Alternative One

Financials for Mines Management, Inc. are not looking very healthy for anyone but CEO Glenn Dobbs, who recently reported to the Securities and Exchange Commission that he has given himself, his son, Douglas Dobbs, and MGN CFO James Moores healthy raises for 2012. 

With virtually across-the-board losses in the third quarter of 2011, the numbers evidence a downward slide over the second quarter.

Chart One:  Losses show an upward trend, with debits multiplying exponentially from start of Dobbs' tenure in 2002 through the most recently available annual figures. See more financials on our AMEX MGN Investors Page.

                                                                        Above: MMI (AMEX MGN) Assets and operating expenses show a steady, if downward trend.

Conversely, Dobbs' annual salary and compensation package shows robust growth, despite the company at large's devastatingly high losses.

Perhaps Dobbs' continual rise in personal fortune is due to the annual increase in sales of AMEX MGN stocks, which have to date been lacking in the payment of dividends to stockholders.

All financial information is directly from MMI's yearly SEC filings/annual reports.

by John A. Cleveland

With all of Montanore Minerals Corp.'s (MMC) pep rally style happy talk and hyperbole, it may be useful to step back and examine some actual facts regarding MMC and the Montanore Project.

Absent some form of additional financing, MMC will be broke in about two years.

Fact one:  MMC is not a mine operating company.  They have no history of operating mines and they have no experience or expertise operating mines.  The most likely outcome for MMC's involvement with the Montanore Project is that, assuming MMC is ultimately successful in obtaining the required permits for the Project, MMC will attempt to sell the mine to a mining company with mine operating expertise.  That buyer could be a foreign company.  Given the demand for minerals in Asia, perhaps it would be an Asian concern.  How would you feel about working for the Chinese or Koreans?

MMI...has made no decision to actually invest in the Montanore Project. It is currently at...the Preliminary Assessment stage.

Fact two:  MMC is very thinly capitalized and is capital constrained.  As of June 30, 2011, MMC had about $22 million on their balance sheet and they are spending about $2 million per quarter (source:  Mines Management, Inc.'s June 30, 2011 Quarterly Report).  Absent some form of additional financing, MMC will be broke in about two years.  The capital costs to bring the Montanore Project into production are estimated to be $752.8 million (source:  ERO Resources Corp. report).  What is the probability that a small, financially weak company, with no prior mine operating experience, will be able to obtain $752.8 million of financing?

Fact three:  MMC is in the very early stages of evaluating the viability of the Montanore Project and has made no decision to actually invest in the Montanore Project (source:  ERO Resources Corp. report).  It is currently at what is referred to as the Preliminary Assessment stage.  There are three additional development stages (Prefeasibility Study; Feasibility Study and Mine Development) that need to be completed before the final stage, Production.  The reality is that the Production stage is years away.  Of course, the permitting process must first be completed.  The Forest Service and the DEQ will issue a record of decision (ROD), which could be appealed.  Following the appeal process, the ROD could be litigated.  This will further add to the timeline for the Montanore Project, perhaps years.  The bottom line:  don't count on anything happening soon.  Take MMC's assertions of imminent operations with a grain of salt.

Over the years since Mines Management Inc. first arrived on the Montanore Mine scene, CEO Glenn Dobbs has delivered some quotable quotes through the business wires.  Always the optimist, Dobbs pins his hopes to a star two or three times per annum by releasing the following silver-lined statements:

August 4, 2004:  "With the existing Environmental Impact Statement (EIS) as the basis for re-permitting, we believe the process will be significantly shorter than if we were starting from scratch."

What are the final few steps before all that Montanore silver and copper starts flooding the commodities market?

May 9, 2005:  "Mines Management, Inc. (AMEX:MGN - News) is pleased to announce that Mines Management, the Montana Dept. of Environmental Quality (DEQ) and U.S. Forest Service (USFS) have executed a Memorandum of Agreement (MOA) outlining the process and schedule to complete the permitting for the Montanore Silver-Copper Project by July 21st, 2006, only twenty months from the filing of the Re-Permitting Application."

May 31, 2006:  "We are pleased at being able to consolidate the Company's land position at the project site and to accelerate our schedule for going underground."

July 13, 2009:  "Completion of the public comment period marks the conclusion of an important step in the process to re-permit the Montanore Silver-Copper project, and significant advancement through the final stage of activities toward completion of the Final EIS...We look forward to completing the remaining steps required for final permitting of mining activities."

September 27, 2011:  "Completion of the SDEIS is a major step forward in the final phase of the permitting process.  It signals a move toward completion of the process."

(continued at right)

IBD Stock News for
Mines Management Inc (MGN): Sales Snapshot 

The government agencies involved in the permitting process have the authority to deny the required permits for mine operation.

What are the final few steps before all that Montanore silver and copper starts flooding the commodities market? 

• Completion of the public comment period on the latest Supplemental Draft Environmental Impact Statement
• Agency review of and response to the public comments
  
• Further agency/MMI study as a result of pertinent public comments
• The completion of a biological assessment of the Montanore Mine proposal by the US Fish and Wildlife Service (not yet underway) for the purpose of rendering an opinion on the effects the mining operation would have on threatened wildlife, if it were ever permitted
• Response from the agencies and/or MMI to the biological assessment
• Historical and archeological assessment of the 16-mile proposed transmission line route
• Study of grizzly bear travel routes and additional mitigation, if the plan is approved by USFWS
  
• Purchase of and/or leasing of 2 acres of land for every acre of grizzly and lynx habitat to be decimated by the mining operation, comprising well over 3,000 acres
• Purchase of wetlands mitigation acreage
• Preliminary test drilling to prove or disprove that the Montanore Mine project presents a "bankable" undertaking for Mines Management & companies, despite the fact that millions of shares in the company have already been sold
• Construction of infrastructure for the mine operation, since all that currently exists is an unfinished tunnel, whose ownership is in dispute in Lincoln County district court, and a compound with some pole buildings and sheds
• Raising the over 700 million to implement for the project as it is currently conceived
  
• Installation of high-voltage transmission lines to bring electricity to the project
• Re-building several miles of Bear Creek Road for use as a commercial access route
  
• Legal settlement with fourth generation unpatented mining claim owners who own much of the land the old Montanore Tunnel cuts through
  
• Probable years in litigation with legally-empowered conservation and environmental protection organizations that have thus far kept the neighboring Revett Minerals Corp. from commencing operations for more than a decade
• If the Revett Rock Creek Mine, which has a considerable head-start on Montanore, is permitted first, this stands to raise additional environmental roadblocks to Montanore's quest of permits.
  

Additional investor caveats: 

• The government agencies involved in the permitting process have the authority to deny the required permits for mine operation.

• Silver and copper prices are unlikely to maintain their present levels indefinitely

• Mines Management Inc. has never built or operated a mining outfit, and the possibility of costly errors and expensive malfunctions is ever-present.

• CEO Glenn Dobbs is a hedge-fund manager who focuses his talents on offshore financial dealings, and has virtually no hands-on experience in the mining industry.

Mining for Non-Miners  Terminology and mining methods through mine costing. 

Arrhythmia Research (AMEX:HRT), Flexible Solutions (AMEX:FSI), NovaGold Resources Inc. (AMEX:NG), North American Palladium Ltd. (AMEX:PAL), Mines Management Inc. (AMEX:MGN) and Tanzanian Royalty (AMEX:TRX) were the biggest losers on the AMEX, Tuesday, December 13.

Quepasa Corp. (AMEX:QPSA), Mines Management Inc. (AMEX:MGN), Alexco Resource Corp. (AMEX:AXU), Overhill Farms (AMEX:OFI), Elephant Talk (AMEX:ETAK) and Paramount Gold and Silver Corp. (AMEX:PZG) were the top losers on the AMEX, Monday, December 19.