, particularly affecting the availability of manpower, drill rigs, mining equipment and production equipment. Increased competition could adversely affect the Registrant'sCompany’s ability to attract necessary capital funding or acquire suitable producing properties or prospects for mineral exploration in the future.

A shortage of equipment and supplies could adversely affect the Company’s ability to operate its business.
The Registrant'sCompany is dependent on various supplies and equipment to carry out its mineral exploration and, if warranted, development operations. Any shortage of such supplies, equipment and parts could have a material adverse effect on the Company’s ability to carry out its operations and therefore limit or increase the cost of potential future production.
The Company’s directors and officers may have conflicts of interest as a result of their relationships with other companies and there is no assurance given by the RegistrantCompany that its directors and officers will not have conflicts of interest from time to time.

The Registrant'sCompany’s directors and officers may serve as directors or officers of other public resource companies or have significant shareholdings in other public resource companies and, to the extent that such other companies may participate in ventures in which the RegistrantCompany may participate, the directors of the RegistrantCompany may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In particular, Bradford Cooke, a Director of the Registrant,Company, is also a Director of Aztec Metals Corp. ("Aztec"(“AzMet”), Aztec Minerals Corp. (“AzMin”) and Endeavour Silver Corp. ("Endeavour"(“Endeavour”), companies in which the RegistrantCompany previously owned or currently owns shares. The interests of these companies may differ from time to time. In the event that such a conflict of interest arises at a meeting of the Registrant'sCompany’s directors, a director who has such a conflict will abstain from voting for or against any resolution involving any such conflict. From time to time several companies may participate in the acquisition, exploration and development of natural resource properties thereby allowing for their participation in larger programs, permitting involvement in a greater number of programs and reducing financial exposure in respect of any one program. It may also occur that a particular company will assign all or a portion of its interest in a particular program to another company due to the financial position of the company making the assignment. In accordance with the laws of the Province of British Columbia, Canada, the directors of the RegistrantCompany are required to act honestly, in good faith and in the best interests of the Registrant.Company. In determining whether or not the RegistrantCompany will participate in any particular exploration or mining project at any given time, the directors will primarily consider the upside potential for the project to be accretive to shareholders, the degree of risk to which the RegistrantCompany may be exposed and its financial position at that time.

The RegistrantCompany does not insure against all risks which we may be subject to in our planned operations and there is no assurance given by the RegistrantCompany that it is adequately insured against all risks.

The RegistrantCompany may become subject to liability for cave ins,cave-ins, pollution or other hazards against which it cannot insure or against which it has elected not to insure because of high premium costs or other reasons. The payment of such liabilities would reduce the funds available for exploration and mining activities.

The RegistrantCompany is subject to significant governmental and environmental regulations and there is no assurance given by the RegistrantCompany that it has met all environmental or regulatory requirements.

The current or future operations of the Registrant,Company, including exploration and development activities and commencement of production on its mineral property interests, require permits from various foreign, federal, state and local governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. There can be no assurance that approvals and permits required in order for the RegistrantCompany to commence production on its various mineral property interests will be obtained. Additional permits and studies, which may include environmental impact studies conducted before permits can be obtained, are necessary prior to operation of the other properties in which the RegistrantCompany has interests and there can be no assurance that the RegistrantCompany will be able to obtain or maintain all necessary permits that may be required to commence construction, development or operation of mining facilities at these properties on terms which enable operations to be conducted at economically justifiable costs.

Canarc Resource Corp.

Form 20-F

19

12
Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. New laws or regulations or amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation of current laws, regulations or permits, could have a material adverse impact on the RegistrantCompany and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

As a current and prior holder of an interestinterests in a U.S. mineral property,properties, the RegistrantCompany may be subject to the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended ("CERCLA"(“CERCLA”). CERCLA, along with analogous statutes in certain states, imposes strict, joint and several liability on owners and operators of facilities which release hazardous substances into the environment. CERCLA imposes similar liability upon generators and transporters of hazardous substances disposed of at an off siteoff-site facility from which a release has occurred or is threatened. Under CERCLA'sCERCLA’s strict joint and several liability provisions, the RegistrantCompany could potentially be liable for all remedial costs associated with property that it currently or previously owned or operated regardless of whether the Registrant'sCompany’s activities are the actual cause of the release of hazardous substances. Such liability could include the cost of removal or remediation of the release and damages for injury to the natural resources. The Registrant'sCompany’s one prior property was located in a historic mining district and may include abandoned mining facilities (including waste piles, tailings, portals and associated underground and surface workings). Releases from such facilities or from any of the Registrant'sCompany’s current and prior U.S. properties due to past or current activities could form the basis for liability under CERCLA and its analogs. In addition, off siteoff-site disposal of hazardous substances, including hazardous mining wastes, may subject the RegistrantCompany to CERCLA liability. The Registrant'sCompany’s current and prior U.S. property isproperties are not, to the Registrant'sCompany’s knowledge, currently listed or proposed for listing on the National Priority List and the RegistrantCompany is not aware of pending or threatened CERCLA litigation which names the RegistrantCompany as a defendant or concerns any of its current or prior U.S. properties or operations. The RegistrantCompany cannot predict the potential for future CERCLA liability with respect to its current or prior U.S. property,properties, nor can it predict the potential impact or future direction of CERCLA litigation in the area surrounding its current and prior property.

properties.

To the best of the Registrant'sCompany’s knowledge, the RegistrantCompany is operating in compliance with all applicable environmental and regulatory regulations.

Regulations and pending legislation governing issues involving climate change could result in increased operating costs, which could have a material adverse effect on the Company’s business.
A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to various climate change interest groups and the potential impact of climate change. Legislation and increased regulation regarding climate change could impose significant costs on the Company, and its suppliers, including costs related to increased energy requirements, capital equipment, environmental monitoring and reporting and other costs to comply with such regulations. Any adopted future climate change regulations could also negatively impact the Company’s ability to compete with companies situated in areas not subject to such limitations. Given the emotion, political significance and uncertainty around the impact of climate change and how it should be dealt with, the Company cannot predict how legislation and regulation will affect our financial condition, operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change by the Company or other companies in its industry could harm its reputation. The potential physical impacts of climate change on the Company’s operations are highly uncertain, and would be particular to the geographic circumstances in areas in which it operates. These may include changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperatures. These impacts may adversely impact the cost, potential production and financial performance of the Company’s operations.
Land reclamation requirements for the Registrant'sCompany’s properties may be burdensome.

There is a risk that monies allotted for land reclamation may not be sufficient to cover all risks, due to changes in the nature of the waste rock or tailings and/or revisions to government regulations. Therefore additional funds, or reclamation bonds or other forms of financial assurance may be required over the tenure of the project to cover potential risks. These additional costs may have material adverse impact on the financial condition and results of the Registrant.

Company.

Canarc Resource Corp.

Form 20-F

20

13
Mining is inherently dangerous and subject to conditions or events beyond the Registrant'sCompany’s control, which could have a material adverse effect on the Registrant'sCompany’s business.

Mining involves various types of risks and hazards, including:

·

environmental hazards,

·

power outages,

·

metallurgical and other processing problems,

·

unusual or unexpected geological formations,

·

structural cave-ins or slides,

·

flooding, fire, explosions, cave-ins, landslides and rock-bursts,

·

inability to obtain suitable or adequate machinery, equipment or labour,

·

metals losses, and

·

periodic interruptions due to inclement or hazardous weather conditions.

● 
environmental hazards,
● 
power outages,
● 
metallurgical and other processing problems,
● 
unusual or unexpected geological formations,
● 
structural cave-ins or slides,
● 
flooding, fire, explosions, cave-ins, landslides and rock-bursts,
● 
inability to obtain suitable or adequate machinery, equipment or labour,
● 
metals losses, and
● 
periodic interruptions due to inclement or hazardous weather conditions.
These risks could result in damage to, or destruction of, mineral properties, production facilities or other properties, personal injury, environmental damage, delays in mining, increased production costs, monetary losses and possible legal liability. The RegistrantCompany may not be able to obtain insurance to cover these risks at economically feasible premiums. Insurance against certain environmental risks, including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from production, is not generally available to the RegistrantCompany or to other companies within the mining industry. The RegistrantCompany may suffer a material adverse effect on its business if it incurs losses related to any significant events that are not covered by its insurance policies.

Canarc Resource Corp.

Form 20-F

21

The RegistrantCompany will be required to locate mineral reserves for its long-term success.

Because mines

None of the Company’s properties currently have limited lives based onany proven and probable mineral reserves. The Company’s long-term success will depend on the Company establishing mineral reserves on its properties and receiving revenue from the Registrantproduction of gold and other base and precious metals. If and when the Company begins production, the Company will have to continually replace and expand its mineral reserves, if any. The Registrant'sCompany’s ability to maintain or increase its annual production of gold and other base or precious metals once its current properties are producing, if at all, will be dependent almost entirely on its ability to acquire, explore, and develop new properties and bring new mines into production.

The Registrant'sCompany’s properties may be located in foreign countries and political instability or changes in the regulations in these countries may adversely affect the Registrant'sCompany’s ability to carry on its business.

Certain of the Registrant'sCompany’s properties are located in countries outside of Canada, and mineral exploration and mining activities may be affected in varying degrees by political stability and government regulations relating to the mining industry. Any changes in regulations or shifts in political attitudes may vary from country to country and are beyond the control of the RegistrantCompany and may adversely affect its business. Such changes have, in the past, included nationalization of foreign owned businesses and properties. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income and other taxes and duties, expropriation of property, environmental legislation and mine safety. These uncertainties may make it more difficult for the RegistrantCompany and its joint venture partners to obtain any required production financing for its mineral properties.

Fluctuations in foreign currency exchange rates may adversely affect the Registrant'sCompany’s future profitability.

In addition to CAD dollar currency accounts, the RegistrantCompany maintains a portion of its funds in U.S. dollar denominated accounts. Certain of the Registrant'sCompany’s mineral property interests and related contracts may be denominated in U.S. dollars. Accordingly, the RegistrantCompany may take some steps to reduce its risk to foreign currency fluctuations. However, the Registrant'sCompany’s operations in countries other than Canada are normally carried out in the currency of that country and make the RegistrantCompany subject to foreign currency fluctuations and such fluctuations may materially affect the Registrant'sCompany’s financial position and results. In addition future contracts may not be denominated in U.S. dollars and may expose the RegistrantCompany to foreign currency fluctuations and such fluctuations may materially affect the Registrant'sCompany’s financial position and results. In addition, the RegistrantCompany is or may become subject to foreign exchange restrictions which may severely limit or restrict its ability to repatriate capital or profits from its mineral property interests outside of Canada to Canada. Such restrictions have existed in the past in countries in which the RegistrantCompany holds property interests and future impositions of such restrictions could have a materially adverse effect on the Registrant'sCompany’s future profitability or ability to pay dividends.

Canarc Resource Corp.
Form 20-F
14
The RegistrantCompany is reliant on third parties.

The Registrant'sCompany’s rights to acquire interests in certain mineral properties may have been granted by third parties who themselves hold only a property option to acquire such properties. As a result, the RegistrantCompany may have no direct contractual relationship with the underlying property holder.

Canarc Resource Corp.

Form 20-F

22

Jurisdiction and Enforcement in U.S. and Canadian Courts.

The enforcement of civil liabilities under the U.S. federal and state securities laws may be affected adversely by the fact that the RegistrantCompany is incorporated under the laws of a foreign country, that certain of its officers and directors are residents of a foreign country, that the independent registered public accounting firm and some or all of the experts named in this report may be residents of a foreign country and that all or a substantial portion of the assets of the RegistrantCompany and said persons may be located outside the U.S. In particular, uncertainty exists as to whether Canadian courts would entertain claims or enforce judgments based on the civil liability provisions of the U.S. federal and state securities laws.

The Registrant'sCompany’s possible PFIC status may have possible adverse tax consequences for United States Investors.

Potential investors who are United States taxpayers should be aware that Canarc may be classified for United States tax purposes as a passive foreign investment company ("PFIC"(“PFIC”) for the current fiscal year and may also have been a PFIC in prior years, and may also be a PFIC in subsequent years. This status arises due to the fact that Canarc'sCanarc’s excess exploration funds may be invested in interest bearing securities creating "passive income"“passive income” which, while modest and ancillary to the exploration business, has been Canarc'sCanarc’s only substantive source of income in the past. If Canarc is a PFIC for any year during a United States taxpayer'staxpayer’s holding period, then such a United States taxpayer, generally, will be required to treat any so-called "excess distribution"“excess distribution” received on its common shares, or any gain realized upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer makes a qualified electing fund ("QEF"(“QEF”) election or a mark-to-market election with respect to the shares of Canarc. In certain circumstances, the sum of the tax and the interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the taxpayer. A United States taxpayer who makes a QEF election generally must report on a current basis its share of Canarc'sCanarc’s net capital gain and ordinary earnings for any year in which Canarc is a PFIC, whether or not Canarc distributes any amounts to its shareholders. A United States taxpayer who makes the mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the common shares over the taxpayer'staxpayer’s tax basis therein. Item 10.E provides further details.

While we believe we have adequate internal control over financial reporting, internal controls cannot provide absolute assurance that objectives are met.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we have furnished a report by management on our internal controls over financial reporting in this annual report on Form 20-F. Such report contains, among other matters, an assessment of the effectiveness of our internal control over financial reporting, including a statement as to whether or not our internal control over financial reporting is effective.

The Registrant'sCompany’s management does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the RegistrantCompany have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Canarc Resource Corp.

Form 20-F

23

15
Differences in United States and Canadian reporting of reserves and resources.

The disclosure in this Annual Report on Form 20-F, including the documents incorporated herein by reference, uses terms that comply with reporting standards in Canada. The terms "mineral resource"“mineral resource”, "measured“measured mineral resource"resource”, "indicated“indicated mineral resource"resource” and "inferred“inferred mineral resource"resource” are defined in and required to be used by the Company pursuant to NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and normally are not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. "Inferred“Inferred mineral resources"resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of the measured mineral resources, indicated mineral resources, or inferred mineral resources will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility, pre-feasibility studies or other economic studies, except in rare cases.

Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of "contained ounces"“contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves"“reserves” by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.

Further, the terms "Mineral Reserve"“Mineral Reserve”, "Proven“Proven Mineral Reserve"Reserve” and "Probable“Probable Mineral Reserve"Reserve” are Canadian mining terms as defined in accordance with NI 43-101 and the CIM Standards. These definitions differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7 standards, a "final"“final” or "bankable"“bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and all necessary permits or governmental authorizations must be filed with the appropriate governmental authority.

Accordingly, information contained in this Annual Report on Form 20-F and the documents incorporated by reference herein containing descriptions of the Company'sCompany’s mineral deposits may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

As a "foreign“foreign private issuer"issuer”, the Company is exempt from Section 14 proxy rules and Section 16 of the Securities Exchange Act of 1934.

The Company is a "foreign“foreign private issuer"issuer” as defined in Rule 3b-4 under the United States Securities Exchange Act of 1934, as amended (the "U.S.“U.S. Exchange Act"Act”). Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the U.S. Exchange Act pursuant to Rule 3a12-3 of the U.S. Exchange Act. Therefore, the Company is not required to file a Schedule 14A proxy statement in relation to the annual meeting of shareholders. The submission of proxy and annual meeting of shareholder information on Form 6-K may result in shareholders having less complete and timely information in connection with shareholder actions. The exemption from Section 16 rules regarding reports of beneficial ownership and purchases and sales of common shares by insiders and restrictions on insider trading in our securities may result in shareholders having less data and there being fewer restrictions on insiders'insiders’ activities in our securities.

Canarc Resource Corp.

Form 20-F

24

Risks Related to the Registrant'sCompany’s Common Shares

The Company does not intend to pay dividends.
The Company has not paid out any cash dividends to date and has no plans to do so in the immediate future. As a result, an investor’s return on investment will be solely determined by his or her ability to sell common shares in the secondary market.
Canarc Resource Corp.
Form 20-F
16
The volatility of the Registrant'sCompany’s common shares could cause investor loss.

The market price of a publicly traded stock, especially a junior resource issuer like Canarc, is affected by many variables in addition to those directly related to exploration successes or failures. Such factors include the general condition of the market for junior resource stocks, the strength of the economy generally, the availability and attractiveness of alternative investments, and the breadth of the public market for the stock. The effect of these and other factors on the market price of the common shares on the Toronto Stock Exchange (the "TSX"“TSX”) and NASD-OTC suggests that Canarc'sCanarc’s shares will continue to be volatile. Therefore, investors could suffer significant losses if Canarc'sCanarc’s shares are depressed or illiquid when an investor seeks liquidity and needs to sell Canarc'sCanarc’s shares.

Penny stock classification could affect the marketability of the Registrant'sCompany's common stock and shareholders could find it difficult to sell their stock.

The Registrant'sCompany's stock may be subject to "penny stock"“penny stock” rules as defined in the Exchange Act rule 3a51-1. The Securities and Exchange Commission has adopted rules which regulate broker-dealer practices in connection with transactions in penny stocks. The Registrant'sCompany’s common shares may be subject to these penny stock rules. Transaction costs associated with purchases and sales of penny stocks are likely to be higher than those for other securities. Penny stocks generally are equity securities with a price of less than U.S.$5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer'scustomer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer'scustomer’s confirmation.

Further, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser'spurchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the Registrant'sCompany’s common shares in the United States and shareholders may find it more difficult to sell their shares.

Possible dilution to current shareholders based on outstanding options and warrants.

At December 31, 2015,2018, Canarc had 191,620,557218,355,144 common shares and 11,920,00016,400,000 outstanding share purchase options and 30,809,11811,755,354 share purchase warrants outstanding. The resale of outstanding shares from the exercise of dilutive securities could have a depressing effect on the market for Canarc'sCanarc’s shares. At December 31, 2015,2018, securities that could be dilutive represented approximately 22.3%12.9% of Canarc'sCanarc’s issued shares. None of theseThese dilutive securities were not exercisable at prices below the December 31, 20152018 closing market price of CAD$0.05 for Canarc'sCanarc’s shares, which accordingly would not result in dilution to existing shareholders.

Canarc Resource Corp.

Form 20-F

25

ITEM 4. INFORMATION ON THE COMPANY

The RegistrantCompany is a Canadian mineral exploration company and is subject to National Instrument 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 material mineral projects. In addition to other matters, it sets out strict guidelines for the classification of and use of the terms "mineral resource"“mineral resource” and "mineral reserve"“mineral reserve” and it requires all technical disclosure on all material properties 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/policy.asp?id=2884&scat=4&title=4%20-%20Distribution%20Requirements.

Canarc Resource Corp.
Form 20-F
17
4.A History and Development of the Company

Incorporation and Reporting Status

The RegistrantCompany was incorporated under the laws of British Columbia, Canada, on January 22, 1987 under the name, "Canarc“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 RegistrantCompany is a reporting company in British Columbia, Alberta, Saskatchewan, Ontario and Nova Scotia. The RegistrantCompany became a reporting issuer under the United States Securities Exchange Act of 1934, as amended, upon filing its registration statement on Form 20-F dated October 9, 1990 with the Securities and Exchange Commission.

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC at www.sec.gov. The Company’s website is at canarc.net.
Business Address

Office address:

Suite #301, 700 West Pender Street

Vancouver, British Columbia, Canada, V6C 1G8 

Phone: (604) 685-9700 

Registered address: 

#910 – 800 West Pender Street 

Vancouver, British Columbia, Canada, V6C 2V6

Phone: (604) 685-6100

Canarc Resource Corp.

Form 20-F

26

Office address:                                   #810 – 625 Howe Street
Vancouver, British Columbia, Canada, V6C 2T6
Phone: (604) 685-9700
Registered address:                            #910 – 800 West Pender Street
Vancouver, British Columbia, Canada, V6C 2V6
Phone: (604) 685-6100
Introduction

The RegistrantCompany commenced operations in 1987 and, since inception, has been engaged in the business of the acquisition, exploration and, if warranted, development of precious metal properties. The RegistrantCompany currently owns or holds, directly or indirectly, interests in several precious metal properties, as follows:

-

New Polaris property (British Columbia, Canada),

-

El Compas property (Zacatecas, Mexico), and

-

Windfall Hills properties (British Columbia, Canada)

- 
New Polaris property (British Columbia, Canada),
- 
Windfall Hills properties (British Columbia, Canada),
- 
Princeton property (British Columbia, Canada),
- 
Hard Cash and Nigel properties (Nunavut, Canada),
- 
Fondaway property (Nevada, USA), and
- 
Corral Canyon property (Nevada, USA).
of which the New Polaris and El CompasFondaway Canyon properties are the material mineral properties of the Registrant.

Company.

Canarc Resource Corp.
Form 20-F
18
In its consolidated financial statements prepared in accordance with IFRS, the RegistrantCompany has capitalized costs, net of recoveries and write-downs, of approximately $11.4$14.2 million in connection with the acquisition, exploration and development on its currently held properties as at December 31, 20152018 and are summarized as follows for the past three fiscal years:

 

 

2015

 

 

2014

 

 

2013

 

 

 

Acquisition

 

 

Exploration/

 

 

 

 

 

Acquisition

 

 

Exploration/

 

 

 

 

 

Acquisition

 

 

Exploration/

 

 

 

 

(in terms of $000s)

 

Costs

 

 

Development

 

 

Total

 

 

Costs

 

 

Development

 

 

Total

 

 

Costs

 

 

Development

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

British Columbia (Canada):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Polaris

 

$3,851

 

 

$5,556

 

 

$9,407

 

 

$3,876

 

 

$7,090

 

 

$10,966

 

 

$3,892

 

 

$7,938

 

 

$11,830

 

Windfall Hills

 

 

339

 

 

 

356

 

 

 

695

 

 

 

401

 

 

 

437

 

 

 

838

 

 

 

408

 

 

 

92

 

 

 

500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zacatecas (Mexico):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

El Compas (1)

 

 

1,126

 

 

 

183

 

 

 

1,309

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

$5,316

 

 

$6,095

 

 

$11,411

 

 

$4,277

 

 

$7,527

 

 

$11,804

 

 

$4,300

 

 

$8,030

 

 

$12,330

 

(1)

The El Compas property was acquired in October 2015.

 
 
2018  
 
 
  2017  
 
 
  2016  
 
 
 
 Acquisition
 
 
 Exploration/
 
 
 
 
 
 Acquisition
 
 
 Exploration/
 
 
 
 
 
 Acquisition
 
 
 Exploration/
 
 
 
 
(in terms of $000s)
 
 Costs
 
 
 Development
 
 
 Total
 
 
 Costs
 
 
 Development
 
 
 Total
 
 
 Costs
 
 
 Development
 
 
 Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
British Columbia (Canada):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Polaris
 $3,888 
 $5,778 
 $9,666 
 $3,875 
 $6,431 
 $10,306 
 $3,858 
 $5,817 
 $9,675 
Windfall Hills
  344 
  630 
  974 
  374 
  522 
  896 
  349 
  447 
  796 
Princeton (1)
  - 
  69 
  69 
  - 
  - 
  - 
  - 
  - 
  - 
FG Gold (2)
  - 
  - 
  - 
  - 
  - 
  - 
  19 
  6 
  25 
 
    
    
    
    
    
    
    
    
    
Nunavut (Canada):
    
    
    
    
    
    
    
    
    
Hard Cash (3)
  9 
  120 
  129 
  - 
  - 
  - 
  - 
  - 
  - 
Nigel (3)
  2 
  - 
  2 
  - 
  - 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
    
    
    
    
Nevada (USA):
    
    
    
    
    
    
    
    
    
Fondaway Canyon (4)
  2,010 
  1,353 
  3,363 
  2,173 
  1,090 
  3,263 
  - 
  - 
  - 
Corral Canyon (5)
  23 
  1 
  24 
  - 
  - 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
    
    
    
    
Other (6)
  10 
  - 
  10 
  - 
  - 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
    
    
    
    
 
 $6,286 
 $7,951 
 $14,237 
 $6,422 
 $8,043 
 $14,465 
 $4,226 
 $6,270 
 $10,496 

(1) 
Canarc entered into a property option agreement in December 2018 for the Princeton property in which Canarc can earn up to an 80% interest. Item 4.D provides further details.
(2) 
Canarc entered into a property option agreement in August 2016 for the FG Gold property in which Canarc can earn up to a 75% interest. The property was written off in 2017. Item 4.D provides further details.
(3) 
Canarc entered into a property option agreement in November 2018 for the Hard Cash and Nigel properties in which Canarc can earn up to a 100% interest. Item 4.D provides further details.
(4) 
The Fondaway Canyon property was acquired in March 2017. Item 4.D provides further details.
(5) 
In 2018, the Company staked 92 mining claims covering 742 hectares in Nevada, USA. Item 4.D provides further details.
(6) 
In December 2018, the Company entered into a Memorandum of Understanding for an exploration and development project in South America. Item 4.D provides further details.
Further information and details regarding Canarc'sCanarc’s mineral property interests are provided in Item 4.D.

Canarc Resource Corp.

Form 20-F

27

Developments over the Last Three Financial Years

Over the course of the past three years ended December 31, 20152018 and to the date of this Form 20-F, the RegistrantCompany had been engaged in exploration and development of precious metal projects in Canada and Mexico.more recently in the U.S. The major events in the development of the Registrant'sCompany’s business over the last three years are set out below. Information and details regarding the Registrant'sCompany’s properties are provided in Item 4.D.

Strategic Mine Acquisition Partnership with Canford Capital Inc. ("Canford")

In late September 2012, Canarc granted Canford a 120-day period of exclusivity to complete its due diligence and to execute a property option agreement to earn up to a 51% interest in the New Polaris gold project in return for up to a CAD$30 million investment in exploration and development of the property. Canarc was to be the manager of the project during the property option period. In February 2013, Canarc entered into a Strategic Mine Acquisition Partnership ("SMAP") with Canford for the purpose of acquiring, expanding and operating gold mines in North America (the "Acquisition Opportunities"). The main parameters of the SMAP agreement were as follows:

(1)

Canarc was to be the manager of the SMAP, and was to identify and evaluate each Acquisition Opportunity including the timing and capital required;

(2)

Once Canarc and Canford agreed to pursue a particular Acquisition Opportunity, Canarc was to complete the due diligence on behalf of the SMAP and Canford was to then arrange 100% of the debt financing required by the SMAP;

(3)

Upon closing each Acquisition Opportunity, Canford was to own a 51% interest and Canarc was to own a 49% interest therein until the debt financing was repaid in full;

(4)

Upon repayment of the debt financing, Canarc would then own a 51% interest and Canford would own a 49% interest therein;

(5)

Canford was to exercise its warrants for 5.65 million common shares of Canarc with an exercise price of CAD$0.15 for total proceeds of CAD$847,500, on the date of closing of the first Acquisition Opportunity; and

(6)

Canarc was to grant Canford a further 60 day period of exclusivity to execute a property option agreement to earn up to a 51% interest in the New Polaris gold mine project in return for up to a CAD$30 million investment in exploration and development, as previously agreed, on the date of closing of the first Acquisition Opportunity.

This Agreement was to be binding upon both Canarc and Canford until it was replaced by a more formal Strategic Joint Venture Partnership Agreement. Canarc and Canford agreed to use their respective commercially reasonable best efforts to complete a more formal Strategic Mine Acquisition Partnership Agreement on or before March 1, 2013. In March 2013, no formal SMAP agreement was executed, and Canford did not commit nor arrange financing for the proposed property option and joint venture to develop the New Polaris gold project nor for the SMAP to acquire operating gold mines in North America.

Letter of Intent with Pan American Goldfields Ltd.

In February 2014, Canarc signed a Letter of Intent (the "LOI") with Pan American Goldfields Ltd. ("Pan American") with respect to a business combination whereby Canarc may acquire all of the outstanding common shares of Pan American (the "Transaction"). The LOI was however terminated in May 2014 as a result of Canarc's due diligence.

Canarc Resource Corp.

Form 20-F

28

The main asset of Pan American was its interest in the La Cieneguita mine properties located in Chihuahua State, Mexico. Pan American, together with its partner operator, Minera Rio Tinto SA de CV ("MRT"), was in pilot production at its gold-silver mine at La Cieneguita whereby Pan American received 35% of net cash flow from production.

The structure of the proposed Transaction was subject to review and consultation by the parties; however, the LOI anticipated that Canarc would acquire all of the outstanding common shares of Pan American (the "Shares") and that the shareholders of Pan American would receive 0.82 (the "Exchange Ratio") of a common share of Canarc and 0.25 of a warrant of Canarc (each whole warrant being a "Warrant") for each Share held. The proposed Exchange Ratio implied a 25% premium to the volume weighted average price of the Shares over the last 20 trading days and accounted for the USD to CAD currency conversion. Each Warrant would be exercisable to purchase one common share of Canarc at an exercise price equal to CAD$0.15 for a period of 3 years.

Pan American had granted Canarc a 130 day period of exclusivity (the "Exclusivity Period") to complete its due diligence and negotiate a definitive agreement with respect to the Transaction. The LOI would terminate on June 30, 2014 unless terminated earlier by either party as a result of its due diligence.

Pursuant to the terms of the LOI, Canarc had agreed to pay $100,000 (the "Funds") to Pan American, following TSX approval; funds of $40,000 were advanced in April 2014 which bore an interest rate of 1% per month and was written off in September 2014 as collectability was doubtful. Pan American had agreed to repay the Funds to Canarc in the event that (a) Canarc terminated the LOI or determined not to proceed with the Transaction as a result of its due diligence; or (b) Pan American terminated the LOI or determined not to proceed with the Transaction for any reason.

Canarc planned to use commercially reasonable efforts to raise up to $1.8 million in working capital financing pursuant to a private placement, subject to regulatory approval. In the event that the private placement was completed, the parties had agreed to negotiate an interim loan facility (the "Loan"). Under the Loan, Canarc would lend Pan American up to a total of $250,000 prior to closing of the Transaction.

Following the completion of the Transaction, Pan American would have the right to nominate two persons to the board of directors of the combined company. The remainder of the board would be nominees of Canarc.

The Transaction was subject to the parties negotiating and entering into a definitive agreement by June 30, 2014. Entering into a definitive agreement with respect to the Transaction was subject to, among other things: (a) each party being satisfied in its sole discretion as to the results of its due diligence review, and (b) approval of the board of directors of each party. The definitive agreement would include customary provisions and deal protections, including receipt of all necessary consents and approvals, including all required stock exchange and shareholder approvals.

In May 2014, as a result of its due diligence, Canarc terminated the LOI with Pan American.

Share Exchange Agreement with Santa Fe Gold Corporation

On July 15, 2014, Canarc and Santa Fe Gold Corporation ("Santa Fe") entered into a Share Exchange Agreement (the "Share Exchange Agreement") pursuant to which Santa Fe was to issue 66,000,000 shares of its common stock to Canarc, and Canarc was to issue 33,000,000 of its common shares to Santa Fe (the "Share Exchange"). Upon consummation of the Share Exchange, Santa Fe would own approximately 17% of Canarc 's outstanding shares and Canarc would own approximately 34% of Santa Fe's outstanding common shares. The Share Exchange Agreement did not close and terminated on its own terms on October 15, 2014.

Canarc Resource Corp.

Form 20-F

29

The purpose of the Share Exchange was to facilitate a significant turnaround for Santa Fe and a material new opportunity for Canarc driven by the appointment of Canarc's nominees to the Santa Fe's management team and Board of Directors, the re-capitalization of Santa Fe, the re-structuring of Santa Fe's secured debt and re-development of its Summit gold-silver mine in New Mexico, USA.

In connection with the strategic Share Exchange:

·

Santa Fe's senior secured creditors, Waterton Global Value, L.P. ("Waterton"), Sandstorm Gold Ltd. and Sandstorm Gold (Barbados) Ltd. ("Sandstorm") have entered into respective agreements that demonstrated that they were supportive of the share exchange transaction and that they were amenable to restructuring collectively approximately $20 million of Santa Fe indebtedness.

·

Santa Fe had entered into a "best-efforts" Placement Agreement with an investment bank, pursuant to which it would place an estimated $22 million of 8% Gold Bonds due in 2018 that were redeemable in cash or gold ETF.

·

Mr. Bradford Cooke, Chairman and Founder of Canarc had been appointed as Chairman of Santa Fe and Santa Fe's board shall consist of three current Santa Fe directors: Messrs. Jakes Jordan, Michael Heeley and Erich Hofer, and two nominees from Canarc: Messrs. Bradford Cooke and Catalin Chiloflischi.

·

Canarc's CEO, Mr. Catalin Chiloflischi, had been appointed President and Chief Executive Officer and Director of Santa Fe, and Canarc's Chief Operating Officer, Mr. Garry Biles, had been appointed Chief Operating Officer of Santa Fe.

Pursuant to the Share Exchange Agreement, in July 2014, Canarc advanced a promissory note loan of $200,000 to Santa Fe, which initially bore an interest rate of 12% per annum compounded monthly; both the principal and interest were due and payable on January 15, 2015, and any past due principal and interest shall bear an interest rate of 14%. In September 2014, further funds of $20,000 were advanced to Santa Fe. The promissory note receivable from Santa Fe along with accrued interest was determined to be impaired as collectability was doubtful, and was written off at December 31, 2014. In 2015, demand notices for repayment have been submitted by Canarc to Santa Fe, as Canarc maintains its legal rights relative to the promissory note loan.

On October 15, 2014, the conditions precedent set forth in the Share Exchange Agreement were not satisfied and the agreement terminated on that date, and Canarc's officers and directors who were appointed to the Santa Fe management and/or board, as specified in the Share Exchange Agreement, resigned from their respective roles as Santa Fe officers and/or directors.

In August 2015, Santa Fe filed voluntary petitions under Chapter 11 of the Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware, USA.

Canarc Resource Corp.

Form 20-F

30

19
Pre-Development and Earn-In Binding Agreement with PanTerra Gold (British Columbia) Limited

On February 24, 2015, Canarc entered into a Pre-Development and Earn-In Binding Agreement (the "Earn-In Agreement"“Earn-In Agreement”) with PanTerra Gold (British Columbia) Limited ("PanTerra"(“PanTerra”), a wholly-owned subsidiary of PanTerra Gold Limited pursuant to which PanTerra was granted a 30-month option to earn a 50% interest in the New Polaris project by spending a total of CAD$10 million in three stages of predevelopment activities including metallurgical test work, drilling, detailed mine planning, tailings dam design, environmental permitting, and completion of a definitive feasibility study. In Stage One, PanTerra shall spend CAD$500,000 for laboratory production of flotation concentrate followed by test work through the Glencore Technology Albion pilot plant and for comprehensive technical and economic review and commencement of environmental baseline data collection required for permitting. In Stage Two, PanTerra can earn a 20% interest in the New Polaris project by spending CAD$3.5 million in predevelopment expenditures which would include a 10,000 m drilling program and engineering and completion of field data required for environmental permitting. In Stage Three, PanTerra can earn an additional 30% interest in the project for a total interest of 50% by spending CAD$6 million in predevelopment expenditures which would primarily focus on the completion of a definitive feasibility study and would include further 10,000 m of infill drilling, additional metallurgical test work, and preliminary engineering. PanTerra can increase its interest in the New Polaris project to 51% by purchasing 1% from Canarc within six months of completion of the definitive feasibility study at a cost of 1% of the net present value established by the definitive feasibility study using a 10% discount rate.

Canarc received the CAD$500,000 for Stage One in 2015. As at December 31, 2015, funds of US$69,000 remain for Stage One expenditures as specified pursuant to the agreement between Canarc and PanTerra.

In August 2015, PanTerrahad informed Canarc that it will not be able to commit to further expenditures to commence Stage Two exploration and permitting work on Canarc'sCanarc’s New Polaris project until PanTerra receivesreceived the approval from the Dominican Republic government for importing New Polaris gold concentrate into the country for processing andprocessing. In September 2016, PanTerra requested a 12 month extensionprovided 30-day notice of its intent to withdraw from the first option of the Earn-In Agreement. PanTerra declared a force majeure event under the terms of the Earn-In Agreement. Canarc does not agree with PanTerra's position. Canarc and PanTerra continue to be in communication regarding this matter, and an extension or a resolution has not yet been negotiated.

agreement, which agreement was effectively terminated on October 22, 2016.

Agreement for the Purchase of All the Shares of Oro Silver Resources Ltd. with Marlin Gold Mining Ltd.

and

Purchase and Sale Agreement with Endeavour Silver Corp.
In July 2015, Canarc and Marlin Gold Mining Ltd. ("(“Marlin Gold"Gold”) entered into a letter of intent which resulted in the Agreement for the Purchase of All the Shares of Oro Silver dated October 8, 2015 (the "Share“Share Purchase Agreement"Agreement”), whereby Canarc acquired 100% of the shares of Marlin Gold'sGold’s wholly owned subsidiary, Oro Silver Resources Ltd. ("(“Oro Silver"Silver”), which indirectly ownsowned 100% of the El Compas gold-silver project located in Zacatecas, Mexico, in exchange for the issuance to Marlin Gold of 19 million common shares of Canarc. Canarc'sCanarc’s acquisition of Oro Silver closed on October 30, 2015. The terms of the agreement include the following:

-

On each of the first three anniversaries of the closing date of the agreement, 55 troy ounces of gold (or the US dollar equivalent) will be paid by Canarc to Marlin Gold or to any of its subsidiaries;

-

Certain mineral concessions named Altiplano include a 3% NSR royalty and a buy back option. Marlin Gold retains the Altiplano royalty and buy back option and will receive a 1.5% NSR on all non-Altiplano claims that currently have no royalties associated with them;

-

Marlin Gold invested CAD$100,000 in Canarc's private placement of 1.67 million units at CAD$0.06 per unit with each unit comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.08 per share until October 30, 2018; and

-

Marlin Gold nominated one person, namely, Mr. Akiba Leisman, to Canarc's board of directors.

The closing of the Share Purchase Agreement resulted in Marlin Gold becoming an insider of Canarc by virtue of having more than 10% (ie. 10.79%) interest in Canarc as at the closing date of October 30, 2015.

Canarc Resource Corp.

Form 20-F

31

The El Compas property iswas a fully permitted gold silver project located in Zacatecas, Mexico and iswas comprised of 24 concessions totaling 3,900 hectares.

In October 2015, Canarc commissioned Mining Plus Canada Consulting Ltd. ("(“Mining Plus"Plus”) to complete a NI 43-101 resource report and preliminary economic assessment (“PEA”) for the El Compas project to determine the project'sproject’s potential viability which was completed in January 2016. Their technical report entitled "NI“NI 43-101 Technical Report for the El Compas Project"Project” (the "El“El Compas Technical Report"Report”) was authored by J Collins PGeo, N Schunke PEng, S Butler PGeo, L Bascome MAIG and F Wright PEng, who are independent Qualified Persons as defined by NI 43-101, iswas dated January 19, 2016, and was prepared in compliance with NI 43-101.

In January 2016, Canarc signed a definitive agreement with the Zacatecas state government to lease and operate the permitted 500 tonne per day La Plata ore processing plant located in the city of Zacatecas, Mexico, approximately 20 kilometres from El Compas. Highlights of the lease agreement include the following:

·

Lease term is 5 years with the right to extend for another 5 years;

·

Canarc assumed responsibility for the plant as of January 29, 2016;

·

Plant will be exclusively operated by Canarc's Mexican subsidiary, Minera Oro Silver de Mexico SA de CV;

·

Canarc will pay a monthly lease payment of MXP 136,000;

·

Grace period of 6 months to allow time for plant refurbishing;

·

Power and water are available for plant operations;

·

Plant capacity is 500 tonnes per day with the possibility to expand;

·

Permitted tailings facilities has a current capacity for approximately 1 million tonnes;

·

Certain plant refurbishment costs will be reimbursed to Canarc by lease payment offsets; and

·

Canarc will reserve up to 100 tonnes per day for toll mining of ore produced by local small miners.

● 
Lease term was 5 years with the right to extend for another 5 years;
● 
Canarc had assumed responsibility for the plant as of January 29, 2016;
● 
Plant was to be exclusively operated by Canarc’s Mexican subsidiary, Minera Oro Silver de Mexico SA de CV;
● 
Canarc was to pay a monthly lease payment of MXP 136,000;
● 
Grace period of 6 months was allowed for time for plant refurbishing;
● 
Power and water were available for plant operations;
● 
Plant capacity was 500 tonnes per day with the possibility to expand;
● 
Permitted tailings facilities had a capacity for approximately 1 million tonnes;
● 
Certain plant refurbishment costs was to be reimbursed to Canarc by lease payment offsets; and
● 
Canarc was to reserve up to 100 tonnes per day for toll mining of ore produced by local small miners.
In March 2016, Canarc entered into an indicative term sheet for up to $10 million in debt financing by way of a gold prepaid facility to develop the El Compas gold-silver project subject to a 60 day due diligence period which is currentlydid not advance due to the subsequent sale of the project to Endeavour in process.

Canarc Resource Corp.

Form 20-F

32

Item 4.D provides further details.

Others

In April 2013,May 2016.

On May 6, 2016, Canarc entered into twoa Purchase and Sale Agreement with Endeavour pursuant to which Canarc sold to Endeavour 100% of the shares of Canarc’s wholly-owned subsidiary, Oro Silver, which indirectly holds a 100% interest in the El Compas project in Zacatecas, Mexico, in consideration for 2,147,239 free-trading common shares of Endeavour, with an aggregate deemed value of CAD$10.5 million (the “Sale Transaction”). The Endeavour shares had a deemed price of CAD$4.89 per share, equal to the volume-weighted average trading price on the TSX for the 10 trading-day period immediately prior to May 6, 2016. As additional consideration, Endeavour assumed Canarc’s obligation to deliver an aggregate of 165 troy ounces of gold (or the US dollar equivalent) to Marlin Gold in three equal payments of 55 troy ounces which were due in October 2016, 2017 and 2018. The foregoing gold delivery obligation was incurred by Canarc in connection with its acquisition of El Compas from Marlin Gold. The Sale Transaction closed on May 27, 2016 at which time Canarc received 2,147,239 free-trading common shares of Endeavour with a fair value of CAD$3.99 per share at that date.
Canarc Resource Corp.
Form 20-F
20
Option Agreement regarding the FG Gold Property with Eureka Resources, Inc.
On August 24, 2016, Canarc entered into the Option Agreement regarding the FG Gold property purchase agreements wherebywith Eureka Resources, Inc., (“Eureka”) which closed on October 12, 2016. In consideration for the grant of the property option agreement, Canarc acquired 100% undivided interests in two adjacent gold properties located in British Columbia, Canada, collectively known as the Windfall Hills property, which are not considered materialissued 250,000 common shares at a value of CAD$0.10 per share to Canarc's business. Item 4.D provides further details.

On September 28, 2012, Canarc closed a brokeredEureka, and subscribed to Eureka’s private placement for 11.3 million750,000 units at a price of CAD$0.100.14 per unit for gross proceedsa total of CAD$1.13 million, with105,000; each unit was comprised of one common share and one transferrable common share purchase warrant. Canford was the sole subscriber in the private placement and became an insider of the Company by virtue of holding more than 10% of the issued and outstanding share capital of Canarc at that time. Item 5.B provides further details.

In 2012, Canarc arrange demand loans of $358,000 from certain directors and an officer of Canarc. These loans were repayable on demand and bore an interest rate of 12% compounded monthly with interest payable semi-annually. In October and December 2012, Canarc repaid all principal and interest in full settlement of outstanding demand loans.

In December 2012 and January 2013, Canarc closed a non-brokered private placement in three tranches totalling 6.1 million units at a price of CAD$0.11 per unit for gross proceeds of CAD$671,000 with each unit comprised of one common share and one common share purchase warrant. Item 5.B provides further details.

In November 2013, the TSX had advised Canarc that the TSX was reviewing the eligibility for continued listing on the TSX of the securities of Canarc pursuant to Part VII of the Toronto Stock Exchange Company Manual. Canarc was being reviewed under the Remedial Review Process and had been initially granted 120 days to comply with all requirements for continued listing with subsequent extensions to comply. Specifically Canarc needed to comply with expenditures of CAD$350,000 on exploration or development work on its mineral resource properties and with adequate working capital. For the nine months ended September 30, 2014, Canarc closed private placements for gross proceeds totalling CAD$3.26 million and completed its drilling program for the Windfall Hills property. In September 2014, the TSX confirmed that Canarc satisfied the TSX's continued listing requirements.

In fiscal 2013, Canarc received demand loans of $126,000 from two directors, which were repayable on demand and bore an interest rate of 12% compounded monthly with interest payable semi-annually. In January 2014, Canarc repaid all principal and interest in full settlement of outstanding demand loans.

In January 2014, Canarc granted 500,000 stock options to an officer with an exercise price of CAD$0.05 and an expiry date of January 14, 2019, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.

On January 31, 2014, Canarc closed a non-brokered private placement for 18 million units at a price of CAD$0.05 per unit for gross proceeds of CAD$900,000, with each unit comprised of one common share and one-half of a whole common share purchase warrant. Item 5.B provides further details.

Canarc Resource Corp.

Form 20-F

33

In March and April 2014, Canarc closed a private placement in two tranches totalling 19.6 million units at a price of CAD$0.10 per unit for gross proceeds of CAD$1.96 million with each unit comprised of one common share and one-half of a whole common share purchase warrant. Item 5.B provides further details.

On July 9, 2014, Canarc closed a private placement for 5 million units at CAD$0.08 per unit for gross proceeds of CAD$400,000. Each unit was comprised of one flow-through common share and one-half of a whole common share purchase warrant; each whole warrant is exercisable to acquire one non-flow through common share at an exercise price of CAD$0.15 per share until July 9, 2016. Funds of CAD$386,000 were expended for flow-through purposes in 2014 and2015. Item 5.B provides further details.

In July 2014, Canarc granted 4,050,000 stock options to directors, officers and employees with an exercise price of CAD$0.10 and an expiry date of July 17, 2019, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.

In May 2015, certain directors and officers of Canarc cancelled 3,360,000 stock options with exercise prices ranging from CAD$0.10 to CAD$0.145 and expiry dates from September 2015 to June 2017.

At Canarc's annual general meeting in June 2015, disinterested shareholders passed two resolutions relating to shares for debt settlements to certain insiders of Canarc in which debts of up to CAD$63,520 owed to certain current and former directors would be settled by the issuance of up to 1.27 million shares and debts of up to CAD$127,400 owed to senior officers would be settled by the issuance of up to 2.55 million shares.

In August 2015, Canarc extended the expiry period of a total of 18.6 million warrants by a period of 18 months which were issued pursuant to two private placements which closed in 2014. Expiry dates for 951,250 warrants which were issued to insiders in those private placements were not extended. Item 5.B provides further details.

In September and October 2015, Canarc closed a non-brokered private placement in two tranches totalling 13.2 million units at a price of CAD$0.06 per unit for gross proceeds of CAD$790,000 with each unit comprised of one common shareEureka and one-half of one common share purchase warrant. Item 5.B provides further details.

On September 24, 2015, Canarc issued 2 million shares at a value of CAD$0.07 in settlement of partial salaries owed to certain officers and fees owed to directors in which the latter also forgave a certain portion of outstanding directors fees owed, resulting in a gain on debt settlement of $54,000.

In December 2015, Canarc granted 5,950,000 stock options to directors, officers and employeeswarrant with an exercise price of CAD$0.060.20 and an expiry date of December 8, 2020September 9, 2018. Canarc can earn up to a 75% interest in the FG gold property in two stages.

In the first stage, Canarc can earn an initial 51% interest over three years by:
- 
incurring CAD$1.5 million in exploration expenditures with an annual minimum of CAD$500,000;
- 
issuing 750,000 common shares in three annual tranches of 250,000 shares; and which are subject to vesting provisions in which 25%
- 
paying 50% of the options vest immediatelyannual BC mineral exploration tax credits (“BC METC”) claimed by Canarc to Eureka to an aggregate maximum exploration expenditure of CAD$1.5 million.
In the second stage, Canarc can earn an additional 24% interest for a total interest of 75% over the following two years by:
- 
incurring CAD$1.5 million in exploration expenditures;
- 
issuing 1.5 million common shares in two annual tranches of 750,000 shares; and
- 
paying the greater of: (i) CAD$75,000 and (ii) 50% of the annual BC METC claimed by Canarc to Eureka to an aggregate maximum exploration expenditure of CAD$1.5 million.
If Canarc failed to satisfy the consideration necessary to exercise the second stage, then a joint venture will be deemed to have formed with Canarc having a 51% interest and Eureka with a 49% interest.
In 2017, Canarc wrote off the FG Gold project.
The FG Gold project is located in the historic Cariboo Gold Camp within the Quesnel Trough area of central British Columbia. Mineralization occurs as quartz veins and stringer zones containing coarse free gold and finer grained iron sulphides bearing gold in a broad shear zone conformable to bedding within deformed and metamorphosed Paleozoic sedimentary rocks. The property consists of 33 contiguous mineral claims totalling 10,400 hectares.
Purchase Agreement with American Innovative Minerals, LLC
On March 20, 2017, the Company entered into and closed the Membership Interest Purchase Agreement with AIM (the “Membership Agreement”) whereby the Company acquired 100% legal and beneficial interests in mineral properties located in Nevada, Idaho and Utah (USA) for a total cash purchase price of $2 million in cash and honouring pre-existing NSRs.
AIM owns 11 gold properties in Nevada of which two properties (Fondaway Canyon and Dixie Comstock) contain historic gold resource estimates, and owns one gold property in Idaho, and has two royalty interests on other properties. These properties include the following:
● 
Fondaway Canyonis an advanced exploration stage gold property located in Churchill County, Nevada. The land package contains 136 unpatented lode claims. The property has a history of previous surface exploration and mining in the late 1980s and early 1990s. The Fondaway Canyon district consists of shear-zone style gold mineralization developed along 3.7 km of strike with a width of up to 900 m. Multiple exploration targets exist along major structural zones, and mineralization is locally concealed by alluvial cover.
● 
Dixie Comstock, also located in Churchill County, Nevada, consists of 26 unpatented lode claims. The property contains a range-front epithermal gold deposit with a non-43-101 compliant resource of 146,000 ounces of gold at 1.063 grams per tonne Au.
Canarc Resource Corp.
Form 20-F
21
●
Clear Trunk property is located in Pershing and Humboldt Counties, Nevada on 4500 acres of fee mineral and unpatented claims in the Sonoma Range, south of Winnemucca and near the Goldbanks gold deposit. The property contains gold-bearing epithermal quartz veins, mesothermal quartz veins with high-grade gold and copper-gold intrusion-hosted mineralization.
●
Bull Run property is located in Elko County, Nevada on two large patented claim groups of 500 acres near near the Jerritt Canyon gold district..
●
Hot Springs Point property is located in Eureka County, Nevada on 160 acres of fee land on north end of the prolific Cortez Trend. Hecla Mining claims surround the project on three sides.
●
Jarbidge property is located in Elko County, Nevada on 8 patented claims along the east end of major gold veins in the Jarbidge mining district.
●
Lightning Tree property is located in Lemhi County, Idaho on 4 unpatented claims near the Musgrove gold deposit.
●
Silver King property is located in Humboldt County, Nevada on 4 patented claims in the Iron Point mining district. Previous exploration focused on low grade gold values but the property was never been explored for silver.
●
A&T property is located in Humboldt Co., Nevada on 2 patented claims on Winnemucca Mountain. The property contains gold-bearing veins in altered shale.
●
Eimis property is located in Elko County, Nevada on one 20 acre patented claim adjacent to the Coleman Canyon gold deposit controlled by Arnevut Resources. Gold anomalies extend onto Eimis property.
●
Silver Peak property is located in Esmeralda County, Nevada on 3 patented (57 acres) and 3 unpatented mining claims covering 50 acres. The property is adjacent to the Mineral Ridge mine controlled by Scorpio Gold Corporation..
In April 2017, Canarc commissioned Techbase International, Ltd (“Techbase”) of Reno, Nevada to complete a NI 43-101 resource report for the Fondaway Canyon project. Their technical report entitled “Technical Report for the Fondaway Canyon Project” (the “Fondaway Canyon Technical Report”) was prepared by Michael Norred, SME Registered Member 2384950, President of Techbase, and Simon Henderson, MSc, MAusIMM CP 110883 (Geology), Consulting Geologist with Wairaka Rock Services Limited of Wellington, New Zealand, who are independent Qualified Persons as defined by NI 43-101, was dated April 3, 2017, and was prepared in compliance with NI 43-101.
Confirmation and Agreement with Barrick Gold Inc. and Skeena Resources Ltd.
In December 2017, Canarc signed a Confirmation and Agreement with Barrick Gold Inc. (“Barrick”) and Skeena Resources Ltd. (“Skeena”) involving Canarc’s 33.3% carried interest in certain mining claims adjacent to the past-producing Eskay Creek Gold mine located in northwest British Columbia, whereby Canarc will retain its 33.33% carried interest. Canarc and Barrick have respectively 33.33% and 66.67% interests in 6 claims and mining leases totaling 2323 hectares at Eskay Creek. Pursuant to an option agreement between Skeena and Barrick, Skeena has the right to earn Barrick’s 66.67% interest in the property. Canarc had written off the property in 2005.
Property Option Agreement with Silver Range Resources Ltd.
In November 2018, Canarc entered into a property option agreement with Silver Range Resources Ltd. (“Silver Range”) whereby Canarc has an option to earn a 100% undivided interests in the Hard Cash and Nigel properties by paying CAD$150,000 in cash and issuing 1.5 million common shares to Silver Range over a four year period. Upon Canarc’s exercise of the option, Silver Range will retain a 2% NSR of which a 1% NSR can be acquired for CAD$1 million. Silver Range shall also be entitled to receive $1 per Au oz of measured and indicated resource estimate and $1 per Au oz of proven or probable reserve estimate, payable in either cash or common shares of Canarc at Canarc’s election.
Canarc Resource Corp.
Form 20-F
22
Hard Cash is located 310 km NE of Stony Rapids, Saskatchewan, on the grant dateshores of Ennadai Lake. Access is provided by float plane or helicopter, and 25% vest every six months thereafter.

there is an all-weather gravel strip at Ennadai Lake Lodge, 35 km east of the property. Nigel is located 15 km west of Hard Cash. Hard Cash is underlain by the Ennadai Greenstone Belt of the Churchill Province. Gold mineralization at Hard Cash and Nigel occurs in high grade quartz veins and lower grade shear zones hosted by basal mafic volcanics overlain by felsic volcanics metamorphosed to upper greenschist/lower amphibolite facies and intruded by granite.

Corral Canyon property (Nevada, USA)
In November 2018, Canarc staked 92 mining claims covering 742 hectares in Nevada, USA.
Corral Canyon property lies 35 km west of the town of McDermitt in Humboldt County along the western flank of the McDermitt caldera complex, an area of volcanic rocks that hosts significant lithium and uranium mineralization in addition to gold. It contains volcanic-hosted, epithermal, disseminated and vein gold mineralization evidenced by previous drilling.
Property Option Agreement with Tasca Resources Ltd., et al.
In December 2018, Canarc entered into a property option agreement jointly with Tasca Resources Ltd. (“Tasca”) and an individual whereby Canarc has an option to earn a 80% interest in the Princeton property by incurring exploration expenditures of CAD$900,000 over a two year period and granting a 1% NSR to Tasca which can be acquired for CAD$1 million and a honoring 2% NSR to the individual of which 1% NSR can be acquired for CAD$1 million.
The Princeton gold property consists of 14,650 hectares located 35 kilometers (km) south of Princeton, British Columbia, and is readily accessible by road. The property is underlain by volcanic rocks of both the Eocene Princeton Group and the Triassic-Jurassic Nicola Group.
Other Mineral Property
In December 2018, Canarc entered into a Memorandum of Understanding for an exploration and development project in South America whereby Canarc paid $10,000 in 2018 and another $10,000 is payable as a success fee to close on an acceptable agreement for such project.
Item 4.D provides further details regarding the Company’s mineral property interests.
Financings and Related Transactions
In March 2016, Canarc closed a private placement in two tranches totalling 22.7 million units at a price of CAD$0.09 per unit for gross proceeds of CAD$2.04 million, with eachmillion. Each unit was comprised of one common share and one-half of one common share purchase warrant. Item 5.B provides further details.

Each whole warrant was exercisable to acquire one common share at an exercise price of CAD$0.12 per common share for a period of three years. On March 3, 2016, Canarc closed the first tranche of the private placement for 17.7 million units and gross proceeds of CAD$1.59 million. On March 14, 2016, Canarc closed the second tranche of the private placement for 5 million units and gross proceeds of CAD$449,500 with a finder’s fee of 311,111 units issued with the same terms as the units issued in the private placement.

In October 2016, Canarc received 576,503 common shares of AzMin, in which AzMet and AzMin completed a distribution by way of a reduction of AzMet’s paid up capital pursuant to Section 74 of the British Columbia Business Corporations Act whereby AzMet distributed all of its 11 million common shares of AzMin to its shareholders on the basis of one AzMin share for every two AzMet shares held.
On April 21, 2017, Canarc closed a private placement for 3.8 million flow through common shares at the purchase price of CAD$0.13 per share for gross proceeds of CAD$500,000. Canarc paid finder’s fees of CAD$32,500 in cash and 250,000 in warrants. Each warrant was exercisable to acquire one non-flow through common share at an exercise price of CAD$0.15 per share until April 21, 2019.
In July 2017, Canarc extended the expiry date of warrants for 8.45 million common shares with an exercise price of CAD$0.10 from July 31, 2017 to July 31, 2018. These warrants were originally issued pursuant to a private placement which closed on January 31, 2014.
Canarc Resource Corp.

Form 20-F

23
Issuer Bids
In February 2017, Canarc received regulatory approval for a normal course issuer bid to acquire up to 10.9 million its common shares, representing approximately up to 5% of its issued and outstanding common shares at that time. The bid commenced on February 8, 2017 and terminated on February 7, 2018. The actual number of common shares purchased under the bid and the timing of any such purchases was at Canarc’s discretion. Purchases under the bid did not exceed 86,128 common shares per day. Canarc paid the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc were returned to treasury and cancelled. During the term of the normal course issuer bid, Canarc purchased an aggregate of 2.6 million common shares for an aggregate purchase price of CAD$220,400, resulting in an average price of CAD$0.08 per share; these shares have been returned to treasury and accordingly cancelled.
In June 2018, Canarc again proceeded with a normal course issuer bid which received regulatory approval to acquire up to 10.9 million common shares of Canarc representing approximately up to 5% of its issued and outstanding common shares at that time. The bid was effective on June 21, 2018 and will terminate on June 20, 2019, or on such earlier date as the bid was completed. The actual number of common shares purchased under the bid and the timing of any such purchases are at Canarc’s discretion. Purchases under the bid shall not exceed 23,893 common shares per day. Canarc shall pay the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc will be cancelled. From June to December 2018, Canarc purchased 438,000 shares for CAD$20,595 with an average price of CAD$0.05 per share, all of which were cancelled in 2018. No further shares were purchased by Canarc in 2019.
Forbearance Agreement
On February 12, 2018, Canarc entered into a Forbearance Agreement with a debtor in which the loan principal totaling $220,000, which was previously written off in 2014, will be repaid in full in 2018 as follows:
Date
34
 Principal (1)
 
February 14, 2018
$25,000
June 30, 2018
25,000
September 30, 2018
85,000
December 31, 2018
85,000
$220,000

(1)               
Funds of $94,500 were received in 2018 with a balance of $59,500 received in January 2019, net of legal fees.
Directors and Officers
In January 2018, Mr. Jacob Margolis, PhD, was appointed Vice President of Exploration for Canarc.
In June 2018, Mr. Bradford Cooke replaced Mr. Catalin Kilofliski as the Chief Executive Officer of Canarc. In October 2018, Mr. Scott Eldridge replaced Mr. Bradford Cooke as Chief Executive Officer of Canarc. Mr. Cooke continues to be the Chairman and a Director of the Company, and Mr. Eldridge continues to be a Director and the Chief Executive Officer of the Company.
At Canarc’s annual general meeting on June 29, 2018, Mr. Leonard Harris did not stand for re-election as Director and retired from the Board. Messrs. Bradford Cooke, Martin Burian and Deepak Malhotra were re-elected to the Board of Directors for the ensuing year. Messrs. Scott Eldridge and Kai Hoffmann were elected as new Directors to the Board of Canarc.
Canarc Resource Corp.
Form 20-F
24
4.B Business Overview

Nature of operations and principal activities

The Registrant'sCompany’s principal business activities are the acquisition, exploration and development of mineral resource property interests. The RegistrantCompany is in the process of exploring and developing its mineral property interests and has not yet determined whether these mineral property interests contain reserves. The recoverability of amounts capitalized for mineral property interests is dependent upon the existence of economically recoverable reserves in its mineral resource properties, the ability of the RegistrantCompany to arrange appropriate financing to complete further work on its mineral property interests, confirmation of the Registrant'sCompany’s interest in the underlying properties, the receipt of necessary permitting and upon future profitable activities on the Registrant'sCompany’s mineral property interests or proceeds from the disposition thereof. The RegistrantCompany has incurred significant operating losses and currently has no operating revenues. The RegistrantCompany has financed its activities principally by the issuance of equity securities. The Registrant'sCompany’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 RegistrantCompany to raise equity financing, and the attainment of profitable operations to fund its operations.

The RegistrantCompany and its management group have in the past been actively involved in the evaluation, acquisition and exploration of mineral properties in Canada, U.S.A., andNorth, Central and South America. Starting with grass roots exploration prospects, it progressed to more advanced properties. To date, the RegistrantCompany has not received any operating revenues from its mineral property interests. The RegistrantCompany plans to continue exploring and developing its mineral property interests and, if appropriate, the RegistrantCompany intends to seek partners or buyers to purchase or to assist in further advancement (by way of joint venture or otherwise) of its mineral property interests. The RegistrantCompany seeks to identify properties with significant potential and to acquire those properties on the basis of property option agreements 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.Company. 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'sCompany’s mineral property interests. Items 3.D and 4.A provide further details.

Further information and details regarding the Registrant'sCompany’s properties are provided in Item 4.D.

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

As of the date of this annual report, the RegistrantCompany has not generated any operating revenues from its mineral property interests.

Competitive conditions

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 RegistrantCompany 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 RegistrantCompany will be able to acquire any interest in additional projects that would yield reserves or results for commercial mining operations.

Canarc Resource Corp.

Form 20-F

35

Government and environmental regulations

The Registrant'sCompany’s operations are subject to governmental regulations in Canada and Mexico,the USA, where the Registrant hadCompany has interests in material mineral properties.

The exploration and development of a mining prospect are subject to regulation by a number of federal and state government authorities. These include the United States Environmental Protection Agency (“EPA”) and the United States Bureau of Land Management (“BLM”) as well as the various state environmental protection agencies. The regulations address many environmental issues relating to air, soil and water contamination and apply to many mining related activities including exploration, mine construction, mineral extraction, ore milling, water use, waste disposal and use of toxic substances. In addition, the Company is subject to regulations relating to labor standards, occupational health and safety, mine safety, general land use, export of minerals and taxation. Many of the regulations require permits or licenses to be obtained and the filing of Notices of Intent and Plans of Operations, the absence of which or inability to obtain will adversely affect the ability for us to conduct our exploration, development and operation activities. The failure to comply with the regulations and terms of permits and licenses may result in fines or other penalties or in revocation of a permit or license or loss of a prospect.
Canarc Resource Corp.
Form 20-F
25
Mining Regulation
Federal
On lands owned by the United States, mining rights are governed by the General Mining Law of 1872, as amended, which allows the location of mining claims on certain federal lands upon the discovery of a valuable mineral deposit and compliance with location requirements. The exploration of mining properties and development and operation of mines is governed by both federal and state laws. Federal laws that govern mining claim location and maintenance and mining operations on federal lands are generally administered by the BLM. Additional federal laws, governing mine safety and health, also apply. State laws also require various permits and approvals before exploration, development or production operations can begin. Among other things, a reclamation plan must typically be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. Local jurisdictions may also impose permitting requirements (such as conditional use permits or zoning approvals).
Nevada
In Nevada, initial stage surface exploration does not require any permits. Notice-level exploration permits (less than 5 acres of disturbance) are required (through the BLM) to allow for drilling. More extensive disturbance required the application for a receipt of a “Plan of Operations” from the BLM.
In Nevada, the Company is also required to post bonds with the State of Nevada to secure environmental and reclamation obligations on private land, with amount of such bonds reflecting the level of rehabilitation anticipated by the then proposed activities.
If the Company is successful in the future at discovering a commercially viable mineral deposit on our property interests, then if and when the Company commences any mineral production, the Company will also need to comply with laws that regulate or propose to regulate our mining activities, including the management and handling of raw materials, disposal, storage and management of hazardous and solid waste, the safety of our employees and post-mining land reclamation.
Environmental Regulation
The Company’s mineral projects are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and, in general, are becoming more restrictive. The development, operation, closure, and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and related laws and regulations requires the Company to obtain permits issued by regulatory agencies, and to file various reports and keep records of our operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to the Company’s proposed operations may be encountered. The Company is currently operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations. The Company’s policy is to conduct business in a way that safeguards public health and the environment. The Company believes that its operations are conducted in material compliance with applicable laws and regulations.
Changes to current local, state or federal laws and regulations in the jurisdictions where the Company operate could require additional capital expenditures and increased operating and/or reclamation costs. Although the Company is unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of our projects.
U.S. Federal Laws
The Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”), and comparable state statutes, impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement for government-incurred cleanup costs, or natural resource damages, or for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (“RCRA”), and comparable state statutes, govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective actions. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances found on exploration, mining and processing sites long after activities on such sites have been completed.
Canarc Resource Corp.
Form 20-F
26
The Clean Air Act (“CAA”), as amended, restricts the emission of air pollutants from many sources, including mining and processing activities. Any future mining operations by the Company may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy construction equipment, which are subject to review, monitoring and/or control requirements under the CAA and state air quality laws. New facilities may be required to obtain permits before work can begin, and existing facilities may be required to incur capital costs in order to remain in compliance. In addition, permitting rules may impose limitations on our production levels or result in additional capital expenditures in order to comply with the rules.
The National Environmental Policy Act (“NEPA”) requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives to those actions. If a proposed action could significantly affect the environment, the agency must prepare a detailed statement known as an Environmental Impact Statement (“EIS”). The United States Environmental Protection Agency (“EPA”), other federal agencies, and any interested third parties will review and comment on the scoping of the EIS and the adequacy of and findings set forth in the draft and final EIS. This process can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts, which can in turn impact the economic feasibility of a proposed project.
The Clean Water Act (“CWA”), and comparable state statutes, impose restrictions and controls on the discharge of pollutants into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The CWA regulates storm water mining facilities and requires a storm water discharge permit for certain activities. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the United States unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges of pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release.
The Safe Drinking Water Act (“SDWA”) and the Underground Injection Control (“UIC”) program promulgated thereunder, regulate the drilling and operation of subsurface injection wells. The EPA directly administers the UIC program in some states and in others the responsibility for the program has been delegated to the state. The program requires that a permit be obtained before drilling a disposal or injection well. Violation of these regulations and/or contamination of groundwater by mining related activities may result in fines, penalties, and remediation costs, among other sanctions and liabilities under the SWDA and state laws. In addition, third party claims may be filed by landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.
Nevada
Other Nevada regulations govern operating and design standards for the construction and operation of any source of air contamination and landfill operations. Any changes to these laws and regulations could have an adverse impact on our financial performance and results of operations by, for example, requiring changes to operating constraints, technical criteria, fees or surety requirements.
The current and anticipated future operations of the Registrant,Company, 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. Unfavourable amendments to current laws, regulations and permits governing operations and activities of mineral exploration companies, or more stringent implementation thereof, could have a materially adverse impact on the RegistrantCompany and could cause increases in capital expenditures which could result in a cessation of operations by the Registrant.Company. To the best of its knowledge, the RegistrantCompany is operating in compliance with applicable laws.

We cannot predict the impact of new or changed laws, regulations or permitting requirements, or changes in the ways that such laws, regulations or permitting requirements are enforced, interpreted or administered. Health, safety and environmental laws and regulations are complex, are subject to change and have become more stringent over time. It is possible that greater than anticipated health, safety and environmental capital expenditures or reclamation and closure expenditures will be required in the future. We expect continued government and public emphasis on environmental issues will result in increased future investments for environmental controls at our operations.
Canarc Resource Corp.
Form 20-F
27
Trends

The cumulative annual averageprices for gold prices per ounce decreased from $1,411 in 2013 to $1,266 in 2014 and then decreased to $1,160 in 2015 and closingfor each of the previous three years were as follows:
Cumulative annual prices for gold per ounce201620172018
Average$1,251$1,257$1,268
High$1,366$1,346$1,355
On April 23, 2019, the price of gold per ounce closed at $1,243$1,270. As of April 23, 2019, the price of gold for 2019 reached a high of $1,344 per ounce on April 22, 2016. Gold prices did not achieve new highs in 2015 and 2014 relative to 2013. In 2013,February 20, 2019, which suggests a trend of improving gold prices per ounce reached an annual high of $1,694 in early January 2013, but only achieved annual highs of $1,385 in 2014 and $1,297 in 2015. The high for 2016 was $1,278 on March 4, 2016 which is lower than the annual highs in the prior three years.

with reduced volatility.

During the period from January 20132016 to December 2015,2018, the closing market price for Canarc'sCanarc’s shares slightly decreased from CAD$0.130.06 to CAD$0.05, –with a decrease of 62%, and the high of CAD$0.24 was in February 2013.0.15 on January 29, 2016. On April 22, 2016,23, 2019, the closing market share price was CAD$0.13. The lack of financing and the absence of a joint venture partner to advance the New Polaris gold project contributed to the ongoing weaknesses in the market price of Canarc's shares although the liquidity and market price of its shares were heightened during the exclusivity period with Canford from September 2012 to early March 2013. In February 2015, the Company did enter into a Pre-Development and Earn-In Binding Agreement with PanTerra to advance the New Polaris project but PanTerra declared force majeure in August 2015 and requested an extension until PanTerra received approval from the Dominican Republic government for importing New Polaris gold concentrate into the country for processing.0.07. The market price of Canarc'sCanarc’s shares strengthened in the latter half of 2015 from the acquisition of the El Compas project which was a near production mining asset, and such strength continued into 2016 as the project progresses.progressed but weakened from the subsequent sale of the project to Endeavour even though Canarc realized significant financial gains from such transaction. Canarc’s share price again strengthened from the property option agreement with Eureka for the FG Gold property in August 2016 and the acquisition of AIM in March 2017 in which the latter resulted in a NI 43-101 resource report for the Fondaway Canyon project. In February 2017, the normal course issuer bid provided a certain baseline support for the market price for most of 2017. Canarc’s cash resources and financial condition improved significantly since the disposition of the El Compas project along with stronger commodity prices have provided further support to the market price of Canarc’s shares. Its market price nominally decreased and remained stagnant for the last half of 2018 as commodity prices fell during the same period, even though Canarc was active in entering into property option agreements and staking of claims in the fourth quarter and in its exploration programs in existing and recent interests in mineral properties, as Canarc also focused on acquisition of projects with potential for major discoveries. Similarly the market price increased in the first quarter of fiscal 2019 as commodity prices improved along with dissemination of the results of its exploration programs and revised preliminary economic assessment of the New Polaris project. Canarc was not active in its normal course issuer bid which is effective from June 2018 to June 2019 as it focused on preserving its cash in late 2018 and early 2019. Items 4.A and 4.D provide further details.

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

4.C Organizational Structure

The Registrant

Canarc carries on its business in large part through its subsidiaries. The RegistrantCanarc has a number of direct or indirect wholly or majority owned subsidiaries of which the active subsidiaries are as follows:

Minera Oro Silver de Mexico SA de CV ("Minera Oro Silver") is a company duly incorporated under the laws of Mexico on November 16, 2006. The Registrant owns 100% of its issued and outstanding shares.

Oro Silver Prestadora SA de CV is a company duly incorporated under the laws of Mexico on December 3, 2015. The Registrant owns 100% of its issued and outstanding shares.

New Polaris Gold Mines Ltd. ("(“New Polaris"Polaris”) (formerly Golden Angus Mines Ltd. - name change effective April 21, 1997) is a corporation formed through the amalgamation of 2820684 Canada Inc. ("2820684"(“2820684”), a former wholly ownedwholly-owned subsidiary of the RegistrantCanarc incorporated under the Canada Business Corporation Act on May 13, 1992, and Suntac Minerals Inc. The RegistrantCanarc owns 100% of the issued and outstanding shares.

AIM U.S. Holdings Corp. is a corporation duly incorporated in the State of Nevada, USA, on March 14, 2017. Canarc Resource Corp.

Form 20-F

36

owns 100% of its issued and outstanding shares.

American Innovative Minerals, LLC (“AIM”) is a limited liability company existing pursuant to the laws of Nevada, USA, on January 20, 2011. Canarc owns 100% membership interest in AIM.
4.D Property, Plant and Equipment


Canarc Resource Corp.
Form 20-F
28
Description of Properties

Property Summary Chart (as of December 31, 2015)2018):

Property Name

Location

Maximum %
Interest Held
(or to be earned) (1)

Capitalized
Acquisition
Expenditures (3)

Capitalized
Exploration
Expenditures (3)

Total
Capitalized
Expenditures (3)

New Polaris (2)

BC, Canada

100.00%

$3,851,000

$5,556,000

$9,407,000

El Compas

Zacatecas, Mexico

100.00%

$1,126,000

$183,000

$1,309,000

Windfall Hills

BC, Canada

100.00%

$339,000

$356,000

$695,000

1

Subject to any royalties or other interests as disclosed below.

2

Previously known as "Polaris-Taku".

3

Net of recoveries and write-downs.

Property NameLocation
Maximum % Interest Held (or to be earned) (1)
Capitalized Acquisition Expenditures (3)
Capitalized Exploration Expenditures (3)
Total Capitalized Expenditures (3)
New Polaris (2)
BC, Canada100.00%$3,888,000$5,778,000$9,666,000
Windfall HillsBC, Canada100.00%$344,000$630,000$974,000
PrincetonBC, Canada80.00%$0$69,000$69,000
Hard CashNunavut, Canada100.00%$9,000$120,000$129,000
NigelNunavut, Canada100.00%$2,000$0$2,000
Fondaway CanyonNevada, USA100.00%$2,010,000$1,353,000$3,363,000
Corral CanyonNevada, USA100.00%$23,000$1,000$24,000
Other (4)
South American/a$10,000$0$10,000

¹     
Subject to any royalties or other interests as disclosed below.
²     
Previously known as “Polaris-Taku”.
3
Net of recoveries and write-downs.
4
In December 2018, Canarc entered into a Memorandum of Understanding for an exploration and development project in South America whereby Canarc paid $10,000 in 2018 and another $10,000 is payable as a success fee to close on an acceptable agreement for such project.
NOTE: All monetary figures are in terms of U.S.$ unless otherwise noted. See below for further details on each property.

The following is a more detailed description of the mineral properties listed above in which the RegistrantCompany has an interest.

Canarc Resource Corp.

Form 20-F

37

Material Mineral Projects

Projects

We do not currently have any proven and probable reserves under Industry Guide 7 standards, See "Cautionary Note to United States Investors Concerning Reserve and Resource Estimates" above.standards. The Company'sCompany’s properties are currently in the exploratory stage. In order to determine if a commercially viable mineral deposit exists in any of such properties, further exploration work will need to be done and a final evaluation based upon the results obtained to conclude economic and legal feasibility. The following is a discussion of the Company'sCompany’s material mineral properties.

Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources. This section and certain related exhibits may use the terms "measured"“measured resources” and "indicated resources"“indicated resources”. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into SEC Industry Guide 7 reserves. See "Cautionary“Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates"Estimates” at the beginning of this annual report.

Canarc Resource Corp.
Form 20-F
29
Cautionary Note to U.S. Investors concerning estimates of Inferred Resources.This section and certain related exhibits may use the term "inferred resources"“inferred resources”. We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. "Inferred resources"“Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally minable. See "Cautionary“Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates"Estimates” at the beginning of this annual report.

The New Polaris Gold and Fondaway Canyon properties are considered material mineral projects of Canarc.
New Polaris Gold Project British(British Columbia, Canada

James Moors, P.Geo, who was ViceCanada)

Garry Biles, P.Eng, President Exploration of the Registrant at that time, was& Chief Operating Officer for Canarc Resource Corp, is the Qualified Person for the purposes of the foregoing technical disclosure on the New Polaris Gold Project.
The informationeconomic analysis contained in the following summary onPEA is considered preliminary in nature and there is no certainty that the preliminary economic assessment will be realized. No inferred mineral resources form part of the PEA economic evaluation and no mineral reserves for the PEA have been established. Mineral resources are not mineral reserves and have not demonstrated economic viability. There is no certainty that economic forecasts outlined in the PEA will be realized. The PEA and the mineral resource may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors.
In April 2019, Canarc completed a preliminary economic assessment of the New Polaris property. The report which was dated February 28, 2019 is titled “The New Polaris Gold Project, has been derived in part from and is partially based on the assumptions, qualifications and procedures set out in the Technical Report titled "Resource Potential, New Polaris Project"British Columbia, Canada, 2019 Preliminary Economic Assessment” (the "New“New Polaris Technical Report"Report”) dated March 14, 2007 and prepared by R.J. Morris, MSc, PGeo, of Moose Mountain Technical Services (“MMTS”). Marc Schulte, P.Eng., Robert J. Morris, M.Sc., P.Geo., Sue Bird, P.Eng., Michael A. Petrina, P.Eng., and G.H. Giroux, MASc, PEng, of Giroux Consultants Limited, who are independentTracey Meintjes, P.Eng., were the Qualified Persons as defined by National Instrument 43-101 ("NI 43-101") and was prepared in compliance with NI 43-101, tofor the best of the Registrant's knowledge.

New Polaris Technical Report.

The following is extracted from, or areis an accurate paraphrasing of, the executive summary, or other sections as indicated from the New Polaris Technical Report, the full copy of which is available online at www.sedar.com as filed on March 16, 2007.April 17, 2019. The New Polaris Technical Report is referenced herein for informational purposes only and is not incorporated herein by reference. Defined terms and abbreviations used herein and not otherwise defined shall have the meanings ascribed to such terms in the New Polaris Technical Report.

Canarc Resource Corp.

Form 20-F

38

Extract of Selected Sections of the Summary from the New Polaris Technical Report

Summary

New Polaris (formerly Polaris-Taku)Polaris-Taku Mine) is an early Tertiary mesothermal gold mineralized body located in northwestern British Columbia about 100 kilometreskm south of Atlin, BC and 60 kilometreskm northeast of Juneau, Alaska.Alaska
Figure 1-1. The nearest roads in the area terminate twenty kilometers duekm south of Atlin, and 10 kilometres southeast of Juneau.approximately 100 km from the Project. Access at the present time is by aircraft. A short airstrip for light aircraft exists on the property.

Shallow draft barges have been used in the past to access the site via the Taku River to transport bulk supplies and heavy equipment to site, as well as ship flotation concentrate from site.

Canarc Resource Corp.
Form 20-F
30
The deposit was mined byNew Polaris project area lies on the eastern flank of the steep, rugged, Coast Range Mountains, with elevations ranging from the sea level to 2,600 metres. The climate is one of heavy rainfalls during the late summer and fall months, and comparatively heavy snowfall, interspersed with rain during the winter.
Operations will include year-round underground methods from 1938mining activities and onsite processing to 1942,produce doré, and from 1946seasonal barge shipping of supplies to early 1951, producingsite. Onsite support for the operations and management of a total of 740,000 tonnes of ore atcamp with fly-in/fly-out service to an average grade of 10.3g/t gold.

onsite landing strip have been planned.

Figure 1-1    
Location Map
The property consists of 61 contiguous Crown-granted mineral claims and one modified grid claim covering 2,100 acres. All claims are 100% owned and held by New Polaris Gold Mines Ltd., a wholly owned subsidiary of Canarc Resource Corp., subject to a 15% net profit interest held by Rembrandt Gold Mines Ltd. Canarc can reduce this net profit interest to a 10% net profit.

profit by issuing 150,000 shares to Rembrandt.

Canarc Resource Corp.
Form 20-F
31
The deposit is composed of three sets of veins (quartz-carbonate stringers in altered rock), the "AB"“A-B” veins are northwest striking and southwest dipping, the "Y"“Y” veins are north striking and dipping steeply east and finally the "C"“C” veins are east-west striking and dipping to the south to southeast at 65º to vertical. The "C"“C” veins appear to hook around to the north and south into the other two sets of veins so that their junctions form an arc. The gold is refractory and occurs dominantly in finely disseminated arsenopyrite grains that mineralize the altered wallrock and stockwork veins. The next most abundant mineral is pyrite, followed by minor stibnite and a trace of sphalerite. The zones of mineralization range from 15 to 250 metres in length and 0.3 to 14 metres in width.

The deposit was mined by underground methods from 1938 to 1942, and from 1946 to early 1951, producing a total of 740,000 tonnes of ore at an average grade of 10.3 g/t gold.
Canarc explored the "C"“C” vein system between 1988 and 1997, and carried out infill drilling in 2003 through 2006, to better define the continuity and grade of the vein systems.

An updated Mineral Resource estimate has been prepared in 2019. The updated estimate uses drillhole data from 1989-2006 and excludes drilling prior to this, or for which the drill year is not known. The resource estimate was prepared by Giroux Consultants Ltd. using ordinary kriging of 192 recentis based on 174 drillholes and 1,432 gold1,464 assay intervals constrainedwhich intersect the veins within four main vein segmentsthe 1989-2006 data set. Ordinary kriging has been used to interpolate the gold grade of six veins as modeled in 3Dmodelled by Canarc geologists. The total New Polaris database consists of 1,056 diamond drillholes with a total of 31,514 sample intervals.

The geologic continuity of the C“C” vein system has been well established through historic mining and diamond drilling. Grade continuity washas been quantified using a geostatistical method calledsemi-variogram, which is used to determine the semivariogram, which measures distances (ranges) and directions of maximum continuity.continuity in the three principle directions. The four principlemain veins in the semivariogramsemi-variogram model produced ranges between 5060 and 90 metres, both120 m along strike and down plunge.

Capping of the assays in each vein has been evaluated using cumulative probability plots (CPPs).
For this study, the classification for each resource block was a functionto Measured, Indicated or Inferred also required that the true thickness of the semivariogram range. In general, blocks estimated using ¼ ofvein is at least 2 m. Blocks are considered Indicated if the semivariogram range were classed as measured, blocks estimated using ½ ofaverage distance to the semivariogram range were classed as indicated, and all other blocks estimated were classed as inferred.

The following tables list the undiluted resource estimate, including the "C" vein west (CWM) from the –90m elevation down, and the "C" vein east (CLOE and CHIE) from the –135m elevation down (the elevations, –90mnearest two drillholes used in the west,interpolation is within 30 m, or if there is at least one drillhole within 10 m and –135mat least two drillholes used in the east, representinterpolation. Veins 7 and 8 (Y19 and Y20) are considered Inferred due to lack of QA/QC documentation for the lower elevationsdrilling within these veins.

A cutoff grade of previous mine development and production. The resource potential above these elevations has been discounted in this study, but are listed4.0 g/t gold, highlighted in the History item, Section 8).

table below, is selected as the economic cutoff for the Project. The confining shape which targets material above this grade is used to define the “reasonable prospects of eventual economic extraction” for the Mineral Resource Estimate. The 4.0 g/t target includes the following considerations: gold price of US$1,300/oz, exchange rate of 0.77 US$:C$; Payable gold % of 99.9%, Offsite refining costs of US$7/oz, mining costs of C$65.20/t, process costs of C$62.70/t, G&A (General and Administration) costs of C$37.00, sustaining capital costs of C$19.83/t, and a 90.5% process recovery.

Table 1-1  
New Polaris Indicated Resources
Confining Shape Target Grade (g/t Au)In Situ Tonnage (tonnes)
In Situ Au Grade
(g/t)
In Situ Au Content
(Oz.)
2.01,880,00010.0605,000
3.01,798,00010.4599,000
4.01,687,00010.8586,000
5.01,556,00011.3567,000
6.01,403,00012.0540,000
7.01,260,00012.6509,000
8.01,105,00013.3472,000
9.0947,00014.1428,000
Canarc Resource Corp.

Form 20-F

39

Measured, undiluted resource

Cutoff grade,

g/t Au

Tonnes > Cutoff

(tonnes)

Grade > Cutoff

Au (g/t)

Contained

Metal (oz)

2.00

390,000

9.48

119,000

4.00

330,000

10.62

113,000

6.00

271,000

11.89

104,000

8.00

203,000

13.54

88,000

Indicated, undiluted resource

Cutoff grade,

g/t Au

Tonnes > Cutoff

(tonnes)

Grade > Cutoff

Au (g/t)

Contained

Metal (oz)

2.00

1,280,000

10.97

451,000

4.00

1,180,000

11.65

442,000

6.00

1,017,000

12.71

416,000

8.00

806,000

14.22

368,000

Measured + Indicated, undiluted resource

Cutoff grade,

g/t Au

Tonnes > Cutoff

(tonnes)

Grade > Cutoff

Au (g/t)

Contained

Metal (oz)

2.00

1,670,000

10.62

570,000

4.00

1,510,000

11.42

555,000

6.00

1,288,000

12.54

519,000

8.00

1,009,000

14.08

457,000

32
Table 1-2   
New Polaris Inferred undiluted resource

Cutoff grade,

g/t Au

Tonnes > Cutoff

(tonnes)

Grade > Cutoff

Au (g/t)

Contained

Metal (oz)

2.00

2,060,000

10.52

697,000

4.00

1,925,000

11.03

683,000

6.00

1,628,000

12.15

636,000

8.00

1,340,000

13.27

571,000

CanarcResources

Confining Shape Target Grade (g/t Au)In Situ Tonnage (tonnes)
In Situ Au Grade
(g/t)
In Situ Au Content
(Oz.)
2.01,639,0009.5502,000
3.01,582,0009.8497,000
4.01,483,00010.2485,000
5.01,351,00010.7464,000
6.01,223,00011.2441,000
7.0942,00012.5380,000
8.0753,00013.8334,000
9.0653,00014.6306,000
Notes for Mineral Resource Corp.

Form 20-F

40

Estimate:

● 
The deposit representsMineral Resource Estimate was prepared by Sue Bird, P.Eng. in accordance with CIM Definition Standards (CIM, 2014) and NI 43-101, with an important gold resource and follow-up work should include test mining and infill drilling.

effective date of February 28, 2019.

● 
Mineral Resources that are not mineral reserves do not have demonstrated economic viability.
Property Description and Location

"

The New Polaris (formerly the Polaris-Taku mine) property consistingconsists of a group of 61 contiguous crown grants, and one modified grid claim totaling, 1,196 ha (2,956 acres) located 96 km (60 miles) south of Atlin, BC and 64 km (40 miles) northeast of Juneau, Alaska. Located at approximately 133º37'W37’W Longitude and 58º42'N42’N Latitude, the deposit lies in close proximity to the "Tulsequah Chief" property of Redcorp on the eastern flank of the Tulsequah River Valley (Figure 6-1)1-1).

The claims are 100% owned and held by New Polaris Gold Mines Ltd., a wholly owned subsidiary of Canarc Resource Corp. (Canarc), and subject to a 15% net profit interest held by Rembrandt Gold Mines Ltd. (Rembrandt), which Canarc has the right to reduce to 10%. The by issuing 150,000 shares to Rembrandt. Table 4-1 summarizes the claims and the locations are shown on Figure 6-2 while Table 6-1 summarizes the claims shown on Figure 6-2. With the exception of4-1. Apart from the W.W.1 claim, the claims are crown granted and are kept in good standing through annual tax payments. The W.W.1 is a modified grid claim. The claim has sufficient work filed on it to keep it in good standing until February 4, 2015.2020. The crown granted claims were legally surveyed in 1937. The mineralized areas are shown on Figure 6-34-2 and 9-2,Figure 7-2, which shows the geology of the property on the mineral showings.
The Polaris No. 1, Silver King No. 1, Silver King No. 5, Black Diamond, Lloyd and Ant Fraction crown grants include the surface rights. Surface rights for the remainder of the property lie with the Crown.

The location ofCrown, including the known mineralization relativeareas covered by the Co-Disposal Facility (CDF) and access road to the outside boundaryCDF, and will need to be obtained from the Province of the property is shown on Figure 6-3.

British Columbia.

Mining of the AB Vein system and to a lesser extent the Y and C veins was carried out during the 1930s to early 1950s. Much of the former infrastructure has been reclaimed. A $200,000$249,000 reclamation bond is in place and it is the writer'swriter’s opinion that this adequately covers the cost of reclaiming the original mill site and infrastructure. At this timeCurrently there is no legal or regulatory requirement to remove or treat the tailings on the property. It is recommended that sampling of the tailings and water be carried out to determine if there acid water or contaminants draining from the tailings and mine workings. As well, sampling of water down stream from the site to determine if drainage form the tailings and waste rock is affecting the water quality of Whitewater Creek or the Tulsequah River. If there is contamination of the waters down stream from the waste dumps and tailings a mitigation plan will be required. The cost of the mitigation will depend upon the level of contamination of the water down stream.

Prior to commencing further exploration on the property, a Notice of Work is required to be submitted to the Mining and Minerals Department of the BC Ministry of Energy and Mines. Work can only commence once approval has been received."

Canarc Resource Corp.

Form 20-F

41

Location Map

33
Table 1 - LIST OF CLAIMS

Claim Name

 

Lot No.

 

 

Folio #

 

 

Claim Name

 

Lot No.

 

 

Folio #

 

Polaris No.1

 

 

6109

 

 

 

4472

 

 

Snow

 

 

3497

 

 

 

4545

 

Polaris No.2

 

 

6140

 

 

 

5223

 

 

Snow #2

 

 

3495

 

 

 

5088

 

Polaris No.3

 

 

6141

 

 

 

5223

 

 

Snow #3

 

 

3494

 

 

 

5495

 

Polaris No.4

 

 

3498

 

 

 

4545

 

 

Snow #4

 

 

3499

 

 

 

5495

 

Polaris No.5

 

 

6143

 

 

 

5223

 

 

Snow #5

 

 

6105

 

 

 

4472

 

Polaris No.6

 

 

6144

 

 

 

5223

 

 

Snow #8

 

 

6107

 

 

 

4472

 

Polaris No.7

 

 

6145

 

 

 

5223

 

 

Snow #7

 

 

3500

 

 

 

4472

 

Polaris No.8

 

 

6146

 

 

 

5223

 

 

Snow #6

 

 

6106

 

 

 

4472

 

Polaris No.9

 

 

6147

 

 

 

5223

 

 

Snow #9

 

 

6108

 

 

 

4472

 

Polaris No.10

 

 

6148

 

 

 

5290

 

 

Black Diamond

 

 

3491

 

 

 

4472

 

Polaris No.11

 

 

6149

 

 

 

5290

 

 

Black Diamond No.3

 

 

6030

 

 

 

4944

 

Polaris No.12 Fr

 

 

6150

 

 

 

5290

 

 

Blue Bird No.1

 

 

5708

 

 

 

4545

 

Polaris No.13 Fr

 

 

6151

 

 

 

5290

 

 

Blue Bird No.2

 

 

5707

 

 

 

4545

 

Polaris No.14

 

 

6152

 

 

 

5290

 

 

Lloyd

 

 

6035

 

 

 

5010

 

Polaris No.15

 

 

6153

 

 

 

5290

 

 

Lloyd No.2

 

 

6036

 

 

 

5010

 

Silver King No.1

 

 

5489

 

 

 

4804

 

 

Rand No.1

 

 

6039

 

 

 

5010

 

Silver King No.2

 

 

5490

 

 

 

4804

 

 

Rand No.2

 

 

6040

 

 

 

5010

 

Silver King No.3

 

 

5493

 

 

 

4804

 

 

Minto No.2

 

 

6033

 

 

 

4944

 

Silver King No.4

 

 

5494

 

 

 

4804

 

 

Minto No.3

 

 

6034

 

 

 

4944

 

Silver King No.5

 

 

5491

 

 

 

4804

 

 

Jumbo No.5

 

 

6031

 

 

 

4944

 

Silver King No.6

 

 

5492

 

 

 

4804

 

 

Ready Bullion

 

 

6032

 

 

 

4944

 

Silver King No.7

 

 

5495

 

 

 

4804

 

 

Roy

 

 

6042

 

 

 

5088

 

Silver King No.8

 

 

5717

 

 

 

4545

 

 

Frances

 

 

6041

 

 

 

5010

 

Sliver Queen No 1

 

 

6026

 

 

 

4545

 

 

Eve Fraction

 

 

6170

 

 

 

5495

 

Sliver Queen No 2

 

 

6027

 

 

 

4545

 

 

Eve No.1 Fraction

 

 

6171

 

 

 

5495

 

Sliver Queen No 3

 

 

6028

 

 

 

4944

 

 

P.T. Fraction

 

 

3493

 

 

 

5495

 

Sliver Queen No 4

 

 

6029

 

 

 

4944

 

 

Ant Fraction

 

 

3492

 

 

 

5088

 

Silver Strand

 

 

6037

 

 

 

5010

 

 

Atlin Fraction

 

 

3496

 

 

 

5088

 

Silver Strand No.2

 

 

6038

 

 

 

5010

 

 

Powder Fraction

 

 

6043

 

 

 

5088

 

F.M Fraction

 

 

6044

 

 

 

5088

 

 

Jay Fraction

 

 

6045

 

 

 

5088

 

Par Fraction

 

 

6154

 

 

 

5290

 

 

 

 

 

 

 

 

 

 

 

Canarc Resource Corp.

Form 20-F

42

4-1  

List of Claims
Claim NameLot No.Folio No. Claim NameLot No.Folio No.
       
Polaris No. 161094472 Snow34974545
Polaris No. 261405223 Snow No. 234955088
Polaris No. 361415223 Snow No. 334945495
Polaris No. 434984545 Snow No. 434995495
Polaris No. 561435223 Snow No. 561054472
Polaris No. 661445223 Snow No. 861074472
Polaris No. 761455223 Snow No. 735004472
Polaris No. 861465223 Snow No. 661064472
Polaris No. 961475223 Snow No. 961084472
Polaris No. 1061485290 Black Diamond34914472
Polaris No. 1161495290 Black Diamond No. 360304944
Polaris No. 12 Fr61505290 Blue Bird No. 157084545
Polaris No. 13 Fr61515290 Blue Bird No. 257074545
Polaris No. 1461525290 Lloyd60355010
Polaris No. 1561535290 Lloyd No. 260365010
Silver King No. 154894804 Rand No. 160395010
Silver King No. 254904804 Rand No. 260405010
Silver King No. 354934804 Minto No. 260334944
Silver King No. 454944804 Minto No. 360344944
Silver King No. 554914804 Jumbo No. 560314944
Silver King No. 654924804 Ready Bullion60324944
Silver King No. 754954804 Roy60425088
Silver King No. 857174545 Frances60415010
Silver Queen No. 160264545 Eve Fraction61705495
Silver Queen No. 260274545 Eve No. 1 Fraction61715495
Silver Queen No. 360284944 P.T. Fraction34935495
Silver Queen No. 460294944 Ant Fraction34925088
Silver Strand No. 160375010 Atlin Fraction34965088
Silver Strand No. 260385010 Powder Fraction60435088
F.M. Fraction60445088 Jay Fraction60455088
Par Fraction61545290    
W.W.1 Tenure No. 353540 Issue date February 4, 1997. Expiry date: February 4, 2020.
Accessibility, Climate, Locate Resources, Infrastructure and Physiography

"

The New Polaris project area lies on the eastern flank of the steep, rugged, Coast Range Mountains. Relief is extremeMountains, with elevations ranging from the sea level to 2,600 metres.

Extensive recent glaciation was the dominant factor in topographic development. The Taku and Tulsequah Rivers are the most prominent topographic feature offeatures: broad valleyvalleys bounded by steep mountains. Numerous tributary streams flow from valleys filled with glaciers. The majorityMost of the glaciers are fingers branching from the extensive Muir ice cap, lying to the northwest of the Taku River. The Tulsequah glacier, which terminates in the Tulsequah valley about 16 kilometreskm north of the New Polaris mine site, is one of the largest glaciers in the immediate area. It forms a dam causing a large lake in a tributary valley that breaks through the ice barrier (Jakülhlaup) during the spring thaw every year, flooding the Tulsequah and Taku valleys below for three to five days.

Small aircraft providesprovide site access from the nearest population centers in Atlin, BC, 100 km north of the Property, or Juneau, Alaska, 60 km southwest of the Property. A short airstrip for light aircraft exists on the property. The nearest roads in the area terminate 20 km due south of Atlin and 10 km southeast of Juneau. Ocean-goingShallow draft barges have been used in the past to access the site when heaviervia the Taku River to transport bulk supplies and heavy equipment is required. Redcorp Ventures Ltd. (Redcorp) has applied to complete a road to their project site, across the river and to the north, which could change the infrastructure to theas well as ship flotation concentration from site. The property can be operated year round, however access would be difficult during break up and freeze up.

year-round.

The climate is one of heavy rainfalls during the late summer and fall months, and comparatively heavy snowfall, interspersed with rain during the winter. The annual precipitation is approximately 1.5 metresm of which 0.7 metresm occurs as rainfall. The snow seldom accumulates to a depth greater than 1.5 metresm on the level. Winter temperatures are not severe and rarely fall below –15ºC. Summer temperatures, in July, average 10ºC with daytime temperatures reaching the high 20's20’s on occasion. The vegetation is typical of northern temperature rain forest, consisting primarily of fir, hemlock, spruce and cedar forest on the hillsides and aspen and alder groves in the river valley."

History

There is sufficient land available within the mineral tenure held by Canarc for installations such as the process plant and related mine infrastructure. Surface rights for the areas covered by the CDF, and access road to the CDF, lie with the Crown and will need to be obtained from the Province of British Columbia.
Historical Resource Estimates
Montgomery Consultants were commissioned to conduct a Geostatistical“Geostatistical Study of the Geological ResourceResource” for the Polaris-Taku Deposit in 1991. The estimate, by G.H. Giroux, carried out this review and calculated a total resource of 2,225,000 tons grading 0.433 opt gold based on a geostatistical approach using a cut-off grade of 0.25 opt gold. These reserves were divided into 333,000 tons at 0.437 opt gold (probable) and 1,892,000 tons at 0.432 opt gold (possible). The estimate discounted much of the reserves around the old workings and did not include dilution and minimum mining width provisions. These estimates were based on both old and new drilling and extended the resource base down to roughly 12001,200 feet (366 m) BSL.

Canarc Resource Corp.
Form 20-F
34
Watts, Griffis, and McQuat were contracted to review the previous “reserves” in August 1992. Their review incorporated the residual reserves within the mine workings, as estimated by Beacon Hill in 1989, into their overall estimate. Their estimations were based upon a minimum mining width of 5 feet (1.5 m) or 15 % dilution and a cut-off grade of 0.25 oz/ton gold.
Giroux was further contracted to provide “resource” updates throughout 1992 and in February 1995 he re-estimated the “resources” for the newly drilled portions of the "C" Zone. Drilling also confirmed the existence of a new "North" Zone which, although it appears to be relatively low grade (0.18 oz/ton gold) has exhibited possible significant widths in the order of 6.5 m. Most of the C vein “resource” lies above 800 feet (244 m) BSL and within 200 feet (60 m) of the existing shaft bottom. Giroux’s estimates were in situ based on a 0.25 oz/ton gold cut-off and did not include dilution provisions as described below and considered to be relevant as they are based on a significant amount of data and were independently calculated.
Table 6-2 summarizes the variety of estimations identified above by the following: Beacon Hill’s 1988 estimation of residual “reserves” within and around the workings were totaled. To this total, the geostatistical resource estimation of Giroux was added after applying a general dilution factor of 25 % at zero grade to Giroux's figures for the " Y " Zone and 15% at zero grade for the "AB" and "C" Zones. The dilution factors were estimated based on vein characteristics. The "Y" Veins are described as being high grade, but narrow, which makes them prone to high dilution from over-break during mining as well as over mining. The "AB" veins in situ grade, as estimated by Giroux, already contains internal dilution from a parallel dike. To this total, an overall additional dilution of 15 % was added which is appropriate as the "C" vein would not experience much dilution since it is generally thought to be fairly thick. This estimate does not meet the definition requirements of NI 43 – 101 for a resource.resource or reserve. The Author has not done sufficient work to classify them as current reserves or resources and is not treating them as current. This estimate therefore should not be relied upon.

Watts, Griffis, and McQuat were contracted to review the previous reserves in August 1992. Their review incorporated the residual reserves within the mine workings, as estimated by Beacon Hill in 1989, into their overall estimate of a total (diluted) mineral resource of 1,600,000 tons at 0.46 opt gold. Their estimations were based upon a minimum mining width of 5 feet or 15 % dilution and a cut-off grade of 0.25 opt gold. The improvement in grade stems from the inclusion of new deeper holes that extend the known mineralization to a depth of 1200 feet BSL and exclusion of lower grade material previouslybut is included in the Montgomery estimate. This estimate does not meet the definition requirements of NI 43 – 101 for a resource. The Author has not done sufficient work to classify them as current reserves or resources and is not treating them as current. This estimate, therefore, should not be relied upon.

Canarc Resource Corp.historical purposes.

Form 20-F

43

Giroux was further contracted to provide resource updates throughout 1992 and in February 1995 he re-estimate the resources for the newly drilled portions of the "C" Zone. Recent drilling has also confirmed the existence of a new "North" Zone, which, although it appears to be low grade (0. 18 opt gold) has exhibited possible significant widths in the order of 22 feet. Giroux has included estimations for this zone, which for purposes of this review have been excluded due to grade. The results of his re-estimate show that the "C" Vein discovered just prior to mine closure represents a significant new addition to the resource base. He has estimated a total of 85,700 tons grading 0.426 opt gold (probable) and 595,000 tons grading 0.425 opt gold (possible) for this zone below the 450 Level (elev. 313 ft BSL) and 1000 feet BSL.

Most of this resource lies above 800 feet BSL and within 200 feet of the existing shaft bottom. The total resources estimated by Giroux to date are summarized on Table 4.2. His estimates were in situ based on a 0.25 opt gold cut-off and did not include dilution provisions as shown below and considered to be relevant as they are based on a significant amount of data and were independently calculated.

In order to summarize the variety of estimations identified above; Godfrey Walton did the following: Beacon Hill estimation of residual reserves within and around the workings was totaled. To this total, the geostatistical resource estimation of Giroux was added after applying a general dilution factor of 25% at zero grade to Giroux's figures for the " Y " Zone and 15% at zero grade for the "AB" and "C" Zones. The in-situ resource base is presently estimated as 582,910 tons at 0.359 opt gold (Probable), and 2,614,210 tons at 0.363 opt gold (Possible) including appropriate dilution factors. The dilution factors were estimated based on vein characteristics. The "Y" veins are described as being high grade, but narrow which makes them prone to high dilution from over-break during mining as well as over mining. The "AB" veins in-situ grade, as estimated by Giroux, already contains internal dilution from a parallel dyke. To this total, Walton added overall additional dilution of 15 %, which, he felt, was appropriate, as the "C" vein would not experience much dilution since it is generally thought to be fairly thick. This estimate does not meet the definition requirements of NI 43 – 101 for a resource. The Author has not done sufficient work to classify them as current reserves or resources and is not treating them as current. This estimate, therefore, should not be relied upon.

In the Author's opinion, the residual reserves in and around the workings included in the Beacon Hill estimation are unlikely to contribute significantly to any new mining operation. For the most part it is in remnants scattered amongst the old stopes and will be difficult to access and develop."

Geological Setting

"

The New Polaris Mine lies on the western edge of a large body of Upper Triassic Stuhini Group volcanic rocks, which has been intruded by a Jurassic-Cretaceous granodiorite body north of the mine. Older Triassic volcanic rocks and earlier sediments underlie the Stuhini volcanic rocks. The granodiorite is part of the Coast Plutonic Complex (Figure 9-1)7-1).

The structural trend in the area is northwest-southeast, paralleling major faults and folds to the east and intrusive alignment to the west. The Triassic volcanic rocks and older sedimentary rocks have been folded and sheared with the Stuhini Group rocks being deformed into broad to isoclinal, doubly plunging symmetrical folds with large amplitudes."

"

Canarc has carried out extensive mapping of the Polaris-Taku property since the early1990's.early 1990’s. The work has been done by a number ofseveral employees and contractors and is shown in Figure 9-2.7-2. The gold deposit is hosted within an assemblage of mafic (basalt and andesite units) volcanic rocks altered to greenschist metamorphic facies. The orientation of these units is inconclusive because there are no marker beds in the sequence. It is thought that the units are steeply dipping (70º to 80º) to the north based on the orientation of the limestone/basalt interface at the southern portion of the property.

A serpentinite unit is located to the northeast, which was identified in recent (1996/97) drilling and underground mapping. This unit appears to form the eastern extent of the mineralization. The age relationship is unclear, but it is assumed that the serpentinite is a later stage feature possibly associated with tectonism in the area.

Canarc Resource Corp.

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The 'vein'‘vein’ zones are structurally controlled shear zones and are typified by silicification and carbonatization cross cutting actual quartz-carbonate veins. These zones have sharp contacts with the wall rock and form anastamosing ribbons and dilations. These zones have been deformed several times, which makes original textures difficult to determine. The zones are generally tabular in geometry forming en-echelon sheets within the more competent host lithologies.

All of the strata within the property have been subjected to compression, rotation and subsequent extension. The plunge of folds appears to be variable though generally shallow. Small-scale isoclinal folds strike north-northwesterly and plunge moderately to the north. Numerous faults are found on the property, the more significant of which are discussed later.

below.

Canarc Resource Corp.
Form 20-F
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The possible extension of the Llewellyn fault, termed the South Llewellyn fault, continues south from the Chief Cross fault along mine grid coordinate 4400 East. Slightly north of Whitewater Creek it is offset to the west by an east-west fault, the 101 fault, to continue in a more southeast orientation of the opposite side of Whitewater Creek. This northwest-southeast orientation structure was named the Limestone Fault due to its bedding parallel attitude within a discontinuous limestone/marble horizon. It marks the southwest boundary of the "mine wedge"“mine wedge”: the wedge shapedwedge-shaped package of rock within which all past production took place. The northern boundary of the "mine wedge"“mine wedge” is further defined as mentioned above by the Whitewater Creek Schist Zone, a zone of schistose chlorite-amphibolite-serpentinite less than 300 feet100 m thick. A complex network of brittle faults is also found within this zone.

Three major faults, Numbers 1 and 5, and an unnamed fault, lie within the mine wedge. The No.1 and No.5 faults strike northwest-southeast, dipping approximately 45º to the northeast, and are sub-parallel to the unnamed fault, which dips steeply to the southwest. The No.1 fault has reverse displacement of up to 100 feet30 m while the displacement of the No.5 fault is poorly defined. The southwest dipping, unnamed fault showed no displacement, as it apparently parallels the A-B vein system. The mined outmined-out areas indicate the wedge shape, the predominant orientations and continuity of the zones, and the overall plunge of the system to the southeast. An early interpretation of the structure showed that various veins appear to meet and form "junction arcs"“junction arcs” where both thickness and grade improve.

Mineralization
Mineralization of the New Polaris deposit bears strong similarities to many Archean lode gold deposits such as the arsenical gold camp of Red Lake, Ontario where the gold-bearing arsenopyrite is disseminated in the altered rock and in quartz-carbonate stringers.
The vein mineralization consists of arsenopyrite, pyrite, stibnite and gold in a gangue of quartz and carbonates. The sulphide content is up to 10% with arsenopyrite the most abundant and pyrite the next important. Stibnite is fairly abundant in some specimens but overall comprises less than one-tenth of 1% of the vein matter. Alteration minerals include fuchsite, silica, pyrite, sericite, carbonate and albite.
In general, the zones of mineralization ranging from 15 to 250 m in length with widths up to 14 m appear to have been deposited only on the larger and stronger shears. Their walls pinch and swell showing considerable irregularity both vertically and horizontally. Gold values in the veins have remarkable continuity and uniformity and are usually directly associated with the amount of arsenopyrite present. The prominent strike directions are north-south and northwest-southeast, which is interpreted to be within a major shear zone. Up to 80% of the mine production was from “structural knots” or what is now known as “C” zones. In detail the “C” zones are arcuate structures. Figure 7-3 shows a 3D view of the “C” vein system.
The vein mineralization has well marked contacts with the wall rock. The transition from mineralized to non-mineralized rock occurs over a few centimeters. The mineralization consists of at least three stages of quartz veining. The initial stage of quartz-ankerite introduced into the structure was accompanied by a pervasive hydrothermal alteration of the immediately surrounding wall rock. Arsenopyrite, pyrite and lesser stibnite were deposited with the alteration. Later stages of quartz-ankerite veining are barren and have the effect of diluting the gold grades in the structure. The sulphide minerals are very fine-grained and disseminated in both the wall rock and early quartz and ankerite veins. Free gold is extremely rare and to the end of 2005 had not been recognized in core samples. The majority of the gold occurs in arsenopyrite and to a lesser extent in pyrite and stibnite. Because there is no visible gold and the host sulphides are very fine-grained and disseminated there is little nugget effect and gold values even over short intervals rarely exceed 1 oz/ton.
Mineralization was observed by Morris during the site visit both in drill core and underground. The description of the regional setting, local geology, and mineralization appears applicable to the New Polaris project and is sufficiently well understood to support the estimation of Mineral Resources.
Deposit Types

The New Polaris deposit is classified as a mesothermal lode-gold deposit Hodgson, (1993)(Hodgson, 1993).

"

In general, it is quartz-vein-related, with associated carbonatized wall rocks. The deposits are characterized by a high gold/silver ratio, great vertical continuity with little vertical zonation, and a broadly syn-tectonic time of emplacement. They are commonly associated with pyrite, arsenopyrite, tourmaline and molybdenite. Mineralization may occur in any rock type and ranges in form from veins, to veinlet systems, to disseminated replacement zones. Most mineralized zones are hosted by and always related to steeply dipping reverse- or oblique-slip brittle-fracture to ductile-shear zones."

"

Canarc Resource Corp.
Form 20-F
36
The exploration target on the New Polaris project is orogenic lode gold deposits also known as Mesothermal vein deposits. Numerous examples of this type of deposit are known through outthroughout the work including the CambellCampbell Red Lake deposits in Ontario and the Bralorne deposit in British Columbia. Past exploration studies have demonstrated that the New Polaris vein systems have all of the attributes of the orogenic vein gold deposit including, but not limited to association with major structural break, quartz-carbonate vein association, low-sulphide assemblage of pyrite and arsenopyrite, chloritic and sericitically altered wall rocks and persistent gold mineralization over a vertical distance of nearly 1 km."

The deposit type and model isare considered by the QP as appropriate for a Mesothermal lode-gold deposit.

Canarc Resource Corp.

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Mineralization

"Mineralization of

Drilling
Diamond drill programs were carried out on the New Polaris deposit bears strong similarities to many Archean lode gold deposits such asproject when the arsenical gold camp of Red Lake, Ontario whereproject was reactivated in 1988 until 2006. Initially, the gold- bearing arsenopyrite is disseminated indrilling focused on the altered rockdown dip and in quartz-carbonate stringers.

The vein mineralization consists of arsenopyrite, pyrite, stibnite and gold in a gangue of quartz and carbonates. The sulphide content is up to 10% with arsenopyrite the most abundant and pyrite the next important. Stibnite is fairly abundant in some specimens but overall comprises less then one-tenth of 1%along strike extensions of the vein matter. Alteration minerals include fuchsite, silica, pyrite, sericite, carbonateY veins. This work showed that the Y veins, while good grade were narrow and albite.

In general,less continuous than the zones of mineralization ranging from 15 to 250 metres in length with widths up to 14 metres appear to have been deposited only on the larger and stronger shears. Their walls pinch and swell showing considerable irregularity both vertically and horizontally. Gold values in the veins have remarkable continuity and uniformity, and are usually directly associated with the amount of arsenopyrite present. The prominent strike directions are north-south and northwest-southeast, which is interpreted to be within a major shear zone. Up to 80% of the mine production was from "structural knots" or what is now known as "C" zones. In detail the "C" zones are arcuate structures. Figure 11-1 shows a 3D view of the "C"AB vein system.

The It also showed that the Y vein mineralization has well marked contacts withsystem is comprised of about 12 separate veins all of which are narrow and of short strike length.

In 1990, drilling shifted to the wall rock. The transition from mineralizedarea beneath the lowest most C vein stopes. This drilling found that the vein system continued to nonmineralized rock occurs over a few centimeters. The mineralization consists of at least 3 stages of quartz veining. The initial stage of quartz-ankerite introduced into the structure was accompanied by a pervasive hydrothermal alteration of the immediately surrounding wall rock. Arsenopyrite, pyritedepth and lesser stibnite were deposited with the alteration. Later stages of quartz-ankerite veining are barren and have the effect of diluting thethat gold grades in the structure. The sulphide minerals0.30 to 0.45 oz/ton range over an average true thickness of 3 m were present. From 1991 to 1993 most of the drillholes tested the C veins with fewer drilled on the Y vein system.
In 1994, the North Zone was discovered and was tested with a total of 30 drillholes during the 1994 and 1995 period. Although thicknesses of the North Zone are very fine- grained and disseminated in bothup to 6.7 m, the wall rock and early quartz and ankerite veins. Free gold is extremely rare andgrades are relatively low compared to the end of 2005 had not been recognized in core samples. The majorityC vein (less than 0.2 oz/ton). This combined with the limited extent due to structural termination of the gold occurszone by a fault resulted in arsenopyritea decision to terminate exploration of the North Zone.
Encouraging drill results from the C veins and to a lesser extent from the Y vein system led to further drilling on these two vein systems. Drilling on the C vein showed the veins to be open to depth and to have gold grades that ranged from 0.2 to 0.6 oz/ton over true thicknesses of 3 m. The increased interest in pyritethe C vein system was due to its greater continuity and stibnite. Because there is no visible goldthickness compared to the Y vein. The narrow width and lesser continuity of the host sulphides are very fine-grainedY vein system made it a secondary exploration target.
In 1996 and disseminated there is little nugget effect1997 the Y, C and gold values even over short intervals rarely exceed 1 opt."

Mineralization was observed by Morris during the site visit both in drill core andAB veins were explored from underground. The descriptionplan was to closely test the upper portions of the Y, C and AB veins in order to allow calculation of a resource that might form the basis for resumption of mining. The results of the underground drilling program were mixed. The underground workings were for the most part driven along the vein structures with few crosscuts from which holes could be drilled to cut the down dip and along strike extension of the veins. As a result, except for those holes that tested the area immediately below the workings, most cut the veins at shallow angles. The very shallow angles that in places approach parallel to the vein make the use of these intersections inappropriate for a resource calculation. Despite the number of holes drilled during 1996 and 1997, the work did little to expand the extent of the mineralization appears applicablein the AB, C or Y vein systems. The work did confirm that the mineralized shoots in the lower most stopes on the Y and C veins were open to depth.

Drilling restarted on the property in 2003 with the objective of testing the extent of the C vein mineralization. Godfrey Walton, P. Geo., at the request of Canarc, undertook a review of the New Polaris project.

[Endproject and recommended additional drilling in order to test the continuity of Extract]

the “C” vein zone mineralization at depth below the lower most mine workings. To this end, limited drill programs were carried in 2003 to 2005 to target the “C” vein extensions below the existing mine workings.

The economic analysis containedresults of the 2003 to 2005 drilling of the C vein system confirmed the continuity of gold mineralization and the vein structure between the earlier drilled holes. As can be seen in the PEA is considered preliminarysections below, drill results show the C vein system to be an arc-like structure oriented east-west in nature and there is no certainty that the preliminary economic assessment will be realized. No inferred mineral resources form partwest swinging to a northeastern strike in the east. The change in strike occurs across the No.1 fault. To the east of the PEA economic evaluationNo.1 fault, the vein splays into two or more branches. The dip of the vein system is to the south and no mineral reservessoutheast and has an average dip of about 50º, although east of the No.1 fault the vein appears to flatten and thicken in a simoid-like feature. The exact nature of the apparent flattening of the vein’s dip is not clear and requires additional drilling to be resolved.
The thickness of the C veins varies from 0.30 m to a maximum of 15.2 m. The thicker parts of the vein occur to the east of the No. 1 fault where the dip of the vein flattens due to an apparent folding of the vein.
Depending upon the angle of intersection, the true thickness of the core length of the vein material ranges from 100% to about 70%. The average core length thickness of the intersections is approximately 4.5 m and the average grade is 14.4 g/t (0.4 oz/ton) gold. The estimated average true thickness of the vein is 3.0 m.
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All of the holes in this period were drilled from surface and intersected a similar geologic sequence. From the collar, the holes penetrated from 15.2 m to 79.2 m of overburden followed by inter-layered ash and lapilli tuff, volcanic wacke, and foliated andesite. The C vein system crosscuts the strike of the volcanic and volcaniclastic rocks at steep angles.
Mineral Processing and Metallurgical Testing
Gold in the New Polaris deposit is refractory and occurs dominantly in finely disseminated arsenopyrite grains. A 150-ton per day flotation mill was operated from 1937 to 1942 and again from 1946 to 1951 producing 231,604 oz of gold from a head grade of approximately 10 g/t.
Recent metallurgical test work has yielded positive results with a process flowsheet using flotation, bio-oxidation and CIL leaching.
The preliminary flowsheet for the PEANew Polaris project is given below in Figure 13-8.
Test work has demonstrated that both BIOX and POX are potential pre-oxidation process options for New Polaris. BIOX has been selected by Canarc as the base case treatment route due to the lower capital cost and ease of operation compared to a POX circuit.
Various process stage recoveries are listed in Table 13-25.
Table 13-25    
New Polaris Projected Metallurgical Recoveries
AreaRecovery (%)
Sulphide Flotation94.9
BIOX and CIL Leach95.6
Carbon Loss0.1
EW99.9
An overall gold recovery for the process flowsheet in Figure 13-8 is estimated at 90.5%.
Mineral Resource Estimates
The Mineral Resources for the New Polaris Project have been established. Mineral resourcesupdated with revised estimates by Sue Bird, P. Eng of MMTS in accordance with updated Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards (CIM 2014). Updated CIM standards have resulted in changes to the Classification based on QA/QC. There are not mineral reserveschanges to the resource tonnage and have not demonstratedgrade based on updated prices, recoveries and on additional factors to control the “reasonable prospects of eventual economic viability. Thereextraction” including a minimum mining width and an applied underground shape confirming the Resource Estimate.
The Resource Estimate for the New Polaris deposit is no certainty that economic forecasts outlinedsummarized in Table 14-1. The resource has been summarized at various cutoff grades with the base case Au grade cutoff of 4.0 g/t highlighted. At each cutoff the total material within a potential confining mining shape is reported. Therefore, a separate mining shape has been created for each cutoff in the PEA will be realized. table.
The PEAbase case cutoff grade of 4.0 g/t Au is based on the following economic considerations: gold price of US$1,300/oz, exchange rate of 0.77 US$:C$; Payable gold % of 99.9%, Offsite refining costs of US$7/oz, mining costs of C$65.20/t, process costs of C$62.70/t, G&A (General and Administration) costs of C$37.00, sustaining capital costs of C$19.83/t, and a 90.5% process recovery.
The “reasonable prospects for eventual economic extraction” confining shape also considers a minimum mining width of 2.0 m, and removes shapes considered too small and separated from the Mineral Resource (as presented above) may be materially affectedprimary mining volumes. Previous underground mining has been accounted for by using stope and development solids to code a percent of the block outside of the mined out shapes.
MMTS is not aware of any known environmental, permitting, legal, title, taxation, socio-political,socio-economic, marketing, or political factors that could materially affect the Mineral Resource Estimate. Factors that may affect the estimates include: metal price assumptions, changes in interpretations of mineralization geometry and continuity of mineralization zones, changes to kriging assumptions, metallurgical recovery assumptions, operating cost assumptions, confidence in the modifying factors, including assumptions that surface rights to allow mining infrastructure to be constructed will be forthcoming, delays or other relevant factors.

In April 2011, issues in reaching agreements with local or regulatory authorities and stakeholders, and changes in land tenure requirements or in permitting requirement.

Canarc completed a preliminary economic assessmentResource Corp.
Form 20-F
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The effective date of the New Polaris property. this Resource estimate is February 28, 2019.
Table 14-1 
Summary of Indicated and Inferred Total Resource
Indicated
Confining Shape
Target Grade - (g/t Au)
In SituIn Situ Grades  
TonnageAUAu 
(Ktonnes)(g/t)(koz.) 
2.01,88010.0605 
3.01,79810.4599 
4.01,68710.8586 
5.01,55611.3567 
6.01,40312.0540 
7.01,26012.6509 
8.01,10513.3472 
9.094714.1428 
Inferred
Confining Shape
Target Grade - (g/t Au)
In SituIn Situ Grades  
TonnageAUAu 
(Ktonnes)(g/t)(koz.) 
2.01,6399.5502 
3.01,5829.8497 
4.01,48310.2485 
5.01,35110.7464 
6.01,22311.2441 
7.094212.5380 
8.075313.8334 
9.065314.6306 
Notes for Mineral Resource Estimate:
● 
The report which is dated April 10, 2011 is titled "New Polaris Project - Preliminary Assessment Update". J.H.Gray,Mineral Resource Estimate was prepared by Sue Bird, P.Eng., R.J. Morris, M.Sc., P.Geo. in accordance with CIM Definition Standards and G.H. Giroux, MASc., P. Eng. were the Qualified Persons for that Report. The Qualified Person ("QP") pursuant to NI 43-101, for the updated preliminarywith an effective date of February 28, 2019.
Mineral Resources that are not mineral reserves do not have demonstrated economic assessment report is Jim Gray, P. Eng.

Efforts had commenced on the application for an underground development and exploration program at the New Polaris project in 2011 which was halted in February 2012, due to the lackviability.

[End of financial resources.

Extract]

Canarc Resource Corp.

Form 20-F

46

In July 2012 Canarc significantly reduced the estimated cost of the proposed work program to complete a feasibility study for commercial development of the New Polaris project from CAD$26 million to approximately CAD$9 million. Canarc previously planned a CAD$26 million work program which included underground mine development in order to complete a feasibility study for the project. Under the revised program, the underground mine development work will be deferred to the post-feasibility mine development program. Instead, Canarc planned to carry out an additional 15,000 meters of infill core drilling in approximately 35 holes in order to provide sufficient measured and indicated resources for feasibility. About CAD$4 million of the CAD$9 million revised cost was related to drilling and the balance was related to permitting and engineering. The proposed work program to complete a feasibility study was subject to securing a partner for the project and/or financing.

In late September 2012, Canarc granted Canford a 120-day period of exclusivity to complete its due diligence and to execute an option agreement to earn up to a 51% interest in the New Polaris gold project in return for up to a CAD$30 million investment in exploration and development of the property. Canarc was to be the manager of the project during the option period. Pursuant to an agreement to form a SMAP dated February 1, 2013, Canarc granted Canford a further 60-day period of exclusivity on the date on which Canarc was to close an acquisition opportunity subject to the execution of a formal SMAP agreement on or before March 1, 2013. However, in March 2013, no formal SMAP agreement was executed, and Canford was not able to commit or arrange financing for the proposed option and joint venture to develop the New Polaris gold project.

39
On February 24, 2015, Canarc entered into a Pre-Development and Earn-In Binding Agreement (the “Earn-In Agreement”) with PanTerra. PanTerra hasGold (British Columbia) Limited (“PanTerra”), a wholly-owned subsidiary of PanTerra Gold Limited, pursuant to which PanTerra was granted a 30-month option to earn a 50% interest in the New Polaris project by spending a total of CAD$10 million in three stages of predevelopment activities including metallurgical test work, drilling, detailed mine planning, tailings dam design, environmental permitting, and completion of a definitive feasibility study. In Stage One, PanTerra shall spend CAD$500,000 for laboratory production of flotation concentrate followed by test work through the Glencore Technology Albion pilot plant, and for comprehensive technical and economic review and commencement of environmental baseline data collection required for permitting. In Stage Two, PanTerra can earn a 20% interest in the New Polaris project by spending CAD$3.5 million in predevelopment expenditures which would include 10,000 m drilling program and engineering and completion of field data required for environmental permitting. In Stage Three, PanTerra can earn an additional 30% interest in the project for a total interest of 50% by spending CAD$6 million in predevelopment expenditures which would primarily focus on the completion of a definitive feasibility study and would include further 10,000 m of infill drilling, additional metallurgical test work, and preliminary engineering. PanTerra can increase its interest in the New Polaris project to 51% by purchasing 1% from Canarc within six months of completion of the definitive feasibility study at a cost of 1% of the net present value established by the definitive feasibility study using a 10% discount rate.

The Albion process is a technology for recovering gold from refractory sulfide ores owned by Glencore Plc and used commercially under license by PanTerra. In 2015, Canarc received the CAD$500,000 from PanTerra for Stage One in 2015. Asthe first stage of the predevelopment activities. In April 2015, 59 kg of gold concentrate was produced by an independent metallurgical lab from 500 kg of New Polaris project’s prior drill core for metallurgical testing of the Albion process. In July 2015, the Albion testing had entered into the second and final phase aimed at December 31, 2015, funds of US$69,000 remainfurther optimizing test conditions for Stage One expenditures as specified pursuant to the agreement between Canarc and PanTerra.

improving gold recoveries. In August 2015, PanTerra informed Canarc that it will not be able to commit to further expenditures to commence Stage Two exploration and permitting work on Canarc'sthe New Polaris project until PanTerra receivesreceived the approval from the Dominican Republic government for importing New Polaris gold concentrate into the country for processing and PanTerrait requested a 12 month extension of the Earn-In Agreement. In September 2016, PanTerra declared a force majeure event underprovided 30-day notice of its intent to withdraw from the termsfirst option of the Earn-In Agreement. Agreement, which resulted in the effective termination of the same on October 22, 2016.

Canarc does not agreehas been reviewing various processes for treating concentrates to produce gold doré bars at the New Polaris mine site to improve the economics and to possibly reduce certain risks to developing the project.
In the first half of 2018, Canarc assessed pressure oxidation to treat the refractory concentrate and produce dore bars at the mine site. The autoclave study concluded that it would be uneconomic due to excessively high capital and operating costs. In the latter half of 2018, bench-scale testing of New Polaris gold concentrate using bio-oxidation treatment process was conducted. Metallurgical test using bio-oxidation treatment on flotation concentrate resulted in gold extractions up to 96%. Bio-oxidation testing of New Polaris concentrates dramatically increased the cyanide-recoverable gold from 8% for un-oxidized concentrate up to 96% on bio-oxidized material.
Canarc continues with PanTerra's position.its efforts to seek a joint venture partner to advance the New Polaris project through permitting and feasibility.
Fondaway Canyon Gold Project (Nevada, USA)
On February 28, 2017, Canarc entered into the Letter Agreement with AIM and PanTerra continuethe AIM Securityholders to acquire either a direct or indirect 100% legal and beneficial interests in mineral resource properties located in Nevada, Idaho and Utah (USA) for a total purchase price of $2 million. Upon execution of the Letter Agreement, Canarc deposited $200,000 “in trust” towards the purchase price. The deposit was only refundable in limited circumstances including where Canarc determined adverse circumstances exist relating to status of title, material encumbrances, corporate standing, financial conditions, environmental liabilities, and litigation. Canarc had the option to either acquire AIM or acquire AIM’s interests in the mineral properties. Certain of the mineral properties are subject to royalties. There was a 30 day due diligence period. The Letter Agreement was to be in communication regarding this matter,replaced and an extension or a resolution has not yet been negotiated.

Canarc Resource Corp.

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47

El Compas Project, Zacatecas, Mexico

On October 8, 2015, Canarc and Marlin Gold entered into a Share Purchase Agreement, whereby Canarc acquired 100%superseded by the execution of the shares of Oro Silver, which indirectly owns 100% of the El Compas gold-silver project located in Zacatecas, Mexico, in exchange for 19 million common shares of Canarc. Canarc's acquisition of Oro Silver closed on October 30, 2015. The terms of the agreement include the following:

·

On each of the first three anniversaries of the closing date of the agreement, 55 troy ounces of gold (or the US dollar equivalent) will be paid by Canarc to Marlin Gold or to any of its subsidiaries;

·

Certain mineral concessions named Altiplano include a 3% NSR royalty and a buy back option. Marlin Gold retains the Altiplano royalty and buy back option, and will receive a 1.5% NSR on all non-Altiplano claims that currently have no royalties associated with them;

·

Marlin Gold invested CAD$100,000 in Canarc's private placement of 1.67 million units at CAD$0.06 per unit with each unit comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.08 per share until October 30, 2018; and

·

Marlin Gold nominated one person, namely, Mr. Akiba Leisman, to Canarc's board of directors.

The closing of the Share Purchase Agreement resulted in Marlin Gold becoming an Insider of Canarc by virtue of having more than 10% (ie. 10.79%) interest in Canarc as at the closing date of October 30, 2015.

The El Compas property is a fully permitted gold silver project located in Zacatecas, Mexico, and is comprised of 24 concessions totaling 3,900 hectares.

Canarc Resource Corp.

Form 20-F

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In January 2016, Canarc signed a definitive agreement with the Zacatecas state government to lease and operate the permitted 500 tonne per day La Plata ore processing plant located in the city of Zacatecas, Mexico. Highlights of the lease agreement include the following:

·

Lease term is 5 years with the right to extend for another 5 years;

·

Canarc assumed responsibility for the plant as of January 29, 2016;

·

Plant will be exclusively operated by Canarc's Mexican subsidiary, Minera Oro Silver;

·

Canarc will pay a monthly lease payment of MXP 136,000;

·

Grace period of 6 months to allow time for plant refurbishing;

·

Power and water are available for plant operations;

·

Plant capacity is 500 tonnes per day with the possibility to expand;

·

Permitted tailings facilities has a current capacity for approximately 1 million tonnes;

·

Certain plant refurbishment costs will be reimbursed to Canarc by lease payment offsets; and

·

Canarc will reserve up to 100 tonnes per day for toll mining of ore produced by local small miners.

Canarc Resource Corp.

Form 20-F

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Inon or before March 2016,31, 2017. On March 20, 2017, Canarc entered into an indicative term sheet for upthe AIM Agreement with the AIM Securityholders to $10 million in debt financing by way of a gold prepaid facility to developpurchase AIM, and closed the El Compas gold-silver project subject to a 60 day due diligence period.

The El Compas property consists of 24, semi-contiguous mineral concessions covering approximately 3,943 Ha. All concessions are held by Minero Oro Silver. Table of the mineral concessions is set out below:

Canarc Resource Corp.

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All minerals found in Mexico are the property of Mexico and may be exploited by private entities under concessions granted by the Mexican government. The process was defined under the Mexican Mining Law of 1992 and excludes petroleum and nuclear resources from consideration. The Mining Law also requires that non-Mexican entities must either establish a Mexican corporation, or partner with a Mexican entity.

Under current Mexican mining law, amended April 29, 2005, the Director General of Mines ("DGM") grants mineral concessions for a period of 50 year terms with maintenance obligations. There is no distinction between mineral exploration and exploitation concessions. As part of the requirements to maintain a concession in good standing, bi-annual fees must be paid, and a report must be submitted to the DGM each May. This report covers work conducted over the previous yearAIM Agreement on the concession.

The semi-annual fee is calculatedsame date.

AIM owns 11 gold properties in Nevada of which two properties (Fondaway Canyon and Dixie Comstock) contain historic gold resource estimates, and owns one gold property in Idaho, and has two royalty interests on a per-hectare basis. For concessions granted prior to January 2006, the fee is updated based on the amount of time that has passed since granting of the concession and the Mexican Consumer Price Index. For concessions granted after January 2006, a per-hectare escalating fee applies. Many of the concessions that comprise the El Compas property, including the El Compas concession, were granted prior to January 2006.

There are two royalties on the El Compas projectother properties. The Altiplano group of concessions include La Virgen 2, La Casi Virgen 3 Fracc A, La Casi Virgen 3 Fracc B, La Casi Virgen 6, Don Luis del Oro and Don Luis del Oro. These concessions have a three percent NSR royalty on them payable to the previous owners including Exploraciones del Altiplano. The remaining concessions have 1.5 % NSR royalty payable to Marlin Gold. This includes the El Compas and El Orito concessions on which the present Mineral Resource estimate and PEA is located on.

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The El CompasFondaway Canyon project is located in Zacatecas state, Mexico. It is located on the southern outskirts of Zacatecas city, Mexico. The property is centred about UTM coordinates 747,200E, and 2,515,500N, (WGS84 Zone 13 North) atconsidered a mean elevation of about 2,430 metres. Its location map is as follows:

material property.

In October 2015,April 2017, Canarc commissioned Mining Plus Canada Consulting Ltd. ("Mining Plus"Techbase International, Ltd (“Techbase”) of Reno, Nevada to complete a NI 43-101 resource report and preliminary economic assessment for the El Compas project to determine the project's potential viability, which was completed in January 2016. Their technical report entitled "NI 43-101Fondaway Canyon project. The Fondaway Canyon Technical Report for the El Compas Project" (the "El Compas Technical Report") was authoredprepared by J Collins PGeo, N Schunke PEng, S Butler PGeo, L Bascome MAIGMichael Norred, SME Registered Member 2384950, President of Techbase, and F Wright PEng, Simon Henderson, MSc, MAusIMM CP 110883 (Geology), Consulting Geologist with Wairaka Rock Services Limited of Wellington, New Zealand, who are independent Qualified PersonPersons as defined by NI 43-101, was dated January 19, 2016,April 3, 2017, and was prepared in compliance with NI 43-101. The information in43-101 to the following section has been derived from and is based onbest of the assumptions, qualifications and procedures set out in the El Compas Technical Report.

Canarc’s knowledgeCanarc Resource Corp..

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The following extract is selectedextracted from, certain sectionsor is an accurate paraphrasing of, the executive summary, or other sections as indicated from the El CompasFondaway Canyon Technical Report, the full copy of which is available online atwww.sedar.comat www.sedar.com as filed on February 5, 2016.May 1, 2017. The Fondaway Canyon Technical Report is referenced herein for informational purposes only and is not incorporated herein by reference. Defined terms and abbreviations used herein and not otherwise defined shall have the meanings ascribed to such terms in the El CompasFondaway Canyon Technical Report.

Extract of Selected Sections of the Summary from the El CompasFondaway Canyon Technical Report

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Summary
Canarc Resource Corp. (Canarc) acquired the Fondaway Canyon Project and a portfolio of ten other mineral projects from American Innovative Minerals, LLC (AIM) in March, 2017. Canarc commissioned Techbase International Ltd to provide this report on the current status and a current Resources estimate for the Fondaway Canyon project.
Property Description and Location

The El CompasFondaway Canyon property is 3,943 hectaresincludes 136 contiguous, unpatented mining claims, covering approximately 2,220 acres (898 hectares), or 3.5 square miles, on land administered by the U.S. Bureau of Land Management (BLM) in size and covers approximately 2.4km of strike length over the El Compas vein system and 1.2km of strike length over the El Orito vein system.Churchill County, Nevada. The 24 mineral concessionsclaims are located in portions of Township 22 North, Range 33 East, Sections 1, 2, 11, and 12; and Township 22 North Range 34 East, Sections 5,6,7, and 8; Mount Diablo Meridian. The list of mining claims is included Appendix A [in the Fondaway Technical Report].
The title to the Fondaway Canyon property was the subject of a title review, prepared by Mildren Land Services, LLC for Canarc (Mildren, 2017). The claims are currently controlled under a Mining Lease/Purchase Agreement, originally signed in 2012 between Richard Fisk as the owner and Manhattan Mining Company. The agreement was assigned to AIM in August 2013, and then to AIM subsidiary The Fondaway LLC in November 2013. The lease was originally for 148 mining claims, some of which were dropped by AIM in 2014. Canarc acquired AIM in March 2017.
A fee of $155 per claim is payable to the BLM before September 1 each year, and $10.50 per claim is payable to Churchill County by November 1 each year. The Author checked each of the claims on the southern outskirtsBLM’s Land & Mineral Legacy Rehost 2000 System (LR2000)1. All of Zacatecas city, Zacatecas, Mexico. The concessions are 100% owned by Oro Silver, now a subsidiary of Canarc. The La Plata processing facility is located north of Zacatecas city and ownedthe claims were listed as “ACTIVE” by the state governmentBLM, which means that all required fees have been paid through August 31, 2017. All fees and filings for Churchill County are current through September 30, 2017.
A 2012 preliminary title report found that the BLM and Churchill County Recorder records of Zacatecas withunpatented claims at Fondaway Canyon have multiple owners (Mildren, 2017). The County Recorder records show Wilbur Robertson, Fisk-Robertson Mining, or Richard Fisk as the claim owners. The BLM records show various members of the Fisk family and associates, Occidental Minerals, Tenneco Minerals, Nevada Contact Inc and AIM as the claim holders. All of these interests are controlled by Richard Fisk (Mildren, 2017). Under the lease agreement, claims filed by the lessees within the “Area of Interest” (originally a Letter of Intent20 km radius, but reduced to lease ita 2 mile radius in 2014) become the owner’s property. AIM previously collected the documents necessary to Oro Silver.

update the BLM records, but elected to postpone the update due to the cost involved (Mildren, 2017).

Royalties
There is a surface access contract in placeNet Smelter Returns (NSR) royalty of 3%, payable to Richard Fisk, under the 2012 mining lease / purchase agreement between Oro SilverFisk and Maricela Bañuelos ArellanoManhattan Mining Company. An “Advance Royalty” of $35,000 is due each year on July 15th. AIM records indicate that these payments are current through 2016. All advance royalties are recoverable from production royalty payments. A purchase option for the claims, including the 3% royalty can be exercised at any time for a 53 hectare plot covering somelump sum payment of $600,000, less any advance royalties not previously credited to production royalties. The amount remaining on the purchase option is $425,000 (Mildren personal communication).
There is also a NSR royalty of 2% on all minerals produced from the Fondaway Canyon and Dixie Comstock properties, payable to Hale Capital, under a 2013 agreement between AIM and Hale Capital. This royalty can be bought out for a total price of two million dollars ($2,000,000) in cash or 19.999% of the key ground at El Compas, specifically on the Don Luis del Oro and La Virgen concessions withstock in a small block kept out of the agreement for a surface quarry. The term of the surface access contract expires in 2024 and is adequate for surface facilities and underground portal access.

The quarry which is on the south side of the project continuesnew, public company formed to operate regularlythe Fondaway Canyon and trucks are used to transport supplies to and from this project through the nearby suburb.

Oro Silver has acquired also 12 hectares of land for installation of the surface support facilities required for the construction and operation of the project.

The El Compas and El Orito Mineral Resources are located near the centre of the property, entirely within the El Compas, El Orito and Don Luis Del Oro concessions. There is a surface access agreement for part of the project to allow development of the mine portal and required surface support.

Dixie Comstock properties.

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Figure 1: Fondaway Canyon Location
Accessibility, Climate, LocalLocate Resources, Infrastructure and Physiography

El Compas

Access to the Fondaway Canyon property is accessed byvia US Highway 50, five miles east from Fallon, Nevada, then northeast ten miles on Nevada State Route 116 to the Stillwater town site, then continuing north for 30 miles along an all-weatherimproved gravel road, one kilometre fromto Fondaway Canyon on the paved roads in the southern partwestern flank of the city of Zacatecas. Land use inStillwater Range. Existing mine roads provide access into the area is open range cattle ranching, building stone quarries and some recently constructed nearby housing. Zacatecas city is the second largest city in the state after Fresnillo with a population of 138,000 (2005, http: //www.en.wikipedia.org/wiki/Zacatecas). Highways 45 and 49 connect the city to other major centres in Mexico by road, and an international airport (at 2,140 metres elevation) connects Zacatecas with Mexico City and the U.S. by daily flights. The Central Mexican railroad connects Zacatecas to Mexico City and the USA at Juarez as well as international ports. The El Compas property is generally gently rolling to flat, just outside the city, and all parts are accessible. The La Plata processing facility is located on the northern side of Zacatecas and connected via the road network of Zacatecas to the El Compas project site. Roads are well maintained gravel for the final few kilometres to the mine and processing facility sites from Zacatecas.

The climate and vegetation in Zacatecas is typical of the high altitude physiographic region known as the Mesa Central, with a summer rainy season from May to September averaging 15.6°C, and dry winters from December to February, with an average temperature of 10°C. Total annual precipitation is about 430 millimetres, and the average annual temperature is about 13.4°C (http://www.zacatecas.climatemps.com/). canyon.

The elevation of the cityproperty ranges from 5000 to 6000 feet. The area is a semi-arid, high desert biome, with cold winters and hot summers with low average precipitation. Fallon, home of Zacatecasthe Fallon Naval Air Station, has a population of approximately 8,500 people.
Casual labor and industrial services such as mechanical or light fabrication are readily available in the town. Mining related professional services are available from Reno, some 60 miles west of Fallon, and from Winnemucca, some 130 miles to the northeast.
There are no public utilities, including electrical power on the property. Two permitted water wells are on the property, with water available for mining use under the lease agreement.
History
The initial lode mining claims of the Fondaway Canyon property were staked in 1956 by George Fisk and his son Richard operating as Fisk Mining (the Fisks). The Fisks mined approximately 10,000 tons of tungsten ore, recovering 200,000 lbs of tungsten trioxide (WO3). The Fisks also produced 47 flasks of mercury and three tons of antimony during this period. Later, operating with Wilbur Robertson as Fisk/Robertson Mining, the Fisks produced some 2,500 ounces of gold from shallow, oxide material. The Fisk family has continuously owned the mining claims to the present day.
Occidental Minerals optioned the property from 1980-1982, and explored while the Fisks continued mining. Occidental conducted extensive geologic and geochemical surveys, and drilled 15 RC holes in 1981 and 3 core holes in 1982, totaling 5,856 feet of drilling.
Tundra Gold Mines took over the Occidental agreement from 1983-1984. Tundra conducted several miles of VLF-EM and magnetometer surveys, and identified at least 27 anomalies, labeled “A” through “V”. They drilled 35 core holes, totaling 18,316 feet of drilling. New Beginnings Resource Corp joint-ventured with Tundra in 1984 and drilled 18 RC holes, totaling 2,020 feet.
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Homestake Mining Company sub-leased from 1984-1985. Homestake sampled the underground working on the property, and commissioned mineralogy and petrographic studies, as well as metallurgical testing. They drilled 4 core holes, totaling 2,315 feet of drilling.
Mill Creek Mining took over in 1985. Mill Creek drilled 69 RC holes, totaling 6,805 feet, and drilled numerous, shallow percussion holes. They mined near-surface ore at the site of the present Stibnite pit, and attempted vat leach processing that failed to recover any significant values (Cohan, 1997).
Tenneco Minerals leased the property from 1986-1996. They increased the property size to 647 unpatented claims, and took thousands of rock and soil, as well as stream sediment samples. Tenneco drilled over 500 RC holes, totaling 130,000 feet of drilling. They drove an adit with 540 feet of workings to take bulk samples of the mineralized Half Moon zone. They commissioned extensive metallurgical testing at Hazen Labs, showing over 85% recovery for oxide material.
Tenneco built a 1500 tpd heap leach with a 230 gpm Merrill-Crowe processing plant. From August 1989 through August 1990, they mined and processed 186,000 tons of material, and recovered 5,402 ounces of gold, with a reported 87% average recovery (Cohan, 1997). Tenneco completed final reclamation of their mining and processing area areas in 2004.
Consolidated Granby leased the property from 1996-1997, with no significant exploration activity. Stillwater Gold leased the property in 1999, and conducted extensive field mapping and sampling. The detailed mapping and geological interpretation by Michael Brady for Stillwater (Brady, 1997) are the basis for much of the work by later companies, including the Resource modeling done for this technical report.
Nevada Contact Inc (NCI), a subsidiary of Agnico Eagle, leased the property from 2001-2002. They organized the previously-collected data into a GIS and geologic database. They reported their database contained 2,451 rock chip samples, 457 soil samples, and 146 stream sediment samples. Nevada Contact drilled 3 RC holes and 8 RC/Core holes, totaling 5,335 feet of RC and 6,317 feet of core drilling (Nevada Contact, 2002).
Royal Standard Minerals leased the property from 2003-2013, with little reported exploration activity. The technical report commissioned by Royal Standard mentioned the 2002 Nevada Contact drilling, but did not incorporate the drilling results into their Resource model (Strachan, 2003).
The lease was acquired by American Innovative Minerals (AIM) from Royal Standard in 2013. AIM compiled previous drill holes and samples into a GIS database. They collected and assayed more than 250 rock chip samples, as well as grab samples from stockpiles, dumps, and the leach pad. AIM conducted metallurgical tests on the stockpiled material near the original “Main Pit” and on the tungsten mineralization, in order to evaluate the economics of selling these materials.
Aorere Resources Limited obtained an option to purchase the AIM properties in February 2016, which expired at the end of January 2017. Aorere commissioned a Scoping Report (Norred, 2016). They sampled the 2002 core and sent six representative samples to Applied Petrologic Services & Research (APSAR) for detailed petrologic studies (Coote, 2016). Additional core samples were selected and submitted to McClelland Laboratories for a series of metallurgical testing (McPartland, 2017). Aorere contracted Techbase International to compile and validate the drilling and other data from the property, and to produce a Resource estimate. The 2016 mineral resource estimates that are the subject of this report were originally produced for Aorere.
Canarc Resource Corp acquired the Fondaway Canyon property along with substantially all of the mineral properties held by AIM in March 2017. Canarc has not yet conducted any exploration activities on the Fondaway Canyon property.
Geologic Setting
The Fondaway mineralization is hosted primarily in low-grade regional/burial metamorphosed carbonaceous mudstone, silty mudstone and siltstone, (informally described in drill core and historical mapping as shale, mudstone and siltstone) interpreted to lie within the Triassic Age Grass Valley Formation. The Grass Valley Formation has been regionally metamorphosed to sub-greenschist facies (phyllite) and folded into east-west trending folds with approximately 600 feet amplitude across the folds and vertical to slightly overturned limbs (Strachan, 2003). Regional/burial metamorphism of the sedimentary rocks is defined by sericite/illite, mosaic quartz and chlorite. Limited plastic deformation indicates that hydrothermal fluid flow took place in a mainly brittle tectonic regime of a sub-greenschist facies metamorphic environment (Coote, 2016). Limestone and quartzite mapped at the Colorado-Deep Dive Resource Area appears to be over-thrust by Grass Valley phyllite (Strachan, 2003). These younger units are correlated with Jurassic Boyer Ranch formation.
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East-West faulting crosscuts the metamorphosed sedimentary units and these faults host the majority of gold resources at Half Moon, Paperweight, Hamburger Hill and the Colorado-Deep Dive Zones. Gold Mineralization at Deep-Dive appears partially strata bound in the limestone and is possibly controlled by thrust faults and bedding replacement in this instance (Strachan, 2003).
Tertiary age dacite and andesite dikes occur in and crosscutting the mineralized faults. These dikes are altered but not strongly mineralized. Sets of north trending mineralized and post-mineral faults displace east-west trending mineralized faults. The north trending post mineral faults are probably related to basin and range development (Young, 1989).
A stock of Cretaceous age granite occurs immediately north of the resource area and is possibly underlying the tungsten skarn deposits in the mine area.
Mineralization
The mineralization is characteristically a gold/silver ratio of greater than 1:1 and is associated with the sulfide minerals of pyrite, arsenopyrite, and stibnite with lesser amounts of chalcopyrite, tennantite/tetrahedrite, sphalerite, and galena. The mineralization was reported in detail in a Petrology report by Coote (2016).
As described by Coote (2016), gold/electrum is mainly identified as inclusions within pyrite of hydrothermal wall rock replacement and silica/carbonate-rich fracture-fill/breccia cement assemblages, in places in close spatial association and intergrowths with chalcopyrite, sulphosalt minerals and arsenopyrite. Some gold fills or partly fills cavities in pyrite, as intergrowths with Fe/Mg/Ca-carbonate. The distribution of inclusions and cavities in pyrite, including gold/electrum inclusions, partly defines growth zones within the host pyrite. The gold/electrum grain-sizes, as inclusions within or filling cavities in pyrite, are in the range 1 to 10 microns. Some gold/electrum of
a similar size-range occurs interstitial to and as intergrowths with mosaic quartz, sericite/illite and chlorite.
Free gold/electrum is present in stibnite-bearing, mineralization, gold/electrum (5-8 lm) occurs as intergrowths with or interstitial to mosaic quartz intergrown with pyrite, chalcopyrite, chlorite, sericite/illite and hydrothermal hydrocarbon mineralogy within hydrothermally altered, formerly carbonaceous rich wall rock. Whilst chalcopyrite is locally enclosed by coarser grained stibnite, interstitial to and intergrown with mosaic-drusy quartz, no gold/electrum is observed as inclusions within the coarser grained stibnite.
Pyrite and arsenopyrite comprise arsenic and iron sulfides intergrown with hydrothermal replacement and fracture-fill/breccia cement mineralogy. Tabular to prismatic/acicular arsenopyrite is generally finer grained than pyrite, and concentrated within wall rock replacement assemblages, particularly along hydrothermal hydrocarbon bearing shear zones. Pyrite, less abundant and coarser grained within the wall rock replacement assemblages appear to overgrow and even poikilitically enclose subhedral to euhedral arsenopyrite. The preservation of framboidal pyrite of diagenetic or sedimentary basin paragenesis is further evidence of relatively low-grade regional/burial metamorphism of the carbonaceous, fine grained siliciclastic sedimentary rocks.
Fine to medium grained stibnite occurs as intergrowths with and interstitial to mosaic-drusy quartz of fracture-fill/breccia cement. Some amounts of finer grained stibnite are intergrown with wallrock replacement mineralogy and are contained along shears containing sericite/illite, chlorite and hydrothermal hydrocarbon mineralogy. Some stibnite is host to inclusions of subhedral to anhedral fine to very fine grained chalcopyrite (Coote, 2016).
Graphite is only present as detrital grains, together with resolvable quartz, muscovite, tourmaline and zircon. As a result of a combination of regional/burial metamorphism-related and hydrothermalrelated maturation processes, organic carbon has been converted to secondary carbon or hydrocarbon mineralogy.
Drilling
Many exploration holes were drilled by the various mining companies between 1980 and 2002, including Core, Reverse Circulation, and Air-track holes. The Fondaway Canyon database currently contains validated records for 591 holes totaling 161,043 feet (49,086m) of drilling.
Drilling in 2002 by Nevada Contact Inc (NCI) intersected the mineralized zone at greater depths than previous drilling in the Half Moon and Paperweight veins, and also intersected mineralization below the pediment at the west end of the property, confirming this as a new prospective exploration target.
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Mineral Processing and Metallurgical testing
Historical metallurgical testing and operating experience have shown that the oxide mineralized materials at Fondaway Canyon are readily leachable. The metallurgical response of the sulfide mineralized materials have been problematic, however testing results showed recoveries of up to 95% can be achieved by using an oxidizing pre-treatment followed by CIL leach. A multi-stage flotation process also yielded satisfactory laboratory results with flotation results of 93 to 95% being achieved.
The 2016 metallurgical testing provided confidence that the mineralized material tested to date can be treated appropriately to concentrate 79-85% of the gold in less than 10% weight percent via flotation processes. Test results indicate that additional gold might be recovered by incorporating a gravity circuit, and also through treatment of the tails with conventional cyanidation methods. Further testing is needed to find the most cost-effective process for future mining.
Mineral Resource Estimates
Resource estimates have been included in technical reports by previous authors. The resource statements from each report have been examined by the Author, and were found to be in general agreement, in particular as to the total contained gold. None of the previous estimates included the 2002 drilling, which tested the down-dip extension of the mineralized veins.
A new resource estimate was completed in 2016 by Techbase International (the 2016 Resource Estimates). This new estimate incorporated the 2002 drilling, which had not been used for previous estimates. The 2016 estimate included the vein hosted, potentially underground mineable sulfide mineralization. No estimate was made of the shallow, oxide mineralization.
Table 6: 2016 Resource Estimates
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The Mineral Resource was estimated for each vein using polygonal estimation on drill intercepts projected onto a vertical long-section parallel to the average strike direction of that vein. Techbase Version 2015 software was used to perform the estimation.
Polygonal estimation was chosen by the Author as a robust method for estimating the global mineral resources at Fondaway Canyon, considering both the nature of the deposit and the currently available data. The multiple, sub-parallel veins and splays in the mineralized system introduce the risk of mis-correlation without further drilling and interpretation. The majority of the historical drilling data was RC, without downhole surveys, introducing uncertainty as to position and true thickness.
The polygonal methodology applied for this estimate is less sensitive than other methods to these risks. Polygonal estimation was also used for all of the historical resource estimates, including the previous, NI 43-101 compliant technical report (Strachan, 2003), making it possible to directly compare the results.
Interpretation and Conclusions
Interpretation
At Fondaway Canyon, gold Mineralization is localized along over 2 miles of en echelon, east-northeast trending and steeply south dipping structures developed within fine grained Triassic carbonaceous siliciclastic sedimentary rocks and Jurassic limestone, cut by Tertiary dikes.
To date, resources have been estimated for 12 named veins. The bulk of the current resources are hosted by the Paperweight, Half-moon, and Colorado zones, with the remainder in parallel veins or splays of the major veins. The most persistent vein strike length is 3,700 feet on the combined Paperweight – Hamburger Hill zones, and the down-dip extent of the gold mineralization is greater than 1,000 feet based on the drilling by NCI. Vein width is commonly 5 - 20 feet.
Opportunities
The geologic interpretation and modeling for the 2016 Resource estimates have identified opportunities to increase the confidence and continuity in existing structures both along strike and at depth. Several additional adjacent and oblique structures coincident with surface gold anomalies also have high prospectivity, and have not been drill tested to date.
All of the estimated Resources in this report relate to the high grade, sulfide vein mineralization in the eastern half of the project area. Much work remains to integrate the western portion of the project area, lies at about 2,430 metres.

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Work can continue year roundwhich has a correspondingly sparse and predominantly shallow drill history, along a 1 mile corridor to the South Mouth zone, the area of previous surface mining. This corridor has detailed rock and soil geochemistry, with several areas of highly anomalous gold geochemistry suggesting continuity of gold mineralization through this zone.

The South Mouth zone, where mining excavated the shallow oxide mineralization, has not been explored sufficiently to quantify the down dip extension of the sulfide mineralization to depth. The 2002 NCI drilling intercepted mineralized zones with two holes drilled in the Zacatecas region.

Zacatecas the state capital along with the adjoining City of Guadalupe, are modern and fully serviced cities. Electrical power, water, sewage treatment and telecommunications are available on or near to the property. Many local resources, such as experienced labour, operational services, petroleum products, equipment and materials are available in the city.

The region can provide a wide range of manpower skilled in all aspects of mining, processing and administration.

There is access to power via power line and transformer installations at the existing mine access area. The line capacity allows for 480V usage with conversion to 120V. This power supply is currently available for basic dewatering of the underground workings and will also be required for ventilation.

The processing plant with a tailings facility is existing, permitted, road accessible and located near the mine on the other side of Zacatecas from the El Compas mine site. There is grid electricity at the processing facility. The processing facility has an agreement with Minera Capstone to provide water for processing. The existing road network around Zacatecas will be used for moving material from the mine to the processing facility and supplying both the mine and processing facility with material and staff access.

Other infrastructure includes:

·

Office buildings

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Fuel supply

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Explosives magazine

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Ventilation fans and controls

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Electrical distribution

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Air compressors

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Dewatering pumps

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Refuge chambers

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Escapeway system

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Mobile equipment

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The physiography of the region is dominated by basin-and-range type topography, with broad north-north-east trending valleys separated by narrow mountain ranges. Zacatecas city, and the property, occurs in the Sierras de Zacatecas. The Graben de Calera lies to thepediment west of the property. Topographic reliefSouth Mouth pit. These results should be followed up with additional drilling to determine if a bulk tonnage, disseminated gold deposit exists in that area, or if there are potentially offset extensions of the Fondaway Canyon vein systems associated with mineralization at the South Mouth pit.

Metallurgy
There is significant metallurgical testing completed recently and historically (including sizeable underground bulk sampling). Historical test results included using an oxidizing pre-treatment, followed by CIL leaching, which yielded gold recoveries of 86 to 95%. Other historical tests used a two-product flotation circuit, producing a carbon concentrate, then a sulfide concentrate, followed by CIL leaching of the flotation tails, producing combined total recoveries from 93 to 95%.
The 2016 metallurgical testing provided confidence that the mineralized material tested to date can be treated appropriately to concentrate 79-85% of the gold in less than 10% weight percent via flotation processes. Test results indicate that additional gold might be recovered by incorporating a gravity circuit, and also through treatment of the tails with conventional cyanidation methods. Further testing is recommended to find the most cost-effective process for future mining.
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Conclusion
The Fondaway Canyon Project is a well-explored mineral deposit, with significant potential at depth and along strike of the identified mineralized systems. Some of that potential has not been realized due to multiple changes in management over the life of the project, and to operational uncertainties because of its proximity to the adjacent Stillwater WSA. The available data from the various sources has not been well-integrated, and consequently much of it has not been exploited for maximum exploration success.
Based on the Mineral Resource estimates, the opportunities for additional discovery, and the encouraging metallurgical results, it is the Authors’ opinion that the project has the potential to develop into a profitable mining operation.
[End of Extract]
In the second quarter of 2017, Canarc completed 92 surface rock chip sampling and mapping program on the Fondaway Canyon project which returned several high grade gold values.
In the fourth quarter of 2017, Canarc completed an initial 7-hole, 2500-meter core-drilling program at the Fondaway Canyon project. All seven holes intersected gold mineralization. The 2017 drilling results, integrated with historical drilling, indicate the project has bulk-mineable, open-pit potential, as opposed to the underground mining of narrow high-grade zones that was the focus of previous project owners.
In 2018, Canarc completed 3D modelling of the Fondaway Canyon deposit and identified drill targets for the next stage of diamond drilling. Surface mapping and sampling program on the property is low, gentle and vegetation is dominantly cactus, maguey, sage and grass.

Mexico is the largest silver producertrenching in the world, due significantlyReed Pit continue to production from Zacatecas state, at Fresnillobetter define possible high-grade gold mineralization and Somberete. Zacatecas city was founded in 1546, afterto refine targets for the discovery of silver vein systems by Juan de Tolosa. The first record of mine development in the El Orito district was in 1570 with intermittent development up to the Mexican Revolution in 1910. Modern exploration work is from the mid 1990's until 2011 and includes multiple diamond drilling campaigns. From 2002 to 2006, Contracuna mined approximately 55,000 tonnes of ore from El Compas and processed it at a processing facility north of Zacatecas.

History

The modern historynext phase of exploration at El Compas has references to work by Boliden before 2005 but no specific date. Minera Hochschild de Mexico S.A. de C.V. (MHM) completed work in 2005 that included surface mapping, chip sampling and almost 6,000 metres of diamond drilling. Oro Silver started working at El Compas in the fall of 2006. Oro Silver completed multiple drill programs to evaluate the El Compas property. Work also included a survey and chip sampling of the underground workings and ASTER satellite imagery analysis. Three programs of diamond drilling with some reverse circulation drilling were completed by Oro Silver between 2007 and 2011, for a total of 17,686m of drilling.

Deposit Type

Low sulfidation style epithermal veins occur in the El Orito Zone at El Compas and are unique in the Zacatecas district. They are gold-rich, silver-poor (Ag/Au of about 6.7:1 to 20:1), with very low total sulfide and base metal content. Epithermal veins with a low sulfidation style occur in both the andesite and phyllite of the Chilitos Formation, and overlying felsic volcanic rocks of the La Virgen Formation.

Sample Preparation, Analysis and Security

The sample preparation procedures for chip and drill core sampling are consistent with industry standards and adequate for a study of this detail.

Environmental Studies, Permitting and Social or Community Impacts

Oro Silver has obtained Environmental permits from the Mexican government for the development of an underground mine at El Compas and the construction of a 750 tpd leach plant and tailings facility at the El Compas property and has acquired 12 hectares of land on which to construct these facilities. Canarc has signed a Letter of Intent with the Zacatecas government for rental of the idle 500 tpd La Plata processing facility that is located on the northern outskirts of Zacatecas for processing the El Compas potentially economic material. The government processing facility is a fully permitted processing plant and tailings facility as a 500 tpd crushing, grinding and flotation operation and will need to be modified to add a gravity concentrator, a concentrate leaching circuit and a cyanide destruction circuit.

The new El Compas portal is located on the southern outskirts of Zacatecas, approximately 0.7 kilometres from existing residences. However, the closest underground workings to existing residences is approximately 125m (lateral offset between the northern most El Orito upper level and the nearest residence). To minimise impacts of mining operations on the community, the portal and operations area chosen are facing away from the city and are inside an existing rock quarry. Other than the 12 hectares which Canarc owns, the surface rights to other areas of the claims are held by a number of different local families with whom Minera Oro Silver has signed access agreements in place.

The area around Zacatecas has many historic mining properties and operating mines from pre-colonial days and onward with an abundance of mine workings.

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Mineralization and Mineral Resources

The El Compas Mineral Resource has been reported by mineralised vein system, above defined gold cut-off grades and by resource category, which is presented in the table below. The Resource has been depleted for historic mining and therefore is considered in-situ.

Table 1-2 El Compas Mineral Resource Inventory

Mineral Resource Estimate for the El Compas Deposit
January 14, 2016

Vein

Cut off Au g/t

Tonnes

Au g/t

Ag g/t

Au Oz

Ag Oz

Indicated

El Compas

2.0

507,000

6.7

66.7

110,000

1,087,000

El Orito

2.0

45,000

4.3

60.5

6,000

88,000

Total

552,000

6.5

66.2

116,000

1,175,000

Inferred

El Compas

2.0

129,000

3.4

58.0

14,000

240,000

El Orito

2.0

292,000

4.5

60.8

42,000

571,000

Total

421,000

4.2

59.9

57,000

812,000

Notes:

1.

Mineral Resources estimated as of January 14, 2016.

2.

CIM Definition Standards were followed for the Mineral Resource estimates.

3.

Mineral Resources are estimated using Vulcan software, and have been reported at a 2.0 g/t Au cut-off grade.

4.

For the purpose of Resource estimation, assays were capped at 75.0 g/t for Au and 700.0 g/t for Ag.

5.

A bulk density of 2.6 tonnes/m3 has been applied for volume to tonnes conversion.

6.

Resource categories have been applied to the estimation on the basis of drill-hole density, number of available composites, estimation pass and confidence in the estimation.

7.

A small amount of the Resource has been mined at the top of the El Compas vein and this material has been removed from the Resource.

[End of extract]

The economic analysis contained in the PEA is considered preliminary in nature and there is no certainty that the preliminary economic assessment will be realized. No inferred mineral resources form part of the PEA economic evaluation and no mineral reserves for the PEA have been established. Mineral resources are not mineral reserves and have not demonstrated economic viability. There is no certainty that economic forecasts outlined in the PEA will be realized. The PEA and the Mineral Resource (as presented above) may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant factors.

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56

Other Mineral Projects

The following projects are considered not material by the RegistrantCompany, do not have any Guide 7 compliant mineral reserves, and are not compliant with NI 43-101 unless otherwise stated. There is currently no ongoing or proposed exploration or development programs for the properties set out below, other than as specifically stated.

Tay-LP Property, Yukon, Canada

On August 24, 2009, Canarc entered into a property option agreement with Ross River Minerals Inc. and Ross River Gold Ltd. (collectively, "Ross River") to acquire up to a 100% interest in the Tay-LP gold property by paying CAD$1 million in cash and/or shares and spending CAD$1.5 million on exploration over a three-year period, which can occur in two stages. In the first stage, Canarc could have earned a 51% interest by paying CAD$150,000 in cash and spending CAD$900,000 on exploration over a two-year period. In the second stage, Canarc could have earned an additional 49%, thereby totalling 100% interest, by paying CAD$850,000 in cash or shares at Canarc's discretion and spending CAD$600,000 on exploration by the third year. If Canarc did not proceed with the second stage, then a joint venture would have been formed. Canarc was to pay to the optionors a gold bonus equal to CAD$1 per ounce of gold for all proven and probable gold reserves and measured and indicated gold resources to a maximum of 1 million oz gold. The property option agreement was subject to net smelter returns ("NSR") totalling 3% which could be reduced to 1.5% by payments totalling $1.95 million. Commencing on or before October 31, 2009 and continuing on or before October 31 of each subsequent year until the property was put into commercial production, Canarc was to pay to the NSR holders an annual advance NSR royalty payments totalling CAD$25,000 or that number of common shares of Canarc and which was to be deducted from NSR obligations. The NSR of 3% was subject to maximum total payments based on one million payable ounces of gold being mined by commercial production but could have been reduced to 500,000 payable ounces of gold if the NSR was reduced to 1.5%.

On September 3, 2011, Canarc and Ross River amended the property option agreement by increasing the cash payment of CAD$50,000 to CAD$75,000 due by October 31, 2011 (paid), deferring the exploration expenditures of CAD$500,000 from October 31, 2011 to October 31, 2012 and exploration expenditures of CAD$600,000 from October 31, 2012 to October 31, 2013, and including a cash payment of CAD$25,000 due by October 31, 2012.

In October 2012, Canarc amended the property option agreement by extending the due date for the cash payment of CAD$25,000 from October 31, 2012 to December 15, 2012 (paid); exploration expenditures of CAD$500,000 for a 51% interest which were due on October 31, 2012 were increased to CAD$700,000 and its due date extended to December 15, 2013; the due date of October 31, 2013 for both the payment of CAD$850,000 in cash or that number in common shares and exploration expenditures of CAD$600,000 for the remaining 49% interest was extended to December 15, 2014. Also the due date for annual advance NSR royalty payments of CAD$25,000 or that number of common shares was extended from October 31, 2012 to December 15, 2012 and for each subsequent year thereafter.

In late March 2010, Canarc entered into a property option agreement with Cap-Ex Ventures Ltd. ("Cap-Ex") whereby Cap-Ex can acquire 50% of Canarc's interest in the Tay-LP gold property, by paying CAD$100,000 of which CAD$25,000 have been paid, issuing 200,000 common shares of which 100,000 common shares have been received, incurring exploration expenditures of CAD$675,000, and maintaining Canarc's underlying option agreement in good standing until October 2011. Cap-Ex terminated the property option agreement with Canarc in March 2011.

Canarc Resource Corp.

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Canarc completed a Phase 1 exploration program for 10 holes including 2,000 m of diamond drilling in the third and fourth quarters of 2009. The objective of the program was to extend known mineralization along strike and down-dip of existing gold intercepts in three principle target areas.

David St. C. Dunn, P.Geo., and James Moors, P.Geo, who was Vice President Exploration of the Registrant at that time, were the Qualified Persons for the purposes of the technical disclosure on the Tay-LP property as set out in the Technical Report titled "2009 Diamond Drilling Program on the Tay-LP Property" dated March 30, 2010, prepared by David St. C. Dunn, P.Geo., and James G. Moors, PGeo (BC), who was Vice-President, Exploration, of the Registrant at that time (the "Tay-LP Technical Report").

The following information was extracted from, or includes accurate paraphrasings of, the executive summary, or other sections as indicated, from the Tay-LP Technical Report, the full copy of which is available online at www.sedar.com as filed on April 1, 2010. Defined terms and abbreviations used herein and not otherwise defined shall have the meanings ascribed to such terms in the Tay-LP Technical Report.

Property Description

The Tay-LP project of Ross River Gold Ltd. is a gold exploration project, covering an area of approximately 8150 hectares, located in south-central Yukon near the Village of Ross River. The project comprises 413 mineral claims. The Tay-LP area was first staked, following a prospecting discovery in 1984. The property has since been explored intermittently by various companies for intrusion-related gold deposits. Gold is associated with pyrrhotite-dominant, quartz-sulphide veins and replacement zones hosted by folded Paleozoic meta-sedimentary rocks.

The 2009 exploration program was carried out between September 9th and September 25th and comprised 1868 metres of diamond drilling. Personnel included: one of the authors, James Moors, P.Geo., who was V.P. Exploration of Canarc Resource Corp. at that time; Robin S. Tolbert, Project Geologist; Lyle Hansen, Assistant Geologist; and core cutters Robert Smallwood and John Dicks of Atlin. Diamond drilling was performed by Hy-Tech Diamond Drilling of Smithers, B.C.

A road accessible tent camp located near the centre of the property was the base of operations.

The cost of field work and analysis on the property in 2009 was $480,000.

Reserves or resources have not been calculated for the property.

The primary author was part of the 2003 Prospecting and Geochemical surveying program on the Tay-LP claims (Schmidt, U., 2004).

Canarc Resource Corp.

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Summary

The Tay-LP project of Canarc Resource Corp. is a gold exploration project, covering an area of approximately 7575 hectares, located in south-central Yukon, approximately 50 km south of the Village of Ross River and 160 kilometres northeast of Whitehorse. The project comprises 410 contiguous mineral claims. Option agreements give Canarc the right to earn 100% of the property. The property is accessible by road during the summer months via the South Canol Road and a 20 km long dirt branch road.

The region surrounding the property is underlain by variably metamorphosed, folded and faulted Paleozoic miogeoclinal rocks of the Pelly-Cassiar Platform. They range in age from Late Proterozoic to Triassic and include miogeoclinal clastic, carbonate and volcanic rocks. They are considered North American in origin and were deformed during Mesozoic arc -continent collision. These rocks have been intruded by mid-Cretaceous intrusions of intermediate composition.

Gold mineralization on the property is hosted by Cambro-Ordovician calcareous phyllite, marble and schist. Mineralization fits the intrusion-related epigenetic gold mineralization model of the "Tintina Gold Belt", based on gold-bismuth-tellurium chemistry, mineralogy, tectonic setting and age of intrusion. Mineralization occurs in structurally controlled veins and in replacement zones which parallel and in some cases cross-cut the dominant foliation. The exploration objective is to define sufficient structurally controlled or skarn style gold mineralization to support a profitable mine.

The 2009 program consisted of 10 drill holes totaling 1868 metres, drilled in 3 target areas. Results confirmed the presence and continuity of gold bearing structures. The total cost of the field program for 2009 was $480,000.

It is recommended that a first phase of work including an airborne geophysical survey with more advanced systems than those utilized in the 1999 survey should be carried out. This survey will better and more accurately define the geology beneath the glacial overburden that covers the most prospective portions of the property.

Ground Max-Min geophysical surveys should also be carried out to extend the known anomalies and test for mineralization on the peripheries of the known intrusive bodies. This work is estimated to take six weeks to complete at a cost of $252,328.

Following the interpretation of the surveys recommended in Phase 1, a second phase of work consisting of systematic drilling along strike and down dip of current pierce points that returned significant gold content and along the full range of Max-Min and aerially defined geophysical anomalies. This program should consist of at least 2,500 meters of diamond drilling and is estimated to take eight weeks to complete at a cost of $504,000.

Canarc Resource Corp.

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Location Map

David St. C. Dunn, P.Geo., and James Moors, P.Geo, who was Vice President Exploration of the Registrant at that time, are the Qualified Persons for the Tay-LP Technical Report.

Canarc Resource Corp.

Form 20-F

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In 2010, Cap-Ex completed a 470 kilometer airborne geophysical survey at Tay-LP which identified several new EM conductors and magnetic anomalies within prospective geological settings. In March 2011, Cap-Ex terminated its property option agreement with Canarc.

Canarc completed the permitting process for exploration work at the Tay-LP property in 2012.

Canarc decided not to proceed with any further expenditure on the Tay-LP property which was written off in 2013.

Windfall Hills properties British (British Columbia, Canada

Canada)

In April 2011,2013, Canarc entered into two property optionpurchase agreements to purchase 100% interests in two adjacent gold properties located in British Columbia. In April 2011, Canarc entered into a property option agreement with Atna Resources Ltd. ("Atna") whereby Canarc can acquire a 100% interest inColumbia, which comprise the Uduk Lake properties by making $750,000 in cash payments over a four year period of which $125,000 has been paid, honouring a pre-existing 1.5% NSR production royalty that can be purchased for CAD$1 million, and granting the vendor a 2% NSR production royalty. In March 2012, Canarc amended the property option agreement in which the option payment of $100,000 due on April 21, 2012 was payable in 12 monthly installments of $8,333 over a twelve month period beginning April 21, 2012. In April 2013,Windfall Hills properties. Canarc entered into a property purchase agreement with Atna Resources Ltd. (“Atna”) whereby Canarc acquired a 100% undivided interest in the Uduk Lake properties by the issuance of 1,500,000 common shares at a fair value of CAD$0.10 per share, honouring a pre-existing 1.5% NSR production royalty that can be purchased for CAD$1 million, and granting Atna a 3% NSR production royalty.

In April 2011, Canarc entered into a property option agreement with a vendor whereby Canarc can acquire a 100% interest in the Dunn properties by making CAD$250,000 in cash payments over a four year period, and a final bonus payment based on all gold resources estimated in an independent NI 43-101 technical report. The formula for the bonus payment is $30 per oz for measured resources, $20 per oz for indicated resources, and $10 per oz for inferred resources. In March 2012, Canarc amended the property option agreement in which the option payment of CAD$25,000 due on April 20, 2012 was payable in three monthly installments of CAD$8,333 over a three month period beginning April 21, 2012 which were paid. In April 2013, Canarc entered into a property purchase agreement with another vendor whereby Canarc acquired a 100% undivided interest in the Dunn properties by the issuance of 500,000 common shares at a fair value of CAD$0.10 per share and granting the vendor a 2% NSR royalty which can be reduced to 1% NSR royalty for $500,000.

The Windfall Hills gold project is located 65 km south of Burns Lake, readily accessible by gravel logging roads and a lake ferry crossing in the summer-time, or by charter aircraft year-round. The project consists of the Atna properties, comprised of 2 mineral claims totalling 959 hectares and the Dunn properties, comprised of 8 mineral claims totalling 2820 hectares.
In October 2016, Canarc completed a Phase 1geophysical 3D IP-resistivity survey which covered 3.8 sq km, representing about 10% of the property. The survey was at 100 m intervals on 200 m spaced line to a depth of 350 m below surface. The main exploration targets are low sulphidation epithermal, disseminated and stockwork gold-silver deposits with tertiary rhyolite volcanic centers. The IP survey identified four geophysical anomalies which cover an area of coincidental high resistivity and chargeability.
Canarc Resource Corp.
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In 2018, Canarc completed its exploration program which included reconnaissance stream sediment sampling, soil sampling, machine trenching and airborne geophysics to detect new gold-silver anomalies, to better delineate the known epithermal stock-work gold-silver mineralization and to better define drill targets, after which a drilling program and budget will be developed for 2019.
El Compas Project (Zacatecas, Mexico)
On October 8, 2015, Canarc and Marlin Gold entered into a Share Purchase Agreement, whereby Canarc acquired 100% of the shares of Oro Silver, which indirectly owns 100% of the El Compas gold-silver project located in Zacatecas, Mexico, in exchange for 19 million common shares of Canarc. Canarc’s acquisition of Oro Silver closed on October 30, 2015.
The El Compas property was a fully permitted gold silver project located in Zacatecas, Mexico, and was comprised of 24 concessions totaling 3,900 hectares.
In January 2016, Canarc signed a definitive agreement with the Zacatecas state government to lease and operate the permitted 500 tonne per day La Plata ore processing plant located in the city of Zacatecas, Mexico. Highlights of the lease agreement include the following:
● 
Lease term was 5 years with the right to extend for another 5 years;
● 
Canarc assumed responsibility for the plant as of January 29, 2016;
● 
Plant would be exclusively operated by Canarc’s Mexican subsidiary, Minera Oro Silver de Mexico SA de CV;
● 
Canarc was to pay a monthly lease payment of MXP 136,000;
● 
Grace period of 6 months to allow time for plant refurbishing;
● 
Power and water were available for plant operations;
● 
Plant capacity was 500 tonnes per day with the possibility to expand;
● 
Permitted tailings facilities had a capacity for approximately 1 million tonnes;
● 
Certain plant refurbishment costs would be reimbursed to Canarc by lease payment offsets; and
● 
Canarc would reserve up to 100 tonnes per day for toll mining of ore produced by local small miners.
In March 2016, Canarc entered into an indicative term sheet for up to $10 million in debt financing by way of a gold prepaid facility to develop the El Compas gold-silver project subject to a 60 day due diligence period which did not advance due to the subsequent sale of the project.
On May 6, 2016, Canarc entered into a Purchase and Sale Agreement with Endeavour Silver Corp., a company sharing one common director, (“Endeavour”) pursuant to which Canarc sold to Endeavour 100% of the shares of Canarc’s wholly-owned subsidiary, Oro Silver, which indirectly holds a 100% interest in the El Compas project in Zacatecas, Mexico, in consideration for 2,147,239 free-trading common shares of Endeavour, with an aggregate deemed value of CAD$10.5 million (the “Sale Transaction”). The Endeavour shares had a deemed price of CAD$4.89 per share, equal to the volume-weighted average trading price on the TSX for the 10 trading-day period immediately prior to May 6, 2016. As additional consideration, Endeavour assumed Canarc’s obligation to deliver an aggregate of 165 troy ounces of gold (or the US dollar equivalent) to Marlin Gold in three equal payments of 55 troy ounces which were due in October 2016, 2017 and 2018. The foregoing gold delivery obligation was incurred by Canarc in connection with its Windfall Hillsacquisition of El Compas from Marlin Gold. The Sale Transaction closed on May 27, 2016 at which time Canarc received 2,147,239 free-trading common shares of Endeavour with a fair value of CAD$3.99 per share at that date.
FG Gold property (British Columbia, Canada)
On August 24, 2016, Canarc entered into a property option agreement with Eureka which closed on October 12, 2016. In consideration for the grant of the property option agreement, Canarc issued 250,000 common shares at a value of CAD$0.10 per share to Eureka, and subscribed to Eureka’s private placement for 750,000 units at a price of CAD$0.14 per unit for a total of CAD$105,000; each unit was comprised of one common share of Eureka and one-half of one common share purchase warrant with an exercise price of CAD$0.20 and expiry date of September 9, 2018. Canarc can earn up to a 75% interest in the FG gold property in two stages.
In the first stage, Canarc can earn an initial 51% interest over three years by:
- 
incurring CAD$1.5 million in exploration expenditures with an annual minimum of CAD$500,000;
- 
issuing 750,000 common shares in three annual tranches of 250,000 shares; and
- 
paying 50% of the annual BC METC claimed by Canarc to Eureka to an aggregate maximum exploration expenditure of CAD$1.5 million.
Canarc Resource Corp.
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In the second stage, Canarc can earn an additional 24% interest for a total interest of 75% over the following two years by:
- 
incurring CAD$1.5 million in exploration expenditures;
- 
issuing 1.5 million common shares in two annual tranches of 750,000 shares; and
- 
paying the greater of: (i) CAD$75,000 and (ii) 50% of the annual BC METC claimed by Canarc to Eureka to an aggregate maximum exploration expenditure of CAD$1.5 million.
If Canarc failed to satisfy the consideration necessary to exercise the second stage, then a joint venture will be deemed to have formed with Canarc having a 51% interest and Eureka with a 49% interest.
In 2017, Canarc wrote off the FG Gold project.
The FG Gold project was located in the historic Cariboo Gold Camp within the Quesnel Trough area of central British Columbia. Mineralization occurs as quartz veins and stringer zones containing coarse free gold and finer grained iron sulphides bearing gold in a broad shear zone conformable to bedding within deformed and metamorphosed Paleozoic sedimentary rocks. The property consists of 33 contiguous mineral claims totalling 10,400 hectares.
Non Material Mineral Properties owned by American Innovative Minerals, LLC
On March 20, 2017, Canarc entered into and closed the AIM Agreement with the AIM Securityholders to purchase AIM which has 100% legal and beneficial interests in mineral resource properties located in Nevada, Idaho and Utah (USA) for a total purchase price of $2 million. Certain of the mineral properties are subject to royalties.
AIM owns 11 gold properties in Nevada of which two properties (Fondaway Canyon and Dixie Comstock) contain historic gold resource estimates, and owns one gold property in Idaho, and has two royalty interests on other properties. With the exception of the Fondaway Canyon project which included detailed soilis considered a material property, the following properties are not considered material by Canarc:
●
Dixie Comstock, also located in Churchill County, Nevada, consists of 26 unpatented lode claims. The property contains a range-front epithermal gold deposit with a non-43-101 compliant resource of 146,000 ounces of gold at 1.063 grams per tonne Au.
●
Clear Trunk property is located in Pershing and rock geochemical samplingHumboldt Counties, Nevada on 4500 acres of fee mineral and unpatented claims in the Sonoma Range, south of Winnemucca and near the Goldbanks gold deposit. The property contains gold-bearing epithermal quartz veins, mesothermal quartz veins with high-grade gold and copper-gold intrusion-hosted mineralization.
●
Bull Run property is located in Elko County, Nevada on two large patented claim groups of 500 acres near the Jerritt Canyon gold district.
●
Hot Springs Point property is located in Eureka County, Nevada on 160 acres of fee land on north end of the prolific Cortez Trend. Klondex Mining claims surround the project on three sides.
●
Jarbidge property is located in Elko County, Nevada on 8 patented claims along the east end of major gold veins in the Jarbidge mining district.
●
Lightning Tree property is located in Lemhi County, Idaho on 4 unpatented claims near the Musgrove gold deposit.
●
Silver King property is located in Humboldt County, Nevada on 4 patented claims in the Iron Point mining district. Previous exploration focused on low grade gold values but the property was never been explored for silver.
●
A&T property is located in Humboldt Co., Nevada on 2 patented claims on Winnemucca Mountain. The property contains gold-bearing veins in altered shale.
Canarc Resource Corp.
Form 20-F
49
●
Eimis property is located in Elko County, Nevada on one 20 acre patented claim adjacent to the Coleman Canyon gold deposit controlled by Arnevut Resources. Gold anomalies extend onto Eimis property.
●
Silver Peak property is located in Esmeralda County, Nevada on 3 patented (57 acres) and 3 unpatented mining claims covering 50 acres. The property is adjacent to the Mineral Ridge mine controlled by Scorpio Gold Corporation.
Canarc has initiated a comprehensive review of all these Nevada properties to evaluate each property’s potential and to prioritize exploration plans for each property.
Eskay Creek (British Columbia, Canada)
In December 2017, Canarc signed an agreement with Barrick Gold Inc (“Barrick”) and Skeena Resources Ltd. (“Skeena”) involving Canarc’s 33.3% carried interest in certain mining claims adjacent to the past-producing Eskay Creek Gold mine located in northwest British Columbia, whereby Canarc will retain its 33.33% carried interest. Canarc and Barrick have respectively 33.33% and 66.67% interests in 6 claims and mining leases totaling 2323 hectares at Eskay Creek. Pursuant to an option agreement between Skeena and Barrick, Skeena has the right to earn Barrick’s 66.67% interest in the property. Canarc wrote off the property in 2005.
Silver King (Nevada, USA)
In October 2018, Canarc entered into a property option agreement for its Silver King property with Brownstone whereby Brownstone has an option to earn a 100% undivided interest by paying $240,000 in cash over known target areasa 10 year period with early option exercise payment of $120,000. Canarc will retain a 2% NSR of which a 1% NSR can be acquired by Brownstone for $1 million.
The Silver King property is located in 2011. A totalHumboldt County, Nevada on 4 patented claims near Golconda Summit. Previous exploration focused on low grade gold values but the property was never been explored for silver.
Hard Cash and Nigel (Nunavut, Canada)
In November 2018, Canarc entered into a property option agreement with Silver Range whereby Canarc has an option to earn a 100% undivided interests in the Hard Cash and Nigel properties by paying CAD$150,000 in cash and issuing 1.5 million common shares to Silver Range over a four year period. Silver Range retains a 2% NSR of 340 geochemical soilwhich a 1% NSR can be acquired for CAD$1 million. Silver Range shall also be entitled to receive $1 per Au oz of measured and indicated resource estimate and $1 per Au oz of proven or probable reserve estimate, payable in either cash or common shares of Canarc at Canarc’s election.
Hard Cash is located 310 km NE of Stony Rapids, Saskatchewan, on the shores of Ennadai Lake. Access is provided by float plane or helicopter, and there is an all-weather gravel strip at Ennadai Lake Lodge, 35 km east of the property. Nigel is located 15 km west of Hard Cash. Hard Cash is underlain by the Ennadai Greenstone Belt of the Churchill Province. Gold mineralization at Hard Cash and Nigel occurs in high grade quartz veins and lower grade shear zones hosted by basal mafic volcanics overlain by felsic volcanics metamorphosed to upper greenschist/lower amphibolite facies and intruded by granite.
Canarc’s consulting geologist visited the property in September 2018 and sampled gold assays in quartz vein float and outcrop samples were collected onat and near the Swamp showing. In January 2019, Canarc completed a 100 meter by 25 meter grid970 line-km airborne magnetic and radiometric survey over the main 2.8 sq. km. prospect area. Two anomalies were delineatednewly acquired 2,090 hectare Hard Cash gold property. The new geophysical survey results are intended to help define the magnetic and radiometric responses of the known gold mineralization and identify new high priority drill targets along the gold mineralized trend where it is covered by glacial overburden.
Princeton Property (British Columbia, Canada)
In December 2018, Canarc entered into a property option agreement jointly with Tasca Resources Ltd. (“Tasca”) and an individual whereby Canarc has an option to earn a 80% interest in the Princeton property by incurring exploration expenditures of CAD$900,000 over a two year period and granting a 1% NSR to Tasca which can be acquired for CAD$1 million and honoring a 2% NSR to the individual of which 1% NSR can be acquired for CAD$1 million.
Canarc Resource Corp.
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The Princeton gold property consists of 14,650 hectares located 35 kilometers (km) south of Princeton, British Columbia, and is readily accessible by road. The property is underlain by volcanic rocks of both the Eocene Princeton Group and the Triassic-Jurassic Nicola Group.
In 2018, Canarc completed a 2,350 line-kilometer magnetic survey on the basisproperty to identify drill targets for a drill program in 2019.
Corral Canyon property (Nevada, USA)
In 2018, Canarc staked 92 mining claims covering 742 hectares in Nevada, USA.
Corral Canyon property lies 35 km west of multi-element geochemistry.

the town of McDermitt in Humboldt County along the western flank of the McDermitt caldera complex, an area of volcanic rocks that hosts significant lithium and uranium mineralization in addition to gold. It contains volcanic-hosted, epithermal, disseminated and vein gold mineralization evidenced by previous drilling.

Other Mineral Property
In June 2014,December 2018, Canarc received government permitentered into a Memorandum of Understanding for the drilling program which was mobilizedan exploration and development project in July 2014South America whereby Canarc paid $10,000 in 2018 and was financed byanother $10,000 is payable as a flow-through financing of CAD$400,000 which closedsuccess fee to close on an acceptable agreement in July 2014. Funds of CAD$386,000 were expended for flow through purposes is 2014 and 2015. Canarc completed 3 holes and 1,149 metres of drilling that intersected an alteration zone anomalous in gold-silver. The Company is evaluating the possibility of additional geochemical and geophysical surveys in 2016 in order to better target the mineralized zone, subject to financing.

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connection with a prospective mineral project.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Management's

Management’s discussion and analysis in this Item 5 are intended to provide the reader with a review of factors that affected the Registrant'sCompany’s performance during the years presented and factors reasonably expected to impact on future operations and results. The following discussion of the financial condition, changes in financial condition and results of operations of the RegistrantCompany for the three fiscal years ended December 31, 2015, 20142018, 2017 and 20132016 should be read in conjunction with the consolidated financial statements of the RegistrantCompany and related notes included therein.

The Registrant'sCompany’s consolidated financial statements are prepared in accordance with IFRS as issued by the IASB, and all dollar amounts are expressed in United States dollars unless otherwise indicated.

This discussion contains "forward-looking statements"“forward-looking statements” that are subject to risk factors set out under the heading "Item“Item 3. Key Information – D. Risk Factors"Factors”. See "Cautionary“Cautionary Note Regarding Forward-Looking Statements"Statements” above.

5.A Operating Results

In accordance with IFRS, all costs related to investments in mineral property interests are capitalized on a property-by-property basis. Such costs include mineral property acquisition costs and exploration expenditures, net of any recoveries and write-downs.

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The Registrant'sCompany’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 RegistrantCompany to raise equity financing, and the attainment of profitable operations, external financings and further share issuances to meet the Registrant'sCompany’s liabilities as they become payable and for settlement of expenditures.

The RegistrantCompany is not aware of any seasonality in the business that has a material effect upon its financial condition, results of operations or cash flows. The RegistrantCompany is not aware of any changes in the results of its operations that are other than those normally encountered in its ongoing business.

Fiscal Year 20152018– Year ended December 31, 20152018 compared with December 31, 2014

2017

Canarc incurred a net loss of $932,000$1.1 million for the year ended December 31, 20152018 which is significantly lower than the net loss of $1.8$2 million for fiscal 2014,2017, with the latter having commensurately lowerhigher operating expenses in the current period.expenses. Net losses wereloss was impacted by different functional expense items.

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62

Canarc has no sources of operating revenues. Operating losses continue to bewere incurred for ongoing activities of Canarc in acquiring developing and advancing the El Compas project,exploring its mineral property interests, seeking an appropriate joint venture partner to advance the New Polaris property, and pursuing miningmineral projects of merit.

Amortization is for the leasehold improvements and office furnishings and equipment for Canarc’s new office facilities which Canarc moved into in July 2017. In prior periods, Canarc used shared office premises. A full year’s amortization was recognized in 2018 with additional office equipment acquired resulting in a higher expense.
Corporate development expenses were substantially lower in the current fiscal yearperiod than in the prior comparative periods. Corporate development efforts in the first quarter of fiscal year.2017 involve due diligence activities which led to the eventual acquisition of AIM which owns 10 gold properties in Nevada of which two properties (Fondaway Canyon and Dixie Comstock) contain historic gold resource estimates, and owns one gold property in Idaho, and has two royalty interests on other properties. A NI 43-101 technical report for resource estimate was completed for the Fondaway Canyon project in April 2017. During the remaining quarters of fiscal 2017, nominal efforts were sustained on corporate development as Canarc focused on detailed data review of the Fondaway Canyon project and development of a new structural model for gold mineralization to prepare for a Phase 1 exploration program which included ground magnetic survey, rock chip sampling and permitting, and on the 7 hole diamond drilling program which was mobilized and completed in the fourth quarter. In the first and second quarters of fiscal 2015,2018, corporate development efforts werecontinued at a reduced level which involve site visits and preliminary discussions and technical overview of possible projects of merit which have possible near term gold mining properties but such discussions did not advance. Negligible corporate development was done in the third quarter as Canarc focused on a 3D model for Fondaway Canyon property, various scenarios for processing concentrates into gold dore bars at the viabilityNew Polaris property site, and mobilization of the Albion processtrenching and exploration program for Canarc's New Polaris project. ThenWindfall Hills property. Corporate development activities increased in the remaining quartersfourth quarter with a heightened emphasis on “elephant hunting” in seeking projects with potential to be discoveries. These efforts in the last quarter of fiscal 2015,2018 culminated in two property option agreements for the Princeton (British Columbia, Canada) and Hard Cash and Nigel (Nunavut, Canada) properties and staking of 92 mining claims in northwestern Nevada (USA).
Remuneration for employees in 2018 was lower than 2017. Employee remuneration directly related to mineral exploration projects and corporate development were allocated to those specific activities rather than to operations, in which in the first quarter of 2017 Canarc focusedwas active in its due diligence on the El Compas projectFondaway Canyon project. Canarc accomplished financial and corporate milestones in Mexicofiscal 2016 which culminatedresulted in the Share Purchase Agreement with Marlin Goldassessment and payment of bonuses to senior officers and directors for strategic guidance which were not determinable in October 2015. Corporate development expenses2016 as resolved by Canarc’s Compensation Committee in the first quarter of 2017 which contributed to significant remunerations in that quarter. In the remaining three quarters of 2017, employee remuneration was lower due to management allocations to the Fondaway Canyon project for the technical report for the resource estimate and for implementation of the Phase 1 drilling program for that project which was completed in December 2017. The slight increase in the fourth quarter relative to the second and third quarters of 2017 was the year end settlement for banked time and unused vacation time due to the added responsibilities by personnel in advancing Canarc’s projects during the fiscal year. No bonuses were assessed for fiscal 2017 resulting in lower payouts in employer remuneration in the first quarter of fiscal 2018. Remuneration for employees was substantially lower in the first quarter of 2018 than in the same quarter in 2017 but significantly higher in the comparable period in fiscal 2014, and were focused onsecond quarter of 2018 than the La Cieneguita mine properties in Mexico andfirst quarter of 2018. In the Santa Fe mine/mill project in New Mexico;second quarter of 2018, the latter project hasdeparture of a mine and mill which necessitated more technical due diligence resulting in higher expensessenior officer resulted in the third quarterincurrence of fiscal 2014.

severance pay which increased employee remuneration. Remuneration for employees was lower in the currentthird quarter than comparable quarters in 2018 and 2017 due to the departure of a senior officer at the end of June 2018. Heightened corporate development efforts, active exploration programs for the Windfall Hills, Princeton and Hard Cash properties, and ongoing assessment of scenarios for processing concentrates into gold dore bars at the New Polaris property site would reduce technical employee remuneration in the fourth quarter of 2018 as these costs would be allocated to the applicable projects. Such reduction would be offset by the employment of a non technical senior officer in October 2018.

Canarc Resource Corp.
Form 20-F
52
Overall general and administrative expenses were comparable for both 2018 and 2017 but were affected by different expense segments. Audit, tax and legal expenses were similar for both fiscal periods as audit fees did not change, and no changes in corporate tax issues, and legal fees for debt settlement in 2018 were applied against the recovery of the debt principal. Office and sundry are similar across comparative quarters given the fixed nature of such expense; such expense was higher in the third quarter of 2017 due to the office move to its own new facilities. Regulatory expenses are generally higher in the second quarter as Canarc normally holds its annual general shareholders in June of its fiscal year. Expenses for its annual general meeting were higher in the second quarter of 2017 as Canarc sought shareholder approval for changes in the corporate articles and increased the number of stock options grantable under its stock option plan, which Canarc sought greater shareholder notification in both Canada and the US. Regulatory expenses for the third and fourth quarters of both comparable fiscal periods were similar. Rent increased in 2018 for a full year of office rent, due to the office move and Canarc having its own primary office facilities beginning in July 2017.
In the first quarter of fiscal 2017, shareholder communications and marketing programs were initiated to specifically create market awareness of Canarc’s acquisition of AIM along with its 10 gold properties in Nevada of which two properties (Fondaway Canyon and Dixie Comstock) contain historic gold resource estimates and one gold property in Idaho, and has two royalty interests on other properties. A NI 43-101 resource estimate was completed for Fondaway Canyon in May 2017. These activities subsided in the remaining quarters relative to the first quarter of 2017 given the stagnancy in the markets, and such reduced efforts continued into fiscal 2018 resulting in lower comparable expenses.
Share-based payments were lower in 2018 than in 2017 with ongoing vesting provisions of outstanding stock options. In June 2017, stock options for 2.25 million common shares which were performance based were fully vested by Canarc’s Board of Directors. Also in the same month, Canarc granted 3.1 million stock options to directors, officers and employees with an exercise price of CAD$0.10 and an expiry date of June 2, 2022, and which are subject to vesting provisions in which 25% of the options vest immediately on the grant date and 25% vest every six months thereafter. In September 2017, additional stock options for 500,000 common shares were granted to an employee, with an exercise price of CAD$0.09 and expiry date of September 13, 2022, and which are subject to vesting provisions in which 25% of the options vest immediately on the grant date and 25% vest every six months thereafter. Share-based payments would be higher in those respective quarters of fiscal 2017. In late June 2018, the departure of a senior officer resulted in the forfeiture of unvested stock options which would reduce share-based payments with vested stock options being cancelled in July 2018. Also at the end of June 2018, Canarc granted 3,250,000 stock options to directors, officers and employees with an exercise price of CAD$0.08 and an expiry date of June 29, 2023, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter. Then in November 2018, Canarc granted 1,000,000 stock options to an officer of which 500,000 stock options have an exercise price of CAD$0.05 and 500,000 stock options with an exercise price of CAD$0.06 and an expiry date of November 12, 2023, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.
Interest income is earned from Canarc’s premium investment savings account which is interest bearing and its guaranteed investment certificate which matured in August 2018. Canarc’s cash resources are expended on mineral exploration and operating activities, given Canarc does not have any sources of revenues or operating cash inflows, which can be expected to reduce interest bearing investments but have been offset by several rate hikes by the central bank since July 2017. As cash resources are expended, interest income can be expected to be commensurately lower.
Change in the fair value of marketable securities is attributable to disposition of marketable securities, the quoted market price changes in investments in shares, and impairment if any. Marketable securities are classified as financial assets at fair value through profit or loss with any resulting gains or losses in fair values being recognized in profit or loss. Canarc disposed of marketable securities in the second quarter of 2017 and realized gains thereto but had realized losses from dispositions in the third quarter of 2017. The net decreases in the market prices of marketable securities at the end of the third quarter further contributed to the recognition of losses in the fair values of held for trading financial assets, which were slightly offset by gains in the fourth quarter of 2017. Canarc’s shareholdings decreased in fair value in the first quarter of 2018, then increased in the second quarter, significantly decreased in the third quarter and again increasing in the fourth quarter as market prices of its financial instruments fluctuate to market conditions; there were no dispositions of marketable securities in 2018.
Flow through financing costs represent the tax effects for using the look back rule for Canarc’s flow through private placement whereby the subscriber was eligible to write off flow through expenditures in 2017 whereas Canarc fully expended the flow through funds in 2018.
Canarc Resource Corp.
Form 20-F
53
Interest expense was incurred and accrued for the remaining buyout amount of $425,000 which Canarc recognized as a deferred royalty liability upon the acquisition of AIM in March 2017 for the 3% NSR for the Fondaway Canyon project; the original buyout amount was $600,000. Advance royalty payments of $35,000 are due and payable by July 15th of each year until the buyout amount has been fully paid for the 3% NSR for the Fondaway Canyon project. Interest expense shall continue to be incurred until the buyout amount has been fully paid by the annual advance royalty payments at which time the 3% NSR would be bought out.
Foreign exchange gain or loss reflects the transactional impact from the foreign exchange fluctuations of the US$ relative to the CAD$ and the translation effects to Canarc’s functional currency which is the CAD$; its reporting or presentation currency is the US$. Upon the acquisition of AIM in March 2017, foreign exchange was affected by the translation effects of the US$ for Canarc’s wholly owned US subsidiaries.
On February 12, 2018, Canarc entered into a Forbearance Agreement with the debtor in which the loan principal totaling $220,000 shall be repaid in full in 2018, which loan had been written off in 2014. Legal fees, a portion of which is subject to a contingency fee, were netted against the loan principal.
Canarc received $12,000 from Brownstone in 2018 and recognized a recovery for the Silver King property. In the second quarter of 2017, the FG Gold property was written off.
The income tax recovery is the allocation of the premium in the flow through private placement which closed in April 2017 on a pro rata basis of exploration expenditures incurred during the period. Canarc mobilized its exploration and trenching program for the Windfall Hills project in September 2018 given delays from forest fire issues in the immediate area. Flow through exploration programs for the Princeton and Hard Cash were implemented in the fourth quarter in 2018, and for the FG Gold property in 2017.
As at December 31, 2018, the Company has mineral property interests which are comprised of the following:
Canarc Resource Corp.
Form 20-F
54
 
 
 Canada
 
 
 USA
 
 
 
 
 
 
 
($000s)
 
 British Columbia
 
 
 Nunavut
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 New Polaris
 
 
 Windfall Hills
 
 
 FG Gold
 
 
 Princeton
 
 
 Hard Cash
 
 
 Nigel
 
 
 Fondaway Canyon
 
 
 Corral Canyon
 
 
 Other
 
 
 Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition Costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2016
 $3,858 
 $349 
 $19 
 $- 
 $- 
 $- 
 $- 
 $- 
 $- 
 $4,226 
Acquisition of subsidiary
  - 
  - 
  - 
  - 
  - 
  - 
  2,183 
  - 
  - 
  2,183 
Additions, net of recoveries
  6 
  - 
  28 
  - 
  - 
  - 
  44 
  - 
  - 
  78 
Foreign currency translation adjustment
  11 
  25 
  1 
  - 
  - 
  - 
  (54)
  - 
  - 
  (17)
Write off
  - 
  - 
  (48)
  - 
  - 
  - 
  - 
  - 
  - 
  (48)
Balance, December 31, 2017
  3,875 
  374 
  - 
  - 
  - 
  - 
  2,173 
  - 
  - 
  6,422 
Additions, net of recoveries
  6 
  - 
  - 
  - 
  9 
  2 
  12 
  23 
  10 
  62 
Foreign currency translation adjustment
  7 
  (30)
  - 
  - 
  - 
  - 
  (175)
  - 
  - 
  (198)
Balance, December 31, 2018
 $3,888 
 $344 
 $- 
 $- 
 $9 
 $2 
 $2,010 
 $23 
 $10 
 $6,286 
 
    
    
    
    
    
    
    
    
    
    
Deferred Exploration Expenditures:
    
    
    
    
    
    
    
    
    
    
 
    
    
    
    
    
    
    
    
    
    
Balance, December 31, 2016
 $5,817 
 $447 
 $6 
 $- 
 $- 
 $- 
 $- 
 $- 
 $- 
 $6,270 
Additions, net of recoveries
  27 
  44 
  14 
  - 
  - 
  - 
  1,090 
  - 
  - 
  1,175 
Foreign currency translation adjustment
  587 
  31 
  1 
  - 
  - 
  - 
  - 
  - 
  - 
  619 
Write off
  - 
  - 
  (21)
  - 
  - 
  - 
  - 
  - 
  - 
  (21)
Balance, December 31, 2017
  6,431 
  522 
  - 
  - 
  - 
  - 
  1,090 
  - 
  - 
  8,043 
Additions, net of recoveries
  88 
  150 
  - 
  69 
  120 
  - 
  351 
  1 
  - 
  779 
Foreign currency translation adjustment
  (741)
  (42)
  - 
  - 
  - 
  - 
  (88)
  - 
  - 
  (871)
Balance, December 31, 2018
 $5,778 
 $630 
 $- 
 $69 
 $120 
 $- 
 $1,353 
 $1 
 $- 
 $7,951 
 
    
    
    
    
    
    
    
    
    
    
Mineral property interests:
    
    
    
    
    
    
    
    
    
    
Balance, December 31, 2017
 $10,306 
 $896 
 $- 
 $- 
 $- 
 $- 
 $3,263 
 $- 
 $- 
 $14,465 
Balance, December 31, 2018
  9,666 
  974 
  - 
  69 
  129 
  2 
  3,363 
  24 
  10 
  14,237 
Canarc Resource Corp.
Form 20-F
55
Fiscal Year 2017 – Year ended December 31, 2017 compared with December 31, 2016
Canarc incurred a net loss of $2 million for the year ended December 31, 2017 as opposed to a net income of $6.8 million for fiscal 2016, with commensurately higher operating expenses in the current year. Net (loss) income was impacted by different functional expense items. The significant net income for the prior comparative year was primarily attributable to the Sale Transaction with Endeavour for the sale of 100% of its interest in its wholly owned subsidiary, Oro Silver, in consideration for 2,147,239 free-trading common shares of Endeavour which had a market price of CAD$3.99 on the closing date of May 27, 2016 and the increase in the fair values of those Endeavour shares during the year.
During the year ended December 31, 2016, Canarc realized a net income of $2 million from continuing operations and net earnings of $4.8 million from discontinued operations, which contributed to the net income of $6.8 million.
Canarc has no sources of operating revenues. Operating losses were incurred for ongoing activities of Canarc in acquiring and exploring its mineral property interests, seeking an appropriate joint venture partner to advance the New Polaris property, and pursuing mineral projects of merit.
Amortization is for the leasehold improvements and office furnishings and equipment for Canarc’s new office facilities which Canarc moved into in July 2017. In prior years, Canarc used shared office premises.
Corporate development expenses were lower in the current year than in the prior comparative year. In the first quarter of 2016, negligible efforts were expended on corporate development as the primary focus was the advancement of the El Compas project which was acquired in October 2015 and the due diligence of the project by Endeavour, leading to the eventual sale of the project in May 2016. In the remaining quarters of 2016, project generative efforts were re-initiated to identify projects of merit for acquisition purposes as precious metal prices continued their upward trends which weakened in the latter part of the third quarter but would assist with reduced valuations for acquisition purposes. These activities included the engagement of third party consultants to assist and to provide corporate advisory services to allow greater breadth in seeking projects and financing possibilities for larger scaling of projects given the significantly improved financial resources of Canarc from the sale of the El Compas project. Such efforts resulted in the property option agreement in August 2016 with Eureka for the FG gold project which has measured and indicated resources. Ongoing corporate development continued into the first quarter of fiscal 2017 which led to the acquisition of AIM which owns 10 gold properties in Nevada of which two properties (Fondaway Canyon and Dixie Comstock) contain historic gold resource estimates, and owns one gold property in Idaho, and has two royalty interests on other properties. A NI 43-101 technical report for resource estimate was completed for the Fondaway Canyon project in April 2017. During the remaining quarters of fiscal 2017, nominal efforts were sustained on corporate development as Canarc focused on detailed data review of the Fondaway Canyon project and development of a new structural model for gold mineralization to prepare for a Phase 1 exploration program which included ground magnetic survey, rock chip sampling and permitting, and on the 7 hole diamond drilling program which was mobilized and completed in the fourth quarter.
Remuneration for employees was higher in fiscal 2017 than in fiscal 2016. Employee remuneration directly related to mineral exploration projects was allocated to those specific projects rather than to operations, in which Canarc had active exploration programs for its New Polaris project in the current periodfirst quarter of 2016 Canarc was active in terms of assessing the Albion process, arranging concentrates from prior drill core samples and initiating environmental baseline data collection for environmental permitting, and such expenses were also allocated to property investigation and project generation efforts as warranted. In the latter half of 2015, Canarc focused on its due diligence onadvancing the El Compas project including its mineralresulting in a NI 43-101 technical report which provided resource estimate and economic assessment. In the fourth quarter of 2015, Canarc accrued a severance settlementestimates along with a formerpreliminary economic assessment, in seeking financing to develop the mine and to refurbish the mill/plant, due diligence by Endeavour pursuant to the Sale Transaction, project generative activities including the FG Gold project, and the IP survey for the Windfall Hills project. In 2016, Canarc was able to support the positive preliminary economic assessment of the El Compas leading to its eventual sale to Endeavour, disposed of Endeavour shares for proceeds of $8.9 million, closed a private placement for net proceeds of $1.5 million, and closed an option agreement to earn up to a 100% interest in the FG Gold property which has a NI 43-101 resource estimate. These events in 2016 materially improved the working capital of Canarc along with the settlement of all outstanding debts and its portfolio of mineral exploration projects with NI 43-101 technical reports with resource estimates. Such accomplishments in 2016 resulted in the assessment and payment of bonuses to senior officerofficers and a bonus payabledirectors for strategic guidance which were not determinable in 2016 as resolved by Canarc’s Compensation Committee in 2017. This contributed to another senior officer. Inhigher remunerations in the first quarter of 2014, severance settlements for two senior officers contributed to higher2017 than in 2016. In the remaining three quarters of 2017, employee remuneration along with no active exploration programswas lower due to Canarc's projects atmanagement allocations to the Fondaway Canyon project for the technical report for the resource estimate and for implementation of the Phase 1 drilling program for that time.

project which was completed in December 2017. The slight increase in the fourth quarter relative to the second and third quarters of 2017 was the year end settlement for banked time and unused vacation time due to the added responsibilities by personnel in advancing Canarc’s projects.

Canarc Resource Corp.
Form 20-F
56
General and administrative expenses were lower for 2015 than for 2014. The principle factor was legal services renderedhigher in 2014 to Canarcthe current year in relation to the letterprior year. With the exception of intentlegal fees, other segregated expense categories increased. Audit fees increased for the La Cieneguita mine project, TSX delisting review, appointment of a new officer, severance settlements with two officers,2017 and corporate finance issues relating to its working capital. In 2015,accruals for US tax compliance for Canarc’s US subsidiaries were made for 2017 which were not applicable for 2016. Corporate legal services were reduced given the main focus was the technical report and the exploration program for assistance to Canarc's continuous disclosure obligations.the Fondaway Canyon project in the for most of 2017. Office and sundry and rent reflectboth increased due to the ongoing expendituresoffice move and Canarc having its own primary office facilities in July 2017. Regulatory expenses were higher in 2017 from Canarc’s decision to seek shareholder approvals for ancillary office support facilities which are lower as Canarc reduced its personnel. Regulatory fees were lowerthe increase in the current period as Canarc was less activenumber of stock options grantable under its stock option plan and the change in its corporate finance activitiesarticles. To gain wider market breadth of these shareholder resolutions, shareholder approvals were sought in both Canada and expirythe US through dissemination of theits shareholders rights plan in April 2015 and reduced legal fees for its AGM. Relative to prior periods in 2015, general and administrative expenses would increase nominally subsequent to the acquisition of Oro Silver in October 2015 for care and maintenance support for the El Compas project in Mexico.

Shareholder activities continued from commitments from the first half of 2014 with no new shareholder initiatives being implementedmeeting materials in the first half of 2015. InUS. These actions contributed to higher regulatory expenses in the fourthsecond quarter of fiscal 2015,2017 which in effect resulted in shareholders approving all resolutions as proposed by Canarc.

Canarc initiated new shareholder communications and marketing programs were initiated to create market awarenessin the first quarter of Canarc's due diligence and acquisition of2016 as Canarc advanced the El Compas projectproject. These shareholder commitments had terms of up to 12 months and its progress in advancing and developingcontinued into the project.subsequent quarters of 2016. Canarc had initiated and completed a new resource estimate and preliminary economic assessment of the El Compas project, signed a lease agreement for the La Plata processing plant with the Zacatecas government, closed a private placement for CAD$2 million, and entered into an indicative term sheet with a resource fund for debt financing of up to $10 million as a gold prepaid facility in 2016. ShareholderIn the third quarter of 2016, Canarc retained a full time consultant to provide corporate development, growth strategy and market presence which ceased at the end of November 2016. Canarc was also active in its participation in various conferences to increase its marketing efforts and corporate profile as Canarc expanded its portfolio of projects with mineral resources and progressed its exploration programs. These shareholder relations initiatives would also supplement project generative activities were heightened in early 2014 forof Canarc. In the first quarter of fiscal 2017, shareholder communications and marketing services principally in Europeprograms were initiated to attract a greater breadth of investor base, to promote new interest in Canarc's mineral properties, and tospecifically create greatermarket awareness of Canarc’s acquisition of AIM along with its letter10 gold properties in Nevada of intent with Pan Americanwhich two properties (Fondaway Canyon and Dixie Comstock) contain historic gold resource estimates and one gold property in Idaho, and has two royalty interests on other properties. A NI 43-101 resource estimate was completed for Fondaway Canyon in May 2017. These activities subsided in the La Cieneguita mine project at that time. Such activities providedremaining quarters relative to the catalyst for Canarc to close equity financingsfirst quarter of CAD$3.26 million with a geographically diverse group of overseas shareholders2017 given the stagnancy in 2014 and CAD$790,000 in 2015 and CAD$2.04 million in March 2016.

Canarc Resource Corp.the markets.

Form 20-F

63

Share-based payments were significantly higher in the fourthsecond quarter of fiscal 2015 but remain comparatively lower in fiscal 2015 than2017 relative to comparable quarters. In June 2017, stock options for 2.25 million common shares which were performance based were fully vested by Canarc’s Board of Directors. Also in the prior fiscal year. At the beginning of fiscal 2015, Canarc had 4.9 million stock options which were subject to vesting provisions as opposed to 2.5 million unvested stock options at the beginning of fiscal 2014 which resulted in a comparatively higher expense in the first two quarters of 2015. In May 2015, certain directors and officers of Canarc cancelled 3,360,000 stock options with exercise prices ranging from CAD$0.10 to CAD$0.145 and expiry dates from September 2015 to June 2017. The retirement of a director in June 2015 resulted in forfeitures. Then in December 2015,same month, Canarc granted 5,950,0003.1 million stock options to directors, officers and employees with an exercise price of CAD$0.060.10 and an expiry date of December 8, 2020,June 2, 2022, and which are subject to vesting provisions in which 25% of the options vest immediately on the grant date and 25% vest every six months thereafter, which contributed to a higher expense in the fourth quarter. The forfeitures ofthereafter. In September 2017, additional stock options in January 2014 and April 2014 duefor 500,000 common shares were granted to the retirement of two senior officers reduced share-based payments. In July 2014, Canarc granted 4,050,000 stock optionsan employee, with an exercise price of CAD$0.100.09 and an expiry date of July 17, 2019,September 13, 2017, and which wereare subject to vesting provisions in which 20%25% of the options vest immediately on the grant date and 20%25% vest every six months thereafter, which contributed to the higher expensethereafter. Forfeitures in the third quarter of fiscal 2014. Also the 105,000 stock options which were granted in June 2012 with an exercise price of CAD$0.145 and an expiry date of June 18, 2017 which will only vest when Canarc consummates a major transaction or at the discretion of its Board of Directors have vested in December 2015.

2016 reduced share-based payments.

Interest income is realizedearned from Canarc'sCanarc’s premium investment savings account which is cashableinterest bearing and guaranteed investment certificates, and was higher in 2017 given the amount of funds held by Canarc throughout the entire year and higher interest rates on its interest bearing accounts. Canarc’s cash was nominal at the beginning of the first quarter of 2016 for any time.

Canarc recognized a flow-through financing cost of $4,000 from the tax impact for using the look-back rule in 2015 for the flow-through financing of CAD$400,000 in 2014 and for the tax indemnification for the short fallinterest bearing investments.

Change in the flow-through expenditures thereto.

In September 2015, the shares for debt settlements with certain directors included forgivenessfair value of directors fees owed, resulting in a gain on debt settlement of $54,000.

The gain in derivative liabilitymarketable securities is attributable to disposition of marketable securities and to the fluctuationquoted market price changes in investments in shares. Marketable securities are classified as held for trading financial assets with any resulting gains or losses in fair values being recognized in profit or loss. Canarc disposed of marketable securities in the spotsecond quarter of 2017 and realized gains thereto but had realized losses from dispositions in the third quarter of 2017. The net decreases in the market prices of marketable securities at the end of the third quarter further contributed to the recognition of losses in the fair values of held for goldtrading financial assets, which were slightly offset by gains in the fourth quarter of 2017. Canarc received 2.1 million shares of Endeavour in the second quarter of 2016 pursuant to the Sale Transaction which shares increased in fair value during that quarter. Dispositions of Endeavour shares in the second and third quarters for 2016 resulted in the realization of significant gains as well as from increases in the market price of Endeavour shares which were still being held at quarter end in 2016.

Canarc negotiated a debt settlement with a creditor at a reduced cash payout amount resulting in the recognition of a gain of $105,000 in the second quarter of 2016 in which the debt was paid in July 2016.
Interest expense was incurred and accrued for the 55 gold ounces per yearremaining buyout amount of $425,000 which are payable by Canarc to Marlin Gold over 3 years forrecognized as a deferred royalty liability upon the acquisition of AIM in March 2017 for the El Compas project3% NSR for totalthe Fondaway Canyon project; the original buyout amount was $600,000. Advance royalty payments of 165$35,000 are due and payable gold ounces (or in U.S. dollar equivalents).

by July 15th of each year until the buyout amount has been fully paid for the 3% NSR for the Fondaway Canyon project. Interest expense in 2014 was attributableshall continue to be incurred until the demand loans. buyout amount has been fully paid by the annual advance royalty payments at which time the 3% NSR would be bought out.

Canarc repaid all principal and interest in full settlement of outstanding demand loans in January 2014. Canarc has no outstanding demand loans in 2015.

Resource Corp.

Form 20-F
57
Foreign exchange gain or loss reflects the transactional impact infrom the foreign exchange fluctuations of the US$ relative to the CAD$, and not attributable to translation effects, as Canarc'sCanarc’s functional currency is the CAD$ andwhereas its reporting or presentation currency is the US$.

The write-offsfirst quarter of 2016 foreign exchange was affected by the translation effects of the Mexican pesos during which time Canarc had the El Compas project in Mexico prior to its sale to Endeavour in May 2016. Upon the acquisition of AIM in March 2017, foreign exchange was affected by the translation effects of the US$.

In 2016, Canarc received notice of a distribution of $10,000 from a bankruptcy estate which funds were received in 2017. This recovery relates to the promissory notesnote receivable of $275,000 which was written off in 2014 were for promissory notesdue to uncertain collectability. On February 12, 2018, Canarc entered into a Forbearance Agreement with the debtor in which the loan principal totaling $220,000 shall be repaid in full in 2018.
In early July 2017, Canarc terminated the property option agreement with Eureka and loans advanced and owed to Canarc in 2014 which were determined to be uncollectible.

Canarc Resource Corp.

Form 20-F

64

wrote off the FG Gold project at June 30, 2017.

As at December 31, 2015,2017, Canarc had mineral property interests which were comprised of the following:

 

 

British Columbia (Canada)

 

 

Mexico

 

 

 

 

($000s)

 

New Polaris

 

 

Windfall Hills

 

 

El Compas

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition Costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2013

 

$3,892

 

 

$408

 

 

$-

 

 

$4,300

 

Additions

 

 

-

 

 

 

27

 

 

 

-

 

 

 

27

 

Foreign currency translation adjustment

 

 

(16)

 

 

(34)

 

 

-

 

 

 

(50)

Balance, December 31, 2014

 

 

3,876

 

 

 

401

 

 

 

-

 

 

 

4,277

 

Acquisition of Oro Silver

 

 

-

 

 

 

-

 

 

 

1,120

 

 

 

1,120

 

Additions

 

 

-

 

 

 

3

 

 

 

-

 

 

 

3

 

Foreign currency translation adjustment

 

 

(25)

 

 

(65)

 

 

6

 

 

 

(84)

Balance, December 31, 2015

 

$3,851

 

 

$339

 

 

$1,126

 

 

$5,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Exploration Expenditures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2013

 

$7,938

 

 

$92

 

 

$-

 

 

$8,030

 

Additions, net of recoveries

 

 

23

 

 

 

352

 

 

 

-

 

 

 

375

 

Foreign currency translation adjustment

 

 

(871)

 

 

(7)

 

 

-

 

 

 

(878)

Balance, December 31, 2014

 

 

7,090

 

 

 

437

 

 

 

-

 

 

 

7,527

 

Additions, net of recoveries

 

 

23

 

 

 

(11)

 

 

183

 

 

 

195

 

Foreign currency translation adjustment

 

 

(1,557)

 

 

(70)

 

 

-

 

 

 

(1,627)

Balance, December 31, 2015

 

$5,556

 

 

$356

 

 

$183

 

 

$6,095

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral property interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2014

 

$10,966

 

 

$838

 

 

$-

 

 

$11,804

 

Balance, December 31, 2015

 

 

9,407

 

 

 

695

 

 

 

1,309

 

 

 

11,411

 

Canarc Resource Corp.

Form 20-F

65

Fiscal Year 2014– Year ended December 31, 2014 compared with December 31, 2013

Canarc incurred a net loss of $1.83 million for the year ended December 31, 2014 which is higher than the net loss of $1.38 million for fiscal 2013, with commensurately higher operating expenses in the current year. Net losses were impacted by different functional expense items.

Canarc has no sources of operating revenues. Operating losses continue to be incurred for ongoing activities of Canarc in seeking an appropriate joint venture partner to advance the New Polaris property and in pursuing mining projects of merit.

Corporate development expenses were lower in the first quarter of 2014 than the same quarter in 2013, but were higher in the remaining quarters of 2014. In the second quarter of fiscal 2014, Canarc conducted due diligence work on the main asset of Pan American which was its interest in the La Cieneguita mine properties located in Chihuahua State, Mexico. This resulted in the signing of a letter of intent in February 2014 which anticipated that Canarc would acquire all of the outstanding common shares of Pan American, but was terminated in May 2014 due to results from Canarc's due diligence. In the second quarter, Canarc focused its efforts on Santa Fe and its gold-silver mine and mill and the organic growth potential in the district which culminated in the execution of the Share Exchange Agreement in July 2014 whereby Canarc would issue 33 million common shares to Santa Fe and Santa Fe would issue 66 million common shares to Canarc; effectively Canarc would have a 34% interest in Santa Fe and Santa Fe would have a 17% interest in Canarc. In October 2014, the conditions precedent set forth in the Share Exchange Agreement was not satisfied and the agreement terminated on its own terms. Corporate development activities in the fourth quarter of fiscal 2014 focused on evaluating an alternative metallurgical process which resulted in the Pre-Development and Earn-In Binding Agreement with PanTerra in February 2015 to advance Canarc's New Polaris project. Major expenses incurred for corporate development include: legal fees for drafting and finalizing agreements, corporate and securities due diligence and property title opinions; geological and metallurgical assessments; salary allocations; and travel expenses for Mexico and the USA. In early 2013, Canarc was involved in a strategic mine acquisition partnership which intensified Canarc's efforts to identify acquisition opportunities which were to be debt financed but such arrangement ceased in March 2013. Corporate development expenses were negligible for the remaining quarters of 2013.

Remuneration for employees was higher in the current period relative to the prior period in 2013. The employment of a full time senior officer along with severance settlements for two other senior officers contributed to higher employee remuneration. Such employment contributed to Canarc's ability to close three private placements totalling CAD$3.26 million, letter of intent with Pan American which was subsequently terminated, share exchange agreement with Santa Fe which was subsequently terminated, and the pre-development and earn-in agreement in February 2015. Salary allocations during the term of the share exchange agreement prior to its termination resulted in lower salaries incurred for general administration in the third quarter of fiscal 2014 in comparison to prior comparative quarters of 2014 and 2013; these expenses have been accordingly allocated to corporate development efforts.

General and administrative expenses were higher in 2014 than in 2013. The principle factor was legal services rendered to Canarc in relation to TSX delisting review, advisory services rendered to the Board on compensation matters, appointment of a new senior officer, severance settlements with two other senior officers, and corporate finance issues relating to its working capital. In 2013, legal services were mainly for the strategic mine acquisition partnership which was terminated in March 2013. Office and sundry and rent reflect the ongoing expenditures for ancillary office support facilities in which the former was higher in the current period due to increased level of corporate activity related to project due diligence, equity financings and exploration program for the Windfall Hills project. Regulatory fees were higher for the current fiscal year from the proposed shares-for-debt settlement for directors' fees payable which required shareholder approval at Canarc's annual general meeting held in June 2014 which resolution did not pass. In 2013, Canarc had reduced discretionary expenses due to limited cash resources.

Canarc Resource Corp.

Form 20-F

66

Shareholder relations activities were heightened in 2014 than in 2013 for shareholder communications and marketing services principally in Europe to attract a greater breadth of investor base, to promote new interest in Canarc's mineral properties, and to create greater awareness of its letter of intent with Pan American for the La Cieneguita mine project at that time. Such activities provided the catalyst for Canarc to close equity financings of CAD$3.26 million with a geographically diverse group of overseas shareholders. Shareholder activities continued from commitments from prior quarters with no new shareholder activities being implemented in the remaining quarters of fiscal 2014 as the primary focus was the Share Exchange Agreement with Santa Fe and arranging financing for Santa Fe, which agreement was terminated in October 2014.

Share-based payments were higher in the current period than in the prior comparable period. Canarc granted 500,000 stock options in January 2014 which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter. Then in July 2014, Canarc granted 4,050,000 stock options to directors, officers and employees with an exercise price of CAD$0.10 and an expiry date of July 17, 2019, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter; this resulted in the increase in share based payments expenses in the third quarter of 2014. Two million stock options with vesting provisions were granted in the second quarter of 2013. The forfeiture of stock options in January 2014 and April 2014 due to the retirement of two senior officers reduced share-based payments. Also the 1,460,000 stock options which were granted in June 2012 with an exercise price of CAD$0.145 and an expiry date of June 18, 2017 will only vest when Canarc consummates a major transaction or at the discretion of its Board of Directors, and such stock options have not vested as at December 31, 2014. No probable likelihood of a material transaction was attributed to these June 2012 stock option grants, and therefore no share-based payments have been recognized.

Interest income is realized from Canarc's premium investment savings account which is cashable at any time and for the accrued interest for the $40,000 loan owed by Pan American and the $200,000 promissory note and a further loan of $20,000 owed by Santa Fe in which such demand loans were written off due to impairment issues as collectability was doubtful. In 2015, demand notices for repayment have been submitted by Canarc to Santa Fe, as Canarc maintains its legal rights relative to the promissory note loan.

Interest expense was higher in 2013 from the demand loans and for the estimated flow through indemnity obligation from ineligible Canadian exploration expenditures for flow-through purposes; the latter was derecognized at the end of fiscal 2013 as Canarc determined that it was improbable that any further cash outlays would be required. Demand loans were repayable on demand and bore an interest rate of 12% compounded monthly with interest payable semi-annually. In January 2014, Canarc repaid all principal and interest in full settlement of outstanding demand loans.

Foreign exchange gain or loss reflects the transactional impact in the foreign exchange fluctuations of the US$ relative to the CAD$, and not attributable to translation effects.

Canarc Resource Corp.

Form 20-F

67

As at December 31, 2014, Canarc had mineral property interests which are comprised of the following:

 

 

British Columbia (Canada)

 

 

Yukon (Canada)

 

 

 

 

($000s)

 

New Polaris

 

 

Windfall Hills

 

 

Tay-LP

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition Costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2012

 

$3,905

 

 

$210

 

 

$174

 

 

$4,289

 

Additions

 

 

-

 

 

 

212

 

 

 

-

 

 

 

212

 

Foreign currency translation adjustment

 

 

(13)

 

 

(14)

 

 

(11)

 

 

(38)

Write-off

 

 

-

 

 

 

-

 

 

 

(163)

 

 

(163)

Balance, December 31, 2013

 

 

3,892

 

 

 

408

 

 

 

-

 

 

 

4,300

 

Additions

 

 

-

 

 

 

27

 

 

 

-

 

 

 

27

 

Foreign currency translation adjustment

 

 

(16)

 

 

(34)

 

 

-

 

 

 

(50)

Balance, December 31, 2014

 

$3,876

 

 

$401

 

 

$-

 

 

$4,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred Exploration Expenditures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2012

 

$8,643

 

 

$117

 

 

$495

 

 

$9,255

 

Additions

 

 

17

 

 

 

(18)

 

 

10

 

 

 

9

 

Foreign currency translation adjustment

 

 

(722)

 

 

(7)

 

 

(32)

 

 

(761)

Write-off

 

 

-

 

 

 

-

 

 

 

(473)

 

 

(473)

Balance, December 31, 2013

 

 

7,938

 

 

 

92

 

 

 

-

 

 

 

8,030

 

Additions, net of recoveries

 

 

23

 

 

 

352

 

 

 

-

 

 

 

375

 

Foreign currency translation adjustment

 

 

(871)

 

 

(7)

 

 

-

 

 

 

(878)

Balance, December 31, 2014

 

$7,090

 

 

$437

 

 

$-

 

 

$7,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral property interests:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2013

 

$11,830

 

 

$500

 

 

$-

 

 

$12,330

 

Balance, December 31, 2014

 

 

10,966

 

 

 

838

 

 

 

-

 

 

 

11,804

 

Canarc Resource Corp.

Form 20-F

68

 
 
 British Columbia (Canada)
 
 
 USA
 
 
 Mexico
 
 
 
 
($000s)
 
 New Polaris
 
 
 Windfall Hills
 
 
 FG Gold
 
 
 Fondaway Canyon
 
 
 El Compas
 
 
 Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition Costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2015
 $3,851 
 $339 
 $- 
 $- 
 $1,126 
 $5,316 
Additions
  2 
  - 
  19 
  - 
  - 
  21 
Disposition of subsidiary
  - 
  - 
  - 
  - 
  (1,256)
  (1,256)
Foreign currency translation adjustment
  5 
  10 
  - 
  - 
  130 
  145 
Balance, December 31, 2016
  3,858 
  349 
  19 
  - 
  - 
  4,226 
Acquisition of subsidiary
  - 
  - 
  - 
  2,183 
  - 
  2,183 
Additions, net of recoveries
  6 
  - 
  28 
  44 
  - 
  78 
Foreign currency translation adjustment
  11 
  25 
  1 
  (54)
  - 
  (17)
Write off
  - 
  - 
  (48)
  - 
  - 
  (48)
Balance, December 31, 2017
 $3,875 
 $374 
 $- 
 $2,173 
 $- 
 $6,422 
 
    
    
    
    
    
    
Deferred Exploration Expenditures:
    
    
    
    
    
    
 
    
    
    
    
    
    
Balance, December 31, 2015
 $5,556 
 $356 
 $- 
 $- 
 $183 
 $6,095 
Additions, net of recoveries
  12 
  80 
  6 
  - 
  393 
  491 
Disposition of subsidiary
  - 
  - 
  - 
  - 
  (576)
  (576)
Foreign currency translation adjustment
  249 
  11 
  - 
  - 
  - 
  260 
Balance, December 31, 2016
  5,817 
  447 
  6 
  - 
  - 
  6,270 
Additions, net of recoveries
  27 
  44 
  14 
  1,090 
  - 
  1,175 
Foreign currency translation adjustment
  587 
  31 
  1 
  - 
  - 
  619 
Write off
  - 
  - 
  (21)
  - 
  - 
  (21)
Balance, December 31, 2017
 $6,431 
 $522 
 $- 
 $1,090 
 $- 
 $8,043 
 
    
    
    
    
    
    
Mineral property interests:
    
    
    
    
    
    
Balance, December 31, 2016
 $9,675 
 $796 
 $25 
 $- 
 $- 
 $10,496 
Balance, December 31, 2017
  10,306 
  896 
  - 
  3,263 
  - 
  14,465 
Environmental Liabilities

The Registrant'sCompany’s policy is to maintain all operations at North American standards, notwithstanding that certain of the countries within which it may operate may not yet have fully developed such standards in respect to environmental concerns. In accordance with government requirements in Canada, refundable deposits of CAD$250,000 have been placed with regulatory agencies in respect to the Registrant'sCompany’s New Polaris gold property in British Columbia. There are no known environmental contingencies in respect to these or any of the other Registrant'sCompany’s mineral property interests.

Canarc Resource Corp.
Form 20-F
58
Critical Accounting Policies

For the Registrant'sCompany’s exploration activities, there is no product, sales or inventory in the conventional sense. The recoverability of costs capitalized to mineral property interests and the Registrant'sCompany’s future financial success are dependent upon the extent to which it can discover mineralization and the economic viability of advancing such mineral property interests beyond the exploration stage. Such activities may take years to complete and the amount of resulting income, if any, is difficult to determine with any certainty. Many of the key factors are outside of the Registrant'sCompany’s control. The sales value of any mineralization discovered by the RegistrantCompany is largely dependent upon factors beyond the Registrant'sCompany’s control such as the market value of the metals.

As the carrying value and amortization of mineral property interests and capital assets are, in part, related to the Registrant'sCompany’s mineral reserves, the estimation of such reserves is significant to the Registrant'sCompany’s position and results of operations. As of the date of this annual report, the RegistrantCompany has not established any reserves on its mineral property interests.

In accordance with an acceptable accounting policy under IFRS, all costs related to investments in mineral property interests are capitalized on a property-by-property basis. Such costs include mineral property acquisition costs and exploration and development expenditures, net of any recoveries. The costs related to a mineral property interest from which there is production, together with the costs of mining equipment, will be amortized using the unit-of-production method. When there is little prospect of further work on a mineral property interest being carried out by the RegistrantCompany or its partners or when a property interest is abandoned or when the capitalized costs are not considered to be economically recoverable, the related mineral property costs are written down to the amount recoverable. The amounts for mineral property interests as shown in the Registrant'sCompany’s consolidated financial statements represent costs incurred to date, less write-downs and any recoveries, and are not intended to reflect present or future values.

The RegistrantCompany accounts for share-based payments using a fair value-based method with respect to all stock-based payments to directors, officers, employees and non-employees. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The offset to the recorded cost is to the reserve for share-based payments. Consideration received on the exercise of stock options is recorded as share capital and the related reserve for share-based payments is transferred to share capital. Upon expiry, the recorded fair value is transferred from reserve for share-based payments to deficit.

Canarc Resource Corp.

Form 20-F

69

5.B Liquidity and Capital Resources

The RegistrantCompany is in the exploration stage and has not yet determined whether its mineral property interests contain reserves. The recoverability of amounts capitalized for mineral property interests is entirely dependent upon the existence of reserves, the ability of the RegistrantCompany to obtain the necessary financing to complete the development and upon future profitable production. The RegistrantCompany knows of no trends, demands, commitments, events or uncertainties that may result in the Registrant'sCompany’s liquidity either materially increasing or decreasing at the present time or in the foreseeable future. Material increases or decreases in the Registrant'sCompany’s liquidity are substantially determined by the success or failure of the Registrant'sCompany’s exploration programs and overall market conditions for smaller mineral exploration companies. Since its incorporation in 1987, the RegistrantCompany has endeavoured to secure mineral property interests that in due course could be brought into production to provide the RegistrantCompany with cash flow which would be used to undertake work programs on other projects. To that end, the RegistrantCompany has expended its funds on mineral property interests that it believes have the potential to achieve cash flow within a reasonable time frame. As a result, the RegistrantCompany has incurred losses during each of its fiscal years since incorporation. This result is typical of smaller exploration companies and will continue unless positive cash flow is achieved.

The following table contains selected financial information of Canarc'sCanarc’s liquidity:

 

 

December 31,

 

($000s)

 

2015

 

 

2014

 

 

 

 

 

 

 

 

Cash

 

$354

 

 

$675

 

Working capital (deficiency)

 

 

(574)

 

 

(156)

 
 
  December 31,
 
($000s)
 
 2018
 
 
 2017
 
 
 
 
 
 
 
 
Cash
 $2,329 
 $4,304 
Working capital
  2,897 
  4,944 
Canarc Resource Corp.
Form 20-F
59
Canarc has no sources of operating revenues, and ongoing operating expenses continue to reduce its cash resources and working capital. Operating losses continued to be incurred for ongoing activities of Canarc in seeking an appropriate joint venture partner for the New Polaris property and reviewing various processes for treating concentrates to produce gold doré bars, in advancingexploring the El Compas project,Windfall Hills, Hard Cash, Princeton and AIM properties and staking additional property claims and in pursuing new projects of merit.

On January 31, 2014, Canarc closed a private placement for 18 million units at a price of CAD$0.05 per unit for gross proceeds of CAD$900,000 with each unit was comprised of one common share and one-half of a whole common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.10 per share until January 31, 2016. Finder's fees of CAD$22,500 were paid for the private placement.

In March and April 2014, Canarc closed a private placement in two tranches totalling 19.6 million units at a price of CAD$0.10 per unit for gross proceeds of CAD$1.96 million with each unit comprised of one common share and one-half of a whole common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.15 per share for a three year period. On March 18, 2014, Canarc closed the first tranche for 10.6 million units for CAD$1.06 million, and paid CAD$66,170 in

Based on Canarc’s available cash and issued 661,718 in warrants as finders' fees. On April 3, 2014,working capital, Canarc closed the second tranche for 9 million units for CAD$900,000, and paid CAD$6,070 in cash and issued 60,725 in warrants as finders' fees. The finders' fee warrants have the same terms as the underlying warrants in the unit private placement.

On July 9, 2014, Canarc closed a private placement for 5 million units at CAD$0.08 per unit for gross proceeds of CAD$400,000 with each unit comprised of one flow-through common share and one-half of a whole common share purchase warrant; each whole warrant is exercisable to acquire one non-flow through common share at an exercise price of CAD$0.15 per share until July 9, 2016. Funds of CAD$386,000 were expended for flow-through purposes in 2014 and 2015.

Canarc Resource Corp.

Form 20-F

70

In October 2014, Canarc received 358,000 shares from Aztec Metals Corp., a company sharing certain common directors, ("Aztec") in settlement of debt owed to Canarc which Canarc had written off in 2013.

On February 24, 2015, Canarc entered into a Pre-Development and Earn-In Binding Agreement with PanTerra. PanTerra has a 30-month option to earn a 50% interest in Canarc's New Polaris project by spending a total of CAD$10 million in three stages of predevelopment activities including metallurgical test work, drilling, detailed mine planning, tailings dam design, environmental permitting, and completion of a definitive feasibility study. In August 2015, PanTerra informed Canarc thatanticipates it will not be able to commitcontinue its current plan of operations and exploration programs for at least the next 12 months without having to further expendituresseek additional financing or cut-back on planned operations. Additional financing will be sought through private and public equity financings or debt financings if available to commence Stage Two exploration and permitting work on Canarc's New Polaris project until PanTerra receivesCanarc at acceptable terms in the approval from the Dominican Republic government for importing New Polaris gold concentrate into the country for processing and PanTerra requested a 12 month extensioninterests of the Earn-In Agreement. PanTerra declared a force majeure event under the terms of the Earn-In Agreement. Canarc does not agree with PanTerra's position. Canarcshareholders and PanTerra continue to be in communication regarding this matter, and an extension or a resolution has not yet been negotiated. Items 4.A and 4.D provide further details.

In May 2015, certain directors and officers of Canarc cancelled 3,360,000 stock options with exercise prices ranging from CAD$0.10 to CAD$0.145 and expiry dates from September 2015 to June 2017.

In August 2015, Canarc extended the expiry period of a total of 18.6 million warrants by a period of 18 months which were issued pursuant to two private placements which closed in 2014. Expiry dates for 951,250 warrants which were issued to insiders in those private placements were not extended. Material terms of the extended warrants are as follows:

Number of Warrants

Exercise Price

Original Grant Date

Original Expiry Date

New Expiry Date

8,450,000

$0.10

January 31, 2014

January 31, 2016

July 31, 2017

5,915,773

$0.15

March 18, 2014

March 18, 2017

September 18, 2018

4,214,475

$0.15

April 3, 2014

April 3, 2017

October 3, 2018

18,580,248

Total

In September and October 2015, Canarc closed a non-brokered private placement in two tranches totalling 13.2 million units at a price of CAD$0.06 per unit for gross proceeds of CAD$790,000, with each unit comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.08 per share for a three year period. On September 21, 2015, Canarc closed the first tranche of the private placement for 11.5 million units at a price of CAD$0.06 per unit for gross proceeds of CAD$690,000. Canarc paid CAD$36,200 in cash and issued 594,844 in warrants as finders' fees. The finders' fee warrants have the same terms as the underlying warrants in the unit private placement. On October 30, 2015, Canarc closed the second tranche of the private placement for 1.67 million units at a price of CAD$0.06 per unit for gross proceeds of CAD$100,000 with Marlin Gold.

Canarc Resource Corp.

Form 20-F

71

On September 24, 2015, Canarc issued 2 million shares at a value of CAD$0.07 in settlement of partial salaries owed to certain officers and fees owed to directors in which the latter also forgave a certain portion of outstanding directors fees owed, resulting in a gain on debt settlement of $54,000.

On October 8, 2015, Canarc entered into the Share Purchase Agreement with Marlin Gold which closed on October 30, 2015 whereby Canarc issued 19 million common shares at a value of CAD$0.07 per share to Marlin Gold to acquire a 100% interest in Marlin Gold's wholly-owned subsidiary, Oro Silver, which owns the El Compas project through its wholly-owned Mexican subsidiary, Minera Oro Silver.

At December 31, 2015, to maintain its interest and/or to fully exercise the options under various property agreements covering its property interests, Canarc must incur exploration expenditures on the properties and/or make payments in the form of cash and/or shares to the optionors as follows:

 

 

Number of

Shares

 

 

Number of Troy
Ounces of Gold (1)

 

 

 

 

 

 

 

 

New Polaris:

 

 

 

 

 

 

Net profit interest reduction or buydown

 

 

150,000

 

 

 

-

 

 

 

 

 

 

 

 

 

 

El Compas:

 

 

 

 

 

 

 

 

October 30, 2016

 

 

-

 

 

 

55

 

October 30, 2017

 

 

-

 

 

 

55

 

October 30, 2018

 

 

-

 

 

 

55

 

 

 

 

 

 

 

 

 

 

 

 

 

150,000

 

 

 

165

 

(1)

Payable in troy ounces of gold or the U.S. dollar equivalent.

These amounts may be reduced in the future as Canarc determines which properties to continue to explore and which to abandon.

Canarc has entered into a number of option agreements for mineral property interests that involve payments in the form of cash and/or shares of Canarc as well as minimum exploration expenditure requirements. Under Item 5.F, further details of contractual obligations are provided as at December 31, 2015.

Canarc Resource Corp.

Form 20-F

72

Canarc.

In March 2016, Canarc closed a private placement in two tranches totalling 22.7 million units at a price of CAD$0.09 per unit for gross proceeds of CAD$2.04 million with each unit comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.12 per share for a period of three years. On March 3, 2016, the CompanyCanarc closed the first tranche for 17.7 million units for gross proceeds of CAD$1.59 million. On March 14, 2016, the CompanyCanarc closed the second tranche for 5 million units for gross proceeds of CAD$449,500 with a finder'sfinder’s fee of 311,111 units issued with the same terms as the units in the private placement.

The Sale Transaction with Endeavour closed on May 27, 2016 at which time Canarc received 2,147,239 free-trading common shares of Endeavour with a fair value of CAD$3.99 per share at that date. During 2016, Canarc realized proceeds of CAD$11.6 million from the disposition of common shares of Endeavour. Canarc did not dispose of any Endeavour shares in 2017 and 2018.
In MarchSeptember 2016, Canarc issued 250,000 common shares at a value of CAD$0.10 per share to Eureka for the FG gold property, and invested CAD$105,000 for 750,000 units of Eureka comprised of 750,000 common shares and 375,000 warrants.
During 2016, warrants for 1.31 million shares were exercised for proceeds of CAD$104,700 which included finder fee warrants for 58,333 shares with a fair value of US$2,000. In 2016, stock options for 1 million shares were exercised for proceeds of CAD$80,000 with fair values of US$54,300.
In 2016, Canarc entered into an indicative term sheeta debt settlement with a creditor whereby a debt of $138,000 was settled with a cash payment of $33,000, resulting in a gain on debt settlement of $105,000.
In February 2017, Canarc received regulatory approval for a normal course issuer bid to acquire up to $1010.9 million its common shares, representing approximately up to 5% of its issued and outstanding common shares at that time. The bid commenced on February 8, 2017 and terminated on February 7, 2018. The actual number of common shares purchased under the bid and the timing of any such purchases was at Canarc’s discretion. Purchases under the bid did not exceed 86,128 common shares per day. Canarc paid the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc were returned to treasury and cancelled. During the term of the normal course issuer bid, Canarc purchased an aggregate of 2.6 million common shares for an aggregate purchase price of CAD$220,400, resulting in an average price of CAD$0.08 per share; these shares have been returned to treasury and accordingly cancelled.
In March 2017, stock options for 500,000 common shares were cancelled for the exercise of share appreciation rights for 272,727 common shares. In May 2017, stock options for 132,500 common shares were cancelled for the exercise of share appreciation rights for 29,166 common shares.
In April 2017, Canarc closed a private placement for 3.8 million flow through common shares at a price of CAD$0.13 per share for gross proceeds of CAD$500,000. Finders fees include 6.5% cash and 6.5% finders fee warrants; each finder fee warrant is exercisable to acquire one non-flow through common share at an exercise price of CAD$0.15 and has an expiry date of April 21, 2019. Item 5.B provides further details.
Canarc Resource Corp.
Form 20-F
60
In March 2017, Canarc paid $2 million to acquire AIM for 100% legal and beneficial interests in mineral exploration properties located in Nevada, Idaho and Utah (USA).
At Canarc’s annual and special general meeting in June 2, 2017, resolutions were passed for the amendment to its stock option plan to provide for the issuance of options exercisable to acquire up to 44,261,695 common shares.
On June 2, 2017, Canarc provided for the full vesting of 2.25 million performance based stock options which were granted in July 2016 and which have an exercise price of CAD$0.08 and an expiry date of July 7, 2021. On June 2, 2017, Canarc granted 3.1 million stock options to directors, officers and employees with an exercise price of CAD$0.10 and an expiry date of June 2, 2022, and which are subject to vesting provisions in which 25% of the options vest immediately on the grant date and 25% vest every six months thereafter. On September 13, 2017, Canarc granted 500,000 million stock options to an employee, who later become an officer of Canarc, with an exercise price of CAD$0.09 and an expiry date of September 13, 2022, and which are subject to vesting provisions in which 25% of the options vest immediately on the grant date and 25% vest every six months thereafter.
In July 2017, Canarc extended the expiry date of warrants for 8.45 million common shares with an exercise price of CAD$0.10 from July 31, 2017 to July 31, 2018. These warrants were originally issued pursuant to a private placement which closed on January 31, 2014.
In fiscal 2017, Canarc realized proceeds of CAD$135,100 from the disposition of marketable securities and invested CAD$220,000 in strategic investments plus additional strategic investments of CAD$375,000 in January 2018 of which CAD$200,000 was rescinded and returned to Canarc.
On February 12, 2018, Canarc entered into a Forbearance Agreement with the debtor in which the loan principal totaling $220,000, which was previously written off in 2014, will be repaid in full in 2018 as follows:
Date
 Principal (1)
 ($000s)
February 14, 2018 (received)
$25
June 30, 2018 (received)
25
September 30, 2018 (received)
85
December 31, 2018 (received in January 2019)
85
$220
(1) 
Funds of $94,500 were received in 2018 with a balance of $59,500 received in January 2019, net of legal fees.
In June 2018, Canarc again proceeded with a normal course issuer bid which received regulatory approval to acquire up to 10.9 million common shares of Canarc representing approximately up to 5% of its issued and outstanding common shares at that time. The bid is effective on June 21, 2018 and will terminate on June 20, 2019, or on such earlier date as the bid was completed. The actual number of common shares purchased under the bid and the timing of any such purchases was at Canarc’s discretion. Purchases under the bid shall not exceed 23,893 common shares per day. Canarc shall pay the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc will be cancelled. From June to December 2018, Canarc purchased 438,000 shares for CAD$20,595 with an average price of CAD$0.05 per share; the shares were cancelled in 2018.
In October 2018, Canarc entered into a property option agreement for its Silver King property with Brownstone whereby Brownstone has an option to earn a 100% undivided interest by paying $240,000 in cash over a 10 year period with early option exercise payment of $120,000. Canarc will retain a 2% NSR of which a 1% NSR can be acquired by Brownstone for $1 million.
In December 2018, Canarc issued 100,000 common shares at a value of CAD$0.05 per share to Silver Range for the Hard Cash and Nigel properties
Canarc Resource Corp.
Form 20-F
61
In fiscal 2018, Canarc granted the following stock options:
- 
3,250,000 stock options to directors, officers and employees with an exercise price of CAD$0.08 and an expiry date of June 29, 2023, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter; and
- 
1 million stock options to a senior officer, of which 500,000 options have an exercise price of CAD$0.05 and 500,000 options have an exercise price of CAD$0.06 and an expiry date of November 12, 2023, and which are subject to vesting provisions whereby 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.
As at December 31, 2018, Canarc’s marketable securities have a fair value of $719,000.
In the first quarter of 2019, Canarc granted the following stock options:
- 
700,000 stock options to consultants with an exercise price of $0.07 per share and an expiry date of February 22, 2024 and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter; and
- 
300,000 stock options to a director with an exercise price of CAD$0.08 and an expiry date of March 21, 2024, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.
At December 31, 2018, to maintain its interest and/or to fully exercise the options under various property agreements covering its property interests, Canarc must incur exploration expenditures on the properties and/or make payments in the form of cash and/or shares to the optionors as follows:
 
 
 Cash
 
 
 Exploration
 
 
 Cash
 
 
 Annual
 
 
 Number of
 
 
 
 Payments
 
 
 Expenditures
 
 
 Payments
 
 
 Payments
 
 
 Shares
 
 
 
 (CADS$000)
 
 
 (CADS$000)
 
 
 (US$000)
 
 
 (US$000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Polaris:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net profit interest reduction or buydown
 $- 
 $- 
 $- 
 $- 
  150,000 
 
    
    
    
    
    
Fondaway Canyon:
    
    
    
    
    
Advance royalty payment for buyout of 3% net smelter return (1)
  - 
  - 
  - 
  35 
  - 
Buyout provision for net smelter return of 2% (2)
  - 
  - 
  2,000 
  - 
  - 
 
    
    
    
    
    
Windfall Hills:
    
    
    
    
    
Buyout provision for net smelter return of 1.5%
  1,000 
  - 
  - 
  - 
  - 
Reduction of net smelter return of 2% to 1%
  - 
  - 
  500 
  - 
  - 
 
    
    
    
    
    
Princeton:
    
    
    
    
    
On or before:
    
    
    
    
    
January 31, 2019 (expended)
  - 
  1 
  - 
  - 
  - 
December 31, 2019
  - 
  340 
  - 
  - 
  - 
December 31, 2020
  - 
  460 
  - 
  - 
  - 
Buyout provision for net smelter return of 1%
  1,000 
  - 
  - 
  - 
  - 
Reduction of net smelter return of 2% to 1%
  1,000 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
Hard Cash and Nigel:
    
    
    
    
    
On or before:
    
    
    
    
    
November 23, 2019
  20 
  - 
  - 
  - 
  200,000 
November 23, 2020
  30 
  - 
  - 
  - 
  300,000 
November 23, 2021
  40 
  - 
  - 
  - 
  400,000 
November 23, 2022
  50 
  - 
  - 
  - 
  500,000 
Reduction of net smelter return of 2% to 1%
  1,000 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
Other:
    
    
    
    
    
Success fee
  - 
  - 
  10 
  - 
  - 
 
    
    
    
    
    
 
 $4,140 
 $801 
 $2,510 
 $35 
  1,550,000 
(1) 
Advance royalty payments of $355,000 remain payable as at December 31, 2018 with annual payments of $35,000. Items 4.A and 4.D provide further details.
(2) 
The 2% NSR has a buyout provision of either $2 million in debt financing by waycash or 19.99% interest of a gold prepaid facilitypublic entity which owns AIM if AIM were to developclose an initial public offering of at least $5 million. Items 4.A and 4.D provide further details.
Canarc Resource Corp.
Form 20-F
62
These amounts may be reduced in the El Compas gold-silver project subjectfuture as Canarc determines which properties to continue to explore and which to abandon.
Canarc has entered into a 60 day due diligence period.

Canarc'snumber of option agreements for mineral property interests that involve payments in the form of cash and/or shares of Canarc as well as minimum exploration expenditure requirements. Under Item 5.F, further details of contractual obligations are provided as at December 31, 2018.

Canarc’s ability to continue as a going concern is dependent on the ability of Canarc to raise debt or equity financings, and the attainment of profitable operations. Management would need to raise the necessary capital to meet its planned business objectives.

Canarc will continue to rely upon debt and equity financings as its principal source of financing its projects and its ongoing working capital needs.

5.C Research and Development, Patents and Licenses, etc.

The RegistrantCompany does not currently carry out research and development activities.

Items 4.A, 4.D, 5.A and 5.F provide details of the Registrant'sCompany’s mineral property interests, exploration activities, acquisitions and write-downs.

5.D Trend Information

The RegistrantCompany knows of no trends, demand, commitments, events or uncertainties that are reasonably likely to have a material effect on the Registrant'sCompany’s net sales or revenues, income from continuing operations, profitability, liquidity or capital resources or that would cause financial information not necessarily to be indicative of future operating results or financial condition, other than disclosed or inferred in this Form 20-F.

The RegistrantCompany currently has no active business operations that would be affected by recent trends in productions, sales, etc. The RegistrantCompany has no material net sales or revenues that would be affected by recent trends other than the general effect of mineral prices on its ability to raise capital and those other general economic items as set out in Item 3.D.

5.E Off-Balance Sheet Arrangements

There are no known significant or material off-balance sheet arrangements other than those disclosed in this Form 20-F and in the Registrant'sCompany’s audited consolidated financial statements for the years ended December 31, 2015, 20142018, 2017 and 2013.

Canarc Resource Corp.

Form 20-F

73

Shareholder Rights Plan

On May 31, 2005, the shareholders of the Registrant approved a shareholder rights plan (the "Plan"), that became effective on April 30, 2005. The Plan was intended to ensure that any entity seeking to acquire control of the Registrant made an offer that represented fair value to all shareholders and provided the board of directors with sufficient time to assess and evaluate the offer, to permit competing bids to emerge, and, as appropriate, to explore and develop alternatives to maximize value for shareholders. Under the Plan, each shareholder at the time of the Plan's adoption was issued one Right for each common share of the Registrant held. Each Right entitled the registered holder thereof, except for certain "Acquiring Persons" (as defined in the Plan), to purchase from treasury one common share at a 50% discount to the prevailing market price, subject to certain adjustments intended to prevent dilution. The Rights were exercisable after the occurrence of specified events set out in the Plan generally related to when a person, together with affiliated or associated persons, acquired, or made a take-over bid to acquire, beneficial ownership of 20% or more of the outstanding common shares of the Registrant. The Rights expired on April 30, 2015. Item 10.B provides further details.

2016.

Share Appreciation Rights

At the discretion of the Board, certain stock option grants provide the stock option holder the right to receive the number of common shares, valued at the quoted market price at the time of exercise of the stock options, that represent the share appreciation since granting the stock options.

Canarc Resource Corp.
Form 20-F
63
5.F Tabular Disclosure of Contractual Obligations

As the RegistrantCompany performs exploration on its mineral property interests, it decides which ones to proceed with and which ones to abandon. Accordingly, the minimum expenditure commitments are reduced as the RegistrantCompany narrows its interests. To fully exercise the options under various agreements for the acquisition of interests in properties located in Canada and Mexico, the RegistrantUSA, the Company must incur exploration expenditures on the properties and make payments to the optionors as follows as at December 31, 2015:

 

 

Payments due by Period

 

Payments due by Period

 

 

 

 

 

 

 

 

 

 

 

 

 

(CAD$000s)

 

(US$000s)

 

Others

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Troy Ounces of Gold (1)

 

 

 

 

 

Total

 

Less

than 1 year

 

1-3 years

 

3-5 years

 

More

than 5 years

 

Total

 

Less

than 1 year

 

1-3 years

 

3-5 years

 

More

than 5 years

 

Total

 

Less

than 1 year

 

1-3 years

 

More

than 3 years

 

Number

of Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Polaris:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net profit interest reduction or buydown

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

150,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

El Compas:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Troy Ounces of Gold

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

 

165

 

 

55

 

 

110

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

$-

 

 

165

 

 

55

 

 

110

 

 

-

 

 

150,000

 

(1)

Payable in troy ounces of gold or the U.S. dollar equivalent.

Canarc Resource Corp.

Form 20-F

74

These amounts may be reduced in2018:

 
 
Payments due by Period
 
 
Payments due by Period
 
 
 
(CAD$000)  
 
 
(US$000)  
 
 
 
 
 
 
 Less than
 
 
 
 
 
 
 
 
 After
 
 
 
 
 Less than 
 
 
 
 
 
 
 
 After
 
 
 
 Total
 
 
 1 year
 
 
 1-3 years
 
 
 3-5 years
 
 
 5 years
 
 
 Total
 
 
 1 year
 
 
 1-3 years
 
 
 3-5 years
 
 
 5 years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic office lease
 $169 
 $46 
 $123 
 $- 
 $- 
 $- 
 $- 
 $- 
 $- 
 $- 
 
    
    
    
    
    
    
    
    
    
    
Advance royalty payments (1)
  - 
  - 
  - 
  - 
  - 
  355 
  35 
  105 
  105 
  110 
 
    
    
    
    
    
    
    
    
    
    
Total
 $169 
 $46 
 $123 
 $- 
 $- 
 $355 
 $35 
 $105 
 $105 
 $110 

(1) 
Advance royalty payments of $355,000 remain payable as at December 31, 2018 with annual payments of $35,000. Items 4.A and 4.D provide further details.
In February 2017, the future as the Registrant determines which properties continue to be of merit and abandons those with which it does not intend to proceed.

In January 2016, Canarc signed a definitive agreement with the Zacatecas state government to lease and operate the permitted 500 tonne per day La Plata ore processing plant located in the city of Zacatecas, Mexico, approximately 20 kilometres from El Compas. Highlights of the lease agreement include the following (Item 4.D provides further details):

·

Lease term is 5 years with the right to extend for another 5 years;

·

Canarc assumed responsibility for the plant as of January 29, 2016;

·

Canarc will pay a monthly lease payment of MXP 136,000; and

·

Certain plant refurbishment costs will be reimbursed to Canarc by lease payment offsets.

In March 2016, CanarcCompany entered into an indicativeoffice lease arrangement for a term sheetof five years with a commencement date of August 1, 2017. The basic rent per year is CAD$46,000 for upyears 1 to $10 million3 and CAD$48,000 for years 4 to 5. As at December 31, 2018, the Company is committed to the following payments for base rent at its corporate head office in debt financing by way of a gold prepaid facility to develop the El Compas gold-silver project subject to a 60 day due diligence period which is currently in process.

Vancouver, BC, as follows:

 
 
 Amount
 
 
 
 (CAD$000)
 
Year:
 
 
 
2019
 $46 
2020
  47 
2021
  48 
2022
  28 
 
    
 
 $169 
5.G Safe Harbor

This document may contain forward-looking statements. See "Caution“Caution – Forward-Looking Statements"Statements” at the beginning of this annual report. The RegistrantCompany desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all forward-looking statements. Several important factors, in addition to the specific factors discussed in connection with such forward-looking statements individually, could affect the future results of the RegistrantCompany and could cause those results to differ materially from those expressed in the forward-looking statements contained herein.

Canarc Resource Corp.

Form 20-F

75

The Registrant'sCompany’s estimated or anticipated future results or other non-historical facts are forward-looking and reflect the Registrant'sCompany’s current perspective of existing trends and information. These statements involve risks and uncertainties that cannot be predicted or quantified, and consequently actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others:

·

risks related to our exploration and development activities;

·

risks related to the ongoing financing of our planned operations;

·

risks related estimates of mineral deposits;

·

risks related to fluctuations in mineral prices;

·

risks related to the title of our properties;

·

risks related to the highly competitive mineral exploration and mining industry;

·

risks related to potential conflicts of interest with our officers and directors;

·

risks related to environmental and regulatory requirements;

·

risks related to foreign currency fluctuations;

·

risks related to the Registrant's possible status as a passive foreign investment company;

·

risks related to the volatility of the Registrant's common stock; and

·

risks related to the possible dilution of the Registrant's common stock,

● 
risks related to our exploration and development activities;
● 
risks related to the ongoing financing of our planned operations;
● 
risks related estimates of mineral deposits;
● 
risks related to fluctuations in mineral prices;
● 
risks related to the title of our properties;
● 
risks related to the highly competitive mineral exploration and mining industry;
● 
risks related to potential conflicts of interest with our officers and directors;
● 
risks related to environmental and regulatory requirements;
● 
risks related to foreign currency fluctuations;
● 
risks related to the Company’s possible status as a passive foreign investment company;
● 
risks related to the volatility of the Company’s common stock; and
● 
risks related to the possible dilution of the Company’s common stock,
as well as other risks and uncertainties detailed in this annual report and from time to time in the Registrant'sCompany’s other SEC filings.

Therefore, the RegistrantCompany cautions each reader of this document to consider carefully these factors as well as the specific factors that may be discussed with each forward-looking statement in this document or disclosed in the Registrant'sCompany’s filings with the SEC as such factors, in some cases, could affect the ability of the RegistrantCompany to implement its business strategy and may cause actual results to differ materially from those contemplated by the statements expressed therein. Forward-looking statements are subject to a variety of risks and uncertainties including, but not limited to, the risks referred under the section "Risk Factors"“Risk Factors” under Item 3.D above.

Canarc Resource Corp.

Form 20-F

76

64

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A Directors and Senior Management

In accordance with the provisions of theBusiness Corporations Act (British Columbia)the overall control of the business and affairs of the RegistrantCompany is vested in its board of directors. The board of directors of the RegistrantCompany currently consists of five members elected by the shareholders of the RegistrantCompany at each annual meeting of shareholders of the Registrant.

Company.

The directors and senior management of Canarc as of April 22, 201623, 2019 are:

Name and

Province/State and Country of
Residence

Principal Occupation and Occupation during the
Past 5 Years (1)

Current Position with the Registrant Company
and Period of Service

COOKE, Bradford

(5), (6)

British Columbia, Canada

Chairman and Director of Canarc Resource Corp.

(since January 22, 1987);

Chief Executive Officer

(from January 22, 1987 to January 13, 2014);

President of Canarc Resource Corp.

(2014 and

from January 22, 1987June 29, 2018 to January 1, 2006)October 17, 2018);

Chief Executive Officer and Director of Endeavour Silver Corp.

(since July 25, 2002).

Chairman and Director of Canarc Resource Corp.

(since January 22, 1987)

MALHOTRA, Deepak(2)

, (3), (5)

Colorada, USA

President of Pro Solv Consulting, LLC
(since July 2018);
President of Resource Development Inc.

(sincefrom June 1993)

1993 to July 2018).

Director

(since June 29, 2015)

BURIAN, Martin(2)

, (4), (6)

British Columbia, Canada

Managing Director of RCI Capital Group
(since January 2018);
Chief Financial Officer (part time) of Heffel Fine Art Auction House
(since April 2016);
Chief Financial Officer of ML Gold Ltd. (formerly, Cap-Ex Iron Ore Ltd.

)

(sincefrom July 11, 2013)2013 to May 2017);

Director of Atlas Cloud Enterprises Inc.

(since July 9, 2014);

Director of Elysee Development Corp.

(since June 14, 2013);

Director and Chief Financial Officer of Tinkerine Studio Ltd.

(from Feb.February 2014 to Feb.February 2016);

Managing Director of Investment Banking for Haywood Securities Inc.

(from Nov.November 2010 to May 2013);

President (from July 2009 to Oct. 2010) and Vice-President Corporate Finance (from July 2005 to July 2009) of Bolder Investment Partners

Director

(since November 1, 2013)

HARRIS, Leonard

HOFFMANN, Kai(2)

Colorado, USA.

, (3), (4)
Director
British Columbia, Canada

Retired

CEO of NorthStar Communications Canada Corp. (since August 2018);
CEO of Soar Financial Canada Corp. (Oreninc) (since August 2016);
Managing Director of TK News Services UG (haftungsbeschraenkt)
(since July 2012);
Managing Director of NorthStar Communications GmbH
(since February 2011)

Director

(since June 5, 2001)

29, 2018)

LEISMAN, Akiba (3)

New York, USA

ELDRIDGE, Scott
British Columbia, Canada

Director of MarlinCanarc Resource Corp.
(since June 29, 2018);
Director (since June 26, 2017) and CEO of Arctic Star Exploration Corp. (from June 26, 2017 to Oct. 23, 2018);
CFO of Amarillo Gold Mining Ltd.

Corporation

(since September 2012)from October 8, 2014 to November 4, 2017);

Director

President and CEO of Golden Reign Resources Ltd.

Euroscandic International Group

(since July 2014);

Consultant to Wexford Capital LP

(since 2011);

Senior Analyst for Red Kite Capital Management

(Aprilfrom October 2008 to August 2011)

October 2017)

Director

Chief Executive Officer
(since October 30, 2015)

17, 2018)

CHILOFLISCHI, Catalin

BILES, Garry
British Columbia, Canada

Director of Corporate Communications for Aurcana Corporation

(from September 2012 to December 2013);

Manager/Director of Investor Communications for Selwyn Resources Corp.

(from July 2010 to September 2012);

Senior Analyst for Northwest & Ethical Investments

(from August 2004 to July 2010)

Chief Executive Officer

(since January 13, 2014)

BILES, Garry

British Columbia, Canada

Vice-President, Mining, of Canarc Resource Corp.

(from March 1, 2007 to May 31, 2008);

General Manager of Glencairn Gold Corp.

(from April 2005 to January 2007)

President and Chief Operating Officer

(since June 1, 2008)

MARGOLIS, Jacob
Nevada, USA
Exploration Manager for Canarc Resource Corp.
(from May 2017 to December 2017);
Consulting geologist
(from July 2014 to May 2017);
Exploration Manager for Redstar Gold Corp.
(from March 2014 to July 2014)
Vice-President (Exploration)
(since January 2018)
YEE, Philip

British Columbia, Canada

Chief Financial Officer and Vice-President (Finance) of Aztec Minerals Corp.
(since July 2016);
Chief Financial Officer, Vice-President (Finance) and Director of Caza Gold Corp.

(sincefrom November 2007);

2007 to February 2017)

Chief Financial Officer and Vice-President (Finance) of Parallel Resources Ltd.

(from November 2009 to October 2011);

Finance Manager and/or Controller for Canarc Resource Corp.

(from May 2003 to June 2005);

Chief Financial Officer, Finance Manager and/or Controller for Endeavour Silver Corp.

(from May 2003 to February 2007)

Chief Financial Officer and Vice-President (Finance)

(since June 2005);

Secretary (Interim)

(since December 2015)

(1)

Unless otherwise stated above, each of the above-named persons has held the principal occupation or employment indicated for at least five years.

(2)

Members of the Audit Committee.

(3)

Mr. Akiba Leisman is Marlin Gold's appointee to Canarc's Board of Directors. Items 4.A and 4.D provide further details.

77

(1) 
Unless otherwise stated above, each of the above-named persons has held the principal occupation or employment indicated for at least five years.
(2) 
Members of the Audit Committee.
(3) 
Members of the Compensation Committee.
(4) 
Members of the Nomination Committee.
(5) 
Members of the Technical Committee.
(6) 
Members of the Investment Committee.
Canarc Resource Corp.
Form 20-F
65
No director or officer has any family relationship with any other director or officer. The term of office of each of the directors will continue until the next annual general meeting, or until his successor is duly elected, unless his office is vacated in accordance with the articles of the Registrant.Company. Officers hold office at the pleasure of the directors.

To the best of the Registrant'sCompany’s knowledge, there are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any of the Registrant'sCompany’s officers or directors was selected as an officer or director of the Registrant,Company, other than as disclosed in this Form 20-F.

6.B Compensation
Statement of Executive Compensation

The RegistrantCompany is required, under applicable securities legislation in Canada, to disclose to its shareholders details of compensation paid to its directors and officers. The following fairly reflects all material information regarding compensation paid to the Registrant'sCompany's directors and officers that has been disclosed to the Registrant'sCompany’s shareholders under applicable Canadian law.

During the fiscal period ended December 31, 2015,2018, the aggregate compensation incurred by the RegistrantCompany to all individuals who were directors and officers, at the time of their remuneration, in all capacities as a group was CAD$800,0001.1 million of which CAD$180,000238,000 was for severance and CAD$35,000 for bonus.

The table below discloses information with respect to executive compensation paid by the RegistrantCompany to its directors and officers for the fiscal year ended December 31, 2015.2018. The following table sets forth, for the periods indicated, the compensation of the directors and officers.

Canarc Resource Corp.

Form 20-F

78

66
SUMMARY OF COMPENSATION

PAID TO DIRECTORS AND OFFICERS

(in terms of Canadian dollars)

Name and

principal position

Year

Salary(1)

($)

Share-based awards
($)

Option-based awards(2)
($)

Non-equity incentive

plan compensation(3)

($)

Pension

value(5)
($)

All other

compensation(6)
($)

Total

compensation(7)
($)

Annual

Incentive

plans(3)

Long-term

incentive
plans(4)

Bradford J. Cooke (8)

Director, Chairman and former CEO

2015

Nil

Nil

$60,265

$180,000

Nil

Nil

Nil

$240,265

2014

Nil

Nil

$63,620

Nil

Nil

Nil

$4,000

$67,620

2013

$18,511

Nil

$31,639

Nil

Nil

Nil

$8,000

$58,150

Leonard Harris

Director

2015

Nil

Nil

$23,179

Nil

Nil

Nil

$3,000

$26,179

2014

Nil

Nil

$23,858

Nil

Nil

Nil

$5,000

$28,858

2013

Nil

Nil

$12,656

Nil

Nil

Nil

$8,000

$20,656

Martin Burian(9)

Director

2015

Nil

Nil

$9,272

Nil

Nil

Nil

$5,500

$14,772

2014

Nil

Nil

$23,858

Nil

Nil

Nil

$6,000

$29,858

2013

Nil

Nil

Nil

Nil

Nil

Nil

$1,326

$1,326

Bruce Bried (10)

Former Director

2015

Nil

Nil

Nil

Nil

Nil

Nil

$2,000

$2,000

2014

Nil

Nil

$23,858

Nil

Nil

Nil

$5,000

$28,858

2013

Nil

Nil

$12,656

Nil

Nil

Nil

$8,000

$20,656

Deepak Malhotra (11)

Director

2015

Nil

Nil

$9,272

Nil

Nil

Nil

$3,500

$12,772

2014

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

2013

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Akiba Leisman (12)

Director

2015

Nil

Nil

$9,272

Nil

Nil

Nil

Nil

$9,272

2014

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

2013

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Catalin Chiloflischi(13)

Chief Executive Officer

2015

$175,652

Nil

$50,993

$35,000

Nil

Nil

Nil

$261,645

2014

$154,852

Nil

$99,193

Nil

Nil

Nil

Nil

$254,045

2013

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Garry D. Biles

President and COO

2015

$214,615

Nil

$64,901

Nil

Nil

Nil

Nil

$279,516

2014

$207,925

Nil

$63,620

Nil

Nil

Nil

Nil

$271,545

2013

$201,095

Nil

$25,311

Nil

Nil

Nil

Nil

$226,406

Stewart Lockwood (14)

Former Secretary

2015

Nil

Nil

Nil

Nil

Nil

Nil

$75,825 (13)

$75,825

2014

Nil

Nil

$3,976

Nil

Nil

Nil

$112,235 (13)

$116,211

2013

Nil

Nil

$6,328

Nil

Nil

Nil

$69,435 (13)

$75,763

Philip Yee

Chief Financial Officer and Vice-President, Finance and Secretary (Interim)

2015

$105,048

Nil

$27,815

Nil

Nil

Nil

Nil

$132,863

2014

$106,273

Nil

$31,810

Nil

Nil

Nil

Nil

$138,083

2013

$90,877

Nil

$18,984

Nil

Nil

Nil

Nil

$109,861

Name and principal positionYear
Salary (1)
($)
Share-based awards
($)
Option-based awards (2)
($)
Non-equity incentive plan compensation (3)
($)
Pension value (5)
($)
All other compensation (6)
($)
Total compensation (7)
($)
     
Annual incentive plans (3)
Long-term incentive plans (4)


 
Bradford J. Cooke (8)
2018NilNil$24,699NilNilNil$10,000$34,699
Director, Chairman and former Chief Executive Officer2017NilNil$43,421NilNilNil$85,000$128,421
 2016NilNil$13,750NilNilNilNil$13,750
Martin Burian2018NilNil$16,446NilNilNil$4,000$20,446
Director2017NilNil$26,052NilNilNil$15,000$41,052
 2016NilNil$2,375NilNilNil$4,500$6,875
Deepak Malhotra2018NilNil$16,446NilNilNil$4,000$20,446
Director2017NilNil$26,052NilNilNil$14,500$40,552
 2016NilNil$2,375NilNilNil$3,500$5,875
Kai Hoffmann (9)
2018NilNil$16,446NilNilNil$2,000$18,446
Director2017N/AN/AN/AN/AN/AN/AN/AN/A
 2016N/AN/AN/AN/AN/AN/AN/AN/A
Scott Eldridge (10)
2018$43,738Nil$45,306NilNilNil$2,000$91,044
Director and Chief Executive Officer2017N/AN/AN/AN/AN/AN/AN/AN/A
 2016N/AN/AN/AN/AN/AN/AN/AN/A
Leonard Harris (11)
2018NilNilN/ANilNilNil$2,000$2,000
Former Director2017NilNil$26,052NilNilNil$13,000$39,052
 2016NilNil$5,375NilNilNil$3,000$8,375
Catalin Kilofliski (12)
2018$117,517NilN/A$237,981NilNilNil$355,498
Former Chief Executive Officer2017$257,513Nil$60,789$175,000NilNilNil$493,302
 2016$246,067Nil$12,000NilNilNilNil$258,067
Garry D. Biles2018$206,923Nil$20,558NilNilNilNil$227,481
President and COO2017$208,461Nil$52,105$125,000NilNilNil$385,566
 2016$210,000Nil$14,750$30,000NilNilNil$254,750
Jacob Margolis (13)
2018$149,819Nil$8,223NilNilNilNil$158,042
Vice-President, Exploration2017N/AN/AN/AN/AN/AN/AN/AN/A
 2016N/AN/AN/AN/AN/AN/AN/AN/A
Philip Yee2018$117,097Nil$12,335NilNilNilNil$129,432
Chief Financial Officer and Vice-President, Finance and Secretary2017$118,929Nil$30,394$50,000NilNilNil$199,323
 2016$108,378Nil$6,375$15,000NilNilNil$129,753
Notes:
(1) 
Includes the dollar value of cash and non-cash base salary earned during a financial year covered.
(2) 
The amount represents the fair value, on the date of grant and on each vesting date, as applicable, of awards made under Canarc’s Stock Option Plan. The grant date fair value has been calculated using the Black Scholes Option Pricing Model in accordance with IFRS.
(3) 
These amounts include annual non-equity incentive plan compensation, such as severance, bonuses and discretionary amounts for the years ended December 31.
(4) 
N/A.
(5) 
N/A.
(6) 
These amounts cover all compensation other than amounts already set out in the table for the years ended December 31 and include directors fees, as applicable, or other stipends related to Board committee fees, if any.
Canarc Resource Corp.

Form 20-F

79

Notes:

(1)

Includes the dollar value of cash and non cash base salary earned during a financial year covered.

(2)

The amount represents the fair value, on the date of grant and on each vesting date, as applicable, of awards made under Canarc's Stock Option Plan. The grant date fair value has been calculated using the Black Scholes Option Pricing Model in accordance with IFRS.

(3)

These amounts include annual non-equity incentive plan compensation, such as severance, bonuses and discretionary amounts for the year ended December 31, 2015.

(4)

N/A.

(5)

N/A.

(6)

These amounts cover all compensation other than amounts already set out in the table for the year ended December 31, 2015 and include directors fees, as applicable, or other stipends related to Board committee fees, if any.

(7)

These amounts include dollar value of total compensation for the covered year. This is the sum of all amounts reported in columns with footnotes 1 to 6 above for each director and officer.

(8)

Mr. Bradford Cooke resigned as Chief Executive Officer effective January 13, 2014 but remain Chairman and Director. In 2015, Canarc accrued a severance of CAD$180,000 which was paid in March 2016.

(9)

Mr. Martin Burian was nominated to the Board of Directors effective November 1, 2013.

(10)

Mr. Bruce Bried retired as a Director effective June 29, 2015.

(11)

Mr. Deepak Malhotra was nominated to the Board of Directors effective June 29, 2015.

(12)

Mr. Akiba Leisman was nominated to the Board of Directors effective October 30, 2015 pursuant to the Share Purchase Agreement with Marlin Gold. Items 4.A and 4.D provide further details.

(13)

Mr. Catalin Chiloflischi was appointed Chief Executive Officer effective January 13, 2014.

(14)

Legal fees charged to Canarc by a law firm in which Mr. Stewart Lockwood is a partner. Mr. Lockwood resigned a Secretary of Canarc effective December 8, 2015.

67
(7) 
These amounts include dollar value of total compensation for the covered year. This is the sum of all amounts reported in columns with footnotes 1 to 6 above for each director and officer.
(8) 
Mr. Bradford Cooke resigned as Chief Executive Officer effective January 13, 2014 and acted an Interim Chief Executive Officer from June 29, 2018 to October 17, 2018, and continues to be Chairman and Director.
(9) 
Mr. Kai Hoffmann was nominated to the Board of Directors effective June 29, 2018.
(10) 
Mr. Scott Eldridge was nominated to the Board of Directors effective June 29, 2018 and was appointed Chief Executive Office effective October 17, 2018.
(11) 
Mr. Leonard Harris retired from the Board of Directors on June 28, 2018.
(12) 
Mr. Catalin Kilofliski ceased to be Chief Executive Officer effective June 28, 2018.
(13) 
Dr. Jacob Margolis was appointed Vice-President (Exploration) effective January 5, 2018.
Item 10.C provides further details of employment contracts and agreements with current and former senior officers of the Registrant.

Company.

The following table sets forth information concerning outstanding stock options under the Registrant'sCompany’s Stock Option Plan as at December 31, 2015to2018 to each director and officer of the Registrant.Company. No SARs were outstanding.

Canarc Resource Corp.

Form 20-F

80

Options and Stock Appreciation Rights ("SARs"(“SARs”)

The following table discloses incentive stock options which were granted to directors and officers during the fiscal year ended December 31, 2015:

2018:

SUMMARY OF STOCK OPTIONS

GRANTED TO DIRECTORS AND OFFICERS

From January 1, 20152018 to December 31, 2015

Name and

Principal Position

Date of
Grant

Title of Underlying
Security

Number of

Underlying Security

Exercise Price per
Share (CAD$)

Expiry Date

Bradford J. Cooke

Chairman and Director

December 8, 2015

Common shares

1,300,000

$0.06

December 8, 2020

Martin Burian

Director

December 8, 2015

Common shares

200,000

$0.06

December 8, 2020

Leonard Harris

Director

December 8, 2015

Common shares

500,000

$0.06

December 8, 2020

Akiba Leisman

Director

December 8, 2015

Common shares

200,000

$0.06

December 8, 2020

Deepak Malhotra

Director

December 8, 2015

Common shares

200,000

$0.06

December 8, 2020

Catalin Chiloflischi

Chief Executive Officer

December 8, 2015

Common shares

1,100,000

$0.06

December 8, 2020

Garry Biles

President and Chief Operating Officer

December 8, 2015

Common shares

1,400,000

$0.06

December 8, 2020

Philip Yee

Chief Financial Officer and Vice-President (Finance) and Secretary (Interim)

December 8, 2015

Common shares

600,000

$0.06

December 8, 2020

2018

Name and
Principal Position
 
Date of Grant
Title of Underlying Security
Number of
Underlying Security
Exercise Price per Share
(CAD$)
 
Expiry Date
Bradford J. Cooke
Chairman and Director
June 29, 2018 (1)
Common shares600,000$0.08June 29, 2023
Martin Burian
Director
June 29, 2018 (1)
Common shares400,000$0.08June 29, 2023
Deepak Malhotra
Director
June 29, 2018 (1)
Common shares400,000$0.08June 29, 2023
Kai Hoffmann
Director
June 29, 2018 (1)
Common shares400,000$0.08June 29, 2023
Scott Eldridge
Director and Chief Executive Officer
June 29, 2018 (1)
Common shares400,000$0.08June 29, 2023
November 12, 2018 (1)
Common shares500,000$0.05November 12, 2023
November 12, 2018 (1)
Common shares500,000$0.06November 12, 2023
Garry Biles
President and Chief Operating Officer
June 29, 2018 (1)
Common shares500,000$0.08June 29, 2023
Jacob Margolis
Vice-President (Exploration)
June 29, 2018 (1)
Common shares200,000$0.08June 29, 2023
Philip Yee
Chief Financial Officer and Vice-President (Finance) and Secretary
June 29, 2018 (1)
Common shares300,000$0.08June 29, 2023
(1) 
These stock options are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.
Canarc Resource Corp.
Form 20-F
68
At the discretion of the directors, certain option grants provide the holder with the right to receive the number of common shares, valued at the quoted market price at the time of exercise of the stock options, that represent the share appreciation since granting the stock options.

Canarc Resource Corp.

Form 20-F

81

Pension Plan

The RegistrantCompany does not have any pension plan arrangements in place.

Report on Executive Compensation

The Registrant'sCompany’s executive compensation program is administered by the Compensation Committee on behalf the board of directors (the "Board"“Board”).

Compensation of Directors

Mr. Bradford J. Cooke, the former Chief Executive Officer and a Director of Canarc, previously received compensation as consideration for his duties as an operating officer of Canarc as disclosed in the Summary Compensation Table above;Canarc; Mr. Cooke resigned as Chief Executive Officer on January 13, 2014 and was again Chief Executive Officer (Interim) from June 29, 2018 to October 17, 2018 but remains Chairman and a Director. Mr. Cooke was awarded a severance of CAD$180,000 in 2015 which was accrued by Canarc and was paid in March 2016.

At a Compensation Committee meeting held on March 22, 2013, it was resolved that each director shall earn14, 2017, Mr. Cooke received a remunerationbonus of CAD$2,000 per quarter as compensation75,000 in his capacity as a directorChairman in providing strategic guidance and such remuneration shall continue to be accrued.

assisting with mergers and acquisitions.

At a Compensation Committee meetingmeetings held on June 26, 2014,annually, it was resolved that fees for members of the Audit, Compensation and Nomination Committees will be CAD$1,000 per quarter per Committee Chairman and CAD$500 per quarter per Committee Member, and are to be paid each quarter. It was further resolved that no directors fees shall be payable to directors in their capacity as Directors. These resolutions were effective July 1, 2014.

At Canarc's annual generala Compensation Committee meeting in June 2015, disinterested shareholders passedheld on March 14, 2017, all Directors received a resolution relating to sharesone-time bonus of CAD$10,000 for debt settlements to certain insidersthe financial turn-around of Canarc which significantly improved in its financial resources and working capital. In March 2018, the Compensation Committee approved quarterly stipends to Board members in which debts of up tothe Chairman shall receive CAD$63,520 owed to certain current2,500 per quarter and former directors would be settled byeach Director shall receive CAD$1,000 per quarter, excluding a director who is an executive officer. In March 2019, the issuance of up to 1.27 million shares. On September 24, 2015, Canarc issued 1.27 million shares at a value of CAD$0.07 in settlement ofCompensation Committee re-approved Board and Committee fees owed to certain former and current directors in which they also forgave a certain portion of outstanding directors fees owed, resulting in a gain on debt settlement of US$54,000.

for 2019.

During the fiscal year ended December 31, 2015,2018, Canarc granted 2.42.2 million stock options to directors with an exercise price of CAD$0.060.08 and an expiry date of December 8, 2020June 29, 2023 and which are subject to vesting provisions in which 25%20% of the options vest immediately on the grant date and 25%20% vest every six months thereafter.

Canarc Resource Corp.

Form 20-F

82

Performance based stock options for 750,000 common shares which were granted in 2016 to a director fully vested in 2017.

Executive Compensation Program

The Registrant'sCompany’s executive compensation program is based on a pay for performance philosophy. The executive compensation program is designed to encourage, compensate and reward employees on the basis of individual and corporate performance, both in the short and the long term. Base salaries are set at levels which are competitive with the base salaries paid by companies within the mining industry having comparable capitalization to that of the Registrant,Company, thereby enabling the RegistrantCompany to compete for and retain executives critical to the Registrant'sCompany’s long term success. Incentive compensation is directly tied to corporate and individual performance. Share ownership opportunities are provided to align the interests of executive officers with the longer term interests of shareholders.

Compensation for directors and officers, as well as for executive officers as a whole, consists of a base salary, along with annual incentive compensation in the form of an annual bonus, and a longer term incentive in the form of stock options. As an executive officer'sofficer’s level of responsibility increases, a greater percentage of total compensation is based on performance (as opposed to base salary and standard employee benefits) and the mix of total compensation shifts towards stock options, thereby increasing the mutuality of interest between executive officers and shareholders.

Canarc Resource Corp.
Form 20-F
69
No funds were set aside or accrued by the RegistrantCompany or its subsidiaries during the year ended December 31, 20152018 to provide pension, retirement or similar benefits for directors or officers of the RegistrantCompany pursuant to any existing plan provided or contributed to by the RegistrantCompany or its subsidiaries under applicable Canadian laws.

Base Salary

The Board approves ranges for base salaries for executive employees of the RegistrantCompany based on reviews of market data from peer groups and industry in general. The level of base salary for each employee within a specified range is determined by the level of past performance, as well as by the level of responsibility and the importance of the position to the Registrant.

Company.

The Registrant'sCompany’s Chief Executive Officer prepares recommendations for the Compensation Committee which are then presented to the Board with respect to the base salary to be paid to the CEO and other senior executive officers. The CEO'sCEO’s recommendations for base salaries for the senior executive officers, including the Chief Executive Officer, President and Chief Operating Officer, and the Chief Financial Officer, are then submitted for approval by the Board from the Compensation Committee.

At Canarc's annual general meeting in June 2015, disinterested shareholders passed a resolution relating to shares for debt settlements to certain insiders of Canarc in which debts of up to CAD$127,400 owed to senior officers would be settled by the issuance of up to 2.55 million shares. On September 24, 2015, Canarc issued 748,300 shares at a value of CAD$0.07 in settlement of partial salaries owed to certain officers.

Bonus

The Board annually evaluates performance and allocates an amount for payment of bonuses to executive officers and senior management. The aggregate amount for bonuses to be paid will vary with the degree to which targeted corporate performance was achieved for the year. The individual performance factor allows the RegistrantCompany effectively to recognize and reward those individuals whose efforts have assisted the RegistrantCompany to attain its corporate performance objective.

The CEO prepares recommendations for the Compensation Committee which in turn makes a recommendation to the Board with respect to the bonuses to be paid to the executive officers and to senior management.

A bonus of

In fiscal 2016, Canarc paid CAD$35,000 was accrued for the CEO for fiscal 2015 and45,000 in bonuses to two other senior officers. In 2017, Canarc paid in March 2016. No other bonuses were distributed nor paidCAD$350,000 to executive officers as Canarc made significant corporate advancement in 2016 including substantial gains and senior management of Canarc in the 2013, 2014significantly improved its financial resources and 2015 fiscal years.

Canarc Resource Corp.

Form 20-F

83

working capital.

Stock Options

A Stock Option Plan is administered by the Board. The Stock Option Plan is designed to give each option holder an interest in preserving and maximizing shareholder value in the longer term, to enable the RegistrantCompany to attract and retain individuals with experience and ability, and to reward individuals for current performance and expected future performance. The Board considers stock option grants when reviewing executive officer compensation packages as a whole.

During the fiscal year ended December 31, 2015,2018, Canarc granted 3.12 million stock options to senior officers as follows:
-            
1 million stock options with an exercise price of CAD$0.08 and an expiry date of June 29, 2023;
-            
500,000 stock options with an exercise price of CAD$0.05 and an expiry date of November 12, 2023; and
-            
500,000 stock options with an exercise price of CAD$0.06 and an expiry date of December 8, 2020 and whichNovember 12, 2023.
These stock options are subject to vesting provisions in which 25%20% of the options vest immediately on the grant date and 25%20% vest every six months thereafter.

Performance based stock options for 1.5 million common shares which were granted in 2016 to senior officers fully vested in 2017.
Other Compensation

Mr. Bradford J. Cooke formerly CEOreceived a bonus of CAD$75,000 in 2017 in his capacity as Chairman in providing strategic guidance and who remains Chairmanassisting with mergers and acquisitions. In 2017 each Director received a one-time bonus of CAD$10,000 for the financial turn-around of Canarc is a party to an employment arrangement with Endeavour Silver Corp., a companywhich significantly improved in which Mr. Cooke is its Chief Executive Officerfinancial resources and a Director, ("Endeavour") whereby Endeavour is reimbursed by Canarc for time spent by Mr. Cooke on a cost recovery basis. During the financial year ended December 31, 2015, Canarc incurred CAD$Nil (2014 - CAD$Nilworking capital.
Directors’ and 2013 - CAD$18,511) in salary paid or payable to Endeavour for services rendered by Mr. Cooke to Canarc.

Mr. Cooke resigned as Chief Executive Officer of Canarc effective January 13, 2014 but remains its Chairman and a Director. Mr. Cooke was awarded a severance of CAD$180,000 in 2015 which was accrued by Canarc and was paid in March 2016.

Directors' and Officers'Officers’ Liability Insurance

Canarc has an insurance policy for itself and its directors and officers against liability incurred by them in the performance of their duties as directors and officers of Canarc. In January 2014, Canarc renewed its policy which had a CAD$1 million limit of liability, retentions of up to CAD$50,000, and a policy period from January 1, 2014 to January 1, 2015 for a premium of CAD$14,000. In October 2014, Canarc increased its coverage to CAD$5 million limit of liability and extended the term to October 17, 2015 for a net premium of $25,048.

On October 17, 2015, Canarc renewed its annual directors and officers liability insurance coverage of CAD$5 million for a net premium of CAD$15,000.

On October 17, 2016, Canarc increased its directors and officers liability insurance coverage to CAD$10 million for an annual premium of CAD$20,000 which in turn was renewed for the same coverage for an annual premium of CAD$19,200 in 2017. The directors and officers liability insurance was again renewed for a coverage of CAD$10 million for a premium of CAD$20,000.

Canarc Resource Corp.
Form 20-F
70
6.C Board Practices

Statement of Corporate Governance Practices

The RegistrantCompany is required to report annually to its shareholders on its corporate governance practices and policies with reference to National Policy 58-201, Corporate Governance Guidelines (the "Policy"“Policy”) and National Instrument 58-101, Disclosure of Corporate Governance Practices, as adopted by the Canadian Securities Administrators, and effective June 30, 2005.

The Board of Directors

The Board currently consists of five directors, of which three directors (Martin(Messrs. Martin Burian, Deepak Malhotra and Leonard Harris)Kai Hoffmann) are currently "independent"“independent” in the context of the Policy. Mr. Bradford J. Cooke is not an independent director because he was the Chief Executive Officer of Canarc until his resignation on January 13, 2014 and was again Chief Executive Officer (Interim) from June 29, 2018 to October 17, 2018 but remains its Chairman and a Director. Mr. Akiba LeismanScott Eldridge is not considered as an independent director because he is the interimhas been Chief Executive Officer and a Director of Marlin Gold, a company which was an Insider of Canarc by virtue of having more than 10% (ie. 10.79%) interest in Canarc as at the closing date ofsince October 30, 2015 for the Share Purchase Agreement between Canarc and Marlin.

17, 2018.

Directors are elected at the Registrant'sCompany’s annual general meeting and are re-elected for the ensuing year.

Canarc Resource Corp.

Form 20-F

84

The number of years which each director has served is as follows:

Director

Period of Service

(Number of Years)

Bradford Cooke

29

32

Leonard Harris

Martin Burian

13

6

Martin Burian

Deepak Malhotra

2

4

Deepak Malhotra

Kai Hoffmann

Less than 1

Akiba Leisman

Scott Eldridge

Less than 1

Certain directors of the RegistrantCompany are presently directors of other issuers that are reporting issuers (or the equivalent) in any jurisdiction including foreign jurisdictions, as follows:

Director

Other Reporting Issuers

Bradford Cooke

Endeavour Silver Corp.

Aztec Minerals Corp.
Radius Gold Inc.

Martin Burian

Atlas Cloud EnterprisesYnvisible Interactive Inc.

Cap-Ex Iron Ore

Canvass Ventures Ltd.

Assure Holdings Corp.
Elysee Development Corp.

Akiba Leisman

Marlin Gold MiningRBI Ventures Ltd.

Golden Reign Resources Ltd.

Leonard Harris

Coronet Metals Inc.

Deepak MalhotraBlackrock Gold Corp.
Cardero Resource Corp.

Wealth Minerals Ltd.

Standard Tolling

Scott EldridgeArctic Star Exploration Corp.

Solitario Exploration & Royalty Corp.

Canarc Resource Corp.
Form 20-F
71
The independent directors do not hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. However, during the course of a directors'directors’ meeting, if a matter is more effectively dealt with without the presence of members of management, the independent directors request members of management to leave the meeting, and the independent directors then meet.

Canarc Resource Corp.

Form 20-F

85

Bradford J. Cooke is the Chairman of the Board of Directors of Canarc. Martin Burian, as an independent director, was appointed the Lead Director of the Board, with the mandate to ensure that the Board'sBoard’s Agenda will enable it to successfully carry out its duties and to do so without interference from the Chairman of the Board that could result from potential conflicts from his status as a non-independent Board member given that Mr. Cooke as Chairman was the Chief Executive Officer until his resignation on January 13, 2014.

2014 and was again Chief Executive Officer (Interim) from June 29, 2018 to October 17, 2018.

Since January 1, 2007, the RegistrantCompany has held board meetings at least quarterly and at which the majority, if not all, Board members have attended, either in person or by telephone conference call, during the time in which they were directors of the Registrant.

Company.

Board Mandate

The Board of Directors is responsible for supervising management in carrying on the business and affairs of the Registrant.Company. Directors are required to act and exercise their powers with reasonable prudence in the best interests of the Registrant.Company. The Board agrees with and confirms its responsibility for overseeing management's performance in the following particular areas:

·

the strategic planning process of the Registrant;

·

identification and management of the principal risks associated with the business of the Registrant;

·

planning for succession of management;

·

the Registrant's policies regarding communications with its shareholders and others; and

·

the integrity of the internal controls and management information systems of the Registrant.

● 
the strategic planning process of the Company;
● 
identification and management of the principal risks associated with the business of the Company;
● 
planning for succession of management;
● 
the Company's policies regarding communications with its shareholders and others; and
● 
the integrity of the internal controls and management information systems of the Company.
In carrying out its mandate, the Board relies primarily on management to provide it with regular detailed reports on the operations of the RegistrantCompany and its financial position. The Board reviews and assesses these reports and other information provided to it at meetings of the Board and/or of its committees. The CEO reports directly to the Board, giving the Board direct access to information in his areas of responsibility. Other management personnel regularly attend Board meetings to provide information and answer questions. Directors also consult from time to time with management and have, on occasion, visited the properties of the Registrant.Company. The reports and information provided to the Board include details concerning the monitoring and management of the risks associated with the Registrant'sCompany's activities, such as compliance with safety standards and legal requirements, environmental issues and the financial position and liquidity of the Registrant.Company. At least annually, the Board reviews management's report on its business and strategic plan and any changes with respect to risk management and succession planning.

Canarc Resource Corp.

Form 20-F

86

Position Descriptions

The Board of Directors has not yet developed written position descriptions for the Chairman, the chairman of any Board committees, the CEO, the President or the CFO. The Board is of the view that given the size of the Registrant,Company, the relatively frequent discussions between Board members, the CEO, the President and the CFO and the experience of the individual members of the Board, the responsibilities of such individuals are known and understood without position descriptions being reduced to writing. The Board will evaluate this position from time to time, and if written position descriptions appear to be justified, they will be prepared.

Orientation and Continuing Education

The Board does not have a formal policy relating to the orientation of new directors and continuing education for directors. The appointment of a new director is a relatively infrequent event in the Registrant'sCompany’s affairs, and each situation is addressed on its merits on a case-by-case basis. The RegistrantCompany has a relatively restricted scope of operations, and most candidates for Board positions will likely have past experience in the mining business; they will likely be familiar therefore with the operations of a resource company of the size and complexity of the Registrant.Company. The Board, with the assistance of counsel, keeps itself apprised of changes in the duties and responsibilities of directors and deals with material changes of those duties and responsibilities as and when the circumstances warrant. The Board will evaluate these positions, and if changes appear to be justified, formal policies will be developed and followed.

Canarc Resource Corp.
Form 20-F
72
Ethical Business Conduct

The RegistrantCompany has adopted a whistle blower policy, which is set out in its Charter of the Audit Committee which is available for viewing on SEDAR as a schedule to the Registrant'sCompany’s Annual Information Form dated March 24, 2016.

27, 2019.

Nomination of Directors

The Board has neither a formal policy for identifying new candidates for Board nomination. If and when the Board determines that its size should be increased or if a director needs to be replaced, the nomination committee meeting shall be convened. The terms of reference of such a committee will be determined, but are expected to include the determination of the independence of the candidate, his or her experience in the mining business and compatibility with the other directors.

Compensation

Taking into account the Registrant'sCompany’s present status as an exploration-stage enterprise, the Board of Directors reviews the adequacy and form of compensation provided to Directors on a periodic basis to ensure that the compensation is commensurate with the responsibilities and risks undertaken by an effective director.

At aCanarc’s annual Compensation Committee, meeting held on March 22, 2013 which was ratified by a Board of Directors meeting on that same day , it was resolved that each director shall earn a remuneration of CAD$2,000 per quarter as compensation in his capacity as a director for fiscal 2013 and such remuneration shall continue to be accrued.

Canarc Resource Corp.

Form 20-F

87

At a Compensation Committee meeting held on June 26, 2014, it was resolved that fees for members of the Audit, Compensation and NominationBoard Committees will be CAD$1,000 per quarter per Committee Chairman and CAD$500 per quarter per Committee Member, and are to be paid each quarter. It was further resolved that no directors fees shall be payable to directors in their capacity as Directors. These resolutions were effective July 1, 2014.

At Canarc's annual general meeting in June 2015, disinterested shareholders passedIn 2018 and 2019, the Compensation Committee approved stipends for Board members whereby the Chairman will receive a resolution relating to shares for debt settlements to certain insidersquarterly fee of Canarc in which debtsCAD$2,500 and Directors a quarterly fee of up to CAD$63,520 owed to certain current and former directors would be settled by the issuance of up to 1.27 million shares. On September 24, 2015, Canarc issued 1.27 million shares at a value of CAD$0.07 in settlement of fees owed to certain former and current directors in which they also forgave a certain portion of outstanding directors fees owed, resulting in a gain on debt settlement of US$54,000.

1,000.

Audit Committee

The Audit Committee is comprised of:

Chairman:

Martin Burian 

Members:

Deepak Malhotra and Leonard Harris

Chairman:                      Martin Burian
Members:                      Deepak Malhotra and Kai Hoffmann
The mandate of the Audit Committee is as follows:

The Audit Committee will assist the Board of Directors (the "Board"“Board”) of Canarc Resource Corp. (the "Company")the Company in fulfilling its oversight responsibilities. The Committee will review the financial reporting process, the system of internal control and management of financial risks, the audit process, and the Company's process for monitoring compliance with laws and regulations and its own code of business conduct as more fully described below. In performing its duties, the Committee will maintain effective working relationships with the Board of directors,Directors, management, and the external auditors and monitor the independence of those auditors. To perform his or her role effectively, each Committee member will obtain an understanding of the responsibilities of Committee membership as well as the Company'sCompany’s business, operations and risks.

In carrying out its oversight responsibilities, the Audit Committee will:

(a)

Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.

(b)

Review with the Company's management and, as necessary, its external auditors and recommend to the Board the Company's quarterly and annual financial statements and management discussion and analysis that is to be provided to shareholders, stakeholders and the appropriate regulatory authorities, including any financial statement contained in a prospectus, information circular, registration statement or other similar document.

(c)

Review the Company's management annual and interim earnings press release before any public disclosure.

(d)

Recommend to the Board the external auditors to be nominated for the purposes of preparing or issuing an audit report or performing other audit's review or attest services and the compensation to be paid to the external auditors. The external auditors shall report directly to the Committee.

(a) 
Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
(b) 
Review with the Company’s management and, as necessary, its external auditors and recommend to the Board the Company’s quarterly and annual financial statements and management discussion and analysis that is to be provided to shareholders, stakeholders and the appropriate regulatory authorities, including any financial statement contained in a prospectus, information circular, registration statement or other similar document.
(c) 
Review the Company’s management annual and interim earnings press release before any public disclosure.
(d) 
Recommend to the Board the external auditors to be nominated for the purposes of preparing or issuing an audit report or performing other audit’s review or attest services and the compensation to be paid to the external auditors. The external auditors shall report directly to the Committee.
Canarc Resource Corp.

Form 20-F

88

(e)

The Committee will annually review the qualifications, expertise and resources and the overall performance of external auditor and, if necessary, recommend to the Board the termination of the external auditor (and its affiliates), in accordance with the applicable securities laws.

(f)

Review with management the scope and general extent of the external auditors' annual audit. The Committee's review should include an explanation from the external auditors of the factors considered in determining the audit scope, including major risk factors. The external auditors should confirm to the Committee whether or not any limitations have been placed upon the scope or nature of their audit procedures.

(g)

Be directly responsible for the oversight of the work of the external auditors, including the resolution of disagreements between management of the Company and the external auditors.

(h)

Review with the Company's management and external auditors the Company's accounting and financial reporting controls. Obtain annually in writing from the external auditors their observations, if any, on significant weaknesses in internal controls as noted in the course of the auditor's work.

(i)

Evaluate the adequacy and effectiveness of management's system of internal controls over the accounting and financial reporting system within the Company and ensure that the external auditors discuss with the Committee any event or matter which suggests the possibility of fraud, illegal acts or deficiencies in internal controls.

(j)

The Committee is to meet at least once annually, with the independent auditors, separately, without any management representatives present for the purpose of oversight of accounting and financial practices and procedures.

(k)

Review with the Company's management and external auditors significant accounting and reporting principles, practices and procedures applied by the Company in preparing its financial statements. Discuss with the external auditors their judgment about the quality of the accounting principles used in financial reporting.

(l)

Inquire as to the independence of the external auditors and obtain from the external auditors, at least annually, a formal written statement delineating all relationships between the Company and the external auditors and the compensation paid to the external auditors.

73
(e) 
The Committee will annually review the qualifications, expertise and resources and the overall performance of external auditor and, if necessary, recommend to the Board the termination of the external auditor (and its affiliates), in accordance with the applicable securities laws.
(f) 
Review with management the scope and general extent of the external auditors’ annual audit. The Committee’s review should include an explanation from the external auditors of the factors considered in determining the audit scope, including major risk factors. The external auditors should confirm to the Committee whether or not any limitations have been placed upon the scope or nature of their audit procedures.
(g) 
Be directly responsible for the oversight of the work of the external auditors, including the resolution of disagreements between management of the Company and the external auditors.
(h) 
Review with the Company’s management and external auditors the Company’s accounting and financial reporting controls. Obtain annually in writing from the external auditors their observations, if any, on significant weaknesses in internal controls as noted in the course of the auditor’s work.
(i) 
Evaluate the adequacy and effectiveness of management’s system of internal controls over the accounting and financial reporting system within the Company and ensure that the external auditors discuss with the Committee any event or matter which suggests the possibility of fraud, illegal acts or deficiencies in internal controls.
(j) 
The Committee is to meet at least once annually, with the independent auditors, separately, without any management representatives present for the purpose of oversight of accounting and financial practices and procedures.
(k) 
Review with the Company’s management and external auditors significant accounting and reporting principles, practices and procedures applied by the Company in preparing its financial statements. Discuss with the external auditors their judgment about the quality of the accounting principles used in financial reporting.
(l) 
Inquire as to the independence of the external auditors and obtain from the external auditors, at least annually, a formal written statement delineating all relationships between the Company and the external auditors and the compensation paid to the external auditors.
(m) 
At the completion of the annual audit, review with management and the external auditors the following:
i. 
The annual financial statements and related notes and financial information to be included in the Company’s annual report to shareholders.
ii. 
Results of the audit of the financial statements and the related report thereon and, if applicable, a report on changes during the year in accounting principles and their application.
iii. 
Significant changes to the audit plan, if any, and any serious disputes or difficulties with management encountered during the audit. Inquire about the cooperation received by the external auditors during the audit, including all requested records, data and information.
iv. 
Inquire of the external auditors whether there have been any material disagreements with management, which, if not satisfactorily resolved, would cause them to issue a not standard report on the Company’s financial statements.
(n) 
Meet with management, to discuss any relevant significant recommendations that the external auditors may have, particularly those characterized as “material” or “serious”. Typically, such recommendations will be presented by the external auditors in the form of a Letter of Comments and Recommendations to the Committee. The Committee should review responses of management to the Letter of Comments and Recommendations from external auditors and receive follow-up reports on action taken concerning the aforementioned recommendations.
(o) 
Have the sole authority to review in advance, and grant any appropriate pre-approvals, of all non-audit services to be provided by the independent auditors and, in connection therewith, to approve all fees and other terms of engagement. The Committee shall also review and approve disclosures required to be included in periodic reports filed with securities regulators with respect to non-audit services performed by external auditors.
(p) 
Be satisfied that adequate procedures are in place for the review of the Company’s disclosure of financial information extracted or derived from the Company’s financial statements, and periodically assess the adequacy of those procedures.
(q) 
Review and approve the Company’s hiring of partners, employees and former partners and employees of the present and past auditors.
(r) 
Review with management and the external auditors the methods used to establish and monitor the Company’s policies with respect to unethical or illegal activities by the Company employees that may have a material impact in the financial statements.
(s) 
The Committee will conduct an appropriate review of all proposed related party transactions to identify potential conflict of interest and disclosure situations. The Committee shall submit the related party transaction to the Board of Directors for approval by a majority of independent directors, excluding any director who is the subject of a related transaction, and implementation of appropriate action to protect the Company from potential conflicts of interest.
(t) 
The Committee will, if required, prepare a report for the inclusion on the Company’s proxy statement for its annual meeting of stockholders describing the Committee’s structure, its members and their experience and education. The report will address all issues then required by the rules of the regulatory authorities.
Canarc Resource Corp.

Form 20-F

89

(m)

At the completion of the annual audit, review with management and the external auditors the following:

i.

The annual financial statements and related notes and financial information to be included in the Company's annual report to shareholders.

ii.

Results of the audit of the financial statements and the related report thereon and, if applicable, a report on changes during the year in accounting principles and their application.

iii.

Significant changes to the audit plan, if any, and any serious disputes or difficulties with management encountered during the audit. Inquire about the cooperation received by the external auditors during the audit, including all requested records, data and information.

iv.

Inquire of the external auditors whether there have been any material disagreements with management, which, if not satisfactorily resolved, would cause them to issue a not standard report on the Company's financial statements.

(n)

Meet with management, to discuss any relevant significant recommendations that the external auditors may have, particularly those characterized as "material" or "serious". Typically, such recommendations will be presented by the external auditors in the form of a Letter of Comments and Recommendations to the Committee. The Committee should review responses of management to the Letter of Comments and Recommendations from external auditors and receive follow-up reports on action taken concerning the aforementioned recommendations.

(o)

Have the sole authority to review in advance, and grant any appropriate pre-approvals, of all non-audit services to be provided by the independent auditors and, in connection therewith, to approve all fees and other terms of engagement. The Committee shall also review and approve disclosures required to be included in periodic reports filed with securities regulators with respect to non-audit services performed by external auditors.

(p)

Be satisfied that adequate procedures are in place for the review of the Company's disclosure of financial information extracted or derived from the Company's financial statements, and periodically assess the adequacy of those procedures.

(q)

Review and approve the Company's hiring of partners, employees and former partners and employees of the present and past auditors.

(r)

Review with management and the external auditors the methods used to establish and monitor the Company's policies with respect to unethical or illegal activities by the Company employees that may have a material impact in the financial statements.

(s)

The Committee will conduct an appropriate review of all proposed related party transactions to identify potential conflict of interest and disclosure situations. The Committee shall submit the related party transaction to the Board of Directors for approval by a majority of independent directors, excluding any director who is the subject of a related transaction, and implementation of appropriate action to protect the Company from potential conflicts of interest.

(t)

The Committee will, if required, prepare a report for the inclusion on the Company's proxy statement for its annual meeting of stockholders describing the Committee's structure, its members and their experience and education. The report will address all issues then required by the rules of the regulatory authorities.

Canarc Resource Corp.

Form 20-F

90

74
Other Board Committees

Aside from the Audit Committee which has previously been established, the Board has established committees for Compensation and Nomination in 2011 and Investment in 2017 and Technical Environmental, Social and Safety in 20112018 comprised of the following Board members and their respective mandates:

Committee

Members

Mandate

Nomination

Leonard Harris

Martin Burian (Chairman)

Deepak Malhotra

Kai Hoffmann

The function of the Nominating Committee is to identify individuals qualified to become board members and to select, or to recommend that the Board of Directors select the director nominees for the next annual meeting of stockholders,to oversee the selection and composition of committees of the Board of Directors, and to oversee management continuity planning processes.

Compensation

Deepak Malhotra (Chairman)

Martin Burian

Kai Hoffmann

The Compensation Committee shall advise and make recommendations to the Board of Directors in its oversight role with respect to the Company'sCompany’s strategy, policies and programs on the compensation and development of senior management and directors.

Technical Environmental, Social, Safety

Deepak Malhotra

The Technical Environmental, SocialCommittee is to provide technical expertise and Safety Committee shall advise and make recommendations in its oversight roleadvice to the Board of Directors with respect to technical, environmental, socialstrategies, opportunities, challenges, proposals, programs and safety issues affectingbudgets for mineral property acquisition, exploration, development and disposition.
Investment
Martin Burian (Chairman)
Bradford Cooke
The Investment Committee shall oversee and instruct the Company and its advanced mineral exploration projects.

management with respect to the strategic investment of up to CAD$1,000,000 of the Company’s funds (the “Funds”) to purchase the securities of other entities for investment purposes.

The Board has also a Disclosure Committee comprised of the following management persons and its mandate:

Members

Mandate

Chief Executive Officer or President, and Vice-President or Manager of Investor Relations, if any

A Disclosure Policy Committee oversees corporate disclosure practices and ensures implementation and adherence to this policy. The Disclosure Policy Committee's responsibilities include:

·

● maintaining an awareness and understanding of governing disclosure rules and guidelines, including any new or pending developments;

·

● developing and implementing procedures to regularly review;

·

● update and correct corporate disclosure information, including information on the Internet website;

·

● bringing this policy to the attention of directors, management and staff;

·

● monitoring compliance with this policy and undertaking reviews of any violations, including assessment and implementation of appropriate consequences and remedial actions;

·

● reviewing this policy and updating as necessary and appropriate to ensure compliance with prevailing rules and guidelines; and

·

● ascertaining whether corporate developments constitute material information and, if so, ensuring compliance with the procedures outlined in this policy.

Canarc Resource Corp.

Form 20-F

91

Assessments

The Board has no formal process for the assessment of the effectiveness and contribution of the individual directors. Each director has extensive public company experience and is familiar with what is required of him. Frequency of attendance at Board and committee meetings and the quality of participation in such meetings are two of the criteria by which the performance of a director will be assessed.

6.D Employees

The Registrant'sCompany’s business is administered principally from its head office in Vancouver, British Columbia, Canada. As of April 22, 2016,23, 2019, the RegistrantCompany had a staff of twothree full time and twoone part time employees based in Vancouver, BC, Canada.

Canarc Resource Corp.
Form 20-F
75
6.E Share Ownership

As at April 22, 2016,23, 2019, the share ownership and number of stock options of the directors and officers of the RegistrantCompany are as follows:

Share Ownership

Number of Stock Options

Name and

Principal Position

Number of Shares

Percentage (1)

Number of Underlying Security (2)

Exercise Prices per Share (CAD$)

Expiry Dates

Bradford J. Cooke

Chairman and Director

7,053,580

3.28%

1,300,000

$0.06

December 8, 2020

500,000

$0.08

June 26, 2018

800,000

$0.10

July 17, 2019

Martin Burian

Director

24,820

0.01%

200,000

$0.06

December 8, 2020

300,000

$0.10

July 17, 2019

Akiba Leisman

Director

Nil

Nil

200,000

$0.06

December 8, 2020

Deepak Malhotra

Director

416,667

0.19%

200,000

$0.06

December 8, 2020

Leonard Harris

Director

2,074,290

0.96%

500,000

$0.06

December 8, 2020

200,000

$0.08

June 26, 2018

300,000

$0.10

July 17, 2019

Catalin Chiloflischi

Chief Executive Officer

388,889

0.18%

500,000

$0.05

January 14, 2019

1,100,000

$0.06

December 8, 2020

1,000,000

$0.10

July 17, 2019

Garry Biles

President and Chief Operating Officer

1,077,766

0.50%

1,400,000

$0.06

December 8, 2020

400,000

$0.08

June 26, 2018

800,000

$0.10

July 17, 2019

Philip Yee

Chief Financial Officer and Vice-President (Finance) and Secretary (Interim)

466,960

0.22%

600,000

$0.06

December 8, 2020

300,000

$0.08

June 26, 2018

400,000

$0.10

July 17, 2019

(1)

As at April 22, 2016, Canarc had 215,047,931 common shares issued and outstanding.

(2)

Common shares.

 
 
Share Ownership
 
Number of Stock Options
 
Name and
Principal Position
 
 
Number of Shares
 
Percentage (1)
 
Number of Underlying Security (2)
 
Exercise Prices per Share (CAD$)
 
Expiry Dates
Bradford J. Cooke
Chairman and Director
9,010,5804.13%1,300,000$0.06December 8, 2020
1,350,000$0.08July 7, 2021
600,000$0.08June 29, 2023
800,000$0.10July 17, 2019
500,000$0.10June 2, 2022
300,000$0.08March 21, 2024
Martin Burian
Director
374,8200.17%200,000$0.06December 8, 2020
300,000$0.08July 7, 2021
400,000$0.08June 29, 2023
300,000$0.10July 17, 2019
300,000$0.10June 2, 2022
Deepak Malhotra
Director
416,6670.19%200,000$0.06December 8, 2020
300,000$0.08July 7, 2021
400,000$0.08June 29, 2023
300,000$0.10June 2, 2022
Kai Hoffmann
Director
NilNil%400,000$0.08June 29, 2023
Scott Eldridge
Chief Executive Officer
726,5000.33%500,000$0.05November 12, 2023
500,000$0.06November 12, 2023
400,000$0.08June 29, 2023
Garry Biles
President and Chief Operating Officer
1,077,7660.49%1,400,000$0.06December 8, 2020
1,050,000$0.08July 7, 2021
500,000$0.08June 29, 2023
800,000$0.10July 17, 2019
600,000$0.10June 2, 2022
Jacob Margolis
Vice-President (Exploration)
NilNil%200,000$0.08June 29, 2023
500,000$0.09September 13, 2022
Philip Yee
Chief Financial Officer and Vice-President (Finance) and Secretary (Interim)
NilNil%600,000$0.06December 8, 2020
600,000$0.08July 7, 2021
300,000$0.08June 29, 2023
400,000$0.10July 17, 2019
350,000$0.10June 2, 2022
(1) 
As at April 23, 2019, Canarc Resource Corp.

Form 20-F

92

had 218,355,144 common shares issued and outstanding.

(2)            
Common shares.
In February 2017, Canarc received regulatory approval for a normal course issuer bid to acquire up to 10.9 million its common shares, representing approximately up to 5% of its issued and outstanding common shares at that time. The bid commenced on February 8, 2017 and terminated on February 7, 2018. The actual number of common shares purchased under the bid and the timing of any such purchases was at Canarc’s discretion. Purchases under the bid did not exceed 86,128 common shares per day. Canarc paid the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc were returned to treasury and cancelled. During the term of the normal course issuer bid, Canarc purchased an aggregate of 2.6 million common shares for an aggregate purchase price of CAD$220,400, resulting in an average price of CAD$0.08 per share; these shares have been returned to treasury and accordingly cancelled.
In June 2018, Canarc again proceeded with a normal course issuer bid which received regulatory approval to acquire up to 10.9 million common shares of Canarc representing approximately up to 5% of its issued and outstanding common shares at that time. The bid was effective on June 21, 2018 and will terminate on June 20, 2019, or on such earlier date as the bid was completed. The actual number of common shares purchased under the bid and the timing of any such purchases are at Canarc’s discretion. Purchases under the bid shall not exceed 23,893 common shares per day. Canarc shall pay the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc will be cancelled. From June to December 2018, Canarc purchased 438,000 shares for CAD$20,595 with an average price of CAD$0.05 per share, all of which were cancelled in 2018. No further shares were purchased by Canarc in 2019.
All of the Registrant'sCompany’s shareholders have the same voting rights.

Canarc Resource Corp.
Form 20-F
76
Details of all total outstanding options, warrants and other rights to purchase securities of the RegistrantCompany and its subsidiaries as at April 22, 201623, 2019 unless otherwise stated, are set forth below:

Stock Option Summary

Stock options which are outstanding as of April 22, 201623, 2019 are as follows:

Amount Outstanding

Exercise Prices (CAD$)

Dates Granted

Expiry Dates

35,000

$0.135

July 6, 2011

July 6, 2016

30,000

$0.145

June 18, 2012

June 18, 2017

1,425,000

$0.08

June 26, 2013

June 26, 2018

500,000

$0.05

January 14, 2014

January 14, 2019

3,650,000

$0.10

July 17, 2014

July 17, 2019

5,950,000

$0.06

December 8, 2015

December 8, 2020

11,590,000

TOTAL

Amount Outstanding
Exercise Prices
(CAD$)
Dates GrantedExpiry Dates
    
2,300,000$0.10July 17, 2014July 17, 2019
3,700,000$0.06December 8, 2015December 8, 2020
3,600,000$0.08July 7, 2016July 7, 2021
2,050,000$0.10June 2, 2017June 2, 2022
500,000$0.09September 13, 2017September 13, 2022
3,250,000$0.08June 29, 2018June 29, 2023
500,000$0.05November 12, 2018November 12, 2023
500,000$0.06November 12, 2018November 12, 2023
700,000$0.07February 22, 2019February 22, 2024
300,000$0.08March 21, 2019March 21, 2024
    
17,400,000TOTAL  
Of the 11,590,00017,400,000 outstanding stock options, only 6,397,50013,900,000 stock options are exercisable as at April 22, 2016.

Canarc Resource Corp.

Form 20-F

93

23, 2019.

Warrant Summary Chart

Warrants which are

There were no outstanding warrants as of April 22, 2016 are as follows:

Amount Outstanding

Exercise Prices (CAD$)

Date Issued

Expiry Dates

8,450,000

$0.10

January 31, 2014

July 31, 2017 (1)

55,000

$0.15

March 18, 2014

March 18, 2017

5,254,055

$0.15

March 18, 2014

September 18, 2018 (1)

661,718

$0.15

March 18, 2014

September 18, 2018 (1)

346,250

$0.15

April 3, 2014

April 3, 2017

4,153,750

$0.15

April 3, 2014

October 3, 2018 (1)

60,725

$0.15

April 3, 2014

October 3, 2018 (1)

2,500,000

$0.15

July 9, 2014

July 9, 2016

5,332,776

$0.08

September 21, 2015

September 21, 2018

594,844

$0.08

September 21, 2015

September 21, 2018

833,333

$0.08

October 30, 2015

October 30, 2018

8,852,576

$0.12

March 3, 2016

March 3, 2019

2,497,222

$0.12

March 14, 2016

March 14, 2019

155,556

$0.12

March 14, 2016

March 14, 2019

39,747,805

TOTAL

(1)

In August 2015, Canarc extended the expiry period of a total of 18.6 million warrants by a period of 18 months which were issued pursuant to two private placements which closed in 2014. Expiry dates for 951,250 warrants which were issued to insiders in those private placements were not extended. Item 5.B provides further details.

Canarc Resource Corp.

Form 20-F

94

23, 2019.

Stock Option/Share Incentive Plan

The Registrant'sCompany’s directors and shareholders have approved a Share Incentive Plan (the "Plan"“Plan”). The Plan was initially approved by the TSX in 1996. The principal purposes of the Plan are to promote a proprietary interest in the RegistrantCompany among its directors, officers and employees; to retain, attract and motivate the qualified managers of the Registrant;Company; to provide a long termlong-term incentive element in overall compensation; and to promote the long termlong-term profitability of the Registrant.

Company.

Incentives to participate under the Plan may be provided by the granting of share options or share appreciation rights (SARs). The share appreciation right entitles the participant in the Plan to elect, subject to approval by the Board of Directors, in lieu of exercising an outstanding share option, to receive the number of common shares of the RegistrantCompany equivalent in value to the difference between the option exercise price and the net existing market price of the Registrant'sCompany’s common shares multiplied by the number of common shares over which he could otherwise exercise his stock option.

Under the Plan, the Board of Directors of the RegistrantCompany or its Executive Committee may from time to time grant to directors, officers, consultants and full and part time employees of the RegistrantCompany and its associated, affiliated, controlled and subsidiary companies, as the Board or its Executive Committee shall designate, the stock option to purchase from the RegistrantCompany such number of its common shares as the Board or its Executive Committee may designate. The Registrant'sCompany’s Plan allows it to grant stock options to its employees, directors and consultants to acquire up to 44,261,695 common shares which was increased from 18,888,434 common shares of which stock options for 11,920,000 common shares were outstanding as at December 31, 2015, provided that the Company’s Annual and Special Meeting held on June 2, 2017. The total number of common shares to be optioned to any one optionee shall not exceed 5% of the issued common shares of the RegistrantCompany at the time of grant. The exercise price of each option cannot be lower than the last recorded sale of a board lot on the TSX during the trading day immediately preceding the date of granting or, if there was no such sale, the high/low average price for the common shares on the TSX based on the last five trading days before the date of the grant. Pursuant to the Plan, stock options shall be granted pursuant to a stock option agreement in a form that complies with the rules and policies of the TSX, which provide as follows:

(a)

all stock options granted shall be non assignable;

(b)

a stock option must be exercisable during a period not extending beyond 10 years from the time of grant; and

(c)

no financial assistance will be provided with respect to the exercise of stock options.

At the Registrant's annual general meeting held on June 5, 2012, shareholder approval was provided for the increase in the maximum aggregate number of common shares which may be reserved for issuance under the Plan from 16,335,000 shares to 18,888,434 shares at that time.

Canarc Resource Corp.

Form 20-F

95

77
(a) 
all stock options granted shall be non-assignable;
(b) 
a stock option must be exercisable during a period not extending beyond 10 years from the time of grant; and
(c)            
no financial assistance will be provided with respect to the exercise of stock options.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A Major Shareholders

To the best of the Registrant'sCompany’s knowledge, the RegistrantCompany is not directly or indirectly owned or controlled by another company or by any foreign government or by any other natural or legal person(s) severally or jointly. There are no arrangements, known to the Registrant,Company, the operation of which may at a subsequent date result in a change in its control.

As at April 22, 2016,March 31, 2019, the only persons or groups known to the RegistrantCompany to beneficially own 5% or more of the Registrant'sCompany’s issued and outstanding common shares and the number of common shares owned, directly or indirectly, by officers and directors of the RegistrantCompany as a group are as follows:

Title of Class

Identity of Person or Group

Shares Owned (1)

Percentage of Class (2)

Common Shares

Marlin Gold Mining Ltd. (3)

Vancouver, British Columbia, Canada

21,166,666

9.84%

Common Shares

Canford Capital Inc. (4)

Vancouver, British Columbia, Canada

11,300,000

5.25%

(1)

Common shares.

(2)

As at April 22, 2016, Canarc had 215,047,931 common shares issued and outstanding.

(3)

As at April 22, 2016, Marlin Gold owned 21,166,666 common shares of Canarc representing a 9.84% interest in Canarc. Marlin Gold appointed Mr. Akiba Leisman to Canarc's Board of Directors pursuant to the Share Purchase Agreement which closed on October 30, 2015. Items 4.A and 4.D provide further details. Marlin Gold and /or Mr. Leisman does not exert control over Canarc nor over its Board of Directors, is not a member of any of its Board committees, is not actively involved in the operations of Canarc, and does not have any material interest, directly or indirectly, in any transaction that has materially affected or will materially affect Canarc, to the best of Canarc's knowledge, except as disclosed in this Form 20-F.

(4)

As at April 22, 2016, Canford owned 11,300,000 common shares of Canarc representing a 5.25% interest in Canarc. Canford does not exert control over Canarc nor over its Board of Directors nor has any nominees appointed to its Board of Directors, is not actively involved in the operations of Canarc, and does not have any material interest, directly or indirectly, in any transaction that has materially affected or will materially affect Canarc, to the best of Canarc's knowledge, except as disclosed in this Form 20-F. Items 4.A and 5.B provide further details regarding Canford and its relationship with Canarc.

Title of ClassIdentity of Person or Group
Shares Owned (1)
Percentage of Class (2)
Common Shares
Canford Capital Inc. (3)
Vancouver, British Columbia, Canada
11,300,0005.18%
(1) 
Common shares.
(2) 
As at March 31, 2019, Canarc had 218,355,144 common shares issued and outstanding.
(3) 
As at March 31, 2019, Canford Capital Inc. (“Canford”) owned 11,300,000 common shares of Canarc representing a 5.18% interest in Canarc. Canford acquired the 11.3 million common shares of Canarc pursuant to a private placement for CAD$1.13 million which closed in September 2012. In September 2012, Canarc and Canford had entered into a 120-day period of exclusivity to complete Canford’s due diligence and to execute a property option agreement to earn up to a 51% interest in the New Polaris gold project in return for up to a CAD$30 million investment in exploration and development of the property. In February 2013, Canarc entered into a Strategic Mine Acquisition Partnership (“SMAP”) with Canford for the purpose of acquiring, expanding and operating gold mines in North America. In March 2013, no formal SMAP agreement was executed, and Canford did not commit nor arrange financing for the proposed property option and joint venture to develop the New Polaris gold project nor for the SMAP to acquire operating gold mines in North America. Canford does not exert control over Canarc nor over its Board of Directors nor has any nominees appointed to its Board of Directors, is not actively involved in the operations of Canarc, and does not have any material interest, directly or indirectly, in any transaction that has materially affected or will materially affect Canarc, to the best of Canarc’s knowledge.
The closing of the Share Purchase Agreement resulted in Marlin Gold becoming an Insider of Canarc by virtue of having more than 10% (ie. 10.79%) interest in Canarc as at the closing date of October 30, 2015. In the second quarter of fiscal 2016, Marlin Gold was no longer an Insider of Canarc. Marlin Gold appointed Mr. Akiba Leisman to Canarc’s Board of Directors pursuant to the Share Purchase Agreement which closed on October 30, 2015 until the sale of the El Compas project to Endeavour in May 2016. Items 4.A and 4.D provide further details. Marlin Gold and /or Mr. Leisman did not exert control over Canarc nor over its Board of Directors, was not a member of any of its Board committees, was not actively involved in the operations of Canarc, and did not have any material interest, directly or indirectly, in any transaction that had materially affected or would materially affect Canarc, to the best of Canarc’s knowledge, except as disclosed in this Form 20-F.
Canarc Resource Corp.
Form 20-F
78
In February 2017, Canarc received regulatory approval for a normal course issuer bid to acquire up to 10.9 million its common shares, representing approximately up to 5% of its issued and outstanding common shares at that time. The bid commenced on February 8, 2017 and terminated on February 7, 2018. The actual number of common shares purchased under the bid and the timing of any such purchases was at Canarc’s discretion. Purchases under the bid did not exceed 86,128 common shares per day. Canarc paid the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc were returned to treasury and cancelled. During the term of the normal course issuer bid, Canarc purchased an aggregate of 2.6 million common shares for an aggregate purchase price of CAD$220,400, resulting in an average price of CAD$0.08 per share; these shares have been returned to treasury and accordingly cancelled.
In June 2018, Canarc again proceeded with a normal course issuer bid which received regulatory approval to acquire up to 10.9 million common shares of Canarc representing approximately up to 5% of its issued and outstanding common shares at that time. The bid was effective on June 21, 2018 and will terminate on June 20, 2019, or on such earlier date as the bid was completed. The actual number of common shares purchased under the bid and the timing of any such purchases are at Canarc’s discretion. Purchases under the bid shall not exceed 23,893 common shares per day. Canarc shall pay the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc will be cancelled. From June to December 2018, Canarc purchased 438,000 shares for CAD$20,595 with an average price of CAD$0.05 per share, all of which were cancelled in 2018. No further shares were purchased by Canarc in 2019.
All shares of Canarc, including all those held by any major shareholders, are common shares with similar voting rights. As of April 22, 2016March 31, 2019 there were 215,047,931218,355,144 common shares of Canarc which were issued and outstanding. Based on the records of Canarc'sCanarc’s registrar and transfer agent, Computershare Investor Services Inc., of 3rd Floor, 510 Burrard Street, Vancouver, British Columbia, Canada, as at such date there were 453444 registered holders of Canarc'sCanarc’s common shares resident in the United States (68.74%(71.73% of all registered holders) holding 73,806,61764,728,717 common shares. This number represents approximately 34.32%29.64% of the total issued and outstanding common shares of Canarc at that date.

Canarc Resource Corp.

Form 20-F

96

Control by Another Corporation, Foreign Government or Other Persons

To the best of the Registrant'sCompany’s knowledge, the RegistrantCompany is not directly or indirectly owned or controlled by another corporation(s), by any foreign government or by any other natural or legal person(s) severally or jointly.

Change of Control

As of the date of this Form 20-F being April 22, 2016,23, 2019, there is no arrangement known to the RegistrantCompany which may at a subsequent date result in a change of control of the Registrant.

Company.

7.B Related Party Transactions

For the fiscal year ended December 31, 2015,2018, the RegistrantCompany had transactions with related parties.

Key management includes directors (executive and non-executive) and senior management. The compensation paid or payable to key management for employee services is disclosed in the table below.

Canarc Resource Corp.
Form 20-F
79
Except as may be disclosed elsewhere in the Form 20-F, general and administrative costs during 2015, 20142018, 2017 and 20132016 include:

 

 

 

 

 

 

 

 

 

 

 

Net balance receivable (payable)

 

 

 

Years ended December 31,

 

 

  as at December 31,

 

($000s)

 

2015

 

 

2014

 

 

2013

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key management compensation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive salaries and remuneration (1)

 

$415

 

 

$441

 

 

$428

 

 

$(190)

 

$(203)

Severance

 

 

141

 

 

 

136

 

 

 

-

 

 

 

(130)

 

 

(4)

Directors fees

 

 

11

 

 

 

18

 

 

 

29

 

 

 

(3)

 

 

(198)

Share-based payments

 

 

153

 

 

 

205

 

 

 

76

 

 

 

-

 

 

 

-

 

 

 

$720

 

 

$800

 

 

$533

 

 

$(323)

 

$(405)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal fees incurred to a law firm in which a senior officer of the Company is a partner (2)

 

$59

 

 

$102

 

 

$67

 

 

$(145)

 

$(172)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net office, sundry, rent and salary allocations recovered from (incurred to) company(ies) sharing certain common director(s) (3)

 

 

38

 

 

 

(74)

 

 

59

 

 

 

(102)

 

 

(141)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-down of long-term investments (4)

 

 

-

 

 

 

-

 

 

 

91

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Write-off of receivables (5)

 

 

-

 

 

 

-

 

 

 

54

 

 

 

-

 

 

 

-

 

(1)

Includes key management compensation which is included in mineral property interests and corporate development.

(2)

Includes legal fees which are included in share issuance expenses.

(3)

The company(ies) include Aztec, BYG Ventures Ltd. ("BYG") and Endeavour Silver Corp. which share certain common director(s), and Caza Gold Corp. which shared a common director until December 17, 2013.

(4)

Canarc wrote-down its investment in Aztec to a nominal value of CAD$100 in 2013.

(5)

Canarc wrote-off receivables from Aztec and BYG in 2013. In October 2014, Canarc received 358,000 shares from Aztec in settlement of debt owed to Canarc which Canarc had written off in 2013

 
 
     
 
 
  Net balance receivable (payable)
 
($000s)
 
   Years ended December 31,
 
 
  as at December 31,
 
 
 
 2018
 
 
 2017
 
 
 2016
 
 
 2018
 
 
 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key management compensation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Executive salaries and remuneration (1)
 $490 
 $720 
 $460 
 $- 
 $- 
Severance
  184 
  - 
  - 
  - 
  - 
Directors fees
  27 
  98 
  8 
  (7)
  (2)
Share-based payments
  118 
  351 
  245 
  - 
  - 
 
 $819 
 $1,169 
 $713 
 $(7)
 $(2)
 
    
    
    
    
    
Net office, sundry, rent and salary allocations recovered from (incurred to) company(ies) sharing certain common director(s) (2)
  2 
  (16)
  (41)
  1 
  1 
(1) 
Includes key management compensation which is included in employee and director remuneration, mineral property interests, and corporate development.
(2) 
The companies include Endeavour, AzMin and AzMet.
The above transactions were incurred in the normal course of business and are recorded at the exchange amount, being the amount agreed upon by the related parties.

Canarc shares common office facilities, employee and administrative support, and office sundry amongst companiescompany(ies) with certain common director(s), and such allocations to Canarc are on a full cost recovery basis. Any balances due tofrom (to) related parties are payable on demand.

Canarc Resource Corp.

Form 20-F

97

In fiscal 2013, Canarc received demand loans of $126,000 from two directors of Canarc, which were repayable on demand and bore an interest rate of 12% compounded monthly with interest payable semi-annually. In January 2014, Canarc repaid all principal and interest in full settlement of outstanding demand loans.

At Canarc's annual general meeting in June 2015, disinterested shareholders passed two resolutions relating to shares for debt settlements to certain insiders of Canarc in which debts of up to CAD$63,520 owed to certain current and former directors would be settled by the issuance of up to 1.27 million shares and debts of up to CAD$127,400 owed to senior officers would be settled by the issuance of up to 2.55 million shares. On September 24, 2015, Canarc issued 2 million shares at a value of CAD$0.07 in settlement of partial salaries owed to certain officers and fees owed to directors in which the latter also forgave a certain portion of outstanding directors fees owed, resulting in a gain on debt settlement of $54,000.

Items 4.A, 4.D and 7.A provide further details of transactions with Canford.

Items 4.A, 4.D, 5.B and 7.A provide further details of transactions with Marlin Gold.

Items 4.A, 5.B, 6.E and 7.A provide further details of Canarc’s normal course issuer bid.
In each case the transactions described below were, in the Registrant'sCompany’s view, completed on terms no less favourable to the RegistrantCompany than if they had been entered into with unaffiliated parties.

Compensation to Directors and Senior Officers and Options to Purchase Securities

Item 6 provides further details of compensation paid to, and options granted to and held by, directors and senior officers of the Registrant.

Company.

Indebtedness of Directors and Senior Officers

At any time during the Registrant'sCompany’s last completed financial year, no director, executive officer or senior officer of the Registrant,Company, proposed management nominee for election as a director of the RegistrantCompany or each associate or affiliate of any such director, executive or senior officer or proposed nominee is or has been indebted to the RegistrantCompany or any of its subsidiaries or is and has been indebted to another entity where such indebtedness is or has been the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the RegistrantCompany or any of its subsidiaries, other than routine indebtedness and other than as disclosed in the Registrant'sCompany’s audited financial statements and in the Form 20-F.

Interest of Insiders in Material Transactions

Other than as set forth below and in the Form 20-F and in the Registrant'sCompany’s audited financial statements and other than transactions carried out in the ordinary course of business of the RegistrantCompany or any of its subsidiaries, none of the directors or senior officers of the Registrant,Company, a proposed management nominee for election as a director of the Registrant,Company, any member beneficially owning shares carrying more than 5% of the voting rights attached to the shares of the RegistrantCompany nor an associate or affiliate of any of the foregoing persons had since January 1, 20152018 (being the commencement of the Registrant'sCompany’s last audited fiscal period) any material interest, direct or indirect, in any transactions which materially affected or would materially affect the RegistrantCompany or any of its subsidiaries.

Canarc Resource Corp.
Form 20-F
80
The Registrant'sCompany’s directors and officers may serve as directors or officers of other public resource companies or have significant shareholdings in other public resource companies and, to the extent that such other companies may participate in ventures in which the RegistrantCompany may participate, the directors of the RegistrantCompany may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. Also, certain directors and officers of Canarc are directors, officers and / or employees of Aztec, CazaAzMet, AzMin, and Endeavour. The interests of these companies may differ from time to time. Item 6.C provide further details.

7.C Interests of Experts and Counsel

Not applicable.

Canarc Resource Corp.

Form 20-F

98

ITEM 8. FINANCIAL INFORMATION

8.A Consolidated Statements and Other Financial Information

Canarc's

Canarc’s audited consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB, and all dollar amounts are expressed in United States dollars unless otherwise indicated.

Consolidated financial statements audited by an independent registered public accounting firm and accompanied by an audit report are comprised of the following, which are attached hereto and form a part hereof.

(a)

Consolidated Statements of Financial Position as of December 31, 2015 and 2014;

(b)

Consolidated Statements of Comprehensive Loss for each of the years ended December 31, 2015, 2014 and 2013;

(c)

Consolidated Statements of Changes in Shareholders' Equity for each of the years ended December 31, 2015, 2014 and 2013;

(d)

Consolidated Statements of Cash Flows for each of the years ended December 31, 2015, 2014 and 2013; and

(e)

Notes to the consolidated financial statements.

(a) 
Consolidated Statements of Financial Position as of December 31, 2018 and 2017;
(b) 
Consolidated Statements of Comprehensive (Loss) Income for each of the years ended December 31, 2018, 2017 and 2016;
(c) 
Consolidated Statements of Changes in Shareholders’ Equity for each of the years ended December 31, 2018, 2017 and 2016;
(d) 
Consolidated Statements of Cash Flows for each of the years ended December 31, 2018, 2017 and 2016; and
(e) 
Notes to the consolidated financial statements.
The RegistrantCompany is not involved and has not been involved in the recent past in any legal or arbitration proceedings which may have, or had in the recent past, significant effects on the Registrant'sCompany’s financial position or profitability, including governmental proceedings pending or known to be contemplated other than as disclosed in the Company'sCompany’s continuous disclosure documents, regulatory filings, Form 20-F and consolidated financial statements for the years then ended.

Dividend Policy

During its last three completed financial years, the RegistrantCompany has not declared or paid any cash dividends on its common shares and does not currently intend to pay cash dividends. Management intends for earnings, if any, to be retained to finance further growth and activities relating to the business of the Registrant.

Company.

The Directors of the RegistrantCompany may from time to time declare and authorize payment of such dividends, if any, as they may deem advisable and need not give notice of such declaration to any shareholder. No dividend shall be paid otherwise than out of funds and/or assets properly available for the payment of dividends and a declaration by the Directors as to the amount of such funds or assets available for dividends shall be conclusive. The RegistrantCompany may pay any such dividend wholly or in part by the distribution of specific assets and in particular by paid up shares, bonds, debentures or other securities of the RegistrantCompany or any other corporation or in any one or more such ways as may be authorized by the RegistrantCompany or the Directors and where any difficulty arises with regard to such a distribution the Directors may settle the same as they think expedient, and in particular may fix the value for distribution of such specific assets or any part thereof, and may determine that cash payments in substitution for all or any part of the specific assets to which any shareholders are entitled shall be made to any shareholders on the basis of other value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees for the persons entitled to the dividend as may seem expedient to the Directors.

Canarc Resource Corp.

Form 20-F

99

81
Any dividend declared on shares of any class by the Directors may be made payable on such date as is fixed by the Directors.

Subject to the rights of shareholders (if any) holding shares with special rights as to dividends, all dividends on shares of any class shall be declared and paid according to the number of such shares held.

The Directors may, before declaring any dividend, set aside out of the funds properly available for the payment of dividends such sums as they think proper as a reserve or reserves, which shall, at the discretion of the Directors, be applicable for meeting contingencies, or for equalizing dividends, or for any other purpose to which such funds of the RegistrantCompany may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the RegistrantCompany or be invested in such investments as the Directors may from time to time think fit. The Directors may also, without placing the same in reserve, carry forward such funds, which they think prudent not to divide.

If several persons are registered as joint holders of any share, any one of them may give an effective receipt for any dividend, bonuses or other moneys payable in respect of the share.

No dividend shall bear interest against the Registrant.Company. Where the dividend to which a shareholder is entitled includes a fraction of a cent, such fraction shall be disregarded in making payment thereof and such payment shall be deemed to be payment in full.

Any dividend, bonuses or other moneys payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder, or in the case of joint holders, to the registered address of that one of the joint holders who is first named in the register, or to such person and to such address as the holder or joint holders may direct in writing. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. The mailing of such cheque or warrant shall, to the extent of the sum represented thereby (plus the amount of any tax required by law to be deducted) discharge all liability for the dividend, unless such cheque or warrant shall not be paid on presentation or the amount of tax so deducted shall not be paid to the appropriate taxing authority.

Notwithstanding anything contained in the Registrant'sCompany’s Articles of Incorporation, the Directors may from time to time capitalize any undistributed surplus on hand of the RegistrantCompany and may from time to time issue as fully paid and non-assessable any unissued shares, or any bonds, debentures or debt obligations of the RegistrantCompany as a dividend representing such undistributed surplus on hand or any part thereof.

Legal Proceedings

The RegistrantCompany is not involved in any legal or arbitration proceedings which have, or may have had in the recent past, significant effects on the Registrant'sCompany’s financial position or profitability other than as disclosed in the Registrant'sCompany’s continuous disclosure documents, regulatory filings, Form 20-F and consolidated financial statements for the years then ended.

8.B Significant Changes

There has been no significant change in the financial condition of the RegistrantCompany since December 31, 20152018 other than as disclosed in this Form 20-F and in the Registrant'sCompany’s continuous disclosure documents.

Canarc Resource Corp.

Form 20-F

100

ITEM 9. THE OFFER AND LISTING

9.A Offer and Listing Details

The Registrant'sCompany’s common shares are traded on the TSX in Canada under the symbol "CCM"“CCM”. The following prices are stated in terms of Canadian dollars.

The following tables set forth the high and low prices of the common shares for the periods indicated.

(Stated in terms of Canadian dollars)

Fiscal Year

 

High (CAD$)

 

 

Low (CAD$)

 

 

 

 

 

 

 

 

2015

 

$0.10

 

 

$0.03

 

2014

 

$0.13

 

 

$0.03

 

2013

 

$0.24

 

 

$0.04

 

2012

 

$0.22

 

 

$0.09

 

2011

 

$0.30

 

 

$0.09

 

Quarter

 

High (CAD$)

 

 

Low (CAD$)

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

1st Quarter

 

$0.15

 

 

$0.05

 

 

 

 

 

 

 

 

 

 

2015

 

 

 

 

 

 

 

 

4th Quarter

 

$0.09

 

 

$0.04

 

3rd Quarter

 

$0.10

 

 

$0.05

 

2nd Quarter

 

$0.07

 

 

$0.03

 

1st Quarter

 

$0.06

 

 

$0.03

 

 

 

 

 

 

 

 

 

 

2014

 

 

 

 

 

 

 

 

4th Quarter

 

$0.07

 

 

$0.03

 

3rd Quarter

 

$0.11

 

 

$0.06

 

2nd Quarter

 

$0.11

 

 

$0.06

 

1st Quarter

 

$0.13

 

 

$0.04

 

Canarc Resource Corp.

Form 20-F

101

Month

 

High (CAD$)

 

 

Low (CAD$)

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

March

 

$0.12

 

 

$0.09

 

February

 

$0.13

 

 

$0.08

 

January

 

$0.15

 

 

$0.05

 

 

 

 

 

 

 

 

 

 

2015

 

 

 

 

 

 

 

 

December

 

$0.07

 

 

$0.04

 

November

 

$0.07

 

 

$0.05

 

October

 

$0.09

 

 

$0.06

 


In the United States, the Registrant'sCompany’s common shares are quoted for trading on the Over-the-Counter Bulletin Board through March 19, 2015 and since that date on the OTCQB Marketplace under the symbol "CRCUF"“CRCUF”. The following prices are stated in terms of United States dollars.

In relation to the OTCBB and OTCQB, the followingany quotations reflect inter-dealer prices without retail mark-up, mark-down or commission and may not represent actual transactions. The following table sets forth the range of high and low bid prices during the periods indicated on the OTCBB and OTCQB.

The following tables set forth the high and low prices of the common shares for the periods indicated.

Fiscal Year

 

High

 

 

Low

 

 

 

 

 

 

 

 

2015

 

$0.07

 

 

$0.02

 

2014

 

$0.12

 

 

$0.02

 

2013

 

$0.24

 

 

$0.03

 

2012

 

$0.22

 

 

$0.09

 

2011

 

$0.31

 

 

$0.08

 

Quarter

 

High

 

 

Low

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

1st Quarter

 

$0.10

 

 

$0.03

 

 

 

 

 

 

 

 

 

 

2015

 

 

 

 

 

 

 

 

4th Quarter

 

$0.07

 

 

$0.03

 

3rd Quarter

 

$0.07

 

 

$0.03

 

2nd Quarter

 

$0.06

 

 

$0.02

 

1st Quarter

 

$0.05

 

 

$0.02

 

 

 

 

 

 

 

 

 

 

2014

 

 

 

 

 

 

 

 

4th Quarter

 

$0.06

 

 

$0.02

 

3rd Quarter

 

$0.10

 

 

$0.04

 

2nd Quarter

 

$0.10

 

 

$0.05

 

1st Quarter

 

$0.12

 

 

$0.04

 

Canarc Resource Corp.

Form 20-F

102

Month

 

High

 

 

Low

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

March

 

$0.10

 

 

$0.07

 

February

 

$0.08

 

 

$0.06

 

January

 

$0.07

 

 

$0.03

 

 

 

 

 

 

 

 

 

 

2015

 

 

 

 

 

 

 

 

December

 

$0.05

 

 

$0.03

 

November

 

$0.05

 

 

$0.04

 

October

 

$0.07

 

 

$0.04

 

82
9.B Plan of Distribution

Not applicable.

9.C Markets

Since November 2, 1994, the Registrant'sCompany’s common shares have traded on the TSX. From March 16, 1988 to June 2, 1995 and from September 1996 to February 12, 1999, the Registrant'sCompany’s common shares traded on the Vancouver Stock Exchange ("VSE"(“VSE”) (the VSE merged with the Alberta Stock Exchange in 2000, which became known as the Canadian Venture Exchange, and then the TSX acquired the Canadian Venture Exchange to form the TSX Venture Exchange). In February 1997, the RegistrantCompany was listed for trading on the Berlin Stock Exchanges and has since voluntarily delisted from the exchange. On August 3, 1998, the RegistrantCompany was listed on the Frankfurt Exchange. Management of the RegistrantCompany is not aware of any trading market for the Registrant'sCompany’s common shares in the United States apart from the United States OTC Bulletin Board, on which the RegistrantCompany is quoted under the symbol CRCUF; on March 19, 2015, the Registrant'sCompany’s common shares continued to be quoted on the OTCQB Marketplace.

9.D Selling Shareholders

Not applicable.

9.E Dilution

Not applicable.

9.F Expenses of the Issue

Not applicable.

Canarc Resource Corp.

Form 20-F

103

ITEM 10. ADDITIONAL INFORMATION

10.A Share Capital

Not applicable.

10.B Notice of Articles and Articles of Association

The Registrant'sCompany’s Notice of Articles and articles of association, and related matters, are summarized below.

1.

The Registrant was incorporated under the laws of British Columbia on January 22, 1987 under the name, "Canarc Resource Corp." by registration of its Memorandum and Articles with the British Columbia Registrar of Companies. At the Registrant's annual and extraordinary general meeting held in May 2005, the shareholders approved the Notice of Articles be altered to remove the application of the "Pre-Existing Company Provisions" as set forth in Table 3 of the Business Corporations Regulations under the B.C. Business Corporations Act, S.B.C. 2002 (the "BCBCA") and the replacement of the Articles with a new set of Articles which comply with the BCBCA. The Registrant no longer has a Memorandum, which has been replaced by, in part, its Notice of Articles.

1.            
The Registrant'sCompany was incorporated under the laws of British Columbia on January 22, 1987 under the name, “Canarc Resource Corp.” by registration of its Memorandum and Articles with the British Columbia Registrar of Companies. At the Company’s annual and extraordinary general meeting held in May 2005, the shareholders approved the Notice of Articles be altered to remove the application of the “Pre-Existing Company Provisions” as set forth in Table 3 of the Business Corporations Regulations under the B.C. Business Corporations Act, S.B.C. 2002 (the “BCBCA”) and the replacement of the Articles with a new set of Articles which comply with the BCBCA. The Company no longer has a Memorandum, which has been replaced by, in part, its Notice of Articles.
The Company’s Memorandum and Articles do not provide for any specific objects or purposes.

2.

Set forth below is a summary of provisions contained in the Registrant's Articles with respect to:

(a)

Director's power to vote on a proposal, arrangement or contract in which the director is materially interested:

2.            
Set forth below is a summary of provisions contained in the Company’s Articles with respect to:
Canarc Resource Corp.
Form 20-F
83

(a) 
Director’s power to vote on a proposal, arrangement or contract in which the director is materially interested:
A director who holds a disclosable interest in a contract or transaction into which the RegistrantCompany has entered or proposes to enter is not entitled to vote on any directors'directors’ resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

(b)

Directors' power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body:

(b) 
Directors’ power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body:
See (a), above. A director does not hold a disclosable interest in a contract or transaction merely because the contract or transaction relates to the remuneration of the director in that person's capacity as director, officer, employee or agent of the RegistrantCompany or of an affiliate of the Registrant.

(c)

Borrowing powers exercisable by the directors and how such borrowing powers can be varied:

Company.

(c) 
Borrowing powers exercisable by the directors and how such borrowing powers can be varied:
The Registrant,Company, if authorized by the directors, may:

(i)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

(ii)

issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Registrant or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

(iii)

guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

(iv)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Registrant.

Canarc Resource Corp.

Form 20-F

104

(d)

Retirement or non-retirement of directors under an age limit requirement:

(i) 
borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;
(ii) 
issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;
(iii) 
guarantee the repayment of money by any other person or the performance of any obligation of any other person; and
(iv) 
mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.
(d) 
Retirement or non-retirement of directors under an age limit requirement:
The directors are not required to retire upon reaching a specific age.

(e)

Number of shares, if any, required for director's qualification:

105

(e) 
Number of shares, if any, required for director’s qualification:
A director is not required to hold any shares of the Registrant.

3.

All common shares of the Registrant rank equally as to dividends, voting powers and participation in assets (in the event of liquidation) and in all other respects. Dividend entitlement is set by way of the shareholders status as a shareholder on the chosen record date and does not lapse over time. Each share carries one vote per share at meetings of the shareholders of the Registrant. Directors do not stand for re-election on staggered terms at present. There are no indentures or agreements limiting the payment of dividends and there are no conversion rights, special liquidation rights, pre emptive rights or subscription rights attached to the common shares. The shares presently issued are not subject to any calls or assessments. There was a Shareholders Right Plan which expired in April 2015 as detailed in Item 10.B under Summary of Shareholders Rights Plan.

4.

The rights of holders of common shares may not be modified other than by vote of 2/3 of the common shares voting on such modification. The quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting. Due to the quorum requirements, the rights of holders of common shares may be modified by the votes of less than a majority of the issued common shares of the Registrant.

5.

The directors of the Registrant call all annual general meetings and extraordinary general meetings. The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any solicitor for the Registrant, the auditor of the Registrant and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

6.

There are no limitations on the rights to own securities.

7.

There are no provisions in the Registrant's Articles that would have an effect on delaying, deferring or preventing a change of control other than that the Registrant may remove any director before the expiration of his or her term of office only by way of special resolution. In addition, there is a Shareholders Right Plan which expired in April 2015 as detailed in Item 10.B under Summary of Shareholders Rights Plan.

8.

There are no by-law provisions governing the ownership threshold above which shareholder ownership must be disclosed.

9.

The law of British Columbia, Canada, relating to Items 2-8 is not significantly different from the law of the United States.

10.

There are no conditions in the Memorandum and Articles governing changes in capital that are more stringent than is required by law.

Company.

3.            
All common shares of the Company rank equally as to dividends, voting powers and participation in assets (in the event of liquidation) and in all other respects. Dividend entitlement is set by way of the shareholders status as a shareholder on the chosen record date and does not lapse over time. Each share carries one vote per share at meetings of the shareholders of the Company. Directors do not stand for re-election on staggered terms at present. There are no indentures or agreements limiting the payment of dividends and there are no conversion rights, special liquidation rights, pre-emptive rights or subscription rights attached to the common shares. The shares presently issued are not subject to any calls or assessments.
4.            
The rights of holders of common shares may not be modified other than by vote of 2/3 of the common shares voting on such modification. The quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting. Due to the quorum requirements, the rights of holders of common shares may be modified by the votes of less than a majority of the issued common shares of the Company. Notwithstanding the foregoing, at the annual general meeting of shareholders of the Company held on June 2, 2017, the shareholders of the Company approved an amendment to the Company’s articles to allow the directors of the Company to approve, subject to the BCBCA, by directors’ resolution the alteration in certain respects of the authorized share capital of the Company. Pursuant to the amended articles, among other things, the directors of the Company may approve by directors’ resolution the creation of new classes of shares, and the subdivision or consolidation of outstanding classes of shares.
5.            
The directors of the Company call all annual general meetings and extraordinary general meetings. The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any solicitor for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.
6.            
There are no limitations on the rights to own securities.
7.            
There are no provisions in the Company’s Articles that would have an effect on delaying, deferring or preventing a change of control other than that the Company may remove any director before the expiration of his or her term of office only by way of special resolution.
Canarc Resource Corp.

Form 20-F

106

11.

The BCBCA permits an unlimited authorized share capital, and shares may be created with or without par value.

12.

There are no residency requirements for directors under the BCBCA.

13.

Special Resolutions of shareholders can be passed by a minimum of a two-thirds majority at a meeting of shareholders.

14.

General meetings can be held outside British Columbia if the location is approved by resolution of the directors.

15.

The BCBCA provides for shareholder proposals to be made at general meetings. Generally, shareholders holding at least 1% of the voting shares may submit proposals to the Registrant three months prior to the anniversary of the last annual general meeting of shareholders of the Registrant.

16.

Under the BCBCA, dividends may be declared out of profits, capital or otherwise. As well, the BCBCA does not automatically make directors liable to the Registrant for the declaration of dividends while the Registrant is insolvent.

17.

The BCBCA does not require that a company's offer to purchase or redeem its own shares be made on a pro-rata basis to all shareholders.

18.

The BCBCA permits a company to indemnify its directors without court approval, and may also require reimbursement of expenses in certain cases for claims that are successfully defended. Defense costs may also be advanced by a company in certain cases.

19.

All filings with the Registrar under the BCBCA must be made electronically.

20.

Directors' and shareholders' meetings may be held by any form of communications medium permitted under the Articles, including internet chat lines and telephones. In addition, directors' consent resolutions may be passed in the manner provided under the Articles, including e-mail.

21. 

A company may provide financial assistance in connection with the purchase of its shares under the BCBCA.

22.

A company may, in limited circumstances, amalgamate with a foreign company under the BCBCA, without the requirement to first continue the second company into British Columbia. Amalgamations do not require court approval, although court approval may still be requested.

23.

The requisite majority to pass a special resolution at a meeting of shareholders is a two-thirds majority.

24.

General meetings of shareholders may, if the location is approved by directors' resolution, be held outside British Columbia.

25.

General Meetings of shareholders of the Registrant are required to be held each calendar year and not more than 15 months after the holding of the last preceding annual general meeting.

26.

Any offer by the Registrant to purchase or redeem its own shares, need not be made pro-rata to all the shareholders.

27.

Changes to the Registrant's capital structure may be effected by ordinary resolution, including the following changes:

84
8.            
There are no by-law provisions governing the ownership threshold above which shareholder ownership must be disclosed.
9.            
The law of British Columbia, Canada, relating to Items 2-8 is not significantly different from the law of the United States.
10.     
There are no conditions in the Memorandum and Articles governing changes in capital that are more stringent than is required by law.
11.       
The BCBCA permits an unlimited authorized share capital, and shares may be created with or without par value.
12.        
There are no residency requirements for directors under the BCBCA.
13.      
Special Resolutions of shareholders can be passed by a minimum of a two-thirds majority at a meeting of shareholders.
14.       
General meetings can be held outside British Columbia if the location is approved by resolution of the directors.
15.       
The BCBCA provides for shareholder proposals to be made at general meetings. Generally, shareholders holding at least 1% of the voting shares may submit proposals to the Company three months prior to the anniversary of the last annual general meeting of shareholders of the Company.
16.   
Under the BCBCA, dividends may be declared out of profits, capital or otherwise. As well, the BCBCA does not automatically make directors liable to the Company for the declaration of dividends while the Company is insolvent.
17.     
The BCBCA does not require that a company’s offer to purchase or redeem its own shares be made on a pro-rata basis to all shareholders.
18.       
The BCBCA permits a company to indemnify its directors without court approval, and may also require reimbursement of expenses in certain cases for claims that are successfully defended. Defense costs may also be advanced by a company in certain cases.
19.      
All filings with the Registrar under the BCBCA must be made electronically.
20.      
Directors’ and shareholders’ meetings may be held by any form of communications medium permitted under the Articles, including internet chat lines and telephones. In addition, directors’ consent resolutions may be passed in the manner provided under the Articles, including e-mail.
21.     
A company may provide financial assistance in connection with the purchase of its shares under the BCBCA.
22.       
A company may, in limited circumstances, amalgamate with a foreign company under the BCBCA, without the requirement to first continue the second company into British Columbia. Amalgamations do not require court approval, although court approval may still be requested.
23.      
The requisite majority to pass a special resolution at a meeting of shareholders is a two-thirds majority.
24.   
General meetings of shareholders may, if the location is approved by directors’ resolution, be held outside British Columbia.
25.     
General Meetings of shareholders of the Company are required to be held each calendar year and not more than 15 months after the holding of the last preceding annual general meeting.
26.   
Any offer by the Company to purchase or redeem its own shares, need not be made pro-rata to all the shareholders.
27.    
Changes to the Company’s capital structure may be effected by ordinary resolution or a directors’ resolution, subject to the BCBCA.
(a) 
The following changes may be made by ordinary resolution or directors’ resolution, as determined by the board of directors:
Canarc Resource Corp.

Form 20-F

107

·

creation or cancellation of one or more classes or series of shares;

·

creation or removal of special rights and restrictions attaching to any class or series of shares;

·

changing the authorized capital;

·

consolidating or subdividing all or any of the Registrant's issued or unissued shares; and

·

other alterations to the share capital and authorized capital, where permitted under the BCBCA.

28.

The Registrant's name may be changed by ordinary resolution or resolution of the directors.

29.

The removal of court approval of any agreement to indemnify a director or officer in most cases, as well as mandatory indemnification on certain eligible cases.

30.

The remuneration of the auditor of the Registrant may be set by the directors, without the need of seeking a resolution of the shareholders authorizing the directors to set such remuneration.

31.

A director of the Registrant may be removed as a director of the Registrant before the expiration of the director's term of office pursuant to an ordinary resolution of the shareholders.

85
●            
creating or cancelling one or more classes or series of shares;
●            
changing the maximum number of shares that the Company is authorized to issue;
●            
consolidating or subdividing all or any of the Company’s issued or unissued shares;
●            
altering the share capital and authorized capital structure, where permitted by the BCBCA; and
(b) 
The creation or removal of special rights and restrictions attaching to any class or series of shares may only be approved by special or ordinary resolution.
28.     
The Company’s name may be changed by ordinary resolution or resolution of the directors.
29.      
The removal of court approval of any agreement to indemnify a director or officer in most cases, as well as mandatory indemnification on certain eligible cases.
30.     
The remuneration of the auditor of the Company may be set by the directors, without the need of seeking a resolution of the shareholders authorizing the directors to set such remuneration.
31.     
A director of the Company may be removed as a director of the Company before the expiration of the director’s term of office pursuant to an ordinary resolution of the shareholders.
For further information, refer to the full text of the Notice of Articles and Articles of the Registrant,Company, which are available online atwww.sedar.comas part of the Registrant'sCompany’s publicly available filings under the heading "Other"“Other”, as filed on November 10, 2005.

Summary of the Shareholder Rights Plan

The following is a summary of the terms of the Shareholder Rights Plan which was approved at the Registrant's annual and extraordinary meeting held in May 2005, and ratified and confirmed at the Registrant's annual general meetings in April 2008 and again in June 2011. The Shareholder Rights Plan expired in April 2015.

General

The rights will be issued pursuant to a shareholder rights plan agreement dated and effective April 30, 2005, between the Registrant and Computershare Trust Company of Canada as the rights agent. Each right will entitle the holder to purchase from the Registrant one common share at the exercise price of CAD$50.00 per share, subject to adjustments, at any time after the separation time (defined below). However, if a flip-in event (defined below) occurs, each right will entitle the holder to receive, upon payment of the exercise price, common shares having a market value equal to two-times the exercise price. The rights are non-exercisable until the separation time.

Trading of Rights

Until the separation time, the rights will be evidenced by the outstanding certificates for common shares and the rights will be transferred with, and only with, the common shares. As soon as practicable following the separation time, separate certificates evidencing the rights will be mailed to holders of record of common shares as of the close of business at the separation time and the separate rights certificates will thereafter evidence the rights.

Canarc Resource Corp.

Form 20-F

108

Separation Time and Acquiring Person

The rights will separate and trade apart from the common shares and become exercisable at the separation time. "Separation time" generally means the close of business on the 10th trading day following the commencement or announcement of the intent of any person to commence a take-over bid, other than a permitted bid or a competing bid, but under certain circumstances can mean the eighth trading day after a person becomes an "acquiring person" by acquiring 20% or more of the voting shares of any class.

Flip-in Event

A "flip-in event" will, in general terms, occur when a person becomes an acquiring person. Upon the occurrence of a flip-in event, each right will entitle the holder to acquire, on payment of the exercise price, that number of common shares having a market value equal to two-times the exercise price. However, any rights beneficially owned by an acquiring person or by any direct or indirect transferees of such person, will be void. The term "beneficial ownership" is defined to include, under certain circumstances, shares owned indirectly through affiliates, associates, trusts and partnerships, other situations of ownership deemed by operation of law, shares subject to acquisition or voting agreements and shares owned by persons acting jointly or in concert. There are several exceptions, including exceptions directed towards investment managers, trust companies, and independent managers of pension plans who are not participating in a take-over bid.

Permitted Bids

Permitted bids are exempted from the operation of the Shareholder Rights Plan. In summary, a permitted bid is a take-over bid made by way of take-over bid circular which complies with the following provisions:

(a)

It is made to all holders of voting shares of the Registrant of a particular class and for all those voting shares.

(b)

No voting shares can be taken up and paid for before the close of business on the "Permitted Bid Expiry Date", as described below, and unless more than 50% of voting shares held by shareholders independent of the offeror are tendered and not withdrawn.

(c)

Voting shares may be tendered at any time until the Permitted Bid Expiry Date and may be withdrawn until taken up and paid for.

(d)

If the condition described in (b) above is met, there will be a public announcement and the take-over bid will be open for a further period of 10 business days.

The Shareholder Rights Plan contains provisions designed to ensure that, if considered appropriate, the time for tendering to two or more competing permitted bids will occur on the same date.

Permitted Bid Expiry Date

The Permitted Bid provisions require that for a Take-Over to be a Permitted Bid it must be left open until the Permitted Bid Expiry Date. The "Permitted Bid Expiry Date" means 60 days following the date of the Take-Over Bid.

Canarc Resource Corp.

Form 20-F

109

Exchange Option

Under certain circumstances, the board of directors of the Registrant can, on exercise of a right and payment of the exercise price, issue other securities or assets of the Registrant in lieu of common shares. The board of directors of the Registrant can also determine to issue in exchange for the rights, but without payment of the exercise price, common shares having a value equal to the exercise price or other securities or assets of the Registrant having the same value.

Adjustments

The exercise price, the number and kind of shares subject to purchase upon exercise of each right and the number of rights outstanding are subject to adjustment from time to time to prevent dilution in the event that the Registrant takes certain actions involving the Registrant's share capital which would otherwise have a dilutive effect.

Redemption

At any time before the occurrence of a flip-in event, the board of directors may elect to redeem the rights in whole at a redemption price of $0.0001 per right.

Waiver

The board of directors may waive the application of the Shareholder Rights Plan to any flip-in event if it determines that a person became an acquiring person by inadvertence, conditional upon such person having, within 10 days after the determination by the board of directors, reduced its beneficial ownership of shares such that it is no longer an acquiring person. The board of directors may also, until a flip-in event has occurred, waive the application of the Shareholder Rights Plan to any particular flip-in event, but in that event, the board of directors shall be deemed to have waived the application of the Shareholder Rights Plan to any other flip-in event which may arise under any take-over bid then in effect.

Amendments

The board of directors may amend the Shareholder Rights Plan to correct clerical or typographical errors, to maintain the validity of the plan as a result of any changes in any applicable legislation or to increase or decrease the exercise price. Any amendments required to maintain the validity of the Shareholder Rights Plan must be submitted to the shareholders of the Registrant or, after the separation time, to the holders of the rights for confirmation.

Other amendments can only be made with the approval of the shareholders of the Registrant or, after the separation time, the holders of the rights. Any supplements or amendments to the Shareholder Rights Plan require the prior written consent of the TSX.

Term

The Shareholder Rights Plan has a term of 10 years; however, it is subject to ratification at the Meeting, and also at each of the shareholder meetings following the third and sixth anniversaries of the effective date of the Shareholder Rights Plan. If the Shareholder Rights Plan is not so ratified at any meeting, the Shareholder Rights Plan shall terminate forthwith.

The text of the ordinary resolution, in substantially the form which was presented to the shareholders, subject to such changes not affecting the general intent of the said resolution as may be required by the regulatory authorities or by counsel for the Registrant, is set forth below:

"BE IT RESOLVED, with or without amendment, as an ordinary resolution, that the Shareholder Rights Plan Agreement, dated for reference April 30, 2005, between the Company and Computershare Trust Company of Canada, as described in the Information Circular of the Company dated as at April 26, 2005, be and it is hereby approved, ratified and confirmed."

The Shareholder Rights Plan expired in April 2015.

Canarc Resource Corp.

Form 20-F

110

10.C Material Contracts

The following executive employment agreements are in effect:

-

On January 10, 2014, as amended June 26, 2014 and then amended December 8, 2015, an Executive Employment Agreement between Canarc and Mr. Catalin Chiloflischi was signed in respect of Mr. Chiloflischi's capacity as Chief Executive Officer for Canarc. The employment agreement provides that Mr. Chiloflischi's base remuneration is CAD$225,000 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee of Canarc. Canarc accrued a bonus for Mr. Chiloflischi which was paid in March 2016.

-

An Executive Employment Agreement between Canarc and Mr. Garry Biles was signed on January 23, 2007, as amended on June 1, 2011, January 1, 2012 and June 26, 2014, in respect of Mr. Biles' capacity as Chief Operating Officer and President for Canarc. The employment agreement provides that Mr. Biles' base remuneration is CAD$200,000 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee of Canarc.

-

An Executive Employment Agreement between Canarc and Mr. James Moors was signed on June 1, 2011, as amended on January 1, 2102, in respect of Mr. Moors' capacity as Vice-President of Exploration for Canarc. The employment agreement provided that Mr. Moors' base remuneration was CAD$120,000 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee of Canarc. On January 31, 2014, Canarc and Mr. Moors entered into a Settlement Agreement and General Release whereby Mr. Moors received a final settlement and severance of CAD$60,000 payable over a 12 month period ending January 31, 2015 upon his retirement as Vice-President of Exploration for Canarc.

-

An Executive Employment Agreement between Canarc and Mr. Gregg Wilson was signed on January 1, 2012, in respect of Mr. Wilson's capacity as Vice-President of Investor Relations for both Canarc and Caza. The employment agreement provided that Mr. Wilson's base remuneration is CAD$90,000 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee. Mr. Wilson's remuneration was allocated between Canarc and Caza. On March 31, 2014, Canarc and Mr. Wilson entered into a Settlement Agreement and General Release whereby Mr. Wilson received a final settlement and severance of CAD$90,000 (paid) upon his retirement as Vice-President of Investor Relations for Canarc effective April 30, 2014.

-

An Executive Employment Agreement between Caza and Mr. Philip Yee was signed on June 1, 2011 in respect of Mr. Yee's capacity as Chief Financial Officer and Vice-President of Finance for both Canarc and Caza, as approved by Compensation Committees of both companies. The employment agreement provided that Mr. Yee's base remuneration was CAD$180,000 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee. Effective January 1, 2012, Mr. Yee's base remuneration was increased to CAD$193,500 per annum as approved by the Compensation Committees of Caza and Canarc. Effective June 26, 2014, Mr. Yee signed an Executive Employment Agreement with Canarc with no change in base remuneration as approved by Canarc's Compensation Committee. Mr. Yee's remuneration continues to be allocated between Canarc and Caza.

- 
An Employment Agreement between Canarc and Mr. Scott Eldridge was signed on October 15, 2018, in respect of Mr. Eldridge’s capacity as Chief Executive Officer for Canarc. The employment agreement provides that Mr. Eldridge’s base remuneration is CAD$160,000 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee of Canarc.
- 
An Executive Employment Agreement between Canarc and Mr. Garry Biles was signed on January 23, 2007, as amended on June 1, 2011, January 1, 2012 and June 26, 2014, in respect of Mr. Biles’ capacity as Chief Operating Officer and President for Canarc. The employment agreement provides that Mr. Biles’ base remuneration is CAD$200,000 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee of Canarc.
- 
An Executive Employment Agreement between Canarc and Mr. Philip Yee was signed on June 26, 2014, as amended on February 9, 2017, in respect of Mr. Yee’s capacity as Chief Financial Officer for Canarc. The employment agreement provides that Mr. Yee’s base remuneration is CAD$193,500 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee of Canarc. As amended on February 9, 2017, Mr. Yee’s base remuneration will be shared equally with AzMin.
- 
A Consulting Services Agreement between Canarc and Dr. Jacob Margolis was signed on January 5, 2018, in respect of Dr. Margolis’ capacity as Vice-President of Exploration for Canarc. The consulting agreement provided that Dr. Margolis’ remuneration is US$11,000 per month. The consulting agreement has a term which is effective January 5, 2018 and terminated on December 31, 2018 but was renewed effective January 4, 2019 and terminates on December 31, 2019.
- 
On January 10, 2014, as amended June 26, 2014 and then amended December 8, 2015, an Executive Employment Agreement between Canarc and Mr. Catalin Kilofliski was signed in respect of Mr. Kilofliski’s capacity as Chief Executive Officer for Canarc. The employment agreement provides that Mr. Kilofliski’s base remuneration is CAD$225,000 per annum plus a bonus based upon the achievement of performance targets as determined by the Compensation Committee of Canarc. In June 2018, Mr. Kilofliski’s employment was terminated upon payment of his severance.
Canarc Resource Corp.
Form 20-F
86
For the two years immediately preceding April 22, 2016,23, 2019, there were no other material contracts entered into, other than contracts entered into in the ordinary course of business, to which the RegistrantCompany or any member of the group was a party, and other than as disclosed in this Form 20-F. For a description of those contracts entered into in the ordinary course of business refer to Items 4.A and 4.D.

10.D Exchange Controls

There are no governmental laws, decrees or regulations in Canada relating to restrictions on the export or import of capital, or affecting the remittance of interest, dividends or other payments to non residentnon-resident holders of the Registrant'sCompany’s common shares. Any remittances of dividends to United States residents are, however, subject to a 15% withholding tax (10% if the shareholder is a corporation owning at least 10% of the outstanding common shares of the Registrant)Company) pursuant to Article X of the reciprocal tax treaty between Canada and the United States.

Except as provided in the Investment Canada Act (the "Act"“Act”), there are no limitations under the laws of Canada, the Province of British Columbia or in the charter or any other constituent documents of the RegistrantCompany on the right of foreigners to hold or vote the common shares of the Registrant.

Canarc Resource Corp.

Form 20-F

111

Company.

Management of the RegistrantCompany considers that the following general summary is materially complete and fairly describes those provisions of the Investment Canada Act pertinent to an investment by an American investor in the Registrant.

Company.

The following discussion summarizes the principal features of the Investment Canada Act for a non-resident who proposes to acquire the common shares.

The Investment Canada Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture (each an "entity"“entity”) that is not a "Canadian" as defined in the Investment Canada Act (a "non-Canadian"“non-Canadian”), unless after review, the Director of Investments appointed by the minister responsible for the Investment Canada Act is satisfied that the investment is likely to be of net benefit to Canada. An investment in the common shares by a non-Canadian other than a "WTO Investor"“WTO Investor” (as that term is defined by the Investment Canada Act, and which term includes entities which are nationals of or are controlled by nationals of member states of the World Trade Organization) when the Company was not controlled by a WTO Investor, would be reviewable under the Investment Canada Act if it was an investment to acquire control of the RegistrantCompany and the value of the assets of the Registrant,Company, as determined in accordance with the regulations promulgated under the Investment Canada Act, equals or exceeds $5 million for direct acquisition and over $50 million for indirect acquisition, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada's cultural heritage or national identity, regardless of the value of the assets of the Registrant.Company. An investment in the common shares by a WTO Investor, or by a non-Canadian when the RegistrantCompany was controlled by a WTO Investor, would be reviewable under the Investment Canada Act if it was an investment to acquire control of the RegistrantCompany and the value of the assets of the Registrant,Company, as determined in accordance with the regulations promulgated under the Investment Canada Act was not less than a specified amount. A non-Canadian would acquire control of the RegistrantCompany for the purposes of the Investment Canada Act if the non-Canadian acquired a majority of the common shares. The acquisition of one third or more, but less than a majority of the common shares would be presumed to be an acquisition of control of the RegistrantCompany unless it could be established that, on the acquisition, the RegistrantCompany was not controlled in fact by the acquirer through the ownership of the common shares.

Certain transactions relating to the common shares would be exempt from the Investment Canada Act, including: (a) an acquisition of the common shares by a person in the ordinary course of that person's business as a trader or dealer in securities; (b) an acquisition of control of the RegistrantCompany in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Canada Act; and (c) an acquisition of control of the RegistrantCompany by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Registrant,Company, through the ownership of the common shares, remained unchanged.

10.E Taxation

ALL SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO THE INCOME AND OTHER TAX CONSEQUENCES ARISING IN THEIR PARTICULAR CIRCUMSTANCES. THE FOLLOWING IS A SUMMARY ONLY AND OF A GENERAL NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, TO BE LEGAL OR TAX ADVISE TO ANY PARTICULAR SHAREHOLDER.

Canarc Resource Corp.
Form 20-F
87
United States Federal Income Tax Consequences

The following is a discussion of material United States federal income tax consequences, under current law, applicable to a US Holder (as hereinafter defined) of common shares of the Registrant.Company. This discussion does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a US Holder. In addition, this discussion does not cover any state, local or foreign tax consequences. (Refer to "Certain“Certain Canadian Federal Income Tax Considerations"Considerations” for material Canadian federal income tax consequences).

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the "Code"“Code”), Treasury Regulations, published Internal Revenue Service ("IRS"(“IRS”) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations. This discussion does not consider the potential effects, both adverse and beneficial, of any proposed legislation that, if enacted, could be applied, possibly on a retroactive basis, at any time. This discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of common shares of the RegistrantCompany and no opinion or representation with respect to the United States federal income tax consequences to any such holder or prospective holder is made. Accordingly, holders and prospective holders of common shares of the RegistrantCompany should consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of common shares of the Registrant.

Canarc Resource Corp.

Form 20-F

112

Company.

U.S. Holders

As used herein, a "U.S. Holder"“U.S. Holder” means a holder of common shares of the RegistrantCompany who is (i) a citizen or individual resident of the United States, (ii) a corporation or partnership created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate whose income is taxable in the United States irrespective of source or (iv) a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to specific provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, persons or entities that have a "functional currency"“functional currency” other than the U.S. dollar, shareholders subject to the alternative minimum tax, shareholders who hold common shares as part of a straddle, hedging, conversion transaction, constructive sale or other arrangement involving more than one position, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services. This summary is limited to U.S. Holders who own common shares as capital assets within the meaning of Section 1221 of the Code. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares.

Distribution on Common Shares of the Company

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the RegistrantCompany are required to include in gross income for United States federal income tax purposes the gross amount of such distributions, equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the RegistrantCompany has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder'sHolder’s federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's federal taxable income by those who itemize deductions. (The section, "Foreign“Foreign Tax Credit"Credit”, below provides more details). To the extent that distributions exceed current or accumulated earnings and profits of the Registrant,Company, they will be treated first as a return of capital up to the U.S. Holder'sHolder’s adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder that is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder that is a corporation.

Canarc Resource Corp.
Form 20-F
88
In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss. However, an individual whose realized gain does not exceed $200 will not recognize that gain, to the extent that there are no expenses associated with the transaction that meet the requirements for deductibility as a trade or business expense (other than travel expenses in connection with a business trip) or as an expense for the production of income.

Dividends paid on the common shares of the RegistrantCompany generally will not be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation and which owns shares representing at least 10% of the voting power and value of the RegistrantCompany may, under certain circumstances, be entitled to a 70% (or 80% if the U.S. Holder owns shares representing at least 20% of the voting power and value of the Registrant)Company) deduction of the United States source portion of dividends received from the RegistrantCompany (unless the RegistrantCompany qualifies as a "passive“passive foreign investment company,"” as defined below). The availability of this deduction is subject to several complex limitations that are beyond the scope of this discussion.

Certain information reporting and backup withholding rules may apply with respect to the Registrant'sCompany’s common shares. In particular, a payor or middleman within the U.S., or in certain cases outside the U.S., will be required to withhold 31% of any payments to a holder of the Registrant'sCompany’s common shares of dividends on, or proceeds from the sale of, such common shares within the U.S., unless the holder is an exempt recipient, if the holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding tax requirements. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder'sHolder’s U.S. federal income tax liability, provided the required information is furnished to the IRS. U.S. Holders are urged to consult their own tax counsel regarding the information reporting and backup withholding rules applicable to the Registrant'sCompany’s common shares.

Canarc Resource Corp.

Form 20-F

113

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of the RegistrantCompany may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer'staxpayer’s income subject to tax. This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations that apply to the credit among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder'sHolder’s United States income tax liability that the U.S. Holder'sHolder’s foreign source income bears to his or its worldwide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to specific classes of income such as "passive income"“passive income”, "high“high withholding tax interest," "financial” “financial services income," "shipping” “shipping income,"” and certain other classifications of income. Dividends distributed by the RegistrantCompany will generally constitute "passive income"“passive income” or, in the case of certain U.S. Holders, "financial“financial services income"income” for these purposes. In addition, U.S. Holders which are corporations that own 10% or more of the voting stock of the RegistrantCompany may be entitled to an "indirect"“indirect” foreign tax credit under Section 902 with respect to the payment of dividends by the RegistrantCompany under certain circumstances and subject to complex rules and limitations. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific, and U.S. Holders of common shares of the RegistrantCompany should consult their own tax advisors regarding their particular circumstances.

Disposition of Common Shares of the Company

A U.S. Holder will recognize gain or loss upon the sale of common shares of the RegistrantCompany equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder'sshareholder’s tax basis in the common shares of the Registrant.Company. Preferential tax rates apply to long-term capital gains of U.S. Holders that are individuals, estates or trusts. This gain or loss will be capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder, which will be long-term capital gain or loss if the common shares of the RegistrantCompany are held for more than one year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Canarc Resource Corp.
Form 20-F
89
Other Considerations

In the following circumstances, the above sections of this discussion may not describe the United States federal income tax consequences resulting from the holding and disposition of common shares:

Foreign Investment Company

If 50% or more of the combined voting power or total value of the Registrant'sCompany's outstanding shares is held, directly or indirectly, by citizens or residents of the United States, United States domestic partnerships or companies, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), and the RegistrantCompany is found to be engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest therein, it is possible that the RegistrantCompany may be treated as a "foreign investment company" as defined in Section 1246 of the Code, causing all or part of any gain realized by a U.S. Holder selling or exchanging common shares to be treated as ordinary income rather than capital gain. The RegistrantCompany does not believe that it currently qualifies as a foreign investment company. However, there can be no assurance that the RegistrantCompany will not be considered a foreign investment company for the current or any future taxable year.

Passive Foreign Investment Company

As a foreign corporation with U.S. Holders, the RegistrantCompany could potentially be treated as a passive foreign investment company ("PFIC"), as defined in Section 1297 of the Code, depending upon the percentage of the Registrant'sCompany's income which is passive, or the percentage of the Registrant'sCompany's assets which produce or are held for the production of passive income. U.S. Holders owning common shares of a PFIC are subject to the highest rate of tax on ordinary income in effect for the applicable taxable year and to an interest charge based on the value of deferral of tax for the period during which the common shares of the PFIC are owned with respect to certain "excess distributions"“excess distributions” on and dispositions of PFIC stock. However, if the U.S. Holder makes a timely election to treat a PFIC as a qualified electing fund ("QEF") with respect to such shareholder's interest therein, the above-described rules generally will not apply. Instead, the electing U.S. Holder would include annually in his gross income his pro rata share of the PFIC's ordinary earnings and net capital gain regardless of whether such income or gain was actually distributed. A U.S. Holder of a QEF can, however, elect to defer the payment of United States federal income tax on such income inclusions. Special rules apply to U.S. Holders who own their interests in a PFIC through intermediate entities or persons. In addition, subject to certain limitations, U.S. Holders owning, actually or constructively, marketable (as specifically defined) stock in a PFIC will be permitted to elect to mark that stock to market annually, rather than be subject to the excess distribution regime of section 1291 described above. Amounts included in or deducted from income under this alternative (and actual gains and losses realized upon disposition, subject to certain limitations) will be treated as ordinary gains or losses. This alternative will apply to taxable years of U.S. Holders beginning after 1997 and taxable years of foreign corporations ending with or within such taxable years of U.S. Holders.

Canarc Resource Corp.

Form 20-F

114

Because the PFIC determination is made annually on the basis of income and assets, there can be no assurance that the RegistrantCompany will not be classified a PFIC in the current or in a subsequent year. In addition, there can be no assurance that the Registrant'sCompany's determination concerning its PFIC status will not be challenged by the IRS, or that it will be able to satisfy record keeping requirements which will be imposed on QEFs in the event that it qualifies as a PFIC.

Controlled Foreign Registrant

Company

If more than 50% of the total combined voting power of all classes of shares entitled to vote or the total value of the shares of the RegistrantCompany is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by the Code Section 7701(a)(31)), each of which own, actually or constructively, 10% or more of the total combined voting power of all classes of shares entitled to vote of the Registrant ("Company (“United States Shareholder"Shareholder”), the RegistrantCompany could be treated as a controlled foreign corporation ("CFC"(“CFC”) under Subpart F of the Code. This classification would affect many complex results, one of which is the inclusion of certain income of a CFC which is subject to current U.S. tax. The United States generally taxes United States shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States shareholders are generally treated as having received a current distribution out of the CFC'sCFC’s Subpart F income and are also subject to current U.S. tax on their pro rata shares of the CFC'sCFC’s earnings invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the RegistrantCompany which is or was a United States Shareholder at any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent of earnings and profits of the RegistrantCompany attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign RegistrantsCompanys ending with or within such taxable years of United States Shareholders. Special rules apply to United States Shareholders who are subject to the special taxation rules under Section 1291 discussed above with respect to a PFIC. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion. The RegistrantCompany does not believe that it currently qualifies as a CFC. However, there can be no assurance that the RegistrantCompany will not be considered a CFC for the current or any future taxable year.

Canarc Resource Corp.
Form 20-F
90
Certain Canadian Federal Income Tax Considerations

A brief description of certain provisions of the tax treaty between Canada and the United States is included below, together with a brief outline of certain taxes, including withholding provisions, to which United States security holders are subject under existing laws and regulations of Canada. The consequences, if any, of provincial, state and local taxes are not considered.

The following information is general, and security holders should seek the advice of their own tax advisors, tax counsel or accountants with respect to the applicability or effect on their own individual circumstances of the matters referred to herein and of any provincial, state, or local taxes.

The discussion under this heading summarizes the principal Canadian federal income tax consequences of acquiring, holding and disposing of shares of common stock of the RegistrantCompany for a shareholder of the RegistrantCompany who is not a resident of Canada but is a resident of the United States and who will acquire and hold shares of common stock of the RegistrantCompany as capital property for the purposes of the Income Tax Act (Canada) (the "Canadian“Canadian Tax Act"Act”). This summary does not apply to a shareholder who carries on business in Canada through a "permanent establishment"“permanent establishment” situated in Canada or performs independent personal services in Canada through a fixed base in Canada if the shareholder'sshareholder’s holding in the RegistrantCompany is effectively connected with such permanent establishment or fixed base. This summary is based on the provisions of the Canadian Income Tax Act and the regulations thereunder and on an understanding of the administrative practices of Canada Revenue Agency, and takes into account all specific proposals to amend the Canadian Tax Act or regulations made by the Minister of Finance of Canada as of the date hereof. It has been assumed that there will be no other relevant amendment of any governing law although no assurance can be given in this respect. This discussion is general only and is not a substitute for independent advice from a shareholder'sshareholder’s own Canadian and U.S. tax advisors.

The provisions of the Canadian Tax Act are subject to income tax treaties to which Canada is a party, including the Canada-United States Income Tax Convention (1980), as amended (the "Convention"“Convention”).

Canarc Resource Corp.

Form 20-F

115

Dividends on Common Shares and Other Income

Under the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian withholding tax at the rate of 25 percent on dividends paid or deemed to have been paid to him or her by a corporation resident in Canada. The Convention limits the rate to 15 percent if the shareholder is a resident of the United States and the dividends are beneficially owned by and paid to such shareholder, and to 5 percent if the shareholder is also a corporation that beneficially owns at least 10 percent of the voting stock of the payor corporation.

The amount of a stock dividend (for tax purposes) would generally be equal to the amount by which the paid up or stated capital of the RegistrantCompany had increased by reason of the payment of such dividend. The RegistrantCompany will furnish additional tax information to shareholders in the event of such a dividend. Interest paid or deemed to be paid on the Registrant'sCompany’s debt securities held by non-Canadian residents may also be subject to Canadian withholding tax, depending upon the terms and provisions of such securities and any applicable tax treaty.

The Convention generally exempts from Canadian income tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization operated exclusively to administer or provide pension, retirement or employee benefit fund, if the organization is a resident of the United States and is generally exempt from income tax under the laws of the United States provided it is not carrying on a trade or business.

Dispositions of Common Shares

Under the Canadian Tax Act, subject to certain restrictions, a taxpayer'staxpayer’s capital gain or capital loss from a disposition of a share of common stock of the RegistrantCompany is the amount, if any, by which his or her proceeds of disposition exceed (or are exceeded by, respectively) the aggregate of his or her adjusted cost base of the share and reasonable expenses of disposition. The capital gain or loss must be computed in Canadian currency using a weighted average adjusted cost base for identical properties. Fifty percent of the capital gains net of losses are included in income. The amount by which a shareholder'sshareholder’s capital loss exceeds the capital gain in a year may be deducted from a capital gain realized by the shareholder in the three previous years or any subsequent year, subject to certain restrictions in the case of a corporate shareholder.

Canarc Resource Corp.
Form 20-F
91
Under the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains, and may deduct allowable capital losses, realized on a disposition of "taxable Canadian property"property”. Shares of common stock of the RegistrantCompany will constitute taxable Canadian property of a shareholder at a particular time if the shareholder used the shares in carrying on business in Canada, or if at any time in the five years immediately preceding the disposition 25% or more of the issued shares of any class or series in the capital stock of the RegistrantCompany belonged to one or more persons in a group comprising the shareholder and persons with whom the shareholder and persons with whom the shareholder did not deal at arm'sarm’s length and in certain other circumstances.

The Convention relieves United States residents from liability for Canadian tax on capital gains derived on a disposition of shares unless:

(a)

the value of the shares is derived principally from "real property" in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production;

(b)

the shareholder was resident in Canada for 120 months during any period of 20 consecutive years preceding the disposition, and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him or her when he or she ceased to be resident in Canada; or

(c)

the shares formed part of the business property of a "permanent establishment" that the holder has or had in Canada within the 12 months preceding the disposition.

Canarc Resource Corp.

Form 20-F

116

(a)            
the value of the shares is derived principally from “real property” in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production;
(b)            
the shareholder was resident in Canada for 120 months during any period of 20 consecutive years preceding the disposition, and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him or her when he or she ceased to be resident in Canada; or
(c)            
the shares formed part of the business property of a “permanent establishment” that the holder has or had in Canada within the 12 months preceding the disposition.
10.F Dividends and Paying Agents

Not applicable.

10.G Statement by Experts

Not applicable.

10.H Documents on Display

We are subject to the informational requirements of the Exchange Act and file reports and other information with the SEC. You may read and copy any of our reports and other information at, and obtain copies upon payment of prescribed fees from, the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. In addition, the SEC maintains a Website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at http://www.sec.gov. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

We are required to file reports and other information with the securities commissions in Canada. You are invited to read and copy any reports, statements or other information, other than confidential filings, that we file with the provincial securities commissions. These filings are also electronically available from the Canadian System for Electronic Document Analysis and Retrieval ("SEDAR") (www.sedar.com), the Canadian equivalent of the SEC's electronic document gathering and retrieval system.

We "incorporate by reference" information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this Form 20-F and more recent information automatically updates and supersedes more dated information contained or incorporated by reference in this Form 20-F.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements to shareholders.

Canarc Resource Corp.
Form 20-F
92
We will provide without charge to each person, including any beneficial owner, to whom a copy of this Annual Report on Form 20-F has been delivered, on the written or oral request of such person, a copy of any or all documents referred to above which have been or may be incorporated by reference in this Annual Report on Form 20-F (not including exhibits to such incorporated information that are not specifically incorporated by reference into such information). Requests for such copies should be directed to us at the following address: Suite #301 - 700 West Pender#810 – 625 Howe Street, Vancouver, British Columbia, Canada, V6C 1G8.2T6. The Company is required to file financial statements and other information with the Securities Commission in each of the Provinces of Canada, except Quebec, electronically through SEDAR which can be viewed at www.sedar.com.

10.I Subsidiary Information

Not applicable.

Canarc Resource Corp.

Form 20-F

117

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Canarc's

Canarc’s audited consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB, and all dollar amounts are expressed in United States dollars unless otherwise indicated.

Quantitative and qualitative disclosures about market risk are provided in Canarc'sCanarc’s audited consolidated financial statements for the year ended December 31, 20152018 and the notes thereto.

Item 3.D provides information concerning risk factors.

Management of Capital

The RegistrantCompany is an exploration stage company and this involves a high degree of risk. The RegistrantCompany has not determined whether its mineral property interests contain reserves of ore and currently has not earned any revenues from its mineral property interests and, therefore, does not generate cash flows from operations. The Registrant'sCompany’s primary source of funds comes from the issuance of share capital and proceeds from notes payable. The RegistrantCompany is not subject to any externally imposed capital requirements.

The RegistrantCompany defines its capital as debt and share capital. Capital requirements are driven by the Registrant'sCompany’s exploration activities on its mineral property interests. To effectively manage the Registrant'sCompany’s capital requirements, the RegistrantCompany has a planning and budgeting process in place to ensure that adequate funds are available to meet its strategic goals. The RegistrantCompany monitors actual expenses to budget on all exploration projects and overhead to manage costs, commitments and exploration activities.

The RegistrantCompany has in the past invested its capital in liquid investments to obtain adequate returns. The investment decision is based on cash management to ensure working capital is available to meet the Registrant'sCompany’s short-term obligations while maximizing liquidity and returns of unused capital.

Although the RegistrantCompany has been successful at raising funds in the past through the issuance of share capital, it is uncertain whether it will be able to continue this financing in the future. The RegistrantCompany will continue to rely on debt and equity financings to meet its commitments as they become due, to continue exploration work on its mineral property interests, and to meet its administrative overhead costs for the coming periods.

There were no changes in the Registrant'sCompany’s approach to capital management during the year ended December 31, 2015.

2018.

Management of Financial Risk

The RegistrantCompany is exposed in varying degrees to a variety of financial instrument related risks, including credit risk, liquidity risk, and market risk which includes foreign currency risk, interest rate risk and other price risk. The types of risk exposure and the way in which such exposure is managed are provided as follows.

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The fair value hierarchy categorizes financial instruments measured at fair value at one of three levels according to the reliability of the inputs used to estimate fair values. The fair value of assets and liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Assets and liabilities in Level 2 are valued using inputs other than quoted prices for which all significant inputs are based on observable market data. Level 3 valuations are based on inputs that are not based on observable market data.

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The fair values of the Registrant'sCompany’s receivables promissory note receivable,and accounts payable and accrued liabilities and notes payable approximate their carrying values due to the short terms to maturity. Cash isand certain marketable securities are measured at fair values using Level 1 inputs. Disclosure is not madeOther marketable securities are measured using Level 3 of the fair value of the long-term investments as the shares do not have a quoted market price in an active market. There is no separately quoted market value for the Registrant's investment in the shares of Aztec, and the fair value cannot be reliably determined. Therefore they were recordedhierarchy. Flow through premium liability at cost in 2012 and written down to a nominal value of CAD$100 in 2013 due to the lack of liquidity in the stock. In October 2014, the Registrant received 358,000 shares from Aztec in settlement of debt owed to the Registrant which the Registrant had written off in 2013. All gains and losses are included in operations in the period in which they arise. Derivative liabilityinitial recognition is measured using Level 1 inputs, and deferred royalty liability using Level 2 inputs.

(a)

Credit risk:

(a)     
Credit risk:
Credit risk is the risk of potential loss to the RegistrantCompany if the counterparty to a financial instrument fails to meet its contractual obligations.

The Registrant'sCompany's credit risk is primarily attributable to its liquid financial assets including cash. The RegistrantCompany limits exposure to credit risk on liquid financial assets through maintaining its cash with high-credit quality Canadian financial institutions.

Management has reviewed the items comprising the accounts receivable balance which may include amounts receivable from certain related parties, provincial tax credit for qualified mineral expenditures, and goods and services tax refunds due from the government, and determined that all accounts are collectible; accordingly there has been no allowance for doubtful accounts recorded.

(b)

Liquidity risk:

(b)      
Liquidity risk:
Liquidity risk is the risk that the RegistrantCompany will not be able to meet its financial obligations as they become due.

The RegistrantCompany ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account the Registrant'sCompany's holdings of cash and its ability to raise equity financings. As at December 31, 2015,2018, the RegistrantCompany had a working capital deficiency of $574,000 (2014 - $156,000)$2.9 million (2017 – $4.9 million). The Registrant will require additionalCompany has sufficient funding to meet its short-term liabilities and administrative overhead costs, and to maintain its mineral property interests in 2016.

2019.

The following schedule provides the contractual obligations related to the deferred royalty payments as at December 31, 2018:
 
 
Payments due by Period
 
 
 
(US$000)
 
 
 
 
 
 
 
 
 
 
 
 
 After
 
 
 
 Total
 
 
Less than 1 year
 
 
 1-3 years
 
 
 3-5 years
 
 
 5 years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred royalty payments
 $355 
 $35 
 $105 
 $105 
 $110 
 
    
    
    
    
    
Total
 $355 
 $35 
 $105 
 $105 
 $110 
Accounts payable and accrued liabilities are due in less than 90 days, and the notes payable, if any, are due on demand.

(c)

Market risk:

(c)      
Market risk:
The significant market risk exposures to which the RegistrantCompany is exposed are foreign currency risk, interest rate risk and other price risk.

(i)

Foreign currency risk:

The Registrant's

(i)     
Foreign currency risk:
Certain of the Company’s mineral property interests and operations are in Canada and Mexico. A certain portionCanada. Most of its operating expenses are incurred in Canadian dollars and Mexican pesos.dollars. Fluctuations in the Canadian dollar would affect the Registrant'sCompany’s consolidated statements of comprehensive lossincome (loss) as its functional currency is the Canadian dollar, and fluctuations in the U.S. dollar would impact its cumulative translation adjustment as its consolidated financial statements are presented in U.S. dollars.

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94
The RegistrantCompany is exposed to currency risk for its U.S. dollar equivalent of assets and liabilities denominated in currencies other than U.S. dollars as follows:

 

 

Stated in U.S. Dollars

 

 

 

Held in

 

 

Total

 

($000s)

 

Canadian Dollars

 

 

Mexican Pesos

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$70

 

 

$11

 

 

$81

 

Accounts receivable

 

 

11

 

 

 

50

 

 

 

61

 

Accounts payable and accrued liabilities

 

 

(792)

 

 

(13)

 

 

(805)

Derivative liability

 

 

(175)

 

 

-

 

 

 

(175)

Net financial assets (liabilities), December 31, 2015

 

$(886)

 

$48

 

 

$(838)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$643

 

 

$-

 

 

$643

 

Receivables

 

 

10

 

 

 

-

 

 

 

10

 

Accounts payable and accrued liabilities

 

 

(799)

 

 

-

 

 

 

(799)

Net financial assets (liabilities), December 31, 2014

 

$(146)

 

$-

 

 

$(146)

 
 
 Stated in U.S. Dollars
 
($000s)
 
 (Held in Canadian Dollars)
 
 
 
 2018
 
 
 2017
 
 
 
 
 
 
 
 
Cash
 $2,288 
 $4,118 
Marketable securities
  719 
  787 
Receivables
  17 
  100 
Accounts payable and accrued liabilities
  (215)
  (104)
Flow through premium liability
  - 
  (54)
 
    
    
Net financial assets (liabilities), December 31
 $2,809 
 $4,847 
Based upon the above net exposure as at December 31, 20152018 and assuming all other variables remain constant, a 15% (201410% (2017 - 10%15%) depreciation or appreciation of the U.S. dollar relative to the Canadian dollar and Mexican peso could result in a decrease (increase) of approximately $125,700 (2014$281,000 (2017 - $14,600)$727,000) in the cumulative translation adjustment in the Reigstrant's shareholders' equity.

Company’s shareholders’ equity..

The RegistrantCompany has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time.

(ii)

Interest rate risk:

(ii)      
Interest rate risk:
In respect of financial assets, the Registrant'sCompany's policy is to invest cash at floating rates of interest in cash equivalents, in order to maintain liquidity, while achieving a satisfactory return. Fluctuations in interest rates impact on the value of cash equivalents. Interest rate risk is not significant to the RegistrantCompany as it has no cash equivalents at period-end and the promissory notes receivable and notes payable, if any, are stated at fixed interest rates.

(iii)

Other price risk:

(iii) 
Other price risk:
Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market and commodity prices.

The Registrant'sCompany’s other price risk includes equity price risk, whereby investmentsinvestment in marketable securities are subject toheld for trading financial assets with fluctuations in quoted market price fluctuations. The Registrant's long-term investmentprices recorded at FVTPL. There is no separately quoted market value for the Company’s investments in the shares of Aztec does not have a quoted market price in an active market and is therefore measured at cost, net of any write-downs.

The Registrant has recognized a derivative liability pursuant to the share purchase agreement with Marlin Gold which closed on October 30, 2015, whereby the Registrant shall pay 55 troy ounces of gold to Marlin Gold on eachcertain strategic investments.

As certain of the first three anniversariesCompany’s marketable securities are carried at market value and are directly affected by fluctuations in value of the closing dateunderlying securities, the Company considers its financial performance and cash flows could be materially affected by such changes in the future value of the agreement (or its U.S. dollar equivalent), for a total of 165 troy ounces of gold. The derivative liability fluctuates with the gold spot prices resulting in the recognition of gains and losses in profit or loss in which the Registrant has not hedged the payable gold ounces.Company’s marketable securities. Based upon the net exposure as at December 31, 20152018 and assuming all other variables remain constant, a 20% depreciationnet increase or appreciationdecrease of 50% (2017 - 60%) in the market prices of the gold spot prices could result inunderlying securities would increase or decrease respectively net (loss) income by $360,000 (2017 - $472,000).
In February 2017, the Company adopted a decrease/increasenormal course issuer bid whereby the Company may acquire up to 10.9 million common shares of approximately $35,000 (2014 - $Nil)the Company, and shall pay the prevailing market price at the time of purchase, and which terminated on February 7, 2018. In June 2018, the normal course issuer bid was again adopted whereby the Company may acquire up to 10.9 million common shares of the Company until June 20, 2019. The cash consideration paid for any such purchases would be subject to fluctuations in the Registrant's net losses.

market price of its common shares.
Canarc Resource Corp.
Form 20-F
95

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. – C.
Not applicable.

Applicable.

D.
American Depository Receipts
The Company does not have securities registered as American Depository Receipts
Canarc Resource Corp.

Form 20-F

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96
PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

14.A - D

None.

14.E Use of Proceeds

Not Applicable.

ITEM 15. CONTROLS AND PROCEDURES

A.

Disclosure Controls and Procedures

A.            
Disclosure Controls and Procedures
At the end of the period covered by this report, an evaluation was carried out under the supervision of and with the participation of the Registrant'sCompany’s management, including the Chief Executive Officer ("CEO"(“CEO”) and Chief Financial Officer ("CFO"(“CFO”), of the effectiveness of the design and operations of the Company'sCompany’s disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act). Based on that evaluation the CEO and the CFO have concluded that as of the end of the period covered by this report, the Registrant'sCompany’s disclosure controls and procedures were adequately designed and effective to give reasonable assurance that: (i) information required to be disclosed by the RegistrantCompany in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms; and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to the Registrant'sCompany’s management, including its CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

B.

Management's Report on Internal Control over Financial Reporting

B.            
Management’s Report on Internal Control over Financial Reporting
The Registrant'sCompany’s management, including the CEO and CFO, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the RegistrantCompany have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Registrant'sCompany’s controls include policies and procedures that:

-

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Registrant;

-

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS; and

-

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Registrant's assets that could have a material effect on the annual financial statements or interim financial statements.

- 
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
Canarc Resource Corp.

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97
- 
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS;
- 
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the annual financial statements or interim financial statements; and
- 
statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting.
Management conducted an evaluation of the design and operation of the Registrant'sCompany’s internal control over financial reporting as of December 31, 20152018 based on the criteria in a framework developed by the Registrant'sCompany’s management pursuant to and in compliance with the SEC's SEC’sGuidance Regarding Management'sManagement’s Report on Internal Control Over Financial Reporting Under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, Release No. 33-8810 and based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO 2013 framework). This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based upon its assessment, management, including the Registrant'sCompany’s Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2015,2018, the Registrant'sCompany’s internal control over financial reporting was effective.

On January 1, 2014,

C.            
Attestation Report of the Company adopted the COSO 2013 framework, which did not have a material impactRegistered Public Accounting Firm
This Annual Report on the Company's disclosure controls and procedures and internal controls over financial reporting.

C.

Attestation Report of the Registered Public Accounting Firm

The Registrant's independent registered public accounting firm is not required to provide an attestation on management's report on internal control over financial reporting, because the Registrant was not an accelerated filer or large accelerated files. Therefore, this reportForm 20-F does not include an attestation report of the Registrant'sour independent registered public accounting firm regarding internal controlscontrol over financial reportingreporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rulesSection 404(c) of the Securities and Exchange CommissionSarbanes-Oxley Act of 2002, as amended, which provides that permitissuers that are not an “accelerated filer” or “large accelerated filer” are exempt from the Registrantrequirement to provide only management's reportan auditor attestation report.

D.            
Changes in this annual report.

D.

Changes in Internal Controls over Financial Reporting

Internal Controls over Financial Reporting

There were no changes in the Registrant'sCompany’s internal controls over financial reporting identified in connection with the evaluation described above that occurred during the period covered by this annual report that has materially affected or is reasonably likely to materially affect the Registrant'sCompany’s internal control over financial reporting.

ITEM 16. AUDIT COMMITTEE FINANCIAL EXPERT, CODE OF ETHICS AND PRINCIPAL ACCOUNTANT FEES AND SERVICES

16.A Audit Committee Financial Expert

The Registrant'sCompany’s Board of Directors has determined that Mr. Martin Burian qualifies as a financial expert (as defined in Item 407(d)(5)(ii) of Regulation S-K under the Exchange Act) and is independent (as determined under Exchange Act Rule 10A-3 and Section 803A of the NYSE MKT Company Guide).

16.B Code of Ethics

The RegistrantCompany has not adopted a formal written code of ethics givenas posted on its relatively small size.

website at https://canarc.net/_resources/governance/Code-of-Ethics.pdf.

Directors, including the director/employee of the Registrant,Company, are subject to the laws of the Province of British Columbia, Canada, whereby they are required to act honestly, in good faith and in the best interests of the Registrant.Company. Also, the Registrant'sCompany’s legal counsel is available to the management of the RegistrantCompany to provide a high standard of due care in the activities of the RegistrantCompany and to provide guidance when needed.

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Form 20-F

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The RegistrantCompany expects all directors, officers and employees to abide by the following code of ethics which have been communicated to them:

-

act with honesty and integrity and in an ethical manner resolve any actual or apparent conflicts of interest between personal and professional relationships;

-

ensure that any public filings or announcements, whether they are statutory or regulatory filings or other documents submitted for public disclosure and communication, are accurate, complete, fair, timely and understandable in all material respects, taking into consideration applicable standards and regulations;

-

compliance with applicable laws, rules and regulations; and

-

prompt internal reporting of any violations, whether actual or potential, in the code of ethics.

- 
act with honesty and integrity and in an ethical manner resolve any actual or apparent conflicts of interest between personal and professional relationships;
Canarc Resource Corp.
Form 20-F
98
- 
ensure that any public filings or announcements, whether they are statutory or regulatory filings or other documents submitted for public disclosure and communication, are accurate, complete, fair, timely and understandable in all material respects, taking into consideration applicable standards and regulations;
- 
comply with applicable laws, rules and regulations; and
- 
prompt internal reporting of any violations, whether actual or potential, in the code of ethics.
During the fiscal year ended December 31, 2018, the Company did not substantively amend, waive or implicitly waive any provision of the Code with respect to any of the directors, officers or employees subject to it.
16.C Principal Accountant Fees and Services

The following table discloses accounting fees and services of the Registrant:

Company:

(Stated in terms of Canadian dollars)

Type of Services Rendered

 

2015

Fiscal Year

 

 

2014

Fiscal Year

 

 

 

(CAD$)

 

 

(CAD$)

 

 

 

 

 

 

 

 

(a) Audit Fees

 

$

31,000

 

 

$

33,000

 

 

 

 

 

 

 

 

 

 

(b) Audit-Related Fees

 

Nil

 

 

Nil

 

 

 

 

 

 

 

 

 

 

(c) Tax Fees

 

Nil

 

 

Nil

 

 

 

 

 

 

 

 

 

 

(d) All Other Fees

 

Nil

 

 

Nil

 

 
Type of Services Rendered
 
2018
Fiscal Year
(CAD$)
 
 
2017
Fiscal Year
(CAD$)
 
 
 
 
 
 
 
 
(a) Audit Fees
 $35,000 
 $35,000 
 
    
    
(b) Audit-Related Fees
  Nil 
  Nil 
 
    
    
(c) Tax Fees
 $3,500 
 $3,500 
 
    
    
(d) All Other Fees
  Nil 
  Nil 
 
    
    
At an Audit Committee meeting held in March 2016,2019, the Audit Committee pre-approved all services to be performed by the auditors including certain non-audit services requested by management for the 20162019 fiscal year until the next Audit Committee meeting concerning the financial statements for the year ended December 31, 2016,2019, which services are not prohibited services under the independence requirements of the Securities and Exchange Commission or professional standards in Canada or the United States.

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The Audit Committee pre-approves all non-audit services to be performed by the auditor in accordance with the Audit Committee Charter. There were no hours expended on the principal accountant's engagement to audit the Company's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
16.D Exemptions from the Listing Standards for Audit Committees

Not applicable.

16.E Purchases of Equity Securities by the RegistrantCompany and Affiliated Purchasers

None.

 
Issuer Purchases of Equity Securities
 
 
 
 (a)
 
 
(b)
 
 
 (c)
 
 
 (d)
 
Period
 
 Total Number of Shares (or Units) Purchased
 
 
Average Price Paid per Share (or Units)
 
 
 Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
 
 
 Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
 
January 1 to 31, 2018 (1)
  86,000 
 $0.06 
  2,644,500 
  8,214,979 
February 1 to 28, 2018
  Nil 
    
    
    
March 1 to 31, 2018
  Nil 
    
    
    
April 1 to 30, 2018
  Nil 
    
    
    
May 1 to 31, 2018
  Nil 
    
    
    
June 1 to 30, 2018 (2)
  23,000 
 $0.05 
  23,000 
  10,911,657 
July 1 to 31, 2018 (2)
  65,000 
 $0.04 
  88,000 
  10,846,657 
August 1 to 31, 2018 (2)
  48,000 
 $0.04 
  136,000 
  10,798,657 
September 1 to 30, 2018 (2)
  72,000 
 $0.03 
  208,000 
  10,726,657 
October 1 to 31, 2018 (2)
  184,000 
 $0.03 
  392,000 
  10,542,657 
November 1 to 30, 2018 (2)
  46,000 
 $0.03 
  438,000 
  10,496,657 
December 1 to 31, 2018 (2)
  Nil 
    
    
    
Total
  524,000 
    
    
    
(1) 
In February 2017, Canarc received regulatory approval for a normal course issuer bid to acquire up to 10.9 million its common shares, representing approximately up to 5% of its issued and outstanding common shares at that time. The bid commenced on February 8, 2017 and terminated on February 7, 2018. The actual number of common shares purchased under the bid and the timing of any such purchases was at Canarc’s discretion. Purchases under the bid did not exceed 86,128 common shares per day. Canarc paid the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc were returned to treasury and cancelled. During the term of the normal course issuer bid, Canarc purchased an aggregate of 2.6 million common shares for an aggregate purchase price of CAD$220,400, resulting in an average price of CAD$0.08 per share; these shares have been returned to treasury and accordingly cancelled.
(2) 
In June 2018, Canarc again proceeded with a normal course issuer bid which received regulatory approval to acquire up to 10.9 million common shares of Canarc representing approximately up to 5% of its issued and outstanding common shares at that time. The bid was effective on June 21, 2018 and will terminate on June 20, 2019, or on such earlier date as the bid was completed. The actual number of common shares purchased under the bid and the timing of any such purchases are at Canarc’s discretion. Purchases under the bid shall not exceed 23,893 common shares per day. Canarc shall pay the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by Canarc will be cancelled. From June to December 2018, Canarc purchased 438,000 shares for CAD$20,595 with an average price of CAD$0.05 per share, all of which were cancelled in 2018. No further shares were purchased by Canarc in 2019.
16.F Change in Registrant'sCompany’s Certifying Accountant

None.

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99
16.G Corporate Governance

Not applicable.

applicable.

16.H Mine Safety Disclosure

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities with respect to mining operations and properties in the United States that are subject to regulation by the Federal Mine Safety and Health Administration ("MSHA"(“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the "Mine Act"“Mine Act”). During the year ended December 31, 2015,2018, the Company had no mines in the United States that were subject to regulation by the MSHA under the Mine Act.

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100
PART III

ITEM 17. FINANCIAL STATEMENTS

Not Applicable

ITEM 18. FINANCIAL STATEMENTS

The consolidated financial statements of the Company have been prepared in accordance with IFRS as issued by the IASB, and all dollar amounts are expressed in United States dollars unless otherwise indicated.

The following financial statements and related schedules are included in this Item:

 

Financial Statements

 

1.1

Report of Independent Registered Public Accounting Firm dated March 23, 2016

101

1.2

Consolidated statements of financial position as at December 31, 2015 and 2014 together with the consolidated statements of comprehensive loss, changes in shareholders' equity and cash flows for each of the years ended December 31, 2015, 2014 and 2013.

102-106

Financial Statements
1.1 Report of Independent Registered Public Accounting Firm dated March 21, 2019110-111
1.2 Consolidated statements of financial position as at December 31, 2018 and 2017 together with the consolidated statements of comprehensive (loss) income, changes in shareholders’ equity and cash flows for each of the years ended December 31, 2018, 2017 and 2016.112-116

ITEM 19. EXHIBITS

Exhibits

Exhibit #

Description

1-1

1-1

Notice of Articles and Articles (Business Corporations Act of British Columbia), previously filed as Exhibit 2.1 in the Form 20-F with the SEC on July 12, 2005 and incorporated herein by reference

1-2

1-2

Shareholders Right Plan dated April 30, 2005, previously filed as Exhibit 2.2 in the Form 20-F with the SEC on July 12, 2005 and incorporated herein by reference

8-1

8-1

List of Material Subsidiaries

12-1

12-1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Catalin Chiloflischi)

12-2

12-2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Philip Yee)

13-1

13-1

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Catalin Chiloflischi)

13-2

13-2

Certification pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Philip Yee)

15-1

15-1

Resource Potential, New Polaris Project

(dated March 14, 2007), previously furnished on Form 6-K with the SEC in July 2008 and incorporated herein by reference

15-2

15-2

New Polaris Project, Preliminary Assessment

(dated December 23, 2009), previously furnished on Form 6-K with the SEC in July 2010 and incorporated herein by reference

15-3

15-3

New Polaris Project, Preliminary Assessment

(dated April 10, 2011), previously furnished on Form 6-K with the SEC in July 2011 and incorporated herein by reference

15-4

15-4

2009 Diamond Drilling Program on the Tay-LP Property

(dated March 30, 2010), previously furnished on Form 6-K with the SEC in July 2010 and incorporated herein by reference

15-5

15-5

Technical Report for the El Compas Project

(dated January 19, 2016), previously furnished on Form 6-K with the SEC in February 2016 and incorporated herein by reference

15-6
Technical Report for the Fondaway Canyon Project
(dated April 3, 2017), previously furnished on Form 6-K with the SEC in May 2017 and incorporated herein by reference
15-7
New Polaris Gold Project, 2019 Preliminary Economic Assessment
(dated February 28, 2019), previously furnished on Form 6-K with the SEC in April 2019 and incorporated herein by reference

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101
SIGNATURE

The RegistrantCompany hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.

DATED at Vancouver, British Columbia, Canada, as of April 27, 2016.

CANARC RESOURCE CORP.

Per:
By:/s/Catalin Chiloflischi

Catalin Chiloflischi

Chief Executive Officer

26, 2019.

CANARC RESOURCE CORP.
Per:
/s/ Scott Eldridge                                               
Scott Eldridge, Chief Executive Officer
Canarc Resource Corp.

Form 20-F


102
Consolidated Financial Statements

of

CANARC RESOURCE CORP.
(expressed in United States dollars)

Years ended December 31, 2015, 20142018 and 2013

2017

 

INDEPENDENT AUDITORS’ REPORT

TOTHESHAREHOLDERSOFCANARCRESOURCECORP.

WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofCanarcResourceCorp.,whichcomprisethe consolidatedstatementsoffinancial positionasat December31,2015and2014,andtheconsolidated statementsof comprehensiveloss, changesinshareholders’ equityand cashflowsfor theyears ended December31,2015,2014 and2013,andasummaryofsignificantaccountingpoliciesandotherexplanatory information.

Management'sResponsibilityforthe ConsolidatedFinancialStatements

Managementisresponsibleforthepreparationandfairpresentationoftheseconsolidatedfinancialstatementsin accordancewithInternationalFinancialReportingStandards,asissued by theInternationalAccountingStandardsBoard, andforsuch internal controlasmanagementdeterminesisnecessaryto enablethepreparationof consolidatedfinancial statementsthat arefreefrom materialmisstatement,whetherduetofraudorerror.

Auditors’Responsibility

Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudits.We conducted our auditsin accordancewithCanadiangenerally acceptedauditingstandards and thestandardsof thePublicCompanyAccounting OversightBoard(United States).Thosestandards requirethat we complywith ethicalrequirements and planand perform theauditto obtainreasonable assurance aboutwhether theconsolidatedfinancialstatements arefree frommaterial misstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthe consolidatedfinancialstatements.Theproceduresselecteddependon theauditors’judgement,includingthe assessmentoftherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudor error.Inmakingthose riskassessments,theauditor considersinternalcontrolrelevanttotheentity'spreparation andfairpresentationoftheconsolidatedfinancialstatements inorder todesignauditproceduresthatareappropriatein the circumstances,butnotfor thepurposeof expressing anopinionon the effectivenessof the entity's internal control.Anauditalsoincludes evaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessof accountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.

Webelievethattheaudit evidencewehaveobtainedin ourauditsissufficientandappropriateto provideabasisforourauditopinion.

Opinion

Inouropinion,theconsolidatedfinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionofCanarcResourceCorp.asatDecember31,2015and2014, anditsfinancialperformance anditscashflowsfortheyears endedDecember31,2015,2014and2013inaccordancewithInternationalFinancialReportingStandards, as issuedby theInternationalAccounting StandardsBoard.

EmphasisofMatter

Without qualifyingouropinion,wedrawattentiontoNote1intheconsolidatedfinancialstatements,whichdescribesmattersandconditionsthatindicatetheexistenceofmaterialuncertaintiesthat cast substantialdoubtabout the Company’s abilitytocontinueasagoingconcern.

   /s/     Smythe LLP 

CharteredProfessionalAccountants

Vancouver,Canada

March23,2016

 

Canarc Resource Corp.
Form 20-F
103
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND DIRECTORS OF CANARC RESOURCE CORP.

Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Canarc Resource Corp. (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of comprehensive (loss) income, changes in shareholders’ equity, and cash flows for the years ended December 31, 2018, 2017 and 2016, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years ended December 31, 2018, 2017 and 2016, in conformity with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.
Change in Accounting Principle
As discussed in note 3 to the consolidated financial statements, the Company has changed its accounting policies for financial instruments as of January 1, 2018 due to the adoption of IFRS 9, Financial Instruments.
Material Uncertainty Related to Going Concern
Without modifying our opinion, we draw attention to Note 1 of the consolidated financial statements, which indicates that the Company has an accumulated deficit of $46,702,000 as at December 31, 2018. As stated in Note 1 to the consolidated financial statements, this condition, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that casts substantial doubt on the Company’s ability to continue as a going concern.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Canarc Resource Corp.
Form 20-F
104
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Chartered Professional Accountants
We have served as the Company's auditor since 2008.
Vancouver, Canada
March 21, 2019
Canarc Resource Corp.
Form 20-F
105
CANARC RESOURCE CORP.
Consolidated Statements of Financial Position

(expressed in thousands of United States dollars)

       
    December 31,
  Notes  2015  2014
       
ASSETS      
       
CURRENT ASSETS      
Cash   $                  354 $                  675
Receivables and prepaids 15 82 83
Total Current Assets   436 758
       
NON-CURRENT ASSETS      
Restricted cash 7(a)(i) 69 -
Mineral property interests 7 11,411 11,804
Equipment 8 25 2
Total Non-Current Assets   11,505 11,806
Total Assets   $             11,941 $             12,564
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
       
CURRENT LIABILITIES      
Accounts payable and accrued liabilities 12 and 15 $                  952 $                  914
Derivative liability, current portion 6 and 10 58 -
Total Current Liabilities   1,010 914
       
LONG TERM LIABILITIES      
Derivative liability, long term portion 6 and 10 117 -
Total Liabilities   1,127 914
       
SHAREHOLDERS' EQUITY      
Share capital 13 64,537 62,912
Reserve for share-based payments   530 681
Accumulated other comprehensive loss   (3,339) (1,624)
Deficit   (50,914) (50,319)
Total Shareholders' Equity   10,814 11,650
Total Liabilities and Shareholders' Equity   $             11,941 $             12,564

 
 
 
 
 
  December 31,
 
 
 
Notes
 
 
 2018
 
 
 2017
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
Cash
 
 
 
 $2,329 
 $4,304 
Marketable securities
 
7(a) and 8
 
  719 
  787 
Receivables and prepaids
  14 
  87 
  100 
Promissory note receivable
  6 
  59 
  - 
Total Current Assets
    
  3,194 
  5,191 
 
    
    
    
NON-CURRENT ASSETS
    
    
    
Mineral property interests
 
7(b) and 9
 
  14,237 
  14,465 
Equipment
  10 
  80 
  107 
Total Non-Current Assets
    
  14,317 
  14,572 
Total Assets
    
 $17,511 
 $19,763 
 
    
    
    
LIABILITIES AND SHAREHOLDERS' EQUITY
    
    
    
 
    
    
    
CURRENT LIABILITIES
    
    
    
Accounts payable and accrued liabilities
 
11(b) and 14
 
 $262 
 $158 
Flow through premium liability
  11(c)
  - 
  54 
Deferred royalty liability, current
 
7(b) and 11(d)
 
  35 
  35 
Total Current Liabilities
    
  297 
  247 
 
    
    
    
LONG TERM LIABILITIES
    
    
    
Deferred royalty liability, long term
 
7(b) and 11(d)
 
  130 
  136 
Total Liabilities
    
  427 
  383 
 
    
    
    
SHAREHOLDERS' EQUITY
    
    
    
Share capital
  12(b)
  66,305 
  66,328 
Reserve for share-based payments
    
  734 
  1,101 
Accumulated other comprehensive loss
    
  (3,253)
  (1,995)
Deficit
    
  (46,702)
  (46,054)
Total Shareholders' Equity
    
  17,084 
  19,380 
Total Liabilities and Shareholders' Equity
    
 $17,511 
 $19,763 
Refer to the accompanying notes to the consolidated financial statements.

Approved on behalf of the Board:

/s/            Bradford Cooke /s/           Martin Burian
   
Director Director

Canarc Resource Corp.
Form 20-F
106
CANARC RESOURCE CORP.

Consolidated Statements of Comprehensive Loss

(Loss) Income

(expressed in thousands of United States dollars, except per share amounts)

         
     Years ended December 31,
  Notes 2015 2014 2013
         
Expenses:        
Amortization   $                        1 $                        1 $                        1
Corporate development 14 42 345 19
Employee and director remuneration 15 489 514 452
General and administrative 14 and 15 194 290 223
Shareholder relations   91 227 111
Share-based payments 13(c) and 15 161 209 72
         
Loss before the undernoted   (978) (1,586) (878)
         
Interest and other income   3 20 -
Flow through financing costs 12 (4) - -
Gain from debt settlement 13(b)(ii) 54 - -
Gain from derivative liability 10 13 - -
Derecognition of accounts payable 12 - - 99
Derecognition of flow-through obligations 12 - - 213
Interest and finance charges 11 - (1) (17)
Foreign exchange (loss) gain   (20) 11 4
Write-down of long term investments 9 - - (91)
Write-off of receivable and tax recoveries 15 - - (54)
Write-off of promissory notes receivable   - (275) -
Write-off of mineral property interests, net of recoveries7(a)(iii) - - (653)
         
Net loss for the year   (932) (1,831) (1,377)
         
Other comprehensive loss:        
Items that will not be reclassified into profit or loss:        
Foreign currency translation adjustment   (1,715) (922) (764)
         
Comprehensive loss for the year   $              (2,647) $                (2,753) $                (2,141)
         
         
Basic and diluted loss per share   $                (0.01) $                  (0.01) $                  (0.01)
         
Weighted average number of common shares outstanding 164,670,698 148,771,663 113,830,108

 
 
 
 
 
Years ended December 31,
 
 
 
Notes
 
 
2018
 
 
2017
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Amortization
  10 
 $24 
 $14 
 $- 
Corporate development
 
13 and 14
 
  49 
  57 
  136 
Employee and director remuneration
  14 
  590 
  792 
  461 
General and administrative
 
13 and 14
 
  223 
  236 
  193 
Shareholder relations
    
  52 
  171 
  311 
Share-based payments
 
12(c) and 14
 
  118 
  366 
  301 
 
    
    
    
    
Loss before the undernoted
    
  (1,056)
  (1,636)
  (1,402)
 
    
    
    
    
Interest and other income
    
  44 
  52 
  28 
Change in fair value of marketable securities
  8 
  (140)
  (293)
  3,205 
Flow through financing costs
  11(b)
  (4)
  - 
  - 
Gain from debt settlement
  11(a)
  - 
  - 
  108 
Interest and finance charges
  11(d)
  (30)
  (23)
  - 
Foreign exchange (loss) gain
    
  (156)
  - 
  16 
Recovery of promissory note receivable
  6 
  152 
  - 
  10 
Recovery (write off) of mineral property interest
 
9(a)(iii) and (b)(iii)
  12 
  (67)
  - 
Write off of equipment
  10 
  (1)
  - 
  - 
 
    
    
    
    
 
Net (loss) income from continuing operations before income tax
 
  (1,179)
  (1,967)
  1,965 
 
    
    
    
    
Income tax recovery from continuing operations
  11(c)
  54 
  7 
  - 
 
    
    
    
    
 
Net (loss) income from continuing operations
 
  (1,125)
  (1,960)
  1,965 
 
    
    
    
    
Net income from discontinued operations
  7(a)
  - 
  - 
  4,826 
 
    
    
    
    
 
    
    
    
    
Net (loss) income for the year
    
  (1,125)
  (1,960)
  6,791 
 
    
    
    
    
Other comprehensive income (loss):
    
    
    
    
Foreign currency translation adjustment
    
  (1,258)
  1,274 
  70 
 
    
    
    
    
Comprehensive (loss) income for the year
    
 $(2,383)
 $(686)
 $6,861 
 
    
    
    
    
Basic and diluted (loss) earnings per share:
    
    
    
    
 
    
    
    
    
Continuing operations:
    
    
    
    
Basic
    
 $(0.01)
 $(0.01)
 $0.01 
Diluted
    
 $(0.01)
 $(0.01)
 $0.01 
 
    
    
    
    
Discontinued operations:
    
    
    
    
Basic
    
 $- 
 $- 
 $0.02 
Diluted
    
 $- 
 $- 
 $0.02 
 
    
    
    
    
 
Weighted average number of common shares outstanding:
 
    
    
Basic
  12(e)
  218,460,355 
  218,473,845 
  211,483,671 
Diluted
  12(e)
  218,460,355 
  218,473,845 
  212,674,296 
Refer to the accompanying notes to the consolidated financial statements.

Canarc Resource Corp.
Form 20-F
107
CANARC RESOURCE CORP.

Consolidated Statements of Changes in Shareholders’ Equity

(expressed in thousands of United States dollars)

            
        Accumulated    
  Share Capital  Reserve for  Other    
  Number of    Share-Based  Comprehensive    
  Shares Amount  Payments Income (Loss)  Deficit Total
            
Balance, December 31, 2012110,242,171 $           59,682 $                   836 $                                 62 $         (47,526) $               13,054
            
Private placement, net of share issue costs1,600,000 155 - - - 155
Property acquisition2,000,000 196 - - - 196
Exercise of stock options769,000 116 (40) - - 76
Exercise of share appreciation rights207,024 29 (34) - 5 -
Share-based payments- - 72 - - 72
Expiry of stock options- - (236) - 236 -
Other comprehensive income:           
Foreign currency translation adjustment- - (8) (764) 8 (764)
Net loss for the year- - - - (1,377) (1,377)
Balance, December 31, 2013114,818,195 60,178 590 (702) (48,654) 11,412
            
Private placement, net of share issue costs42,618,110 2,780 - - - 2,780
Share-based payments- - 209 - - 209
Expiry of stock options- - (168) - 168 -
Finders fee warrants- (46) 46 - - -
Other comprehensive income:           
Foreign currency translation adjustment- - 4 (922) (2) (920)
Net loss for the year- - - - (1,831) (1,831)
Balance, December 31, 2014157,436,305 62,912 681 (1,624) (50,319) 11,650
            
Acquisition of subsidary (Note 6)19,000,000 1,017 - - - 1,017
Private placement, net of share issue costs13,165,552 523 - - - 523
Shares for debt settlement2,018,700 106 - - - 106
Share-based payments- - 161 - - 161
Cancellation and expiration of stock options- - (243) - 243 -
Finders fee warrants- (21) 21 - - -
Modification of finders fee warrants- - 5 - (5) -
Expiry of finders fee warrants- - (97) - 97 -
Other comprehensive income:           
Foreign currency translation adjustment- - 2 (1,715) 2 (1,711)
Net loss for the year- - - - (932) (932)
Balance, December 31, 2015191,620,557 $           64,537 $                   530 $                       (3,339) $          (50,914) $                10,814

 
 
 
 
 
 
 
 
 
 
 
 Accumulated
 
 
 
 
 
 
 
 
 
  Share Capital
 
 
 Reserve for
 
 
 Other
 
 
 
 
 
 
 
 
 
 Number of
 
 
 
 
 
 Share-Based
 
 
 Comprehensive
 
 
 
 
 
 
 
 
 
 Shares
 
 
Amount
 
 
 Payments
 
 
Income (Loss)
 
 
 Deficit
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2015
  191,620,557 
 $64,537 
 $530 
 $(3,339)
 $(50,914)
 $10,814 
Private placement, net of share issue costs
  22,699,596 
  1,440 
  - 
  - 
  - 
  1,440 
Finders fee shares
  311,111 
  26 
  - 
  - 
  - 
  26 
Property acquisition (Note 12(b)(iii))
  250,000 
  19 
  - 
  - 
  - 
  19 
Exercise of stock options
  1,000,000 
  115 
  (54)
  - 
  - 
  61 
Share-based payments
  - 
  - 
  301 
  - 
  - 
  301 
Cancellation and expiration of stock options
  - 
  - 
  (26)
  - 
  26 
  - 
Exercise of warrants
  1,250,000 
  77 
  - 
  - 
  - 
  77 
Exercise of finder fee warrants
  58,333 
  6 
  (2)
  - 
  - 
  4 
Finders fee warrants
  - 
  (10)
  10 
  - 
  - 
  - 
Other comprehensive income (loss):
    
    
    
    
    
    
Foreign currency translation adjustment
  - 
  - 
  - 
  70 
  4 
  74 
Net income for the year
  - 
  - 
  - 
  - 
  6,791 
  6,791 
Balance, December 31, 2016
  217,189,597 
  66,210 
  759 
  (3,269)
  (44,093)
  19,607 
Private placement, net of share issue costs
  3,846,154 
  274 
  - 
  - 
  - 
  274 
Common share buy-back under normal course issuer bid (Note 12(b)(ii))
  (2,558,500)
  (168)
  - 
  - 
  - 
  (168)
Exercise of share appreciation rights
  301,893 
  23 
  (23)
  - 
    
  - 
Share-based payments
  - 
  - 
  366 
  - 
  - 
  366 
Cancellation and expiration of stock options
  - 
  - 
  (12)
  - 
  12 
  - 
Finders fee warrants
  - 
  (11)
  11 
  - 
  - 
  - 
Other comprehensive income (loss):
    
    
    
    
    
    
Foreign currency translation adjustment
  - 
  - 
  - 
  1,274 
  (13)
  1,261 
Net loss for the year
  - 
  - 
  - 
  - 
  (1,960)
  (1,960)
Balance, December 31, 2017
  218,779,144 
  66,328 
  1,101 
  (1,995)
  (46,054)
  19,380 
Common share buy-back under normal course issuer bid (Note 12(b)(i) and (ii))
  (524,000)
  (21)
  - 
  - 
  - 
  (21)
Property acquisition (Note 12(b)(i))
  100,000 
  4 
  - 
  - 
  - 
  4 
Share issue expenses
  - 
  (6)
  - 
  - 
  - 
  (6)
Share-based payments
  - 
  - 
  118 
  - 
  - 
  118 
Cancellation and expiration of stock options
  - 
  - 
  (407)
  - 
  407 
  - 
Expiration of finders fee warrants
  - 
  - 
  (70)
  - 
  70 
  - 
Other comprehensive income (loss):
    
    
    
    
    
    
Foreign currency translation adjustment
  - 
  - 
  (8)
  (1,258)
  - 
  (1,266)
Net loss for the year
  - 
  - 
  - 
  - 
  (1,125)
  (1,125)
Balance, December 31, 2018
  218,355,144 
 $66,305 
 $734 
 $(3,253)
 $(46,702)
 $17,084 

Refer to the accompanying notes to the consolidated financial statements.

Canarc Resource Corp.
Form 20-F
108
CANARC RESOURCE CORP.

Consolidated Statements of Cash Flows

(expressed in thousands of United States dollars)

        
    Years ended December 31,
   2015 2014 2013
        
Cash provided from (used by):       
        
Operations:       
Net loss for the year  $             (932) $            (1,831) $            (1,377)
Items not involving cash:       
Accrued interest  - (15) 17
Amortization  1 1 1
Share-based payments  161 209 72
Flow through financing costs  2 - -
Derecognition of accounts payable  - - (99)
Derecognition of flow-through obligations  - - (213)
Gain from debt settlement  (54) - -
Gain on derivative liability  (13) - -
Write-down of long term investment  - - 91
Write-off of promissory notes receivable  - 275 -
Write-off of mineral property interest  - - 653
Write-off of receivable and tax recoveries  - - 54
   (835) (1,361) (801)
Changes in non-cash working capital items:       
Receivables and prepaids  54 22 11
Accounts payable and accrued liabilities  197 (26) 322
Cash used by operating activities  (584) (1,365) (468)
        
Financing:       
Issuance of common shares, net of share issuance costs 523 2,780 231
Proceeds from demand loans  - - 126
Repayment of demand loans  - (128) -
Cash provided from financing activities  523 2,652 357
        
Investing:       
Acquisition of subsidiary (Note 6)  8 - -
Restricted cash  69 - -
Promissory notes receivables  - (260) -
Mineral property interests, net of recoveries  (337) (402) (9)
Cash used by investing activities  (260) (662) (9)
        
(Decrease) increase in cash  (321) 625 (120)
Cash, beginning of year  675 50 170
        
Cash, end of year  $               354 $                675 $                  50

 
 
 
 
 
Years ended December 31,
 
 
 
Notes
 
 
2018
 
 
2017
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash provided from (used by):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income from continuing operations
 
 
 
 $(1,125)
 $(1,960)
 $1,965 
Items not involving cash:
 
 
 
    
    
    
Accrued interest
 
 
 
  30 
  23 
  - 
Amortization
 
 
 
  24 
  14 
  - 
Change in fair value of marketable securities
 
 
 
  140 
  293 
  (3,205)
Derecognition of accounts payable
 
 
 
  - 
  - 
  (3)
Flow through financing costs
 
 
 
  4 
  - 
  - 
Gain from debt settlement
 
 
 
  - 
  - 
  (105)
Income tax recovery
 
 
 
  (54)
  (7)
  - 
Recovery of promissory notes receivable
 
 
 
  (152)
  - 
  (10)
Share-based payments
 
 
 
  118 
  366 
  301 
Write off of mineral property interest
��
 
 
  - 
  67 
  - 
Write-off of equipment
 

  1 
  - 
  - 
 
  (1,014)
  (1,204)
  (1,057)
Changes in non-cash working capital items:
 
 
 
    
    
    
Receivables and prepaids
 
 
 
  5 
  42 
  (91)
Accounts payable and accrued liabilities
 

  88 
  69 
  (923)
Operating cash flow used by continuing operations
 
 
 
  (921)
  (1,093)
  (2,071)
Operating cash flow used by discontinued operations
  7(a)
  - 
  - 
  (55)
Net cash used by operating activities
    
  (921)
  (1,093)
  (2,126)
 
    
    
    
    
Financing:
    
    
    
    
Issuance of common shares, net of share issuance costs
    
  - 
  331 
  1,466 
Exercise of stock options
    
  - 
  - 
  61 
Exercise of warrants
    
  - 
  - 
  81 
Share buyback under normal course issuer bid
    
  (27)
  (168)
  - 
Cash (used by) provided from financing activities
    
  (27)
  163 
  1,608 
 
    
    
    
    
Investing:
    
    
    
    
Mineral property interests, net of recoveries
    
  (841)
  (3,164)
  (198)
Proceeds from optioned mineral property interest
    
  12 
  - 
  - 
Deferred royalty payment
  11(d)
  (35)
  (35)
  - 
Acquisition of marketable securities
  8 
  (289)
  (175)
  (81)
Proceeds from disposition of marketable securities
  8 
  154 
  104 
  8,931 
Proceeds from promissory note receivable
  6 
  94 
  - 
  - 
Expenditures for equipment
  10 
  (6)
  (121)
  - 
 
Cash (used by) provided from investing activities from continuing operations
 
  (911)
  (3,391)
  8,652 
Cash used by investing activities from discontinued operations
  7(a)
  - 
  - 
  (409)
Net cash (used by) provided from investing activities
    
  (911)
  (3,391)
  8,243 
 
    
    
    
    
Unrealized foreign exchange (loss) gain on cash
    
  (116)
  546 
  - 
 
    
    
    
    
(Decrease) increase in cash
    
  (1,975)
  (3,775)
  7,725 
Cash, beginning of year
    
  4,304 
  8,079 
  354 
 
    
    
    
    
Cash, end of year
    
 $2,329 
 $4,304 
 $8,079 
Refer to the accompanying notes to the consolidated financial statements.

Canarc Resource Corp.
Form 20-F
109
CANARC RESOURCE CORP.

Consolidated Statements of Cash Flows

(expressed in thousands of United States dollars)

         
    

 

 

Years ended December 31,

 

 

  Notes 2015 2014 2013
         
         
Non-cash financing and investing activities:        
         
Issuance of shares for:        
Mineral property interests 7(a)(ii) $                      - $                      - $                  196
Shares for debt settlement 13(b)(ii) 106 - -
         
Fair value of finders fee warrants from:        
Issuance of finders fee warrants 13 21 46 -
Modification of finders fee warrants 13(d) 5 - -
         
Expiration of:        
Stock options   243 168 236
Finders fee warrants   97 - -
         
Fair value allocated to common shares issued on exercise of:      
Stock options 13 - - 40
Share appreciation rights 13 - - 29
         
         
         
Income taxes paid   - - -
         
Interest received   - 5 -
Interest paid   - 7 -
         

  
 
Years ended December 31,
 
 Notes
 
2018
 
 
2017
 
 
2016
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
Non-cash financing and investing activities: 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
Fair value of deferred royalty liability7(b) and 11(d)
 $- 
 $183 
 $- 
 
    
    
    
Fair value of common shares issued for: 
    
    
    
Mineral property interests12(b)(i) and (iii)
  4 
  - 
  19 
Finders fees12(b)(iii)
  - 
  - 
  26 
 
    
    
    
 
Fair value allocated to common shares issued on exercise of:
 
    
    
Share appreciation rights12(b)(ii)
  - 
  23 
  - 
Stock options12(b)(iii)
  - 
  - 
  54 
Finders fee warrants12(b)(iii)
  - 
  - 
  2 
 
    
    
    
Fair value of finders fee warrants from: 
    
    
    
Issuance of finders fee warrants12(b)(ii) and (iii)
  - 
  11 
  10 
 
    
    
    
Expiration of: 
    
    
    
Stock options 
  407 
  12 
  26 
Finders fee warrants 
  70 
  - 
  - 
 
    
    
    
 
    
    
    
 
    
    
    
Income taxes paid 
  - 
  - 
  - 
 
    
    
    
Interest received 
  - 
  - 
  - 
Interest paid 
  - 
  - 
  - 
Refer to the accompanying notes to the consolidated financial statements.

Canarc Resource Corp.
Form 20-F
110
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

1.Nature of Operations and Going Concern

1.    
Nature of Operations and Going Concern
Canarc Resource Corp. (the “Company”), a company incorporated under the laws of British Columbia on January 22, 1987, is in the mineral exploration business and has not yet determined whether its mineral property interests contain reserves. The recoverability of amounts capitalized for mineral property interests is dependent upon the existence of reserves in its mineral property interests, the ability of the Company to arrange appropriate financing and receive necessary permitting for the exploration and development of its mineral property interests, and upon future profitable production or proceeds from the disposition thereof. The address of the Company’s registered office is #910 – 800 West Pender Street, Vancouver, BC, Canada, V6C 2V6 and its principal place of business is #301 – 700 West Pender Street, Vancouver, BC, Canada, V6C 1G8.

The Company has no operating revenues, has incurred a significant net lossesloss of $932,000 for the year ended December 31, 2015 (2014 - $1.8$1.1 million in 2018 (2017 – net loss of $2.0 million and 20132016 - $1.4net income of $6.8 million), and has a deficit of $51$46.7 million as at December 31, 2015 (20142018 (2017 - $50.3$46.1 million and 20132016 - $48.7$44.1 million). Furthermore,In addition, the Company has a working capital deficiency of $574,000 (2014 - $156,000).negative cash flows from operations. These consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidationrepayment of liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent on the ability of the Company to raise debt or equity financings, and the attainment of profitable operations. Management would needcontinues to find opportunities to raise the necessary capital to meet its planned business objectives and continues to seek financing opportunities. There can be no assurance that management’s plans will be successful. These matters indicate the existence of material uncertainties that cast substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern, and such adjustments could be material.

2.Basis of Presentation

(a)Statement of compliance:

2.    
Basis of Presentation
(a)      
Statement of compliance:
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

(b)Approval of consolidated financial statements:

(b)     
Approval of consolidated financial statements:
These consolidated financial statements were approved by the Company’s Board of Directors on March 23, 2016.

(c)Basis of presentation:

21, 2019.

Canarc Resource Corp.
Form 20-F
111
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
2.
Basis of Presentation (continued)
(c)     
Basis of presentation:
These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments which are measured at fair value, as disclosed in Note 5.

In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
Canarc Resource Corp.Page 7

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014

(d)    
Functional currency and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

2.Basis of Presentation (continued)

(d)Functional currency and presentation currency:

presentation currency:

The Company’s functional currency of the Company and its subsidiaries is the Canadian dollar, and accounts denominated in currencies other than the Canadian dollar have been translated as follows:

ŸMonetary assets and liabilities at the exchange rate at the consolidated statement of financial position date;
ŸNon-monetary assets and liabilities at the historical exchange rates, unless such items are carried at fair value, in which case they are translated at the date when the fair value was determined;
ŸShareholders’ equity items at historical exchange rates; and
ŸRevenue and expense items at the rate of exchange in effect on the transaction date.

• 
Monetary assets and liabilities at the exchange rate at the consolidated statement of financial position date;
• 
Non-monetary assets and liabilities at the historical exchange rates, unless such items are carried at fair value, in which case they are translated at the date when the fair value was determined;
• 
Shareholders’ equity items at historical exchange rates; and
• 
Revenue and expense items at the rate of exchange in effect on the transaction date.
The Company’s presentation currency is the United States dollar. For presentation purposes, all amounts are translated from the Canadian dollar functional currency to the United States dollar presentation currency for each periodperiod. Statement of financial position accounts, with the exception of equity, are translated using the exchange rate at the end of each reporting period.

period, transactions on the statement of comprehensive income (loss) are recorded at the average rate of exchange during the period, and equity accounts are translated using historical actual exchange rates.

Exchange gains and losses arising from translation to the Company’s presentation currency are recorded as cumulative translation adjustment, which is included in accumulated other comprehensive income (loss).

(e)Critical accounting estimates and judgements:

(e) 
Critical accounting estimates and judgements:
The preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates, assumptions and judgements that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements along with the reported amounts of revenues and expenses during the period. Actual results may differ from these estimates and, as such, estimates and judgements and underlying assumptions are reviewed on an ongoing basis. Revisions are recognized in the period in which the estimates are revised and in any future periods affected.

Significant areas requiring the use of management estimates relate to determining the recoverability of promissory notes receivable, mineral property interests, receivables and long-term investments; valuation of certain marketable securities; the determination of accrued liabilities; the fair value of derivative liabilities; accrued site remediation; amount of flow-through obligations andobligations; fair value of deferred royalty liability; recognition of deferred income tax liability; the variables used in the determination of the fair value of stock options granted and finder’s fees warrants issued;issued or modified; and the recoverability of deferred tax assets. While management believes the estimates are reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.

Canarc Resource Corp.
Form 20-F
112
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
2.            
Basis of Presentation (continued)
(e) 
Critical accounting estimates and judgements: (continued)
The Company applies judgment in assessing the functional currency of each entity consolidated in these consolidated financial statements. The functional currency of the Company and its subsidiaries is measureddetermined using the currency of the primary economic environment in which that entity operates.

The Company applies judgment in assessing whether material uncertainties exist that would cast substantial doubt as to whether the Company could continue as a going concern.

Canarc Resource Corp.Page 8

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

2.Basis of Presentation (continued)

(e)Critical accounting estimates and judgements: (continued)

At the end of each reporting period, the Company assesses each of its mineral resource properties to determine whether any indication of impairment exists. Judgment is required in determining whether indicators of impairment exist, including factors such as: the period for which the Company has the right to explore; expected renewals of exploration rights; whether substantive expenditures on further exploration and evaluation of resource properties are budgeted or planned; and results of exploration and evaluation activities on the exploration and evaluation assets. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

In the acquisition of Oro Silver Resources Ltd.American Innovative Minerals, LLC (“Oro Silver”AIM”), in March 2017, judgement was required to determine if the acquisition represented either a business combination or an asset purchase. More specifically, management concluded that Oro SilverAIM did not represent a business as the assets acquired were not an integrated set of activities with inputs, processes and outputs. Since it was concluded that the acquisition represented the purchase of assets, there was no goodwill generatedrecognized on the transactiontransactions and acquisition costs were capitalized to the assets purchased rather than expensed. The fair values of the net assets acquired were determined using estimates and judgements. (Note 6)7).

Canarc Resource Corp.Page 9

Judgment is applied in determining whether disposal groups or cash generating unit represent a component of the entity, the results of which should be recorded in discontinued operations in the consolidated statements of comprehensive income (loss) and cash flows.
(f)            
New accounting standards and recent pronouncements:
The standards listed below include only those which the Company reasonably expects may be applicable to the Company in the current period and at a future date. The impact is not expected to have a material impact on the statements.
Canarc Resource Corp.
Form 20-F
113
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

2.Basis of Presentation (continued)

(f)New accounting standards and recent pronouncements:

(i)

2.            
Basis of Presentation (continued)
(f)            
New accounting standards and recent pronouncements: (continued)
The following standard has become effective during the current year:

Annual Improvements 2010-2012 Cycle

Makes amendments to the following standards:

·IFRS 2 — Amends the definitions of “vesting condition” and “market condition” and adds definitions for “performance condition” and “service condition”
·IFRS 3 — Require contingent consideration that is classified as an asset or a liability to be measured at fair value at each reporting date
·IFRS 8 — Requires disclosure of the judgments made by management in applying the aggregation criteria to operating segments, clarify reconciliations of segment assets only required if segment assets are reported regularly
·IFRS 13 — Clarify that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure certain short-term receivables and payables on an undiscounted basis (amends basis for conclusions only)
·IAS 16 and IAS 38 — Clarify that the gross amount of property, plant and equipment is adjusted in a manner consistent with a revaluation of the carrying amount
·IAS 24 — Clarify how payments to entities providing management services are to be disclosed.

(ii)The standard listed below include only those which the Company reasonably expects may be applicable to the Company at a future date. The Company is currently assessing the impact of the standard on the consolidated financial statements.

The following standardstandards will become effective in future periods:

(i)            
IFRS 9Financial Instruments (2014)

16 Leases

This new standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both the lessee and the lessor. The new standard introduces a single lessee accounting model that requires the recognition of all assets and liabilities arising from a lease.
The main features of the new standard are as follows:
● 
An entity identifies as a lease a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
● 
A lessee recognizes an asset representing the right to use the leased asset, and a liability for its obligation to make lease payments. Exceptions are permitted for short-term leases and leases of low-value assets.
● 
A lease asset is initially measured at cost, and is then depreciated similarly to property, plant and equipment. A lease liability is initially measured at the present value of the unpaid lease payments.
● 
A lessee presents interest expense on a finalized versionlease liability separately from depreciation of IFRS 9, which contains accounting requirementsa lease asset in the statement of profit or loss and other comprehensive income.
● 
A lessor continues to classify its leases as operating leases or finance leases, and to account for financial instruments, replacing IAS 39Financial Instruments: Recognition and Measurement. them accordingly.
● 
A lessor provides enhanced disclosures about its risk exposure, particularly exposure to residual-value risk.
The new standard containssupersedes the requirements in IAS 17 Leases, IFRIC 4 Determining Whether an Arrangement Contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27 Evaluating the following areas:

·Classification and measurement. Financial assets are classified by reference to the business model within which they are held and their contractual cash flow characteristics. The 2014 version of IFRS 9 introduces a “fair value through other comprehensive income” category for certain debt instruments. Financial liabilities are classified in a similar manner to under IAS 39; however, there are differences in the requirements applying to the measurement of an entity's own credit risk.
·Impairment. The 2014 version of IFRS 9 introduces an “expected credit loss” model for the measurement of the impairment of financial assets, so it is no longer necessary for a credit event to have occurred before a credit loss is recognized.

Substance of Transactions Involving the Legal Form of a Lease.
Canarc Resource Corp.Page 10

The new standard is effective for annual periods beginning on or after January 1, 2019, with earlier application permitted for entities that also apply IFRS 15 Revenue from Contracts with Customers.
Canarc Resource Corp.
Form 20-F
114
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

2.Basis of Presentation (continued)

(f)New accounting standards and recent pronouncements: (continued)

2.            
Basis of Presentation (continued)
(f)            
New accounting standards and recent pronouncements: (continued)
(ii)            (continued)

·Hedge accounting. Introduces a new hedge accounting model that
The Conceptual Framework for Financial Reporting
The revised Conceptual Framework, issued by the International Accounting Standards Board (IASB) in March 2018, replaces the Conceptual Framework for Financial Reporting (issued by the IASB in September 2010).
The revised Conceptual Framework includes the following:
● 
Concepts on measurement, including factors to consider when selecting a measurement basis.
● 
Concepts on presentation and disclosure, including when to classify income and expenses in other comprehensive income.
● 
Guidance on determining the boundary of a reporting entity.
● 
Updated definitions of an asset and a liability.
● 
Updated criteria for recognizing assets and liabilities in financial statements, and guidance on when to remove them.
● 
Clarification on the roles of stewardship, prudence, measurement uncertainty and substance over form.
The IASB and the IFRS Interpretations Committee began using the revised Conceptual Framework immediately after it was issued. The effective date for stakeholders who develop an accounting policy based on the Conceptual Framework is designed to be more closely aligned with how entities undertake risk management activities when hedging financial and non-financial risk exposures.
·Derecognition. The requirements for the derecognition of financial assets and liabilities are carried forward from IAS 39.

Applicable to the Company's annual periods beginning on or after January 1, 2018.

3.Significant Accounting Policies

2020. Earlier application is permitted.

(iii) 
Annual Improvements to IFRS Standards 2015–2017 Cycle
The following standards have been revised to incorporate amendments:
● 
IFRS 3 Business Combinations – The amendments clarify that when an entity obtains control of a business that is a joint operation, it applies the requirements for a business combination achieved in stages, including remeasuring previously held interests in that business.
● 
IFRS 11 Joint Arrangements – The amendments clarify that when an entity obtains joint control of a business that is a joint operation, it does not remeasure previously held interests in that business.
● 
IAS 12 Income Taxes – The amendments clarify that an entity recognizes income tax consequences of dividends in profit or loss, other comprehensive income or equity, depending on where the entity recognized the originating transaction or event that generated the distributable profits giving rise to the dividend.
● 
IAS 23 Borrowing Costs – The amendments clarify that an entity treats as general borrowings any borrowings made specifically to obtain a qualifying asset that remain outstanding when the asset is ready for its intended use or sale.
The standards are effective for annual periods beginning on or after January 1, 2019.
Canarc Resource Corp.
Form 20-F
115
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
2.            
Basis of Presentation (continued)
(f)            
New accounting standards and recent pronouncements: (continued)
(iv)            
Prepayment Features with Negative Compensation (Amendments to IFRS 9 Financial Instruments)
IFRS 9 Financial Instruments has been revised to incorporate amendments issued by the International Accounting Standards Board (IASB) in October 2017. The amendments clarify that a financial asset that would otherwise have contractual cash flows that are solely payments of principal and interest but do not meet that condition only as a result of a prepayment feature with negative compensation, may be measured at amortized cost or at fair value through other comprehensive income when eligibility conditions are met.
The amendment is effective for annual periods beginning on or after January 1, 2019.
(v)            
IFRIC 23 Uncertainty over Income Tax Treatments
This new Interpretation, issued by the International Accounting Standards Board (IASB) in June 2017, clarifies how to apply the recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments.
The main features of IFRIC 23 are as follows:
● 
An entity considers an uncertain tax treatment separately or together with other uncertain tax treatments depending on which approach better predicts the resolution of the uncertainty.
● 
Taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates are determined based on whether it is probable that a taxation authority will accept an uncertain tax treatment.
● 
An entity reassesses judgments or estimates relating to uncertain tax treatments when facts and circumstances change.
The interpretation is effective for annual periods beginning on or after January 1, 2019.
Canarc Resource Corp.
Form 20-F
116
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
3.            
Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

(a)Basis of consolidation:

(a)            
Basis of consolidation:
These consolidated financial statements include the accounts of the Company and its wholly-owendwholly-owned subsidiaries including New Polaris Gold Mines Ltd., Oro Silver Resources Ltd. (“Oro Silver”) and Minera Oro Silver de Mexico SA de CV (“Minera Oro Silver”).AIM. The financial statements of subsidiaries are included in the consolidated financial statements from the date control commences until the date control ceases. All significant intercompany transactions and balances are eliminated on consolidation.

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

(b)Financial instruments:

(i)

(b) 
Financial assets:

instruments:

The Company classifies itshas adopted IFRS 9Financial Instruments(“IFRS 9”) as of January 1, 2018. IFRS 9 replaces IAS 39Financial Instruments: Recognition and Measurement(“IAS 39”). IFRS 9 utilizes a revised model for the classification and measurement of financial assetsinstrument and a single, forward-looking “expected loss” impairment model. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward in IFRS 9, with the following categories:exception that for financial liabilities designated at fair value through profit or loss, (“FVTPL”), loans and receivables, held-to-maturity (“HTM”) and available-for-sale (“AFS”). The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at initial recognition.

Financial assets at FVTPL

Financial assets at FVTPL are initially recognized at fair value with changeschange in fair value recorded through profit or loss. Cash and restricted cash are includedthat is attributable to changes in this categorycredit risk of that liability is presented in other comprehensive (loss) income instead of in statement of operations as previously applied.

The Company has classified its financial assets.

instruments as follows under IFRS 9 compared to the Company’s previous accounting policy under IAS 39:
IAS 39IFRS 9
Financial Assets
CashFair value through profit or loss ("FVTPL")FVTPL
Marketable securitiesFVTPLFVTPL
ReceivablesLoans and receivable at amortized costAmortized cost
Financial Liability
Accounts payable and accrued liabilitiesOther financial liabilities under amortized costAmortized cost
Flow through premium liabilityOther financial liabilities under amortized costAmortized cost
Deferred royalty liabilityOther financial liabilities under amortized costAmortized cost
   
Canarc Resource Corp.Page 11

Canarc Resource Corp.
Form 20-F
117
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

3.Significant Accounting Policies (continued)

(b)Financial instruments: (continued)

3.            
Significant Accounting Policies (continued)
(b) 
Financial instruments: (continued)
(i)            
Financial assets: (continued)

Loans

Initial recognition and receivables

Loans and receivables are non-derivativemeasurement

A financial assets with fixedasset is measured initially at fair value plus, for an item not at fair value through profit or determinable paymentsloss, transaction costs that are not quoted in an active market. They aredirectly attributable to its acquisition or issue. On initial recognition, a financial asset is classified as current assets or non-current assets based on their maturity date. Loans and receivables are carriedmeasured at amortized cost less any impairment. Loansor fair value through profit or loss. A financial asset is measured at amortized cost if it meets the conditions that: (i) the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; (ii) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and receivables comprise tradeinterest on the principal amount outstanding; and other receivables.

Held to maturity

These assets are non-derivative(iii) is not designated as fair value through profit or loss.

Subsequent measurement
The subsequent measurement of financial assets with fixed or determinable payments and fixed maturities that the Company’s management has the positive intention and ability to hold to maturity. HTM investments are initially recognizeddepends on their trade-dateclassification as follows:
Financial assets at fair value through profit or loss
Financial assets measured at fair value through profit and loss are carried in the consolidated statements of financial position at fair value with changes in fair value therein, recognized in the consolidated statements of operations and comprehensive (loss) income.
Financial assets measured at amortized cost
A financial asset is subsequently are measured at amortized cost, using the effective interest rate method. If theremethod and net of any impairment allowance, if:
● 
the asset is held within a business whose objective evidence that is to hold assets in order to collect contractual cash flows; and
● 
the investment is impaired, determined by reference to external credit ratings and other relevant indicators,contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.
(ii)            
Derecognition:
A financial asset or, where applicable a part of a financial asset or part of a group of similar financial assets is measured at derecognized when:
● 
the present value of estimated futurecontractual rights to receive cash flows. Any changesflows from the asset have expired; or
● 
the Company has transferred its rights to receive cash flows from the carrying amountasset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either: (a) the Company has transferred substantially all the risks and rewards of the investment, including impairment losses, are recognized in profitasset, or loss. The(b) the Company has no HTM financial assets as at December 31, 2015neither transferred nor retained substantially all the risks and 2014.

Available-for-sale financial assets

AFS financial assets are non-derivatives that are either designated as available-for-sale or not classified in anyrewards of the other financial asset, categories. Changes inbut has transferred control of the fair value of AFS financial assets are recognized as other comprehensive income (loss) and classified as a component of equity. AFS assets include investments in equities of other entities.

Management assesses the carrying value of AFS financial assets at least annually and any impairment charges are also recognized in profit or loss. When financial assets classified as AFS are sold, the accumulated fair value adjustments recognized in other comprehensive income (loss) are included in profit or loss.

asset.
Canarc Resource Corp.Page 12

Canarc Resource Corp.
Form 20-F
118
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

3.Significant Accounting Policies (continued)

(b)Financial instruments: (continued)

(ii)

3.            
Significant Accounting Policies (continued)
(b) 
Financial instruments: (continued)
(iii)            
Financial liabilities:

The Company classifies its financial liabilities in the following categories: FVTPL and other financial liabilities.

Financial liabilities at FVTPL

are recognized when the Company becomes a party to the contractual provisions of the financial instrument. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires. Financial liabilities at FVTPL are initially recognizedclassified as either financial liabilities at fair value with changes in fair value recorded through profit or loss.

Derivatives are initially recognized at their fair value on the date the derivative contract is entered into and are subsequently re-measured at their fair value at each reporting period with changes in the fair value recognized in profitloss or loss.

Liabilities which are to be settled in payable ounces (or the U.S. dollar equivalent) are recorded using the spot price of the commodity.

Other financial liabilities

Other financial liabilities are non-derivatives and are recognized initially at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method. Any difference between the amounts originally received, net of transaction costs, and the redemption value is recognizedcost. All interest-related charges are reported in profit or loss over the period to maturity using the effectivewithin interest method.

Other financial liabilities are classified as current or non-current based on their maturity date. Financial liabilities include trade accounts payable and accrued liabilities.

(iii) expense, if applicable.

(iv)            
Fair value hierarchy:

hierarchy

The Company categorizes financial instruments measured at fair value at one of three levels according to the reliability of the inputs used to estimate fair values. The fair value of financial assets and financial liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Financial assets and liabilities in Level 2 are valued using inputs other than quoted prices for which all significant inputs are based on observable market data. Level 3 valuations are based on inputs that are not based on observable market data.

Canarc Resource Corp.Page 13

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

3.Significant Accounting Policies (continued)

(b)Financial instruments: (continued)

(iv)

(c)            
Impairment of financialnon-financial assets:

The Company assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. An evaluation is made as to whether a decline in fair value is “significant” or “prolonged” based on indicators such as significant adverse changes in the market, economic or legal environment.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

(v) Derecognition of financial assets and liabilities:

Financial assets are derecognized when the investments mature or are sold, and substantially all the risks and rewards of ownership have been transferred. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. Gains and losses on derecognition are recognized within other income and finance costs.

(c)Impairment of non-financial assets:

The carrying amounts of non-current assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If there are indicators of impairment, the recoverable amount of the asset is estimated in order to determine the extent of the impairment. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount and is recorded as an expense in profit or loss.

Canarc Resource Corp.
Form 20-F
119
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
3.            
Significant Accounting Policies (continued)
(c)            
Impairment of non-financial assets: (continued)
The recoverable amount is the higher of an asset’s “fair value less costs to sell” for the asset's highest and best use, and “value-in-use”. Where the asset does not generate cash flows that are independent from other assets, the recoverable amount of the cash-generating unit to which the asset belongs is determined. “Fair value less costs to sell” is determined as the amountprice that would be obtained fromreceived to sell an asset in an orderly transaction between market participants at the salemeasurement date less incremental costs directly attributable to disposal of the asset, in an arm’s length transaction between knowledgeableexcluding financing costs and willing parties.income tax expenses. For mining assets this would generally be determined based on the present value of the estimated future cash flows arising from the continued development, use or eventual disposal of the asset. In assessing these cash flows and discounting them to the present value, assumptions used are those that an independent market participant would consider appropriate. In assessing “value-in-use”, the estimated future cash flows expected to arise from the continuing use of the assets in their present form and from their disposal are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

Canarc Resource Corp.Page 14

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

3.Significant Accounting Policies (continued)

(c)Impairment of non-financial assets: (continued)

For the purposes of impairment testing, mineral property interests are allocated to cash-generating units to which the exploration or development activity relates. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years.periods. A reversal of an impairment loss is recognized immediately in profit or loss.

(d)Mineral property interests:

(d)            
Mineral property interests:
All costs related to investments in mineral property interests are capitalized on a property-by-property basis. Such costs include mineral property acquisition costs and exploration and development expenditures, net of any recoveries. The costs related to a mineral property from which there is production, together with the costs of mining equipment, will be amortized using the unit-of-production method. When there is little prospect of further work on a property being carried out by the Company or its partners or when a property is abandoned or when the capitalized costs are not considered to be economically recoverable, the related property costs are written down to the amount recoverable.

From time to time, the Company may acquire or dispose of a mineral property interest pursuant to the terms of a property option agreement. As the property options are exercisable entirely at the discretion of the optionee, the amounts payable or receivable are not recorded. Property option payments are recorded as property costs or recoveries when the payments are made or received. Proceeds received on the sale or property option of the Company’s property interest is recorded as a reduction of the mineral property cost. The Company recognizes in income those costs that are recovered on mineral property interests when amounts received or receivable are in excess of the carrying amount.

The amounts shown for mineral property interests represent costs incurred to date and include advance net smelter return (“NSR”) royalties, less recoveries and write-downs, and are not intended to reflect present or future values.

(e)Equipment:

Equipment is recorded at cost and, for equipment subject to amortization, the Company uses the declining balance method at rates of up to 30% annually.

Canarc Resource Corp.Page 15

Canarc Resource Corp.
Form 20-F
120
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

3.            
Significant Accounting Policies (continued)
(e)            
Equipment:
Leasehold improvements and office equipment and furnishings are recorded at cost, and are amortized on a double declining basis as follows:
3.Double Declining Rate
Leasehold improvementsSignificant Accounting Policies (continued)20%
Office equipment30%
Office furnishings20%

(f)Proceeds on unit offerings:

(f)            
Proceeds on unit offerings:
Proceeds received on the issuance of units, consisting of common shares and warrants, are first allocated to the fair value of the common shares with any residual value then allocated to warrants.

(g)Non-monetary transactions:

Consideration received on the exercise of warrants is recorded as share capital and any related reserve for share-based payments is transferred to share capital. Upon expiry of the warrants, the recorded fair value of the warrants is transferred from the reserve for share-based payments to deficit.

(g)            
Non-monetary transactions:
Common shares issued for consideration other than cash are valued at their quoted market price at the date of issuance.

(h)Flow-through common shares:

(h)            
Flow-through common shares:
The Company will from time to time, issue flow-through common shares to finance a significant portion of its exploration program. Pursuant to the terms of the flow-through share agreements, these shares transfer the tax deductibility of qualifying resource expenditures to investors. On issuance, the Company bifurcates the flow-through shares into: (i) a flow-through share premium, equal to the estimated premium, if any, investors pay for the flow-through feature, which is recognized as a liability and (ii) share capital. Upon expenses being incurred, the Company derecognizes the liability and recognizes a deferred tax liability for the amount of tax reduction renounced to the shareholders. The premium is recognized as other income and the related deferred tax is recognized as a tax provision.

Proceeds received from the issuance of flow-through shares are restricted to be used only for Canadian resource property exploration expenditures withwithin a two-year period. The portion of the proceeds received but not yet expended at the end of the Company’s period is disclosed separately as flow-through share proceeds.

The Company may also be subject to a Part XII.6 tax on flow-through proceeds renounced under the Look-back Rule, in accordance with the Government of Canada flow-through regulations. When applicable, this tax is accrued as a finance expense until paid.

(i)Share-based payments:

Canarc Resource Corp.
Form 20-F
121
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
3.            
Significant Accounting Policies (continued)
(i)            
Share buy-back:
The Company has implemented a normal course issuer bid whereby the Company would buy back its common shares on the exchange in which its shares are listed at the prevailing market prices. Shares which are purchased would reduce share capital for the cash consideration paid including any associated transaction costs. Common shares which are purchased under the normal course issuer bid are returned to treasury and cancelled.
(j) 
Share-based payments:
The Company has a stock option plan that is described in Note 13(c)12(c). Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The offset to the recorded cost is to the reserve for share-based payments. Consideration received on the exercise of stock options is recorded as share capital and the related reserve for share-based payments is transferred to share capital. Upon expiry, the recorded fair value is transferred from reserve for share-based payments to deficit.

The Company has a share appreciation rights plan, which provides stock option holders the right to receive the number of common shares that are equal in value to the intrinsic value of the stock options at the date of exercise. Amounts transferred from the reserve for share-based payment to share capital are based on the ratio of shares actually issued to the number of stock options originally granted. The remainder is transferred to deficit.

Canarc Resource Corp.Page 16

(k) 
Environmental rehabilitation:
The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of mineral property interests and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future rehabilitation cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to mining assets along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on the same basis as mining assets.
The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to mining assets with a corresponding entry to the rehabilitation provision. The Company’s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.
Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit or loss for the period.
Canarc Resource Corp.
Form 20-F
122
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

3.Significant Accounting Policies (continued)

(j)Environmental rehabilitation:

TheCompa

3.            
nSignificant Accounting Policiesy recogni (continued)zes liabilities forstatutory, contractual,constructive orlegal obligationsassociated with the retirement of mineral property interests andequipment,when those obligations resultfrom the acquisition,construction,development or normal operation ofthe assets.The
(k) 
Environmental rehabilitation: (continued)
The net present valuevalue of future rehabilitation cost estimates arisingrestoration costs arising from the decommissioning of plant and other site preparation workis capitalized to mining assets along witha correspondingincrease in the rehabilitation provisioninthe periodincurred.Discount rates using a pre-taxratesubsequent site damage that reflect the time value of money are used to calculatethe netpresent value.The rehabilitation assetis depreciated on the same basis as mining assets.

TheCompany’s estimates of reclamation costs could change asa result of changesin regulatory requirements,discount rates and assumptions regarding the amount and timing of thefuture expenditures.These changesare recordeddirectly to mining assets with acorresponding entry to the rehabilitation provision. The Company’s estimates are reviewed annuallyforchangesin regulatory requirements, discount rates, effectsofinflationand changesin estimates.

Changesin the net present value, excluding changesin the Company’s estimates of reclamationcosts, are charged to profit orloss forthe period.

Thenet present value ofrestoration costs arising from subsequent site damage thatisincurredis incurred on an ongoing basis during productionongoing basis during production are charged to profit or lossin in the periodincurred.

Thecostsperiod incurred.

The costs of rehabilitationrehabilitation projects thatwereincludedinthat were included in the rehabilitation provisionrehabilitation provision are recordedagainstrecorded against the provisionprovision asincurred.The incurred. The cost of ongoing current programsprograms to prevent aand control pollution is charged against profit or loss as incurred.
(l)            
Earnings (loss) per share:
nd controlpollutionis chargedagainst profit orloss asincurred.

(k)Earnings (loss) per share:

Basic earnings (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common sharesoutstandingshares outstanding during the period. The treasury stock method is used to calculate diluted earnings (loss) per common share amounts. Under the treasury stock method, the weighted average number of common shares outstanding used for the calculation of the diluted per common share amount assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. In the Company’s case, diluted loss per share presented is the same as basic loss per share as the effect of outstanding options and warrants in the loss per common share calculation would be anti-dilutive.

Canarc Resource Corp.Page 17

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands

(m) 
Provisions:
Provisions are recorded when a present legal or constructive obligation exists as a result of United States dollars, except per share amounts)

3.Significant Accounting Policies (continued)

(l)Provisions:

Provisions are recordedwhen apresentlegalor constructive obligation existsas a result ofpastpast eventswhereitisprobable where it is probable that an outflow ofresources embodyingoutflow of resources embodying economic benefitswill will be required to settlesettle the obligation,obligation, and areliablea reliable estimate of the amount of the obligationobligation can be made.

Theamount recognized

The amount recognized as a provisionisprovision is the best estimateestimate of the considerationconsideration required to settlesettle the present obligpresent obligation ation atthe the statement of financial positiondate, takingintoaccountfinancial position date, taking into account the risks and uncertainties surroundinguncertainties surrounding the obligation.Whereobligation. Where a provisionismeasured usingprovision is measured using the cash flowsflows estimated to settlesettle the presentobligation,its carrying obligation, its carrying amountis thepresent value is the present value of those cash flows.Whenflows. When some or allofall of the economic benefits requiredeconomic benefits required to settlesettle a provisionprovision are expectedexpected to be recovered from a thirdparty,the receivableis recognizedthird party, the receivable is recognized as an asset ifitis virtuallycertain that reimbursementwillbe received if it is virtually certain that reimbursement will be received and the amount receivablereceivable canbemeasuredreliably.

(m)Income taxes:

be measured reliably.

(n) 
Income taxes:
The Company follows the asset and liability method for accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and losses carried forward. Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in profit or loss in the period that includes the substantive enactment date. Deferred tax assets are recognized to the extent that recovery is considered probable.

4.Management of Capital

Canarc Resource Corp.
Form 20-F
123
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
4. 
Management of Capital
The Company is an exploration stage company and this involves a high degree of risk. The Company has not determined whether its mineral property interests contain reserves of ore and currently has not earned any revenues from its mineral property interests and, therefore, does not generate cash flows from operations. The Company’s primary source of funds comes from the issuance of share capital and proceeds from debt. The Company has generated cash inflows from the disposition of marketable securities. The Company is not subject to any externally imposed capital requirements.

The Company defines its capital as debt and share capital. Capital requirements are driven by the Company’s exploration activities on its mineral property interests. To effectively manage the Company’s capital requirements, the Company has a planning and budgeting process in place to ensure that adequate funds are available to meet its strategic goals. The Company monitors actual expenses to budget on all exploration projects and overhead to manage costs, commitments and exploration activities.

The Company has in the past invested its capital in liquid investments to obtain adequate returns. The investment decision is based on cash management to ensure working capital is available to meet the Company’s short-term obligations while maximizing liquidity and returns of unused capital.

Canarc Resource Corp.Page 18

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

4.Management of Capital (continued)

Although the Company has been successful at raising funds in the past through the issuance of share capital, it is uncertain whether it will be able to continue this financing in the future. The Company will continue to rely on debt and equity financings to meet its commitments as they become due, to continue exploration work on its mineral property interests, and to meet its administrative overhead costs for the coming periods.

There were no changes in the Company’s approach to capital management during the year ended December 31, 2015.

5.Management of Financial Risk

2018.

5. 
Management of Financial Risk
The Company has classified its cash and marketable securities as financial assets at FVTPL; long-term investments as AFS financial assets; receivables as loansfinancial assets at amortized cost; and receivables; accounts payable and accrued liabilities, as other financial liabilities;flow through premium liability and derivativedeferred royalty liability as FVTPL.

financial liabilities at amortized cost.

The Company’s long-term investment in shares of Aztec Metals Corp. (“Aztec”), a company sharing twoone common directors,director, (“AzMet”) is classified as AFS but does not have aFVTPL. There is no separately quoted market pricevalue for the Company’s investments in an active market and is therefore measured at cost, netthe shares of any write-downs.

AzMet which have $Nil book value.

The fair values of the Company’s receivables and accounts payable and accrued liabilities approximate their carrying values due to the short terms to maturity. Cash isand certain marketable securities are measured at fair values using Level 1 inputs. DerivativeOther marketable securities are measured using Level 3 of the fair value hierarchy. Deferred royalty liability is measured using Level 12 inputs.

Canarc Resource Corp.
Form 20-F
124
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
5. 
Management of Financial Risk (continued)
The Company is exposed in varying degrees to a variety of financial instrument related risks, including credit risk, liquidity risk and market risk which includes foreign currency risk, interest rate risk and other price risk. The types of risk exposure and the way in which such exposure is managed are provided as follows.

(a)Credit risk:

(a)            
Credit risk:
Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations.

The Company's credit risk is primarily attributable to its liquid financial assets including cash. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash with high-credit quality Canadian financial institutions.

Management has reviewed the items comprising the accounts receivable balance which may include amounts receivable from certain related parties, and determined that all accounts are collectible; accordingly, there has been no allowance for doubtful accounts recorded.

Canarc Resource Corp.Page 19

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

5.Management of Financial Risk (continued)

(b)Liquidity risk:

(b)            
Liquidity risk:
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due.

The Company ensures that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company's holdings of cash and its ability to raise equity financings. As at December 31, 2015,2018, the Company had a working capital deficiency of $574,000 (2014 - $156,000)$2.9 million (2017 – $4.9 million). The Company will require significant additionalhas sufficient funding to meet its short-term liabilities and administrative overhead costs, and to maintain its mineral property interests in 2016.

2019.

The following schedule provides the contractual obligations related to the deferred royalty payments (Notes 7(b) and 11(d)) as at December 31, 2018:
 
             Payments due by Period 
 
 
 
 
 
 Less than
 
 
 
 
 
 
 
 
 After
 
 
 
 Total
 
 
 1 year
 
 
 1-3 years
 
 
 3-5 years
 
 
 5 years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred royalty payments
 $355 
 $35 
 $105 
 $105 
 $110 
 
    
    
    
    
    
Total
 $355 
 $35 
 $105 
 $105 
 $110 
Accounts payable and accrued liabilities are due in less than 90 days,days.
Canarc Resource Corp.
Form 20-F
125
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and the notes payable, if any, are due on demand.

(c)Market risk:

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
5. 
Management of Financial Risk (continued)
(c)            
Market risk:
The significant market risk exposures to which the Company is exposed are foreign currency risk, interest rate risk and other price risk.

(i)            
Foreign currency risk:

The

Certain of the Company’s mineral property interests and operations are in Canada and Mexico. A certain portionCanada. Most of its operating expenses are incurred in Canadian dollars and Mexican pesos.dollars. Fluctuations in the Canadian dollar would affect the Company’s consolidated statements of comprehensive lossincome (loss) as its functional currency is the Canadian dollar, and fluctuations in the U.S. dollar would impact its cumulative translation adjustment as its consolidated financial statements are presented in U.S. dollars.

Canarc Resource Corp.Page 20

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

5.Management of Financial Risk (continued)

(c)Market risk: (continued)

(i) Foreign currency risk: (continued)

The Company is exposed to currency risk for its U.S. dollar equivalent of assets and liabilities denominated in currencies other than U.S. dollars as follows:

   Stated in U.S. Dollars
   Held in Total
   Canadian Dollars Mexican Pesos 
     
Cash $                 70$               11$                 81
Accounts receivable 115061
Accounts payable and accrued liabilities (792)(13)(805)
Derivative liability (175)-(175)
     
Net financial assets (liabilities), December 31, 2015 $             (886)$               48$              (838)
     
Cash $               643$                  -$               643
Receivables 10-10
Accounts payable and accrued liabilities (799)-(799)
     
Net financial assets (liabilities), December 31, 2014 $             (146)$                  -$              (146)

 
 
 Stated in U.S. Dollars
 
 
 
 (Held in Canadian Dollars)
 
 
 
 2018
 
 
 2017
 
 
 
 
 
 
 
 
Cash
 $2,288 
 $4,118 
Marketable securities
  719 
  787 
Receivables
  17 
  100 
Accounts payable and accrued liabilities
  (215)
  (104)
Flow through premium liability
  - 
  (54)
 
    
    
Net financial assets (liabilities), December 31
 $2,809 
 $4,847 
Based upon the above net exposure as at December 31, 20152018 and assuming all other variables remain constant, a 15% (201410% (2017 - 10%15%) depreciation or appreciation of the U.S. dollar relative to the Canadian dollar and Mexican peso could result in a decrease (increase) of approximately $125,700 (2014$281,000 (2017 - $14,600)$727,000) in the cumulative translation adjustment in the Company’s shareholders’ equity.

The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time.

Canarc Resource Corp.
Form 20-F
126
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
5. 
Management of Financial Risk (continued)
(c)            
Market risk: (continued)
(ii)            
Interest rate risk:

In respect of financial assets, the Company's policy is to invest excess cash at floating rates of interest in cash equivalents, in order to maintain liquidity, while achieving a satisfactory return. Fluctuations in interest rates impact on the value of cash equivalents. The Company’s investments in guaranteed investment certificates bear a fixed rate and are cashable at any time prior to maturity date. Interest rate risk is not significant to the Company as it has no cash equivalents at period-end and the promissory notes receivable and notes payable, if any, are stated at fixed interest rates.

period-end.
Canarc Resource Corp.Page 21

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

5.Management of Financial Risk (continued)

(c)Market risk: (continued)

(iii)Other price risk:

(iii) 
Other price risk:
Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market and commodity prices.

The Company’s other price risk includes equity price risk, whereby investmentsinvestment in marketable securities are subject toheld for trading financial assets with fluctuations in quoted market price fluctuations. Theprices recorded at FVTPL. There is no separately quoted market value for the Company’s long-term investmentinvestments in the shares of Aztec does not have a quotedcertain strategic investments.
As certain of the Company’s marketable securities are carried at market pricevalue and are directly affected by fluctuations in an active market and is therefore measured at cost, netvalue of any write-downs.

The Company has recognized a derivative liability pursuant to the share purchase agreement with Marlin Gold Mining Ltd. (“Marlin Gold”) which closed on October 30, 2015, wherebyunderlying securities, the Company shall pay 55 troy ounces of gold to Marlin Gold on eachconsiders its financial performance and cash flows could be materially affected by such changes in the future value of the first three anniversaries of the closing date of the agreement (or its U.S. dollar equivalent), for a total of 165 troy ounces of gold. The derivative liability fluctuates with the gold spot prices resulting in the recognition of gains and losses in profit or loss in which the Company has not hedged the payable gold ounces. (Notes 6 and 10).Company’s marketable securities. Based upon the net exposure as at December 31, 20152018 and assuming all other variables remain constant, a 20% depreciationnet increase or appreciationdecrease of 50% (2017 - 60%) in the market prices of the gold spot prices could result inunderlying securities would increase or decrease respectively net (loss) income by $360,000 (2017 - $472,000).

In February 2017, the Company adopted a decrease/increasenormal course issuer bid whereby the Company may acquire up to 10.9 million common shares of approximately $35,000 (2014 - $Nil)the Company, and shall pay the prevailing market price at the time of purchase, and which terminated on February 7, 2018. In June 2018, the normal course issuer bid was again adopted whereby the Company may acquire up to 10.9 million common shares of the Company until June 20, 2019. The cash consideration paid for any such purchases would be subject to fluctuations in the Company’s net losses.

market price of its common shares. (Notes 12(b)(i) and (ii)).
Canarc Resource Corp.Page 22

Canarc Resource Corp.
Form 20-F
127
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

6.Acquisition of Oro Silver Resources Ltd.

6. 
Promissory Note Receivable
Pursuant to an agreement in July 2014, the Company advanced a promissory note loan of $200,000, which bore an interest rate of 12% per annum compounded monthly; both the principal and interest were due and payable on January 15, 2015, and any past due principal and interest bore an interest rate of 14%. In September 2014, the Company advanced further funds of $20,000. In December 2014, the promissory note receivable along with accrued interest was determined to be impaired as collectability was doubtful, and was written off. In 2016, the Company received notice for the distribution of funds from the bankruptcy estate in which funds of $10,000 were received in 2017. On October 8, 2015,February 12, 2018, the Company entered into a Forbearance Agreement with the debtor in which the loan principal totaling $220,000 will be repaid in full in 2018 as follows:
Date
 Principal
January 31, 2018
$25
June 30, 2018
25
September 30, 2018
85
December 31, 2018
85
$220
Funds of $94,500 were received in 2018 with a balance of $59,500 received in January 2019, net of legal fees.
7. 
Acquisition and Disposition of Companies
(a) 
Oro Silver Resources Ltd.
On May 6, 2016, the Company entered into a Purchase and Sale Agreement forwith Endeavour Silver Corp., a company sharing one common director, (“Endeavour”) which closed on May 27, 2016 pursuant to which the PurchaseCompany sold to Endeavour 100% of all the Sharesshares of the Company’s wholly-owned subsidiary, Oro Silver Resources Ltd. (“Oro Silver”), which indirectly holds a 100% interest in the El Compas project in Zacatecas, Mexico, in consideration for 2,147,239 common shares of Endeavour (the “Sale Transaction”) with a fair value of CAD$3.99 per share on May 27, 2016.
As additional consideration, Endeavour assumed the Company’s obligation to deliver an aggregate of 165 troy ounces of gold (or the US Dollar equivalent) to Marlin Gold Mining Ltd. (“Marlin Gold”) in three equal payments of 55 troy ounces which closed onwere due in October 30, 2015 (the “Share Purchase Agreement”). As consideration2016, 2017 and 2018. The foregoing gold delivery obligation was incurred by the Company issued 19 million common shares to Marlin Gold to acquire a 100% interest in Marlin Gold’s wholly-owned subsidiary,connection with its acquisition of Oro Silver from Marlin Gold.
Canarc Resource Corp.
Form 20-F
128
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
7. 
Acquisition and Disposition of Companies (continued)
(a) 
Oro Silver Resources Ltd. (continued)
The reported gain on the sale of Oro Silver in 2016 is as follows:
Consideration received from sale of Oro Silver:
Fair value of common shares of Endeavour
$6,571
Derivative liability assumed by Endeavour
200
$6,771
Less:
Cost of disposition of Oro Silver:
Net assets of Oro Silver
1,873
Transaction costs
19
(1,892)
Gain from disposition of subsidiary
$4,879
The reported net income from discontinued operations from the sale of Oro Silver is as follows:
 
 
      December 31,    
 
 
 
 2018
 
 
 2017
 
 
 2016
 
 
 
 
 
 
 
 
 
 
 
Amortization
 $- 
 $- 
 $(2)
Foreign exchange gain
  - 
  - 
  5 
Legal
  - 
  - 
  (3)
Office and sundry
  - 
  - 
  (7)
Rent
  - 
  - 
  (3)
Salaries and management
  - 
  - 
  (13)
Property investigation
  - 
  - 
  (5)
Gain from disposition of subsidiary
  - 
  - 
  4,879 
Loss from derivative liability
  - 
  - 
  (25)
Net income from discontinued operations
 $- 
 $- 
 $4,826 
Canarc Resource Corp.
Form 20-F
129
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
7. 
Acquisition and Disposition of Companies (continued)
(a) 
Oro Silver Resources Ltd. (continued)
The reported cash flows from discontinued operations from the sale of Oro Silver are as follows:
 
 
  December 31,  
 
 
 
 2018
 
 
 2017
 
 
 2016
 
 
 
 
 
 
 
 
 
 
 
Cash provided from (used by) discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
Net income (loss) from discontinued operations
 $- 
 $- 
 $4,826 
Items not involving cash:
    
    
    
Amortization
  - 
  - 
  2 
Foreign currency translation
  - 
  - 
  (14)
Gain from disposition of subsidiary
  - 
  - 
  (4,879)
Loss from derivative liability
  - 
  - 
  25 
 
  - 
  - 
  (40)
Changes in non-cash working capital items:
    
    
    
Receivables and prepaids
  - 
  - 
  (8)
Accounts payable and accrued liabilities
  - 
  - 
  (7)
Operating cash flow used by discontinued operations
 $- 
 $- 
 $(55)
 
    
    
    
Investing:
    
    
    
Mineral property interests, net of recoveries
 $- 
 $- 
 $(409)
Cash used by investing activities from discontinued operations
 $- 
 $- 
 $(409)
Canarc Resource Corp.
Form 20-F
130
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
7. 
Acquisition and Disposition of Companies
(b) 
American Innovative Minerals, LLC
On March 20, 2017, the Company entered into and closed the Membership Interest Purchase Agreement with AIM (the “Membership Agreement”) whereby the Company acquired 100% legal and beneficial interests in mineral properties located in Nevada, Idaho and Utah (USA) for a total cash purchase price of $2 million in cash and honouring pre-existing NSRs.
Certain of the mineral properties are subject to royalties. For the Fondaway Canyon project, it bears both a 3% NSR and a 2% NSR. The 3% NSR has a buyout provision for an original amount of $600,000 which is subject to advance royalty payments of $35,000 per year by July 15th of each year until a gross total of $600,000 has been paid at which time the NSR is bought out. A balance of $425,000 with a fair value of $183,000 was outstanding upon the closing of the Membership Agreement and a remaining balance of $355,000 remains payable as at December 31, 2018 (2017 - $390,000). The 2% NSR has a buyout provision of either $2 million in cash or 19.99% interest of a public entity which owns the El Compas project through its wholly owned Mexican subsidiary, Minera Oro Silver. AIM if AIM were to close an initial public offering of at least $5 million.
The terms of the Share PurchaseMembership Agreement include the following:

-On each of the first three anniversaries of the closing date of the Share Purchase Agreement, 55 troy ounces of gold (or the U.S. dollar equivalent) will be paid by the Company to Marlin Gold or to any of its subsidiaries;

-Certain mineral concessions named Altiplano include a 3% NSR royalty and a buy back option. Marlin Gold retains the Altiplano royalty and buy back option, and will receive a 1.5% NSR on all non-Altiplano claims that currently have no royalties associated with them;

-Marlin Gold invested CAD$100,000 in the Company’s private placement at CAD$0.06 per unit with each unit comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.08 per share until October 30, 2018 (Note 13(b)(ii)); and

-Marlin Gold nominated one person to the Company’s Board of Directors.

The Share Purchase Agreement iswas considered to be outside the scope of IFRS 3 Business Combinations since Oro Silver doesAIM did not meet the definition of a business, and as such, the transaction was accounted for as an asset acquisition.

The following table sets forth an allocation of the purchase price to assets acquired and liabilities assumed, based on their fair values:

values at the date of acquisition in March 2017:
 
American Innovative Minerals, LLC
  Oro Silver
Resources Ltd.
Assets:
Cash$               8
Receivables and prepaids53
Equipment25
Mineral property interestinterests1,120
$2,183
 
Liabilities:Total
$2,183
Consideration paid for AIM in March 2017:
Cash
$2,000
Accounts payables and other accrued liabilities
Obligation for deferred royalty payments
(1)
183
    
Total consideration
$        1,205

2,183
Canarc Resource Corp.Page 23

Canarc Resource Corp.
Form 20-F
131
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

6.Acquisition of Oro Silver Resources Ltd. (continued)

Consideration given:

Share consideration:
Number of shares issued19,000,000
Deemed value per share$   0.0000535
$          1,017
Derivative liability:
Number of payable troy ounces of gold165
Spot price per troy ounce$           1.142
188
Total consideration$          1,205

8.            
Marketable Securities
 
 
 December 31,
 
 
 
 2018
 
 
 2017
 
 Balance, begin of period
 $787 
 $955 
 Investment in marketable securities
  289 
  175 
 Disposition of marketable securities at fair value
  (154)
  (104)
 Change in fair value of marketable securities
  (140)
  (293)
 Foreign currency translation adjustment
  (63)
  54 
 Balance, end of period
 $719 
 $787 

The closingquoted market value and fair value of the Share Purchase Agreement resulted in Marlin Gold becoming an Insidershares of the Company by virtue of having a 10.79% interest in the Company ascompanies was $719,000 at the closing date of October 30, 2015.

December 31, 2018 (2017 - $787,000).
Canarc Resource Corp.Page 24

Canarc Resource Corp.
Form 20-F
132
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

7.Mineral Property Interests

   British Columbia (Canada)  Mexico  
   New Polaris Windfall Hills  El Compas  Total
   (Note 7(a)(i)) (Note 7(a)(ii))  (Notes 6 and 7(b))  
        
Acquisition Costs:       
        
Balance, December 31, 2013 $              3,892$                408 $                    - $        4,300
Additions -27 - 27
Foreign currency translation adjustment (16)(34) - (50)
Balance, December 31, 2014 3,876401 - 4,277
Acquisition of subsidiary -- 1,120 1,120
Additions -3 - 3
Foreign currency translation adjustment (25)(65) 6 (84)
Balance, December 31, 2015 $              3,851$                339 $             1,126 $        5,316
        
Deferred Exploration Expenditures:       
        
Balance, December 31, 2013 $              7,938$                  92 $                    - $        8,030
Additions 23352 - 375
Foreign currency translation adjustment (871)(7) - (878)
Balance, December 31, 2014 7,090437 - 7,527
Acquisition of subsidiary -- - -
Additions (recoveries), net of recoveries 23(11) 183 195
Foreign currency translation adjustment (1,557)(70) - (1,627)
Balance, December 31, 2015 $              5,556$                356 $                183 $        6,095
        
Mineral property interests:       
Balance, December 31, 2014 $            10,966$                838 $                    - $      11,804
Balance, December 31, 2015 9,407695 1,309 11,411
        

Canarc Resource Corp.Page 25

9.            
Mineral Property Interests
 
 
 Canada
 
 
 USA
 
 
 
 
 
 
 
 
 
 British Columbia
 
 
 Nunavut
 
 
 Nevada
 
 
 
 
 
 
 
 
 
 New Polaris
 
 
 Windfall Hills
 
 
 FG Gold
 
 
 Princeton
 
 
 Hard Cash
 
 
 Nigel
 
 
 Fondaway Canyon
 
 
 Corral Canyon
 
 
 Other
 
 
 Total
 
 
 
 (Note 9(a)(i))
 
 
 (Note 9(a)(ii))
 
 
 (Note 9(a)(iii))
 
 
 (Note 9(a)(iv))
 
 
 (Note 9(a)(v))
 
 
 (Note 9(a)(v))
 
 
 (Notes 7(b) and 9(b)(i))
 
 
 (Note 9(b)(ii))
 
 
 (Note 9(c))
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition Costs:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2016
 $3,858 
 $349 
 $19 
 $- 
 $- 
 $- 
 $- 
 $- 
 $- 
 $4,226 
Acquisition of subsidiary
  - 
  - 
  - 
  - 
  - 
  - 
  2,183 
  - 
  - 
  2,183 
Additions, net of recoveries
  6 
  - 
  28 
  - 
  - 
  - 
  44 
  - 
  - 
  78 
Foreign currency translation adjustment
  11 
  25 
  1 
  - 
  - 
  - 
  (54)
  - 
  - 
  (17)
Write off
  - 
  - 
  (48)
  - 
  - 
  - 
  - 
  - 
  - 
  (48)
Balance, December 31, 2017
  3,875 
  374 
  - 
  - 
  - 
  - 
  2,173 
  - 
  - 
  6,422 
Additions, net of recoveries
  6 
  - 
  - 
  - 
  9 
  2 
  12 
  23 
  10 
  62 
Foreign currency translation adjustment
  7 
  (30)
  - 
  - 
  - 
  - 
  (175)
  - 
  - 
  (198)
Balance, December 31, 2018
 $3,888 
 $344 
 $- 
 $- 
 $9 
 $2 
 $2,010 
 $23 
 $10 
 $6,286 
 
    
    
    
    
    
    
    
    
    
    
Deferred Exploration Expenditures:
    
    
    
    
    
    
    
    
    
    
 
    
    
    
    
    
    
    
    
    
    
Balance, December 31, 2016
 $5,817 
 $447 
 $6 
 $- 
 $- 
 $- 
 $- 
 $- 
 $- 
 $6,270 
Additions, net of recoveries
  27 
  44 
  14 
  - 
  - 
  - 
  1,090 
  - 
  - 
  1,175 
Foreign currency translation adjustment
  587 
  31 
  1 
  - 
  - 
  - 
  - 
  - 
  - 
  619 
Write off
  - 
  - 
  (21)
  - 
  - 
  - 
  - 
  - 
  - 
  (21)
Balance, December 31, 2017
  6,431 
  522 
  - 
  - 
  - 
  - 
  1,090 
  - 
  - 
  8,043 
Additions, net of recoveries
  88 
  150 
  - 
  69 
  120 
  - 
  351 
  1 
  - 
  779 
Foreign currency translation adjustment
  (741)
  (42)
  - 
  - 
  - 
  - 
  (88)
  - 
  - 
  (871)
Balance, December 31, 2018
 $5,778 
 $630 
 $- 
 $69 
 $120 
 $- 
 $1,353 
 $1 
 $- 
 $7,951 
 
    
    
    
    
    
    
    
    
    
    
Mineral property interests:
    
    
    
    
    
    
    
    
    
    
Balance, December 31, 2017
 $10,306 
 $896 
 $- 
 $- 
 $- 
 $- 
 $3,263 
 $- 
 $- 
 $14,465 
Balance, December 31, 2018
  9,666 
  974 
  - 
  69 
  129 
  2 
  3,363 
  24 
  10 
  14,237 
Canarc Resource Corp.
Form 20-F
133
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

7.Mineral Property Interests (continued)

(a)Canada:

9.            
Mineral Property Interests (continued)
(a)            
Canada:
(i)            
New Polaris:

Polaris (British Columbia):

The New Polaris property, which is located in the Atlin Mining Division, British Columbia, is 100% owned by the Company subject to a 15% net profit interest which may be reduced to a 10% net profit interest within one year of commercial production by issuing 150,000 common shares to Rembrandt Gold Mines Ltd. Acquisition costs at December 31, 20152018 include a reclamation bond for $182,000 (2014$184,000 (2017 - $217,000)$200,000).

On February 24, 2015, the Company entered into a Pre-Development and Earn-In Binding Agreement with PanTerra Gold

(ii)            
Windfall Hills (British Columbia) Limited, a wholly-owned subsidiary of PanTerra Gold Limited, (“PanTerra”). PanTerra has a 30-month option to earn a 50% interest in the New Polaris project by spending a total of CAD$10 million in three stages of predevelopment activities including metallurgical test work, drilling, detailed mine planning, tailings dam design, environmental permitting, and completion of a definitive feasibility study. In Stage One, PanTerra shall spend CAD$500,000 for laboratory production of flotation concentrate followed by test work through the Glencore Technology Albion pilot plant, and for comprehensive technical and economic review and commencement of environmental baseline data collection required for permitting. In Stage Two, PanTerra can earn a 20% interest in the New Polaris project by spending CAD$3.5 million in predevelopment expenditures which would include 10,000 metres drilling program and engineering and completion of field data required for environmental permitting. In Stage Three, PanTerra can earn an additional 30% interest in the project for a total interest of 50% by spending CAD$6 million in predevelopment expenditures which would primarily focus on the completion of a definitive feasibility study and would include further 10,000 metres of infill drilling, additional metallurgical test work, and preliminary engineering. PanTerra can increase its interest in the New Polaris project to 51% by purchasing 1% from the Company within six months of completion of the definitive feasibility study at a cost of 1% of the net present value established by the definitive feasibility study using a 10% discount rate.

The Company had received the CAD$500,000 for Stage One. As at December 31, 2015, funds of US$69,000 remain for Stage One expenditures as specified pursuant to the agreement between the Company and PanTerra.

In August 2015, PanTerra had informed the Company that it will not be able to commit to further expenditures to commence Stage Two exploration and permitting work on the Company’s New Polaris project until PanTerra receives the approval from the Dominican Republic government for importing New Polaris gold concentrate into the country for processing. The Company does not agree with their position. The Company and PanTerra continue to be in communication regarding this matter, and an extension or a resolution has not yet been negotiated.

:
Canarc Resource Corp.Page 26

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

7.Mineral Property Interests (continued)

(a)Canada: (continued)

(ii) Windfall Hills:

In April 2013, the Company entered into a property purchase agreement with Atna Resources Ltd. (“Atna”) whereby the Company acquired a 100% undivided interest in the Uduk Lake properties by the issuance of 1,500,000 common shares at a fair value of CAD$0.10 per share, honouring a pre-existing 1.5% NSR production royalty that can be purchased for CAD$1 million, and granting Atna a 3% NSR production royalty.

In April 2013, the Company entered into a property purchase agreement whereby the Company acquired a 100% undivided interest in the Dunn properties by the issuance of 500,000 common shares at a fair value of CAD$0.10 per share and granting the vendor a 2% NSR royalty which can be reduced to 1% NSR royalty for $500,000.

(iii)            Tay-LP:

FG Gold (British Columbia):
On August 24, 2009,2016, the Company entered into a property option agreement with Ross River MineralsEureka Resources, Inc., (“Eureka”) which closed on October 12, 2016. In consideration for the grant of the property option agreement, the Company issued 250,000 common shares at a value of CAD$0.10 per share to Eureka, and Ross River Gold Ltd.subscribed to acquireEureka’s private placement for 750,000 units at a price of CAD$0.14 per unit for a total of CAD$105,000; each unit was comprised of one common share of Eureka and one-half of one common share purchase warrant with an exercise price of CAD$0.20 and expiry date of September 9, 2018. The Company can earn up to 100%a 75% interest in the Tay-LPFG gold property located in Yukon, by payingtwo stages.
In the first stage, the Company can earn an initial 51% interest over three years by:
- 
incurring CAD$11.5 million in cash and/orexploration expenditures with an annual minimum of CAD$500,000;
- 
issuing 750,000 common shares in three annual tranches of 250,000 shares; and spending
- 
paying 50% of the annual BC mineral exploration tax credits (“BC METC”) claimed by the Company to Eureka to an aggregate maximum exploration expenditure of CAD$1.5 million on exploration over a three-year period which can occur in two stages. The Company decided not to proceed with any further expenditure on the Tay LP property which was written off in 2013.

million.
Canarc Resource Corp.Page 27

Canarc Resource Corp.
Form 20-F
134
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

7.Mineral Property Interests (continued)

(b)Mexico:

El Compas:

The

9.            
Mineral Property Interests (continued)
(a)            
Canada: (continued)
(iii)            
FG Gold (British Columbia): (continued)
In the second stage, the Company acquiredcan earn an additional 24% interest for a total interest of 75% over the El Compas project locatedfollowing two years by:
- 
incurring CAD$1.5 million in Zacatecas, Mexico, pursuant toexploration expenditures;
- 
issuing 1.5 million common shares in two annual tranches of 750,000 shares; and
- 
paying the Share Purchase Agreement with Marlin Gold by waygreater of: (i) CAD$75,000 and (ii) 50% of the acquisition of a 100% interest in Oro Silver (Note 6). On each of the first three anniversaries of the date of the Share Purchase Agreement, 55 troy ounces of gold (or the U.S. dollar equivalent) will be paidannual BC METC claimed by the Company to MarlinEureka to an aggregate maximum exploration expenditure of CAD$1.5 million.
If the Company failed to satisfy the consideration necessary to exercise the second stage, then a joint venture would be deemed to have formed with the Company having a 51% interest and Eureka with a 49% interest.
In 2017, the Company terminated the property option agreement with Eureka and wrote off the FG Gold project.
(iv)            
Princeton (British Columbia):
In December 2018, the Company entered into a property option agreement jointly with Tasca Resources Ltd. (“Tasca”) and an individual whereby the Company has an option to earn a 80% interest in the Princeton property by incurring exploration expenditures of CAD$900,000 over a two year period and granting a 1% NSR to Tasca which can be acquired for CAD$1 million and honoring a 2% NSR to the individual of which 1% NSR can be acquired for CAD$1 million.
(v)            
Hard Cash and Nigel (Nunavut):
In November 2018, the Company entered into a property option agreement with Silver Range Resources Ltd. (“Silver Range”) whereby the Company has an option to earn a 100% undivided interests in the Hard Cash and Nigel properties by paying CAD$150,000 in cash and issuing 1.5 million common shares to Silver Range over a four year period. Silver Range retains a 2% NSR of which a 1% NSR can be acquired for CAD$1 million. Silver Range shall also be entitled to receive $1 per Au oz of measured and indicated resource estimate and $1 per Au oz of proven or to anyprobable reserve estimate, payable in either cash or common shares of its subsidiaries. Certain mineral concessions named Altiplano include a 3% NSR royalty and a buy back option. Marlin Gold will retain the Altiplano royalty and buy back option, and will receive a 1.5% NSR on all non-Altiplano claims that currently have no royalties associated with them. (Notes 6 and 10)

Company at the Company’s election.

(vi)            
Eskay Creek property (British Columbia):
In January 2016,December 2017, the Company signed a definitivean agreement with Barrick Gold Inc (“Barrick”) and Skeena Resources Ltd. (“Skeena”) involving the Zacatecas state governmentCompany’s 33.3% carried interest in certain mining claims adjacent to lease and operate the permitted 500 tonne per day La Plata ore processing plantpast-producing Eskay Creek Gold mine located in northwest British Columbia, whereby the cityCompany will retain its 33.33% carried interest. The Company and Barrick have respectively 33.33% and 66.67% interests in 6 claims and mining leases totaling 2323 hectares at Eskay Creek. Pursuant to an option agreement between Skeena and Barrick, Skeena has the right to earn Barrick’s 66.67% interest in the property. The Company wrote off the property in 2005.
Canarc Resource Corp.
Form 20-F
135
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of Zacatecas, Mexico. HighlightsUnited States dollars, except per share amounts)
9.            
Mineral Property Interests (continued)
(b)            
United States:
(i)            
Fondaway Canyon (Nevada):
On March 20, 2017, the Company closed the Membership Agreement with AMI whereby the Company acquired 100% legal and beneficial interests in mineral properties located in Nevada, Idaho and Utah (USA) for a total purchase price of $2.2 million (Note 7(b)). Certain of the leasemineral properties are subject to royalties.
(ii)            
Corral Canyon (Nevada):
In 2018, the Company staked 92 mining claims covering 742 hectares in Nevada, USA.
(iii)            
Silver King (Nevada):
In October 2018, the Company entered into a property option agreement includefor its Silver King property with Brownstone Ventures (US) Inc. (“Brownstone”) whereby Brownstone has an option to earn a 100% undivided interest by paying $240,000 in cash over a 10 year period with early option exercise payment of $120,000. The Company will retain a 2% NSR of which a 1% NSR can be acquired by Brownstone for $1 million.
(c)            
Other:
In December 2018, the following:

·Lease term is 5 years with the right to extend for another 5 years;
·The Company assumed responsibility for the plant as of January 29, 2016;
·The Company will pay a monthly lease payment of $7,715 (MXP 136,000); and
·Grace period of 6 months to allow time for plant refurbishing.

(c)Expenditure options:

Company entered into a Memorandum of Understanding for an exploration and development project in South America whereby the Company paid $10,000 in 2018 and another $10,000 is payable as a success fee to close on an acceptable agreement for such project.

Canarc Resource Corp.
Form 20-F
136
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
9.            
Mineral Property Interests (continued)
(d)            
Expenditure options:
As at December 31, 2015,2018, to maintain the Company’s interest and/or to fully exercise the options under various property agreements covering its properties, the Company must make payments to the optionors as follows:

    
  Number of Number of
  Shares Troy Ounces of Gold (1)
    
New Polaris (Note 7(a)(i)):   
Net profit interest reduction or buydown150,000 -
    
El Compas (Notes 6, 7(b) and 10):   
October 30, 2016- 55
October 30, 2017- 55
October 30, 2018- 55
    
 150,000 165

 
 
 Cash
 
 
 Exploration
 
 
 Cash
 
 
 Annual
 
 
 Number of
 
 
 
 Payments
 
 
 Expenditures
 
 
 Payments
 
 
 Payments
 
 
 Shares
 
 
 
 (CADS$000)
 
 
 (CADS$000)
 
 
 (US$000)
 
 
 (US$000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Polaris (Note 9(a)(i)):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net profit interest reduction or buydown
 $- 
 $- 
 $- 
 $- 
  150,000 
 
    
    
    
    
    
Fondaway Canyon (Notes 7(b) and 9(b)(i)):
    
    
    
    
    
Advance royalty payment for buyout of 3% net smelter return (1)
  - 
  - 
  - 
  35 
  - 
Buyout provision for net smelter return of 2% (2)
  - 
  - 
  2,000 
  - 
  - 
 
    
    
    
    
    
Windfall Hills (Note 9(a)(ii)):
    
    
    
    
    
Buyout provision for net smelter return of 1.5%
  1,000 
  - 
  - 
  - 
  - 
Reduction of net smelter return of 2% to 1%
  - 
  - 
  500 
  - 
  - 
 
    
    
    
    
    
Princeton (Note 9(a)(iv)):
    
    
    
    
    
On or before:
    
    
    
    
    
January 31, 2019 (expended)
  - 
  1 
  - 
  - 
  - 
December 31, 2019
  - 
  340 
  - 
  - 
  - 
December 31, 2020
  - 
  460 
  - 
  - 
  - 
Buyout provision for net smelter return of 1%
  1,000 
  - 
  - 
  - 
  - 
Reduction of net smelter return of 2% to 1%
  1,000 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
Hard Cash and Nigel (Note 9(a)(v)):
    
    
    
    
    
On or before:
    
    
    
    
    
November 23, 2019
  20 
  - 
  - 
  - 
  200,000 
November 23, 2020
  30 
  - 
  - 
  - 
  300,000 
November 23, 2021
  40 
  - 
  - 
  - 
  400,000 
November 23, 2022
  50 
  - 
  - 
  - 
  500,000 
Reduction of net smelter return of 2% to 1%
  1,000 
  - 
  - 
  - 
  - 
 
    
    
    
    
    
Other (Note 9(c)):
    
    
    
    
    
Success fee
  - 
  - 
  10 
  - 
  - 
 
    
    
    
    
    
 
 $4,140 
 $801 
 $2,510 
 $35 
  1,550,000 
(1) Payable
Advance royalty payments of $355,000 remain payable as at December 31, 2018 with annual payments of $35,000.
(2) 
The 2% NSR has a buyout provision of either $2 million in troy ouncescash or 19.99% interest of gold or the U.S. dollar equivalent.

a public entity which owns AIM if AIM were to close an initial public offering of at least $5 million.

These amounts may be reduced in the future as the Company determines which mineral property interests to continue to explore and which to abandon.

Canarc Resource Corp.Page 28

Canarc Resource Corp.
Form 20-F
137
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

7.Mineral Property Interests (continued)

(d)Title to mineral property interests:

9.            
Mineral Property Interests (continued)
(e)            
Title to mineral property interests:
The Company has diligently investigated rights of ownership of all of its mineral property interests/concessions and, to the best of its knowledge, all agreements relating to such ownership rights are in good standing. However, all properties and concessions may be subject to prior claims, agreements or transfers, and rights of ownership may be affected by undetected defects.

(e)Realization of assets:

(f)            
Realization of assets:
The Company’s investment in and expenditures on its mineral property interests comprise a significant portion of the Company’s assets. Realization of the Company’s investment in these assets is dependent on establishing legal ownership of the mineral properties, on the attainment of successful commercial production or from the proceeds of their disposal. The recoverability of the amounts shown for mineral property interests is dependent upon the existence of reserves, the ability of the Company to obtain necessary financing to complete the development of the properties, and upon future profitable production or proceeds from the disposition thereof.

(f)Environmental:

(g)            
Environmental:
Environmental legislation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislation of the Company’s operation may cause additional expenses and restrictions.

If the restrictions adversely affect the scope of exploration and development on the mineral properties, the potential for production on the property may be diminished or negated.

The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including provisions relating to property reclamation, discharge of hazardous materials and other matters. The Company may also be held liable should environmental problems be discovered that were caused by former owners and operators of its current properties and former properties in which it has previously had an interest. The Company is not aware of any existing environmental problems related to any of its current or former mineral property interests that may result in material liability to the Company.

Canarc Resource Corp.Page 29

Canarc Resource Corp.
Form 20-F
138
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

8.Equipment

      Field Office 
     Building Equipment Equipment Total
Cost:       
Balance, December 31, 2013   $                 -$            -$                9$                 9
Adjustments   ----
Balance, December 31, 2014   --99
Add:       
Acquisition of subsidiary (Note 6)   717125
Foreign currency translation adjustment --(1)(1)
Balance, December 31, 2015   717933
        
Accumulated amortization:       
Balance, December 31, 2013   --66
Add:   Amortization   --11
Balance, December 31, 2014   --77
Add:       
Amortization   --11
Balance, December 31, 2015   --88
        
Net book value:       
Balance, December 31, 2014   $                 -$                  -$                2$                2
Balance, December 31, 2015   $                7$               17$                1$              25
        

9.Long-Term Investments

As at December 31, 2015,

10.            
Equipment
 
 
 Leasehold
 
 
 Office Furnishings
 
 
 
 
 
 
 Improvements
 
 
 and Equipment
 
 
 Total
 
Cost:
 
 
 
 
 
 
 
 
 
Balance, December 31, 2016
 $- 
 $8 
 $8 
Acquisitions
  90 
  31 
  121 
Write-off
  - 
  (8)
  (8)
Balance, December 31, 2017
  90 
  31 
  121 
Acquisitions
  - 
  6 
  6 
Write-off
  - 
  (2)
  (2)
Foreign currency translation adjustment
  (7)
  (2)
  (9)
Balance, December 31, 2018
  83 
  33 
  116 
 
    
    
    
Accumulated amortization:
    
    
    
Balance, December 31, 2016
 $- 
 $7 
 $7 
Amortization
  10 
  4 
  14 
Write-off
  - 
  (7)
  (7)
Balance, December 31, 2017
  10 
  4 
  14 
Amortization
  17 
  7 
  24 
Write-off
  - 
  (1)
  (1)
Foreign currency translation adjustment
  (1)
  - 
  (1)
Balance, December 31, 2018
  26 
  10 
  36 
 
    
    
    
Net book value:
    
    
    
Balance, December 31, 2017
 $80 
 $27 
 $107 
Balance, December 31, 2018
 $57 
 $23 
 $80 
11.            
Accounts Payable and Accrued Liabilities
(a)            
Debt Settlement and Derecognition:
In 2016, the Company had an interestentered into a debt settlement with a creditor whereby a debt of 7%$138,000 was settled with a cash payment of $33,000, resulting in Aztec (2014 – 7%).

There is no separately quoted market value for the Aztec shares and the fair value cannot be reliably determined. Therefore they were recorded at cost, net of any write-downs.

In 2013, the Company wrote-down its investment in Aztec to a nominal value of CAD$100. In October 2014, the Company received 358,000 shares from Aztec ingain on debt settlement of debt owed to the Company which the Company had written off in 2013.

Canarc Resource Corp.Page 30

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

10.Derivative Liability

     
  Derivative Liability  
  October 30, 2015 December 31, 2015  (Gain) Loss on
  Acquisition of   Derivative Liability
  Oro Silver   
     
Number of payable troy ounces of gold165165  
Spot price per troy ounce of gold$                  1.142$                     1.062  
Balance$                     188$                        175 $                         (13)
     

On each of the first three anniversaries of the date of the Share Purchase Agreement, 55 troy ounces of gold (or the U.S. dollar equivalent) will be paid by the Company to Marlin Gold or to any of its subsidiaries pursuant to the Share Purchase Agreement (Note 6). The estimated fair value is based on the spot market price of gold at the period end.

11.Notes Payable

Balance, December 31, 2013$             131
Add:
Interest during the year1
Less:
Repayment of:
Principal121
Interest7
Foreign currency translation adjustment4
132
Balance, December 31, 2015 and 2014$                  -

$105,000. In fiscal 2013, the Company received demand loans of $126,000 from two directors of the Company, which were repayable on demand and bore an interest rate of 12% compounded monthly with interest payable semi-annually. In January 2014, the Company repaid all principal and interest in full settlement of outstanding demand loans.

Canarc Resource Corp.Page 31

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

12.Flow Through Tax Indemnification and Derecognition of Liabilities

In 2010, certain exploration expenditures incurred in 2007 were disallowed as Canadian exploration expenditures (“CEE”) for flow-through purposes in which the Company recognized a provision for flow through indemnification at that time. In 2013, the Company determined that it was improbable that any further cash outlays would be required, and therefore the Company derecognized the provision for flow through indemnification for these expenditures.

In 2013,2016, the Company also derecognized debt of $3,000 owed to a provisionforeign creditor, and recognized a gain of $99,000 by writing off certain liabilities related to an exploration project which was written off in 2008.

$3,000 from the derecognition of accounts payable.

(b)            
Flow-Through Tax Indemnification:
In 2015, the Company incurred a shortfall of CAD$14,000 in CEECanadian exploration expenditures for flow through purposes, and recognized a provision of US$2,000 for flow through indemnification as at December 31, 2015 and2017 which was included in accounts payable and accrued liabilities.

liabilities but was derecognized in 2018.
Canarc Resource Corp.
Form 20-F
139
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
11.            
Accounts Payable and Accrued Liabilities (continued)
(c)            
Flow Through Premium Liability
On April 21, 2017, the Company closed a private placement for 3.8 million flow through common shares at CAD$0.13 per share for gross proceeds of CAD$500,000. The fair value of the shares was CAD$0.11 per share, resulting in the recognition of a flow through premium liability of CAD$0.02 per share for a total of CAD$76,900. (Note 12(b)(ii)).
13.Balance, December 31, 2016
$-
Add:Share Capital
Excess of subscription price over fair value of flow through common shares
57
Foreign currency translation adjustment
4
Less:
Income tax recovery
(7)
Balance, December 31, 2017
54
Less:
Income tax recovery
(54)
Balance, December 31, 2018
$-

(d)            
Deferred Royalty Liability
The 3% NSR for the Fondaway Canyon project which was acquired in March 2017 has a buyout provision for an original amount of $600,000 which is subject to advance royalty payments of $35,000 per year by July 15th of each year until a gross total of $600,000 has been paid at which time the NSR is bought out in full. A balance of $425,000 was remaining upon the closing of the Membership Agreement. (Note 7(b)).
(a)
 Deferred Royalty
Authorized:
 Liability
Balance, December 31, 2016
$-
Add:
Obligation for advance royalty payments
183
Interest
23
Less:
Advance royalty payment
(35)
Balance, December 31, 2017
171
Add:
Interest
30
Less:
Advance royalty payment
(35)
Foreign currency translation adjustment
(1)
Balance, December 31, 2018
$165

Canarc Resource Corp.
Form 20-F
140
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
12.            
Share Capital
(a)            
Authorized:
The authorized share capital of the Company is comprised of an unlimited number of common shares without par value.

(b)Issued:

(i)
(b)            
Issued:
(i) 
In June 2018, the Company received regulatory approval for a normal course issuer bid to acquire up to 10.9 million common shares of the Company representing approximately up to 5% of its issued and outstanding common shares at that time. The bid is effective on June 21, 2018 and will terminate on June 20, 2019, or on such earlier date as the bid is completed. The actual number of common shares purchased under the bid and the timing of any such purchases is at the Company’s discretion. Purchases under the bid shall not exceed 23,893 common shares per day. The Company shall pay the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by the Company will be cancelled. From June to December 2018, the Company purchased 438,000 shares for CAD$20,595 with an average price of CAD$0.05 per share; the shares were cancelled in 2018.
In December 2018, the Company issued 100,000 common shares at a value of CAD$0.05 per share to Silver Range for the Hard Cash and Nigel properties (Note 9(a)(v)).
(ii) 
In February 2017, the Company received regulatory approval for a normal course issuer bid to acquire up to 10.9 million common shares of the Company representing approximately up to 5% of its issued and outstanding common shares at that time. The bid was effective on February 8, 2017 and terminated on February 7, 2018. The actual number of common shares purchased under the bid and the timing of any such purchases was at the Company’s discretion. Purchases under the bid shall not exceed 86,128 common shares per day. The Company paid the prevailing market price at the time of purchase for all common shares purchased under the bid, and all common shares purchased by the Company were cancelled. For the year ended December 31, 2017, the Company purchased 2.6 million shares for CAD$213,700 with an average price of CAD$0.08 per share, of which 2.5 million common shares have been cancelled and the remaining common shares were cancelled in February 2018. Subsequent to December 31, 2017, a further 86,000 common shares for CAD$6,450 were purchased at an average price of CAD$0.08 per share, all of which were cancelled in February 2018.
In March 2017, stock options for 500,000 common shares were cancelled for the exercise of share appreciation rights for 272,727 common shares at a fair value of CAD$0.10 per share. In May 2017, stock options for 132,500 common shares were cancelled for the exercise of share appreciation rights for 29,166 common shares at a fair value of CAD$0.10 per share.
On April 21, 2017, the Company closed a private placement for 3.8 million flow through common shares at CAD$0.13 per share for gross proceeds of CAD$500,000. The fair value of the shares was CAD$0.11 per share, resulting in the recognition of a flow through premium liability of CAD$0.02 per share for a total of CAD$76,900. Finder fees were comprised of CAD$32,500 in cash and 250,000 warrants; each warrant is exercisable to acquire one non-flow through common share at an exercise price of CAD$0.15 per share until April 21, 2019.
Canarc Resource Corp.
Form 20-F
141
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
12.            
Share Capital (continued)
(b)            
Issued: (continued)
(iii) 
In March 2016, the Company closed a private placement in two tranches totalling 22.7 million units at a price of CAD$0.09 per unit for gross proceeds of CAD$2.04 million with each unit comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.12 per share for a period of three years. On March 3, 2016, the Company closed the first tranche for 17.7 million units for gross proceeds of CAD$1.59 million. On March 14, 2016, the Company closed the second tranche for 5 million units for gross proceeds of CAD$449,500 with a finder’s fee of 311,111 units issued with the same terms as the units in the private placement.

(ii)On September 21, 2015, the Company closed the first tranche of a private placement for 11.5 million units at a price of CAD$0.06 per unit for gross proceeds of CAD$690,000. Each unit was comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.08 per share until September 21, 2018. The Company paid CAD$36,200 in cash and issued 594,844 in warrants as finders’ fees. The finders’ fee warrants have the same terms as the underlying warrants in the unit private placement. On October 30, 2015, the Company closed the second tranche of a private placement for 1.67 million units at a price of CAD$0.06 per unit for gross proceeds of CAD$100,000 with Marlin Gold. Each unit was comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.08 per share until October 30, 2018 (Note 6).

Canarc Resource Corp.Page 32

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(b)Issued: (continued)

(ii)(continued)

On September 24, 2015, the Company issued 2 million shares at a value of CAD$0.07 in settlement of partial salaries owed to certain officers and fees owed to certain directors in which the latter also forgave a certain portion of outstanding directors fees owed, resulting in a gain on debt settlement of $54,000.

On October 8, 2015, the Company entered into the Share Purchase Agreement with Marlin Gold which closed on October 30, 2015 whereby the Company issued 19 million common shares at a value of CAD$0.07 per share to Marlin Gold to acquire a 100% interest in Marlin Gold’s wholly-owned subsidiary, Oro Silver, which owns the El Compas project through its wholly-owned Mexican subsidiary, Minera Oro Silver (Note 6).

(iii)On January 31, 2014, the Company closed a private placement for 18 million units at a price of CAD$0.05 per unit for gross proceeds of CAD$900,000. Each unit was comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.10 per share until January 31, 2016; in August 2015, 8.45 million warrants had their expiry date extended to July 31, 2017 (Note 13(d)). Finder’s fees of CAD$22,500 were paid for the private placement.

In March and April 2014, the Company closed a private placement in two tranches totalling 19.6 million units at a price of CAD$0.10 per unit for gross proceeds of CAD$1.96 million with each unit comprised of one common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one common share at an exercise price of CAD$0.150.12 per share for a period of three year period.years. On March 18, 2014,3, 2016, the Company closed the first tranche for 10.617.7 million units for gross proceeds of CAD$1.06 million, and paid CAD$66,170 in cash and issued 661,718 in warrants as finders’ fees. In August 2015, 5.9 million warrants had their expiry date extended to September 18, 2018 (Note 13(d)).1.59 million. On April 3, 2014,March 14, 2016, the Company closed the second tranche for 95 million units for gross proceeds of CAD$900,000, and paid CAD$6,070 in cash and449,500 with a finder’s fee of 311,111 units issued 60,725 in warrants as finders’ fees. The finders’ fee warrants havewith the same terms as the underlying warrantsunits in the unit private placement.

In August 2015, 4.2 million warrants had their expiry date extended to October 3, 2018 (Note 13(d)).

On July 9, 2014,September 2016, the Company closedissued 250,000 common shares at a private placementvalue of CAD$0.10 per share to Eureka for 5the FG gold property (Note 9(a)(iii)).

In 2016, warrants for 1.31 million units at CAD$0.08 per unitshares were exercised for gross proceeds of CAD$400,000. Each unit was comprised104,700 which included finder fee warrants for 58,333 shares with a fair value of one flow-through common share and one-half of one common share purchase warrant; each whole warrant is exercisable to acquire one non-flow through common share at an exercise price of CAD$0.15 per share until July 9, 2016. The Company expended funds of CAD$386,000 for flow through purposes (Note 12).

(iv)In May 2013, the Company issued 2 million shares at a value of CAD$0.10 per share for the acquisition of 100% interests in the Windfall Hills properties. Note 7(a)(ii) provides further details.

US$2,000. In 2013,2016, stock options for 769,000 common1 million shares were exercised and stock options for 700,000 common shares were cancelled for the exerciseproceeds of share appreciation rights for 207,024 common shares.

CAD$80,000 with fair values of US$54,300.
Canarc Resource Corp.Page 33

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(c)Stock option plan:

(c)            
Stock option plan:
The Company has a stock option plan that allows it to grant stock options to its directors, officers, employees, and consultants to acquire up to 44,261,695 common shares which was increased from 18,888,434 common shares of which stock options for 11,920,000 common shares are outstanding as at December 31, 2015.the Company’s Annual and Special Meeting held on June 2, 2017. The exercise price of each stock option cannot be lower than the last recorded sale of a board lot on the TSX during the trading day immediately preceding the date of granting or, if there was no such date, the high/low average price for the common shares on the TSX based on the last five trading days before the date of the grant. Stock options have a maximum term of ten years and terminate 30 days following the termination of the optionee’s employment, except in the case of death, in which case they terminate one year after the event. Vesting of stock options is made at the discretion of the board at the time the stock options are granted.

At the discretion of the board, certain stock option grants provide the holder the right to receive the number of common shares, valued at the quoted market price at the time of exercise of the stock options, that represent the share appreciation since granting the stock options.

The continuity of outstanding stock options for the years ended December 31, 2015, 2014 and 2013 is as follows:

   2015  2014  2013
    Weighted   Weighted   Weighted
    average   average   average
    exercise   exercise   exercise
   Number price  Number price  Number price
   of Shares (CAD$)  of Shares (CAD$)  of Shares (CAD$)
          
Outstanding balance, beginning of year10,130,000$0.10 8,325,000$0.11 9,999,000$0.15
Granted 5,950,000$0.06 4,550,000$0.09 2,000,000$0.08
Exercised -- -- (769,000)$0.10
Cancelled for share appreciation rights-- -- (700,000)$0.10
Forfeited (245,000)$0.11 (175,000)$0.10 (160,000)$0.12
Expired (3,915,000)$0.12 (2,570,000)$0.11 (2,045,000)$0.25
Outstanding balance, end of year 11,920,000$0.08 10,130,000$0.10 8,325,000$0.11
          
Exercise price range (CAD$) $0.05 - $0.145  $0.05 - $0.145  $0.08 - $0.145 

Canarc Resource Corp.Page 34

Canarc Resource Corp.
Form 20-F
142
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(c)Stock option plan: (continued)

12.            
Share Capital (continued)
(c)            
Stock option plan: (continued)
The continuity of outstanding stock options for the years ended December 31, 2018, 2017 and 2016 is as follows:
 
 
 2018
 
 
 
 
 
 2017
 
 
 
 
 
 2016
 
 
 
 
 
 
 Number
 
 
Weighted average
 
 
 Number
 
 
  Weighted average
 
 
 Number
 
 
  Weighted average
 
 
 
 of Shares
 
 
  exercise price (CAD$)
 
 
 of Shares
 
 
  exercise price (CAD$)
 
 
 of Shares
 
 
exercise price (CAD$)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding balance, beginning of year
  19,357,500 
 $0.08 
  16,445,000 
 $0.08 
  11,920,000 
 $0.08 
Granted
  4,250,000 
 $0.07 
  3,600,000 
 $0.10 
  8,010,000 
 $0.08 
Exercised
  - 
  - 
  - 
  - 
  (1,000,000)
 $0.08 
Cancellation for share appreciation rights
  - 
  - 
  (632,500)
 $0.06 
  - 
  - 
Forfeited
  (1,012,500)
 $0.09 
  (18,750)
 $0.10 
  (1,965,000)
 $0.09 
Expired
  (6,195,000)
 $0.08 
  (36,250)
 $0.14 
  (520,000)
 $0.10 
Outstanding balance, end of year
  16,400,000 
 $0.08 
  19,357,500 
 $0.08 
  16,445,000 
 $0.08 
 
    
    
    
    
    
    
Exercise price range
    
 $0.05 - $0.10 
    
 $0.06 - $0.10 
    
 $0.05 - $0.145 
The following table summarizes information about stock options exercisable and outstanding at December 31, 2015:

    Options Outstanding     Options Exercisable  
    Weighted Weighted   Weighted Weighted
    Average Average   Average Average
Exercise Number Remaining Exercise Number Remaining Exercise
Prices Outstanding at Contractual Life Prices Exercisable at Contractual Life Prices
(CAD$) Dec 31, 2015 (Number of Years) (CAD$) Dec 31, 2015 (Number of Years) (CAD$)
             
$0.135 160,000 0.51 $0.135 160,000 0.51 $0.135
$0.145 105,000 1.46 $0.145 105,000 1.46 $0.145
$0.08 1,525,000 2.49 $0.08 1,525,000 2.49 $0.08
$0.05 500,000 3.04 $0.05 400,000 3.04 $0.05
$0.10 3,680,000 3.54 $0.10 2,220,000 3.54 $0.10
$0.06 5,950,000 4.94 $0.06 1,487,500 4.94 $0.06
  11,920,000 4.02 $0.08 5,897,500 3.47 $0.08

2018 and 2017:

 
 
 
 
 
 
 
Options Outstanding
 
 
 
 
 
Options Exercisable
 
 
 
 
 
 
 
 
Weighted
 
 
Weighted
 
 
 
 
 
Weighted
 
 
Weighted
 
 
 
 
 
 
 
 
Average
 
 
Average
 
 
 
 
 
Average
 
 
Average
 
 
Exercise
 
 
Number
 
 
Remaining
 
 
Exercise
 
 
Number
 
 
Remaining
 
 
Exercise
 
 
Prices
 
 
Outstanding at
 
 
Contractual Life
 
 
Prices
 
 
Exercisable at
 
 
Contractual Life
 
 
Prices
 
 
(CAD$)
 
 
Dec 31, 2018
 
 
(Number of Years)
 
 
(CAD$)
 
 
Dec 31, 2018
 
 
(Number of Years)
 
 
(CAD$)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $0.10 
  2,300,000 
  0.54 
 $0.10 
  2,300,000 
  0.54 
 $0.10 
 $0.06 
  3,700,000 
  1.94 
 $0.06 
  3,700,000 
  1.94 
 $0.06 
 $0.08 
  3,600,000 
  2.52 
 $0.08 
  3,600,000 
  2.52 
 $0.08 
 $0.10 
  2,050,000 
  3.42 
 $0.10 
  2,050,000 
  3.42 
 $0.10 
 $0.09 
  500,000 
  3.70 
 $0.09 
  375,000 
  3.70 
 $0.09 
 $0.08 
  3,250,000 
  4.49 
 $0.08 
  1,300,000 
  4.49 
 $0.08 
 $0.06 
  500,000 
  4.87 
 $0.06 
  100,000 
  4.87 
 $0.06 
 $0.05 
  500,000 
  4.87 
 $0.05 
  100,000 
  4.87 
 $0.05 
    
  16,400,000 
  2.79 
 $0.08 
  13,525,000 
  2.42 
 $0.08 
Canarc Resource Corp.
Form 20-F
143
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
12.            
Share Capital (continued)
(c)            
Stock option plan: (continued)
 
 
 
 
Options Outstanding
 
 
 
 
 
Options Exercisable
 
 
 
 
 
Weighted
 
 
Weighted
 
 
 
 
 
Weighted
 
 
Weighted
 
 
 
 
 
Average
 
 
Average
 
 
 
 
 
Average
 
 
Average
 
 
Exercise
 
 
Remaining
 
 
Exercise
 
 
Number
 
 
Remaining
 
 
Exercise
 
 
Prices
 
 
Contractual Life
 
 
Prices
 
 
Exercisable at
 
 
Contractual Life
 
 
Prices
 
 
(CAD$)
 
 
(Number of Years)
 
 
(CAD$)
 
 
Dec 31, 2017
 
 
(Number of Years)
 
 
(CAD$)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $0.08 
  0.48 
 $0.08 
  1,400,000 
  0.48 
 $0.08 
 $0.10 
  1.54 
 $0.10 
  3,600,000 
  1.54 
 $0.10 
 $0.06 
  2.94 
 $0.06 
  5,312,500 
  2.94 
 $0.06 
 $0.08 
  3.52 
 $0.08 
  2,410,000 
  3.52 
 $0.08 
 $0.10 
  4.42 
 $0.10 
  1,537,500 
  4.42 
 $0.10 
 $0.09 
  4.70 
 $0.09 
  125,000 
  4.70 
 $0.09 
    
  2.94 
 $0.08 
  14,385,000 
  2.62 
 $0.08 
During the year ended December 31, 2015,2018, the Company recognized share-based payments of $161,000 (2014$118,000 (2017 - $209,000$366,000 and 20132016 - $72,000)$301,000), net of forfeitures, based on the fair value of stock options that were earned by the provision of services during the period. Share-based payments are segregated between directors and officers, employees and consultants, as applicable, as follows:

    December 31,  
  2015  2014  2013
      
Directors and officers$             153 $             205 $               76
Employees8 4 5
Consultants- - (9)
      
 $             161 $             209 $               72

Canarc Resource Corp.Page 35

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(c)Stock option plan: (continued)

 
 
  December 31,  
 
 
 
 2018
 
 
 2017
 
 
 2016
 
 
 
 
 
 
 
 
 
 
 
Directors and officers
 $118 
 $351 
 $245 
Employees
  - 
  15 
  2 
Consultants
  - 
  - 
  54 
 
    
    
    
 
 $118 
 $366 
 $301 
The weighted average fair value of stock options granted and the weighted average assumptions used to calculate share-based payments for stock option grants are estimated using the Black-Scholes option pricing model as follows:

  2015  2014  2013
      
Number of stock options granted5,950,000 4,550,000 2,000,000
Fair value of stock options granted (CAD$)$0.05 $0.08 $0.06
      
Market price of shares on grant date (CAD$)$0.06 $0.09 $0.08
Pre-vest forfeiture rate19.64% 5.29% 3.54%
Risk-free interest rate0.75% 1.38% 1.71%
Expected dividend yield0% 0% 0%
Expected stock price volatility140% 118% 117%
Expected option life in years4.24 4.48 4.52

 
 
 2018
 
 
 2017
 
 
 2016
 
 
 
 
 
 
 
 
 
 
 
Number of stock options granted
  4,250,000 
  3,600,000 
  8,010,000 
Fair value of stock options granted (CAD$)
 $0.04 
 $0.08 
 $0.07 
 
    
    
    
Market price of shares on grant date (CAD$)
 $0.05 
 $0.10 
 $0.09 
Pre-vest forfeiture rate
  16.09%
  15.41%
  15.99%
Risk-free interest rate
  2.10%
  0.95%
  0.55%
Expected dividend yield
  0%
  0%
  0%
Expected stock price volatility
  119%
  134%
  140%
Expected option life in years
  4.22 
  4.03 
  4.42 
Canarc Resource Corp.
Form 20-F
144
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
12. Share Capital (continued)
(c) Stock option plan: (continued)
Expected stock price volatility is based on the historical price volatility of the Company’s common shares.

In June 2012,fiscal 2016, the Company granted 1,460,000the following stock options:
- 3,260,000 stock options to directors, officers and employees with an exercise price of CAD$0.1450.08 and an expiry date of July 7, 2021, and which are subject to vesting provisions in which 25% of the options vest immediately on the grant date and 25% vest every six months thereafter;
- 3,000,000 stock options to a director, officers and a consultant with an exercise price of CAD$0.08 and an expiry date of July 7, 2021, and which shall vest only when the Company closes a material transaction or at the discretion of the Company’s Board of Directors;
- 1,000,000 stock options to consultants with an exercise price of CAD$0.08 and an expiry date of July 7, 2021, and which fully vested on grant date; and
- 750,000 stock options to a consultant with an exercise price of CAD$0.11 and an expiry date of September 21, 2021, and which fully vest on December 20, 2016.
In March 2017, stock options for 500,000 common shares were cancelled for the exercise of share appreciation rights for 272,727 common shares. In May 2017, stock options for 132,500 common shares were cancelled for the exercise of share appreciation rights for 29,166 common shares.
On June 2, 2017, the Company’s Board of Directors provided for the full vesting of 2.25 million performance based stock options which were granted in July 2016 and which have an exercise price of CAD$0.08 and an expiry date of July 7, 2021.
In fiscal 2017, the Company granted the following stock options:
- 3,100,000 stock options to directors, officers and employees with an exercise price of CAD$0.10 and an expiry date of June 18, 2017. These2, 2022, and which are subject to vesting provisions in which 25% of the options vest immediately on the grant date and 25% vest every six months thereafter; and
- 500,000 stock options will onlyto an employee with an exercise price of CAD$0.09 and an expiry date of September 13, 2022, and which are subject to vesting provisions in which 25% of the options vest whenimmediately on the Company consummates a major transaction or at the discretion of its Board of Directors,grant date and any remaining outstanding stock options were vested as at December 8, 2015.

25% vest every six months thereafter;

In June 2013,fiscal 2018, the Company granted 2,000,000the following stock options:
- 3,250,000 stock options to directors, officers and employees with an exercise price of CAD$0.08 and an expiry date of June 26, 2018,29, 2023, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.

In 2013, stock options for 769,000 common shares were exercised,thereafter; and stock options for 700,000 common shares were cancelled for the exercise of share appreciation rights for 207,024 common shares.

In January 2014, the Company granted 500,000

- 1,000,000 stock options to an officer withof which 500,000 stock options have an exercise price of CAD$0.05 and 500,000 stock options with an exercise price of CAD$0.06 and an expiry date of January 14, 2019,November 12, 2023, and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.

In July 2014,February 2019, the Company granted 4,050,000700,000 stock options to directors, officers and employeesconsultants with an exercise price of CAD$0.10$0.07 per share and an expiry date of July 17, 2019,February 22, 2024 and which are subject to vesting provisions in which 20% of the options vest immediately on the grant date and 20% vest every six months thereafter.

Canarc Resource Corp.Page 36

Canarc Resource Corp.
Form 20-F
145
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(c)Stock option plan: (continued)

In May 2015, certain directors and officers of

12. Share Capital (continued)
(d) Warrants:
At December 31, 2018, the Company cancelled 3,360,000 stock options with exercise prices ranging from CAD$0.10 to CAD$0.145 and expiry dates ranging from September 2015 to June 2017.

In December 2015, the Company granted 5,950,000 stock options to directors, officers and employees with an exercise price of CAD$0.06 and an expiry date of December 8, 2020, and which are subject to vesting provisions in which 25% of the options vest immediately on the grant date and 25% vest every six months thereafter.

(d)Warrants:

On March 3, 2016, the Company issued 8.85 millionhad outstanding warrants with an exercise price of CAD$0.12 and an expiry date of March 3, 2019 from the first tranche of the private placement. On March 14, 2016, the Company issued 2.65 million warrants with an exercise price of CAD$0.12 and an expiry date of March 14, 2019 from the second and final tranche of the private placement. (Note 13(b)(i)).

as follows:
Canarc Resource Corp.Page 37

 
Exercise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prices
 
 
 
 Outstanding at
 
 
 
 
 
 
 
 
 
 
 
 Outstanding at
 
 
(CAD$)
 
Expiry Dates
 
December 31, 2017
 
 
 Issued
 
 
 Exercised
 
 
 Expired
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $0.10 
July 31, 2018 (1), (7)
  8,450,000 
  - 
  - 
  (8,450,000)
  - 
 
    
    
    
    
    
    
 $0.15 
September 18, 2018 (1)
  5,254,055 
  - 
  - 
  (5,254,055)
  - 
 
    
    
    
    
    
    
 $0.15 
September 18, 2018 (1), (2)
  661,718 
  - 
  - 
  (661,718)
  - 
 
    
    
    
    
    
    
 $0.15 
October 3, 2018 (1)
  4,153,750 
  - 
  - 
  (4,153,750)
  - 
 
    
    
    
    
    
    
 $0.15 
October 3, 2018 (1), (3)
  60,725 
  - 
  - 
  (60,725)
  - 
 
    
    
    
    
    
    
 $0.08 
September 21, 2018
  5,332,776 
  - 
  - 
  (5,332,776)
  - 
 
    
    
    
    
    
    
 $0.08 
September 21, 2018 (4)
  536,511 
  - 
  - 
  (536,511)
  - 
 
    
    
    
    
    
    
 $0.12 
March 3, 2019 (8)
  8,852,576 
  - 
  - 
  - 
  8,852,576 
 
    
    
    
    
    
    
 $0.12 
March 14, 2019 (8)
  2,497,222 
  - 
  - 
  - 
  2,497,222 
 
    
    
    
    
    
    
 $0.12 
March 14, 2019 (5), (8)
  155,556 
  - 
  - 
  - 
  155,556 
 
    
    
    
    
    
    
 $0.12 
April 21, 2019 (6)
  250,000 
  - 
  - 
  - 
  250,000 
 
    
    
    
    
    
    
 
    
  36,204,889 
  - 
  - 
  (24,449,535)
  11,755,354 
Canarc Resource Corp.
Form 20-F
146
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(d)Warrants: (continued)

At December 31,

12. Share Capital (continued)
(d) Warrants: (continued)
(1) On August 28, 2015, the Company had outstandingextended the terms of the expiry periods of the warrants by 18 months.
(2) As these warrants are agent’s warrants, a fair value of $43,120 was originally recorded as follows:

Exercise      
Prices  Outstanding at    Outstanding at
(CAD$)Expiry DatesDecember 31, 2014 Issued Exercised ExpiredDecember 31, 2015
       
$0.20September 28, 2015(1)11,300,000--(11,300,000)-
       
$0.20September 28, 2015(1), (2)904,000--(904,000)-
       
$0.20December 19, 2015 (1)4,500,000--(4,500,000)-
       
$0.20January 11, 2016 (1), (7)600,000---600,000
       
$0.20January 18, 2016 (1), (7)1,000,000---1,000,000
       
$0.10January 31, 2016(7)550,000---550,000
       
$0.10July 31, 2017(3)8,450,000---8,450,000
       
$0.15March 18, 201755,000---55,000
       
$0.15September 18, 2018(3)5,254,055---5,254,055
       
$0.15September 18, 2018(3), (4)661,718---661,718
       
$0.15April 3, 2017346,250---346,250
       
$0.15October 3, 2018 (3)4,153,750---4,153,750
       
$0.15October 3, 2018(3), (5)60,725---60,725
       
$0.15July 9, 20162,500,000---2,500,000
       
$0.08September 21, 2018-5,749,443--5,749,443
       
$0.08September 21, 2018(6)-594,844--594,844
       
$0.08October 30, 2018-833,333--833,333
       
  40,335,4987,177,620-(16,704,000)30,809,118

share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 120%, risk-free rate 1.17%, expected life 3 years, and expected dividend yield 0%. On August 28, 2015, the agent’s warrants were modified by the extension of the expiry term by 18 months resulting in a net fair value adjustment of $4,622 as applied to reserve for share-based payments with a corresponding debit to deficit using the Black-Scholes option pricing model with the following revised assumptions: volatility 146%, risk-free rate 0.46%, expected life 3 years, and expected dividend yield 0%.
Canarc Resource Corp.Page 38

(3) As these warrants are agent’s warrants, a fair value of $3,335 was originally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 121%, risk-free rate 1.27%, expected life 3 years, and expected dividend yield 0%. On August 28, 2015, the agent’s warrants were modified by the extension of the expiry term by 18 months resulting in a net fair value adjustment of $386 as applied to reserve for share-based payments with a corresponding debit to deficit using the Black-Scholes option pricing model with the following revised assumptions: volatility 146%, risk-free rate 0.46%, expected life 3 years, and expected dividend yield 0%.
(4) As these warrants are agent’s warrants, a fair value of $20,747 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 147%, risk-free rate 0.57%, expected life 3 years, and expected dividend yield 0%.
(5) As these warrants are agent’s warrants, a fair value of $10,320 was originally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 150%, risk-free rate 0.58%, expected life 3 years, and expected dividend yield 0%.
(6) As these warrants are agent’s warrants, a fair value of $11,460 was originally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 125%, risk-free rate 0.71%, expected life 2 years, and expected dividend yield 0%.
(7) On July 14, 2017, the Company extended the term of the expiry period of the warrants by one year from July 31, 2017 to July 31, 2018, which expired unexercised.
(8) These warrants expired unexercised on their respective expiry dates in 2019.
Canarc Resource Corp.
Form 20-F
147
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(d)Warrants: (continued)

(1)The warrants are subject to an accelerated expiry whereby if after the four month plus one day hold period from the closing date of the private placement, the volume weighted average trading price as traded on the TSX equals or exceeds CAD$0.30 per share for a period of 10 consecutive trading days, the Company will have the right, within five business days, to accelerate the expiry date of the warrants by giving not fewer than 30 days written notice to the warrant holder whereby the warrants shall expire 30 days after such date of the notice.

(2)As these warrants are agent’s warrants, a fair value of $97,470 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 107%, risk-free rate 1.14%, expected life 3 years, and expected dividend yield 0%.

(3)On August 28, 2015, the Company extended the terms of the expiry periods of the warrants by 18 months.

(4)As these warrants are agent’s warrants, a fair value of $43,120 was originally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 120%, risk-free rate 1.17%, expected life 3 years, and expected dividend yield 0%. On August 28, 2015, the agent’s warrants were modified by the extension of the expiry term by 18 months resulting in a net fair value adjustment of $4,622 as applied to reserve for share-based payments with a corresponding debit to deficit using the Black-Scholes option pricing model with the following revised assumptions: volatility 146%, risk-free rate 0.46%, expected life 3 years, and expected dividend yield 0%.

(5)As these warrants are agent’s warrants, a fair value of $3,335 was originally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 121%, risk-free rate 1.27%, expected life 3 years, and expected dividend yield 0%. On August 28, 2015, the agent’s warrants were modified by the extension of the expiry term by 18 months resulting in a net fair value adjustment of $386 as applied to reserve for share-based payments with a corresponding debit to deficit using the Black-Scholes option pricing model with the following revised assumptions: volatility 146%, risk-free rate 0.46%, expected life 3 years, and expected dividend yield 0%.

(6)As these warrants are agent’s warrants, a fair value of $20,747 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 147%, risk-free rate 0.57%, expected life 3 years, and expected dividend yield 0%.

(7)These warrants expired unexercised in January 2016.

Canarc Resource Corp.Page 39

12. Share Capital (continued)
(d) Warrants: (continued)
At December 31, 2017, the Company had outstanding warrants as follows:
 
Exercise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prices
 
 
 
 Outstanding at
 
 
 
 
 
 
 
 
 
 
 
 Outstanding at
 
 
(CAD$)
 
Expiry Dates
 
December 31, 2016
 
 
 Issued
 
 
 Exercised
 
 
 Expired
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $0.10 
July 31, 2018 (1), (7)
  8,450,000 
  - 
  - 
  - 
  8,450,000 
 
    
    
    
    
    
    
 $0.15 
March 18, 2017
  55,000 
  - 
  - 
  (55,000)
  - 
 
    
    
    
    
    
    
 $0.15 
September 18, 2018 (1)
  5,254,055 
  - 
  - 
  - 
  5,254,055 
 
    
    
    
    
    
    
 $0.15 
September 18, 2018 (1), (2)
  661,718 
  - 
  - 
  - 
  661,718 
 
    
    
    
    
    
    
 $0.15 
April 3, 2017
  346,250 
  - 
  - 
  (346,250)
  - 
 
    
    
    
    
    
    
 $0.15 
October 3, 2018 (1)
  4,153,750 
  - 
  - 
  - 
  4,153,750 
 
    
    
    
    
    
    
 $0.15 
October 3, 2018 (1), (3)
  60,725 
  - 
  - 
  - 
  60,725 
 
    
    
    
    
    
    
 $0.08 
September 21, 2018
  5,332,776 
  - 
  - 
  - 
  5,332,776 
 
    
    
    
    
    
    
 $0.08 
September 21, 2018 (4)
  536,511 
  - 
  - 
  - 
  536,511 
 
    
    
    
    
    
    
 $0.12 
March 3, 2019
  8,852,576 
  - 
  - 
  - 
  8,852,576 
 
    
    
    
    
    
    
 $0.12 
March 14, 2019
  2,497,222 
  - 
  - 
  - 
  2,497,222 
 
    
    
    
    
    
    
 $0.12 
March 14, 2019 (5)
  155,556 
  - 
  - 
  - 
  155,556 
 
    
    
    
    
    
    
 $0.12 
April 21, 2019 (6)
  - 
  250,000 
  - 
  - 
  250,000 
 
    
    
    
    
    
    
 
    
  36,356,139 
  250,000 
  - 
  (401,250)
  36,204,889 
Canarc Resource Corp.
Form 20-F
148
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(d)Warrants: (continued)

At December 31, 2014,

12. Share Capital (continued)
(d) Warrants: (continued)
(1) On August 28, 2015, the Company had outstandingextended the terms of the expiry periods of the warrants by 18 months.
(2) As these warrants are agent’s warrants, a fair value of $43,120 was originally recorded as follows:

Exercise      
Prices  Outstanding at    Outstanding at
(CAD$)Expiry Dates December 31, 2013 Issued Exercised ExpiredDecember 31, 2014
       
$0.20September 28, 2015(1)11,300,000---11,300,000
       
$0.20September 28, 2015(1), (2)904,000---904,000
       
$0.20December 19, 2015 (1)4,500,000---4,500,000
       
$0.15 /until January 11, 2015600,000---600,000
$0.20expiry January 11, 2016 (1)     
       
$0.15 /until January 18, 20151,000,000---1,000,000
$0.20expiry January 18, 2016 (1)     
       
$0.10January 31, 2016-9,000,000--9,000,000
       
$0.15March 18, 2017-5,309,055--5,309,055
       
$0.15March 18, 2017(3)-661,718--661,718
       
$0.15April 3, 2017-4,500,000--4,500,000
       
$0.15April 3, 2017(4)-60,725--60,725
       
$0.15July 9, 2016-2,500,000--2,500,000
       
  18,304,00022,031,498--40,335,498

(1)The warrants are subject to an accelerated expiry whereby if after the four month plus one day hold period from the closing date of the private placement, the volume weighted average trading price as traded on the TSX equals or exceeds CAD$0.30 per share for a period of 10 consecutive trading days, the Company will have the right, within five business days, to accelerate the expiry date of the warrants by giving not fewer than 30 days written notice to the warrant holder whereby the warrants shall expire 30 days after such date of the notice.

(2)As these warrants are agent’s warrants, a fair value of $97,470 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 107%, risk-free rate 1.14%, expected life 3 years, and expected dividend yield 0%.

share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 120%, risk-free rate 1.17%, expected life 3 years, and expected dividend yield 0%. On August 28, 2015, the agent’s warrants were modified by the extension of the expiry term by 18 months resulting in a net fair value adjustment of $4,622 as applied to reserve for share-based payments with a corresponding debit to deficit using the Black-Scholes option pricing model with the following revised assumptions: volatility 146%, risk-free rate 0.46%, expected life 3 years, and expected dividend yield 0%.
Canarc Resource Corp.Page 40

(3) As these warrants are agent’s warrants, a fair value of $3,335 was originally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 121%, risk-free rate 1.27%, expected life 3 years, and expected dividend yield 0%. On August 28, 2015, the agent’s warrants were modified by the extension of the expiry term by 18 months resulting in a net fair value adjustment of $386 as applied to reserve for share-based payments with a corresponding debit to deficit using the Black-Scholes option pricing model with the following revised assumptions: volatility 146%, risk-free rate 0.46%, expected life 3 years, and expected dividend yield 0%.
(4) As these warrants are agent’s warrants, a fair value of $20,747 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 147%, risk-free rate 0.57%, expected life 3 years, and expected dividend yield 0%.
(5) As these warrants are agent’s warrants, a fair value of $10,320 was originally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 150%, risk-free rate 0.58%, expected life 3 years, and expected dividend yield 0%.
(6) As these warrants are agent’s warrants, a fair value of $11,460 was originally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 125%, risk-free rate 0.71%, expected life 2 years, and expected dividend yield 0%.
(7) On July 14, 2017, the Company extended the term of the expiry period of the warrants by one year from July 31, 2017 to July 31, 2018.
Canarc Resource Corp.
Form 20-F
149
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(d)Warrants: (continued)

(3)As these warrants are agent’s warrants, a fair value of $43,120 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 120%, risk-free rate 1.17%, expected life 3 years, and expected dividend yield 0%.

(4)As these warrants are agent’s warrants, a fair value of $3,335 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 121%, risk-free rate 1.27%, expected life 3 years, and expected dividend yield 0%.

12. Share Capital (continued)
(d) Warrants: (continued)
At December 31, 2013,2016, the Company had outstanding warrants as follows:

Exercise      
Prices  Outstanding at    Outstanding at
(CAD$)Expiry Dates December 31, 2012 Issued Exercised ExpiredDecember 31, 2013
       
$0.15 /until September 28, 201411,300,000---11,300,000
$0.20expiry September 28, 2015 (1)    
       
$0.15 /until September 28, 2014904,000---904,000
$0.20expiry September 28, 2015(1), (2)    
       
$0.15 /until December 19, 20144,500,000---4,500,000
$0.20expiry December 19, 2015 (1)    
       
$0.15 /until January 11, 2015-600,000--600,000
$0.20expiry January 11, 2016 (1)     
       
$0.15 /until January 18, 2015-1,000,000--1,000,000
$0.20expiry January 18, 2016 (1)     
       
  16,704,0001,600,000--18,304,000

(1)The warrants are subject to an accelerated expiry whereby if after the four month plus one day hold period from the closing date of the private placement, the volume weighted average trading price as traded on the TSX equals or exceeds CAD$0.30 per share for a period of 10 consecutive trading days, the Company will have the right, within five business days, to accelerate the expiry date of the warrants by giving not fewer than 30 days written notice to the warrant holder whereby the warrants shall expire 30 days after such date of the notice.

Canarc Resource Corp.Page 41

 
Exercise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prices
 
 
 
 Outstanding at
 
 
 
 
 
 
 
 
 
 
 
 Outstanding at
 
 
(CAD$)
 
Expiry Dates
 
December 31, 2015
 
 
 Issued
 
 
 Exercised
 
 
 Expired
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 $0.20 
January 11, 2016 (1)
  600,000 
  - 
  - 
  (600,000)
  - 
 
    
    
    
    
    
    
 $0.20 
January 18, 2016 (1)
  1,000,000 
  - 
  - 
  (1,000,000)
  - 
 
    
    
    
    
    
    
 $0.10 
January 31, 2016
  550,000 
  - 
  - 
  (550,000)
  - 
 
    
    
    
    
    
    
 $0.10 
July 31, 2017 (2)
  8,450,000 
  - 
  - 
  - 
  8,450,000 
 
    
    
    
    
    
    
 $0.15 
March 18, 2017
  55,000 
  - 
  - 
  - 
  55,000 
 
    
    
    
    
    
    
 $0.15 
September 18, 2018 (2)
  5,254,055 
  - 
  - 
  - 
  5,254,055 
 
    
    
    
    
    
    
 $0.15 
September 18, 2018 (2), (3)
  661,718 
  - 
  - 
  - 
  661,718 
 
    
    
    
    
    
    
 $0.15 
April 3, 2017
  346,250 
  - 
  - 
  - 
  346,250 
 
    
    
    
    
    
    
 $0.15 
October 3, 2018 (2)
  4,153,750 
  - 
  - 
  - 
  4,153,750 
 
    
    
    
    
    
    
 $0.15 
October 3, 2018 (2), (4)
  60,725 
  - 
  - 
  - 
  60,725 
 
    
    
    
    
    
    
 $0.15 
July 9, 2016
  2,500,000 
  - 
  - 
  (2,500,000)
  - 
 
    
    
    
    
    
    
 $0.08 
September 21, 2018
  5,749,443 
  - 
  (416,667)
  - 
  5,332,776 
 
    
    
    
    
    
    
 $0.08 
September 21, 2018 (5)
  594,844 
  - 
  (58,333)
  - 
  536,511 
 
    
    
    
    
    
    
 $0.08 
October 30, 2018
  833,333 
  - 
  (833,333)
  - 
  - 
 
    
    
    
    
    
    
 $0.12 
March 3, 2019
  - 
  8,852,576 
  - 
  - 
  8,852,576 
 
    
    
    
    
    
    
 $0.12 
March 14, 2019
  - 
  2,497,222 
  - 
  - 
  2,497,222 
 
    
    
    
    
    
    
 $0.12 
March 14, 2019 (6)
  - 
  155,556 
  - 
  - 
  155,556 
 
    
    
    
    
    
    
 
    
  30,809,118 
  11,505,354 
  (1,308,333)
  (4,650,000)
  36,356,139 
Canarc Resource Corp.
Form 20-F
150
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

13.Share Capital (continued)

(d)Warrants: (continued)

(2)As these warrants are agent’s warrants, a fair value of $97,470 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 107%, risk-free rate 1.14%, expected life 3 years, and expected dividend yield 0%.

(e)Common shares reserved for issuance:

  Number of Shares
  December 31,
  2015 2014
   
Stock options (Note 13(c))11,920,00010,130,000
Warrants (Note 13(d))30,809,11840,335,498
   
Balance42,729,11850,465,498

(f)Shareholder rights plan:

On May 31, 2005,

12. Share Capital (continued)
(d) Warrants: (continued)
(1) The warrants were subject to an accelerated expiry whereby if after the shareholdersfour month plus one day hold period from the closing date of the private placement, the volume weighted average trading price as traded on the TSX equals or exceeds CAD$0.30 per share for a period of 10 consecutive trading days, the Company approved a shareholder rights plan (the “Plan”) that became effective on April 30, 2005. The Plan is intendedwill have the right, within five business days, to ensure that any entity seeking to acquire controlaccelerate the expiry date of the warrants by giving not fewer than 30 days written notice to the warrant holder whereby the warrants shall expire 30 days after such date of the notice.
(2) On August 28, 2015, the Company makes an offer that representsextended the terms of the expiry periods of the warrants by 18 months.
(3) As these warrants are agent’s warrants, a fair value of $43,120 was originally recorded as share issuance expense as applied to all shareholdersshare capital with a corresponding credit to reserve for share-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 120%, risk-free rate 1.17%, expected life 3 years, and providesexpected dividend yield 0%. On August 28, 2015, the board of directors with sufficient time to assess and evaluateagent’s warrants were modified by the offer, to permit competing bids to emerge, and, as appropriate, to explore and develop alternatives to maximize value for shareholders. Under the Plan, each shareholder at the timeextension of the Plan’s adoptionexpiry term by 18 months resulting in a net fair value adjustment of $4,622 as applied to reserve for share-based payments with a corresponding debit to deficit using the Black-Scholes option pricing model with the following revised assumptions: volatility 146%, risk-free rate 0.46%, expected life 3 years, and expected dividend yield 0%.
(4) As these warrants are agent’s warrants, a fair value of $3,335 was issued one Rightoriginally recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for each common shareshare-based payments calculated using the Black-Scholes option pricing model with the following assumptions: volatility 121%, risk-free rate 1.27%, expected life 3 years, and expected dividend yield 0%. On August 28, 2015, the agent’s warrants were modified by the extension of the Company held. Each Right entitlesexpiry term by 18 months resulting in a net fair value adjustment of $386 as applied to reserve for share-based payments with a corresponding debit to deficit using the registered holder thereof, exceptBlack-Scholes option pricing model with the following revised assumptions: volatility 146%, risk-free rate 0.46%, expected life 3 years, and expected dividend yield 0%.
(5) As these warrants are agent’s warrants, a fair value of $20,747 was recorded as share issuance expense as applied to share capital with a corresponding credit to reserve for certain “Acquiring Persons” (as defined inshare-based payments calculated using the Plan)Black-Scholes option pricing model with the following assumptions: volatility 147%, risk-free rate 0.57%, expected life 3 years, and expected dividend yield 0%.
(6) As these warrants are agent’s warrants, a fair value of $10,320 was originally recorded as share issuance expense as applied to purchase from treasury one common share atcapital with a 50% discountcorresponding credit to reserve for share-based payments calculated using the prevailing market price, subject to certain adjustments intended to prevent dilution. The Rights are exercisable afterBlack-Scholes option pricing model with the occurrence of specified events set out in the Plan generally related to when a person, together with affiliated or associated persons, acquires, or makes a take-over bid to acquire, beneficial ownership of 20% or more of the outstanding common shares of the Company. The Rights expired on April 30, 2015.

following assumptions: volatility 150%, risk-free rate 0.58%, expected life 3 years, and expected dividend yield 0%.
Canarc Resource Corp.Page 42

Canarc Resource Corp.
Form 20-F
151
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

14.Corporate Development and General and Administrative

     Years ended December 31,  
   2015  2014  2013
       
Corporate Development:      
Geology $                   3 $                   3 $                 18
Legal 4 118 -
Metallurgy - 25 -
Salaries and remuneration 5 106 -
Sundry - 5 -
Travel and transportation 30 88 1
  $                 42 $               345 $                 19
       
General and Administrative:      
Accounting and audit $                 26 $                 24 $                 24
Legal 18 79 30
Office and sundry 61 77 54
Regulatory 56 70 58
Rent 33 40 57
  $               194 $               290 $               223
       

Canarc Resource Corp.Page 43

12. Share Capital (continued)
(e) Basic and diluted (loss) earnings per share:
The calculation of basic and diluted (loss) earnings per share for the relevant periods is based on the following:
 
 
 December 31,  
 
 
 
 2018
 
 
 2017
 
 
 2016
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average number of common shares outstanding
  218,460,355 
  218,473,845 
  211,483,671 
Effect of dilutive securities
  - 
  - 
  1,190,625 
 
    
    
    
Diluted weighted average number of common shares outstanding
  218,460,355 
  218,473,845 
  212,674,296 
(f) Common shares reserved for issuance:
 
 
 Number of Shares
 
 
 
 December 31,
 
 
 
 2018
 
 
 2017
 
 
 2016
 
 
 
 
 
 
 
 
 
 
 
Stock options (Note 12(c))
  16,400,000 
  19,357,500 
  16,445,000 
Warrants (Note 12(d))
  11,755,354 
  36,204,889 
  36,356,139 
 
    
    
    
Balance
  28,155,354 
  55,562,389 
  52,801,139 
Canarc Resource Corp.
Form 20-F
152
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

15.Related Party Transactions

13. Corporate Development and General and Administrative
 
 
Years ended December 31,
 
 
 
 2018
 
 
 2017
 
 
 2016
 
 
 
 
 
 
 
 
 
 
 
Corporate Development:
 
 
 
 
 
 
 
 
 
Corporate advisory
 $- 
 $13 
 $69 
Geology and technical review
  26 
  21 
  22 
Legal
  - 
  5 
  7 
Salaries and remuneration
  1 
  - 
  3 
Sundry
  - 
  - 
  4 
Travel and transportation
  22 
  18 
  31 
 
 $49 
 $57 
 $136 
 
    
    
    
General and Administrative:
    
    
    
Accounting, audit and tax
 $36 
 $39 
 $27 
Legal
  15 
  16 
  29 
Office and sundry
  56 
  67 
  53 
Regulatory
  50 
  70 
  53 
Rent
  66 
  44 
  31 
 
 $223 
 $236 
 $193 
Canarc Resource Corp.
Form 20-F
153
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
14. Related Party Transactions
Key management includes directors (executive and non-executive) and senior management. The compensation paid or payable to key management is disclosed in the table below.

Except as disclosed elsewhere in the consolidated financial statements, the Company had the following general and administrative costs with related parties during the years ended December 31, 2015, 20142018, 2017 and 2013:

       Net balance receivable (payable)
 Years ended December 31,  as at December 31, 
  2015  2014  2013  2015  2014
          
Key management compensation:         
Executive salaries and remuneration (1)$             415 $             441 $             428 $           (190) $           (203)
Severance141 136 - (130) (4)
Directors fees11 18 29 (3) (198)
Share-based payments153 205 76 - -
 $             720 $             800 $             533 $           (323) $           (405)
          
Legal fees incurred to a law firm in which a senior officer of the Company is a partner (2)$               59 $             102 $               67 $           (145) $           (172)
          
Net office, sundry, rent and salary allocations recovered from (incurred to) company(ies) sharing certain common director(s) (3)38 (74) 59 (102) (141)
          
Write-down of long-term investments (4)- - 91 - -
          
Write-off of receivables (5)- - 54 - -
          

(1)2016:
 
 
    
 
 
 Net balance receivable (payable)
 
 
 
  Years ended December 31,
 
 
 as at December 31,
 
 
 
 2018
 
 
 2017
 
 
 2016
 
 
 2018
 
 
 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key management compensation:
 
 
 
 
 
 
 
 
 
 
 
 
Executive salaries and remuneration (1)
 $490 
 $720 
 $460 
 $- 
 $- 
Severance
  184 
  - 
  - 
  - 
  - 
Directors fees
  27 
  98 
  8 
  (7)
  (2)
Share-based payments
  118 
  351 
  245 
  - 
  - 
 
 $819 
 $1,169 
 $713 
 $(7)
 $(2)
 
    
    
    
    
    
Net office, sundry, rent and salary allocations recovered from (incurred to) company(ies) sharing certain common director(s) (2)
  2 
  (16)
  (41)
  1 
  1 
(1)Includes key management compensation which is included in mineral property interests and corporate development.

(2) Includes legal fees which are included in share issuance expenses.

(3)The company(ies) include Aztec, BYG Ventures Ltd. (“BYG”) and Endeavour Silver Corp. which share certain common director(s), and Caza Gold Corp. which shared a common director until December 17, 2013.

(4)The Company wrote-down its investment in Aztec to a nominal value of CAD$100 in 2013. Note 9 provides further details.

(5)The Company wrote-off receivables from Aztec and BYG in 2013. Note 9 provides further details.

employee and director remuneration, mineral property interests, and corporate development.
Canarc Resource Corp.Page 44

(2) The companies include Endeavour, Aztec Minerals Corp., a company sharing one common director, (“AzMin”) and AzMet.
The above transactions are incurred in the normal course of business. Note 7(a) for the Sale Transaction with Endeavour; and Note 8 for marketable securities held in Endeavour, AzMin and AzMet.
Canarc Resource Corp.
Form 20-F
154
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

15.Related Party Transactions (continued)

The above transactions are incurred in the normal course of business. Notes 6, 7(b), 10 and 13(b)(ii) provide disclosure for the acquisition of Oro Silver from Marlin Gold, Note 9 for investments in Aztec, Note 11 for demand loans with certain related parties, and Note 13(b)(ii) for shares-for-debt settlements with certain officers and directors.

16.Segment Disclosures

15. Segment Disclosures
The Company has one operating segment, being mineral exploration, with assets located in Canada and Mexico,the United States, as follows:

 December 31, 2015 December 31, 2014
 CanadaMexicoTotal CanadaTotal
       
Restricted cash$           69$                -$             69 $              -$                -
Mineral property interests10,1021,30911,411 11,80411,804
Equipment12425 22
       

17.Deferred Income Taxes

(a)A reconciliation of income tax provision computed at Canadian statutory rates to the reported income tax provision is provided as follows:

     
  2015 2014
     
     
Net loss for the year $                    (932) $                 (1,831)
Canadian statutory tax rate 26.0% 26.0%
     
Income tax benefit computed at statutory rates $                    (242) $                    (476)
Temporary differences (30) 220
Items non-deductible for income tax purposes 43 49
Unused tax losses and tax offsets not recognized in tax asset 1,556 207
Under (over) provided in prior years (1,378)  
Impact of foreign exchange on tax assets and liabilities 51  
Effect of change in tax rate - -
     
Deferred income tax recovery $                          - $                          -
     

 
 
December 31, 2018
 
 
December 31, 2017
 
 
 
Canada
 
 
USA
 
 
Other
 
 
Total
 
 
Canada
 
 
USA
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mineral property interests
 $10,840 
 $3,387 
 $10 
 $14,237 
 $11,202 
 $3,263 
 $14,465 
Leasehold improvements and equipment
  80 
  - 
  - 
  80 
  107 
  - 
  107 
16. Commitments
In February 2017, the Company entered into an office lease arrangement for a term of five years with a commencement date of August 1, 2017. The basic rent per year is CAD$46,000 for years 1 to 3 and CAD$48,000 for years 4 to 5. As at December 31, 2018, the Company is committed to the following payments for base rent at its corporate head office in Vancouver, BC, as follows:
 
 
 Amount
 
 
 
 (CAD$000)
 
Year:
 
 
 
2019
 $46 
2020
  47 
2021
  48 
2022
  28 
 
    
 
 $169 
For the Fondaway Canyon project, the 3% NSR has a buyout provision which is subject to advance royalty payments of $35,000 per year by July 15th of each year until a gross total of $600,000 has been paid at which time the NSR is bought out. A balance of $355,000 remains payable as at December 31, 2018. (Note 7(b)).
Canarc Resource Corp.
Form 20-F
155
CANARC RESOURCE CORP.
Notes to the Consolidated Financial Statements
Years ended December 31, 2018, 2017 and 2016
(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)
17. Deferred Income Taxes
(a) A reconciliation of income tax provision computed at Canadian statutory rates to the reported income tax provision is provided as follows:
 
 
2018
 
 
2017
 
 
 
 
 
 
 
 
Net (loss) income for the year
 $(1,125)
 $(1,960)
Canadian statutory tax rate
  27.0%
  26.0%
 
    
    
Income tax expense (benefit) computed at statutory rates
 $(304)
 $(510)
Temporary differences
  (70)
  12 
Items not taxable/deductible for income tax purposes
  44 
  102 
Tax losses and tax offsets recognized/unrecognized in tax asset
  359 
  502 
Under (over) provided in prior years
  104 
  - 
Expired losses
  - 
  63 
Effect of change in tax rates
  - 
  (107)
Impact of foreign exchange on tax assets and liabilities
  (133)
  (62)
 
    
    
Deferred income tax recovery
 $- 
 $- 
 
    
    
Effective January 1, 2013,2018, the Canadian federal corporate tax rate is 15% and the British Columbia provincial tax rate is 11%12% for a total Canadian statutory tax rate of 26%27%.

Canarc Resource Corp.Page 45

(b) The tax effected items that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities at December 31, 2018 and 2017 are presented below:
 
 
  December 31,
 
 
 
2018
 
 
2017
 
Deferred tax assets
 
 
 
 
 
 
Non-capital losses carried forward
 $- 
 $- 
Deferred tax assets
  - 
  - 
 
    
    
Deferred tax liabilities
    
    
Marketable securities
    
    
Book value over tax value of property, plant and equipment
  - 
  - 
Book value over tax value of mineral properties
  - 
  - 
Deferred tax liabilities
  - 
  - 
 
    
    
Net deferred tax assets
 $- 
 $- 
Canarc Resource Corp.
Form 20-F
156
CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the

Years ended December 31, 2015, 20142018, 2017 and 2013

2016

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

17.Deferred Income Taxes (continued)

(b)The tax effected items that give rise to significant portions of the deferred income tax assets and deferred income liabilities at December 31, 2015 and 2014 are presented below:

      
    December 31,  
   2015 2014
      
      
Deferred tax assets    
 Non-capital losses carried forward $               83 $               38
Deferred tax assets 83 38
      
Deferred tax liabilities    
 Book value over tax value of property, plant and equipment(8) -
 Book value over tax value of mineral properties (75) (38)
Deferred tax liabilities (83) (38)
      
Net deferred tax assets $                  - $                  -

(c)The Company recognizes tax benefits on losses or other deductible amounts where the probable criteria for the recognition of deferred tax assets have been met. The Company’s unrecognized deductible temporary differences and unused tax losses for which no deferred tax asset is recognized consist of the following amounts:

      
   December 31,
   2015 2014
      
      
Non-capital losses $         16,102 $           8,748
Capital losses 184 8
Available for sale securities 42 50
Share issue costs 207 228
Tax value over book value of mineral properties 6,262 482
Tax value over book value of equipment 1,184 1,434
Unrecognized deductible temporary differences $         23,981 $         10,950

Canarc Resource Corp.Page 46

CANARC RESOURCE CORP.

Notes to

17. Deferred Income Taxes (continued)
(c) The Company recognizes tax benefits on losses or other deductible amounts where the Consolidated Financial Statements

Forprobable criteria for the Years ended December 31, 2015, 2014recognition of deferred tax assets have been met. The Company’s unrecognized deductible temporary differences and 2013

(tabular dollar amounts expressed in thousandsunused tax losses for which no deferred tax asset is recognized consist of United States dollars, except per share amounts)

17.Deferred Income Taxes (continued)

(c)(continued)

the following amounts:

 
 
 December 31,
 
 
 
 2018
 
 
 2017
 
 Non-capital losses
 $6,278 
 $5,573 
 Marketable securities
  164 
  106 
 Share issue costs
  86 
  173 
 Unrealized foreign exchange
  336 
  186 
 Tax value over book value of mineral properties
  6,544 
  7,262 
 Tax value over book value of equipment
  1,259 
  1,345 
 Unrecognized deductible temporary differences
 $14,667 
 $14,645 

As at December 31, 2015,2018, the Company’s unrecognized unused non-capital losses have the following expiry dates:

   
2016 $                53
2017 2,298
2018 3,876
2019 736
2020 1,198
2021 1,246
2022 87
   
2026 497
2027 1,020
2028 125
2029 947
2030 474
2031 766
2032 822
2033 269
2034 805
2035 1,175
   
   
  $         16,394
   

Canarc Resource Corp.Page 47

CANARC RESOURCE CORP.

Notes to the Consolidated Financial Statements

For the Years ended December 31, 2015, 2014 and 2013

(tabular dollar amounts expressed in thousands of United States dollars, except per share amounts)

HEAD OFFICE                                     #301 – 700 West Pender Street

Vancouver, BC, Canada, V6C 1G8

Telephone:(604) 685-9700
Facsimile:(604) 685-9744

Website: www.canarc.net

DIRECTORSBradford Cooke

Martin Burian

Deepak Malhotra

Akiba Leisman

Leonard Harris

OFFICERSCatalin Chiloflischi ~ Chief Executive Officer

Garry Biles ~ President and Chief Operating Officer

Philip Yee ~ Chief Financial Officer and Corporate Secretary (Interim)

REGISTRAR AND                             Computershare Investor Services Inc.

TRANSFER AGENT                          3rd Floor, 510 Burrard Street

Vancouver, BC, Canada, V6C 3B9

AUDITORSSmythe LLP

7th Floor, 355 Burrard Street

Vancouver, BC, Canada, V6C 2G8

SOLICITORS AND                            Axium Law Corporation

REGISTERED OFFICE                     #910 – 800 West Pender Street

Vancouver, BC, Canada, V6C 2V6

SHARES LISTED                               Trading Symbols

TSX:CCM
OTC-QB:CRCUF
DBFrankfurt:CAN

Canarc Resource Corp.Page 48

XHIBIT 8-1

LIST OF MATERIAL SUBSIDIARIES

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:

Minera Oro Silver de Mexico SA de CV is a company duly incorporated under the laws of Mexico on November 16, 2006. The Registrant owns 100% of its issued and outstanding shares.

Oro Silver Prestadora SA de CV is a company duly incorporated under the laws of Mexico on December 3, 2015. The Registrant owns 100% of its issued and outstanding shares.

New Polaris Gold Mines Ltd. (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 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.

2026
 $53 
2027
  225 
2030
  455 
2031
  778 
2032
  834 
2033
  272 
2034
  813 
2035
  1,013 
2036
  - 
2037
  1,172 
2038
  662 
 
    
 
    
 
 $6,277 
 
    

Canarc Resource Corp.
Form 20-F
157