MINES MANAGEMENT ANNOUNCES
2007
YEAR END FINANCIAL RESULTS
Spokane, Washington - April 8, 2008 -- Mines
Management, Inc. (AMEX: MGN, TSX: MGT) ("the Company") is
pleased to announce operational and financial results for the year ending
December 31, 2007.
2007
Highlights
- Successfully completed
financing activities, including completion of public equity offering
in second quarter 2007 with gross proceeds of $34.2 million and
completion of a private placement with gross proceeds of $10 million
in November 2007.
- Commenced the advanced
underground exploration program at the Montanore Site by completing
construction of a water treatment plant and dry storage facility in
November 2007.
- Procurement and delivery
of underground and surface equipment to rehabilitate the Libby adit,
extend the adit towards the ore body and develop the drill stations
for the drilling program.
- Hired an additional 12
employees including Vice President/General Manager for the Montanore
Project, Project Engineer, Senior Site Geologist and additional
operations staff for the site.
- Completed and submitted a
preliminary draft EIS in November 2007; advanced the permitting
process by working closely with state and federal agencies.
- Maintained
a strong cash and cash equivalents position of more than $32.3
million as of December 31, 2007.
Financial and Operating Results
Mines Management, Inc. reported a net loss for
the year ended December 31, 2007 of $8.4 million or $0.38 per share
compared to a loss of $6.0 million or $0.47 per share for the year ending
December 31, 2006. The 2007 increase of $2.4 million in net loss versus
2006, and the 2006 net loss increase of $0.8 million versus 2005, was
primarily due to increased capital investment and administrative expenses
in support of the Montanore Project.
Expense Summary
Expenditures
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2007
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2006
(millions)
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2005
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Montanore Project Expense
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$2.9
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$2.7
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$2.7
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Administrative Expense
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$5.6
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$2.7
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$1.7
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Non Cash Stock Option Expense
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$1.0
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$0.9
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$1.0
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Interest Income
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($1.1)
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$(.3)
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$(.2)
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Montanore Project expense includes exploration,
fees, filing and licenses, environmental, engineering and permitting
expense. Increased activity on the Montanore Project primarily
resulted from increased payments to consultants for permitting
activities, collecting additional environmental baseline data,
mineralized material and resource studies, and exploration activities
related to reopening the Libby adit. Administrative Expense, which
includes general overhead and office expense, legal, accounting,
compensation, rent, taxes, and investor relations expense, increased $2.9
million or 107% in 2007 over 2006. This increase is attributed to the
purchase in November 2007 of the MRC 5% net proceed Royalty for $500,000,
expensing of $500,000 in property charges related to a write down,
addition of seven staff members, salary increases among existing staff
and increased legal and accounting fees asso ciated with our cross-border
equity financings in 2007 that resulted in gross proceeds of $44.2
million. Stock option expense, which includes stock options granted
to officers, employees and consultants, increased $0.1 million from 2006
to 2007, while interest income increased significantly by $0.8 million
due to the increased cash on hand after completing the public and private
stock offerings.
Liquidity and Capital Resources
At December 31, 2007, our aggregate cash, short
term investments, and long term investments totaled $32.6 million
compared to $5.2 million at December 31, 2006. In 2007, we received $41.6
million in net proceeds from the sales of common stock from a public
offering in the second quarter of 2007 and a private placement in
November 2007. The net cash used for operating activities during
2007 was $5.1 million, which consisted primarily of permitting, environmental,
exploration, and engineering expenses for the Montanore project and
general administrative expenses. We purchased $6.1 million in fixed
assets in 2007, which principally consisted of equipment for
rehabilitating and extending the adit. We spent $3.1 million in
2007 for infrastructure classified as construction in progress at the
Montanore Project site. The net increase in cash and cash equivalents for
the year ending December 31, 2007 w as $29.0 million.
We anticipate capital expenditures in 2008 of
approximately $22.7 million which will consist of (i) $1.3 million in
each quarter for ongoing operating and general administrative expenses,
(ii) $2.5 million in the first quarter to begin the exploration and
delineation drilling program at the Montanore Project and (iii) $5.0
million in each remaining quarter to sustain efforts in furtherance of
the program. We will require external financing in 2008 and 2009 to fund
the completion of the advanced exploration and delineation drilling
program and completion of a bankable feasibility study.
Advanced Exploration and Delineation Drilling
Program
In 2006, we acquired the property providing
access to the 14,000 foot Libby adit. With additional development,
the Libby adit will provide access to the Montanore deposit. We
also acquired two permits related to the Libby adit that, with minor
revisions, allow us to reopen, dewater and rehabilitate the adit.
In 2007, as part of the advanced exploration and
delineation drilling program at Montanore, we completed the construction
and startup of a water treatment facility. The objectives
of our underground evaluation program are to:
- Expand
the known higher grade intercepts of the Montanore deposit;
- Develop
additional information about the deposit;
- Further
assess and define the mineralized zone; and
- Provide
additional geotechnical, hydrological and other data.
Stage 1�Dewatering and Adit Rehabilitation
With the exception of the first 600 feet, the
length of the Libby adit contains water. During the
first stage of the evaluation drilling program, we plan to dewater the
adit, and treat the discharged water using ultra-filtration and possibly
chemical pre-treatment so that discharged water, both during the
dewatering process as well as during development of the adit and drilling
program, meets Montana�s water quality standards. We completed the pilot
scale tests of the water treatment plant in November 2007. We have
been delayed starting the dewatering pending approval by the Forest
Service of an environmental assessment (EA) for road use. As
dewatering begins, we plan to rehabilitate the adit, which we anticipate
to involve, among other activities, scaling the walls, installing new
roof bolts and extending electricity, ventilation and dewatering infrastructure
into the adit. We estim ate that Stage 1 activities will cost
approximately $7.3 million.
Stage
2�Advancement of Adit, Drifting and Establishment of Drill Stations
Once
rehabilitation is complete, we plan to advance the adit approximately
3,000 feet towards the middle of the deposit. Following the
advancement of the adit, we expect to commence 10,000 feet of development
drifting, which will be necessary to provide drill access. The
process of drifting and the establishment of drill stations will continue
throughout the remainder of the program. We expect that Stage 2
will cost approximately $7.5 million.
Stage
3�Phase I Delineation Drilling
In
Stage 3 of the advanced exploration and delineation drilling program, we
expect to commence approximately 20,000 feet of delineation diamond core
drilling. We expect to spend approximately $0.5 million on Phase I
delineation drilling. We also expect to spend approximately $12.7 million
during Stages 1, 2 and 3 on site operating and capital costs, optimization
studies and general corporate support.
Stage
4�Phase II Drilling and Bankable Feasibility Study
During
this stage we anticipate completing an additional 25,000 feet of diamond
core drilling, undertaking additional metallurgical and geotechnical
testing and analysis, and if the results of our exploration are
successful, preparing for and completing a bankable feasibility study at
an estimated cost, with site operating and capital costs, of
approximately $10.0 million.
Permitting
of the Montanore Project
The
agencies completed preparation of the preliminary draft EIS in the fourth
quarter of 2007, which is currently being reviewed internally by the
agencies. We continue to address technical questions and comments
generated by the USFS and the State during the EIS review process.
Once
the agencies have completed their review, the final draft EIS and the
draft permits are provided to the public for review and comment. The
agencies may consider public comments in preparing the final EIS and
final permits. If the public review process is successfully completed,
the agencies would proceed to determine the form of the final EIS and
permits and would issue a joint Record of Decision setting forth their
decisions on our proposed plan of operations and hard rock mining
program. Following issuance of the Record of Decision, and
resolution of any appeals or legal challenges to the Record of Decision,
we would receive the required permits and finalize the
Montanore Project Description based on the results of the completed
agency review.
Mines
Management, Inc., is a U.S. based mineral exploration company in the
business of acquisition, exploration and development of precious and base
metals minerals deposits. Currently, the Company is focused on
advancement of the Montanore Silver-Copper Project located in
northwestern Montana. The Montanore Project is currently undergoing
an advanced stage exploration and evaluation program and re-permitting
process.
This
press release contains forward-looking statements regarding the Company,
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements regarding further exploration and
evaluation of the Montanore Project, including planned rehabilitation and
extension of the Libby adit, drilling activities, feasibility
determination, engineering studies, environmental and permitting
requirements, process and timing, and financing needs; the markets for
silver and copper, planned expenditures in 2008 and 2009; and potential
completion of a bankable feasibility study. The use of any of the words
"anticipate," "estimate," "expect,"
"may," "project," "should," "believe,"
and similar expressions are intended to identify uncertainties. These
statem ents are based on assumptions that the Company believes are
reasonable but that are subject to uncertainties and business
risks. Actual results relating to any and all of these subjects may
differ materially from those presented. Factors that could cause results
to differ materially include fluctuations in silver and copper prices,
negative results of environmental studies, problems or delays in or
objections to the permitting process, the proximity of the Project to the
Cabinet Wilderness Area, failure or delay of third parties to provide
services, changes in the attitude of state and local officials
toward the Montanore Project and other factors discussed in the Company's
periodic filings with the Securities and Exchange Commission, including
its annual report on Form 10-K for the year ended December 31, 2007.
Contact:
Mines Management, Inc.
Douglas Dobbs, Vice President Corporate Development & Investor
Relations
Phone: 509-838-6050
Email: info@minesmanagement.com
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