Mines Management Reports 2012 Second Quarter Results
Mines Management Reports 2012 Second Quarter Results
Spokane, WA US, August 16, 2012 /FSC/ - Mines Management, Inc. (MGT - TSX, MGN - NYSE-Amex),(the "Company") is pleased to announce financial and operating results for the second quarter of 2012.
Overview Second 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 currently incorporating the responses in the final EIS.
* The Company submitted supplemental information to the Corps of Engineers concerning permit compensatory mitigation and other information to assist the agencies in the review of the Company's application. This process will continue on a current path with the Environmental Impact Study ("EIS").
* The Company continued meeting 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 $15.5 million as of June 30, 2012.
* On April 5, 2012 the Company executed an agreement with Estrella Gold Corp. in which MMI can earn 75% of the La Estrella gold exploration project in central Peru. This is the Company's first venture into South America. The initial core drilling commenced in April 2012.
During the second quarter of 2012, the Company continued to maintain the Libby adit in a care and maintenance condition in preparation for development activities when the Record of Decision is received. Technical support and assistance were provided for ongoing permitting and environmental efforts. Monthly regulatory data gathering and reporting to state agencies is ongoing.
The Company continued to work on mine plan reviews related to optimization of the Preliminary Economic Assessment ("PEA"). Utilizing the LIDAR generated topographical maps of the site, the Company also continued work on resource model evaluations and identification of target areas which are being incorporated into the planned underground drill program.
The Company has completed four exploration diamond drill holes on the La Estrella gold-silver deposit in eastern Huancavelica, Peru, for a total of 1106 meters. The program is planned to include a total of seven holes and 2500 meters of drilling per the Earn-in Agreement with Estrella Gold Corp. Bradley MDH, Lima, has been chosen as the drill services provider and has averaged about 35 meters per day. Assay results from three of the four holes completed to date, shown below, indicate long intervals of continuously mineralized rock:
Drill Hole From To Interval per per
(m) (m) (m) tonne) tonne)
E-23 84.4 197.2 112.8 0.41 21.4
154 160 6 0.83 204
166.6 197.2 30.6 0.63 7.9
The local community has demonstrated cordial relations toward the project throughout the program, and much effort on the part of the Company has been directed toward communication and community involvement. The exploration program has been designed to use community labor in the construction of drill platforms and access roads, and has utilized manually-portable drilling equipment. All excavation work has been manually performed and has preserved soil layers in an organized manner, to provide for restoration when reclamation is underway. An exploration camp under the direction of ExploSupport, Lima, has provided continuous logistic support for the project.
During the second quarter of 2012, the Company also commenced a 3D geologic modeling effort for the La Estrella gold-silver project in Peru which includes data input from historic drilling completed by companies previously associated with the project.
Montanore Permitting and Environmental
The agencies have compiled public comments and are preparing responses to these comments along with updates/revisions to the Draft Environmental Impact Statement ("DEIS") and the Supplement EIS towards completion of a Final EIS. The Company continues to work with the agencies in developing response and details that will become integral to the Final EIS.
The Company submitted supplemental information to the Corps of Engineers concerning permit compensatory mitigation and other information to assist the agencies in the review of the Company's application. This process should continue on a current path with the EIS.
The USFS submitted a Fisheries Biological Assessment ("BA") and a Terrestrial Biological Assessment to the U.S. Fish and Wildlife Service ("FWS") in July 2011. The FWS provided comments on the Fisheries BA to the USFS in late 2011. The Company has agreed to provide assistance to the USFS in preparing a revised Fisheries BA. This process was initiated during the second quarter 2012 and is anticipated to be completed sometime during the third quarter. In addition, the Company has agreed to fund a staff person for the FWS to support its effort in reviewing the Terrestrial BA submitted last year. It is anticipated that this funding support will help to ensure the schedule is maintained as both of the BAs are critical to the overall schedule.
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 when incurred, with the exception of equipment and buildings which are capitalized. The Company has no revenues from mining operations. Financial results of operations include primarily interest income, general and administrative expenses, permitting, project advancement and engineering expenses.
Quarter Ended June 30, 2012
The Company reported a net loss of $2.4 million for the quarter ended June 30, 2012 compared to a net loss of $1.6 million for the quarter ended June 30, 2011. This $0.8 million dollar increase in net loss during the second quarter of 2012 was primarily due to the following items: (1) a $0.4 million increase in operating expenditures primarily for technical services associated with the exploration of the La Estrella Project; and (2) a $0.4 million decrease in other income primarily from the change in the fair market value of warrant derivatives which expired in April of 2012.
Six Months Ended June 30, 2012
The Company reported a net loss of $3.7 million for the six months ended June 30, 2012 compared to a net loss of $0.3 million for the six months ended June 30, 2011. The $3.4 million increase in net loss was primarily attributable to the change in other income, including: (1) a decrease of $1.3 million in the net gain on fair market value of warrant derivatives which expired in April of 2012; and (2) the absence of the 2011 period gain of $2.0 million on the sale of available-for-sale securities.
During the six months ended June 30, 2012, the net cash used for operating activities was approximately $3.5 million, which is $0.1 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 for the Montanore Project becomes clearer.
We anticipate expenditures of approximately $4.5 million for the final six months of 2012, which we expect to consist of approximately $3.0 million for general and administrative expenses, $1.0 million for permitting, engineering, and geologic studies for the permitting for the Montanore Project and $0.5 million on exploration at La Estrella. 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 to fund 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 Montanore and on 2012 exploration results and additional exploration plans, if any, for La Estrella.
Michael G. Rasmussen, PhD, Vice President of Exploration for Mines Management, Inc., is a Qualified Person for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators, and has approved the technical information contained in this news release.
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:
Douglas Dobbs, Vice President of Corporate Development & Investor Relations
Mines Management, Inc.
905 West Riverside - Suite 311
Spokane, Washington 99201
Email: firstname.lastname@example.org Web: www.minesmanagement.com