Add
MGN to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| MGN > SEC Filings for MGN > Form 10-Q on 15-May-2012 | All Recent SEC Filings |
15-May-2012
Quarterly Report
The following discussion and analysis should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in our Annual Report on Form 10-K for the year ended December 31, 2011, as well as with the financial statements and related notes and the other information appearing
elsewhere in this report. As used in this report, unless the context otherwise indicates, references to "we," "our," the "Company" and "us" refer to Mines Management, Inc. and its subsidiaries collectively.
We are an exploration stage company with a large silver-copper project, the Montanore Project, located in northwestern Montana. The Montanore project continues to be the Company's main focus. During 2012, the Company has continued to plan for the advanced exploration and delineation drilling program at the Montanore Project, principally through the pursuit of federal and state agency permitting approvals.
Overview First Quarter 2012
† The U.S. Forest Service ("USFS") and the Montana Department of Environmental Quality ("MDEQ") issued the Supplemental Draft Environmental Impact Study ("SDEIS") in late September 2011. The comment period on the SDEIS was completed on December 21, 2011 and the USFS and MDEQ are incorporating the responses in the final EIS.
† The Company continued meetings with federal and state agencies, Montana legislators, local Lincoln County Commissioners, Libby City officials, business leaders and community members and kept them informed of the project status.
† The Company continued its program to reduce expenditures and conserve cash pending the completion of permitting.
† The Company's cash and investment position remained strong at $17.6 million as of March 31, 2012.
† On April 5, 2012 the Company executed an agreement with Estrella Gold Corp. in which the Company can earn 75% of the La Estrella gold exploration project in central Peru. This is the Company's first venture into South America.
The net decrease in cash and cash equivalents for the quarter ended March 31, 2012 was approximately $1.1 million. Management has reviewed the near term spending forecast and continued a plan to diligently conserve cash where prudent. Given our current cash and investment position of approximately $17.6 million as of March 31, 2012, we believe we have sufficient funds to complete the permitting process and initiate the adit rehabilitation and drill station development. Additional financing will be required to complete the evaluation drilling program and a bankable feasibility study.
Current Activities
During the first quarter of 2012, work at the Montanore Project included ongoing support operations for the permitting process. Studies continued on the ground water intake for the adit, monitoring wells and the surface waters in the area. The Company continues to maintain the Libby adit in a care and maintenance condition, pumping and processing water generated in the adit. Additional support for the permitting process includes data gathering for the biological aspects of the permit relating to fisheries and other wildlife in the area.
As previously discussed, the Company is using topographic surveys completed using LIDAR technology which provided construction level detailed topographic information to support technical/environmental detailed planning for the permitting process and the initiation of underground rehabilitation and development drilling when the record of decision is received.
The Company has also commenced mine plan reviews during the first quarter of 2012 related to optimization of the Preliminary Economic Assessment (PEA). In addition, the Company initiated a full review and audit of the land position and mining claims associated with the project using the LIDAR generated topographical maps of the site. This effort will ensure that the claim package and land base will provide the most flexibility for the project moving forward.
Permitting and Environmental
The public comment period for the Army Corps of Engineers' 404 permit ended during the first quarter of 2012. The Company is working with the Army Corps of Engineers on various matters required to complete the 404 permit, including evaluation of tailings disposal alternatives.
The U.S. Fish and Wildlife Service ("USFWS") continues to advance work related to the completion of a fisheries and terrestrial biological opinion. The Company is providing assistance with data collection and the determination of appropriate mitigation efforts.
The items discussed above are the next critical steps towards the completion of the Final Environmental Impact Study ("FEIS") and Biological Opinion. Once these are completed, the agencies can publish the FEIS. The Company anticipates that the FEIS can be finalized in the third or fourth quarter of 2012 but the control of this schedule is in the hands of various government agencies and the Company has little input on this schedule.
Financial and Operating Results
Mines Management, Inc. is an exploration stage company with a large silver-copper project, the Montanore Project, located in northwestern Montana. 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 interest income, general and administrative expenses, permitting, project advancement and engineering expenses.
Quarter Ended March 31, 2012
The Company reported a net loss of $(1.3) million for the quarter ended March 31, 2012 compared to net income of $1.3 for the quarter ended March 31, 2011. The $2.6 million decrease in income from the first quarter of 2011 was primarily due to the following items: (1) General and administrative expenses, legal and accounting expenses, and fees, filing and licenses expenses were a combined $0.2 million higher in the first quarter of 2011 due to additional costs associated with the completion of the underwritten public offering of stock; (2) Expenditures for technical services were $0.2 million more during the first quarter of 2011 due to environmental fees and expenses; (3) The gain from the change in fair market value of warrant derivatives was $1.0 million more in the first quarter of 2011 compared to 2012 ; and (4) During the first quarter of 2011, a $2.0 million dollar gain was realized on the sale of available-for-sale securities.
Liquidity
During the three months ended March 31, 2012, the net cash used for operating activities was approximately $1.4 million, which is $0.3 million less than the same period during the prior year. We have continued to limit activity levels, including capital expenditures, until the timing for the receipt of the record of decision becomes clearer.
We anticipate expenditures of approximately $6.5 million for the final three quarters of 2012, which we expect to consist of $1.5 million each quarter for general and administrative expenses and $0.5 million each quarter for permitting, engineering, and geologic studies for the permitting for the Montanore Project. We expect to spend $0.5 million on exploration at La Estrella during 2012. Additional external financing, however, would be required following receipt of the record of decision to complete the evaluation drilling program and a bankable feasibility study at the Montanore Project and increased exploration efforts at the La Estrella property in 2013. The timing and amount of additional external financing will be based on the timing of the record of decision and planned drilling program for the Montanore Project and on 2012 exploration results and additional exploration plans, if any, for the La Estrella gold exploration project in central Peru.
Off-Balance Sheet Arrangements
As of March 31, 2012, we had no existing off-balance sheet arrangements (as defined under SEC rules) that have, or are reasonably likely to have, a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
|
|