Mines Management, Inc. (“MMI”) (NYSE-Amex:MGN) (TSX:MGT) has filed on SEDAR a Technical Report entitled “Technical Report: Preliminary Economic Assessment, Montanore Project, Montana, USA prepared for Mines Management Inc.” (“Technical Report”) dated February 3, 2011, in support of a Preliminary Economic Assessment (“PEA”) for the Company’s wholly owned Montanore Silver-Copper Project in compliance with Canadian National Instrument 43-101. (“NI 43-101”). The Technical Report was prepared by Mine and Quarry Engineering Services, Inc. of San Mateo, California (“MQes). MMI previously announced the PEA results set forth below on December 22, 2010.

A mine plan developed by MMI was audited by MQes. Cost estimates were developed by MQes. The mine plan is based on a measured and indicated mineral resource of 81.5 million short tons of material grading 2.04 ounces per short ton (“opt”) silver and 0.75% copper, and an inferred mineral resource of 35.0 million short tons grading 1.85 opt silver and 0.71% copper at a cutoff grade of 1.0 opt silver, previously reported in an NI 43-101 Technical Report dated October 2005 prepared by Mine Development Associates (“MDA”) of Reno, Nevada. MDA’s estimate reported by MMI of estimated mineralized material reported pursuant to U.S. Securities and Exchange Commission rules in its annual report on Form 10-K for the year ended December 31, 2009, remains unchanged.

The PEA indicates the potential for a financially robust underground mine utilizing conventional grinding and flotation processing techniques at a nominal throughput of 12,500 short tons per day (“st/d”). At a 5% discount rate, a silver price of US$15.00 per ounce (“oz”) and a copper price of US$3.10 per pound (“lb”), the project’s pre-tax Net Present Value (“NPV”) is indicated to be US$485 million with an internal rate of return (“IRR”) of 17.4% on an unleveraged 100% equity basis.

Using metals prices as of November 17, 2010, of US$25.65/oz. silver and US$3.72/lb. copper, the project indicated a pre-tax NPV of US$1.323 billion and IRR of 32.3%, at a 5% discount rate.

All dollar amounts in this release are stated in U.S. currency, unless otherwise stated. The disclosure set forth below is derived from the Technical Report unless otherwise expressly noted. Average estimates are assumed over the 15-year life of mine (“LOM”) unless otherwise stated.

Project Parameters:
Nominal Processing Rate 12,500 short tons per day
Average Silver Grade 1.88 ounces per short ton
Average Copper Grade 0.72 %
Silver Recovery 86 %
Copper Recovery 90 %
Average Annual Silver Production 6.4 million ounces
Average Annual Copper Production 51.1 million pounds
Mining Extraction of Resources 50.5%

Project Economics:
Long-term Silver price $15.00 per ounce
Long-term Copper price $3.10 per pound
Discount rate 5.0%
Net Present Value (NPV) $ 485.6 million
Internal Rate of Return (IRR) 17.4 %
Estimated Initial Capital Expenditure $ 552.3 million
Capital Cost Contingency 20%
Estimated Direct (Onsite) Operating costs $ 22.31 per short ton
Estimated Life of Mine 15 years
Net Undiscounted LOM Cash-flow (pre-tax) $1.118 billion
Direct (Onsite) Operating costs (AgEq in plant feed) $ 4.58 per ounce AgEq

Note: The Technical Report is based on measured, indicated and inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves at this time. Mineral prices used to calculate silver equivalency were US$15.00 per ounce of silver and US$3.10 per pound of copper. The cost estimates used in the preparation of a preliminary assessment are very preliminary and may increase significantly for actual construction and operations, and there is no certainty that the preliminary assessment and economics set forth in the Technical Report will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Direct Onsite Operating Costs include mining, processing, and G&A costs.


The Montanore Silver-Copper Project is 100% controlled by Mines Management, Inc., subject to a $0.20-per-ton production royalty. The Montanore deposit underlies portions of Lincoln and Sanders Counties in northwestern Montana. The Company controls its mineral rights for the deposit by virtue of extralateral rights projecting from patented apex claims.

The mineralized zones crop out at the surface and extend down dip at least 12,000 ft. to the north-northwest. The mineralization is open ended in the down-dip direction. Mineralization occurs in two sub-parallel horizons separated by a silver and copper deficient zone. The average dip is just over 15 degrees in the up dip area, increasing to an average of 24 degrees in the northwestern, down dip area. The deposit is controlled on one side to the southwest by a fault. The width of the main horizon in plan view is controlled by property boundaries to a maximum of 2,000 ft. The average thickness for each of the two horizons is 35 ft., depending upon cutoff. During mining, the deposit would be accessed through three declines, each extending approximately 15,000 to 17,000 feet from the east, with processing facilities at the surface.

Mineralized Material Estimate in Accordance with U.S. SEC Industry Guide 7

Short Tons

Silver Grade (Ounces per short ton)

Copper Grade

Cut-off (Silver Ounces per short ton)
Mineralized Material   81,506,000   2.04   0.75%   1.0
Resource Estimate in Accordance with Canadian NI 43-101
Measured   4,026,000   1.85   0.74%   1.0
Indicated   77,480,000   2.05   0.75%   1.0
Inferred   35,080,000   1.85   0.71%   1.0

The project is being advanced under permits approved by the state of Montana in 1993. Surface facilities have been constructed in preparation for an underground evaluation and drilling program that will support a feasibility study. The project is currently undergoing a NEPA process, following which the Company plans an underground evaluation program to support a feasibility study.


The Technical Report is based on an underground mining operation, utilizing conventional grinding and flotation processes. The deposit would be bulk mined 350 days per year and utilize an inclined room and pillar mining method producing at a nominal rate of 12,500 short tons per operating day, although the mine is being permitted for a throughput of up to 20,000 short tons per day.

Over the 15-year mine life, an estimated 59 million short tons of process feed would be treated at average grades of 1.88 ounces silver per ton and 0.72% copper, yielding a total of 96 million ounces of silver and 767 million pounds of copper. Above average feed grades of 2.26 opt silver and 0.84% copper would be mined in the first four years.

Under the current mine plan, forty foot wide topslices would be mined on strike below the hanging wall contact. Connection drifts between adjacent top cuts would be mined following the hanging wall contact at a gradient of 15% forming obliquely angled permanent stope pillars. Mineralization below the top slice would be mined by a longhole bench. Based on rock mechanics study recommendations, MMI plans that a minimum interbed thickness of 50 feet will be maintained between the mining zones.

Mining at Montanore is planned to be highly mechanized through the use of large high-tech mining equipment including modern load-haul-dump units (“LHD”) and trucks, and computer-controlled drilling jumbos. Material flow would consist of broken ground being hauled from the faces by LHD and truck to grizzlies centrally located in each mining panel. The material would discharge from the rock pass, via an apron feeder, onto the pre-crusher conveyor system to the crusher. Primary crushing would occur underground. The process feed would then be transported via conveyor to the surface for grinding and flotation.

The deposit is open down dip to the northwest. Diamond drilling in the northern area of the deposit has suggested a third mineralized bed might exist. Insufficient data was available to include this mineralization in resources, however there is potential for expansion of the resource.


The process flowsheet selected for investigation at the Montanore project uses conventional grinding and flotation techniques and is broadly similar to that used at copper projects elsewhere. Process development for the project has concentrated on initial validation of a basic flow sheet involving crushing, SAG and ball mill grinding, bulk sulfide flotation, concentrate regrinding, followed by three cleaner stages. Results have been encouraging, with no fatal flaws encountered that would require a fundamental change in the process.


Major infrastructure for the project will include a 230kV electrical transmission line approximately 17 miles in length, access road and bridge improvements and water treatment facilities, among other items.


Capital costs are based on run of mine material delivered to the underground feeders, primary crushing, coarse feed conveying, process plant and ancillary facilities as defined in the equipment list contained in the 2006 preliminary capital and operating cost study.

Estimated Initial Capital Cost – Summary
Items                   US$(000’s)
Total Direct Field Costs 231,481
Major Site Access & Infrastructure Capital Costs* 232,819
Total Indirect Field Costs 34,770
Contingency 53,250
Total Project Capital Costs                   552,320

* Other capital project costs have been included for access roads and bridges, a temporary 34.5kV power line, tailing, 230kV power line, mine development, equipment and infrastructure, as well as owners environmental and working capital.

The initial capital cost for the Montanore project to treat 12,500 st/d of material is estimated at US$552.3 million (+/-35% accuracy). Ongoing and replacement capital costs and closure capital are estimated to be an additional US$217.9 million over the life of mine. Costs are expressed in 2 nd quarter, 2010 U.S. dollars.


The following life-of-mine costs are expected for the operating phase of the project:

Estimated Direct Operating Costs


Average Unit Cost US$/st Mill Feed
Mining   12.85
Processing   7.68
General & Administration  

Total Direct (Onsite) Operating Costs  



The following sensitivity table demonstrates that the project has robust economics across a range of silver and copper price scenarios.

Effect of Metal Prices on NPV @ 5% (US$millions)

Silver Price (US$/oz)




$2.50 67.4 228.7 390.0
$3.10 324.3

$3.70 581.1 742.4 903.7

Effect of Metal Prices on IRR

Silver Price (US$/oz)

















  • Permitting: Continue with completion of permitting process. Remaining steps include completion of Supplemental Draft Environmental Impact Study (“EIS”), Final EIS, and Record of Decision.
  • Evaluation drilling program: Complete development drifting and evaluation program, including 50,000 feet of diamond core drilling. The program would confirm the resource, geological structure and deposit geometry in the areas of the planned infrastructure and first mining panels. It would also furnish sample material for metallurgical testwork, geotechnical and geometallurgical modeling. This would provide information needed to advance the engineering development of the project.
  • Feasibility study: Data from evaluation program will support completion of a final feasibility study.

The PEA has been prepared with audit and cost estimation by MQes, and input from Hatch Engineering, MMI, MDA, McIntosh Engineering, Klepfer Mining Services, among others.


The Technical Report in support of the PEA was prepared under the supervision of Mr. Chris Kaye, and Mr. Geoffrey Challiner, each of whom is an independent “Qualified Persons,” as such term is defined in National Instrument 43-101, and each have read and confirmed that this news release fairly and accurately reflects the technical contents of the Technical Report . Mr. Steve Ristorcelli, with Mine Development Associates (“MDA”), also an independent Qualified Person, has reviewed the information with respect to the reported silver and copper resources contained in this release.


The Montanore deposit was discovered in 1983 by U.S. Borax & Chemical, which conducted approximately 70,000 feet of diamond core drilling. Mines Management’s mineral claims, which were leased to the operator, overlapped a portion of the deposit. In 1988, title to the deposit was sold to a consortium led by Noranda Minerals of Canada. Noranda conducted numerous activities including completion of project permitting by 1993, 14,000 feet of development of an evaluation adit, compilation of surface claims and patenting of mineral claims, among other things. In 2002, Noranda withdrew from the project due to low metals prices at the time, and quitclaimed title to the deposit to Mines Management in accordance with the lease agreement. In 2006, Mines Management acquired Noranda’s U.S. operating companies, along with title to patented lands including the portal site to the adit and project permits, and initiated excavation of the portal and reconstruction of site infrastructure in preparation for resuming the evaluation drilling program. In 2005, MMI initiated the NEPA process, and is currently working toward completion of supplemental draft and final environmental impact studies.

Mines Management, Inc. is a U.S.-based mineral exploration company focused on advancement of the Montanore Silver-Copper Project located in northwestern Montana. The Montanore project is a large silver-copper project currently undergoing project permitting and engineering studies, and represents a foundation on which MMI intends to become a significant precious and base metals production company. MMI has assembled a team which is highly experienced in mine development, mineral exploration, and financing. Further information on MMI and its properties is available on the Company’s website at www.minesmanagement.com, in its 10-K Annual Report dated December 31, 2009, and other documentation generally available on the Securities and Exchange Commission’s website ( www.sec.gov) and on the Canadian website SEDAR ( www.sedar.com). Or you can contact the company directly at the location described below.

Cautionary Note to U.S. Investors concerning estimates of Measured, Indicated and Inferred Mineral Resources:

This section uses the terms “Measured Mineral Resources,” “Indicated Mineral Resources” and “Inferred Mineral Resources.” We advise U.S. investors that while those terms are recognized and required by 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.

FORWARD LOOKING STATEMENTS - Some information contained in 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 the results of the Preliminary Economic Assessment including estimated capital and operating costs, throughput and process rates, recoveries, production, NPV and IRR calculations, mining and processing methods, and plans, and further exploration and evaluation of the Montanore Project including progress and expectations regarding environmental and permitting requirements and the process and timing thereof. The use of any of the words "anticipate," "estimate," "expect," "may," "project," "should," "would," "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 in documents filed by Mines Management, Inc., with the U.S. Securities and Exchange Commission and with other regulatory authorities, including the availability, terms, conditions and timing of required governmental permits and approvals, the very preliminary cost estimates used in the preparation of the PEA which may increase significantly for actual construction and operations, changes in the mine plan, processing or estimates of mineral resources on which the PEA was based, changes in worldwide economic and political events affecting the supply of and demand for silver and copper, and the availability of 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 process problems, uncertainty regarding future changes in applicable law or implementation of existing law, the availability of experienced employees, and the factors discussed under "Risk Factors" in Mines Management, Inc.'s Annual Report on Form 10-K for the period ending December 31, 2009.

Copyright Business Wire 2010

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