Similar in my thinking with CX, I started a position in BMD this morning. They have a nice, boring product that will be needed for years to come. It's an infrastructure play. They are at the right place at the right time. They are perfectly positioned to provide the necessary infrastructure to support Alberta's economic boom.
"The Petroleum Human Resources Council of Canada recently estimated that the number of people directly employed in oil sands operations -- currently about 50,000 -- will reach 80,000 by 2008. An additional 70,000 construction, manufacturing and service jobs will also be created -- 40 per cent of them outside Alberta...
According to a 2003 study by TD Bank Financial Group, the Calgary-Edmonton corridor is already the fastest growing economic region in the country, boasting per-capita gross domestic product that's 40 per cent above the Canadian average. And the Canada West Foundation recently projected that Alberta's economic growth will lead the country this year and next, due in large part to the booming energy sector...
'Fort McMoney' and it's not hard to see why. The signs of sudden, conspicuous growth are everywhere -- from the overflowing sewage treatment plant to the huge morning queues at the two Tim Hortons franchises. Housing development and local infrastructure have not kept up with the surging population, so renting a single bedroom in a shared mobile home will set you back about $700 a month. And this, clearly, is just the beginning. The region's population is projected to grow by about 43 per cent in the next five years, all because of the oil sands."
macleans.ca 07308
MORNING NOTES 5 OF 7 2/7/2006
Last evening Birch Mountain announced another major news release. This should be a relief to the broker community who worry about the Birch stock price. Birch reported yesterday that, “The size of the Hammerstone project described in the project Update is larger than contemplated in the original public disclosure document released one year ago.” “The scope of the project has also increased and includes enlarged lime prodcuing facilities with hydrated llime and milk of lime plants, as well as a cement plant and a facility to receive and regenrate spent lime produced in oil sands water treatment.”
Please read the entire news release because it lays out the blueprint for a “cradle to grave” byproduct and processing system for the Athabasca oil sands region. This is an
important announcement. It sets a new higher bar for the company. I always thought the company had $15 to $20 stock price potential. I suppose after further study, and a new
report, I will have to raise my bar as well. Amongst other issues the Province of Alberta is becoming a strong cheerleader of Birch Mountain’s potential. This past year a great deal of cement has been sent south to New Orleans under NAFTA leaving the province wanting.
Doug Rowe commented, “We received strong support from industry and government to develop a local supply of cement and reagent limestone products.” Senior Vice President Derrick Kershaw, who used to stick handle Syncrude, commented,” We are designing an integrated facility to meet the industry’s needs for construction products and reagents, as well as providing full-cycle environmental solutions. For spent lime recycling and gypsum disposal.”
The pot at the end of the BMD rainbow is now much larger. Relative to point 10 on my Discovery Grid, do you have then patience and the courage to see Birch Mountain’s value creation journey through? Management is competent and I believe they can execute and communicate. A cement plant, by itself, will be a significant resource for the province of Alberta when it comes on stream by 2008 to 2010. If you will think long term you will be handsomely rewarded, in my opinion. There is a strong global tailwind blowing in the Athabasca. As one executive from an oil sands producer recently told me, “Birch Mountain has the Athabasca locked up.” Birch is a core holding. Buy and forget, in my opinion.
Message 22140793
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From their website:
Birch Mountain is developing the industrial mineral potential of our extensive mineral properties in the oil sands region of northeastern Alberta. Limestone from the Muskeg Valley Quarry, MVQ and Hammerstone will be marketed as construction aggregates and as rock for making concrete and asphalt. Reagent grade limestone can be used directly or in processed form as quicklime in applications such as flue gas desulphurization, water treatment, pulp and paper manufacturing, and soil and biosolids stabilization.
Birch Mountain believes the strong global demand for oil and the heightened profile of Alberta’s oil sands will ensure long-term demand for limestone products from the MVQ and Hammerstone Project.
In the Athabasca area of northeastern Alberta, our enviable position of leaseholdings and permits is rich with limestone, a product in high demand by the oil sands industry and local community for products such as aggregate and quicklime. Our location gives us a compelling price advantage over our major quicklime competitors, whose supply is hundreds of kilometres away.
We have 995,713 acres acres of strategic leaseholdings and permits in Athabasca, the heart of the booming oil sands industry, where production is expected to grow 500% by 2033.
The limestone quarry is strategically located in an area central to current oil sands mining. Over 86 billion dollars in oil sands mine development is planned for the region. |
