FOR IMMEDIATE RELEASE
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RELEASE 07-13
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MINES MANAGEMENT ANNOUNCES THIRD QUARTER EARNINGS
AND MONTANORE SILVER-COPPER PROJECT UPDATE
Spokane, Washington � November 15, 2007 � MINES MANAGEMENT, INC. (Amex: MGN, TSX: MGT)
(the "Company") is pleased to provide an update on activities occurring during the third
quarter of 2007.
Advancing the Montanore Silver-Copper Project continues to be the Company's main focus. In
addition to its planned advanced exploration and delineation drilling program, the Company is
continuing its permitting efforts with federal and state agencies and its optimization review
of the Project. During the third quarter of 2007, construction and installation of a water treatment
plant was the main activity at the Montanore Project site, with testing and commissioning of the plant
scheduled for November 2007.
Overview
In the third quarter of 2007, the Company:
·
Maintained a strong cash position, with $26.3 million at September 30, 2007.
·
Continued preparations for the advanced exploration and delineation drilling program by:
o
commencing installation and construction of the water treatment plant and building,
which was completed as of October 31, 2007,
o
hiring additional staff at the Project site to support initiation of underground
activities at the Libby adit, and
o
receiving shipments of underground mining and surface equipment.
·
Advanced the permitting process by working closely with state and federal agencies to provide
technical and other information in support of the preparation of the draft environmental impact
statement.
During the third quarter, our progress at the Project site included the installation of a water
treatment plant and construction of the ventilation support structure in preparation for the
commencement of rehabilitation activities in the Libby adit. The Company expects to start the
dewatering and rehabilitation of the Libby adit late in the fourth quarter of 2007, once the final
approval of the Environmental Assessment for road use is received. Following dewatering and
rehabilitation, the Company expects to advance the adit approximately 3,000 feet toward the middle of
the mineral deposit.
The Company plans an additional 10,000 feet of development drifting to provide drill access to
different portions of the deposit, construction of drill stations, and diamond core drilling of
approximately 50 holes totaling approximately 45,000 feet. The objectives of the advanced exploration
and delineation drilling 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.
The Company expects that results of the drilling program, if successful, would provide data
to support the completion of a bankable feasibility study, allowing the Company to convert a portion
of its mineralized material/resource estimates into reserves.
The net cash expenditures for the quarter ending September 30, 2007, were $3.4 million for the
purchase of equipment and construction of the water treatment plant and other infrastructure and
$0.6 million for operating activities. The Company believes that it has sufficient working capital
for rehabilitation of the Libby adit and commencement of the delineation drilling program.
Advanced Exploration and Delineation Drilling Program
During the third quarter of 2007, the Company continued preparations for the exploration and
delineation drilling activities at the Libby adit site. The water treatment plant components were
delivered during the quarter and installation of the plant was completed October 31, 2007, with testing
and startup activities beginning on November 1, 2007. Other activities included the delivery of major
mine equipment, pump stations, power load centers and other key equipment necessary for the delineation
drilling program. Installation of the ventilation duct work was completed for the first several hundred
feet of the adit.
Technical staff and site personnel numbers remained relatively constant with an electrician and
general laborer added to the site staffing. The Company expects to begin rehabilitation activities
at the Libby adit once the approval of the Environmental Assessment (EA) is received from the U.S.
Forest Service (USFS) and dewatering commences. The EA is scheduled to be approved in early
December 2007.
Major equipment for the rehabilitation stage of the program is either on site or scheduled for
delivery in the fourth quarter of 2007, or early in the first quarter of 2008. Costs for the major
equipment are within budget, and it is still anticipated that expenditures through the end of 2007
will be approximately $6.5 million for equipment and activities related to the preparation for
commencement of the drilling program.
During the third quarter, the Company also advanced the geologic model for the project, and it is
expected that the updated model will be completed in the fourth quarter. The Libby site engineering
and geologic staff continues to focus their efforts on optimization of the current proposed mine plan.
During the fourth quarter of 2007, the Company expects to initiate discussions and solicit proposals
from outside engineering firms on the task of updating the current cost study to a bankable feasibility
study by incorporating the results of the delineation drilling program.
Permitting and Environmental
The Company continued work with the U.S. Forest Service and the Montana Department of Environmental
Quality in the third quarter of 2007 on the final stages of the preliminary draft Environmental Impact
Statement (EIS). It is anticipated that the preliminary draft will be issued to the agencies for
internal review early in November. The preliminary draft EIS will be reviewed for content and then
jointly edited to produce the draft EIS which will be submitted for public comment. The agencies'
schedule indicates the completion of the draft EIS by April 2008.
The Company also continues to work with the State of Montana to develop the 404 permit application,
which will establish allowable discharge levels, and collect baseline environmental information to
support our permit applications. Formal permit applications will be submitted concurrently with the
submission of the draft EIS for public comment.
Financial and Operating Results
Mines Management 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 and 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 September 30, 2007
The Company reported a net loss for the quarter ended September 30, 2007 of $1.7 million, or
$0.09 per share, compared to a net loss of $1.4 million, or $0.11 per share, for the quarter ended
September 30, 2006. The $0.3 million increase in net loss was attributed to a $0.3 million increase
in the third quarter of 2007 in legal, accounting, financing, and administrative expenses related to
increased investor relations activities in support of the Montanore Project, and a $0.2 million
increase in employee compensation as a result of salary increases and the addition of thirteen new
employees, offset by a $0.3 million increase in interest income received in the third quarter of 2007
compared to the third quarter of 2006 from earnings on the $32.1 million net proceeds of the Company's
public offering in April 2007. Overall Project spending also increased in the third quarter of 2007
compared to the third quarter of 2006 as a result of increased permitting activities and site
preparation for the delineation drilling program.
Nine Months Ended September 30, 2007
The Company reported a net loss for the nine months ended September 30, 2007 of $5.1 million or
$0.30 per share compared to a net loss of $4.0 million, or $0.31 per share, for the nine months ended
September 30, 2006. The $1.1 million increase in net loss for the nine months ended September 30, 2007,
compared to the nine months ended September 30, 2006, is largely attributable to a $0.3 million increase
in legal, accounting and administrative expenses related to the increased cost of implementing
additional Sarbanes-Oxley internal control procedures and investor relations activities related to the
public offering completed in April 2007, increased compensation expense of $0.5 million, a net $0.3
million increase in all other activities and a $0.3 million increase in stock option expense due to new
hires and repricing of options in accordance with Company policy. These increased expenditures of $1.6
million were offset by an increase of $0.5 million in interest income for the first nine months of 2007
from earnings on the proceeds of the Company's public offering in April 2007.
Liquidity
During the quarter ended September 30, 2007, the net cash used for operating activities was
$0.5 million, which consisted largely of permitting and administrative expenses associated with
increased activities at the Montanore Project. The net cash used in investing activities during the
quarter was $3.4 million for procurement of equipment and construction in progress. For the nine
months ended September 30, 2007, the net cash from financing activities was $31.6 million, consisting
of proceeds from the public offering completed in April 2007. The net cash on hand at the end of the
first nine months of 2007 was $26.3 million, compared to $2.1 million at end of the first nine months
of 2006.
The Company anticipates spending approximately $6.5 million from cash and investments on hand
during the final quarter of 2007 for activities and equipment purchases related to the advanced
exploration and delineation drilling program and repermitting efforts at the Montanore Project. The
Company believes that it has sufficient working capital for rehabilitation of the Libby adit and
commencement of the delineation drilling program which will take place over the next two years. In
order to complete the planned program, the Company expects that it will require approximately $10
million in additional financing.
Subsequent to the end of the third quarter, the Company completed a $10 million private placement
of its common stock on November 5, 2007. The proceeds of that transaction are expected to be used for
working capital and general corporate purposes, including advancement of the Montanore Project and
potential acquisitions.
Forward Looking Statements
Some information contained in or incorporated by reference into this report may contain forward
looking statements. These statements include comments 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, financing needs, planned expenditures in 2007 and 2008, potential completion of a
bankable feasibility study, and the use of proceeds received from the Company�s recent private placement
transaction and the markets for silver and copper. The use of any of the words �development�,
"anticipate", "continues", "estimate", "expect", "may", "project", "should", "believe", and similar
expressions are intended to identify uncertainties. The Company believes the expectations reflected in
those forward looking statements are reasonable. However, the Company 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 into this report: Worldwide economic and political events affecting the
supply of and demand for silver and copper; volatility in the market price for silver and copper;
financial market conditions and the availability of financing on acceptable terms; 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, and potential opposition to the majority of permits; uncertainty regarding future
changes in applicable law or implementation of existing law; the availability of experienced employees;
the factors discussed under "Risk Factors" in our Form 10-K, as amended, for the period ending
December 31, 2006.
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