Spokane, Washington --
December 18, 2015 - MINES MANAGEMENT, INC. (NYSE-MARKET: MGN, TSX:
MGT)(also the "Company") announces financial and operating results
for the third quarter ending September 30, 2015, and recent
milestones achieved in the permitting process for the Montanore
Silver-Copper Project.
Overview
-
The U.S. Forest Service ("USFS") and the Montana
Department of Environmental Quality ("MDEQ") continued to integrate
clarifying comments into the Final Environmental Impact Statement
(the "Final EIS") and Record of Decision ("ROD") as a result of the
public objection process completed during the second quarter of
2015. The Company expects the permitting process to be
completed by early 2016.
-
The Company raised $1,665,000 in October 2015
through the sale of certain idle equipment previously utilized for
construction of infrastructure at the Montanore Project. The
funds received from the sale will be utilized for general working
capital and advancement of the permitting for the Montanore
Project.
-
The Company's cash reserves as of September 30,
2015, plus amounts raised in October 2015, are estimated to be
sufficient to continue operations into the first quarter of 2016.
Accordingly, the Company is seeking financing and may
consider a joint venture of the Montanore Project or other
strategic alternatives. If the Company were to issue
equity at the current stock price, the conversion price of the
existing Series B 6% convertible preferred stock (the "preferred
stock"), would be adjusted downward to equal the issuance price,
resulting in an increase in the number of shares of common stock
issuable on conversion of the preferred stock. 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. Although third
parties have expressed interest in various transactions regarding
the Company or the Montanore Project, and the Company has solicited
indications of interest from third parties, to date the Board has
not considered the terms of the proposals received to be in the
best interests of the Company or its stockholders.
-
On July 1, 2015, the Company received a letter
from NYSE MKT LLC ("NYSE MKT" or the "Exchange") stating that it is
not in compliance with the continued listing standards as set forth
in Section 1003(a)(i-iv) of the NYSE MKT Company Guide (the
"Company Guide"). In order to maintain its listing, the
Company submitted a plan on August 3, 2015, in accordance with the
Exchange's requirement, which addresses how it intends to regain
compliance with the financial impairment standards set forth in
Section 1003(a)(iv) of the Company Guide by December 31, 2015 and
the equity standards set forth in Section 1003(a)(i)-(iii) of the
Company Guide by December 31, 2016. On October 21, 2015, the
NYSE MKT notified the Company that the Company had made a
reasonable demonstration of its ability to regain compliance with
financial impairment standards by the end of the revised plan
period of December 31, 2015.
Montanore Permitting and Environmental
The MDEQ continues to advance the permitting
review process and preparation of its own ROD based on the joint
issuance of the Final EIS with the USFS. The MDEQ will issue
its version of the Final ROD in accordance with the Montana
Environmental Policy Act following the issuance of the Notice of
Availability by the USFS in the Federal Register. 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 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. During the
third quarter, the MDEQ initiated the public review process of the
air quality permit and the Montana Pollutant Discharge Elimination
System ("MPDES") permit. No public comments were received on
the draft air quality permit and the comment period was extended to
October 2015 for the MPDES permit. Under the State of
Montana's regulations, the Company expects these permits to be
issued following issuance of the Final EIS and ROD.
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. 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.
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 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 September 30, 2015
The Company reported operating expenses of $1.0
million compared to $1.6 million for the quarters ended September
30, 2015 and 2014, respectively. The most significant factors
contributing to the $0.6 million decrease in operating expenses
include: (i) a $0.1 million decrease in general and administrative
expenses primarily due to decreased stock compensation costs and
the absence of costs during 2015 associated with the special
shareholder meeting pertaining to the financing the Company
completed in July of 2014, (ii) 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 cost of baseline
studies associated with the EIS during 2015, and (iii) a $0.2
million decrease in depreciation as a result of assets reaching the
end of their depreciable lives and limited acquisitions of property
and equipment during the past few years. During the quarter ended
September 30, 2014, operating expenses were partially offset by
$0.1 million in other income resulting from the sale of the
Company's interest in an oil and gas lease with no comparable
transaction during 2015. The Company reported net losses of $1.0
million and $1.5 million for the quarters ended September 30, 2015
and 2014, respectively.
Nine Months Ended September 30, 2015
The Company reported a decrease in operating
expenses of $1.2 million during the nine months ended September 30,
2015 compared to the nine months ended September 30, 2014. The
decrease in operating expenses consisted of a $0.4 million decrease
in general and administrative expenses, a $0.5 million decrease in
technical services, and a decrease of $0.5 million in depreciation,
offset by an increase of $0.2 million in legal, accounting, and
consulting expenditures. The $0.4 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 2015
compared to 2014, a $0.2 million decrease in director and stock
compensation during 2015 compared to 2014, and the absence of $0.1
million in costs during 2015 associated with the special
shareholder meeting pertaining to the financing the Company
completed in July of 2014. The $0.5 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 cost of baseline studies associated with the EIS.
The $0.5 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 Part II, Item I, Legal Proceedings. During the nine
months ended September 30, 2014, operating expenses were partially
offset by other income of $0.1 million which resulted from the sale
of the Company's interest in an oil and gas lease with no
comparable transaction during 2015. The Company reported net losses
of $3.8 million and $4.9 million for the nine months ended
September 30, 2015 and 2014, respectively.
Liquidity
During the nine months ended September 30, 2015,
the net cash used in operating activities was approximately $3.4
million, which was $0.7 million less than the same period in the
prior year. Net cash utilized by financing activities during the
nine months ended September 30, 2015 consisted of the payment of
$0.2 million cumulative preferred stock dividends. Net cash
provided by financing activities during the 2014 period was $3.7
million primarily from the sale of preferred stock. Net cash
provided by investing activities during the nine months ended
September 30, 2014 was $1.7 million and included certificates of
deposit maturing and proceeds from the sale of property and
equipment. The Company's cash and cash equivalents decreased during
the nine months ended September 30, 2015 from $3.9 million at
December 31, 2014 to approximately $0.3 million at September 30,
2015. During October of 2015, the Company raised $1.7 million
through the sale of idle equipment previously utilized for
construction of infrastructure at the Montanore Project.
The Company currently does not have enough cash on
hand to fund ongoing operating expenses through the first quarter
of 2016. Operating expenses are estimated at approximately $1.0
million for the fourth quarter of 2015, consisting of approximately
$0.6 million for ongoing operating, legal, and general
administrative expenses and $0.4 million 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. Although third parties
have expressed interest in various transactions regarding the
Company or the Montanore Project, and the Company has solicited
indications of interest from third parties, to date the Board has
not considered the terms of the proposals received to be in the
best interests of the Company or its stockholders. 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. There can be no
assurance that any financing obtained will not be highly dilutive
to existing stockholders. In addition, it is uncertain that the
amount of any available financing would enable the Company to
continue its business and operations for more than a few months,
which would be unlikely to satisfy the NYSE MKT listing
requirements. In addition, if the financing involves the sale of
equity securities at the current market price or at a discount to
the current market price, the conversion price of the existing
convertible preferred stock would be adjusted downward to equal the
sale price of the financing, resulting in an increase in the number
of shares of common stock issuable on conversion of the convertible
preferred stock. Following any such financing, the Company still
must obtain external financing of approximately $25 million to $30
million to complete the evaluation drilling program at the
Montanore Project and a definitive feasibility study.
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,
Montana Record of Decision, MPDES permit and Clean Water Act
404 permit and the timing thereof; anticipated completion of the
Montanore Project permitting process and the timing thereof; belief
that the federal court complaint filed in June 2015 challenging
issuance of the Biological Opinion regarding the Montanore Project
will not delay issuance of the final Record of Decision; planned
use of funds generated from equipment sales and expectation that
the Company's cash is sufficient to continue operations into the
first quarter of 2016; need for and seeking of financing and
potential consideration of a joint venture of the Montanore Project
or other strategic alternatives; potential antidilution adjustments
to the Company's Series B 6% convertible preferred stock conversion
price if the Company were to issue equity in a financing
transaction; activities and expenditures planned for the fourth
quarter 2015 including continued work on permitting, engineering
and geologic studies to finalize the permitting process;
information regarding measured, indicated and inferred mineral
resources; anticipated cost of completing the evaluation drilling
program at the Montanore Project and a definitive feasibility
study; and the effects on our planned activities of potential
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 issuance of the final
Record of Decision, Environmental Impact Statement, Montana Record
of Decision, MPDES permit and Clean Water Act 404 permit and
completion of the permitting process for the Montanore Project due
to litigation or for any other reason; whether external
financing sufficient to continue the Company's business
through and beyond the first quarter 2016 can be obtained on
acceptable terms or at all; whether the Company will engage in a
joint venture of the Montanore Project or other strategic
transaction and the terms of such; whether the Company will be able
to continue its business past the first quarter 2016; continued
disputes regarding claim ownership and rights in the Montanore
Project area and the potential effects thereof; 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. Additional information is available
on the Company's website at www.minesmanagement.com.
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#1974287
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