Progress On Permitting Process For Montanore

SPOKANE, WA - Mines Management Inc. reported operating results for the fiscal year, which ended December 31st, 2012, and subsequent progress on the permitting process for the Montanore Project.

Glenn M. Dobbs, the Company╒s Chairman and CEO, stated, There was significant progress made on the permitting process for the Montanore in 2012, setting the stage for advancement through the final phase toward completion. We are pleased that the Biological Consultation has commenced, marking a significant milestone that leaves the Final Environmental Impact Statement, concluding with the Record of Decision, the only remaining major activity following the Biological Opinion. In addition, an important new front for potentially adding value came from exploration on the Estrella gold-silver project in Peru. Data gathered from surface exploration and drilling activities has significantly expanded the known zone of gold and silver mineralization, and identified additional new targets, justifying extension of our exploration agreement into the second year.

We continue to manage our funds in a prudent manner, and plan to balance expenditures in accordance with our priorities, Mr. Dobbs added.  Suffice to say, both the Montanore and Estrella projects have advanced markedly during the year, although declining valuations have plagued the entire minerals sector and we are hopeful for a rebound in the junior metals market. Set forth below is a summary of the Company's accomplishments during 2012, and a discussion of our individual activities.

In 2012 the USFS and Montana Department of Environmental Quality (MDEQ) continued to develop the Final EIS that assesses the environmental impacts of the Montanore Project, including wetlands mitigation and water quality analyses. In working to develop the Final EIS, the USFS and MDEQ incorporated public comments which were invited following release of the Supplement Draft EIS in September 2011.

As a result of public comments, new and updated technical data generated by the EIS contractor, the Company and its consultants was incorporated into the Final EIS, and the agencies prepared updates to monitoring requirements and mitigation for each of the alternatives analyzed.

The USFS prepared BA's for terrestrial and aquatic wildlife for review by the USFWS in support of a biological opinion (BO), which the USFWS is required to complete prior to the granting of a record of decision by the USFS. The USFWS provided general comments to the USFS early in 2012, and the USFS completed both BA's in early 2013.

Also, as part of the development of the Final EIS and determination of the agencies' preferred alternatives, the U.S. Army Corps of Engineers (USACE) must complete an analysis of potential Project discharges of dredged or fill material into waters of the United States, including wetlands. These discharges are regulated under Section 404 of the Clean Water Act which requires a permit for construction of the tailings facility and subsequent discharge of dredged or fill material.

In 2012, the Company completed a conceptual mitigation plan for aquatic resources affected by the proposed tailings impoundment and continues to work with the USACE to analyze extensive aquatic habitat data and advance the mitigation plan. During 2012, the Company also provided extensive technical analyses for alternative tailings impoundment areas and the feasibility of each site in connection with the 404 analysis.

During 2012, the Company expanded its Project monitoring activities, as well, in order to establish baseline conditions prior to the initiation of Project development activities. The increased monitoring activities are tied to expected agency requirements prior to or during initial Project development activities that will be incorporated into the Final EIS.

Also during 2012, the Company developed water rights applications which request authorization for beneficial use of water resources and submitted them to the State of Montana. Submittal of these applications followed selection of the preferred alternatives, and comments from the agencies are pending.

On April 10, 2012, following a period of due diligence, the Company announced an Earn-In Agreement on the Estrella gold-silver exploration property located in central Peru. Previous exploration on the property had identified a zone of gold and silver mineralization approximately 1,500 meters long, north to south by 300 meters wide, east to west. The Company rapidly mobilized, and by August had completed approximately 2,700 meters of diamond core drilling in eight holes in the southwestern quadrant of the area of mineralization. Seven holes intercepted mineralization exceeding 100 meters in thickness over an additional area approximately 500 meters long, north to south, which extended known mineralization by 300 meters to the west.

Results from drilling and surface exploration activities, including a 3D IP/Resistivity survey, indicate that the mineralized zone remains open to the north, south and west.

Subsequent to year-end 2012, the Company decided to extend exploration activities into a second year. Permit modifications are underway, and the Company is assessing plans for further exploration including 2,300 meters of additional drilling required to fulfill the requirements of the agreement for the second year.

Dobbs said,  Our net cash expenditures for operating activities totaled $7.2 million. Cash outlays were less than projected due to delays in the USFS approval of our EIS and the absence of additional expense for adit rehabilitation. In 2013, we plan to continue to focus on planning for our exploration and delineation drilling program at the Montanore Project pending the final permitting approvals. Our current cash position should be sufficient to complete the permitting process and initiate the adit rehabilitation and drill station development. Additional external financing would be required to complete the evaluation drilling program and a bankable feasibility study. Development activities would be deferred if the permitting process is delayed or if commodity prices make the project difficult to finance or increase the cost of such financing.