Birch Mountain reports second quarter 2007 results



    CALGARY, Aug. 14 /CNW/ - Birch Mountain Resources Ltd. ("Birch Mountain"
or the "Company") (BMD: TSX and AMEX) today reported financial results for the
second quarter ended June 30, 2007.

    Highlights

    Sales from the Muskeg Valley Quarry ("MVQ") were 600,452 tonnes for the
second quarter of 2007. The average selling price for the second quarter for
crushed and graded aggregates was $8.68 per tonne and the average selling
price for aggregates produced to a top size specification was $6.91 per tonne
which compares to an average selling price of $8.02 per tonne for the first
quarter of 2007, the majority of which were sales of crushed and graded
aggregates.
    In June 2007, Birch Mountain signed a three-year contract with Suncor
Energy Inc for the supply of a variety of construction aggregates from the
MVQ.
    During the second quarter of 2007, the MVQ produced a total of 546,000
tonnes of aggregate. The majority of the production occurred in June, when
production on an annualized basis exceeded 5 million tonnes per year. To meet
this demand, quarry staff was increased and the operations were running seven
days a week, twenty four hours a day.
    To meet demand, stockpiled products were drawn-down. Inventory of
finished goods and work-in-process decreased during the quarter and at
June 30, 2007 totaled $4,354,414 in value. Inventory includes blasted,
unexcavated rock, work-in-progress rock as well as processed aggregate
stockpiles meeting Alberta Transportation specifications.
    Although June's activity was a good demonstration of the growing
productive capacity of the MVQ, ordered quantities to date in Q3 are lower.
Discussions with oil sands companies indicate that demand for Birch Mountain's
aggregate products remains strong and the Company continues to quote on
inquiries. The Company believes that uncertainty around a potential labour
disruption by a number of construction unions may be a factor.
    Joel Jarding, President and COO, commented, "This has been an exciting
time for me after joining the Company in May of this year. Customers continue
to comment on the need for larger quantities of quality aggregate and related
products for their oil sands projects and our team is confident that we can
meet those needs. We remain focused on securing additional orders, improving
our operational efficiency, retaining quality people and developing long term
customer relations. These steps are critical to achieving longer term
profitable operations."

    Financial Results (unaudited)

    For the second quarter ended June 30, 2007, the Company incurred a loss
of $5,912,191 (2006 - $1,607,295) and as at June 30, 2007, had an accumulated
deficit of $27 million.
    The Company earned revenues from limestone sales of $4,269,313 (2006 -
$87,829) in the second quarter of 2007. Additional revenue of $540,602 (2006 -
$nil) was generated through contract trucking from the quarry to customers.
Total cost of goods sold for the limestone sales was $3,224,258 (2006 -
$79,105) and was $517,334 (2006 - $nil) for the contract trucking.
    During the second quarter of 2007, expenses totaled $7,048,826 (2006 -
$1,780,377). Total expenses increased in 2007 as the Company continued with
early operations, while in 2006 operations commenced in May 2006. The increase
relates primarily to the following items:

    
    -  Interest and bank charges have increased $1,036,569 in the second
       quarter of 2007 as a result of $519,434 in interest on the
       $34.5 million convertible debenture issued in December 2006 and
       $285,571 accretion of the unamortized discount on these debentures.
       Additionally, interest of $126,142 was recorded on the bank loan and
       $91,457 on the long term debt. The Company did not have the debentures
       or debt financings in the second quarter of 2006.
    -  Indirect quarry costs increased $3,294,850. During the quarter ended
       June 30, 2006, the quarry had begun initial production resulting in
       small amounts of indirect quarry costs because pre-production costs
       were capitalized. During the quarter ended June 30, 2007, the quarry
       was in early operations and had produced 546,000 tonnes of aggregate
       and sold 600,452 tonnes. At June 30, 2007, the quarry was operating
       seven days a week, twenty-four hours a day to produce various
       specification of aggregate to meet current and expected orders.
    -  Professional fees increased by $408,193 due mainly to the amortization
       of financing fees on the convertible debentures in the amount of
       $181,272 which was not reported in 2006 as the debentures were not
       issued until the fourth quarter of 2006. Additionally, $100,852 of
       stock-based compensation expense for options granted to advisors in
       previous periods was reported in the quarter for 2007 and not recorded
       in 2006.
    -  Salaries, wages and benefits increased by $293,355 as a result of
       $182,000 in directors fees recorded in second quarter 2007, which were
       not recorded in 2006. Stock based compensation increased by $126,113
       due to a slightly higher number of outstanding options.
    

    The Company has a working capital deficit at June 30, 2007 of
$7.7 million, a change of approximately $17 million from December 31, 2006.
The change is a result of the continued operation and development of the MVQ
and Hammerstone Project as the Company spent a total of $6.9 million on
mineral development and exploration, $4.4 million on indirect quarry costs and
purchased approximately $2.8 million in property, plant and equipment during
the six months ended June 30, 2007. Additionally, the working capital balance
was reduced by $5.6 million as a result of a reclassification of costs
recorded in 2006 as a deposit, which based on further information has been
reclassified to mineral properties.
    Summarized unaudited consolidated financial statements as at and for the
three months and six months ended June 30, 2007 are reported in the tables
below. The Company's independent auditor has not performed a review of the
accompanying Financial Statements in accordance with standards established by
the Canadian Institute of Chartered Accountants for a review of interim
financial statements. The Company encourages readers to review the Second
Quarter 2007 Financial Report and other informational disclosures on SEDAR
and/or EDGAR at www.sedar.com and www.edgar.com.

    Conference Call

    Birch Mountain Resources Ltd. will be releasing its second quarter 2007
financial results on Tuesday, Aug. 14, 2007, and hosting a conference call at
11 a.m. Eastern Time, 9 a.m. Mountain Time, on Wednesday, Aug. 15, 2007. The
second quarter 2007 financial results will be available at SEDAR or the
Securities and Exchange Commission's website.
    The conference call will consist of a brief presentation followed by a
question and answer session. Interested shareholders, analysts and investors
are invited to participate by calling 866-514-1894. You will be asked to
provide your name, company affiliation and telephone number.

    
    TABLE A: Consolidated Balance Sheets                    UNAUDITED
    -------------------------------------------------------------------------

    As at                                               June 30, December 31,
                                                           2007         2006
    -------------------------------------------------------------------------
    Assets
    Current
      Cash and cash equivalents                       1,178,832    1,345,483
      Accounts receivable                             2,493,861    2,202,698
      Inventory                                       4,354,414    5,703,196
      Prepaids and deposits                             902,292    7,995,965
    -------------------------------------------------------------------------
                                                      8,929,399   17,247,342
    Long-term prepaids                                  137,294      137,294
    Restricted cash                                   3,000,000    4,250,000
    Property, plant and equipment                    21,188,500   18,729,682
    Mineral properties                               51,443,163   44,608,237
    -------------------------------------------------------------------------
    Total Assets                                     84,698,356   84,972,555
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Current
      Bank loan                                       8,067,594            -
      Accounts payable and accrued liabilities        5,084,860    4,113,610
      Current portion of long term debt               1,018,125    1,580,858
      Deferred revenue                                   50,306       50,306
      Other current liabilities                       2,411,425    2,437,781
    -------------------------------------------------------------------------
                                                     16,632,310    8,182,555

    Long term debt                                    5,424,484    6,911,321
    Asset retirement obligation                         307,016    1,100,000
    Convertible debentures                           29,101,883   28,537,087
    -------------------------------------------------------------------------
                                                     51,465,693   44,730,963
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital                                    48,278,706   47,489,830
    Contributed surplus                              11,978,615   10,236,663
    Deficit                                         (27,024,656) (17,484,901)
    -------------------------------------------------------------------------
                                                     33,232,663   40,241,592
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total Liabilities and Shareholders' Equity       84,698,356   84,972,555
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    TABLE B: Consolidated Statements of Loss and Deficit

                                                UNAUDITED
    -------------------------------------------------------------------------
                             3 Months     3 Months     6 Months     6 Months
                                Ended        Ended        Ended        Ended
                              June 30,     June 30,     June 30,     June 30,
    For the periods ended        2007         2006         2007         2006
    -------------------------------------------------------------------------
      Sales revenue         4,269,313       87,829    4,864,797       87,829
      Delivery revenue        540,602            -      804,260            -
    -------------------------------------------------------------------------
      Total revenue         4,809,915       87,829    5,669,057       87,829
    -------------------------------------------------------------------------
      Cost of sales         3,224,258       79,105    3,717,513       79,105
      Delivery cost           517,334            -      773,065            -
    -------------------------------------------------------------------------
      Total cost of
       revenues             3,741,592       79,105    4,490,578       79,105
    -------------------------------------------------------------------------
      Gross profit          1,068,323        8,724    1,178,479        8,724

      Expenses
      Amortization            217,219       29,332      438,389       48,045
      Interest, bank
       charges and
       accretion            1,047,294       10,725    1,990,909       12,787
      Mineral exploration
       costs                  122,179      201,144      229,731      474,954
      Office                  191,494      115,095      213,166      233,363
      Professional fees       598,406      190,213      907,719      367,998
      Indirect quarry
       costs                3,718,667      423,817    4,396,012      597,485
      Salaries, wages and
       benefits               508,544      215,189      771,001      512,669
      Shareholder
       services and
       marketing              265,411      341,361      590,787      601,356
      Stock-based
       compensation           379,614      253,501    1,195,441    1,212,798
    -------------------------------------------------------------------------
                            7,048,826    1,780,377   10,833,155    4,061,455
    -------------------------------------------------------------------------

    Loss before other
     income                (5,980,503)  (1,771,653)  (9,654,676)  (4,052,731)
    -------------------------------------------------------------------------
    Interest and other
     income                    68,312      164,358      114,921      380,157
    -------------------------------------------------------------------------
    Net loss and
     comprehensive
     loss                  (5,912,191)  (1,607,295)  (9,539,755)  (3,672,574)
    Deficit, beginning
     of period            (21,112,465)  (9,355,906) (17,484,901)  (7,290,627)
    Deficit, end of
     period               (27,024,656) (10,963,201) (27,024,656) (10,963,201)
    -------------------------------------------------------------------------

    Net loss per share,
     basic and diluted          (0.07)       (0.02)       (0.11)       (0.05)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    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: Joel Jarding, President and COO or Derrick
Kershaw, Senior Vice President, 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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