FOR IMMEDIATE RELEASE
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RELEASE 09-07
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MINES MANAGEMENT ANNOUNCES SECOND QUARTER
FINANCIAL AND OPERATING RESULTS
Spokane, Washington �
September 8, 2009 � MINES MANAGEMENT, INC. (NYSE Amex: "MGN",
TSX: "MGT") is pleased to announce results for the second
quarter, 2009.
In the second quarter of 2009, the Company:
- Completed the EIS public comment period June 29, 2009, with
agencies currently compiling the data.
- Approved and adopted the Shareholders Rights Plan at the June
18, 2009 Annual Meeting of shareholders.
- Demobilized Small Mine Development, the adit
rehabilitation contractor, on April 30, 2009 after installation and
testing of the sumps for the water treatment system at the Montanore adit site.
- Maintained a strong cash and investment position at June 30,
2009, with $15.5million of unrestricted cash, availability under its
line of credit, and unrestricted certificates of deposit.
The net cash expenditures for the six months
ended June 30, 2009 were $0.1 million for the purchase of equipment and
completion of the water treatment plant and other site infrastructure and
$4.4 million for operating activities. The Company believes that it has
sufficient working capital to complete the rehabilitation of the Libby adit and commencement of delineation drilling. Given
our current available funds of approximately $15.5 million on June 30,
2009, we will require approximately $10.0 million of external financing
in 2010 to fund the final phases of the advanced exploration program and
delineation drilling program and completion of a bankable feasibility
study. The Company continues to investigate financing opportunities and
the potential for equity or debt financing during the current year.
Advanced Exploration and
Delineation Drilling Program
Libby operations in the second quarter of
2009 included continued operations on the Montanore
site water treatment system and dewatering of the decline. After
completion of the 7200 foot level sump and decanting system, Small Mine
Development, the adit rehabilitation
contractor, was demobilized April 30, 2009 as an expenditure conservation
measure pending completion of the permitting process. To date,
infrastructure placed in the decline includes a refuge chamber, mine
power center and temporary pump station along
with the previously installed sumps and pumping system at the 700 ft.
location. The decline is now in a standby mode pending notification from
the relevant governmental agencies regarding approval of the draft
Environmental Impact Statement ("EIS") and issuance of a Record
of Decision.
Engineering for the nitrate removal addition
to the water treatment system is complete with construction on hold
pending receipt of the EIS and Record of Decision. Construction of the
nitrate system is scheduled to start and be completed prior to beginning
to drive the final section of the adit to reach
the ore body and install drill stations. The current schedule is to begin
construction of the concrete chambers in the early fall of 2009 or late
April/early May of 2010 based on timing of receipt of the Record of
Decision following completion of the final EIS.
Engineering and geology work continues using
existing information. Geology confirmation mapping is beginning with the
advance of the rehabilitation down the decline. Currently, hydrological
studies are being carried out for the creation of a hydrological model
for the rock formations being crossed by the decline.
Permitting and Environmental
In the second quarter of 2009, the U.S
Forest Services (USFS) and the Montana Department of Environmental Quality
(DEQ) issued the draft environmental impact statement for public review. The
agencies extended the public review period for 30 days to June 29, 2009. The
public meeting for comments was held as scheduled on April 16, 2009. The
Company finished its review of the draft EIS and is working with the
agencies on its comments to the draft EIS. We anticipate that the EIS
contractor will compile all comments generated from the public by the end
of July.
The Company continues to work on technical
and regulatory issues with the agencies with regard to the EIS, project
mitigation, public comments and other project issues. The Company
continues to collect baseline data in anticipation of starting up the
evaluation work in 2010. This includes data regarding fisheries, water
quality, grizzly bear, and other important environmental receptors. Also,
a site meeting occurred in June, 2009 with the Montana DEQ, U.S. Forest
Service, Environmental Protection Agency, and Army Corps of Engineers to
review the project as part of their selection of the Least Damaging
Practical Alternative (LDPA) process.
The agencies have reviewed the Company�s
three-dimensional hydrologic model and are working collaboratively to
determine how it can be implemented in the EIS. This new model addresses
water quantity, water quality, and other public and agency comments for
the project. The Company has also started to initiate hydrological
investigation in the Libby Adit, as required by
Minor Revisions to Permit 150, which will provide important technical
data for the hydrologic model.
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 with the exception
of equipment and infrastructure 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,
2009
The Company reported a net loss for the
quarter ended June 30, 2009 of $1.9 million, or $0.08 per share, compared
to a net loss of $2.5 million, or $0.11 per share, for the quarter ended
June 30, 2008. The $0.6 million decrease in net loss in the second quarter
of 2009 is attributable to decreases in operating expenses of $0.4
million over the second quarter of 2008, principally in general and
administrative expenses, and an increase in other income of $0.2 million.
The decrease in operating expenses resulted from a decline in promotion
and investor relations spending of $0.1 million, and $0.5 million in
stock compensation. Technical services increased in 2009 over 2008 for
work on the adit and the underground water
treatment system of $0.2 million before SMD was demobilized the end of
April. The increase in other income resulted from the adoption on January
1, 2009 of the reporting requirements of EITF 07-5 which resulted in a
$0.3 million gain on warrant derivatives. Net interest income decreased by $0.1 million
in 2009
- Six Months Ended June 30, 2009
The Company reported a net loss for the six
months ended June 30, 2009 of $4.9 million, or $0.22 per share, versus a
loss of $4.4 million or $0.19 per share for the six months ended June 30,
2008. The $0.5 million increase in net loss in 2009 is largely
attributable to increased technical services costs in 2009 for work on
the Libby adit water treatment system including
rehabilitation, sump and decant construction, and pumping station
installation of $0.6 and additional permitting and environmental costs of
$0.4 million. This was offset by reduced general and administrative costs
including decreases of $0.2 million in investor relation expenditures and
$0.4 million for stock compensation, and an increase of $0.1 million for
consulting services. Legal, accounting, and consulting fees decreased by
$0.2 million in 2009, and net interest income decreased by $0.2 million.
Liquidity
During the six months ended June 30, 2009,
the net cash used for operating activities was $4.4 million, which
consisted largely of permitting and technical expenses associated with
increased activities at the Montanore Project
site. The net cash used in investing activities during the quarter was
$0.1 million, principally for construction in progress.
We continue to reduce activity levels,
including capital expenditures, until the timing of the Record of
Decision becomes more clear. We anticipate
expenditures of approximately $4.5 million in the final two quarters of
2009, which will consist of $1.5 million per quarter 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.
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 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, and
estimates of mineralized material and measured, indicated and inferred
resources; financing needs; the markets for silver and copper; planned
expenditures in 2009 and 2010; 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. 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 into this report: 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 this
Annual Report on Form 10-K for the period ending December 31, 2008.
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