Mines Management Announces 3rd Quarter Financial Results and Update on Montanore Silver-Copper Project

MINES MANAGEMENT, INC. (NYSE Alternext US: MGN) (TSX: MGT), announces results for the 3^rd quarter, 2008.

Advancing the Montanore Silver-Copper Project continues to be the Company’s main focus. In addition to its advanced exploration and delineation drilling program, the Company is continuing its repermitting efforts with federal and state agencies and its optimization review of the Project.

Overview

In the third quarter of 2008:

• The U. S. Forest Service and the Montana DEQ continued their joint review of the preliminary draft environmental impact statement (PDEIS).
• Small Mine Development (SMD), an independent contractor engaged by the Company to assist with the rehabilitation of the Libby Adit, mobilized in late August to assist in the excavation of two sumps and placed them into service as part of the overall dewatering system to clarify water before sending it to the water treatment plant.
• The Company maintained a strong cash position with $19.6 million of unrestricted cash and unrestricted certificates of deposit at September 30, 2008.
• The Company continued to build its Investor Relations program by increasing retail contacts as well as investment conference attendance during the quarter (3 shows).

The primary cash expenditures for the quarter ended September 30, 2008, were $5.0 million for the purchase of a certificate of deposit, $1.8 million for the purchase of securities, and $1.5 million for operating activities. Management has reviewed near-term spending and implemented a plan to conserve cash where prudent. The Company believes that it has sufficient working capital to complete the rehabilitation of the Libby adit and to commence delineation drilling.

Advanced Exploration and Delineation Drilling Program

Libby operations in the third quarter of 2008 showed progress in implementing the Montanore site water treatment system, including constructing two dewatering sumps, continued design work on the nitrate removal system and mobilization of the adit rehabilitation contractor.

Two sumps were excavated and placed into service during the third quarter of 2008. These sumps consist of two declining drifts approximately 15 ft. x 15 ft. in section and 80 ft. long each. These sumps are part of the overall dewatering system designed to clarify mine water before sending it to the water treatment plant on the surface. A suspended platform was constructed and installed in one sump, allowing for personnel access to the sump pumps. Construction of the sumps allowed a good test of most of the mining equipment that will be used for decline advancement and future mine development. The jumbo, roof bolter, LHDs and haul trucks were all used to construct the sumps. Other support equipment saw limited use, such as the explosives loading truck and scissor lift truck.

Engineering for the nitrate removal addition to the water treatment system is advancing in accordance with expectations. The current schedule is to have the design completed in early December, with construction set to begin in late April or early May 2009. In accordance with this schedule, the plant is expected to be ready for operation when the EIS is issued next year. Engineering and geology work continue using existing information.

Permitting and Environmental

In the third quarter of 2008, the U.S. Forest Service (USFS) and Montana Department of Environmental Quality (MDEQ) continued to conduct its internal review of the preliminary draft environmental impact statement (PDEIS). In addition, the USFS and MDEQ are expected to finalize their selection of the preferred alternative in November, which may be included in the PDEIS submitted for public review. The agencies have indicated that the submission of the PDEIS is still on schedule for the fourth quarter of 2008.

The Company continues to provide additional technical data and other support information to the agencies in the preparation of the PDEIS. In addition, the Company has expanded the 3-dimensional hydrologic model designed to predict water inflow to the mine during the evaluation drilling program to include the full mine project. This information, when completed, will be submitted to the agencies to be incorporated into the long-term monitoring program for the Montanore Project.

The USFS advised the Company on August 21, 2008, that the environmental assessment (EA) being developed for the underground evaluation program should be terminated and the analysis incorporated into the environmental impact statement (EIS) being prepared for the overall project. While the Company believes that the EA provided adequate analyses to meet regulatory requirements, the Company agreed to accept their recommendation. The State’s approval for the Minor Revision to Permit 150 (Evaluation Program) remains in place; however, the Company continues to construct project infrastructure to support the evaluation drilling program. The Company does not anticipate any delays to the EIS schedule due to this change.

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 with the exception of equipment and site infrastructure, 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, 2008

The Company reported a net loss for the quarter ended September 30, 2008, of $3.1 million, or $0.14 per share, compared to a net loss of $1.7 million, or $0.09 per share, for the quarter ended September 30, 2007. The $1.4 million increase in net loss in the third quarter of 2008 is attributable to increases in operating expenses of approximately $1.1 million over the third quarter of 2007, principally in depreciation, compensation, environmental expenses, and permitting. These increases resulted from the addition of new employees and depreciation for new equipment received late in 2007. Permitting and environmental costs increased by approximately $0.6 million during the third quarter of 2008 compared to the third quarter of 2007 because of increased activities relating to the submission of the second draft PDEIS. Interest income was down $0.2 million for the third quarter 2008 versus 2007 because of lower interest rates and reduced cash on hand.

Nine Months Ended September 30, 2008

The Company reported a net loss for the nine months ended September 30, 2008, of $7.5 million, or $0.33 per share, versus a loss of $5.1 million, or $0.30 per share, for the nine months ended September 30, 2007. The $2.4 million increase in net loss in 2008 is largely attributable to increased depreciation of $0.7 million, an increase in legal accounting and consulting fees of $0.1 million, compensation increase of $1.1 million and increased environmental and permitting expenses of $0.5 million. These increases were a result of a full nine months of depreciation of the Montanore equipment and site infrastructure delivered and completed in late 2007 and early 2008. Legal fees increased in 2008 because of the increased activity on the EIS for the Montanore Project, primarily responding to Forest Service comments and questions. The compensation increase was due to the addition of new employees and the payment of stock-based compensation for employees and directors for 2008. Permitting and environmental expenditures are up due to responding to agency comments, report updates, and additional technical studies that are being incorporated into the final PDEIS to be distributed for public comment.

Liquidity

During the nine months ended September 30, 2008, the net cash used for operating activities was $6.2 million, which consisted largely of permitting and administrative expenses associated with increased activities at the Montanore Project site. The net cash used in investing activities during the nine months was $7.8 million, which was for the purchase of a $5.0 million Certificate of Deposit and an equity investment of $1.8 million and $1.0 million for equipment and construction in progress. Cash from financing activities included $1.8 million in short-term debt, which was a draw down from a $5.0 million line of credit at Washington Trust Bank and $0.6 million from the exercise of stock options by an officer.

The Company anticipates spending approximately $2.9 million from cash and investments on hand during the final quarter of 2008 for maintenance of ongoing water treatment activities and engineering studies relating to site optimization and repermitting efforts at the Montanore Project. The total capital and operating expenses for the year to date are approximately $5.0 million below the original forecast for the year because of delays relating to the PDEIS issuance for public comment, which is scheduled to be completed late in the fourth quarter. The Company believes that it has sufficient working capital for rehabilitation and completion of the Libby adit and commencement of delineation drilling, which are estimated to cost $19.0 million. Once initial drilling results are in, the company expects to initiate the process of obtaining a bankable feasibility study.

Forward-Looking Statements

Some information contained in or incorporated by reference into this report may contain forward-looking statements. These statements include comments regarding further exploration and evaluation of the Montanore Project, including planned dewatering, rehabilitation and extension of the Libby Adit, drilling activities, feasibility determination, engineering studies, environmental and permitting requirements, process and timing; financing needs; planned expenditures in 2008; potential completion of a bankable feasibility study; and the markets for silver and copper. The use of any of the words "development,” "anticipate,” "continues,” "estimate,” "expect,” "may,” "project,” "should,” "believe,” and similar expressions are intended to identify uncertainties. The Company believes the expectations reflected in those forward-looking statements are reasonable. However, the Company cannot assure that the expectations will prove to be correct. Actual results could differ materially from those anticipated in these forward-looking statements as a result of the factors set forth below and other factors set forth and incorporated by reference into this report:

• Worldwide economic and political events, including those affecting the supply of, and demand for, silver and copper, and the availability and cost of financing for mining projects
• Volatility in the market price for silver and copper
• Financial market conditions and the availability of financing on acceptable terms
• Uncertainties associated with developing new mines
• Variations in ore grade and other characteristics affecting mining, crushing, milling and smelting and mineral recoveries
• Geological, technical, permitting, mining and processing problems
• The availability, terms, conditions and timing of required governmental permits and approvals, and potential opposition to the majority of permits
• Uncertainty regarding future changes in applicable law or implementation of existing law
• The availability of experienced employees
• The factors discussed under "Risk Factors” in our Form 10-K, for the period ending December 31, 2007.

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