Birch Mountain raising $32 million (September 12, 2005)

Vancouver — Industrial mineral miner Birch Mountain Resources (BMD-V) is going to the market to raise $32 million for its Muskeg Valley limestone quarry in northeastern Alberta.

With a preliminary prospectus filed, the company has engaged a syndicate of underwriters, led by RBC Capital Markets, for a public offering of 8 million shares at $4.00 apiece. The underwriters hold the right to buy (a greenshoe option) an additional 1 million shares at the same price. The offering is expected to close soon.

Birch Mountain recently received all its necessary approvals to begin construction and operations at the quarry. Surface preparation is now under way.

The company’s Muskeg Valley and Hammerstone projects are located near the Athabasca oil sands, thereby providing a large, local source of construction aggregate and quicklime for the booming oil development.

Portions of the limestone deposits are of high enough quality for calcining into quicklime, which is used by oil sands operators to treat air and water emissions.

A prefeasibility study, conducted earlier this year by engineering firm AMEC Americas, reviewed proven and probable limestone reserves of 1.2 billion tonnes on the company’s Hammerstone project. The study estimated initial capital costs of $130 million to develop the quarry and build an aggregate and quicklime plant. The operation would last up to 70 years, and has pre-tax net present value of $698 million.

Birch Mountain shares have risen sharply over the last month to the $4.50 level, almost a 9-year high. With its 69.1 million shares outstanding, the company posts a market capitalization of $310 million.