MINES MANAGEMENT, INC. (NYSE Amex: MGN)(TSX: MGT) announces results for the third quarter, 2009.
Overview
In the third quarter of 2009, the Company:
- Worked on responding to the public comments to the Environmental Impact Statement ("EIS") and incorporating them into a revised EIS document expected to be completed during the fourth quarter of 2009.
- Reviewed data and information on potential mining, exploration and development opportunities in Latin America and the western United States.
- Discussed financing opportunities and timing, and approved the filing of a shelf registration in the fourth quarter of 2009.
- Maintained a strong cash and investment position at September 30, 2009, with $14.2 million of unrestricted cash and certificates of deposit.
- Repaid a $1.8 million line of credit in September 2009.
The net cash expenditures for the nine months ended September 30, 2009 were $0.2 million for the purchase of equipment and completion of the water treatment plant and other site infrastructure and $5.7 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. The Company estimates that it will require approximately $10.0 million of additional funds to complete the delineation drilling program and a bankable feasibility study.
Advanced Exploration and Delineation Drilling Program
Libby operations in the third quarter of 2009 included continued operations on the Montanore site water treatment system maintaining the level at the second sump and pumping station. 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 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 the delineation drilling stations. The current schedule is to begin constructionof the concrete chambers in early May of 2010 based on timing of receipt of the Record of Decision following completion of the final EIS.
Engineering refinement and geology work continues using existing information. Geology confirmation mapping is beginning with the advance of the rehabilitation down the decline. The agencies have reviewed our three-dimensional hydrologic model and are working collaboratively to determine how it can be implemented in the final EIS. The new model addresses water quantity, water quality, and other public and agency comments for the project. We have also started to initiate hydrological investigation in the Libby adit, as required by minor revisions to our Hard Rock Operating Permit 150, which will provide important technical data for the hydrologic model.
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.
In the third quarter of 2009, 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, USFS, Environmental Protection Agency, and Army Corps of Engineers to review the project as part of the Least Damaging Practicable Alternative process. Specifically, in selecting the least environmentally damaging practicable alternative, the relevant government agencies are evaluating the proposed locations for the construction of a tailings impoundment based on which location best affords protection of the aquatic ecosystem while enabling the Company to meet its project purpose.
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. The Company continues to expense all of its expenditures with the exception of expenditures for equipment and infrastructure, which are capitalized. The Company has no revenues from mining operations. Financial results of operations include primarily interest income and general and administrative, permitting, project advancement and engineering expenses.
Quarter Ended September 30, 2009
The Company reported a net loss for the quarter ended September 30, 2009 of $2.3 million, or $0.10 per share, compared to a net loss of $3.1 million, or $0.14 per share, for the quarter ended September 30, 2008. The $0.8 million decrease in net loss in the third quarter of 2009 is attributable to decreases in operating expenses of $1.5million over the third quarter of 2008, principally in general and administrative expenses of $0.6 million, technical services of $0.8 million, and legal, accounting, and consulting of $0.1 million, offset by a decrease in other income (loss) of $0.7 million. The decrease in other income (loss) resulted from a $0.6 million loss due to the change in fair market value of warrant derivatives and a decrease in net interest income of $0.1 million during the quarter ended September 30, 2009. The Company has reduced its operating expenses in the second and third quarters of 2009 to conserve resources pending the determination of environmental permits.
Nine Months Ended September 30, 2009
The Company reported a net loss for the nine months ended September 30, 2009 of $7.2 million, or $0.32 per share, versus a loss of $7.5 million or $0.33 per share for the nine months ended September 30, 2008. Thedecrease in net loss in 2009 is largely attributable to a decrease in general and administrative expenses of $1.1 million which is comprised of a decline in promotion and investor relations expenses of $0.2 million and a decrease in stock compensation of $0.9 million. Technical services costs increased by $0.2 million in 2009 for work on the Libby adit water treatment system including rehabilitation, sump and decant construction, and pumping station installation. Legal, accounting, and consulting expenses decreased by $0.2 million. Other income (loss) for the nine months ending September 30, 2009 decreased by $0.9 million from 2008 because of a $0.5 million loss from the change in fair market value of warrant derivatives and a reduction of net interest income of $0.4 million.
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.
Contacts:
Mines Management, Inc.
Douglas Dobbs, 509-838-6050
Vice
President Corporate Development & Investor Relations
Fax:
509-838-0486
info@minesmanagement.com
www.minesmanagement.com