0001104659-12-077716.txt : 20121114 0001104659-12-077716.hdr.sgml : 20121114 20121114114919 ACCESSION NUMBER: 0001104659-12-077716 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20121114 DATE AS OF CHANGE: 20121114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MINES MANAGEMENT INC CENTRAL INDEX KEY: 0000066649 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 910538859 STATE OF INCORPORATION: ID FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32074 FILM NUMBER: 121202162 BUSINESS ADDRESS: STREET 1: 905 W RIVERSIDE AVENUE STREET 2: SUITE 311 CITY: SPOKANE STATE: WA ZIP: 99201 BUSINESS PHONE: 5098386050 MAIL ADDRESS: STREET 1: 905 W RIVERSIDE AVENUE STREET 2: SUITE 311 CITY: SPOKANE STATE: WA ZIP: 99201 10-Q 1 a12-20019_110q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2012

 

OR

 

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

COMMISSION FILE NUMBER 001-32074

 

MINES MANAGEMENT, INC.

(Exact Name of Registrant as Specified in its Charter)

 

IDAHO

 

91-0538859

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

905 W. Riverside Avenue, Suite 311

Spokane, Washington

 

99201

(Address Of Principal Executive Offices)

 

(Zip Code)

 

(509) 838-6050

(Registrant’s Telephone Number, Including Area Code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer o

 

 

 

Non-accelerated filer o

 

Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

 

At November 14, 2012, 28,999,752 common shares, par value $0.001 per share, were issued and outstanding.

 

 

 



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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

 

Information contained in or incorporated by reference into this Quarterly Report on Form 10-Q may contain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995.  The use of any of the words “development”, “anticipate”, “continues”, “estimate”, “expect”, “may”, “project”, “should”, “believe”, or similar expressions are intended to identify such statements.  Forward-looking statements included in this report relate to, among other things, comments regarding further exploration and evaluation of the Montanore Project, including drilling activities, feasibility determinations, including those in the Preliminary Economic Assessment, engineering and environmental studies, environmental, reclamation and permitting requirements and the process and timing and the costs associated with the foregoing; the process and timing associated with the Montanore Project permitting process, including the issuance of biological opinions, a final environmental impact statement and a record of decision and completion of wetland mitigation plans; financing needs, including the financing required to fund the final phases of the Montanore Project advanced exploration and delineation drilling program and a bankable feasibility study; sources of financing; the sufficiency of working capital to complete the rehabilitation of the Libby adit and commence delineation drilling; planned expenditures and cash requirements for 2012 and 2013;planned exploration and evaluation of the Estrella property in Peru, and results of drilling at Estrella; efforts to reduce costs, including reducing manpower; results of the Montanore Project hydrological model and the effects thereof; the search for potential exploration and development opportunities in the mining industry; the possibility of challenges by environmental groups or others to our permitting efforts or planned exploration, development or mining activities; potential completion of a bankable feasibility study and the costs associated therewith; and markets for silver and copper.  We believe the expectations reflected in those forward-looking statements are reasonable.  However, we cannot assure that the expectations will prove to be correct.  Certain cautionary statements are also included elsewhere in this report, including, without limitation, in conjunction with the forward-looking statements.  All forward-looking statements speak only as of the date made.  All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements.  Except as required by law, we undertake no obligation to update any forward-looking statements.  Factors that could cause actual results to differ materially from our expectations include, among others, those factors referenced in the “Risk Factors” section of this report and our Annual Report on Form 10-K for the year ended December 31, 2011 and such things as:

 

·      the availability of experienced employees;

 

·      uncertainties associated with developing new mines or mining operations;

 

·      the absence of any history of production;

 

·      the history of losses, which we expect to continue for the foreseeable future;

 

·      uncertainties associated with acquiring new mining properties, including uncertainties regarding the availability of properties or companies to be acquired, the ability to negotiate acquisitions on acceptable terms or to otherwise accomplish such acquisitions, the ability to finance such acquisitions on acceptable terms, and the ability to manage acquired assets or to achieve the goals of the acquisition;

 

·      the absence of proven or probable reserves, and uncertainty regarding whether reserves will be established at our Montanore Project;

 

·      the speculative nature of exploration for mineral resources, including variations in ore grade and other characteristics affecting mining and mineral recoveries, which involves substantial expenditures and is frequently non-productive;

 

·      the need for additional financing to complete the underground evaluation program,  to develop the Montanore Project and to conduct additional exploration at the Estrella project in Peru;

 

·      financial market conditions and the availability of financing, or its availability on terms acceptable to us;

 

·      the availability, terms, conditions, costs, timing of, or delays in receiving required governmental permits and approvals;

 

·      the competitive nature of the mining industry;

 

·      risks inherent in the mining process, including geological, technical, permitting, mining and processing problems;

 

·      changes in geological information and the interpretation thereof;

 



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·      worldwide economic and political events affecting the supply of and demand for silver and copper and volatility in the market price for silver and copper;

 

·      ongoing reclamation obligations on the Montanore Project properties;

 

·      significant government regulation of mining activities;

 

·      uncertainty regarding changes in mining or environmental laws that could increase costs and impair our ability to develop our properties;

 

·      environmental risks;

 

·      uncertainty regarding title to some of our properties;

 

·      the potential for a business combination transaction pursuant to which a third party may attempt to acquire us, which may divert management attention and Company resources;

 

·      anti-takeover provisions in our articles of incorporation and bylaws and under Idaho law, which may enable our incumbent management to retain control of us and discourage or prevent a change of control that may be beneficial to our stockholders;

 

·      the volatility of the market price of our common stock;

 

·      our intention not to pay any cash dividends in the foreseeable future;

 

·      the potential depressive effect of issuances of common stock on the market price of our common stock;

 

·      future dilution of shareholders by the exercise of options, and the depressive effect on the stock price of the existence of a significant number of outstanding options;

 

·      obligations under a long-term contract to sell our silver production; and

 

·      other factors, many of which are beyond our control.

 




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PART I— FINANCIAL INFORMATION

 

ITEM 1.                FINANCIAL STATEMENTS

 

Contents

 

 

Page

 

 

FINANCIAL STATEMENTS:

 

 

 

Condensed consolidated balance sheets

1

 

 

Condensed consolidated statements of operations

2

 

 

Condensed consolidated statements of comprehensive loss

3

 

 

Condensed consolidated statements of cash flows

4

 

 

Notes to condensed consolidated financial statements

5-9

 

i



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Mines Management, Inc. and Subsidiaries

(An Exploration Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

September 30,
2012

 

December 31,
2011

 

Assets

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

11,792,222

 

$

17,121,800

 

Interest receivable

 

5,077

 

13,702

 

Prepaid expenses and deposits

 

275,473

 

207,285

 

Certificates of deposit

 

1,559,361

 

1,559,361

 

Total current assets

 

13,632,133

 

18,902,148

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT:

 

 

 

 

 

Buildings and leasehold improvements

 

836,454

 

836,454

 

Equipment

 

6,450,089

 

6,450,089

 

Office equipment

 

344,939

 

330,356

 

 

 

7,631,482

 

7,616,899

 

Less accumulated depreciation

 

5,154,386

 

4,438,799

 

 

 

2,477,096

 

3,178,100

 

OTHER ASSETS:

 

 

 

 

 

Available-for-sale securities

 

23,262

 

13,276

 

Reclamation deposits

 

1,184,966

 

1,236,846

 

 

 

1,208,228

 

1,250,122

 

 

 

$

17,317,457

 

$

23,330,370

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

 

$

498,444

 

$

370,723

 

Payroll and payroll taxes payable

 

40,057

 

17,631

 

Warrant derivatives

 

 

357,977

 

Total current liabilities

 

538,501

 

746,331

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

Asset retirement obligation

 

451,281

 

435,171

 

Total liabilities

 

989,782

 

1,181,502

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Preferred shares — no par value, 10,000,000 shares authorized; -0- shares issued and outstanding

 

 

 

Common shares — $0.001 par value, 100,000,000 shares authorized; 28,999,752 and 28,739,110 shares issued and outstanding, respectively

 

29,000

 

28,739

 

Additional paid-in capital

 

86,805,769

 

86,224,400

 

Accumulated deficit

 

(1,117,306

)

(1,117,306

)

Deficit accumulated during the exploration stage

 

(69,401,885

)

(62,989,076

)

Accumulated other comprehensive income

 

12,097

 

2,111

 

Total stockholders’ equity

 

16,327,675

 

22,148,868

 

 

 

$

17,317,457

 

$

23,330,370

 

 

See accompanying notes to condensed consolidated financial statements.

 

1



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Mines Management, Inc. and Subsidiaries

(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

From Inception
of Exploration
Stage August 12,
2002 Through

September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

REVENUE:

 

 

 

 

 

 

 

 

 

 

 

Royalties

 

$

6,527

 

$

8,056

 

$

27,108

 

$

18,446

 

$

147,179

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

839,656

 

1,719,572

 

2,577,430

 

3,522,105

 

32,298,985

 

Technical services and exploration

 

1,384,087

 

680,715

 

3,005,134

 

2,048,049

 

29,952,010

 

Depreciation

 

242,469

 

251,018

 

733,857

 

759,108

 

5,186,439

 

Legal, accounting, and consulting

 

130,507

 

100,533

 

352,908

 

425,073

 

4,598,770

 

Fees, filing, and licenses

 

122,390

 

182,506

 

176,306

 

276,736

 

2,743,124

 

Impairment of mineral properties

 

 

 

 

 

504,492

 

Total operating expenses

 

2,719,109

 

2,934,344

 

6,845,635

 

7,031,071

 

75,283,820

 

LOSS FROM OPERATIONS

 

(2,712,582

)

(2,926,288

)

(6,818,527

)

(7,012,625

)

(75,136,641

)

OTHER INCOME:

 

 

 

 

 

 

 

 

 

 

 

Gain from warrant derivatives

 

 

126,345

 

357,977

 

1,823,552

 

476,381

 

Gain on sale of available-for-sale securities

 

 

 

 

2,005,904

 

2,005,904

 

Interest income, net

 

13,127

 

34,397

 

47,741

 

96,606

 

3,252,471

 

 

 

13,127

 

160,742

 

405,718

 

3,926,062

 

5,734,756

 

NET LOSS

 

$

(2,699,455

)

$

(2,765,546

)

$

(6,412,809

)

$

(3,086,563

)

$

(69,401,885

)

NET LOSS PER SHARE (basic and diluted)

 

$

(0.09

)

$

(0.10

)

$

(0.22

)

$

(0.11

)

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (basic and diluted)

 

28,995,839

 

28,739,110

 

28,928,315

 

27,350,016

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

2



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Mines Management, Inc. and Subsidiaries

(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Net Loss

 

$

(2,699,455

)

$

(2,765,546

)

$

(6,412,809

)

$

(3,086,563

)

Adjustment to net unrealized gains (losses) on marketable securities

 

8,081

 

(29,945

)

9,986

 

(1,885,159

)

Comprehensive loss

 

$

(2,691,374

)

$

(2,795,491

)

$

(6,402,823

)

$

(4,971,722

)

 

See accompanying notes to condensed consolidated financial statements.

 

3



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 Mines Management, Inc. and Subsidiaries

(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

Nine Months Ended
September 30,

 

From Inception of
Exploration Stage
August 12, 2002
Through
September 30,

 

 

 

2012

 

2011

 

2012

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net loss

 

$

(6,412,809

)

$

(3,086,563

)

$

(69,401,885

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Stock-based compensation

 

306,230

 

1,233,674

 

10,905,899

 

Stock received for services

 

 

 

(11,165

)

Depreciation

 

733,857

 

759,108

 

5,186,439

 

Initial measurement of asset retirement obligation

 

 

 

344,187

 

Accretion of asset retirement obligation

 

16,110

 

15,292

 

107,094

 

Gain on sale of available-for-sale securities

 

 

(2,005,904

)

(2,005,904

)

Gain from warrant derivatives

 

(357,977

)

(1,823,552

)

(476,381

)

Impairment of mineral properties

 

 

 

504,492

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Interest receivable

 

8,625

 

24,537

 

(5,077

)

Prepaid expenses and deposits

 

(68,188

)

(78,107

)

(335,884

)

Accounts payable

 

127,721

 

(152,435

)

498,280

 

Payroll and payroll taxes payable

 

22,426

 

27,877

 

36,877

 

Net cash used in operating activities

 

(5,624,005

)

(5,086,073

)

(54,653,028

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchase of property and equipment

 

(32,853

)

 

(7,697,121

)

Proceeds from disposition of property and equipment

 

 

 

35,423

 

Proceeds (purchase) of certificates of deposit

 

51,880

 

(39,564

)

(2,683,415

)

Net proceeds from sale of available-for-sale securities

 

 

3,821,252

 

2,005,904

 

Increase in mineral properties

 

 

 

(144,312

)

Net cash provided by (used in) investing activities

 

19,027

 

3,781,688

 

(8,483,521

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Net proceeds from sale of common stock

 

275,400

 

15,337,494

 

74,881,436

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

(5,329,578

)

14,033,109

 

11,744,887

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

17,121,800

 

4,866,840

 

47,335

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

11,792,222

 

$

18,899,949

 

$

11,792,222

 

SUPPLEMENTAL INFORMATION:

 

 

 

 

 

 

 

Interest paid

 

$

 

$

 

$

65,768

 

 

See accompanying notes to condensed consolidated financial statements.

 

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NOTE 1  — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 

Organization:

 

Mines Management, Inc. (the Company) is an Idaho corporation incorporated in 1947.  The Company acquires, explores, and develops mineral properties in North and South America.

 

Summary of Significant Accounting Policies:

 

These unaudited interim financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, as well as the instructions to Form 10-Q.  Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting solely of normal recurring adjustments) considered necessary for a fair presentation of the interim financial statements have been included.

 

The preparation of financial statements in accordance with US GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s condensed consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company’s consolidated financial position and results of operations. Operating results for the three and nine month periods ended September 30, 2012, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2012.

 

For further information, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

 

(a)                                 Exploration Stage Enterprise

 

Since the Company is in the exploration stage of operation, the Company’s financial statements are prepared in accordance with the provisions of Accounting Standards Codification (“ASC”) 915, Development Stage Enterprises, as it devotes substantially all of its efforts to acquiring and exploring mining interests that management believes should eventually provide sufficient net profits to sustain the Company’s existence.  Until such interests are engaged in commercial production, the Company will continue to prepare its consolidated financial statements and related disclosures in accordance with this standard.

 

(b)                                 Mining properties, exploration and development costs

 

All exploration expenditures are expensed as incurred.  Significant property acquisition payments for active exploration properties are capitalized, including payments to acquire mineral rights.  Once a feasibility study has been completed, approved by management, and a decision is made to put the ore body into production, expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on the units of production basis over proven and probable reserves.  The Company charges to operations the allocable portion of capitalized costs attributable to properties sold.  Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.

 

(c)                                  Fair value measurements

 

The Company discloses the inputs used to develop the fair value measurements for the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as well as the level within the fair value hierarchy in which the fair value measurements in their entirety fall.  The three levels of the fair value hierarchy are as follows:

 

Level 1:  Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

 

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Level 2:  Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

 

Level 3:  Unobservable inputs due to the fact that there is little or no market activity.

 

(d)                                 Stock compensation

 

The Company measures and records the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, recognized over the period during which an employee is required to provide services in exchange for such award.  Compensation cost is recognized for awards granted and adjusted for awards modified, repurchased or cancelled.

 

(e)                                  Net loss per share

 

Basic earnings or loss per share is computed on the basis of the weighted average number of shares outstanding during the period.   Diluted earnings or loss per share is calculated on the basis of the weighted average number of shares outstanding during the period plus the effect of potential dilutive shares during the period.  Potential dilutive shares include outstanding stock options and warrants.  For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive.  Therefore, basic loss per share is the same as diluted loss per share for the periods ended September 30, 2012 and 2011.

 

(f)                                   Recent Accounting Pronouncements

 

In June 2011, the Financial Accounting Standards Board, or FASB, issued guidance regarding the presentation of comprehensive income (loss).  The new standard requires the presentation of comprehensive income (loss), the components of net income (loss) and the components of other comprehensive income (loss) either in a single continuous statement of comprehensive income (loss) or in two separate but consecutive statements.  The updated guidance is effective on a retrospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011.  The Company adopted the provisions of this guidance effective January 1, 2012, as reflected in the condensed consolidated statements of comprehensive loss herein.

 

(g)                                  Subsequent events

 

The Company evaluated events and transactions subsequent to the balance sheet date of September 30, 2012 for potential recognition or disclosure in the condensed consolidated financial statements.

 

NOTE 2  — CERTIFICATES OF DEPOSIT:

 

The Company owns two certificates of deposit for a total of $1,559,361.  These investments mature in August 2013 and bear interest at the rate of 0.30%.

 

The Company also has a certificate of deposit pledged as security for a Letter of Credit to the Montana Department of Environmental Quality as a reclamation guarantee for the Montanore expansion evaluation program.  This certificate matures on January 3, 2013, bears interest at the rate of 0.55% and renews automatically each year.  This certificate of deposit ($1,124,055 and $1,175,935 at September 30, 2012 and December 31, 2011, respectively) is included with reclamation deposits on the Condensed Consolidated Balance Sheets.

 

NOTE 3  — AVAILABLE-FOR-SALE SECURITIES:

 

Available-for-sale securities are comprised of common stocks which have been valued using quoted market prices in active markets. The following table summarizes the Company’s available-for-sale securities:

 

 

 

September 30,
 2012

 

December 31,
2011

 

Cost

 

$

11,165

 

$

11,165

 

Unrealized Gains

 

12,097

 

2,111

 

Fair Market Value

 

$

23,262

 

$

13,276

 

 

6



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The Company sold one investment in marketable equity securities during March 2011.  Proceeds from the sale were $3,821,252 and the realized gain from the sale was $2,005,904.  No securities have been sold during 2012.

 

NOTE 4 — FAIR VALUE MEASUREMENTS:

 

The following table summarizes the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2012, and the fair value calculation input hierarchy level determined to apply to each asset and liability category.  Quoted market prices were used to determine the fair value of available-for-sale securities.  See note 5 for further discussion on the fair value measurement technique used to value the warrant derivatives.  The Company has no financial assets or liabilities that are measured at fair value on a nonrecurring basis.

 

 

 

Balance at
 September 30,
 2012

 

Balance at
December 31,
2011

 

Input
Hierarchy

Level

 

Assets:

 

 

 

 

 

 

 

Available-for-sale securities

 

$

23,262

 

$

13,276

 

Level 1

 

Liabilities:

 

 

 

 

 

 

 

Warrant derivatives

 

 

$

357,977

 

Level 3

 

Asset retirement obligation

 

$

451,281

 

$

435,171

 

Level 3

 

 

The following table presents the fair value reconciliation of Level 3 liabilities measured at fair value during the nine months ended September 30, 2012:

 

 

 

Warrant
Derivatives

 

Asset
Retirement
Obligation

 

Balance January 1, 2012

 

$

357,977

 

$

435,171

 

Accretion expense

 

 

5,286

 

Gain on warrant derivatives

 

(336,920

)

 

Balance March 31, 2012

 

21,057

 

440,457

 

Accretion expense

 

 

5,350

 

Gain on warrant derivatives

 

(21,057

)

 

Balance June 30, 2012

 

 

445,807

 

Accretion expense

 

 

5,474

 

Balance September 30, 2012

 

$

 

$

451,281

 

 

NOTE 5 — WARRANT DERIVATIVES:

 

The Company had common share purchase warrants with exercise price reset features which qualified for treatment as a derivative liability.  These warrants expired on April 20, 2012.  The warrants did not qualify for hedge accounting and, as such, all changes in the fair value of the warrants were recognized in earnings until they expired.  The Company reported a gain from the change in fair value of these warrants of $-0- and $126,345 in the Condensed Consolidated Statements of Operations for the three months ended September 30, 2012 and 2011, respectively.  Gains of $357,977 and $1,823,552 were recorded for the nine months ended September 30, 2012 and 2011, respectively.

 

NOTE 6 — CONCENTRATION OF CREDIT RISK:

 

The Company maintains most of its cash and cash equivalents in one financial institution.  Balances are insured by the Federal Deposit Insurance Corporation up to $250,000.  The Company’s total uninsured bank deposit balance (including certificates of deposit) totaled approximately $14,361,000 as of September 30, 2012.  To date, the Company has not experienced a material loss or lack of

 

7



Table of Contents

 

access to its invested cash or cash equivalents; however, no assurance can be provided that access to the Company’s invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

 

NOTE 7 — STOCKHOLDERS’ EQUITY:

 

Common Shares:

 

On March 8, 2011, the Company completed a public offering of 4,800,000 shares of common stock at a price of $3.15 per share, resulting in gross proceeds of $15,120,000 ($14,212,800 in net proceeds after deducting underwriting commissions and a corporate finance fee but before deducting offering expenses).  On April 4, 2011, the underwriters exercised the over-allotment option for 320,000 shares of common stock at a price of $3.15 per share.  The gross proceeds resulting from the over-allotment were $1,008,000 ($947,520 in net proceeds after deducting underwriting commissions and a corporate finance fee but before deducting offering expenses).  Therefore, the total offering was 5,120,000 shares of common stock, resulting in aggregate net proceeds of $15,160,320 before deducting offering expenses.

 

For a description of the public offering that occurred in 2007 and the sales of common stock during 2007 and 2005, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  The warrants associated with the public offering completed in April 2007 expired on April 20, 2012.  No warrants related to this offering were exercised before they expired.  The warrants associated with the sale of stock in October 2005, also expired on April 20, 2012.  Cumulative warrants exercised relating to this issue were 269,620.  During the nine months ended September 30, 2012 and 2011, $-0- and 101,435 warrants were exercised for gross proceeds of $-0- and $144,474, respectively.

 

Preferred Shares:

 

The Company has authorized 10,000,000 preferred shares, no par value.  Through September 30, 2012, the Company had not issued any preferred shares.

 

NOTE 8 — STOCK OPTIONS:

 

There has been no change to the Company’s 2003 and 2007 Stock Option Plans during 2012, other than the items summarized below.  For a description of these Stock Option Plans, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

 

The Board of Directors authorized the Company to establish the 2012 Equity Incentive Plan (“2012 Plan”) which was approved by the shareholders in June 2012.  The Company may grant options to purchase up to 3,000,000 common shares under the 2012 Plan.  The common shares subject to the 2012 Plan may be either authorized and unissued shares or reacquired shares, bought on the market or otherwise, at the discretion of the Board.  The 2012 Plan provides for the issuance of incentive stock options to employees and nonqualified stock options to directors, employees and consultants of the Company.  No participant is eligible to be granted more than 200,000 common shares during any calendar year.  The option exercise price may not be less than 100% of fair market value per share on the date of grant and the options are exercisable within ten years from the date of grant of the option.  The vesting schedule of the options is at the discretion of the Board of Directors.

 

A summary of the option activity under the Company’s Stock Option Plans as of September 30, 2012, and changes during the period then ended, is presented below:

 

 

 

Number of
Options

 

Weighted-
Average
Exercise
Price

 

Weighted-
Average
Remaining
Contractual
Term

 

Aggregate
Intrinsic Value

 

Outstanding at January 1, 2012

 

3,601,000

 

$

1.86

 

 

 

 

 

Exercised

 

(200,000

)

$

0.99

 

 

 

 

 

Outstanding at March 31, 2012

 

3,401,000

 

$

1.92

 

 

 

 

 

Exercised

 

(5,000

)

$

1.29

 

 

 

 

 

Outstanding at June 30, 2012

 

3,396,000

 

$

1.92

 

 

 

 

 

Issued

 

456,000

 

$

1.19

 

 

 

 

 

Exercised

 

(60,000

)

$

1.29

 

 

 

 

 

Forfeited or expired

 

(40,000

)

$

1.29

 

 

 

 

 

Outstanding at September 30, 2012

 

3,752,000

 

$

1.85

 

2.99

 

$

449,040

 

Exercisable at September 30, 2012

 

3,672,000

 

$

1.82

 

3.05

 

$

449,040

 

 

8



Table of Contents

 

The fair value for each option award is estimated at the date of grant using the Black-Scholes option-pricing model using the assumptions noted in the following table.  Volatility for the periods presented is based on the historical volatility of the Company’s common shares over the expected life of the option.  The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.  The Company does not foresee the payment of dividends in the near term.

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Weighted average risk-free interest rate

 

0.30

%

0.63

%

0.30

%

0.65

%

Weighted average volatility

 

72.33

%

87.16

%

72.33

%

86.67

%

Expected dividend yield

 

 

 

 

 

Weighted average expected life (in years)

 

3.0

 

3.6

 

3.0

 

3.6

 

Weighted average grant-date fair value

 

$

0.56

 

$

1.20

 

$

0.56

 

$

1.20

 

 

During the three months ended September 30, 2012, there were 60,000 stock options exercised with a weighted average exercise price of $1.29.  There were no stock options exercised during the three months ended September 30, 2011.  The total intrinsic value of options exercised during the three months ended September 30, 2012 was $2,400.  During the nine months ended September 30, 2012 and 2011, there were 265,000 and 303,000 stock options exercised with a weighted average exercise price of $1.06 and $1.57, respectively.  The total intrinsic value of options exercised during the nine months ended September 30, 2012 and 2011 was $212,522 and $218,293, respectively.

 

A summary of the status of the Company’s nonvested options as of September 30, 2012, and changes during the period then ended, is presented below:

 

 

 

Number of
Options

 

Weighted-
Average
Grant-Date
Fair Value

 

Nonvested at January 1, 2012

 

730,000

 

$

1.18

 

Vested

 

(650,000

)

$

1.20

 

Nonvested at March 31,2012

 

80,000

 

$

0.99

 

Granted or Vested

 

 

 

Nonvested at June 30, 2012

 

80,000

 

$

0.99

 

Granted or Vested

 

 

 

Nonvested at September 30, 2012

 

80,000

 

$

0.99

 

 

As of September 30, 2012, there was no unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plans.

 

Total compensation cost recognized for stock-based employee compensation awards was $255,360 and $1,146,304 for the three months ended September 30, 2012 and 2011, respectively.  Total compensation cost recognized for stock-based employee compensation awards was $306,230 and $1,233,674 for the nine months ended September 30, 2012 and 2011, respectively.  These costs were included in general and administrative expenses and technical services on the Condensed Consolidated Statements of Operations.  Cash received from options exercised under all share-based payment arrangements during the nine months ended September 30, 2012 and 2011 was $275,400 and $152,700, respectively.

 

NOTE 9 — COMMITMENTS:

 

The Company entered into an Exploration Earn-In Agreement with Estrella Gold Corp. (“Estrella”) on April 5, 2012, pursuant to which the Company could acquire 75% of the Estrella gold and silver exploration property located in central Peru by expending $5,000,000 on exploration activities.  Under the terms of the agreement, the Company is required to make annual cash payments to Estrella of $100,000 prior to the end of the first agreement year ending on February 28, 2013, and $200,000 prior to the end of each subsequent agreement year until the earn-in has been completed.  The Company is also required to

 

9



Table of Contents

 

expend a minimum of $500,000 in exploration and development expenditures in each of the first and second agreement years.  The Company may terminate this agreement at any time during the earn-in period, however, a minimum of $350,000 in exploration and development expenses is required during the first year of the agreement regardless of whether or not the agreement is terminated.  As of September 30, 2012, the Company has met the first year’s exploration and development expenditure requirements.

 

ITEM 2.                                                MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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 primary focus.  During 2012, the Company continued planning for the advanced exploration and delineation drilling program at the Montanore Project, principally through the pursuit of federal and state agency permitting approvals.

 

Overview Third Quarter 2012

 

·                  The Biological Consultation between the U.S. Forest Service (“USFS”) and the U.S. Fish and Wildlife Service (“USFWS”) has been initiated and is expected to conclude with a Biological Opinion.

 

·                  Initial drilling at the La Estrella exploration project in Peru was encouraging and has extended the gold and silver mineralized zone.

 

·                  The USFS and the Montana Department of Environmental Quality (“MDEQ”) issued the completed Supplemental Draft Environmental Impact Study (“SDEIS”) in late September 2011.  The comment period on the SDEIS concluded on December 21, 2011.  The USFS and MDEQ are currently incorporating the responses into the Final Environmental Impact Statement (“FEIS”). 

 

·                  The Company continues to work with the U.S. Army Corps of Engineers (“Corps of Engineers”) on the 404 permitting process.  This process will continue concurrently with completion of the FEIS.

 

·                  The Company continued meeting with federal and state agencies, members of Congress, Montana legislators, local Lincoln County Commissioners, Libby City officials, business leaders and community members in an effort to keep them informed of the project’s 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 $13.4 million as of September 30, 2012.

 

Current Activities

 

Montanore:

 

During the third quarter of 2012, the Company continued to maintain the Libby adit in a care and maintenance condition preparatory to development activities and adit rehabilitation when the Record of Decision is received.  Technical support and assistance were provided for ongoing permitting and environmental efforts.  Gathering of environmental data and reporting to state and federal agencies as part of the permitting process is ongoing.

 

The Company continued to work on mine plan reviews related to optimization of the Preliminary Economic Assessment (“PEA”). Utilizing the LIDAR generated topographical maps of the project site, the Company also continued work on resource model evaluations and identification of target areas which are being incorporated into the planned underground drill program.  The Company is currently reviewing and updating the cost estimates for the revised delineation drilling program.

 

La Estrella:

 

At its La Estrella project in Peru, the Company completed an eight hole diamond core drill program totaling approximately 2,700 meters in August 2012, in a program

 

10



Table of Contents

 

designed to test the southwestern extent of a gold and silver mineralized zone, which remains open to the north, south, and west.  Seven of the eight holes intersected gold and silver mineralization exceeding 100 meters in thickness.  The 2012 drilling program has extended the known mineralized zone by approximately 300 meters to the west over an extent of approximately 500 meters north to south.  Currently, we are evaluating and modeling the data.

 

Montanore Permitting and Environmental

 

The agencies initiated work to prepare the FEIS for the Montanore Project.  The preparation of the FEIS includes updating the document to provide better clarity, additional support information, and other key elements necessary to complete the document.

 

An equally important aspect of the permitting process involves consultation between the USFS and the USFWS.  The Fisheries Biological Assessment (“BA”) was initiated in April.  A draft revision was submitted for review which has been completed.  The Fisheries BA is being updated along with the completion of a mitigation plan.  Once these two items are completed, the USFWS will commence work on the Biological Opinion (“BO”).

 

Consultation with regard to the Terrestrial (grizzly bears, etc.) BA has also commenced.  The USFWS has completed an internal review of the Terrestrial BA which was completed by the USFS and submitted in July of 2011.  The USFWS has provided comments to the USFS which is actively addressing those comments.  At the same time, the USFWS has commenced work on portions of the Terrestrial BO that are not subject to USFS updates to the BA. 

 

The Company continues to work with the Corps of Engineers on the 404 permitting process.  The Corps of Engineers has determined that the application is complete and is analyzing the proposal.  The Clean Water Act requires that the Environmental Protection Agency (“EPA”) play a support role in the analysis.  The Corps of Engineers and EPA are working together on the permitting process, which continues concurrently with the FEIS process schedule.  In addition, the Company continues to communicate with the EPA on information and clarification on the 404 permitting process and related issues.

 

Completion of the permitting process is contingent upon the completion of the FEIS and issuance of a Record of Decision.

 

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 September 30, 2012

 

The Company reported a net loss of $2.7 million for the quarter ended September 30, 2012 compared to a net loss of $2.8 million for the quarter ended September 30, 2011.  The most significant changes in operating expenses were:  (1) a $0.9 million decrease in general and administrative expenses primarily due to the value of stock compensation issued during the third quarter of 2012 compared to 2011mostly offset by (2) a $0.7 million increase in technical services associated with the exploration of the La Estrella Project.  There was also a $0.1 million decrease in other income primarily from the change in the fair market value of warrant derivatives which expired in April of 2012.

 

Nine Months Ended September 30, 2012

 

The Company reported a net loss of $6.4 million for the nine months ended September 30, 2012 compared to a net loss of $3.1 million for the nine months ended September 30, 2011.  The $3.3 million increase in net loss was primarily attributable to the change in other income, including:  (1) a decrease of $1.5 million in the net gain on fair market value of warrant derivatives which expired in April of 2012, and (2) the absence of the 2011 period gain of $2.0 million on the sale of available-for-sale securities.  Operating expenses decreased by $0.2 million with significant changes in the following line items:  (1) general and administrative expenses decreased by $0.9 million primarily due to the higher value of stock compensation issued during the third quarter of 2011 and (2) legal, accounting, consulting, and filing fees decreased for a combined total of $0.2 million due to the absence of various costs associated with the completion of the underwritten public

 

11



Table of Contents

 

offering during 2011, almost entirely offset by (3) a $1.0 million increase in technical services due to the exploration of the La Estrella Project.

 

Liquidity

 

During the nine months ended September 30, 2012, the net cash used in operating activities was approximately $5.6 million, which is $0.5 million more 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 for the Montanore Project becomes clearer.

 

We anticipate expenditures of approximately $2.0 million for the final three months of 2012, which we expect to consist of approximately $1.0 million for general and administrative expenses, $0.5 million for permitting, engineering, and geologic studies for the permitting for the Montanore Project and $0.5 million on exploration support including permit renewals and resource modeling at La Estrella.  We expect to fund these expenditures from cash on hand.  Additional external financing 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 to fund increased exploration efforts at the La Estrella property in 2013.   We expect the timing and amount of additional external financing to be based on the timing of the Record of Decision and planned drilling program for Montanore and on 2012 exploration results and additional exploration plans, if any, for La Estrella.

 

Off-Balance Sheet Arrangements

 

As of September 30, 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.

 

ITEM 3.                                                QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The majority of our cash balances are held in U.S. dollars and our long term investment certificates of deposit are denominated in U.S. dollars in local and national banking institutions.  We manage the timing of cash required for review of the permitting and engineering of the Montanore Project and for general corporate purposes utilizing our money market account, and we invest funds not immediately required in certificates of deposit with varying maturities and fixed early retirement costs of three months interest.  Our policy is to invest only in government securities rated “investment grade” or better.

 

The market prices of base and precious metals such as silver and copper fluctuate widely and are affected by numerous factors beyond the control of any mining company.  These factors include expectations with regard to the rate of inflation, the exchange rates of the U.S. dollar and other currencies, interest rates, global or regional political, economic or banking crises, and a number of other factors.  If the market price of silver or copper should decrease, the value of the Company’s Montanore Project could decline and the Company might not be able to recover its investment in that project.  Any determination to develop or construct a mine would be made long before the first revenues from production would be received.  Price fluctuations between the time that such decisions are made and the commencement of production could affect the economics of the mine.

 

ITEM 4.                                                CONTROLS AND PROCEDURES

 

Our management, with the participation of Glenn M. Dobbs, the Company’s President and CEO, and James H. Moore, the Company’s Chief Financial Officer and Treasurer, has evaluated the Company’s disclosure controls and procedures as of September 30, 2012.  Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are designed and were effective as of September 30, 2012 to give reasonable assurances that the information required to be disclosed in the reports that the Company’s files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is also accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

There has been no change in our internal control over financial reporting during the quarter ended September 30, 2012 that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

 

12



Table of Contents

 

PART II— OTHER INFORMATION

 

ITEM 1.                                                LEGAL PROCEEDINGS

 

None.

 

ITEM 1A.                                       RISK FACTORS

 

None.

 

ITEM 2.                                                UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3.                                                DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4.                                                MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5.                                                OTHER INFORMATION

 

None.

 

ITEM 6.                                                EXHIBITS

 

Exhibit No.

 

Title of Exhibit

 

 

 

31.1

 

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

31.2

 

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

32.1

 

Certification of Chief Executive Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act)

32.2

 

Certification of Chief Financial Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act)

101

 

The following financial information from Mines Management Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2012, and December 31, 2011, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2012, and September 30, 2011 and from Inception through September 30, 2012, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012, and September 30, 2011, and from Inception through September 30, 2012 and (iv) the Notes to Consolidated Financial Statements. Pursuant to rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

13



Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

MINES MANAGEMENT, INC.

 

 

 

 

Date:   November 14, 2012

By:

/s/ Glenn M. Dobbs

 

 

Glenn M. Dobbs

 

 

President and Chief Executive Officer

 

 

 

 

 

By:

/s/ James H. Moore

Date:  November 14, 2012

 

James H. Moore

 

 

Chief Financial Officer

 

14


EX-31.1 2 a12-20019_1ex31d1.htm EX-31.1

EXHIBIT 31.1

 

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Glenn M. Dobbs, certify that:

 

1.              I have reviewed this quarterly report on Form 10-Q of Mines Management, Inc.;

 

2.              Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.              Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.              The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.                                           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.                                           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.                                            Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.                                           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.              The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

 

a.                                           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.                                           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2012

 

 

 

 

/s/ Glenn M. Dobbs

 

Glenn M. Dobbs

 

President and Chief Executive Officer

 


EX-31.2 3 a12-20019_1ex31d2.htm EX-31.2

EXHIBIT 31.2

 

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, James H. Moore, certify that:

 

1.              I have reviewed this quarterly report on Form 10-Q of Mines Management, Inc.;

 

2.              Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.              Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.              The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a.         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b.         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c.         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d.         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.              The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

 

a.         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b.         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 14, 2012

 

 

 

 

/s/ James H. Moore

 

James H. Moore

 

Chief Financial Officer

 


EX-32.1 4 a12-20019_1ex32d1.htm EX-32.1

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Mines Management, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

 

/s/ Glenn M. Dobbs

 

Glenn M. Dobbs

 

President and Chief Executive Officer

 

November 14, 2012

 

 

A signed original of this written statement required by Section 906 has been provided to Mines Management, Inc. and will be retained by Mines Management, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 


EX-32.2 5 a12-20019_1ex32d2.htm EX-32.2

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Mines Management, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

 

/s/ James H. Moore

 

James H. Moore

 

Chief Financial Officer

 

November 14, 2012

 

 

A signed original of this written statement required by Section 906 has been provided to Mines Management, Inc. and will be retained by Mines Management, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 


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FONT-FAMILY: Times New Roman" size="2">%</font></p></td></tr> <tr style="HEIGHT: 0px"> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 35.8%; PADDING-TOP: 0in" valign="top" width="35%"> <p style="MARGIN: 0in 0in 0pt 10pt; TEXT-INDENT: -10pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Weighted average volatility</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 2.68%; PADDING-TOP: 0in" valign="bottom" width="2%"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 1pt; FONT-FAMILY: Times New Roman" size="2">&#160;</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 12.86%; PADDING-TOP: 0in" valign="bottom" width="12%" colspan="2"> <p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: right" align="right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">72.33</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; 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size="1">&#160;</font></b></p></td></tr> <tr style="HEIGHT: 0px"> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; WIDTH: 57.78%; PADDING-TOP: 0in" valign="bottom" width="57%" bgcolor="#CCEEFF"> <p style="MARGIN: 0in 0in 0pt 10pt; TEXT-INDENT: -10pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Balance January 1, 2012</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; WIDTH: 3.4%; PADDING-TOP: 0in" valign="bottom" width="3%" bgcolor="#CCEEFF"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 1pt; FONT-FAMILY: Times New Roman" size="2">&#160;</font></p></td> <td style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0in; BORDER-TOP: medium none; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; BORDER-LEFT: medium none; WIDTH: 1.3%; PADDING-TOP: 0in; BORDER-BOTTOM: medium none" valign="bottom" width="1%" bgcolor="#CCEEFF"> <p style="MARGIN: 0in 0in 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size="2">&#160;</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; WIDTH: 16.36%; PADDING-TOP: 0in" valign="bottom" width="16%" bgcolor="#CCEEFF" colspan="2"> <p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: right" align="right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">5,350</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; WIDTH: 2.7%; PADDING-TOP: 0in" valign="bottom" width="2%" bgcolor="#CCEEFF"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 1pt; FONT-FAMILY: Times New Roman" size="2">&#160;</font></p></td></tr> <tr style="HEIGHT: 0px"> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 57.78%; PADDING-TOP: 0in" valign="bottom" width="57%"> <p style="MARGIN: 0in 0in 0pt 10pt; TEXT-INDENT: -10pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Gain on warrant derivatives</font></p></td> <td 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style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0in; BORDER-TOP: medium none; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; BORDER-LEFT: medium none; WIDTH: 16.36%; PADDING-TOP: 0in; BORDER-BOTTOM: medium none" valign="bottom" width="16%" bgcolor="#CCEEFF" colspan="2"> <p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: right" align="right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">445,807</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; WIDTH: 2.7%; PADDING-TOP: 0in" valign="bottom" width="2%" bgcolor="#CCEEFF"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 1pt; FONT-FAMILY: Times New Roman" size="2">&#160;</font></p></td></tr> <tr style="HEIGHT: 0px"> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 57.78%; PADDING-TOP: 0in" valign="bottom" width="57%"> <p style="MARGIN: 0in 0in 0pt 10pt; TEXT-INDENT: -10pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: 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style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0in; BORDER-TOP: medium none; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; BORDER-LEFT: medium none; WIDTH: 16.36%; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 1pt solid" valign="bottom" width="16%" colspan="2"> <p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: right" align="right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">5,474</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 2.7%; PADDING-TOP: 0in" valign="bottom" width="2%"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 1pt; FONT-FAMILY: Times New Roman" size="2">&#160;</font></p></td></tr> <tr style="HEIGHT: 0px"> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; WIDTH: 57.78%; PADDING-TOP: 0in" valign="bottom" width="57%" bgcolor="#CCEEFF"> <p style="MARGIN: 0in 0in 0pt 10pt; TEXT-INDENT: -10pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">Balance September 30, 2012</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; WIDTH: 3.4%; PADDING-TOP: 0in" valign="bottom" width="3%" bgcolor="#CCEEFF"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 1pt; FONT-FAMILY: Times New Roman" size="2">&#160;</font></p></td> <td style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0in; BORDER-TOP: medium none; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; BORDER-LEFT: medium none; WIDTH: 1.3%; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 2.25pt double" valign="bottom" width="1%" bgcolor="#CCEEFF"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">$</font></p></td> <td style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0in; BORDER-TOP: windowtext 1pt solid; PADDING-LEFT: 0in; BACKGROUND: #cceeff; PADDING-BOTTOM: 0in; BORDER-LEFT: medium none; WIDTH: 15.06%; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 2.25pt double" valign="bottom" 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style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 2.5%; PADDING-TOP: 0in" valign="bottom" width="2%"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 1pt; FONT-FAMILY: Times New Roman" size="2">&#160;</font></p></td> <td style="BORDER-RIGHT: medium none; PADDING-RIGHT: 0in; BORDER-TOP: medium none; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; BORDER-LEFT: medium none; WIDTH: 12%; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 1pt solid" valign="bottom" width="12%"> <p style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: right" align="right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">(200,000</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0.375pt; WIDTH: 2.5%; PADDING-TOP: 0in" valign="bottom" width="2%"> <p style="MARGIN: 0in 0in 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" size="2">)</font></p></td> <td style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; WIDTH: 1.3%; PADDING-TOP: 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