Birch Mountain Files 2006 Annual Report



    CALGARY, April 2 /CNW/ - Birch Mountain Resources Ltd. ("Birch Mountain"
or the "Company") (BMD: TSX and AMEX) announces filing of its 2006 Annual
Financial Report that is available on www.sedar.com or www.sec.gov.

    Year 2006 at a Glance
    The Company commenced operations in the Muskeg Valley Quarry ("MVQ"),
producing and selling limestone aggregates in various specifications. Total
limestone sales for the year were $1,540,564. Aggregate product inventories
were stockpiled to assure the ability to supply into the high demand spot
market for aggregates. The MVQ is now 110 Ha (275 acres) of exposed limestone
and quarry operations, which is approximately 80% greater than the original
plan for 2006. The accelerated development is a result of the earlier
acquisition of the Company's crushing spread, clearing the plant site earlier
than planned and starting the construction of the South Haul Road ("SHR")
within the MVQ mineral surface lease. The quarry development expenditures in
2006 have favorably positioned Birch Mountain to meet the anticipated sales
volumes for 2007.
    Regulatory, engineering and environmental work for the Hammerstone
Project, which will include an expanded quarry and production facilities to
process limestone into quicklime, cement and other related products, plus
facilities for recycling spent lime and reclaiming solid residues generated
when reagent limestone or lime are used to capture sulphur, was also advanced
significantly during the year. The Company also undertook further development
with regulatory, engineering and environmental work and initial tree clearing
to prepare for the construction of the SHR. Key milestones accomplished,
related to this work, include the following:
    
    -  In May 2006, the Company filed an application and environmental impact
       assessment with provincial regulatory authorities for the Hammerstone
       Project. The proposed Hammerstone Project integrates the existing MVQ
       into an expanded quarry and aggregate plant, and adds a limestone-
       processing complex.
    -  In August 2006, an updated independent NI 43-101 technical report
       entitled Hammerstone Project, Alberta: Qualified Person's Review and
       Technical Report (the "2006 Technical Report") was released, based on
       an update of the pre-feasibility study. The 2006 Technical Report was
       authored by AMEC Americas Limited and Phoenix Process Engineering,
       Inc.
    -  In January 2007, the regulatory application for the SHR was filed.
    -  In February 2007 the Company filed its 2007 Hammerstone Project Update
       (the "2007 Project Update") with the Alberta Natural Resources
       Conservation Board, Alberta Environment and the Alberta Energy and
       Utilities Board. The purpose of the 2007 Project Update was to inform
       regulators and regional stakeholders of Birch Mountain's optimized
       development plan for the Hammerstone Project. The new plan stages
       plant capacities and capital expenditures to better align the build up
       of production capacity with current demand projections; the ultimate
       productive capacity is consistent with the 2006 Technical Report.



    Financial Overview
    The tables below summarize the financial position and results of
    operations for the years ended December 31.
    -------------------------------------------------------------------------
    CONSOLIDATED BALANCE SHEET                         2006          2005
    -------------------------------------------------------------------------
    ASSETS
    Current
      Cash and cash equivalents                      1,345,483    32,322,603
      Accounts receivable                            2,202,698       476,455
      Inventory                                      5,703,196             -
      Prepaids and deposits                          7,995,965       441,545
    -------------------------------------------------------------------------
                                                    17,247,342    33,240,603

    Restricted cash                                  4,250,000     1,000,000

    Long-term asset                                    137,294       232,489

    Property, plant and equipment                   18,729,682       425,112

    Mineral properties                              44,608,237    13,662,648
    -------------------------------------------------------------------------
    TOTAL ASSETS                                    84,972,555    48,560,852
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current
      Accounts payable and accrued liabilities       4,113,610     3,369,083
      Current portion of long term debt              1,580,858             -
      Deferred revenue                                  50,306        50,306
      Other current liabilities                      2,437,781     3,346,264
    -------------------------------------------------------------------------
                                                     8,182,555     6,765,653

    Long term debt                                   6,911,321             -
    Asset retirement obligation                      1,100,000       360,000
    Convertible debentures                          28,537,087             -
    -------------------------------------------------------------------------
                                                    44,730,963     7,125,653
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY
    -------------------------------------------------------------------------
    Share capital                                   47,489,830    46,950,953
    -------------------------------------------------------------------------
    Contributed surplus                             10,236,663     1,774,873
    -------------------------------------------------------------------------
    Deficit                                        (17,484,901)   (7,290,627)
    -------------------------------------------------------------------------
                                                    40,241,592    41,435,199
    -------------------------------------------------------------------------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      84,972,555    48,560,852
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    CONSOLIDATED STATEMENTS OF LOSS
     AND DEFICIT                         2006          2005          2004
    -------------------------------------------------------------------------
    Sales                            $   895,455   $         -   $         -
    Cost of sales                        989,412             -             -
    Other limestone sale                 645,109             -             -
    Interest and other income            498,028       332,568        48,190
    Expenses                           7,840,462     4,433,905     2,172,876
    Mineral exploration costs            858,964       540,481       762,371
    Indirect quarry costs              2,544,028             -             -
    -------------------------------------------------------------------------
    Loss                             $10,194,274   $ 4,641,818   $ 2,887,057
    -------------------------------------------------------------------------
    Loss per share, basic and fully
     diluted                         $     (0.13)  $     (0.08)  $     (0.05)
    -------------------------------------------------------------------------
    Ending Deficit                   $ 17,484,901  $ 7,290,627   $ 2,648,809
    -------------------------------------------------------------------------


    The Company has a working capital balance at December 31, 2006 of
$9.1 million, a decrease of approximately $17.4 million from December 31,
2005. The decrease is a result of the continued operation and development of
the MVQ and Hammerstone Project as the Company spent a total of $32.1 million
on mineral development, $1.0 million on mineral exploration, $2.5 million on
initial quarry operations and purchased approximately $18.4 million in
equipment during 2006.
    The Company secured additional financing during the year which included:
    -  Issuing convertible unsecured subordinated debentures having a face
       value of $34.5 million during the year. The debentures were issued
       pursuant to a public offering and mature on December 31, 2011. The
       debentures are convertible into common shares of the Company at any
       time prior to maturity at the option of the debenture holder at a
       conversion price of $3.30 per share. In the year ended December 31,
       2006 no debentures were converted into shares. The debentures bear
       interest at 6% and interest is payable semi-annually commencing on
       June 30, 2007. Assuming no conversions, interest expense relating to
       the debentures will be approximately $2,070,000 annually.
    -  Entering into a financing agreement with a Canadian lending
       institution to finance a crushing and screening plant costing
       $6,922,050 plus GST. The original loan amount was $7,337,373 with an
       interest rate of 6.02%. The loan is to be paid off over five years
       based on blended principal and interest payments of $1,379,184 per
       year.
    -  Arranging a capital lease financing line that allowed for the
       financing of a piece of quarry excavation equipment costing
       $1,235,000. Lease payments, consisting of principal and interest, will
       be $255,384 annually until August 2011 when the Company will have the
       option to purchase the equipment at its residual value of $200,000.
    Additionally, the Company completed a $15.5 million senior secured credit
facility subsequent to December 31, 2006.
    The Company incurred a loss of $10,194,274 in the year ended December 31,
2006 (2005-$4,641,818; 2004-$2,887,057) and at December 31, 2006, had a
retained deficit of $17,484,901. The Company earned revenues from limestone
sales of $1,540,564 which includes an off-quarry limestone sale. The Company
did not have any sales in 2005 or 2004. The Company earned interest income in
2006 of $498,028, $332,568 in 2005 and $48,190 in 2004.
    In 2006, Birch Mountain focused its resources on the opening and early
operations of the quarry and the further development of the Hammerstone
Project. Total expenses have risen in 2006 and 2005 as the Company moves
forward with activities necessary for operations, including work necessary for
the Hammerstone Project, the SHR application, the payment of professional fees
related to long-term debt financing, implementation of the US Sarbanes-Oxley
Act and the independent 2006 Technical Report. Total expenses increased
$6,269,068 or 126%, of which $2,544,028 or 41% was related to indirect quarry
costs, $1,600,375 or 26% was related to stock-based expenses, $727,644 or 12%
was related to professional fees, $436,604 or 7% was related to shareholder
services, $454,673 or 7% was due to increased salaries and benefits, $437,701
was related to interest and bank charges and $222,153 or 4% was related to
amortization, accretion and depletion. Office expenses decreased by $478,950
from 2005 due to an accrual of $516,286 in 2005 related to the flow through
shares. The remaining difference is related to development, operations and
corporate activities for the development of the Company's limestone reserve in
its Athabasca leases and permits.
    In 2006, the Company spent a total of $32,987,591 on development of the
existing quarry and the Hammerstone Project, of which $32,128,627 was
capitalized and $858,964 was reported as an expense. These expenditures can be
broken down into four broad categories with the following estimated
expenditures:
    -  Site construction of $29.7 million paid to NORAMAC Ventures, an
       independent third party, for the excavation and stockpiling of surface
       overburden, development of the quarry pit, construction of equipment
       maintenance and lay down pads and a road and scale foundations,
       preparing part of the SHR and clearing the plant site;
    -  Payments of $2.2 million to contractors and consultants for
       engineering, drilling, technical, environmental and regulatory
       services including any related materials;
    -  An accrual of $679,000 for future site reclamation costs for the MVQ;
       and
    -  Various administrative costs and salaries directly related to the MVQ
       or the Hammerstone Project.
    

    Important Information Regarding Financial Information in the News Release
    The financial information in this news release should be read in
conjunction with the Company's 2006 Annual Financial Report and other
informational disclosures on SEDAR or EDGAR at www.sedar.com and
www.edgar.com.
    The financial numbers presented in the summary tables may refer to
certain financial measures that are not determined by Generally Accepted
Accounting Principles (GAAP) in Canada or the United States. Financial
measures such as regular general and administrative expenses and mineral
exploration costs are not measures recognized under GAAP and do not have
standardized meanings prescribed by GAAP. We discuss these measures, which
have been derived from our financial statements and applied on a consistent
basis, because we believe that they facilitate the understanding of the
results of our operations and financial position and are relevant measures of
the ability of the Company to earn returns for shareholders. These measures
may differ from those made by other issuers and accordingly, may not be
comparable with such measures as reported by other corporations.

    Investor Presentations
    The Company will be hosting a one hour analysts' conference call at
11:00AM Eastern, 9:00AM Mountain for one hour on Tuesday April 3, 2007. A copy
of the slides will be available on the Company's website at
www.birchmountain.com.on Tuesday morning, in advance of the presentation.

    Forward Looking Statements
    This news release contains certain forward-looking statements. All
statements, other than statements of historical fact, included herein,
including without limitation, statements regarding potential mineralization,
resources and reserves, exploration and development plans and results,
anticipated capital expenditures and financing thereof, anticipated outcomes
and timing of regulatory applications and approvals and the future plans and
objectives of Birch Mountain are forward-looking statements that involve
various risks and uncertainties. There can be no assurance that such
statements will prove to be accurate and actual results and future events
could differ materially from those anticipated in such statements. Certain
amounts in the financial statements are based on estimates using the best
currently available information and assumptions of management. Important
factors that could cause actual results to differ materially from Birch
Mountain's expectations are disclosed elsewhere in documents that are
available to the public at www.sedar.com and www.sec.gov.

    %SEDAR: 00003909E




For further information:

For further information: Douglas Rowe, President & CEO, or Dan
Rocheleau, Acting CFO & Director of Financial Reporting, Birch Mountain
Resources Ltd., Tel (403) 262-1838, Fax (403) 263-9888, www.birchmountain.com

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BIRCH MOUNTAIN RESOURCES LTD.

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