Assays from the first three drill holes in the latest programme intersected significant mineralisation, including 65.4m grading 2.83g/t gold from 122.7m.

Last month, the company reported rock chip sampling had exceeded 5g/t in multiple zones at Fondaway, including a sample grading 42.1g/t from the Reed pit stockpile.

Canarc established Fondaway's indicated and inferred resource in April, totalling just over 1 million ounces at 6.29g/t.

The broad zones intersected in the latest drilling extend the mineralised zones to depth and, along with previous exploration results, defined bulk tonnage mineralisation, the company said.

Previous exploration had focused on narrow, high-grade zones.

"It is becoming clear that Fondaway Canyon offers the potential to develop bulk tonnage gold mineralisation suitable for openpit mining," CEO Catalin Kilofliski said.

Once the remaining assays are returned in January, the company plans to start evaluating openpit potential and prioritise targets for a possible phase two drill programme.

Canarc bought Fondaway and nine other gold projects in Nevada, plus one in Idaho, through its acquisition of American Innovative Minerals in March for US$2 million.

The company had working capital of US$5.8 million at the end of September. Its shares are trading at the low end of its 52-week range of C$0.07-0.12 (US$0.06-0.09).