Mr. Douglas Dobbs reports

MINES MANAGEMENT REPORTS THIRD QUARTER 2014 FINANCIAL RESULTS

Mines Management Inc. has released financial and operating results for the third quarter ending Sept. 30, 2014, and is providing an update on recent milestones achieved in the permitting process for the Montanore silver-copper project.

Overview third quarter 2014

• 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-per-cent 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.
• 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 United States 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 Sept. 30, 2014

The company reported a net loss of $1.5-million and $1.8-million for the quarters ended Sept. 30, 2014, and 2013, respectively. The most significant differences in operating expenditures between the two quarters include a decrease in technical services of $100,000 during the 2014 quarter, primarily due to a reduction of the amount of environmental baseline data collected in 2014 compared with 2013 as part of the premining activity monitoring requirements included in the FEIS. Other decreases in operating expenses for the quarter ended Sept. 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 totalled $100,000 in general and administrative, technical services, and depreciation expenses. There was also a $100,000 gain in other income resulting from the sale of the company's interest in an oil and gas lease during the quarter ended Sept. 30, 2014.

Nine months ended Sept. 30, 2014

The company reported a net loss of $4.9-million for the nine months ended Sept. 30, 2014, compared with a net loss of $5.8-million for the nine months ended Sept. 30, 2013. The change in net loss resulted primarily from reduced operating expenses during the 2014 period including: a $500,000 decrease in general and administrative expenses consisting of $100,000 less of stock-based compensation during the 2014 period compared with the 2013 period, the absence in 2014 of a $100,000 payment to continue the earn-in agreement with Estrella Gold Corp., a decrease in 2014 of $200,000 in payroll with two fewer employees, and a $100,000 decrease in promotional and other administrative expenses during 2014; a $500,000 decrease in technical services and exploration expenses, $400,000 related to the termination of the La Estrella project in January, 2014, and $100,000 related to the decrease in fees paid to the contractor working on the environmental impact study during 2014; and a $100,000 decrease in depreciation during 2014 due to property and equipment having reached the end of its depreciable life; partly offset by an increase of $200,000 in legal, accounting and consulting expenditures during the 2014 period primarily associated with a litigation matter; and a $100,000 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 Sept. 30, 2014, the net cash used in operating activities was approximately $4.1-million, which is $700,000 less than the same period in the prior year. Net cash provided by financing activities during 2014 was $3.7-million. This decreased cash, cash equivalents and certificates of deposit from $5.7-million at Dec. 31, 2013, to approximately $5.4-million at Sept. 30, 2014.

The company anticipates expenditures of approximately $1.3-million for the fourth quarter of 2014, which it expects to consist of approximately $700,000 for general and administrative expenses, and $600,000 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. The company plans to continue to limit activity levels, including capital expenditures, until the record of decision is issued.

We seek Safe Harbor.