MINES MANAGEMENT YEAR-END
EARNINGS RELEASE
Spokane, Washington � May 3, 2011 � Mines
Management, Inc. (NYSE-Amex: "MGN", TSX: "MGT")
(the "Company") is pleased to announce financial and
operating results for the year ending December 31, 2010.
Overview
Highlights
- On
April 4, 2011, the Company completed an underwritten public
offering of 5,120,000 shares of common stock that yielded net
proceeds of approximately $15.1 million. The Company intends to
use the net proceeds for advancement of the permitting process for
its Montanore Project, the commencement of the Company's planned
delineation drilling program which will include advancement of the
adit, establishment of drilling stations and commencement of
exploratory drilling, and for general corporate purposes, including
possible acquisition and exploration of new mining properties.
- The
Company engaged Mine and Quarry Engineering Services, Inc. of San
Mateo, California (MQES) to prepare a Technical Report entitled
"Technical Report: Preliminary Economic Assessment, Montanore
Project, Montana, USA prepared for Mines Management, Inc."
dated February 3, 2011 (PEA), in compliance with guidelines under
Canadian National Instrument 43-101 ("NI 43-101"). The Company
announced the PEA results
on December 22, 2010.
- The
U.S. Forest Service (USFS) and the Montana Department of
Environmental Quality (MDEQ) continued their environmental review,
and are in the process of formulating responses to comments
received from the public and from Environmental Protection Agency
(EPA) on the Draft Environmental Impact Study (EIS) for the
Montanore Project.
- Permitting
Milestones achieved in 2010 included:
- Selection
by the government agencies of the preferred alternative for the
transmission line proposed for the Montanore Project, announced
on October 8, 2010, and
- Completion
of a study to monitor the grizzly bear in the Montanore Project
area, which is located in a portion of the Cabinet/Yaak Ecosystem
recovery area, announced on August 8, 2010.
- The
Company continued meetings with federal and state agencies,
Montana legislators, and local Lincoln County Commissioners, Libby
City officials, business leaders and community members.
- The
Company continued its program to reduce expenditures and conserve
cash pending the completion of permitting.
- Cash
and investment position remained strong at December 31, 2010.
At December 31,
2010, the balance of our cash and unrestricted certificates of deposit
remained strong at over $6.4 million. We also had $3.7 million in
equity securities that were available for sale. Our net cash
expenditures for operating activities for 2010 totaled $6.7 million.
Cash outlays were less than projected due to delays in the USFS
approval of our EIS and the cessation of adit rehabilitation and
dewatering until permits are received. Our cash position was augmented
by the $15.1 million of net proceeds received from the common stock
offering completed in April, 2011.
In 2011, we
plan to continue to focus on planning for our exploration and
delineation drilling program at the Montanore Project pending the final
permitting approvals. The completion of the recent financing will
provide sufficient cash to complete the permitting process and initiate
the adit rehabilitation and drill station development. Additional
financing will be required to complete the evaluation drilling program
and a bankable feasibility study. Development activities could be
deferred if the permitting process is delayed or if commodity prices
make the project difficult to finance or increase the cost of such
financing.
Financial
and Operating Results
We
reported a net loss for the year ended December 31, 2010 of $10.7
million or $0.46 per share compared to a loss of $9.4 million or $0.41
per share for the year ended December 31, 2009. The increase of $1.3
million in net loss between 2010 and 2009 was comprised of a reduction
in project and administrative expenses of $0.8 million and an increase
of $2.1 million in non-cash expenses. The following table summarizes
expenditures by category and year:
Expense
Summary
Expenditures (Millions)
|
2010
|
2009
|
|
|
|
Montanore Project Expense
|
$3.7
|
$4.4
|
Administrative Expense
|
$3.3
|
$3.4
|
Depreciation
|
$1.0
|
$1.0
|
Non Cash Stock Option Expense
|
$1.8
|
$0.4
|
Other Expense
|
$0.9
|
$0.2
|
Montanore
Project Expense includes exploration, fees, filing and licenses, and
technical services, including environmental, engineering and permitting
expense. Montanore Project Expense decreased by $0.7 million during
2010 compared to 2009 for the following reasons: (i) decreased spending
related to adit rehabilitation activity by $1.2 million during 2010 and
(ii) an increase of $0.5 million in consultant fees paid in 2010
primarily to MQES to conduct the PEA.
Administrative
Expense, which includes general overhead and office expense, legal,
accounting, compensation, rent, taxes, and investor relations expense,
decreased in 2010 by $0.1 million. The decrease was primarily due to a
decline in legal, accounting, and consulting expenditures associated
with a proposed public offering during 2009.
Non-Cash
Stock Option Expense (which is included in general and administrative
and technical services expenses in our statement of operations)
increased by $1.4 million during 2010 primarily because of $1.8 million
of expense associated with the grant of approximately 1.3 million
options during 2010. The 2009 stock option expense was the result of
recognizing additional compensation expense as options granted or
re-priced in prior years vested.
The
$0.7 million increase in Other Expense includes a $0.5 million increase
in loss recognized due to a change in the fair market value of warrant
derivatives and a decrease of $0.2 million in interest income during
2010 as a result of utilizing funds for operating activities during
2010.
Liquidity
and Capital Resources
At
December 31, 2010, our aggregate cash, short term investments, and long
term investments totaled $10.1 million compared to $13.8 million at
December 31, 2009. Cash flows provided by financing activities were
$0.5 million in 2010 compared to $1.8 million utilized in 2009,
primarily to pay off the balance on the line of credit. The net cash
used for operating activities during 2010 was $6.7 million, which
consisted primarily of permitting, environmental, exploration, and
engineering expenses for the Montanore project and general and
administrative expenses, compared with $7.4 million of cash used for
operating activities in 2009. Cash provided by investing activities for
2010 was $4.9 million, primarily from the early withdrawal of funds
from a certificate of deposit, compared with $0.1 million of cash used
in investing activities in 2009. The net decrease in cash and cash
equivalents for the year ending December 31, 2010 was $1.2 million.
We
anticipate expenditures in 2011 of approximately $8.0 million, which we
expect will consist of (i) $1.5 million in each quarter for ongoing
operating and general administrative expenses and (ii) $0.5 million in
each quarter for permitting, engineering and geologic studies to finalize
our permitting of the Montanore Project. The recently completed public
offering of $15.1 million net proceeds will provide adequate cash
availability for years 2011 and 2012 to fund ongoing environmental,
engineering, permitting and general and administrative expenses. The
Company�s aggregate cash and liquid investments totaled $23.1 million
as of April 29, 2011. Additional financing, however, will be required
to complete the evaluation drilling program and a bankable feasibility
study.
About Mines Management
Mines Management, Inc. is engaged in the
business of acquiring and exploring, and if exploration is successful,
developing mineral properties containing precious and base metals. The
Company�s primary focus is on the advancement of the Montanore silver-copper
project, an advanced stage exploration project, located in northwestern
Montana.
Statements
Regarding Forward-Looking Information: Some statements contained in
this press release are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and other
applicable securities laws. Investors are cautioned that
forward-looking statements are inherently uncertain and involve risks
and uncertainties that could cause actual results to differ materially,
including comments regarding the use of proceeds from the underwritten
public offering, further exploration and evaluation of the Montanore
project, including drilling activities, feasibility determinations,
including those in the PEA, engineering and environmental studies,
environmental, reclamation and permitting requirements and the process
and timing and the costs associated with the foregoing, financing
needs, including the financing required to fund the final phases of the
advanced exploration and delineation drilling program and a bankable
feasibility study, the sufficiency of working capital to complete the
rehabilitation of the Libby adit and commence delineation drilling and
planned expenditures and cash requirements for 2011. Actual results may
differ materially from those presented. Factors that could cause
results to differ materially include fluctuations in silver and copper
prices. Mines Management, Inc. assumes no obligation to update this
information. There can be no assurance that future developments
affecting Mines Management, Inc. will be those anticipated by
management. Please refer to the discussion of risk factors in the
Company's Form 10-K for the year ended December 31, 2010, as amended.
Contact:
Mines Management, Inc.
Attn: Douglas Dobbs, Vice President Corporate Finance & Development
Phone: 509-838-6050
Fax: 509-838-0486
Email: info@minesmanagement.com
Web: www.minesmanagement.com
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