I believe it was my post here that first mentioned BMD:
Message 22140984
FYI, here are my updated reasons to be bullish:
- BMD is not yet profitable and has had negligent sales. As such, it is highly speculative. The story had yet to unfold, yet they are making steady progress. On April 4 they reported:
"Excellent progress continues to be made in advancing the quarry. The area developed for the quarry, access road, product stockpiles, overburden and reclamation soils storage areas now exceeds 44 hectares (110 acres). Within the prepared site, the active quarry covers 20 hectares (50 acres) with three of the four limestone units available for quarrying. Blasting operations are underway to expose the deepest limestone unit."
- BMD is an infrastructure play on the Canadian oil sands. The company holds the metallic and industrial mineral rights to roughly 1 million acres of land in Athabasca, the heart of the booming oil sands industry, where production is expected to grow 500% by 2033.
- BMD has a simple business model. Dig, haul, crush, screen, deliver. Bring other stuff back on the return trip. Rinse and repeat.
- Once under way, BMD will have a high quality product that will be in demand by the oil sand producers as well as the entire province as infrastructure gets built out. It is estimated that it takes 75 million tons of aggregate to operate one mine alone over the 35 year life of the mine. Aggregate would also be used in road construction, railway bedding and concrete. Quicklime is used in purifying air and water emissions at oil sands processing facilities (e.g., scrubbing sulphur dioxide), as well as softening water used in steam-assisted gravity drainage operations, a process in which steam is injected into the ground to soften viscous bitumen so that it can be easily pumped to surface.
- BMD’s limestone is superior relative to any other known source of aggregate in the Athabasca region. Tests by EBA Engineering in Calgary indicate that the BMD aggregate produces concrete that provides 28 day strength in 7 days. BMD’s accelerated-strength aggregate is an advantage in the time sensitive construction environment of the Athabasca region where tens of millions of dollars are spent every day on construction projects.
Further, the "Petroraphic Number " (PN) of BMD’s limestone is also superior . Aggregate with a PN of 100 is considered ideal. Rock with a PN above 140 is considered fair to poor. A PN measure of between 100 and 130 is considered suitable for concrete. BMD’s limestone yielded a PN of 110 in independent tests. Competing gravel pits include Poplar Creek (PN = 175) and Susan Lake (175<PN<2 0 0 ). There is currently no competition for BMD’s high quality concrete aggregate in the Fort McMurray area.
- Availability: The top limestone is accessible at or near surface so no significant removal of overburden will be required to access high quality product. This means that a minimal amount of stripping, and therefore time, is required prior to opening the pit.
- Stock price has showing great strength lately. Today it was featured as a momentum play. Yesterday Cramer mentioned it again. Posters on Yahoo say that between AMEX and TSX there is a huge short position, suggesting margin calls and a squeeze. The amount of vehemence on the Yahoo board is unusual, and I can only be emboldened by the belief that the ferociousness exhibited is an indication of the upside for longs once BMD starts gearing up. The bear's arguments are wrong, lame, and focused only on the past.
>BIRCH MOUNTAIN RESOURCES LTD ("BMD-VADP3")
> Net Total
> Date Change Shorted
>---------------------------------------
> 2006/03/31 877,345 2,285,245
> 2006/03/15 175,869 1,407,900
> 2006/02/28 549,300 1,232,031
> 2006/02/15 82,000 682,731
> 2006/01/31 107,251 600,731
> 2006/01/15 -142,420 493,480
>This is from the TSX. The AMEX short interest 0n March 10th was 626,000. What might that be now???
- An experienced quarry manager was hired this week and granted options set at a reasonable price: Peter brings over 30 years experience in hard rock quarrying and the aggregate production business. His experience includes establishing new quarries and all aspects of quarry operations.... The Board has approved the issuance of 30,000 options under the Company's employee option plan to Mr. Heidenreich. The options are exercisable at $8.60 per share.
- The rest of BMD's management team has extensive experience: president and CEO (president of Brougham Energy in 1984); Sr. VP (23 yrs. at Syncrude); Sr. VP (30 years consulting experience), VP Exploration (Ph.D., 20 years experience; former president of Calgary Mineral Exploration); VP (27 yrs. experience) VP (31 yrs. with TransCanada PipeLines)
- They have been building a stockpile and should start shipments soon. Yet there's lots of work ahead. It's just the 2nd inning. BMD has to get beyond the studying and approval stage and start the delivery stage.
- The potential is growing faster than most expected and the scope of the project and demand is to be much larger. The pre-feasibility study is being revised upward and is expected in 6-8 weeks. BMD has been asked by customers to expand its role and haul waste on return trips, making it more lucrative. In a 3/31 report, Westwind said, "We believe that taking back the FGD solids could not only produce high margins but also further strengthen BMD's competitive positions by offering quicklime users a complete FGD solution."
- BMD sits on RIWC planning group with all the key players of the oil sands. They are an insider, not the outsider that Yahoo bashers claim.
- BMD has the potential to be a near monopoly, or at least have a huge advantage with a superior location. The nearest lime plants are over 900 kilometers away, suggesting a $90/ton transportation cost disadvantage to BMD. On the low end, BMD's products will be used for roads, site pads, highways, foundations, bridges, and plant construction. After Hammerstone is up and running, its products will be used for making cement, gasification of coke, flue gas desulphurization, water treatment, and possibly soil stabilization.
- Aggregate is currently being supplied to the region from the Susan Lake gravel pit, owned by the government and known to contain ironstone and other impurities, making it ill-suited for concrete. The life span is expected to be 5-10 years. The lime market in Fort McMurray is in its infancy. This is the best time to invest in the players that will supply the products needed for a long, sustained growth period.
- BMD has the support of the government of Alberta. The province has only two cement plants. A cement plant, by itself, will be a significant resource for the province of Alberta when it comes on stream by 2008 to 2010.
- Joe Tillinghast of Fidelity owns BMD. That's huge IMO and validates my thesis.
- BMD recently presented at a base metals conference, giving them an audience to update on their progress and attract new money.
- In a recent report, Davenport Research said. "The trip further solidified our extremely favorable view of Birch Mountain, while enhancing our overall perception of the opportunity that awaits them. We truly believe Birch has a once in a lifetime opportunity to capitalize on the robust growth that will occur in the oilsand region of Alberta, Canada over the next 50 years. We visited the Muskeg Valley Quarry in Fort McMurray and the progress made just over the last 4 months is almost inconceivable. The entire quarry has been opened up and expanded to the west. Blasting continues in various areas, and BMD has already stocked piled units 1 through 4 aggregate that will be sold in the next month." They have a "strong buy" rating.
- Talk on Yahoo board that it will become a Canadian Trust. (Perhaps after it achieves positive cash flow?)
- In December BMD was named to the "TSX Venture 50," the first ever ranking of Canada's top public companies listed on the TSX Exchange.
birchmountain.com
mikeberry.biz |
