Mines Management Reports 2012 First Quarter Results
Mines Management Reports 2012 First Quarter Results
Spokane, Washington - May 21, 2012 - Mines Management, Inc. (NYSE-Amex: "MGN", TSX: "MGT") (the "Company") is pleased to announce financial and operating results for the first quarter of 2012.
Overview First Quarter 2012
* The U.S. Forest Service ("USFS") and the Montana Department of Environmental Quality ("MDEQ") issued the Supplemental Draft Environmental Impact Study ("SDEIS") in late September 2011. The comment period on the SDEIS was completed on December 21, 2011 and the USFS and MDEQ are incorporating the responses in the final EIS.
* The Company continued meetings with federal and state agencies, Montana legislators, local Lincoln County Commissioners, Libby City officials, business leaders and community members and kept them informed of the project status.
* The Company continued its program to reduce expenditures and conserve
cash pending the completion of permitting.
* The Company's cash and investment position remained strong at $17.6 million as of March 31, 2012.
* On April 5, 2012 the Company executed an agreement with Estrella Gold Corp. in which the Company can earn 75% of the La Estrella gold exploration project in central Peru. This is the Company's first venture into South America.
Financial and Operating Results
The Company reported a net loss of $1.3 million for the quarter ended March 31, 2012 compared to net income of $1.3 million for the quarter ended March 31, 2011. The $2.6 million decrease in income from the first quarter of 2011 was primarily due to the following items: (1) the absence in the 2012 quarter of a $2.0 million gain realized in the 2011 quarter on the sale of available-for-sale securities and (2) a $1.0 million lower gain from the change in fair market value of warrant derivatives in the first quarter of 2012 compared to the first quarter of 2011, partially offset by $0.2 million less in the 2012 period in combined general and administrative expenses, legal and accounting expenses, and fees, filing and licenses expenses, which were higher in the 2011 period due to a public offering and $0.2 million lower expenditures for technical services in the 2012 period.
During the three months ended March 31, 2012, the net cash used for operating activities was approximately $1.4 million, which is $0.3 million less than the same period during the prior year. We have continued to limit activity levels, including capital expenditures, until the timing for the receipt of the record of decision becomes clearer.
We anticipate expenditures of approximately $6.5 million for the final three quarters of 2012, which we expect to consist of $1.5 million each quarter for general and administrative expenses and $0.5 million each quarter for permitting, engineering, and geologic studies for the permitting for the Montanore Project. We expect to spend $0.5 million on exploration at La Estrella during 2012. Additional external financing, however, would be required following receipt of the record of decision to complete the evaluation drilling program and a bankable feasibility study at the Montanore Project and increased exploration efforts at the La Estrella property in 2013. The timing and amount of additional external financing will be based on the timing of the record of decision and planned drilling program for the Montanore Project and on 2012 exploration results and additional exploration plans, if any, for the La Estrella gold exploration project in central Peru.
During the first quarter of 2012, work at the Montanore Project included ongoing support operations for the permitting process. Studies continued on the ground water intake for the adit, monitoring wells and the surface waters in the area. The Company continues to maintain the Libby adit in a care and maintenance condition, pumping and processing water generated in the adit. Additional support for the permitting process includes ongoing data gathering for the biological aspects of the permit relating to fisheries and other wildlife in the area.
The public comment period for the Army Corps of Engineers' 404 permit ended during the first quarter of 2012. The Company is working with the Army Corps of Engineers on various matters required to complete the 404 permit, including evaluation of tailings disposal alternatives.
The U.S. Fish and Wildlife Service ("USFWS") continues to advance work related to the completion of a fisheries and terrestrial biological opinion. The Company is providing assistance with data collection and the determination of appropriate mitigation efforts.
The items discussed above are the next critical steps towards the completion of the Final Environmental Impact Study ("FEIS") and Biological Opinion. Once these are completed, the agencies can publish the FEIS. The timing of completion of the FEIS is uncertain due to control of the schedule being in the hands of various government agencies.
As previously discussed, the Company is using topographic surveys completed using LIDAR technology which provided construction level detailed topographic information to support technical/environmental detailed planning for the permitting process and the initiation of underground rehabilitation and development drilling when the record of decision is received.
The Company also commenced mine plan reviews during the first quarter of 2012 related to optimization of the Preliminary Economic Assessment (PEA). In addition, the Company initiated a full review and audit of the land position and mining claims associated with the project using the LIDAR generated topographical maps of the site. This effort will ensure that the claim package and land base will provide the most flexibility for the Project moving forward.
In addition, since finalization of agreements under which the Company has an option to acquire 75% of the La Estrella gold-silver project, the Company has made preparations for the upcoming exploration program. Preparations for the exploration program have included selection of contractors to oversee exploration, construction of camp infrastructure and logistics, community relations, health and safety, and administration. Agreements have been made to utilize services provided by local community members and businesses where possible, including road building, excavation and reclamation of drill sites over the course of the program. Exploration and drilling activities are expected to commence by the end of May.
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 located in northwestern Montana. The Montanore is an advanced stage exploration project containing a Canadian NI 43-101 compliant measured resource of 4.03 million tons of material grading 1.85 ounces per ton ("opt") silver and 0.74% copper, an indicated resource of 77.5 million tons grading 2.05 opt silver and 0.75% copper, and an inferred resource of 35.1 million tons grading 1.85 opt silver and 0.71% copper, and is currently undergoing the process to obtain permitting approval. Additional information is available at Mines Management's website: www.minesmanagement.com.
Cautionary Note to U.S. Investors concerning estimates of Measured and Inferred Mineral Resources:
This press release uses the terms "Measured Mineral Resource", "Indicated Mineral Resource", and "Inferred Mineral Resource." We advise U.S. investors that while those terms are recognized and required by Canadian NI 43-101, the Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves. Inferred Mineral Resources have a greater amount of uncertainty as to their existence and as to their economic and legal feasibility. In accordance with Canadian rules, estimates of Inferred Mineral Resources cannot form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that part or all of the Inferred Mineral Resources exists, or is economically or legally mineable. Disclosure of "contained ounces" in a Mineral Resource is permitted under Canadian regulations, however, the SEC normally only permits issuers to report mineralization that does not constitute 'reserves' by SEC standards as "in place" tonnage and grade without reference to unit measures. Accordingly, the information contained in this press release may not be comparable to similar information made public by U.S. companies that are not subject to NI 43-101.
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 U.S. and Canadian 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 anticipated permitting and engineering activities and geologic studies, planning for the exploration and delineation drilling program at the Montanore Project pending permitting approvals, planned exploration expenditures and activities at the La Estrella exploration property in Peru, 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 2012. Actual results may differ materially from those presented. Factors that could cause results to differ materially include delays in permitting at Montanore, delays in commencing or a decision not to proceed with exploration at La Estrella, political unrest or delays in obtaining community agreements or permitting in Peru in connection with planned exploration activities, world economic conditions or 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, 2011, as amended.
FOR MORE INFORMATION:
Mines Management, Inc. Phone: 509-838-6050
Douglas Dobbs, Vice President of Corporate Development
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