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"NOT YOUR AVERAGE PROSPECT"
Tuesday, March 6

At this year’s PDAC I had the pleasure of meeting one of Canada’s most celebrated prospectors, Don McKinnon.  With more than 45 years of experience in the international mineral exploration industry, Mr. McKinnon is renowned for the discovery of Hemlo, one of Canada's largest and richest gold mining camps.  I had a lengthy chat with McKinnon and learned he had just published a book, THE SCHOLARLY PROSPECTOR, and then went on to explain what else is occupying his time these days.

Baltic Resources [TSXV: BLR]– Chaired by Canadian mining icon Don McKinnon – is one of Canada’s newer juniors, currently with 3 projects underway in Northern Ontario, Canada.

Who would want to bet against Baltic’s chances for success in Northern Ontario; it’s McKinnon’s ‘own backyard’.

Baltic’s three Projects are:

Martison Lake Project
The company owns a 50% joint venture interest in a world-class phosphate deposit with a resource estimate of 113 million tonnes averaging 21% P2O5 — high-grade ore by industry standards. For 2006, the Company plans to conduct a pre-feasibility study to update the capital and operating costs, the desired product mix and operating rate of both the mine site and phosphoric acid plant. The phosphate resources will also be brought up to National Instrument 43-101 standards. Pending the results of the pre-feasibility, a bankable feasibility will be undertaken in 2007.

Coral Rapids Project
Diamonds, Uranium, VMS Base Metals and High-Calcium Limestone Potential. A recent ultra high-resolution airborne magnetic and electromagnetic survey carried over Baltic's Coral Rapids Property has identified a minimum of thirty anomalous magnetic responses having high potential of representing kimberlitic intrusions. Of these thirty, fifteen high priority targets have been drilled of which nine intersected kimberlitic intrusions.

Hawkins Gold Project
Host to the historic Shenango Gold Mine and a known low-grade gold horizon with values of 1 to 4 grams per ton of gold over 4 to 30 meter widths along a minimum strike distance of 3 to 4 kilometers. This was proved up by Falconbridge Exploration Ltd. in the mid-1980's by means of an extensive shallow drilling program. No subsequent drilling was carried out to evaluate these felsic volcaniclastic units at depth or to the west. Our exploration program is aimed at extending the auriferous horizon west ward and sampling it to determine grade. The Companies goal is establish a large tonnage deposit accessible to open pit mining.

The project that interested me the most – and the primary reason for my writing this piece – is the Martison Lake Project.  Having spoken about this project with Don and then his son, Gordon McKinnon – I was impressed with the story.

Conceptually, what Baltic is going to do at Martison Lake is mine igneous carbonate-rich Phosphate from their 50 % owned Martison Lake Property.

The phosphate deposit had previously been delineated back in the late nineties:

Geological resources, which are open to increase at depth and along strike, were calculated by MRDI in 1998 to be 113 million tonnes averaging 21% P2O5 — high-grade ore by industry standards. These resources, which have been reported in previous company annual reports for 1998 and 1999, were calculated before the advent of National Instrument 43-101, which adopts CIM Standards on Mineral Resources, and Reserves. The resources should be regarded as order-of-magnitude estimates requiring further work and a Technical Report before qualifying as Mineral Resources under N.I. 43-101.

Management is hopeful that Baltic will receive their N.I. 43-101 classifications in short order perhaps as early as this month – and this is will, in turn, lead to the rapid conclusion of a pre-feasibility.

This “mined phosphate” will then be combined with sulphuric acid and water to create Super Phosphoric Acid [High Heat Liquid Fertilizer].  Basically, the fertilizer remains “liquid” so long as it remains “hot”.  If it cools – it solidifies making it very difficult to apply to crops.

Phosphate fertilizers are particularly suited to and utilized in the production of corn [ethanol].  An explanatory presentation of how this all works is available here.

What Really Makes This Work

As such, this product cannot practically be transported economically via sea going ships – the heat aspects and timelines make this impractical.  Apparently, it does however, ship well [short-haul] by rail and truck.  This means that this product “must be produced domestically – for the domestic [North American] market”.  What this means is that the price of this product will not be undercut by cheaper imports.

Currently, this product is already in agricultural use in the Upper Mid West of the U.S. and in Canada.  According to McKinnon, this product is currently produced in Florida and shipped north via rail.

Sulphuric Acid is readily available ‘nearby’ the Martison Lake property as the byproduct of large scale base metals smelters.  Due to government imposed ‘clean air regulations’ – base metals smelters are compelled to produce this sulphuric acid [reducing toxic emissions] in great quantities.

When McKinnon added that this phosphoric acid has recently been trading for as much as 550 per ton – with prospects of a +100 million tonne deposit [open at depth and along strike], the proximity to vast amounts of ‘cheap’ but essential sulphuric acid feedstock along with proximity to the farming regions of the U.S. and Canadian mid west - this makes too much sense.

With petroleum becoming increasingly scarce and petroleum based fertilizers becoming increasingly more expensive – I like the story.

This represents a multi-faceted mining play; some fantastic near term potential pay off in fertilizer – of all things - with a lot of “blue sky” exploration potential ‘kickers’ with one of Canada’s most iconic – and successful – prospectors.  Certainly not your average prospect.

Baltic only recently went public and a great many of the “right institutions” are onboard, according to Gordon McKinnon – in fact, their financing was greatly oversubscribed.

Also of note, Baltic’s 50/50 joint venture partner on the Martison Lake Project, Phoscan Chemical Corp [TSXV: FOS], currently has 48 million shares outstanding with a share price of .54 while Baltic has 21 million shares outstanding with a share price of .44.

Current share price:  .44 Cdn.

Disclosure:  I do not own the stock.