Mines Management Announces Results of Annual Meeting and First Quarter 2011 Financial and Operating Results
Mines Management, Inc. (NYSE Amex:MGN) (TSX:MGT) (the 'Company') is
pleased to announce the results of the Company's Annual Meeting of
Shareholders ('Meeting') held in Spokane, Washington, on June 16th,
2011, at which the Company′s shareholders considered the following
proposals:
Proposal 1 ? The Director Election Proposal: to elect two Class II
directors, Mr. Glenn M. Dobbs and Mr. Roy G. Franklin, whose terms
were scheduled to expire at the Meeting, for a term expiring at the
2014 annual meeting of shareholders;
Proposal 2 ? The Auditor Appointment Proposal: to ratify the
appointment of the Company′s independent registered accounting firm,
Tanner LC, for the fiscal year ending December 31, 2011; and
Proposal 3 ? The 2005 Warrant Proposal: to approve the issuance of a
number of shares of common stock in excess of the NYSE Amex 20%
limitation upon the exercise of common stock purchase warrants issued
in a private placement and having a current exercise price of $2.56
per share, at the election of the holders thereof at any time or from
time-to-time prior to the expiration of such warrants.
At the Meeting, shareholders elected the two director nominees and
approved the Auditor Appointment and 2005 Warrant proposals. The
foregoing proposals and the results of the shareholder vote thereon are
described in more detail in the Company′s Definitive Proxy Statement on
Schedule 14A filed with the Securities and Exchange Commission ('SEC?)
on April 22, 2011, and Form 8-K filed with the SEC on June 21, 2011,
respectively.
Additionally, the Company reports on results from the first quarter,
2011, as follows:
Recent Events
On April 4, 2011, the Company completed an underwritten public
offering of 5,120,000 shares of common stock that yielded net proceeds
of approximately $15.2 million before deducting offering expenses. The
Company intends to use the net proceeds for advancement of the
permitting process for its Montanore Project, the commencement of the
Company′s planned delineation drilling program which will include
advancement of the adit, establishment of drilling stations and
commencement of exploratory drilling, and for general corporate
purposes, including possible acquisition and exploration of new mining
properties.
First Quarter Highlights
Mine and Quarry Engineering Services, Inc. of San Mateo, California
('MQES?) finalized the Technical Report entitled 'Technical Report:
Preliminary Economic Assessment, Montanore Project, Montana, USA
prepared for Mines Management, Inc.? dated February 3, 2011 ('PEA?),
which was filed with Canadian securities regulators in accordance with
Canadian National Instrument 43-101?Standards of Disclosure for
Mineral Projects ('NI 43-101?).
The U.S. Forest Service ('USFS?) and the Montana Department of
Environmental Quality ('MDEQ?) continued their environmental review,
and are in the process of formulating responses to comments received
from the public and from the Environmental Protection Agency ('EPA?)
on the Draft Environmental Impact Study ('EIS?) for the Montanore
Project.
The Company continued meetings with federal and state agencies,
Montana legislators, and local Lincoln County Commissioners, Libby
City officials, business leaders and community members.
The Company continued its program to reduce expenditures and conserve
cash pending the completion of permitting.
The Company sold one investment in marketable equity securities during
March 2011, resulting in proceeds of $3.8 million and a realized gain
of $2.0 million.
Cash and investment position were significantly strengthened to $22.8
million at March 31, 2011.
The Company′s exploration and corporate development team continued to
examine and evaluate additional opportunities in North America and
South America.
The net increase in cash and cash equivalents for the quarter ended
March 31, 2011 was approximately $16.4 million. Management has reviewed
the near term spending forecast and continued a plan to diligently
conserve cash where prudent. Given our current cash position of
approximately $22.8 million on March 31, 2011, we have sufficient funds
to complete the permitting process and initiate the adit rehabilitation
and drill station development. Additional financing will be required to
complete the evaluation drilling program and a bankable feasibility
study.
Current Activities
During the first quarter of 2011, MQES finalized the PEA which was
prepared to provide guidance on the potential viability of the Montanore
Project and the basis for the continuation of exploration activities.
The PEA did not update the mineral resource analysis of the Montanore
deposit completed in October 2005 by Mine Development Associates ('MDA
Report?). Mineralized material, as set forth in the MDA Report, is 81.5
million short tons of material grading 2.04 oz/short ton silver and
0.75% copper with a cutoff grade of 1.0 oz /short ton silver. The PEA
assumed pricing of the estimated Montanore resources based on a three
year trailing average at August 16, 2010 (i.e. $3.10 per lb. for copper
and $15.00 per ounce for silver) and developed cost estimates for
development of the Montanore Project. Company personnel participated in
preparation of the report by providing current pricing for equipment and
revised mining concepts and plans for the study.
Initial capital costs for the project were estimated to be $552.3
million (with ± 35% accuracy). The PEA concludes that the Montanore
Project 'demonstrates favorable economic potential? which justifies
'commencement of a resource evaluation program and subsequent
pre-feasibility study.?
Other projects at the Montanore Project include the continued support of
the permitting efforts through data gathering for the hydrological
modeling, tailings permitting support, and other permitting related work
currently underway. Hydrological work involves the monitoring of several
sites in and around the project site. Included in the sites are surface
stream flow, monitoring wells, and underground water flow measurements.
Community support activities included work with groups affiliated with
or located in the city of Libby, Montana, including the Job Service
Employer′s Committee, the Chamber of Commerce and others.
Permitting and Environmental
The Company continues its efforts to obtain the requisite approvals,
permits and opinions from the USFS, the MDEQ, the Army Corps of
Engineers and the U.S. Fish and Wildlife Service, that would allow the
Company to initiate its underground exploration drilling program and
ultimately decide whether to advance the Montanore Project to the
development stage. The EIS was completed in 2009 and the agencies
determined that a Supplemental Draft Environmental Impact Statement
('SDEIS?) would be necessary to address specific project environmental
issues. The agencies are working diligently to complete the SDEIS and
the Company anticipates that the SDEIS could be issued by the agencies
in mid-2011, which would be followed by a public comment period. During
the first quarter, the Company completed a conceptual wetland mitigation
plan that is necessary to support the Section 404 application and will
likely be coordinated with the public notice of the SDEIS.
The USFS and MDEQ have been working closely with the Army Corps of
Engineers and the U.S. EPA to address specific technical issues that
will be included in the SDEIS. The agencies have significantly advanced
the technical development of waste rock characterization, historical and
predicted water quality analyses, and wetland delineation evaluations.
The agencies continue to work with the Company on project hydrology,
wetlands mitigation, and air quality model results to demonstrate
compliance with new air quality guidance issues. It is expected that
these topics will all be completed in time to facilitate the issuance of
the SDEIS in mid-2011.
As part of our permitting process, the USFS must undertake certain
biological assessments and submit draft reports of these assessments to
the U.S. Fish and Wildlife Service ('FWS?) for consideration in
connection with the FWS′s biological opinions addressing the impact of
the project on threatened and endangered species, including grizzly bear
and bull trout. The issuance of the biological opinion by the FWS is
required prior to the completion of a record of decision, discussed
below. Mitigation plans for both grizzly bears and bull trout have been
developed and will be finalized as part of the FWS′s final biological
opinion.
As part of the development of a final EIS and the determination of the
agencies′ preferred alternatives, the U.S. Army Corps of Engineers
('Corps?) must complete an analysis of potential project discharges of
dredged or fill material into waters of the United States, including
wetlands. Such discharges are regulated by Section 404 of the Clean
Water Act which requires a permit before dredged or fill material may be
discharged. During 2010, the Company worked with the Corps and the USFS
to identify acceptable wetland mitigation sites for the project. Towards
the latter part of 2010, the Company identified several sites that are
anticipated to be sufficient to adequately provide compensatory
mitigation for the loss of wetlands due to project activities. The USFS
and MDEQ have selected preferred alternatives for the plant site, mine
portals, and tailings facility. The Corps is expected to issue its
determination that our proposed tailings site is the Least
Environmentally Damaging Practicable Alternative, which is the first
step in this 404 permit approval process, in the first half of 2011. The
Corps is expected to issue a public notice of the proposed 404 permit at
the same time the SDEIS is issued by the USFS. The subsequent public
comment period for this 404 permit is anticipated to run concurrently
with the SDEIS public comment period.
Issuance of a record of decision ('ROD?) by the USFS approving our
proposed Mine Plan of Operations is the final step of the federal
approval process and can occur only after the final FWS biological
opinion, the 404 dredge and fill discharge permit and the final EIS have
been issued. Following the ROD, the other agencies would be expected to
issue their permits relating to mine development activities, including
amendments to the hard rock mining permit and the MPDES permit, over a
6 month period. Once the USFS issues a ROD, we would be authorized to
commence our planned advanced exploration and delineation drilling
program. No further authorization would be required by the State of
Montana for the exploration program, which received State approvals in
2006.
It is estimated that a ROD could occur in 2012 allowing exploration and
mine development work to commence; however, this timing is dependent on,
among other things, the number of comments received from the SDEIS
review process.
Financial and Operating Results
Mines Management, Inc. is an exploration stage company with a large
silver-copper project, the Montanore Project, located in northwestern
Montana. None of our properties, including our principal property, the
Montanore Project, is currently in production. The Company continues to
expense all of its expenditures when incurred, with the exception of
equipment which is capitalized. Financial results of operations include
primarily interest income, general and administrative expenses,
permitting, project advancement and engineering expenses.
Quarter Ended March 31, 2011
The Company reported net income for the quarter ended March 31, 2011 of
$1.3 million, or $0.05 per share, compared to a net loss of $3.4
million, or $(0.15) per share, for the quarter ended March 31, 2010. The
$4.7 million increase over the first quarter of 2010 is attributable to
the following items: (1) General and administrative expenses decreased
by $0.8 million from the first quarter of 2010, principally due to the
issuance of stock options in January 2010 of $0.9 million offset by an
increase in investor relations, travel, and consulting expenses in 2011
of $0.1 million; (2) Technical service expenses were $0.3 million less
in 2011 due to stock options issued in 2010 of $0.2 million and a
reduction of environmental fees and expenses in 2011 of $0.1 million;
and (3) Other income increased by $3.6 million in 2011 compared to 2010
because of a $1.6 million gain recognized from the increase in the fair
market value of warrant derivatives and a $2.0 million gain on the sale
of available-for-sale securities in 2011.
Liquidity
During the quarter ended March 31, 2011, the net cash used for operating
activities was approximately $1.7 million, which is consistent with the
prior year. We have continued to limit activity levels, including
capital expenditures, until the timing of the ROD becomes clearer.
We anticipate expenditures of approximately $6.0 million for the final
three quarters of 2011, which will consist of $1.5 million per quarter
for operating and general and administrative expenses and $0.5 million
per quarter for permitting, engineering, and geologic studies to
finalize the permitting for the Montanore Project. Given our current
cash position of approximately $22.8 million on March 31, 2011, we
expect to have adequate cash on hand to complete the permitting process
and initiate the adit rehabilitation and drill station development. The
Company intends to investigate project financing opportunities during
the current year.
About Mines Management
Mines Management, Inc. is engaged in the business of acquiring and
exploring, and if exploration is successful, developing mineral
properties containing precious and base metals. The Company′s primary
focus is on the advancement of the Montanore silver-copper project, an
advanced stage exploration project, located in northwestern Montana.
Statements Regarding Forward Looking Information: Some
statements contained in this press release are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, and other applicable securities laws. Investors are
cautioned that forward-looking statements are inherently uncertain and
involve risks and uncertainties that could cause actual results to
differ materially, including, among other things, comments regarding
further exploration and evaluation of the Montanore Project, including
drilling activities, feasibility determinations, including those in the
Preliminary Economic Assessment, engineering and environmental studies,
environmental, reclamation and permitting requirements and the process
and timing and the costs associated with the foregoing; the process and
timing associated with the permitting process, including the issuance of
biological opinions, a supplemental and final environmental impact
statement and a record of decision and completion of wetland mitigation
plans; estimates of mineralized material; financing needs, including the
financing required to fund the final phases of the advanced exploration
and delineation drilling program andbankable feasibility study;
use of the proceeds from the financing completed on April 4, 2011;
sources of financing; the sufficiency of working capital to complete the
rehabilitation of the Libby adit and commence delineation drilling;
planned expenditures and cash requirements for 2011; efforts to reduce
costs, including reducing manpower; results of the hydrological model
and the effects thereof; the search for potential exploration and
development opportunities in the mining industry; the possibility of
challenges by environmental groups or others to our permitting efforts
or planned exploration, development or mining activities; potential
completion of a bankable feasibility study and the costs associated
therewith; and markets for silver and copper. Actual results may differ
materially from those presented. Factors that could cause results to
differ materially include fluctuations in silver and copper prices.
Mines Management, Inc, assumes no obligation to update this information.
There can be no assurance that future developments affecting Mines
Management, Inc, will be those anticipated by management. Please refer
to the discussion of risk factors in the Company Form 10-K for the year
ended December 31, 2010, as amended.
Mines Management, Inc.
Vice President of Corporate Development
Douglas
Dobbs, 509-838-6050
info@minesmanagement.com