MINES MANAGEMENT, INC.
SECOND QUARTER RESULTS AND
MONTANORE SILVER-COPPER PROJECT UPDATE

SPOKANE, WASHINGTON – August 20, 2007 – Mines Management, Inc. (Amex: MGN, TSX: MGT) is pleased to announce results for the second quarter of 2007 and provide an update on activities at the Montanore Silver-Copper Project, including progress made on preparations for the advanced exploration and delineation drilling program and the permitting process. 

Overview

The Montanore project continues to be the Company’s main focus and, in addition to the planned advanced exploration and delineation drilling program, the Company is continuing its repermitting efforts with applicable federal and state agencies and its optimization review of the Project. 

During the second quarter of 2007, the Company closed an offering of its equity securities for gross proceeds to the Company of US$34,183,000, or US$32,125,000 in net proceeds after deducting underwriting commissions but before deducting offering expenses.   As a result, management believes that the Company has sufficient funds on hand to finance the first three phases of its advanced exploration and delineation program at the Montanore Project, which it expects to complete during the next twenty-four months.

Highlights

In the second quarter of 2007, the Company:

·         Completed a $34.2 million public offering of equity.

·         Initiated preparations for the advanced exploration and delineation drilling program by, among other things:

o        ordering a $1 million water treatment plant and building;

o        hiring additional staff at the Libby adit site to support initiation of underground activities at the Libby adit, including dewatering, rehabilitation, advancement, drifting, and delineation drilling;

o        placing a $2.8 million order for Sandvik underground mining 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 second quarter, the Company initiated its two-year advanced exploration and delineation drilling program at the Montanore Project site.  The Company expects to dewater and rehabilitate the Libby adit, and then 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 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 operating activities for the quarter ending June 30, 2007 was $1.6 million.  The Company believes that the recently completed financing provides sufficient working capital for rehabilitation of the Libby adit and commencement of the delineation drilling program over the next two years.  In order to complete the planned program through bankable feasibility, the Company would need an additional $10 million in external financing.

Advanced Exploration and Delineation Drilling Program

During the second quarter of 2007, the Company initiated the first stage of its planned advanced exploration and delineation drilling program, during which it plans to dewater and rehabilitate the Libby adit.  Delivery of a $1 million water treatment plant, through which the water discharged from the adit will be filtered, is expected to be delivered during the third quarter of 2007, followed by commissioning and startup. 

Also during the second quarter, additional staff including one chief geologist and one project engineers, were hired, and the construction of additional office space in Libby was initiated in preparation for commencement of dewatering and rehabilitation of the adit.  Eight full time employees are on staff for the project as of June 30, 2007.

The Company expects to begin rehabilitation activities shortly after dewatering begins.   These activities are anticipated to include scaling the back of the adit, installing new roof bolts and extending utilities into the adit, including electricity, piping, ventilation, and dewatering infrastructure.

In preparation for commencement of the planned second stage of the program, the Company has ordered primary mobile mine equipment, including:

·         one roof bolter,

·         one twin boom jumbo face drill

·         one four cubic yard LHD unit,

·         one six cubic yard LHD unit, and

·         two underground twenty-four cubic yard trucks,

all of which are expected to be delivered during 2007. The Company expects capital expenditures of $12 million during the remainder of 2007 for equipment and activities related to the advancement of the drilling program.

Also in the second quarter, the Company performed quality control and assurance review of its initial revised mine model.  The Company expects to confirm the accuracy of this model by inputting the data gathered during the delineation drilling program, which, if the Company is successful in obtaining the permits necessary to support further development of the Montanore Project, is expected to support a bankable feasibility study.

Permitting and Environmental

During the second quarter of 2007, the Company continued to work closely with the U.S. Forest Service (USFS) and Montana Department of Environmental Quality (MDEQ) on the draft environmental impact statement (EIS). Chapter-2 of the EIS (Proposed Action) was completed in draft form and submitted to the agencies for review by the Company’s third party EIS contractor in late July 2007.  In addition, the Company participated in the discussion and development of proposed alternatives for placement of tailings, plant site and portal locations that will be assessed and analyzed as part of the overall EIS review.

The Company also continues to work with the State of Montana on additional technical details related to the MPDES discharge permit, transmission line, and other state authorizations required for the Project.  Once the draft EIS is completed, the Company will update its permit applications to match the agencies’ preferred alternatives, and will include the 404 permit application submittal to the Army Corps of Engineers.

The USFS and MDEQ have advised the Company that they now expect to begin internal review of the completed draft EIS in October 2007. The Company has submitted comments to the agencies on ways to improve this schedule. Once the agencies have completed their review, the draft EIS and draft permits will be provided to the public for review and comment. The agencies may consider public comments in preparing the final EIS and final permits.  When the public review process is concluded, 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.  The agencies have not set a preliminary schedule to issue the final EIS and Record of Decision.  Management expects that the number of comments received will determine the schedule but does not expect a Record of Decision before the end of the fourth quarter of 2008.

Financial and Operating Results

Mines Management is an exploration stage company with a large silver-copper project, the Montanore Project, located in northwest 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 and other miscellaneous.

Quarter Ended June 30, 2007

The Company reported a net loss for the quarter ended June 30, 2007 of $1.6 million or $0.09 per share compared to a $1.5 million loss or $0.12 per share for the quarter ended June 30, 2006.  The $0.1 million increase in net loss was attributed to a $0.1 million increase in the second quarter in legal, accounting, financing, and administrative expenses related to increased investor relations activities, and a $0.3 million increase in employee compensation as a result of bonuses, salary increases, and the addition of four new employees, offset by a $0.3 million decrease in expenditures at the Montanore Project in the second quarter of 2007 for permitting, engineering, and environmental analysis, compared to the second quarter of 2006.  Project spending decreased in the second quarter of 2007 as the Company reduced its permitting activities as it focused on obtaining financing for the delineation drilling program.

Six Months Ended June 30, 2007

The net loss for the six months ended June 30, 2007 was $3.4 million or $0.22 per share versus a loss of $2.6 million or $0.20 per share for the six months ended June 30, 2006.  The $0.8 million increase in net loss for the six months ended June 30, 2007 compared to the six months ended June 30, 2006 is largely attributed to a $0.5 million increase in legal, accounting and administrative expenses related to the increased cost of implementing Sarbanes-Oxley internal control procedures, investor relations activities related to the public offering, increased compensation expense of $0.4 million and a $0.1 million increase in equipment rental costs at the Montanore site.  These increased expenditures were offset by an increase of $0.2 million in interest income for the first half of the year.

Liquidity

For the quarter ended June 30, 2007, the net cash used for operating activities was $1.0 million, which consisted largely of legal and accounting expenses associated with the public offering.  The net cash provided by financing activities for the quarter was $31.6 million from the public offering completed during the quarter. The net cash used in investing activities during the quarter was $0.9 million on procurement of fixed assets and construction in progress.  The net increase in cash on hand at the end of the second quarter 2007 versus year-end 2006 was $29.7 million.

For the six months ended June 30, 2007 the net cash from financing activities was $31.6 million from the public offering.  The net increase in cash on hand at the end of the half year ending 2007 versus 2006 was $29.5 million.

The Company anticipates spending approximately $12 million from cash and investments on hand during the final two quarters of 2007 for activities and equipment purchases related to the advanced exploration and delineation drilling program and the Montanore Project permitting. The Company believes that the recently completed financing provides 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.  The Company will need an additional $10 million in external financing in order to complete the planned program through completion of a bankable feasibility study, which is a necessary prerequisite to development and production at Montanore.

About Mines Management

Mines Management, Inc. is an advanced exploration stage company focused on the acquisition, exploration and advancement of precious and base metals mineral deposits.  The Company is currently focused on the Montanore Silver-Copper Project located in northwestern Montana.  The Montanore Project contains a large silver and copper resource. 

Forward Looking Statements

Some information contained in or incorporated by reference into this report may contain forward looking statements.  These statements include comments regarding Montanore Project permitting, the commencement and completion of activities related to the planned rehabilitation of the Libby adit and delineation drilling program, the hiring of additional staff, 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, including 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, 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.