Mines Management Announces Second Quarter 2011 Financial and Operating Results
Mines Management, Inc. (NYSE Amex: MGN) (TSX: MGT) (the 'Company') is
pleased to announce financial and operating results for the second
quarter.
Mr. Glenn Dobbs, the Company′s President and Chief Executive Officer,
stated, 'Significant progress has been made to advance the Montanore
Silver-Copper Project through the re-permitting process. We anticipate
completion of the Supplemental Draft Environmental Impact Study
('SDEIS?) in the near term, and commencement of the final phase of
permitting following shortly thereafter. We remain in excellent
financial condition as we move closer to the completion of permitting of
the Montanore Project, and look forward to commencement of the
underground delineation drilling program.?
Overview Second Quarter 2011
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.
The U.S. Forest Service ('USFS?) and the Montana Department of
Environmental Quality ('MDEQ?) continued their environmental review of
the Montanore Project, and are in the process of formulating responses
to comments received from the public and from the Environmental
Protection Agency ('EPA?) in the SDEIS for the 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.
Cash and investment position remained strong at $22 million at June
30, 2011.
The Company′s exploration and corporate development team continued to
examine and evaluate additional opportunities in North America and
Latin America.
The net decrease in cash and cash equivalents for the quarter ended June
30, 2011 was approximately $0.8 million. Management has reviewed the
near term spending forecast and continued a plan to diligently conserve
cash where prudent. Given our current cash and investment position of
approximately $22 million on June 30, 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 second quarter of 2011, work at the Montanore Project
included ongoing support operations for the permitting process. Studies
continued on the ground water intake for the adit, monitoring wells and
the surface waters in the area. Additional support for the permitting
process includes data gathering for the biological aspects of the permit
relating to fisheries and other wildlife in the area.
A light, imaging, detection and ranging ('LIDAR?) survey has been
undertaken to provide a more accurate topographic rendition of the
Montanore Project area. LIDAR survey methods have the ability to 'see
through? the trees and underbrush to yield a very accurate topographic
map. This accuracy is necessary for the final engineering of surface
facility layouts including the tailings area, plant site, conveyor runs
and roads. The LIDAR survey will continue in phases throughout the
summer months and advance to the higher elevations as the snowpack melts.
Community support activities included participation in the local Chamber
of Commerce meetings, Montanore Positive Action Committee ('MPAC?)
activities, and Job Service surveys. MPAC is a local support group that
is actively promoting and supporting the Montanore Project in the local
community and the state. MPAC held a rally in April 2011 with over
fifteen speakers from the local community and political leaders from the
surrounding area and region.
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 ('USFWS?) that would
allow the Company to initiate its underground exploration drilling
program. The results of the underground exploration drilling program
will form the basis upon which the Company, and financing parties, can
determine whether to advance the Montanore Project to the development
stage.
The Environmental Impact Statement was completed in 2009 and the
agencies determined that a 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 the third quarter of 2011, which would be
followed by a public comment period of forty-five days.
In addition, the Company submitted its formal application to the Army
Corps of Engineers for the 404 Permit for the project. The Army Corps of
Engineers will review the application, along with information provided
in the SDEIS, and initiate a public notice and application review
process.
The USFS has completed a draft Biological Assessment for the project.
Final edits and reviews are underway and it is expected to be released
to the USFWS in the third quarter of 2011 to initiate the formal
Section ?7 Consultation process (Endangered Species Act) required to
advance the project. The USFS and the USFWS will work collaboratively on
the review process, which will culminate in the issuance by the USFWS of
a Biological Opinion.
The Company completed additional technical study plans for the proposed
wetland mitigation sites. The field work will be implemented in the
third quarter of 2011 and will be a critical component of the Army Corps
of Engineers process and the issuance of the Final EIS and Record of
Decision by the USFS. With the completion of the SDEIS expected the
third quarter of 2011, the Company anticipates issuance of the Final EIS
and the Record of Decision could still occur in early 2012.
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. The Company continues to expense all of its expenditures when
incurred, with the exception of equipment and buildings which are
capitalized. The Company has no revenues from mining operations.
Financial results of operations include primarily interest income,
general and administrative expenses, permitting, project advancement and
engineering expenses.
Quarter Ended June ?30, 2011
The Company reported a net loss for the quarter ended June ?30, 2011 of
$1.6 million, or $0.06 per share, compared to a net loss of $1.2
million, or $0.05 per share, for the quarter ended June ?30, 2010. The
$0.4 million increase in net loss in the second quarter of 2011 is
attributable to a decrease of $0.7 million in the gain recognized from
the fair value of warrant derivatives. This was partially offset by a
reduction in operating expenses from the second quarter of 2010,
principally a $0.3 million decrease in consultant fees paid to Mine and
Quarry Engineering for work on the preliminary economic assessment and
the completion of the Grizzly Bear study during 2010.
Six Months Ended June ?30, 2011
The Company reported a net loss for the six months ended June ?30, 2011
of $0.3 million, or $0.01 per share, compared to a loss of $4.6 million
or $0.20 per share for the six months ended June ?30, 2010. The $4.3
million decrease in net loss from 2010 is attributable to the following
items: (i) ?decreased general and administrative costs of $0.6 million in
2011 primarily the result of decreased stock compensation related to
options issued in January ?of 2010; (ii) ?decreased technical services
costs of $0.7 million in 2011 principally due to a reduction in
consultant fees paid to Mine and Quarry Engineering in 2010, decreased
environmental expenses paid to the DEQ, and completion of the Grizzly
Bear Study in 2010; (iii) ?decrease in accounting and legal fees of $0.1
million due to decreased permitting issues related to the EPA and USFS′s
request for a SEIS; (iv) ?increased investment income of $2.0 from sale
of available-for-sale securities during 2011, and (v) ?increase of $0.9
million in the net gain on fair market value of warrant derivatives
during 2011.
Liquidity
During the six months ended June ?30, 2011, the net cash used for
operating activities was approximately $3.6 million, which is consistent
with the same period during the prior year. We have continued to limit
activity levels, including capital expenditures, until the timing for
the receipt of the Record of Decision becomes clearer.
We anticipate expenditures of approximately $4.0 million for the final
six months of 2011, which we expect to consist of $3.0 million for
general and administrative expenses and $1.0 million for permitting,
engineering, and geologic studies to finalize the permitting for the
Montanore Project. Depending on the amount and rate of progress with our
permitting efforts and market conditions, the Company might seek
additional financing before the end of 2011.
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 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 anda bankable feasibility study; 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, among other things, 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′s 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
www.minesmanagement.com