Permitting and EnvironmentalIn the first quarter of 2010, the USFS and the Montana DEQ continued work on addressing comments generated by the public on the Draft EIS for the Montanore project. This included work sessions with the U.S. Environmental Protection Agency (“EPA”) and the Army Corps of Engineers (“Corps”). In addition, the agencies continued their internal review of the various transmission line alternatives and modifications that could address public comments that were generated in the public review period. The Company has been working closely with the agencies on several key elements of the project that involved hydrology, waste characterization, and the water balance and chemical loading model. The hydrology model predicts mine inflow and the Company expects that it is close to consensus with the various agencies on this issue. Hydrologic tests completed in the Libby decline in 2009 were compiled and incorporated into the hydrologic model. This information provided an important insight to predicted mine inflow, that was previously modeled with historic data generated by Noranda Minerals Corporation. The Company continued to expand the current information on water balances and incorporated an extensive chemical loading model to assist in predicting water quality from various locations of the project. All supplemental information generated continues to support the Draft EIS characterization and environmental analyses and were completed to address public comments. While the Company believes a final EIS may still be completed in 2010, it can offer no assurances in respect of the timing of a final EIS because the duration and success of our permitting efforts are contingent upon many variables not within our control. For example, in the work sessions described above, the EPA submitted comments relating to the Montanore Project’s hydrologic model, waste characterization and water management. The Company is working diligently with the USFS to address these comments but, the USFS may require the Draft EIS to be supplemented. Any such supplemented Draft EIS would be issued for public notice and comment and would likely delay the completion of a final EIS to 2011.
Work continued with the Corps for permitting issues related to the 404 Permit, which is required for the tailings impoundment. The Company completed preliminary wetland mitigation plans that the Corps, along with the EPA, will consider in their overall analysis. The Corps previously determined that the Poorman tailings facility alternative was its Least Damaging Preferred Alternative (“LDPA”) and, to address public comments, the Corps re-analyzed the various alternatives considered previously. It appears that the Corps will continue to select the Poorman tailings site as their LDPA.The EIS contractor continues to develop responses and text edits to the document that addresses public comments. The Company continues to participate in the process and provide additional technical information when and where needed. Financial and Operating Results The Company is an exploration stage company with a large silver-copper project, the Montanore Project, located in northwestern Montana. None of its 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 which is capitalized. Financial results of operations include primarily interest income, general and administrative expenses, permitting, project advancement and engineering expenses. Quarter Ended March 31, 2010 The Company reported a net loss for the quarter ended March 31, 2010 of $3.4 million, or $0.15 per share, compared to a net loss of $3.0 million, or $0.13 per share, for the quarter ended March 31, 2009. The $0.4 million increase in net loss in the first quarter of 2010 is attributable to increases in general and administrative expenses of $0.8 million over the first quarter of 2009, principally due to the issuance of stock options in January 2010 of $0.9 million. Technical service expenses were $0.5 million less in 2010 due to suspending work by the Company’s underground mining contractor, Small Mine Development, for site rehabilitation, sump construction and dewatering in April 2009. Legal and accounting expenses increased by $0.1 million in the first quarter of 2010 over the comparable 2009 period.
LiquidityDuring the quarter ended March 31, 2010, the net cash used for operating activities was approximately $1.7 million, which consisted largely of permitting and technical expenses associated with activities at the Montanore Project site. This was offset by $0.1 million received from stock option exercises during the first quarter of 2010. Cash at the end of the quarter was $4.5 million compared to $6.1 million at the beginning of the quarter. The Company is taking steps to continue to reduce activity levels, including capital expenditures, until the timing of the Record of Decision on the Montanore project becomes more clear. We anticipate expenditures of approximately $4.5 million for the final three quarters of 2010, which will consist of $0.6 million per quarter for general and administrative expenses, $0.4 million per quarter for ongoing expense for the delineation drilling and mine scoping studies for the Montanore Project, and $0.5 million per quarter for ongoing permitting and environmental expenses to finalize the EIS. Given the Company’s current cash position and certificates of deposit of approximately $11.0 million on March 31, 2010, the Company expects to require approximately $10.0 million of external financing to fund the final phases of the advanced exploration program and delineation drilling program and completion of a bankable feasibility study. The Company intends to investigate financing alternatives. Mines Management, Inc. Mines Management, Inc. is a U.S. based mineral company focused on the acquisition and exploration of silver dominant mineral deposits. The Company’s primary focus is on the advancement of the Montanore silver-copper project located in northwestern Montana, with a goal to ultimately become a new mid-tier producer of precious and base metals. As of May 14, 2010, the Company had 23,100,109 shares of common stock issued and outstanding. 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, among other things, comments regarding further exploration and evaluation of the Montanore Project, including planned rehabilitation and extension of the Libby adit, drilling activities, feasibility determinations, 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 for the remainder of 2010, sources of financing, potential completion of a bankable feasibility study, results of the hydrological model and the effects thereof, and the search for potential exploration and development opportunity in the mining industry. 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 elsewhere in documents filed by the Company with the U.S. Securities and Exchange Commission, and with other regulatory authorities, including 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 the Company’s Annual Report on Form 10-K for the period ending December 31, 2009.