- 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 $15.2 million before deducting offering expenses. 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 U.S. Forest Service (“USFS”) and the Montana Department of Environmental Quality (“MDEQ”) continued their environmental review of the Montanore Project, and are in the process of formulating responses to comments received from the public and from the Environmental Protection Agency (“EPA”) in the SDEIS for the project.
- 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 $22 million at June 30, 2011.
- The Company’s exploration and corporate development team continued to examine and evaluate additional opportunities in North America and Latin America.
Current ActivitiesDuring the second quarter of 2011, 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. Additional support for the permitting process includes data gathering for the biological aspects of the permit relating to fisheries and other wildlife in the area. A light, imaging, detection and ranging (“LIDAR”) survey has been undertaken to provide a more accurate topographic rendition of the Montanore Project area. LIDAR survey methods have the ability to “see through” the trees and underbrush to yield a very accurate topographic map. This accuracy is necessary for the final engineering of surface facility layouts including the tailings area, plant site, conveyor runs and roads. The LIDAR survey will continue in phases throughout the summer months and advance to the higher elevations as the snowpack melts. Community support activities included participation in the local Chamber of Commerce meetings, Montanore Positive Action Committee (“MPAC”) activities, and Job Service surveys. MPAC is a local support group that is actively promoting and supporting the Montanore Project in the local community and the state. MPAC held a rally in April 2011 with over fifteen speakers from the local community and political leaders from the surrounding area and region. Permitting and Environmental The Company continues its efforts to obtain the requisite approvals, permits and opinions from the USFS, the MDEQ, the Army Corps of Engineers and the U.S. Fish and Wildlife Service (“USFWS”) that would allow the Company to initiate its underground exploration drilling program. The results of the underground exploration drilling program will form the basis upon which the Company, and financing parties, can determine whether to advance the Montanore Project to the development stage.
The Environmental Impact Statement was completed in 2009 and the agencies determined that a SDEIS would be necessary to address specific project environmental issues. The agencies are working diligently to complete the SDEIS and the Company anticipates that the SDEIS could be issued by the agencies in the third quarter of 2011, which would be followed by a public comment period of forty-five days.In addition, the Company submitted its formal application to the Army Corps of Engineers for the 404 Permit for the project. The Army Corps of Engineers will review the application, along with information provided in the SDEIS, and initiate a public notice and application review process. The USFS has completed a draft Biological Assessment for the project. Final edits and reviews are underway and it is expected to be released to the USFWS in the third quarter of 2011 to initiate the formal Section 7 Consultation process (Endangered Species Act) required to advance the project. The USFS and the USFWS will work collaboratively on the review process, which will culminate in the issuance by the USFWS of a Biological Opinion. The Company completed additional technical study plans for the proposed wetland mitigation sites. The field work will be implemented in the third quarter of 2011 and will be a critical component of the Army Corps of Engineers process and the issuance of the Final EIS and Record of Decision by the USFS. With the completion of the SDEIS expected the third quarter of 2011, the Company anticipates issuance of the Final EIS and the Record of Decision could still occur in early 2012. 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, 2011The Company reported a net loss for the quarter ended June 30, 2011 of $1.6 million, or $0.06 per share, compared to a net loss of $1.2 million, or $0.05 per share, for the quarter ended June 30, 2010. The $0.4 million increase in net loss in the second quarter of 2011 is attributable to a decrease of $0.7 million in the gain recognized from the fair value of warrant derivatives. This was partially offset by a reduction in operating expenses from the second quarter of 2010, principally a $0.3 million decrease in consultant fees paid to Mine and Quarry Engineering for work on the preliminary economic assessment and the completion of the Grizzly Bear study during 2010. Six Months Ended June 30, 2011 The Company reported a net loss for the six months ended June 30, 2011 of $0.3 million, or $0.01 per share, compared to a loss of $4.6 million or $0.20 per share for the six months ended June 30, 2010. The $4.3 million decrease in net loss from 2010 is attributable to the following items: (i) decreased general and administrative costs of $0.6 million in 2011 primarily the result of decreased stock compensation related to options issued in January of 2010; (ii) decreased technical services costs of $0.7 million in 2011 principally due to a reduction in consultant fees paid to Mine and Quarry Engineering in 2010, decreased environmental expenses paid to the DEQ, and completion of the Grizzly Bear Study in 2010; (iii) decrease in accounting and legal fees of $0.1 million due to decreased permitting issues related to the EPA and USFS’s request for a SEIS; (iv) increased investment income of $2.0 from sale of available-for-sale securities during 2011, and (v) increase of $0.9 million in the net gain on fair market value of warrant derivatives during 2011. Liquidity During the six months ended June 30, 2011, the net cash used for operating activities was approximately $3.6 million, which is consistent with 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 $4.0 million for the final six months of 2011, which we expect to consist of $3.0 million for general and administrative expenses and $1.0 million for permitting, engineering, and geologic studies to finalize the permitting for the Montanore Project. Depending on the amount and rate of progress with our permitting efforts and market conditions, the Company might seek additional financing before the end of 2011.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, among other things, comments regarding further exploration and evaluation of the Montanore Project, including drilling activities, feasibility determinations, including those in the Preliminary Economic Assessment, engineering and environmental studies, environmental, reclamation and permitting requirements and the process and timing and the costs associated with the foregoing; the process and timing associated with the permitting process, including the issuance of biological opinions, a final environmental impact statement and a record of decision and completion of wetland mitigation plans; estimates of mineralized material; financing needs, including the financing required to fund the final phases of the advanced exploration and delineation drilling program and a bankable feasibility study; sources of financing; the sufficiency of working capital to complete the rehabilitation of the Libby adit and commence delineation drilling; planned expenditures and cash requirements for 2011; efforts to reduce costs, including reducing manpower; results of the hydrological model and the effects thereof; the search for potential exploration and development opportunities in the mining industry; the possibility of challenges by environmental groups or others to our permitting efforts or planned exploration, development or mining activities; potential completion of a bankable feasibility study and the costs associated therewith; and markets for silver and copper. Actual results may differ materially from those presented. Factors that could cause results to differ materially include, among other things, 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.