Mines Management Announces Second Quarter 2010 Results
Mines Management, Inc. (NYSE-Amex:MGN) (TSX:MGT) is pleased to announce
financial and operating results for the second quarter ending June 30,
2010.
In the second quarter of 2010:
The U.S. Forest Service (USFS) and the Montana Department of
Environmental Quality (DEQ) continued formulating responses to public
comments received on the Draft Environmental Impact Statement (DEIS)
for the Montanore Project in 2009.
The Company′s exploration and corporate development team continued to
explore additional resource opportunities in North America and Latin
America.
The Company continued meetings with federal and state agencies,
Montana legislators, local Lincoln County Commissioners, Libby City
officials and residents.
The Company closed out the quarter at June 30, 2010 with $9.0 million
of unrestricted cash and certificates of deposit.
The Company continued its program to reduce expenditures and conserve
cash pending the completion of permitting.
The net cash operating expenditures for the six months ended June 30,
2010 was $3.6 million. The Company believes that it has sufficient
working capital to complete the rehabilitation of the Libby adit and
initiate delineation drilling at Montanore.
Advanced Exploration and Delineation
Drilling Program
Second quarter operations included continued operations on the Montanore
mine site water treatment system and maintaining the water level of the
decline. Water from the decline is being treated on day shift at a rate
of 350 gallons per minute which equates to approximately 72 gallons per
minute of water infiltration from the formations. Ongoing water
monitoring continues with respect to the water treatment in order to
generate data which is used in monthly reports furnished to the Montana
DEQ for monitoring purposes and for the hydrological data base that is
currently under development through our hydrology contractor.
In April 2010, the Company awarded a contract to Mine Quarry Engineering
Services (MQES) to develop an economic assessment of the project using
the existing NI 43-101 resource report prepared by Mine Development
Associates and to develop a Preliminary Economic Assessment (PEA) of the
Montanore Project.
Engineering and geology work continues using existing information.
Geology work has concentrated on the basic resource model in support of
the NI 43-101 for the review being done by MQES. Engineering work is
concentrated on the gathering and preparation of supporting documents
and summarizing information for the MQES PEA study.
Permitting and Environmental
In the second quarter of 2010, the USFS and the Montana DEQ continued to
respond to comments generated by the public and agencies on the DEIS,
addressing wetlands, water quality, and waste characterization. The
agencies have completed the development of alternatives for selection of
the electrical transmission line corridor but are working to harmonize
the preferred alternative between the USFS and Montana DEQ.
The Company finalized several technical support documents on hydrology,
waste characterization and a water/balance chemical loading model that
are currently under review by the agencies. The final revisions were
based on previous comments generated by either the public or the
agencies. Efforts continue on other technical documents and applications
that are necessary for the environmental review process or agency
approval. This includes air quality modifications, domestic waste water
management, and other similar project environmental and permitting
requirements.
The Company is working with the USFS and Montana DEQ on development of
environmental mitigation (i.e. wetlands, sediment loading and fisheries)
for the project. The Company is also working with the U.S. Army Corps of
Engineers (ACOE) to develop mitigation of wetlands use under the ACOE′s
404 permitting process.
The Company continues to work with the agencies to refine overall
project description to minimize environmental impacts analyzed in the
DEIS. This will help in the reduction of costs associated with
mitigation and monitoring activities that may be required for the
project.
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 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, 2010
The Company reported a net loss for the quarter ended June 30, 2010 of
$1.2 million, or $0.05 per share, compared to a net loss of $1.9
million, or $0.08 per share, for the quarter ended June 30, 2009. The
$0.7 million decrease in net loss in the second quarter of 2010 is
attributable to (i) decreases in operating expenses of $0.1million
from the second quarter of 2009, principally in stock compensation
included in general and administrative expenses, and (ii) a gain on
warrant derivatives of $0.7 million offset by a decrease in interest
income of $0.1 million.
Six Months Ended June 30, 2010
The Company reported a net loss for the six months ended June 30, 2010
of $4.6 million, or $0.20 per share, compared to a loss of $4.9 million
or $0.22 per share for the six months ended June 30, 2009. The $0.3
milliondecrease in net loss from 2009 is attributable to the
following items: (i) increased general and administrative costs of $0.7
million in 2010 primarily due to an increase in stock compensation due
to options issued in January of 2010; (ii) increased legal, accounting
and consulting costs of $0.1 million in 2010 due to fees associated with
permitting issues; (iii) decreased technical services costs of $0.5
million in 2010 due to suspending site rehabilitation work in April
2009; and (iv) increased other income of $0.6 million in 2010 primarily
due to a net gain in the fair market value of warrant derivatives.
Liquidity
During the six months ended June 30, 2010, the net cash used for
operating activities was $3.6 million, which consisted largely of
permitting and technical expenses associated with activities at the
Montanore Project site.
We continue to reduce activity levels, including capital expenditures,
until the timing for the receipt of the Record of Decision becomes more
clear. We anticipate expenditures of approximately $3.6 million in the
final six months of 2010, which we expect to consist of $2.1 million for
general and administrative expenses and $1.5 million for ongoing
expenses in preparation for the delineation drilling program, additional
mine scoping studies, and responding to EIS comments. 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 2010.
Mines Management, Inc. is a U.S. based mineral company focused on the
acquisition and exploration of precious and base metals 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 August 18, 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