SPOKANE, WASH., March 21 /CNW/ - Mines Management, Inc. (AMEX: MGN)(TSX:
MGT) is pleased to announce financial results and an operational update for
the year ending December 31, 2006.
-- Completed listing of our common stock on the Toronto Stock Exchange,
effective January 10, 2006.
-- Received independent estimate of mineralized material and mineral
resources from Mine Development Associates on March 1, 2006 and filed a report
under Canada's National Instrument 43-101, reporting mineral resources at
-- Completed initial Montanore Project mining and milling cost studies
by Hatch of Vancouver, identifying critical areas of focus for project
improvement and development.
-- Acquired two Noranda subsidiaries holding Hard Rock Operating Permit
150 and MPDES water discharge permit for exploration drilling, and title to
the properties at the portal site of the Libby adit.
-- Reopened Libby Adit, installed site facilities.
-- Filed a $65 million shelf registration statement with the Securities
and Exchange Commission, which became effective June 27, 2006.
-- Continued drafting of the Montanore Project Environmental Impact
Statement, in cooperation with the U.S. Forest Service, independent
consultants and the Montana Department of Environmental Quality ("MDEQ").
-- Received final approval on November 28, 2006, for a minor revision to
Hard Rock Operating Permit 150 to resume exploration and drilling activities
at the Libby adit following a review by the MDEQ.
-- Conducted the first phase of the re-opening of the Libby adit portal
and preliminary evaluation and water quality tests in the third quarter of
-- Our year end cash and certificates of deposit balance remained strong
at over $5.1 million.
-- Our net cash expenditures for operating activities for the year 2006
totaled $4.9 million, as expected.
In 2007, the Company plans to focus on commencement of an underground
evaluation drilling program at the Montanore Project's Libby adit located in
northwestern Montana. The Company intends to continue its emphasis on the
re-permitting applications and commencement of a phased financing plan for the
Montanore project. The Company will require additional capital to complete the
proposed $40 million evaluation and drilling program starting in early 2007.
Financial and Operating Results
Mines Management, Inc. reported a net loss for the year ended December
31, 2006 of $6.0 million or $0.47 per share versus a loss of $5.2 million or
$0.45 per share and $2.5 million or $0.26 per share for the years ending
December 31, 2005 and 2004, respectively. The 2006 increase in net loss versus
2005 of $0.8 million and the 2005 net loss increase versus 2004 of $2.7
million, were primarily due to increased expenditures in Montanore Project and
Expenditures Expense Summary
2006 2005 2004
------- ------- -------
Montanore Project Expense $ 2.7 $ 2.2 $ 0.2
Administrative Expense $ 2.7 $ 2.2 $ 1.0
Non Cash Stock Option Expense $ 0.9 $ 1.0 $ 1.4
Interest Income $ (0.3) $ (0.2) $ (0.1)
Montanore project expense includes exploration, fees, filing and
licenses, environmental, engineering and permitting expense. Increased
activity on the Montanore Project was primarily the result of increased
payments to consultants for permitting activities, collecting additional
environmental baseline data, mineralized material and resource studies, and
exploration activities related to reopening the Libby adit. Administrative
expense, which includes general overhead and office expense, legal,
accounting, compensation, rent, taxes, and investor relations expense,
increased $0.5 million or 22% in 2006 over 2005 as we added two additional
staff members, increased legal and accounting fees due to increased regulatory
requirements and implementation of Sarbanes-Oxley Act of 2002 reporting on
internal controls as an accelerated filer for 2006, and a general increase in
the Company's activities. Stock option expense, which includes stock options
granted to officers, employees and consultants, remained approximately
unchanged from 2005 to 2006, while interest income increased slightly due to a
full year of interest for certificates of deposit purchased in October of
The major area for additional spending for 2005 over 2004 was the
increased activity on the Montanore Project, primarily as a result of
increased payments to consultants for permitting activities, collecting
additional environmental baseline data, mineralized material and resource
studies, and mine engineering and optimization. Administrative expense doubled
in 2005 over 2004 as we commenced an investor relations program targeted at
increasing liquidity, hired additional employees for the Montanore Project,
and leased additional office space in January 2005 to accommodate our expanded
staff. Stock option expense, which includes stock options granted to officers,
employees and consultants, decreased from 2004 to 2005 due to fewer options
being granted and no previously issued options vesting in 2005.
At December 31, 2006, our aggregate cash, short term investments, and
long term investments totaled $5.2 million compared to $8.9 million at
December 31, 2005. In 2006, we received $1.5 million from the exercise of
warrants and stock options. The net cash used for operating activities was
$4.9 million, which consisted primarily of permitting, environmental
exploration, and engineering expenses for the Montanore project and
administrative expenses. The net decrease in cash and cash equivalents for the
year ending December 31, 2006 was $3.9 million.
We anticipate spending approximately $1.0 million each quarter in 2007
for ongoing operating expenses and an additional $5.0 million per quarter for
the evaluation drilling program starting with the second quarter of 2007 for
estimated total 2007 expenditures of approximately $19.0 million. The Company
will require external financing in 2007 to fund the evaluation drilling
This press release contains forward-looking statements regarding the
Company, within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, including statements regarding commencement of the
planned underground evaluation drilling program and estimated expenditures in
2007. These statements are based on assumptions that the Company believes are
reasonable but that are subject to uncertainties and business risks. Actual
results relating to any and all of these subjects may differ materially from
those presented. Factors that could cause results to differ materially include
fluctuations in silver and copper prices, negative results of environmental
studies, problems or delays in or objections to the permitting process, the
proximity of the Project to the Cabinet Wilderness Area, failure or delay of
third parties to provide services, changes in the attitude of state and local
officials toward the Montanore Project and other factors discussed in the
Company's periodic filings with the Securities and Exchange Commission,
including its annual report on Form 10-K, as amended, for the year ended
December 31, 2006.
For further information:
For further information: Mines Management, Inc. Douglas Dobbs,
509-838-6050 www.minesmanagement.com firstname.lastname@example.org