SPOKANE, Wash., Nov. 24, 2014 (GLOBE NEWSWIRE) -- MINES MANAGEMENT, INC. (NYSE-MARKET: MGN, TSX: MGT) (also the "Company") announces financial and operating results for the third quarter ending September 30, 2014, and recent milestones achieved in the permitting process for the Montanore Silver-Copper Project.
Overview Third Quarter 2014
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The Company completed a financing in July of 2014 which yielded gross proceeds, of $4.0 million (net proceeds of $3.5 million after deducting placement agent and investor fees and expenses and other offering expenses). The Company sold 4,000 units consisting of one share of the Company's Series B 6% convertible preferred stock plus a warrant to purchase approximately 636 shares of the Company's common stock at a stated value of $1,000 per unit.
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The U.S. Forest Service ("USFS") and the Montana Department of Environmental Quality ("MDEQ") continued to develop the Final Environmental Impact Statement ("FEIS") and issued the preliminary FEIS during the third quarter of 2014.
- 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 FEIS and although not required for the FEIS, it is required prior to beginning construction of the tailings impoundment dam.
Montanore Permitting and Environmental
Approval by regulatory agencies will be 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 FEIS before a Record of Decision can be issued by the USFS and MDEQ. The FEIS 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 FEIS is an important document utilized by the State of Montana to support issuance of the other permits. A preliminary FEIS was completed in August 2014 and participating agencies reviewed and submitted comments on the preliminary FEIS. During the fourth quarter of 2014, a second preliminary FEIS will be prepared and then reviewed by the USFS and MDEQ. Once the agencies approve the preliminary FEIS, it will be printed and a Notice of Availability will be filed in the Federal Register which marks the beginning of the public comment period on the FEIS.
The USFS and MDEQ are also preparing a Record of Decision ("ROD") for the Montanore project. Draft versions of that document were also completed during the first quarter 2014 and are currently being reviewed and edited by the agencies. A draft ROD will be issued with the FEIS.
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 USACE is currently focused on finalizing impact analyses on Waters of the U.S. as well as proposed compensatory mitigation proposed by the Company. The USACE process will be completed after the issuance of the 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, these permits will be issued following issuance of the FEIS and Record of Decision.
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, 2014
The Company reported a net loss of $1.5 million and $1.8 million for the quarters ended September 30, 2014 and 2013, respectively. The most significant differences in operating expenditures between the two quarters include a decrease in technical services of $0.1 million during the 2014 quarter, primarily due to a reduction of the amount of environmental baseline data collected in 2014 compared to 2013 as part of the pre-mining activity monitoring requirements included in the FEIS. Other decreases in operating expenses for the quarter ended September 30, 2014, include a decrease in depreciation as assets reach the end of their depreciable life, and a decrease in payroll related expenditures due to two less employees during 2014, which together totaled $0.1 million in general and administrative, technical services, and depreciation expenses. There was also a $0.1 million gain in other income resulting from the sale of the Company's interest in an oil and gas lease during the quarter ended September 30, 2014.
Nine Months Ended September 30, 2014
The Company reported a net loss of $4.9 million for the nine months ended September 30, 2014 compared to a net loss of $5.8 million for the nine months ended September 30, 2013. The change in net loss resulted primarily from reduced operating expenses during the 2014 period including: (1) a $0.5 million decrease in general and administrative expenses consisting of $0.1 million less of stock-based compensation during the 2014 period compared to the 2013 period, the absence in 2014 of a $0.1 million payment to continue the Earn-In Agreement with Estrella Gold Corp., a decrease in 2014 of $0.2 million in payroll with two fewer employees, and a $0.1 million decrease in promotional and other administrative expenses during 2014; (2) a $0.5 million decrease in technical services and exploration expenses, $0.4 million related to the termination of the La Estrella project in January 2014, and $0.1 million related to the decrease in fees paid to the contractor working on the Environmental Impact Study during 2014; and (3) a $0.1 million decrease in depreciation during 2014 due to property and equipment having reached the end of its depreciable life; partly offset by (4) an increase of $0.2 million in legal, accounting and consulting expenditures during the 2014 period primarily associated with a litigation matter as described in Part II, Item I, Legal Proceedings; and (5) a $0.1 million gain in other income resulting from the sale of the Company's interest in an oil and gas lease during 2014.
Liquidity
During the nine months ended September 30, 2014, the net cash used in operating activities was approximately $4.1 million, which is $0.7 million less than the same period in the prior year. Net cash provided by financing activities during 2014 was $3.7 million. This decreased our cash and cash equivalents and certificates of deposit from $5.7 million at December 31, 2013 to approximately $5.4 million at September 30, 2014.
We anticipate expenditures of approximately $1.3 million for the fourth quarter of 2014, which we expect to consist of approximately $0.7 million for general and administrative expenses, and $0.6 million for permitting, environmental, engineering, and geologic studies for the Montanore Project. Anticipated expenditures for 2015 are not expected to vary significantly from 2014 until the Record of Decision is issued. Additional financing will be required to continue operations and to complete the evaluation drilling program and a bankable feasibility study. We plan to continue to limit activity levels, including capital expenditures, until the Record of Decision is issued.
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 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.
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. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially, including comments regarding planned activities and expenditures in 2014, anticipated permitting and the timing thereof, drilling and engineering activities and geologic and feasibility studies; the timing of issuance of a Final Environmental Impact Statement and Draft and Final Records of Decision; the planned commencement of an underground infill drilling program; mineral resources; and, required external financing to continue the Company's business as a going concern. Actual results may differ materially from those presented. Factors that could cause results to differ materially include delays in and increases in the cost of permitting at Montanore, 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; whether external financing for the Company's business can be obtained on acceptable terms or at all; and world economic conditions or fluctuations in silver, gold 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, 2013, as amended.