CALGARY, Aug. 2 /PRNewswire-FirstCall/ - Birch Mountain Resources Ltd.
("Birch Mountain" or the "Company") (BMD:TSXV and AMEX) has released an
independent National Instrument 43-101 ("NI 43-101") technical report (the
"2006 Technical Report") on the Hammerstone prefeasibility update study
conducted by AMEC Americas Limited ("AMEC") and the concurrent valuation
study by AMEC reported in the news release dated June 26, 2006. The 2006
Technical Report supercedes and replaces the NI 43-101 technical report
released in March 24, 2005 (the "2005 Technical Report"). The 2006
Technical Report will be available on-line at http://www.sedar.com and
http://www.sec.gov.
    HIGHLIGHTS
    ----------

      -  Market demand for Hammerstone limestone products is driven by the
         growth of the oil sands industry. CERI has forecasted bitumen supply
         growth to 2070.

      -  Part of the value uplift over the 2005 prefeasibility study is
         provided by additional quicklime and reagent limestone sales to
         capture sulphur in the combustion of alternative fuels by the oil
         sands industry. Using assumptions documented in the 2006 Technical
         Report, by 2020 alternative fuels are projected to supply just over
         40% of the oil sands industry's requirements for fuel, power and
         hydrogen. About half of the alternative fuel utilization is
         projected to consume limestone and/or quicklime for
         desulphurization.

      -  The updated Hammerstone limestone reserves, which are sufficient to
         meet projected sales to 2060, are 1.0 billion tonnes (net of mining
         losses), with 460 million tonnes ("Mt") of proven limestone reserves
         and 539 Mt of probable limestone reserves.

      -  The discounted cash flow net present value ("NPV") of Hammerstone in
         constant 2006 dollars, using a discount rate of 7.5%, is
         C$1,669 million on a pre-tax basis and C$1,099 million on an
         after-tax basis. The internal rate of return ("IRR") after tax is
         31.2% and the payback period is estimated to be 5.9 years from
         January 2006. All operating and capital costs are deducted from
         revenues in calculating the annual cash flows used to arrive at NPV.

      -  Initial development capital required prior to 2013 to construct the
         Hammerstone quarry and aggregate plant, the first activation and the
         first two calcining kilns, and the first hydrating plant, is
         estimated to be C$276 million. The valuation (NPV) takes into
         account capital spending estimates totalling C$577 million, plus
         C$443 million in sustaining capital over the life of the project to
         2060.
    The results of the prefeasibility update study and valuation report
were included in Birch Mountain's prior news release of June 26, 2006, and
full details are provided in the 2006 Technical Report. The valuation
results reported in the 2006 Technical Report and presented here are
slightly higher than those reported in the prior news release because a
review of activation plant capacity requirements demonstrated that the
construction start for the second activation plant could be delayed until
2013. The new valuation is shown in the following table.
    Hammerstone Project NPV and IRR from the 2006 Technical Report.
    -------------------------------------------------------------------------
          Discount Rate:       0%      2.5%      5%      7.5%     10%    15%
    -------------------------------------------------------------------------
    Pre-tax NPV (C$)         12,891    5,874    2,987    1,669  1,005    424
    Pre-tax IRR (%)           36.3%
    After-tax NPV (C$)        8,613    3,913    1,981    1,099    655    266
    After-tax IRR (%)         31.2%
    -------------------------------------------------------------------------
    The 2006 Technical Report was authored by independent qualified persons
Ross Griffiths P.Eng., Principal Geologist, Mining, and Donald Doe P. Eng.,
Technical Director, Mining, AMEC Mining & Metals, Calgary, Dr. Michael
Samis Ph.D., P.Eng., Director of Financial Services, AMEC Mining & Metals,
Oakville, Ontario, and John Macfadyen P.Eng., President, Phoenix Process
Engineering, Inc. ("Phoenix"), St. Peters, Missouri. The prefeasibility
update study and 2006 Technical Report incorporate contributions from other
AMEC and Phoenix personnel, the Canadian Energy Research Institute
("CERI"), Dr. Graham A. Davis of the Colorado School of Mines, Norwest
Corporation ("Norwest"), and Birch Mountain. Birch Mountain has also
incorporated information from EnviroSolv Energy LLC ("EnviroSolv").
    SUMMARY OF MARKET DEMAND AND PRODUCT SALES DETERMINATION
    --------------------------------------------------------

    Oil Sands Industry Growth and Demand

      -  Market demand for Hammerstone products, including aggregates, lime
         (quicklime and hydrated lime) and reagent limestone, is driven by
         the growth of Alberta's oil sands industry.

      -  CERI, working with Professor Davis, produced an oil sands bitumen
         supply forecast to 2070. World crude oil price uncertainties were
         considered, and risked future forecasts were provided for bitumen
         production and construction in the Alberta oil sands.

      -  Norwest Corporation analyzed the demand for limestone and
         limestone-derived products in oil sands construction projects and
         bitumen production operations.

    AGGREGATE PRODUCTS DEMAND AND SALES FORECASTS

    Aggregate Demand

      -  Aggregates are required in the construction and production phases of
         oil sands projects. Using their extensive experience in the oil
         sands industry, Norwest independently determined the aggregate
         demand volumes for the construction and production phases using
         published project descriptions, historical usage and engineering
         design calculations.

      -  Published information indicates that in 2004, 81 million tonnes of
         road aggregates and 2 million tonnes of concrete rock remained in
         the region for oil sands construction and operations. For the same
         year, oil sands demand for aggregate products was estimated to be
         10.7 million tonnes annually.

      -  Demand for aggregate products for regional infrastructure and
         municipal construction is estimated to be 10% of the oil sands
         industry demand.

      -  Total aggregate demand is now projected to be 15 million tonnes in
         2006, rising to over 30 million tonnes per year by 2060. Cumulative
         aggregate demand to 2060 is projected to be 1.3 billion tonnes.

    Aggregate Market Share and Sales Projections

      -  Market share projections for most aggregate products have been
         reduced from those used in the 2005 pre-feasibility report.

      -  Birch has taken a conservative approach to market share and sales
         volumes. For construction and base aggregates, Birch's projected
         sales represent approximately 2/3 of total market demand to 2060,
         recognizing that in excess of 400 million tonnes of aggregate will
         need to be supplied from existing or undiscovered non-Hammerstone
         sources.

      -  Concrete rock is essentially exhausted in the region. For this
         reason, Birch is projecting supplying 100% of this relatively small
         market segment.

    REAGENT PRODUCTS DEMAND AND SALES FORECASTS

      -  Lime and reagent limestone demand is generated during the bitumen
         production phase; there is no demand from the oil sands construction
         phase.

    Natural Gas and Alternative Fuels Utilization by the Oil Sands Industry

      -  The oil sands industry is a large consumer of natural gas, used for
         fuel to produce thermal and electrical energy and for reforming to
         produce the hydrogen used in upgrading bitumen to synthetic crude
         oil. The projected growth of the oil sands industry means, "The
         historical dependence on abundant and inexpensive natural gas, for
         fuel and the generation of hydrogen, must change. With or without a
         third development wave beyond 2012, the industry will need to
         encourage the further development of options to use bitumen based
         products, or alternatives such as coal." (Alberta Chamber of
         Resources, Oil Sands Technology Roadmap, 2004).

      -  Alternative fuels such as bitumen, petroleum coke, asphaltenes and
         coal, are available in the region to the oil sands operators. These
         alternative fuels contain sulphur that must be captured for the
         producers to operate within their licensed limits for sulphur
         dioxide (SO2) emissions.

      -  To determine demand for quicklime and reagent limestone associated
         with utilizing alternative fuels, it is first necessary to consider:
         a) the ultimate potential for alternative fuels utilization by the
         oil sands industry and b) the proportion of alternative fuels
         utilization that is likely to require quicklime and/or reagent
         limestone for sulphur emissions reduction.

      -  Published information and discussions with knowledgeable individuals
         in government and industry point to future natural gas supply
         concerns (particularly around future prices and competition for
         clean-burning natural gas), leading to a gradual increase in
         alternative fuels utilization.

      -  Using the assumptions documented in the 2006 Technical Report,
         alternative fuels use is projected to increase from less than 10%
         today, to where, in 25 years, an estimated 80% of new (incremental,
         year-on-year) energy requirements are met by alternative fuels. No
         retrofitting of existing operations has been considered, although
         some retrofitting will likely be implemented.

    Quicklime and Reagent Limestone Demand for Desulphurization

      -  The 2005 Hammerstone Pre-feasibility Report contained demand factors
         for quicklime used as a reagent to capture sulphur in flue gas
         desulphurization (FGD) processes associated with synthetic crude oil
         production.

      -  The 2006 Technical Report contains new demand factors for quicklime
         and reagent limestone used by the oil sands industry to capture
         sulphur in the combustion of alternative fuels.

      -  Consumption of natural gas, per barrel of bitumen produced, by
         mining/extraction operations, in-situ recovery projects and bitumen
         upgrading operations is known from published information. The
         volumes of alternative fuels required to produce the same energy
         input per barrel of bitumen were determined using their published
         energy contents.

      -  The sulphur contents of alternative fuels are known and the demand
         factors for the quicklime and/or reagent limestone that must be used
         to capture sulphur in alternative fuel combustion processes,
         typically involving fluidized bed combustion (FBC) and/or FGD, were
         determined using chemical and process engineering calculations.

      -  Integrated oil sands operators may choose to install large scale
         alternative fuel gasification systems to produce hydrogen in
         addition to thermal and electrical energy, which may or may not need
         quicklime/reagent limestone for sulphur capture. The report assumes
         that only about half of the alternative fuel growth will require
         quicklime and/or reagent limestone for sulphur capture.

      -  Based on the assumptions documented in the 2006 Technical Report, by
         2020 43% of the oil sands industry's energy requirements for fuel,
         power and hydrogen are projected to be met by alternative fuels,
         increasing to about 50% in 2030 and 67% by 2070. Technologies
         requiring quicklime and reagent limestone for sulphur capture are
         projected to be used for about half of the alternative fuel
         combustion.

    Quicklime and Reagent Limestone Market Share and Sales Forecasts

      -  Competing sources of limestone and quicklime are available in
         Southern Alberta, B.C., Manitoba and Montana and may be shipped into
         the oil sands region by truck or train. AMEC estimates the cost for
         rail transport is C$0.09 per tonne-kilometre and Norwest estimates
         the cost for truck transport is C$0.12 per tonne-kilometre.

      -  Considering the cost of transporting competing products from
         Southern Alberta or further afield, distance weighting factors were
         used to set the market share estimates (90% for North Athabasca, 80%
         for South Athabasca and 50% for Cold Lake) used to convert demand
         projections into sales forecasts.

    Hydrated Lime Demand for Water Treatment

      -  Hydrated lime is used to treat boiler-feed-waters for generating
         steam, which is used for in-situ bitumen recovery, surface mining
         extraction and bitumen upgrading.

      -  Demand factors for hydrated lime for water treatment are the same or
         lower than those used in the 2005 pre-feasibility report.

    Hydrated Lime Market Share and Sales Projections

      -  Considering the cost of transporting competing products from
         Southern Alberta and further afield, distance weighting factors were
         used to set the market share estimates (95% for North Athabasca, 85%
         for South Athabasca and 60% for Cold Lake) used to convert demand
         projections into sales forecasts.

    Quarry Plan and Schedule Considerations

      -  Having established Hammerstone products sales forecasts, AMEC
         developed the quarry plan and schedule to finalize the volumes to be
         quarried, the losses, and the sequencing of the various products
         from the limestone units in the quarry. In some years, the quarry
         plan limits the final product sales volumes.

    Cash flow analysis and valuation

      -  AMEC incorporated the final product sales volumes, together with the
         product prices recommended by Norwest and the capital and operating
         costs, into the cash flow analysis used to determine the Hammerstone
         valuation.

    TECHNICAL RESOURCES
    -------------------
    AMEC is an international project management and services company that
designs, delivers and supports infrastructure assets for customers
worldwide across the public and private sectors. AMEC employs about 44,000
people in more than 40 countries, generating annual turnover of around C$11
billion.
    CERI is an independent, not-for-profit research organization, committed
to excellence in the analysis of energy economics and related environmental
issues in the producing, transporting, and consuming sectors. CERI was
founded in 1975 and has produced more than 100 major research studies as
well as numerous smaller works and monographs for all levels of government
and industry, both nationally and internationally.
    Graham A. Davis is Professor of Economics and Business at the Colorado
School of Mines in Golden, Colorado. He holds a Ph.D. in Mineral Economics,
an MBA, and a B.Sc in Metallurgical Engineering. His areas of expertise are
project valuation under uncertainty and the economics of mineral and energy
markets.
    Phoenix is a multidisciplinary engineering firm in suburban St. Louis,
Missouri, US, providing engineering services to the lime, Portland cement
and industrial minerals industries on a world-wide basis. Phoenix has more
than 40 years of engineering expertise in raw materials studies, process
engineering, feasibility studies, preliminary engineering, detailed
engineering design of production facilities and other services.
    Norwest is an internationally recognized consultancy serving the
mining, quarrying, oil and gas industries. With major offices in Canada and
the US, Norwest provides an array of services, from exploration to
marketing, to assist mineral producers, banks, government institutions, and
consumers of mineral products.
    EnviroSolv of Terrace Park, Ohio, is a private company with a highly
technical professional team specializing in providing
environmentally-friendly solutions to its power and industrial clients. The
technical team has assisted in developing more than 50 patents focused on
environmental emissions and currently the EnviroSolv team is developing
advanced environmental applications for the fossil fuel and natural gas
industries.
    Hugh J. Abercrombie, Ph.D., P.Geol., Vice President, Exploration, is
identified as Birch Mountain's qualified person for this news release.
    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
results, research and development results, 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.
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 http://www.sedar.com and http://www.sec.gov.
    Cautionary Note to US Investors: The terms "reserve", "proven reserve"
and "probable reserve" used in this news release are defined in accordance
with NI 43-101, "Standards of Disclosure for Mineral Projects", under the
guidelines set out by the CIM in, "Standards on Mineral Resources and
Mineral Reserves", adopted by the CIM Council on August 20, 2000. In the
US, Securities and Exchange Commission ("SEC") Industry Guide 7 defines a
mineral reserve as, "That part of a mineral deposit which could be
economically and legally extracted or produced at the time of the reserve
determination." According to interpretations by SEC staff of mining
industry disclosure standards, such terms may not be used by SEC
registrants unless the registrant has completed a "bankable" feasibility
study and all applicable permits are in place or expected imminently. US
investors are cautioned not to place undue reliance on disclosure that is
not issued in accordance with SEC regulations.
    The TSX Venture Exchange does not accept responsibility for the
adequacy
    or accuracy of this news release.

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