Some very interesting info filed in the 20f/a, filed 2/7/2000, just ten days before the ITA press release.
freeedgar.com
Item 1.
ITEM 1: DESCRIPTION OF THE BUSINESS
A. INTRODUCTION
The principle activity of Birch Mountain Resources Ltd. (the "Company" or
"Birch") is the development of methods to economically recover a previously
unreported form of naturally occurring precious and non-precious metals from the
Company's mineral properties.
Birch is also an exploration stage company engaged in the search for
commercially viable deposits of precious and non-precious metals. The Company
has no assurance that such a commercially viable ore deposit exists in any of
its mineral properties.
Birch holds Metallic and Industrial Mineral Permits ("Mineral Permits") and
Metallic and Industrial Mineral Leases ("Mineral Leases") in the Province of
Alberta totaling approximately 2.5 million acres. Dawson Bay holds Special
Exploration Permits in the Province of Manitoba totaling approximately 200,000
acres.
Birch undertakes geological and metallurgical research as part of its
exploration activities. Geological research has worked towards improving the
Prairie Gold Model. Metallurgical research has been directed towards improving
analytical methods and developing extraction and recovery processes for
microparticulate and nanoparticulate metals on the Company's Mineral Permits and
Mineral Leases. Because geological and metallurgical research is conducted as an
integral and necessary part of Birch's exploration, the Company has had no
segregated expenditures dedicated to research and development over the past
three years.
The Company estimates that the following amounts have been expended on research related
activities during each of the Corporation's last three fiscal years: in 1997 -
$170,000 in 1998 - $285,000 and in 1999 - $890,000. Through its geological and
metallurgical research efforts, Birch has identified a previously unreported
form of natural, non- precious nanoparticulate metal in rocks from its Athabasca
mineral property. Birch has developed proprietary processes to extract this
nanoparticulate metal from these rocks and has sought protection for this
intellectual property by filing a U.S. patent application. There is no assurance
that Birch's processes will be economically viable until appropriate tests using
large tonnage samples demonstrate complete technical and economic feasibility.
Exploration Research
Originally, Birch's research activities were directed towards developing the
Prairie Gold Model, a new mineral exploration model explaining a possible
process leading to the deposition of unusual occurrences of microparticulate
gold and other precious and non-precious metals in rocks from Birch's Athabasca
and Dawson Bay mineral properties. An early version of this geological model was
developed at the Geological Survey of Canada in partnership with Birch and other
mineral exploration companies. The Prairie Gold Model guides Birch's exploration
for metals on its Athabasca and Dawson Bay mineral properties.
Metallurgical Research
As an outgrowth of its research related to improving the Prairie Gold Model,
Birch has developed new technology for the analysis and extraction of
microparticulate and nanoparticulate metals. Microparticulate gold and other
precious and non-precious metals were first reported in rocks from the Athabasca
region by the Geological Survey of Canada in 1994, based on the detection of
these metals by electron imaging and x-ray analysis. Since this time, Birch and
other companies and researchers have used the same techniques to examine surface
rock and drill core samples from this area. The results of these studies have
identified multiple locations on Birch's Athabasca Mineral Permits and Mineral
Leases where micropaticulate precious and non-precious metals occur in the rock.
Birch believes that the diverse elemental assemblage documented within these
rocks is indicative of a previously unknown type of mineral deposition process.
Birch also has evidence that suggests that conventional methods for determining
metal concentrations are ineffective in detecting the metals shown by electron
imaging to be present in these rocks.
In 1999, Birch established its own metallurgical laboratory to conduct
proprietary research into the analysis and recovery of precious metals from its
Athabasca and Dawson Bay mineral properties. Material properties research is
also conducted using advanced analytical equipment available in industry,
university and government research laboratories. The goals of this work are to
identify and characterize the specific forms of metals present so that effective
analytical, extraction and recovery processes can be designed and tested.
Birch believes that the extremely small size of the metals in rocks from
Athabasca has a profound impact on both their physical and chemical behavior.
Furthermore, Birch's material properties research has identified what it
believes to be the first documented occurrence of natural nanoparticulate metal
in rocks from its Athabasca mineral property. By handling and treating the rock
in accordance with the properties of the contained metals, Birch has been able
to extract nanoparticulate metal from the rock into solution. Birch has filed a
U.S. patent application to protect its intellectual property related to the
extraction of this newly identified form of natural metal. This technology is
still under development; it has not been independently verified; and its
commercial significance has not been determined. Birch's success in finding a
commercially viable mineral deposit, a reserve within Birch's mineral permits
and leases, depends not only on locating sufficient microparticulate gold,
platinum etc., but also upon the economic recoverability of these metals.
Research related to nanoparticulate metals is on-going, and results demonstrate
that Birch can successfully produce nanoparticulate metal concentrates at the
bench scale. The results of Birch's analytical method development program,
however, show that additional work is required before Birch is able to generate
reproducible measurements of the metal concentrations in solutions containing
nanoparticulate metals. Bulk and/or pilot testing, which are essential in
evaluating the economic feasibility of the research, cannot be done until a
method for quantitative determination of nanoparticulate metal concentrations is
developed and verified.
Birch believes that its research activities may provide new ways to focus
exploration on its existing mineral properties and may be applicable to similar
rocks in other sedimentary basins. Therefore, Birch's continuing research
program may lead to additional discoveries elsewhere in the world and the
development of new intellectual property.
Birch believes that its discovery may have applications beyond metals
exploration and will direct some of its research activities to identifying
additional opportunities.
PLAN OF OPERATION FOR THE NEXT YEAR
Birch will continue work related to developing and improving its mineral
extraction and measurement technology in the Company's lab, with verification of
results in independent research laboratories. The Company is in the process of
establishing a Scientific Advisory Board composed of senior scientists from
industry and academia. As the nature of the science undertaken by the Company is
relatively new, most of the expertise in the area of nanomaterials science and
technology resides in academic research institutes. The initial members of the
Scientific Advisory Board are expected to be associated with universities.
The primary functions of the Scientific Advisory Board will be:
o to provide independent advice to the Board of Directors on scientific
matters,
o to advise management on the Company's scientific program, and
o to provide a liaison role with scientific institutions and researchers
on specific technical activities.
Birch will continue studies using the electric logs and geochemical analyses of
core from over five hundred wells drilled by Birch and oil sands companies that hold overlapping mineral
interests. The core and e-logs have been provided to Birch under the terms of
the cooperation agreements with oil sands companies that hold overlapping
mineral rights, more fully described in Item 2: Description of Properties. These
analyses will be used, in conjunction with other analytical results, to focus
future exploration drilling to areas of alteration and elevated metal content in
the Devonian limestone.
There is no conclusive evidence supportive of the occurrence of precious metals
in potentially economic concentrations or quantities on Birch's mineral
properties. There is no assurance that the Company has a commercially viable
mineral deposit on its mineral properties.
The independent audit of Birch is to determine whether or not there is
reasonable evidence of potentially economic concentrations of minerals and
reasonable evidence of potential commercial applications for the technology
under development. The specific scope of work includes:
o Summary review of past work on the Athabasca mineral property and other
Mineral Leases held by the Company and how such work has been disclosed
to the public;
o Review work relative to the identification of a "new form of precious
metal" within the context of a new ore deposit model and how such work
was disclosed to the public;
o Review the Company's approach to reviewing various assay methodologies
and the basis of the determination that they were unsatisfactory for
this "new form of previous metal" and new ore deposit model;
o Review the dissemination of the various assay results in press-releases
in terms of timing and completeness of disclosure;
o Review the sample preparation methodology and process development in
respect of the reported extraction methodology. This will require a
reasonable level of disclosure by the Company and the auditor has
reserved the right to have the process reviewed by individuals with the
appropriate academic qualifications if deemed necessary;
o Supervise test work at an independent laboratory, along with such other
conventional assay techniques as may be deemed appropriate by the
independent auditor. The location and protocol for the test will be
decided by the independent auditor after discussions with the Company;
and
o Produce a draft report to the CDNX outlining the results of the audit
and making recommendations for adequate disclosure to the public.
The independent technical audit is being conducted by Associated Mining
Consultants of Calgary, Alberta. The audit commenced October 6, 2000 and the
Company expects that it should be completed by the end of March, 2001.
The ramifications of the independent audit report conflicting with the Company's
assertions are difficult to predict and unknown to the Company at this time. |
