Spokane, Washington
-- August 21, 2015 - 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
-
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.
-
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
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Mines Management Inc. via Globenewswire
HUG#1947052
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