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MINES
MANAGEMENT ANNOUNCES FIRST QUARTER RESULTS
Spokane, Washington - June 1, 2009 - MINES MANAGEMENT, INC. (NYSE Amex:
"MGN", TSX: "MGT") is pleased to announce results
for the first quarter.
First
Quarter Highlights
- The
U.S. Forest Service and the Montana Department of Environmental
Quality ("DEQ") issued the draft Environmental Impact
Statement ("EIS") for the public comment period which
ends on June 27, 2009. On May 15, 2009, the government agencies
extended the public comment period by 30 days from its original
expiration date of May 28, 2009.
- Small
Mine Development (SMD), the Company's underground mine contractor,
continued the excavation of two sumps and placed them into service
as part of the adit dewatering system to clarify water before
sending it to the water treatment plant.
- The
Company maintained a strong cash and investment position at March
31, 2009, with $17.9 million of unrestricted cash, availability
under its line of credit, and unrestricted certificates of
deposit.
- The
Company implemented a program to reduce expenditures and conserve
cash during the current metal price downturn.
The net cash
expenditures for the quarter ended March 31, 2009 was $2.1 million for
operating and investing activities. Management has reviewed near term
spending forecast and implemented a plan to diligently conserve cash
where prudent. The Company believes that it has sufficient working
capital to complete the rehabilitation of the Libby adit and
commencement of delineation drilling.
Advanced
Exploration and Delineation Drilling Program
Libby
operations in the first quarter of 2009 included continued operations
on the Montanore site water treatment system, construction of
dewatering sumps, completion of the design work of the nitrate removal
system and continued planning for the rehabilitation of the 14,000 foot
Libby adit.
Small
Mine Development, our adit rehabilitation contractor, is currently
re-bolting and scaling the entry of the adit. At of the end of March
2009, it has advanced in excess of 5000 feet. Advance rates are
expected to increase as Small Mine Development gains familiarity with
our equipment and develops a systematic approach to the work. Thus far,
the ground conditions appear to be as expected. Original projections
had required that welded wire mesh be installed on the ribs down
approximately 5 ft. from the sill. After the first quarter advance, it
now appears that this may not be necessary throughout the adit.
Engineering
for the nitrate removal addition to the water treatment system is
complete, but construction is on hold pending receipt of the EIS and
Record of Decision (ROD). 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 ROD 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, a system is being developed
to evaluate the water producing areas as they are encountered.
Permitting
and Environmental
In
the first quarter of 2009, the U.S Forest Services (USFS) and the
Montana Department of Environmental Quality (MDEQ) completed the draft
environmental impact statement. The public notice of availability was published
and the document was made available for public review. The public
comment period ends June 27, 2009. The Company is reviewing the draft
environmental impact statement (DEIS) and will provide comments prior
to the deadline. A public meeting was held on April 16, 2009 at which
the agencies accepted additional comments from the public.
The
Company continues to work with the agencies on other issues during the
public comment period. In addition, the Company has initiated
discussions with the USFS and MDEQ on the selection of the preferred
alternative process once the public comment period closes. Preliminary
discussions with the USFS and the U.S. Fish and Wildlife Service were
completed in the first quarter of 2009 concerning the biological
assessment and biological opinion that will be initiated once a
preferred alternative is selected by the agencies.
The
Army Corps of Engineers (ACOE) is evaluating information to determine
the Least Damaging Practical Alternative (LDPA) for the tailings
impoundment. The ACOE previously considered the Poorman Creek
Impoundment alternative as its preliminary LDPA, but is now reviewing
comments provided by the USFS concerning the Little Cherry Creek
Impoundment alternative. Following review, it will determine which
alternative will finally be selected as the LDPA.
The
Company submitted a three-dimensional numerical hydrologic model to the
agencies as part of the DEIS comments. The agencies completed a
two-dimensional numerical hydrologic model to predict
groundwater/surface water issues. The Company's model is the next level
of technical predictions that can incorporate geology, structures and
other important hydrologic features. The Company anticipates working
with the agencies to incorporate the more dynamic numerical model as
part of the update to the final EIS.
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. None of
our properties, including our principal property, the Montanore
Project, is currently in production. The Company continues to expense
all of its expenditures when incurred, with the exception of equipment
and site infrastructure, which are capitalized. Financial results of
operations include primarily interest income, general and
administrative expenses, permitting, project advancement and
engineering expenses.
- Quarter Ended March 31,
2009
The Company reported a net loss for the
quarter ended March 31, 2009 of $3.0 million, or $0.13 per share,
compared to a net loss of $1.8 million, or $0.08 per share, for the
quarter ended March 31, 2008. The $1.2 million increase in net loss in
the first quarter of 2009 is attributable to increases in technical
expenses of approximately $0.8 million over the first quarter of 2008,
principally due to payments to underground mining contractor SMD for
site rehabilitation, sump construction and dewatering, and for EIS
technical consultants, environmental expenses, and permitting. General
and administrative expenses increased $0.1 million due to the addition
of supervisory mine site employees since the first quarter of 2008 and
normal annual wage increases, offset by decreases of $0.1 million in
legal, accounting and consulting expenses in the first quarter of 2009
over the comparable 2008 period. As a result of adopting a new
accounting standard, the Company had a loss from the change in fair
value of warrants classified as derivative instruments of $0.3 million
for the quarter ended March 31, 2009. Interest income also decreased by
$0.2 million, as the Company�s interest-bearing bank balances declined.
Liquidity
and Capital Resources
During
the quarter ended March 31, 2009, the net cash used for operating
activities was $2.0 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, for construction in progress.
We
are taking steps to reduce activity levels, including capital
expenditures, until the timing of the Record of Decision becomes more clear. We anticipate expenditures of
approximately $9.0 million the final three quarters of 2009, which will
consist of $1.5 million per quarter for general and administrative
expenses and $4.5 million for ongoing expense of preparation for the
delineation drilling program and addition mine scoping studies. Given
our current cash position of $17.9 million on March 31, 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 will investigate financing opportunities and options from
equity and debt financing during the current year.
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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