SPOKANE, Wash., Aug. 21, 2015 (GLOBE NEWSWIRE) -- MINES MANAGEMENT, INC. (NYSE-MARKET: MGN, TSX: MGT) (also the "Company") announces financial and operating results for the second quarter ending June 30, 2015, and recent milestones achieved in the permitting process for the Montanore Silver-Copper Project, as well as achievements regarding litigation.
Highlights
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The U.S. Forest Service ("USFS") and the Montana Department of Environmental Quality ("MDEQ") provided legal notice to the public on April 1, 2015 announcing the availability of the Final Environmental Impact Statement ("EIS") and Draft Record of Decision ("ROD"). This initiated a 45 day public objection and resolution process, which ended May 15, 2015. The USFS has completed its review of the comments and issued a response letter requiring clarifying comments to be added to the Final EIS and Final ROD. The Company expects the permitting to be completed by late 2015 or early 2016.
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The Company continued to work with the U.S. Army Corps of Engineers ("USACE") on the Clean Water Act 404 permitting process. This process will continue concurrently with work on the Final EIS and although not required for the Final EIS, it is required prior to beginning construction of the tailings impoundment dam.
- In May 2015, the Commissioners appointed by the U.S. District Court for the District of Montana, Missoula Division to determine just compensation for the Company's easements across certain unpatented non-mineralized claims in the area of the Montanore Project following the conclusion of the trial in April, 2015, reported that claim-holders have lost no value and are due no compensation from the Company. On August 7, 2015, the U.S. District Court issued its final ruling affirming the Commissioners' report.
Montanore Permitting and Environmental
Approval by regulatory agencies is required before the Montanore Project can proceed with exploration and project development. The agencies that are involved with the major permits include the USFS, MDEQ, USACE, and the U.S. Fish and Wildlife Service ("USFWS"). There are other permits required, such as water rights, which will involve other agencies.
The permitting process requires completion of the Final EIS before a ROD is issued by the USFS and MDEQ. The Final EIS describes various elements of the project, provides analysis of impacts, includes public input, and discloses aspects of the proposed project that were considered by the agencies. The Final EIS is used by the State of Montana to support issuance of the ROD and other permits.
On April 1, 2015, the USFS and MDEQ provided legal notice to the public announcing the availability of the Final EIS and Draft ROD. Following this public notice, the objection process commenced. The objection process is a new program replacing the previous USFS appeal program. Under the objection process, individuals or organizations with legal standing had 45 days, or until May 15, 2015, to provide the agencies with objections to the Final EIS and Draft ROD and their proposed resolutions to address their concern. The USFS has completed its review of the comments and issued a response letter requiring clarifying comments to be added to the Final EIS and Final ROD. After this has been completed, the USFS should file a Notice of Availability in the Federal Register indicating that the Final EIS and Final ROD have been issued. The State of Montana will then issue its version of the Final ROD in accordance with the Montana Environmental Policy Act. Receipt of the federal and Montana Final RODs provide the necessary authorizations for the Company to complete dewatering and proceed with underground drilling at the Montanore Project contingent upon meeting environmental mitigation requirements.
The other major permit required is the 404 permit issued by the USACE under the Clean Water Act. This permit is required when waters of the U.S. are impacted by a proposed action, in this case by the project tailings impoundment. The Company completed a compensatory mitigation plan for aquatic resources affected by the proposed tailings impoundment which was accepted by the USACE as complete during 2014. It is anticipated the USACE will make a permit decision shortly after the Final EIS is issued. The State of Montana must certify the USACE Section 404 authorization through the Section 401 certification process before the USACE can issue a permit. The State has been involved throughout the 404 review process and continues to work with the USACE during 2015. The Company expects the 404 permit will be issued subsequent to the issuance of the Final ROD.
The MDEQ continues to work on water rights, transmission line permits, and other minor regulatory reviews that will be required to gain approval for the project. Under the State of Montana's regulations, the Company expects these permits to be issued following issuance of the Final EIS and ROD.
In June 2015, Save Our Cabinets, Earthworks, and Defenders of Wildlife filed a complaint in the United States District Court for the District of Montana challenging the issuance of the Biological Opinion regarding the Montanore Project by the USFWS. The USFWS has not yet responded to the complaint. The Company is not a party to this litigation. The Company does not currently expect that this litigation will delay the USFS objection and resolution process related to the issuance of the Final ROD.
Financial and Operating Results
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 general and administrative expenses, and permitting, project advancement and engineering expenses.
Quarter Ended June 30, 2015
The Company reported operating expenses of $1.2 million compared to $1.8 million for the quarters ended June 30, 2015 and 2014, respectively, which is a decrease of $0.6 million. The decrease in operating expenditures includes a $0.2 million decrease in general and administrative expenses which was primarily due to decreases in director compensation and stock compensation costs during 2015. There was also a $0.2 million decrease in technical services primarily associated with a reduction in fees paid to contractors and consultants working on the Environmental impact Study ("EIS") as well as a decrease in the baseline studies associated with the EIS, and a reduction in stock compensation cost during 2015. The $0.2 million decrease in depreciation was a result of assets reaching the end of their depreciable lives and limited acquisitions of property and equipment during the past few years.
Six Months Ended June 30, 2015
The Company reported a decrease in operating expenses of $0.6 million during the six months ended June 30, 2015 compared to the six months ended June 30, 2014. The decrease in operating expenses consisted of a $0.2 million decrease in each of general and administrative expenses and technical services, a decrease of $0.4 million in depreciation, offset by an increase of $0.2 million in legal, accounting, and consulting expenditures. The $0.2 million decrease in general and administrative expenses included a decrease in payroll expenditures of $0.1 million as a result of having one less employee during the first six months of 2015 compared to the first six months of 2014 and a $0.1 million decrease in director compensation during 2015 compared to 2014. The $0.2 million decrease in technical services during 2015 primarily consisted of a reduction in fees paid to contractors and consultants working on the EIS as well as a reduction in the baseline studies associated with the EIS. The $0.4 million decrease in depreciation resulted from assets reaching the end of their depreciable lives with limited acquisitions of property and equipment during the past few years. The increase of $0.2 million in legal, accounting, and consulting expenditures primarily resulted from the litigation matter described in Highlights.
Liquidity
During the six months ended June 30, 2015, the net cash used in operating activities was approximately $2.6 million, which was comparable to the same period in the prior year. Net cash utilized by financing activities during the six months ended June 30, 2015 consisted of the payment of $0.1 million cumulative preferred stock dividends. The Company's cash and cash equivalents decreased during the six months ended June 30, 2015 from $3.9 million at December 31, 2014 to approximately $1.1 million at June 30, 2015. Net cash provided by investing and financing activities amounted to $1.8 million during the six months ended June 30, 2014 and included certificates of deposit maturing and proceeds from common stock options exercised.
We do not currently have enough cash on hand to fund ongoing operating expenses, estimated at approximately $2.2 million for the final two quarters of 2015, consisting of approximately $0.6 million in each quarter for ongoing operating, legal, and general administrative expenses and $0.6 and $0.4 million in the third and fourth quarters, respectively, for permitting, environmental, engineering, and geologic studies for the Montanore Project. Additional financing will be required for the Company to continue its business and operations. Accordingly, the Company is seeking financing and may consider a joint venture of the Montanore Project or other strategic alternatives. There can be no assurance that the Company will be successful in obtaining financing or entering into another type of transaction that will permit it to continue its business, or that the terms of any such financing or transaction would not make future financings or transactions more difficult or otherwise limit the Company's flexibility or opportunities in the future.
ABOUT MINES MANAGEMENT
Mines Management, Inc. is engaged in the business of 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, which deposit contains mineralized material of approximately 81.5 million tons with average grades of 2.04 ounces silver per ton and 0.74% copper in two mineralized zones.
In 2011, in accordance with Canadian National Instrument (NI) 43-101, the Company completed a third party Preliminary Economic Assessment (PEA) which indicated robust potential economics. The mineral resource was reported to contain the following:
| Tons | Silver Grade (oz. per ton) | Copper Grade | |
| Measured | 4,026,000 | 1.85 | 0.74% |
| Indicated | 77,480,000 | 2.05 | 0.75% |
| Inferred | 35,080,000 | 1.85 | 0.71% |
The Montanore project is currently in the final phase of the permitting process which, if completed successfully, would allow for the construction of the project. Prior to considering a development decision, the Company plans to conduct additional underground evaluation and drilling activities to support completion of a final feasibility study. Preparation for additional evaluation and drilling could commence upon issuance of a Final Record of Decision and completion of certain environmental mitigation activities, if sufficient funds are available.
Additional information is available on the Company's website at www.minesmanagement.com.
Cautionary Note to U.S. Investors concerning estimates of Measured, Indicated 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. 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 including comments regarding anticipated issuance of the final Record of Decision, Environmental Impact Statement and Clean Water Act 404 permit and the timing thereof; activities and expenditures planned for 2015 including continued work on permitting, engineering and geologic studies to finalize the permitting process; mineral resources; plans to continue as a going concern and complete an evaluation program and bankable feasibility study if financing can be raised; and the effects on our planned activities of whether we are successful in raising additional financing. Investors are cautioned that forward looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially from those presented. Factors that could cause results to differ materially include delays in and increases in the cost of completing work related to the Record of Decision, final Environmental Impact Statement and 404 permit, whether external financing for the Company's business can be obtained on acceptable terms or at all; continued disputes regarding claim ownership and rights in the Montanore Project area, changes in interpretation of geological information, whether additional permitting may be required at Montanore in the future; the results of delineation drilling and feasibility studies; continued decreases and future fluctuations in silver, gold and copper prices; and world economic conditions. 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, 2014.
For more information, contact:
Douglas D. Dobbs, President
Mines Management, Inc.
905 West Riverside Avenue - Suite 311
Spokane, WA 99201
Phone: 509-838-6050
Fax: 509-838-0486
Email: info@minesmanagement.com
Web: www.minesmanagement.com
HUG#1947052