Mines Management Inc is a U.S.-based mineral development company focused on the exploration and development of silver dominant deposits. Mines Management Inc has a market cap of $40.4 million; its shares were traded at around $1.77 with and P/S ratio of 2248.4.
Highlight of Business Operations:The net cash expenditures for the six months ended June 30, 2009 were $0.1 million for the purchase of equipment and completion of the water treatment plant and other site infrastructure and $4.4 million for operating activities. The Company believes that it has sufficient working capital to complete the rehabilitation of the Libby adit and commencement of delineation drilling.
The Company reported a net loss for the quarter ended June 30, 2009 of $1.9 million, or $0.08 per share, compared to a net loss of $2.5 million, or $0.11 per share, for the quarter ended June 30, 2008. The $0.6 million decrease in net loss in the second quarter of 2009 is attributable to decreases in operating expenses of $0.4 million over the second quarter of 2008, principally in general and administrative expenses, and an increase in other income of $0.2 million. The decrease in operating expenses resulted from a decline in promotion and investor relations spending of $0.1 million, and $0.5 million in stock compensation. Technical services increased in 2009 over 2008 for work on the adit and the underground water treatment system of $0.2 million before SMD was demobilized the end of April. The increase in other income resulted from the adoption on January 1, 2009 of the reporting requirements of EITF 07-5 which resulted in a $0.3 million gain on warrant derivatives. Net interest income decreased by $0.1 million in 2009.
The Company reported a net loss for the six months ended June 30, 2009 of $4.9 million, or $0.22 per share, versus a loss of $4.4 million or $0.19 per share for the six months ended June 30, 2008. The $0.5 million increase in net loss in 2009 is largely attributable to increased technical services costs in 2009 for work on the Libby adit water treatment system including rehabilitation, sump and decant construction, and pumping station installation of $0.6 and additional permitting and environmental costs of $0.4 million. This was offset by reduced general and administrative costs including decreases of $0.2 million in investor relation expenditures and $0.4 million for stock compensation, and an increase of $0.1 million for consulting services. Legal, accounting, and consulting fees decreased by $0.2 million in 2009, and net interest income decreased by $0.2 million.
Liquidity During the six months ended June 30, 2009, the net cash used for operating activities was $4.4 million, which consisted largely of permitting and technical expenses associated with increased activities at the Montanore Project site. The net cash used in investing activities during the quarter was $0.1 million, principally for construction in progress.
We continue to reduce activity levels, including capital expenditures, until the timing of the Record of Decision becomes more clear. We anticipate expenditures of approximately $4.5 million in the final two quarters of 2009, which will consist of $1.5 million per quarter for general and administrative expenses and $1.5 million for ongoing expenses in preparation for the delineation drilling program, additional mine scoping studies, and responding to EIS comments. Given our current available funds of approximately $15.5 million on June 30, 2009, we will require approximately $10.0 million of external financing in 2010 to fund the final phases of the advanced exploration program and delineation drilling program and completion of a bankable feasibility study. The Company continues to investigate financing opportunities and the potential for equity or debt financing during the current year.
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