Mines Management Announces First Quarter Financial and Operating Results
MINES MANAGEMENT, INC. (NYSE Amex:MGN) (TSX:MGT)(the 'Company?) is
pleased to announce results for the first quarter, 2010.
Overview
In the first quarter of 2010:
The U.S. Forest Service ('USFS?) and the Montana Department of
Environmental Quality ('DEQ?) continued compiling responses to
comments from the public received on the Draft Environmental Impact
Statement ('EIS?) for the Montanore Project.
The Company′s exploration and corporate development team continued to
examine additional opportunities in North America and South America.
The Company maintained a strong cash and investment position at March
31, 2010, with $11.0 million of unrestricted cash and certificates of
deposit.
The Company entered into an agreement with Mine Quarry Engineering
Services ('MQES?) to begin preparation of a Preliminary Economic
Assessment ('PEA?) for the Montanore Project.
The Company continued its program to reduce expenditures and conserve
cash pending the completion of permitting.
The net decrease in cash and cash equivalents for the quarter ended
March 31, 2010 was approximately $1.6 million. The Company has reviewed
the near term spending forecast and implemented a plan to conserve cash
where prudent.
Advanced Exploration and Delineation
Drilling Program
Libby operations in the first quarter of 2010 included continued
operations on the Montanore site water treatment system and dewatering
of the decline. Monitoring continues to provide data for the hydrologic
database that is currently under development through the Company′s
contractor. The Company expects that the resulting model will support
its position on the water issues being considered by the agencies in the
permitting process.
The Company awarded a contract to MQES in April to carry out work for
the PEA. Engineering and geology work continues using existing
information in support of ongoing engineering work and analysis for the
PEA.
Permitting and Environmental
In the first quarter of 2010, the USFS and the Montana DEQ continued
work on addressing comments generated by the public on the Draft EIS for
the Montanore project. This included work sessions with the U.S.
Environmental Protection Agency ('EPA?) and the Army Corps of Engineers
('Corps?). In addition, the agencies continued their internal review of
the various transmission line alternatives and modifications that could
address public comments that were generated in the public review period.
The Company has been working closely with the agencies on several key
elements of the project that involved hydrology, waste characterization,
and the water balance and chemical loading model. The hydrology model
predicts mine inflow and the Company expects that it is close to
consensus with the various agencies on this issue.
Hydrologic tests completed in the Libby decline in 2009 were compiled
and incorporated into the hydrologic model. This information provided an
important insight to predicted mine inflow, that was previously modeled
with historic data generated by Noranda Minerals Corporation.
The Company continued to expand the current information on water
balances and incorporated an extensive chemical loading model to assist
in predicting water quality from various locations of the project. All
supplemental information generated continues to support the Draft EIS
characterization and environmental analyses and were completed to
address public comments.
While the Company believes a final EIS may still be completed in 2010,
it can offer no assurances in respect of the timing of a final EIS
because the duration and success of our permitting efforts are
contingent upon many variables not within our control. For example, in
the work sessions described above, the EPA submitted comments relating
to the Montanore Project′s hydrologic model, waste characterization and
water management. The Company is working diligently with the USFS to
address these comments but, the USFS may require the Draft EIS to be
supplemented. Any such supplemented Draft EIS would be issued for public
notice and comment and would likely delay the completion of a final EIS
to 2011.
Work continued with the Corps for permitting issues related to the 404
Permit, which is required for the tailings impoundment. The Company
completed preliminary wetland mitigation plans that the Corps, along
with the EPA, will consider in their overall analysis. The Corps
previously determined that the Poorman tailings facility alternative was
its Least Damaging Preferred Alternative ('LDPA?) and, to address public
comments, the Corps re-analyzed the various alternatives considered
previously. It appears that the Corps will continue to select the
Poorman tailings site as their LDPA.
The EIS contractor continues to develop responses and text edits to the
document that addresses public comments. The Company continues to
participate in the process and provide additional technical information
when and where needed.
Financial and Operating Results
The Company is an exploration stage company with a large silver-copper
project, the Montanore Project, located in northwestern Montana. None of
its 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, 2010
The Company reported a net loss for the quarter ended March 31, 2010 of
$3.4 million, or $0.15 per share, compared to a net loss of $3.0
million, or $0.13 per share, for the quarter ended March 31, 2009. The
$0.4 million increase in net loss in the first quarter of 2010 is
attributable to increases in general and administrative expenses of $0.8
million over the first quarter of 2009, principally due to the issuance
of stock options in January 2010 of $0.9 million. Technical service
expenses were $0.5 million less in 2010 due to suspending work by the
Company′s underground mining contractor, Small Mine Development, for
site rehabilitation, sump construction and dewatering in April 2009.
Legal and accounting expenses increased by $0.1 million in the first
quarter of 2010 over the comparable 2009 period.
Liquidity
During the quarter ended March 31, 2010, the net cash used for operating
activities was approximately $1.7 million, which consisted largely of
permitting and technical expenses associated with activities at the
Montanore Project site. This was offset by $0.1 million received from
stock option exercises during the first quarter of 2010. Cash at the end
of the quarter was $4.5 million compared to $6.1 million at the
beginning of the quarter.
The Company is taking steps to continue to reduce activity levels,
including capital expenditures, until the timing of the Record of
Decision on the Montanore project becomes more clear. We anticipate
expenditures of approximately $4.5 million for the final three quarters
of 2010, which will consist of $0.6 million per quarter for general and
administrative expenses, $0.4 million per quarter for ongoing expense
for the delineation drilling and mine scoping studies for the Montanore
Project, and $0.5 million per quarter for ongoing permitting and
environmental expenses to finalize the EIS. Given the Company′s current
cash position and certificates of deposit of approximately $11.0 million
on March 31, 2010, the Company expects to require approximately $10.0
million of external financing to fund the final phases of the advanced
exploration program and delineation drilling program and completion of a
bankable feasibility study. The Company intends to investigate financing
alternatives.
Mines Management, Inc.
Mines Management, Inc. is a U.S. based mineral company focused on the
acquisition and exploration of silver dominant mineral deposits. The
Company′s primary focus is on the advancement of the Montanore
silver-copper project located in northwestern Montana, with a goal to
ultimately become a new mid-tier producer of precious and base metals.
As of May 14, 2010, the Company had 23,100,109 shares of common stock
issued and outstanding.
FORWARD LOOKING STATEMENTS - Some information contained in or
incorporated by reference into this release may contain forward looking
statements as defined in the Private Securities Litigation Reform Act of
1995. These statements include, among other things, comments regarding
further exploration and evaluation of the Montanore Project, including
planned rehabilitation and extension of the Libby adit, drilling
activities, feasibility determinations, engineering studies,
environmental and permitting requirements, process and timing, and
estimates of mineralized material and measured, indicated and inferred
resources, financing needs, the markets for silver and copper, planned
expenditures for the remainder of 2010, sources of financing, potential
completion of a bankable feasibility study, results of the hydrological
model and the effects thereof, and the search for potential exploration
and development opportunity in the mining industry. The use of any of
the words 'anticipate,' 'estimate,' 'expect,' 'may,' 'project,'
'should,' 'believe,' and similar expressions are intended to identify
uncertainties. We believe the expectations reflected in those forward
looking statements are reasonable. However, we cannot assure that the
expectations will prove to be correct. Actual results could differ
materially from those anticipated in these forward looking statements as
a result of the factors set forth below, and other factors set forth and
incorporated by reference elsewhere in documents filed by the Company
with the U.S. Securities and Exchange Commission, and with other
regulatory authorities, including worldwide economic and political
events affecting the supply of and demand for silver and copper, and the
availability and cost of financing for mining projects, volatility in
the market price for silver and copper, financial market conditions and
the availability of financing on acceptable terms or on any terms,
uncertainty regarding whether reserves will be established at Montanore,
uncertainties associated with developing new mines, variations in ore
grade and other characteristics affecting mining, crushing, milling and
smelting and mineral recoveries, geological, technical, permitting,
mining and processing problems, the availability, terms, conditions and
timing of required governmental permits and approvals, uncertainty
regarding future changes in applicable law or implementation of existing
law, the availability of experienced employees, the factors discussed
under 'Risk Factors' in the Company′s Annual Report on Form 10-K for the
period ending December 31, 2009.
Mines Management, Inc.
Douglas Dobbs, Vice President Corporate
Development & Investor Relations, 509-838-6050
Fax: 509-838-0486
Email:
info@minesmanagement.com
Web:
www.minesmanagement.com