10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(MARK ONE)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2006.

[  ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________.

COMMISSION FILE NUMBER  000-29786

MINES MANAGEMENT, INC.

(Exact Name of Registrant as Specified in its Charter)

IDAHO	91-0538859
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

905 W. Riverside Avenue, Suite 311 Spokane, Washington	99201
(Address Of Principal Executive Offices)	(Zip Code)

(509) 838-6050

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [X] Yes    [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer __

Accelerated filer __

Non-accelerated filer X_

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  [  ]  No  [X]

At November 10, 2006, 12,899,467 shares of common stock, par value per share $0.01, were issued and outstanding.

SEC 1296 (9-05)

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the  form displays a currently valid OMB control number.

MINES MANAGEMENT, INC.

FORM 10-Q

QUARTER ENDED September 30, 2006

INDEX

PAGE

PART I – FINANCIAL INFORMATION  (Note final to match pages)

ITEM 1.

FINANCIAL STATEMENTS

3

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

18

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK AND HEDGING ACTIVITIES

21

ITEM 4.

CONTROLS AND PROCEDURES

21

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

22

ITEM 1A.

RISK FACTORS

22

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

22

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

22

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

22

ITEM 5.

OTHER INFORMATION

22

ITEM 6.

EXHIBITS

22

SIGNATURES

23

2

Part I – Financial Information

Item 1. Financial statements (unaudited)

Mines Management, Inc. and Subsidiaries

Contents

Page

FINANCIAL STATEMENTS:

Consolidated balance sheets

4

Consolidated statements of income

6

Consolidated statements of stockholders’ equity

7

Consolidated statements of cash flows

8

Notes to consolidated financial statements

9-17

3

Mines Management, Inc. and Subsidiaries
Consolidated Balance Sheets
			September 30,	December 31,
			2006	2005
Assets
CURRENT ASSETS:
	Cash and cash equivalents		$    2,120,689	$    4,648,294
	Interest receivable		20,598	101,380
	Prepaid expenses and deposits		145,305	30,169
		Total current assets	2,286,592	4,779,843
MINERAL PROPERTIES			504,492	504,492
PROPERTY AND EQUIPMENT:
	Mine buildings		77,917	39,917
	Vehicles and equipment		145,641	80,568
	Office equipment		212,024	185,969
			435,582	306,454
	Less accumulated depreciation		141,307	101,470
			294,275	204,984
INVESTMENTS:
	Certificates of deposit		4,370,252	4,158,692
	Available-for-sale securities		43,386	25,146
			4,413,638	4,183,838
			$    7,498,997	$    9,673,157

See accompanying notes to consolidated financial statements.

4

< /TR> < /TR> < /TR> < /TR>

				Consolidated Balance Sheets
				September 30,	December 31,
				2006	2005
Liabilities and Stockholders’ Equity
CURRENT LIABILITIES:
	Accounts payable			$        46,645	$       130,655
	Due to officer			2,398	2,398
	Severance currently payable			-	20,000
	Payroll taxes payable			4,702	18,048
			Total current liabilities	53,745	171,101
COMMITMENTS
STOCKHOLDERS’ EQUITY:
	Common stock – 100,000,000 shares, $0.01 par value, authorized;
		12,849,467 and 12,469,510 shares issued and outstanding		128,494	124,695
	Preferred stock – 10,000,000 shares, no par value,
		authorized; -0- shares issued and outstanding		-	-
	Additional paid-in capital			21,637,445	19,705,219
	Accumulated deficit			(1,117,306)	(1,117,306)
	Deficit accumulated during the development stage			(13,235,602)	(9,224,533)
	Accumulated other comprehensive income			32,221	13,981
			Total stockholders’ equity	7,445,252	9,502,056
				$    7,498,997	$    9,673,157

See accompanying notes to consolidated financial statements.

5

 

Mines Management, Inc. and Subsidiaries
Consolidated Statements of Income
							From Inception
							August 12, 2002
			Three Months Ended		Nine Months Ended		Through
			September 30,		September 30,		September 30,
			2006	2005	2006	2005	2006
REVENUE:
	Royalties		$           3,269	$           2,418	$           9,776	$           8,127	$              38,145
OPERATING EXPENSES:							& nbsp;
	Depreciation		17,247	6,915	39,837	15,797	77,293
	Administrative		125,154	117,843	386,614	512,760	1,502,123
	Legal, accounting, and consulting		176,807	69,133	339,433	135,810	753,237
	Miscellaneous		1,756	537	3,602	3,684	19,406
	Exploration		78,614	-	78,614	718	83,310
	Oil and gas operating		-	-	-	-	12,173
	Rent and office		104,487	31,140	225,517	90,587	457,393
	Compensation, directors, officers and staff		268,393	180,405	625,916	450,202	1,959,544
	Taxes and licenses		(20,320)	10,907	42,183	30,512	128,144
	Telephone		5,791	4,123	16,438	10,341	47,763
	Fees, filing, and licenses		268,016	217,168	514,725	262,629	1,183,472
	Environmental		67,336	-	177,705	83,233	423,468
	Engineering		54,085	242,453	332,131	455,182	1,411,742
	Permitting		351,729	338,478	1,053,588	690,014	2,201,090
	Commissions		-	-	-	-	68,440
	Stock options granted to officers and employees		-	-	392,530	321,030	2,964,401
	Stock options granted for services		18,200	19,304	29,745	547,483	592,314
		Total operating expenses	1,517,295	1,238,406	4,258,578	3,609,982	13,885,313
LOSS FROM OPERATIONS			(1,514,026)	(1,235,988)	(4,248,802)	(3,601,855)	(13,847,168)
OTHER INCOME:							& nbsp;
	Interest		74,676	56,448	237,733	155,751	608,108
	Miscellaneous		-	-	-	-	3,458
			74,676	56,448	237,733	155,751	611,566
NET LOSS			$    (1,439,350)	$    (1,179,540)	$    (4,011,069)	$    (3,446,104)	$       (13,235,602)
NET LOSS PER SHARE			$          (0.11)	$          (0.11)	$          (0.31)	$          (0.31)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING			12,849,467	11,221,047	12,759,033	10,940,118

See accompanying notes to consolidated financial statements.

6

Mines Management, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity							Nine Months Ended September 30, 2006
									Deficit
									Accumulated	Accumulated
							Additional		During the	Other
			Common Stock		Issuable Common Stock		Paid-in	Accumulated	Development	Comprehensive
			Shares	Amount	Shares	Amount	Capital	Deficit	Stage	Income	Total
BALANCES, AUGUST 12, 2002 (INCEPTION)			5,316,956	$53,170	90,000	$22,500	$1,448,145	$(1,117,306)	-	$846	$407,355
	Common stock issued for cash		5,169,312	51,693			14,346,448				14,398,141
	Common stock issued to directors		375,000	3,750			146,250				150,000
	Common stock issued for services		5,000	50			1,950				2,000
	Issuable common stock issued		90,000	900	(90,000)	(22,500)	21,600				-
	Exercise of stock options		908,088	9,080			70,420				79,500
	Exercise of stock warrants		578,367	5,784			688,234				694,018
	Issuance of stock options						2,962,510				2,962,510
	Issuance of stock for Heidelberg shares		26,787	268			(268)				-
	Revaluation of stock options		-				19,930				19,930
	Comprehensive loss:
		Adjustment to net unrealized gain
		on marketable securities								13,135	13,135
		Net loss							(9,224,533)		(9,224,533)
Comprehensive loss						&nbs p;					(9,211,398)
BALANCES, DECEMBER 31, 2005			12,469,510	$124,695	-	-	$19,705,219	$(1,117,306)	$(9,224,533)	$13,981	$9,502,056
	Exercise of stock options		273,374	2,733	-	-	876,516	-	-	-	879,249
	Exercise of stock warrants		105,750	1,058			633,443				634,501
	Issuance of stock options to employees		-		-	-	392,530	-	-	-	392,530
	Issuance of stock options for services		-		-	-	29,745	-	-	-	29,745
	Issuance of stock for Heidelberg shares		833	8	-	-	(8)	-	-	-	-
	Comprehensive loss:
		Adjustment to net unrealized gain
		on marketable securities	-	-	-	-	-	-		18,240	18,240
		Net loss	-	-	-	-	-		(4,011,069)		(4,011,069)
Comprehensive loss						&nbs p;					(3,992,829)
BALANCES, SEPTEMBER 30, 2006			12,849,467	$128,494	-	-	$21,637,445	$(1,117,306)	$(13,235,602)	$32,221	$7,445,252

See accompanying notes to consolidated financial statements.

7

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Mines Management, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
									From Inception
									August 12, 2002
					Three Months Ended		Nine Months Ended		Through
					September 30,		September 30,		September 30,
					2006	2005	2006	2005	2006
Increase (Decrease) in Cash and Cash Equivalents
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss				$    (1,439,350)	$    (1,179,540)	$    (4,011,069)	$      (3,446,104)	$  (13,235,602)
	Adjustments to reconcile net loss to net cash
		used in operating activities:
			Issuance of stock options to employees		-	19,304	392,530	868,513	3,538,515
			Issuance of stock options for services		18,200	-	29,745	-	7,035
			Depreciation		17,247	6,914	39,837	15,797	77,293
			Changes in assets and liabilities:
				Interest receivable	111,865	61,644	80,782	(7,998)	(20,598)
				Prepaid expenses	(84,305)	28,476	(115,136)	(5,264)	(144,805)
				Accounts payable	(4,189)	(103,922)	(84,010)	6,749	49,043
				Severance payable	-	(10,000)	(20,000)	(45,000)	-
				State income taxes payable	-	-	-	-	(164)
				Payroll taxes payable	(15,775)	2,968	(13,346)	3,411	1,522
				Net cash used in operating activities	(1,396,307)	(1,174,156)	(3,700,667)	(2,609,896)	(9,727,761)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchase of fixed assets				(120,026)	(50,710)	(129,128)	(81,294)	(369,730)
	Purchase of certificates of deposit				(156,258)	(109,061)	(211,560)	(122,932)	(4,370,252)
	Increase in mineral properties				-	-	-	-	(144,312)
				Net cash used in investing activities	(276,284)	(159,771)	(340,688)	(204,226)	(4,884,294)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from sales of common stock				-	179,998	1,513,750	733,516	16,685,409
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					(1,672,591)	(1,153,929)	(2,527,605)	(2,080,606)	2,073,354
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					3,793,280	1,498,318	4,648,294	2,424,995	47,335
CASH AND CASH EQUIVALENTS, END OF PERIOD					$     2,120,689	$        344,389	$     2,120,689	$          344,389	$       2,120,689

See accompanying notes to consolidated financial statements.

8

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization:

Mines Management, Inc. (the “Company”) is a publicly held Idaho corporation incorporated in 1947.  The Company acquires, explores, and develops mineral properties principally in North America.  The Company performed exploration activities in South America in 2002.

Summary of Significant Accounting Policies:

a.

The accompanying consolidated financial statements include the accounts of Mines Management, Inc., and its wholly-owned subsidiaries, Newhi, Inc., Montanore Mineral Corporation, and Montmin Corporation.  Intercompany balances and transactions have been eliminated.  Newhi, Inc., was formed by the Company for the purpose of merger with Heidelberg Silver Mining Company, Inc.  In the merger, completed on April 15, 1988, Heidelberg Silver Mining Company, Inc., was merged into Newhi, Inc.  To effect the merger, the Company issued 367,844 shares of its previously unissued common stock.  Also in connection with this merger, the Company issued 11,117 shares of common stock and paid $4,446 as a finder’s fee.  Montanore Mineral Corporation and Montmin Corporation were acquired in conjunction with a stock transfer agreement with Noranda Finance Corporatio n as described more fully in note 9.  

b.

All exploration expenditures are expensed as incurred.  Significant property acquisition payments for active exploration properties are capitalized.  If no mineable ore body is discovered, previously capitalized costs are expensed in the period the property is abandoned.  Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on a units of production basis over proven and probable reserves.

Should a property be abandoned, its capitalized costs are charged to operations.  The Company charges to operations the allocable portion of capitalized costs attributable to properties sold.  Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.

c.

The Company evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amount may not be recoverable.  If the sum of estimated future net cash flows on an undiscounted basis is less than the carrying amount of the related asset grouping, an asset impairment is considered to exist.  The related impairment loss is measured by comparing estimated future net cash flows on a discounted basis to the carrying amount of the asset.  Changes in significant assumptions underlying future cash flow estimates may have a material effect on the Company’s financial position and results of operations.  To date no such impairments have been identified.

d.

Property and equipment are stated at cost.  Buildings and leasehold improvements are depreciated on the straight-line basis over an estimated useful life of 39 years.  Machinery and furniture are generally being depreciated using accelerated methods over estimated useful lives ranging from 5 to 10 years.

e.

Basic and diluted loss per share are computed using the weighted average number of shares outstanding duringthe periods (12,849,467 and 11,221,047 in the quarters ended September 30, 2006, and 2005, respectively).  Stock options and warrants outstanding are antidilutive and are not considered in the computation.

9

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

Summary of Significant Accounting Policies (continued):

f.

Cash and cash equivalents include cash on hand, cash in banks, investments in certificates of deposit with original maturities of 90 days or less, and money market funds.

g.

The Company’s financial instruments as defined by Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures about Fair Value of Financial Instruments, include cash and loans payable.  All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at September 30, 2006.

h.

Deferred income tax is provided for differences between the bases of assets and liabilities for financial and income tax reporting.  A deferred tax asset, subject to a valuation allowance, is recognized for estimated future tax benefits of tax-basis operating losses being carried forward.

i.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results may differ from those estimates.

j.

The Company has adopted SFAS No. 143, Accounting for Asset Retirement Obligations, which establishes a uniform methodology for accounting for estimated reclamation and abandonment costs.  According to SFAS No. 143, the fair value of a liability for an asset retirement obligation (ARO) will be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made.  The ARO is capitalized as part of the carrying value of the assets to which it is associated, and depreciated over the useful life of the asset.

In March 2005, the Financial Accounting Standards Board (FASB) issued Interpretation No. 47 (FIN No. 47), Accounting for Conditional Asset Retirement Obligations, which clarifies that the term conditional asset retirement obligation, as used in SFAS No. 143 refers to a legal obligation to perform an asset retirement activity where the timing or method of settlement are conditional on a future event. Where the obligation to perform the asset retirement activity is unconditional, even though uncertainty exists about the timing or method of settlement, the entity is required to recognize a liability for the fair value of the conditional retirement obligation if reasonably estimable.  FIN No. 47 also clarifies when an entity would have sufficient information to reasonably estimate fair value.  At September 30, 2006, no asset retirement liabilities have been recorded by the Company.

k.

Certain amounts in the prior-period consolidated financial statements have been reclassified for comparative purposes to conform to current period presentation with no effect on previously reported net loss.

10

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

Summary of Significant Accounting Policies (continued):

l.   

In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which revised SFAS No. 123, Accounting for Stock-Based Compensation, and superseded APB Opinion 25, Accounting for Stock Issued to Employees, and its related implementation guidance.  SFAS No. 123R requires measurement and recording to the financial statements of the costs of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, recognized over the period during which an employee is required to provide services in exchange for such award.  Effective January 1, 2004, the Company adopted SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure.  As provided for under SFAS No. 148, the Company used the “modified prospective method” of transition. &nb sp;Under that method of transition the costs recognized in the financial statements for the quarters ended September 30, 2006 and 2005, are the same as if they had been based on their fair values at the grant date.  The Company recognized stock-based compensation of approximately $18,200 and $19,304 for the quarters ended September 30,2006 and September 30,2005, respectively.

For purposes of calculating the fair value of options, volatility for the two years presented is based on the historical volatility of the Company’s common shares over its public trading life.  The Company currently does not foresee the payment of dividends in the near term.  The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Quarter Ended

Quarter Ended

September 30,

September 30,

(2006)

(2005)

Weighted average risk-free interest rate

        4.71%

3.87%

Weighted average volatility

      58.91%

70.40%

Expected dividend yield

 -     

-

Weighted average expected life (in years)

   2.00    

2.00

At September 30, 2006, the Company had four stock option plans, which are described more fully in note 5.  

11

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 2 — STOCKHOLDERS’ EQUITY:

Common Stock:

In 2003, the Company sold 1,152,007 common shares for $1,267,207 ($1.10 per share).  In connection with the stock sales, the Company granted warrants to purchase up to 1,152,007 common shares at $1.20 per share through two years from the date of issue.  Cumulative warrants exercised relating to this issue at both September 30, 2006, and December 31, 2005, were 1,152,007.  

In 2004, the Company sold 1,285,000 common shares for $6,425,000 ($5.00 per share).  In connection with the stock sales, the Company granted warrants to purchase up to 511,000 common shares at $7.25 per share through five years from the initial exercise date.  The Company paid a cash finder’s fee of 7% of the gross offering funds received in the offering.  The finder also received 3% warrant compensation or warrants to purchase 192,750 common shares at $7.25 per share through February 18, 2009.  These warrants were repriced at $6.00 per share in October 2005, in accordance with the terms of the 2004 warrant agreement.  Cumulative warrants exercised relating to this issue at September 30, 2006, and December 31, 2005, were 145,750 and 40,000, respectively.

In 2005, the Company sold 1,016,667 common shares for $6,100,002 ($6.00 per share).  In connection with the stock sales, the Company granted warrants to purchase up to 737,084 common shares at $8.25 per share through five years from the initial exercise date.  To date, no warrants have been exercised.  The Company paid a cash finder’s fee of 7% of the gross offering funds received in the offering.  The finder also received a 3.75% warrant compensation or warrants to purchase 228,750 common shares at $8.25 per share through October 20, 2010.

In 2005, the Company also sold an additional 40,000 common shares for $240,000 ($6.00 per share).

Preferred Stock:

The Company has authorized 10,000,000 shares of no-par-value preferred stock.  Through September 30, 2006, the Company had not issued any shares of preferred stock.

NOTE 3 — MINING PROPERTIES:

Mining properties are comprised of acquisition, exploration, and development costs related to the Advance and Iroquois properties in the Northport region of northeastern Washington State and the Montanore property in northwestern Montana, as shown below:

September 30,   

December 31,

2006

2005

Montanore

$

278,519

$

278,519

Advance

2,139

2,139

Iroquois

    223,834

    223,834

$

  504,492

$

  504,492

12

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 3 — MINING PROPERTIES (continued):

The Montanore property (formerly the Noxon property) located in northwestern Montana includes 18 mining claims covering 355 acres plus one 5-acre patented mill site.  In August 2002, the Company acquired a controlling interest in the Montanore silver copper deposit in Sanders County, Montana.  The Company received a quitclaim deed from Noranda Mineral Corp. (Noranda) when Noranda elected to withdraw from the project.  The mineral rights acquired by the Company are subject to a $0.20 per ton royalty, and a 5% net profits royalty which would commence after the operator has recovered all of its exploration and development costs.  In December 2002, the Company received a quitclaim deed to all intellectual property connected with studies that Noranda carried out on the project.

The Advance property consists of 720 acres of patented mineral rights.  Although the Company does not own the overlying surface rights to its patented mineral rights, it does have right of access to explore and mine.

The Iroquois property consists of 64 acres of patented mineral and surface rights and 15 unpatented mining claims containing 300 acres.

NOTE 4 — INVESTMENTS:

The Company owns four $110,416 certificates of deposit and six $111,549 certificates of deposit for a total of $1,110,959.  These investments mature in 2008 and earn rates from 3.3% to 3.64%.  The Company owns ten $217,568 certificates of deposit and ten $108,361 certificates of deposit for a total of $3,259,293.  These investments mature in 2009 and earn rates of 4.21% and 4%, respectively.

The Company owns 45,000 free-trading shares of Bitterroot Resources, Ltd. (BTT), a public Canadian corporation traded on the Toronto Venture Exchange.  The shares are held as “available for sale.”  This investment is being recorded at fair market value with a corresponding adjustment to stockholders’ equity.  The 45,000 free-trading shares at September 30, 2006, and December 31, 2005, had an approximate market value of $16,142 and $15,057 U.S. funds, respectively.  The Company also owns 196,000 free-trading shares of Centram Exploration Ltd., a public Canadian corporation traded on the Toronto Venture Exchange.  The shares are held as “available for sale.”  The shares were received in 2002 in exchange for administrative services provided by the Company.  The 196,000 free-trading shares at September 30, 2006, and December 31, 2005, had an approximate market value of $27,244 a nd $10,089 U.S. funds, respectively.

NOTE 5 — STOCK OPTIONS:

During the year ended December 31, 1998, the stockholders of the Company approved two stock-based compensation plans: a fixed employee stock-based compensation plan and a performance-based plan.  Under the fixed plan, the Company may grant options to purchase up to 460,000 shares of common stock.  The exercise price shall not be less than the fair market value on the date of grant of the shares.  Stock options shall be exercisable within ten years from the date of the grant of the option.  Options under the fixed plan vest immediately.

At September 30, 2006, no 1998 nonqualified plan options were outstanding.

13

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 5 — STOCK OPTIONS (continued):

Under the performance based plan, the Company may grant options to purchase up to 460,000 shares of common stock.  The exercise price shall not be less than the fair market value on the date of grant of the shares.  Stock options shall be exercisable within ten years from the date of the grant of the option.  Options under the incentive plan vest immediately.

At September 30, 2006, no incentive-based plan options were outstanding.

During the year ended December 31, 2003, the stockholders of the Company approved two new stock-based compensation plans – the 2003 Stock Option Plan (which includes both qualified and nonqualified options) and the 2003 Consultant Stock Compensation Plan.  Under the 2003 Stock Option Plan, the Company may grant options to purchase up to 1,200,000 shares of common stock.  Under the 2003 Consultant Stock Compensation Plan the Company may grant options to purchase up to 400,000 shares of common stock.  During 2004, the Company increased the maximum number of common shares available under the 2003 Stock Option Plan and the 2003 Consultant Stock Compensation Plan to 3,000,000 and 700,000 shares, respectively.

Under both 2003 plans the exercise price shall be no less than 100% of the fair market value per share on the date of grant.  Stock options shall be exercisable within ten years from the date of the grant of the option.  Vesting of the options granted under both plans is at the prerogative of the Board of Directors.  Options granted under the plans in 2003 vest immediately except for options issued to Glenn Dobbs, President and Chairman of the Board of Directors. Options issued to Mr. Dobbs were 50% vested at year end December 31, 2003, and become fully vested upon completion of certain financing arrangements.  The options granted to Mr. Dobbs were fully vested at year end December 31, 2004.

At September 30, 2006, the following options granted under the 2003 plans were outstanding:

 Remaining

   Weighted

Contractual

Exercise

Number of

    Average

     Life

   Number

  Prices  

  Options   

Exercise Price

  (in years)   

Exercisable

$

1.60

500,000

$

1.60

1.43

500,000

1.85

100,000

1.85

1.91

100,000

3.95

20,000

3.95

2.73

20,000

4.65

475,000

4.65

2.59

475,000

3.75

220,000

3.75

3.26

120,000

3.93

155,000

3.93

3.34

155,000

4.01

214,000

4.01

3.66

214,000

4.92

15,000

4.92

3.97

0

5.70

5,000

5.70

3.72

5,000

6.20

175,000

6.20

4.70

175,000

6.21

30,000

6.21

4.91

10,000

6.34

100,000

6.34

4.21

50,000

   6.42

     200,000

   6.42

4.83

                0

Subtotal

2,209,000

$4.01

1,824,000

14

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 5 — STOCK OPTIONS (continued):

During January 2005, the Company issued 214,000 stock options to an individual as compensation for the performance of marketing services. The options have an exercise price of $4.01 and vested 25% at the time of issuance, 25% 60 days thereafter and the remaining balance on May 28, 2005.  The options expire five years from issuance.  

During February 2005, the Company issued 205,000 stock options to directors and employees.  The options have an exercise price of $3.93 and vest immediately.  The options expire five years from issuance.

During June 2005, the Company issued 25,000 stock options to an individual as compensation for the performance of consulting services.  The options have an exercise price of $5.70 and vested immediately.  The options expire five years from issuance.

During June 2005, the Company issued 25,000 stock options to an individual as compensation for the performance of consulting services.  The options have an exercise price of $5.99 per share, representing the share price at the close of trading on June 6, 2005, and vest 40% at the time of issuance (June 6, 2005), and 20% each on June 6 of 2006, 2007, and 2008.  The Company has a policy of re-pricing all incentive stock options as market conditions allow.  As a result, the above stock option grants on June 6, 2005, were cancelled and replaced by the same number of stock options at an exercise price of $4.92 per share representing the stock price as of the close of trading on September 7, 2005.

During December 2005, the Company issued 100,000 stock options to an officer.  The options have an exercise price of $6.34 per share, representing the share price at the close of trading on December 13, 2005, and vest 50% at the time of issuance (December 13, 2005) and 50% on December 13, 2006.

During June 2006, the Company issued 170,000 stock options to officers, directors, and employees and 5,000 stock options to an individual as compensation for the performance of consulting services.  The options have an exercise price of $6.20 and vest immediately.  The options expire five years from issuance.

During July and September 2006, the Company issued 200,000 stock options to directors and 30,000 to the new Project Engineer for the Montanore Project.  The options have an exercise price of $6.42 and $6.21, respectively.  The options issued to the directors vest over a two year period, 20,000 on July 9, 2007 and 20,000 on July 9,  2008 for each director.  The options issued to the new employee, 10,000 vest immediately, while the remaining 20,000 vest over a two year period, 10,000 on September 20, 2007 and 10,000 on September 20, 2008.  Fair value of the options is calculated using the Black-Scholes option-pricing model and is recognized as the options vest.

For purposes of calculating the fair value of options, volatility for the two years presented is based on the historical volatility of the Company’s common shares over its public trading life.  The Company currently does not foresee the payment of dividends in the near term.  The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Quarter Ended

Quarter Ended

September 30,

September 30,

(2006)

(2005)

Weighted average risk-free interest rate

4.71%   

3.87%

Weighted average volatility

    58.91%

70.41%

Expected dividend yield

-    

-

Expected lives (in years)

    2.00

2.00

Weighted average fair value (in dollars)

  $1.82

$1.99

15

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 5 — STOCK OPTIONS (continued):

The following summarizes option activity for the quarter ended September 30, 2006:

Weighted-Average

Shares

Exercise Price

Under Option

Per Share

Outstanding at June 30, 2006

1,979,000

$3.73

Granted

230,000

  6.39

Exercised

Forfeited

Expired

             -    

-    

Balance at September 30, 2006

2,209,000

$4.01

Options outstanding at September 30, 2006, have a remaining contractual life of approximately four years.

NOTE 6 — CONCENTRATION OF CREDIT RISK:

The Company maintains its cash and cash equivalents in one financial institution.  Balances are insured by the Federal Deposit Insurance Corporation up to $100,000.

NOTE 7 — DEFERRED INCOME TAX:

At September 30, 2006, and December 31, 2005, the Company had deferred tax assets which were fully reserved by valuation allowances.  Following are the components of such assets and allowances:

Sept. 30,

December 31,

2006

2005

Deferred tax assets arising from:

Net operating loss carry forwards

$

1,550,000

$

959,000

Stock option compensation

530,000

460,000

Accrued severance compensation

-    

2,000

2,080,000

1,421,000

Less valuation allowance

2,080,000

1,421,000

Net deferred tax assets

$

-    

$

-    

16

Mines Management, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 7 — DEFERRED INCOME TAX (continued):

For the periods presented, the effective income tax rate differed from the expected rate because of the effects of annual changes in the deferred tax asset valuation allowance.  Changes in the deferred tax asset valuation allowance for the third quarter ended September 30, 2006, and the year ended December 31, 2005, relate only to corresponding changes in deferred tax assets for those periods.

At September 30, 2006, the Company had federal tax-basis net operating loss carry forwards totaling approximately $10,300,000, which will expire in various amounts from 2006 through 2025.

NOTE 8 — COMMITMENTS:

On August 11, 2005, Mines Management was named as a co-defendant in a lawsuit filed by Montana Reserves Company (“MRC”) in the Superior Court of the State of Washington in Spokane County, Washington.  Named as co-defendants are Noranda Minerals, Normin Corp., Mines Management, and Newhi, Inc.  The action seeks damages in connection with the conveyance of the Montanore property from Noranda to Newhi, and challenges the computation of a net proceeds royalty payable to MRC pursuant to a Royalty Agreement between Noranda and MRC in respect to the Montanore property.  Management does not believe that the outcome of this lawsuit will have a material adverse effect.

NOTE 9 — BUSINESS COMBINATION:

On May 31, 2006 Noranda Finance Corporation and Newhi, Inc. executed a stock transfer agreement by which all issued and outstanding shares of capital stock for both Noranda Minerals Corporation and Normin Corporation have been transferred to Newhi, Inc.  Noranda Minerals Corporation and Normin Corporation are Delaware corporations registered to do business in Montana.  At the same time, Newhi submitted a $30,000 cash bond to the Montana Department of Environmental Quality (DEQ) to replace Noranda’s previous bond.  Subsequently, the official names of the companies where changed to Montanore Minerals Corporation and Montmin Corporation, respectively.  The existing Montana State Hard Rock Permit #00150 and MPDES permit MT-00320279 stayed in place with Montanore Minerals Corporation, formerly known as Noranda Minerals Corporation, which is now owned by Newhi, Inc., a wholly-owned subsidiary of the Company.

17

Item 2:  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Mines Management, Inc. (“MMI” or the “Company”) completed Phase 1 work authorized by a minor revision to the Hard Rock Mining Permit for the Libby Creek adit (Libby Adit), approved July 14, 2006 by the Montana DEQ, which involved opening the Libby Adit and initiating water treatability analyses. The first 600 feet of the Libby Adit was inspected and found to be in good shape and water samples were collected and sent for analysis.  Preliminary water treatability studies were completed.  Progress is being made with both the Montana DEQ and the U.S. Forest Service on the second minor revision to the Permit submitted in the second quarter of 2006, which, if approved, will authorize us to begin dewatering and rehabilitation of the Libby Adit and evaluation drilling.  Based on discussions and information submitted to those agencies, we anticipate receiving approval in the fourth quarter of 2006. Additional Mont anore Project staffing will be delayed until approval of the Phase II minor revision. The Montanore Project continues to be our primary focus: permitting, engineering optimization, reserve enhancement and project funding being emphasized through the end of the year.

Overview

In the third quarter of 2006, the Company

·

Completed the initial Montanore Project mining and milling cost studies, identifying critical areas of focus for project improvement and development.

·

Maintained strong cash and investment position with $6.5 million on hand at September 30, 2006.

·

Inspected the first 600 feet of the Libby Adit.

·

Collected water samples from the Libby Adit and completed preliminary bench scale testing for water treatment systems.

·

Continued work with state and federal agencies to provide technical information for the environmental impact statement process.

·

Began evaluation of financing alternatives to fund the adit rehabilitation and delineation drilling program for the Montanore Project.

In May 2006, the Company completed the acquisition of two companies now named Montanore Minerals Corporation and Montmin Corporation.  With these acquisitions came two key permits, including the Hard Rock Mining Permit referenced above, which allowed the Company to reopen the Libby Adit and, when minor permit revisions are approved, will allow the Company to continue its evaluation of the Montanore deposit.

The net cash expenditures for operating activities for the quarter ending September 30, 2006 was $1.4 million.  We believe that we have sufficient working capital for the next 18 months of operations at current levels.  We will require additional capital to complete the proposed evaluation drilling program.

Permitting and Environmental

During the third quarter of 2006, MMI continued to work with state and federal agencies on the EIS, transmission line, MPDES permit, air quality permit, and other permits necessary for exploration of the Montanore Project.  Significant progress was made on resolving outstanding technical and environmental issues and updated technical information and permit applications were submitted based on this progress.  

MMI finalized and submitted all technical responses to agency comments received last quarter, covering a wide range of technical aspects of the project.  Work continues on the Bear Creek road survey and design to support transfer of the road to Lincoln County.  

18

As noted above, in the second quarter of 2006, MMI submitted a second minor revision to the Hard Rock Mining Permit for the Libby Creek adit that addresses technical issues related to re-initiating the evaluation drilling program.  Following approval of the Phase I minor revision to that permit, received early in the third quarter of 2006, MMI initiated the acquisition and installation of surface facilities that will be required for the drilling program.  The agencies have completed several rounds of discussions on technical issues with respect to the drilling plan, including consultation between USFS and the U.S. Fish and Wildlife Service for a special use permit for road access to the site.  Approval for this stage of the project is expected to be received in the fourth quarter of 2006.

The Company’s EIS contractor continues to work on final sections of the EIS with specific attention to the project alternative analyses, environmental impacts, cumulative assessment and other aspects of the environmental review.  The Montana DEQ continues to work on both the Montana Pollution Discharge Elimination System (MPDES) permit application review and the power transmission line permitting effort.

MMI continues to meet with the Montana DEQ and the USFS to discuss technical issues and to perform other tasks as necessary to advance the permitting activities.

Geology

MMI is advancing  the orebody geologic structure interpretation and mine model development focusing on the various mineralized beds associated with the rock formations.  Previously input geologic structure information assisted in developing the three dimensional aspects of the bedding which is used to re-interpolate the B1 and B zones.  In addition, expansion of the mineralized zone, beyond the B1 and B zones, was initiated and was integral to the proposed evaluation drilling program submitted with the second miner revision to the Hard Rock Mining Permit.

Work is ongoing to refine the drilling program based on the advancements of the geologic computer model.

Engineering

The primary focus of our third quarter efforts were on the engineering and geology work necessary to support the planned evaluation drilling program.  Mine facilities, power requirements, ventilation, pumping systems, and other activities were all updated for the new drilling evaluation program. Initial discussions and bid solicitations were made to vendors and contractors for mine supplies and service contracts for the evaluation drilling program.

Engineering efforts for the third quarter were primarily focused on planning and preparation for the evaluation drilling program, updated information for the cost update review and optimization effort; along with additional technical support for the permitting.

Financial and Operating Results

Mines Management is an exploration stage company with a major silver/copper project, the Montanore Project, located in northwest Montana.  The Company continues to expense all of its expenditures and has no revenues from mining operations.  Financial results of operations include primarily interest income, general and administrative expenses, permitting and engineering expenses, and other miscellaneous.

Quarter Ended September 30, 2006

The Company reported a net loss for the quarter ended September 30, 2006 of $1.4 million or $0.11 per share compared to $1.2 million loss or $0.11 per share for the quarter ended September 30, 2005. The $0.2 million increased expenditures for the third quarter 2006 compared to third quarter 2005 were mainly attributable to increased activity for the Montanore Project permitting, technical studies, and preparation for the adit

19

rehabilitation and evaluation drilling program, which included administrative and legal expenses relating to the transfer of the Hard Rock Mining Permit #00150 following the acquisition of the Noranda companies in May 2006.  

Nine Months Ended September 30, 2006

The net loss for the first three quarters of 2006 was $4.0 million or $0.31 per share verses a net loss of $3.4 million or $0.31 for the same period in 2005. The year to date increase through September 30, 2006, versus September 30, 2005, was $0.6 million, again attributable to increased activity at the Montanore Project, partially offset by warrant and option income during the first quarter of 2006.

Liquidity

For the quarter ending September 30, 2006 the net cash used for operating activities was $1.4 million, which largely consisted of permitting, engineering and site preparation expenses for the Libby Creek adit rehabilitation and delineation drilling program.  The net decrease in cash on hand at the end of the second quarter 2006 was $1.7 million for the third quarter of 2006.  Year to date cash used in operating activities was $3.7 million and $0.3 million for investing activities was offset by proceeds from sale of stock from the exercise of warrants and stock options of $1.5 million resulting in a net decrease in cash of $2.5 million year to date through the third quarter 2006.  

The Company anticipates spending approximately $1.5 to $2.0 million from cash and investments on hand for the final quarter in 2006 to finalize permitting, engineering, the preliminary draft EIS, and the reopening of the Libby Creek adit for the Montanore Project.

Forward Looking Statements

Some information contained in or incorporated by reference into this report may contain forward looking statements.  These statements include comments regarding Montanore Project development, re-permitting, financing needs, 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.  We believe the expectations reflected in those forward looking statements are reasonable.  However, we 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 rep ort:

·

Worldwide economic and political events affecting the supply of and demand for silver and copper

·

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

·

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, 2005.

20

Item 3.  Quantitative and Qualitative Disclosures About Market Risk and Hedging Activities

All of our cash balances are held in U.S. dollars and our long term investment CDs are denominated in U.S. dollars in local and national banking institutions.  We manage the timing of cash required for review of the Montanore deposit, re-permitting, and engineering of the Montanore Project and for general corporate purposes utilizing our money market account and invest funds not immediately required in investments, currently in certificates of deposit with varying maturities and fixed early retirement costs of three months interest.  Our policy is to invest only in government and corporate grade securities rated “investment grade” or better.

The market prices of base and precious metals such as silver and copper fluctuate widely and are affected by numerous factors beyond the control of any mining company.  These factors included expectations with regard to the rate of inflation, the exchange rates of the dollar and other currencies, interest rates, global or regional political, economic or banking crises, and a number of other factors.  If the market price of silver or copper should decrease dramatically, the value of the Company’s Montanore Project could decline and the Company might not be able to recover its investment in that project.  The determination to develop or construct a mine would be made long before the first revenues from production would be received. Price fluctuations between the time that such decisions are made and the commencement of production could affect the economics of the mine.

Item 4. Controls and Procedures

Glenn M. Dobbs, MMI’s President and CEO, and James H. Moore, MMI’s Chief Financial Officer and Treasurer, have evaluated MMI’s disclosure controls and procedures as of September 30, 2006.  Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that MMI’s disclosure controls and procedures are designed, and were effective as of September 30, 2006 to give reasonable assurances that the information required to be disclosed in the reports that MMI files or submits under the Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and that such information is also accumulated and communicated to MMI’s management, including its Chief Executive Officer and Chief Financial Officer.

There were no changes in MMI’s internal controls or, to the knowledge of the management of MMI, any other changes that materially affect, or are reasonably likely to materially affect, MMI’s internal control over financial reporting. MMI engaged an outside firm in the third quarter of 2006 to augment its own internal accounting resources and to provide expertise in applying GAAP to new or complex accounting issues as an integral part of its ongoing system of internal controls over financial reporting.

21

PART II: OTHER INFORMATION

Item 1.

Legal Proceedings

On August 11, 2005, Mines Management was named as a co-defendant in a lawsuit filed by Montana Reserves Company (“MRC”) in the Superior Court in Spokane County Washington., Named as co-defendants are Noranda Minerals, Normin Corp., Mines Management and Newhi, Inc.  The action seeks damages in connection with the conveyance of the Montanore property from Noranda to Newhi, and challenges the computation of a net proceeds royalty payable to MRC pursuant to a Royalty Agreement between Noranda and MRC in respect to the Montanore property.  Management does not believe that the outcome of this lawsuit will have a material adverse effect on Mines Management’s business or results of operations.

Item 1a. Risk Factors

There are no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ending December 31, 2005.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.

Defaults Upon Senior Securities

None

Item 4.

Submission of Matters to a Vote of Security Holders

None

Item 5.

Other Information

None

Item 6.

Exhibits

(a)

Exhibits:

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act  

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act)

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act)

22

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned thereunto duly authorized.

Date :November 10, 2006	/s/ Glenn M. Dobbs By:                                                                            Glenn M. Dobbs President and Chief Executive Officer
Date:  November 10, 2006	/s/ James H. Moore By:                                                                            James H. Moore Chief Financial Officer

23

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Glenn M. Dobbs, certify that:

1.

I have reviewed this Form 10-Q of Mines Management, Inc. (the “registrant”);

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 10, 2006

/s/ Glenn M. Dobbs

Glenn M. Dobbs

Chief Executive Officer

1

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, James H. Moore, certify that:

1.

I have reviewed this Form 10-Q of Mines Management, Inc. (the “registrant”);

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 10, 2006

/s/ James H. Moore

James H. Moore

Chief Financial Officer

1

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Mines Management, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Glenn M. Dobbs

Glenn M. Dobbs

Chief Executive Officer

Date:  November 10, 2006

A signed original of this written statement required by Section 906 has been provided to Mines Management, Inc. and will be retained by Mines Management, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

1

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Mines Management, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ James H. Moore

James H. Moore

Chief Financial Officer

Date: November 10, 2006

A signed original of this written statement required by Section 906 has been provided to Mines Management, Inc. and will be retained by Mines Management, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

1