Mines Management, Inc. (NYSE Amex: MGN) (TSX: MGT) (the "Company") is pleased to announce financial and operating results for the year ended December 31, 2010.


  • On April 4, 2011, the Company completed an underwritten public offering of 5,120,000 shares of common stock that yielded net proceeds of approximately $15.1 million. The Company intends to use the net proceeds for advancement of the permitting process for its Montanore Project, the commencement of the Company's planned delineation drilling program which will include advancement of the adit, establishment of drilling stations and commencement of exploratory drilling, and for general corporate purposes, including possible acquisition and exploration of new mining properties.
  • The Company engaged Mine and Quarry Engineering Services, Inc. of San Mateo, California (MQES) to prepare a Technical Report entitled "Technical Report: Preliminary Economic Assessment, Montanore Project, Montana, USA prepared for Mines Management, Inc." dated February 3, 2011 (PEA), in compliance with guidelines under Canadian National Instrument 43-101 ("NI 43-101"). The Company announced the PEA results on December 22, 2010.
  • The U.S. Forest Service (USFS) and the Montana Department of Environmental Quality (MDEQ) continued their environmental review, and are in the process of formulating responses to comments received from the public and from Environmental Protection Agency (EPA) on the Draft Environmental Impact Study (EIS) for the Montanore Project.
  • Permitting Milestones achieved in 2010 included:
    • Selection by the government agencies of the preferred alternative for the transmission line proposed for the Montanore Project, announced on October 8, 2010, and
    • Completion of a study to monitor the grizzly bear in the Montanore Project area, which is located in a portion of the Cabinet/Yaak Ecosystem recovery area, announced on August 8, 2010.
  • The Company continued meetings with federal and state agencies, Montana legislators, and local Lincoln County Commissioners, Libby City officials, business leaders and community members.
  • The Company continued its program to reduce expenditures and conserve cash pending the completion of permitting.
  • Cash and investment position remained strong at December 31, 2010.

At December 31, 2010, the balance of our cash and unrestricted certificates of deposit remained strong at over $6.4 million. We also had $3.7 million in equity securities that were available for sale. Our net cash expenditures for operating activities for 2010 totaled $6.7 million. Cash outlays were less than projected due to delays in the USFS approval of our EIS and the cessation of adit rehabilitation and dewatering until permits are received. Our cash position was augmented by the $15.1 million of net proceeds received from the common stock offering completed in April, 2011.

In 2011, we plan to continue to focus on planning for our exploration and delineation drilling program at the Montanore Project pending the final permitting approvals. The completion of the recent financing will provide sufficient cash to complete the permitting process and initiate the adit rehabilitation and drill station development. Additional financing will be required to complete the evaluation drilling program and a bankable feasibility study. Development activities could be deferred if the permitting process is delayed or if commodity prices make the project difficult to finance or increase the cost of such financing.

Financial and Operating Results

We reported a net loss for the year ended December 31, 2010 of $10.7 million or $0.46 per share compared to a loss of $9.4 million or $0.41 per share for the year ended December 31, 2009. The increase of $1.3 million in net loss between 2010 and 2009 was comprised of a reduction in project and administrative expenses of $0.8 million and an increase of $2.1 million in non-cash expenses. The following table summarizes expenditures by category and year:
Expense Summary
Expenditures         2010             2009
Montanore Project Expense $ 3.7 $ 4.4
Administrative Expense 3.3 3.4
Depreciation 1.0 1.0
Non-Cash Stock Option Expense 1.8 0.4
Other Expense 0.9 0.2

Montanore Project Expense includes exploration, fees, filing and licenses, and technical services, including environmental, engineering and permitting expense. Montanore Project Expense decreased by $0.7 million during 2010 compared to 2009 for the following reasons: (i) decreased spending related to adit rehabilitation activity by $1.2 million during 2010 and (ii) an increase of $0.5 million in consultant fees paid in 2010 primarily to MQES to conduct the PEA.

Administrative Expense, which includes general overhead and office expense, legal, accounting, compensation, rent, taxes, and investor relations expense, decreased in 2010 by $0.1 million. The decrease was primarily due to a decline in legal, accounting, and consulting expenditures associated with a proposed public offering during 2009.

Non-Cash Stock Option Expense (which is included in general and administrative and technical services expenses in our statement of operations) increased by $1.4 million during 2010 primarily because of $1.8 million of expense associated with the grant of approximately 1.3 million options during 2010. The 2009 stock option expense was the result of recognizing additional compensation expense as options granted or re-priced in prior years vested.

The $0.7 million increase in Other Expense includes a $0.5 million increase in loss recognized due to a change in the fair market value of warrant derivatives and a decrease of $0.2 million in interest income during 2010 as a result of utilizing funds for operating activities during 2010.

Liquidity and Capital Resources

At December 31, 2010, our aggregate cash, short term investments, and long term investments totaled $10.1 million compared to $13.8 million at December 31, 2009. Cash flows provided by financing activities were $0.5 million in 2010 compared to $1.8 million utilized in 2009, primarily to pay off the balance on the line of credit. The net cash used for operating activities during 2010 was $6.7 million, which consisted primarily of permitting, environmental, exploration, and engineering expenses for the Montanore project and general and administrative expenses, compared with $7.4 million of cash used for operating activities in 2009. Cash provided by investing activities for 2010 was $4.9 million, primarily from the early withdrawal of funds from a certificate of deposit, compared with $0.1 million of cash used in investing activities in 2009. The net decrease in cash and cash equivalents for the year ending December 31, 2010 was $1.2 million.

We anticipate expenditures in 2011 of approximately $8.0 million, which we expect will consist of (i) $1.5 million in each quarter for ongoing operating and general administrative expenses and (ii) $0.5 million in each quarter for permitting, engineering and geologic studies to finalize our permitting of the Montanore Project. The recently completed public offering of $15.1 million net proceeds will provide adequate cash availability for years 2011 and 2012 to fund ongoing environmental, engineering, permitting and general and administrative expenses. The Company’s aggregate cash and liquid investments totaled $23.1 million as of April 29, 2011. Additional financing, however, will be required to complete the evaluation drilling program and a bankable feasibility study.

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, an advanced stage exploration project, located in northwestern Montana.

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 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 regarding the use of proceeds from the underwritten public offering, further exploration and evaluation of the Montanore project, including drilling activities, feasibility determinations, including those in the PEA, engineering and environmental studies, environmental, reclamation and permitting requirements and the process and timing and the costs associated with the foregoing, 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 2011. Actual results may differ materially from those presented. Factors that could cause results to differ materially include 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, 2010, as amended.

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