In my opinion, the Stockwatch today butchered John Kaisers' write-up on Birch Mountain. Below are both versions
and you be the judge. Two things happened today in my opinion. Uninformed sellers sold to smart buyers.
STOCKWATCH EDITED VERSION.
Birch Mountain Resources Ltd -
Kaiser says hold Birch Mountain for big spec cycle
Birch Mountain Resources Ltd
BMD
Shares issued 27,777,790
2000-01-13 close $2.84
Friday Jan 14 2000
John Kaiser, writing in the Jan. 3-7 Bottom-Fish Review dated Jan. 10, says
Birch Mountain Resources is a hold at $2.90. Mr. Kaiser recommended the stock
in December, 1998, at 30 cents, and did not make a repeat buy tip in 1999; the
precious minerals explorer was his top performer for the year. In the current
report, Mr. Kaiser notes that Birch Mountain broke out of its $1-$1.50 holding
pattern in spite of an absence of any new official developments. In reviewing the
company's "Prairie gold" model in Northern Alberta, Mr. Kaiser says he was not
impressed with the stock's mysterious gains during the year, or with Hugh
Abercrombie's insistence that his hair-raising scientific theories only be discussed
off the record. "The stock has effectively developed a cult following which some
insiders have fuelled with that old promotional standby, 'If you only knew what we
know,'" Mr. Kaiser observes. One thing that did impress him was the involvement
of Strathcona Minerals, of Busang fraud-busting fame. Overall, Mr. Kaiser is
optimistic, saying the stock is probably in the early stages of a big speculation
cycle.
Bottom-Fish Action Weekly Review
Copyright 2000 John Kaiser
January 10, 2000
Week of January 3-7, 2000
General Review: Of which BMD is a part of.....
Birch Mountain Resources Ltd (BMD-V: $2.90)
Spec Cycle 100% Hold from 1999- +900%
Birch Mountain Resources Ltd (BMD-V) broke out of its $1-$1.50 holding
pattern in late December despite the absence of any new official
developments
since the company provided a technical overview last July. The company has
been investigating the "prairie gold" model in the Fort McMurray area of
northern Alberta since the early nineties. According to this model gold and
platinum group metals have been deposited in the carbonates underlying the
tar sands currently being exploited by Syncrude and others. This model is
very similar to the Carlin model in that the plumbing system is some sort of
fault structure and the solutions are forced into lateral movement by an
impervious cap rock overlying a rock type that serves as a chemical sponge.
The key difference is that whereas the mineralizing mechanism in a Carlin
style deposit is driven by a heat engine such as a nearby intrusive, the
prairie gold mineralization is carried by low temperature brines driven by
some other sort of mechanism. The problematic difference is that while
Carlin
style gold mineralization shows up consistently when subjected to fire
assays, there is no such consistency with prairie gold mineralization.
Paradoxically, Birch Mountain has observed microscopic gains of gold and
platinum in the rock using a scanning electron microscope. Skepticism about
the source of the precious metals in the brine and the inability to produce
consistent fire assays has caused most investors to lump Birch Mountain in
with traditional "no see-um" gold plays collectively called "desert dirt"
frauds. These plays typically involve unaltered rock or poorly consolidated
sediments and generate consistent assays only through some blackbox assaying
technique or the special magic of certain obscure assay labs. These frauds
have been chased off the Canadian exchanges and now flourish in the OTC
Bulletin Board market. Birch Mountain is different from these plays in that
it has a deposition model that does involve alteration and a plumbing
system,
and it has spent all its efforts since 1996 on developing an assaying
technique that produces consistent results and can stand up to industry
evaluation. As of July the company still had not achieved a breakthrough,
but
the breakout in the stock suggests that a meaningful breakthrough has
finally
been achieved. I flagged Birch Mountain as a bottom-fish in late 1998
because
I was impressed by management's persistence and the fact that it was
proceeding with a systematic research campaign long after the Friedland
powered stock play of 1996 had exhausted itself. What did not impress me was
the stock's mysterious rise in 1999 without any new fundamental
developments,
and the fact that Hugh Abercrombie was willing to describe esoteric
scientific theories that make your hair stand on end, but only on an
off-the-record basis. Even less impressive was the adoption of Birch
Mountain
by desert dirt lovers such as Jay Taylor. The stock has effectively
developed
a cult following which some insiders have fueled with that old promotional
standby "if you only knew what we know". But one of the things that did
impress me was Birch Mountain's involvement last year of Graham
Farquharson's
Strathcona Mineral Services. Strathcona achieved worldwide fame in 1997 when
it was retained to verify the gold content of Bre-X's Busang gold deposit,
and has become iconic in the realm of mineral play fraud-busting. Management
has indicated that this year it would be in a position to make disclosures
that will free analysts from their "trust us" predicament. I suspect that
whatever Strathcona has to say about the "prairie gold" project will be a
key
factor in how the industry reacts. Achieving a reliable assaying method is,
of course, only a third of the battle. The second third is to find economic
concentrations in sufficient quantity to be mine-able. In this regard Birch
Mountain will get a big help through access to hundreds of drill cores
generated by the tar sands operators. So far it looks like the
mineralization
is concentrated in a narrow horizon a couple metres thick just beneath the
tar sand deposits. If the tar sand cap proves to be a critical element in
the
deposition model, Birch Mountain will face a troubling logistical hurdle.
The
proximity of volatile rich tar sand deposits make it unlikely that the gold
bearing horizon could be mined underground in the way potash deposits are
mined. Open pit mining is not an option because not only does removal of the
overlying waste rock involve a monster stripping cost, but also an
environmental liability. The only mining scenario that seems feasible is one
where the gold/PGM horizon is mined after the oil companies have removed the
tar sands. That is why Birch Mountain has entered co-development deals with
Syncrude and the other tar sand operators. Birch Mountain owns the mineral
rights and the tar sand operators control "access". It is interesting to
note
that Birch Mountain has just reached a deal to acquire the 1,991 ha Fort
MacKay property for 600,000 shares from NSR Resources Inc (NSR-T: $0.10) and
Tintina Mines Ltd (TTS-T: $0.31), two other juniors which have spent the
past
decade in a similar quest but without the same degree of sophistication.
That
Birch Mountain should issue nearly $2 million worth of paper for claims
representing only 10% of this duo's holdings suggests management knows
something the rest of us don't. If the prairie gold model holds up, the
enormity of the area affected implies some mind-boggling resource numbers.
The third third of the battle is development of a metallurgical process that
can economically extract the gold and PGM metals from the mineralized rock.
Birch Mountain's prairie gold play is still a long way from collapsing the
market for these commodities, but proof of the play's legitimacy may be just
around the corner. Birch Mountain has 31.7 million shares fully diluted,
which gives the company a market cap of nearly $90 million. Although
bottom-fishers are up 900%, I think we are still in the early stages of a
big
spec cycle. |
