10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 001-32074

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 o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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

At August 14, 2015, 29,814,040 common shares, par value $0.001 per share, were issued and outstanding.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

Information contained in or incorporated by reference into this Quarterly Report on Form 10-Q may contain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995.  The use of any of the words “development”, “anticipate”, “continues”, “estimate”, “expect”, “may”, “project”, “should”, “believe”, or similar expressions are intended to identify such statements.  Forward-looking statements included in this report relate to, among other things, comments regarding further exploration and evaluation of the Montanore Project, including drilling activities, engineering and environmental studies, environmental, reclamation and permitting requirements and the process and timing and the costs associated with the foregoing; the process and timing associated with the Montanore Project permitting process, including the issuance of a final environmental impact statement and a record of decision; financing needs, including the financing required to fund the Company’s ongoing activities, sources of financing and the effect of existing and future financing structures on future financing, joint venture or business combination transactions; planned expenditures and cash requirements for the remaining two quarters of 2015 and efforts to reduce costs, including reducing manpower; and future plans relating to the potential structures for continued exploration and potential development of the Montanore deposit.  We believe the expectations reflected in those forward-looking statements are reasonable.  However, we cannot assure that the expectations will prove to be correct.  Certain cautionary statements are also included elsewhere in this report, including, without limitation, in conjunction with the forward-looking statements.  All forward-looking statements speak only as of the date made.  All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements.  Except as required by law, we undertake no obligation to update any forward-looking statements.  Factors that could cause actual results to differ materially from our expectations include, among others, those factors referenced in the “Risk Factors” section of this report and our Annual Report on Form 10-K for the year ended December 31, 2014 and such things as:

·the need for additional financing to continue our business and complete the underground evaluation program and whether such financing will be available on acceptable terms or at all;

·terms of proposals the Company may receive relating to the acquisition or joint venture development of the Montanore project;

·financial market conditions and the availability of financing, or its availability on terms acceptable to us;

·the history of losses, which we expect to continue for the foreseeable future;

·the potential depressive effect of the potential issuances of common stock or securities exercisable or convertible to common stock on the market price of our common stock;

·future dilution of shareholders by the exercise of warrants or options, and the depressive effect on the stock price of the existence of a significant number of outstanding warrants and options;

·the absence of proven or probable reserves, and uncertainty regarding whether reserves will be established at our Montanore Project;

·the speculative nature of exploration for mineral resources, including variations in ore grade and other characteristics affecting mining and mineral recoveries, which involves substantial expenditures and is frequently non-productive;

·the availability, terms, conditions, costs, timing of, or delays in receiving required governmental permits and approvals;

·challenges by environmental groups and others to the issuance of the biological opinion and potential challenges to other steps in the exploration and development of the Montanore Project;

·the competitive nature of the mining industry;

·changes in geological information and the interpretation thereof;

·worldwide economic and political events affecting the supply of and demand for silver and copper and volatility in the market price for silver and copper;

·ongoing reclamation obligations on the Montanore Project properties;

·significant government regulation of mining activities;

·environmental risks;

·uncertainty regarding title to some of our properties;

·the volatility of the market price of our common stock;

·the availability of experienced employees;

·other factors, many of which are beyond our control.

MINES MANAGEMENT, INC.

FORM 10-Q

QUARTER ENDED JUNE 30, 2015

INDEX

		Page
PART I — FINANCIAL INFORMATION
ITEM 1.	Financial Statements (unaudited)	i
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	12
ITEM 4.	Controls and Procedures	12
PART II — OTHER INFORMATION
ITEM 1.	Legal Proceedings	13
ITEM 1A.	Risk Factors	14
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
ITEM 3.	Defaults Upon Senior Securities	14
ITEM 4.	Mine Safety Disclosures	14
ITEM 5.	Other Information	14
ITEM 6.	Exhibits	14
SIGNATURES		15

PART I— FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

Contents

	Page
FINANCIAL STATEMENTS (unaudited):
Condensed consolidated balance sheets	1
Condensed consolidated statements of operations	2
Condensed consolidated statements of comprehensive loss	3
Condensed consolidated statements of cash flows	4
Notes to condensed consolidated financial statements	5-9

i

Mines Management, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30,2015			December 31,2014
Assets
CURRENT ASSETS:
Cash and cash equivalents	$	1,111,410		$	3,862,462
Interest receivable	2,205			4,484
Prepaid expenses and deposits	356,836			307,951
Total current assets	1,470,451			4,174,897
PROPERTY AND EQUIPMENT:
Buildings and leasehold improvements	836,454			836,454
Equipment	6,361,318			6,361,318
Office equipment	344,657			343,897
	7,542,429			7,541,669
Less accumulated depreciation	7,040,555			6,997,153
	501,874			544,516
OTHER ASSETS:
Available-for-sale securities	5,074			2,467
Reclamation deposits	1,184,966			1,184,966
	1,190,040			1,187,433
	$	3,162,365		$	5,906,846
Liabilities and Stockholders’ Equity
CURRENT LIABILITIES:
Accounts payable	$	258,865		$	326,570
Payroll and payroll taxes payable	17,474			18,141
Dividends payable	52,890			52,890
Total current liabilities	329,229			397,601
LONG-TERM LIABILITIES:
Asset retirement obligation	515,511			503,279
Total liabilities	844,740			900,880
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred shares — no par value, 10,000,000 shares authorized; Series B 6% convertible preferred shares — $1,000 stated value, 3,526 shares issued and outstanding	3,526,000			3,526,000
Common shares — $0.001 par value, 100,000,000 shares authorized; 29,814,040 shares issued and outstanding	29,814			29,814
Additional paid-in capital	87,850,408			87,685,232
Accumulated deficit	(89,082,506		)	(86,226,382		)
Accumulated other comprehensive losses	(6,091		)	(8,698		)
Total stockholders’ equity	2,317,625			5,005,966
	$	3,162,365		$	5,906,846

See accompanying notes to condensed consolidated financial statements.

1

Mines Management, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
REVENUE:
Royalties	$	—		$	7,627		$	—		$	14,918
OPERATING EXPENSES:
General and administrative	509,478			700,228			1,061,380			1,291,863
Technical services	418,416			604,421			841,374			1,086,339
Depreciation	15,565			206,091			43,402			412,792
Legal, accounting, and consulting	291,865			328,208			757,489			534,912
Fees, filing, and licenses	2,560			5,397			50,360			73,166
Total operating expenses	1,237,884			1,844,345			2,754,005			3,399,072
LOSS FROM OPERATIONS	(1,237,884		)	(1,836,718		)	(2,754,005		)	(3,384,154		)
OTHER INCOME:
Gain from sale of property and equipment	—			11,900			—			11,900
Interest income, net	1,553			2,481			3,661			6,206
	1,553			14,381			3,661			18,106
NET LOSS	(1,236,331		)	(1,822,337		)	(2,750,344		)	(3,366,048		)
CUMULATIVE PREFERRED STOCK DIVIDENDS	(52,890		)	—			(105,780		)	—
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(1,289,221	)	$	(1,822,337	)	$	(2,856,124	)	$	(3,366,048	)
NET LOSS PER SHARE (basic and diluted)	$	(0.04	)	$	(0.06	)	$	(0.09	)	$	(0.12	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (basic and diluted)	29,814,040			29,179,030			29,814,040			29,108,403

See accompanying notes to condensed consolidated financial statements.

2

Mines Management, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Net Loss	$	(1,236,331	)	$	(1,822,337	)	$	(2,750,344	)	$	(3,366,048	)
Adjustment to net unrealized gain (loss) on marketable securities	1,627			964			2,607			(6,977		)
COMPREHENSIVE LOSS	$	(1,234,704	)	$	(1,821,373	)	$	(2,747,737	)	$	(3,373,025	)

See accompanying notes to condensed consolidated financial statements.

3

Mines Management, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,750,344	)	$	(3,366,048	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	165,176			143,038
Depreciation	43,402			412,792
Accretion of asset retirement obligation	12,232			11,654
Gain on sale of property and equipment	—			(11,900		)
Changes in assets and liabilities:
Interest receivable	2,279			4,783
Prepaid expenses and deposits	(48,885		)	(62,605		)
Accounts payable	(67,705		)	301,211
Payroll and payroll taxes payable	(667		)	5,852
Net cash used in operating activities	(2,644,512		)	(2,561,223		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of property and equipment	—			12,213
Purchase of property and equipment	(760		)	—
Proceeds from certificates of deposit	—			1,565,577
Net cash provided by (used in) investing activities	(760		)	1,577,790
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sales of common stock	—			177,750
Cumulative preferred stock dividends	(105,780		)	—
Net cash provided by (used in) financing activities	(105,780		)	177,750
NET DECREASE IN CASH AND CASH EQUIVALENTS	(2,751,052		)	(805,683		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	3,862,462			4,145,092
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	1,111,410		$	3,339,409
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Accrual of cumulative preferred stock dividends	$	52,890		$	—

See accompanying notes to condensed consolidated financial statements.

4

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations:

Mines Management, Inc. (the Company) is an Idaho corporation incorporated in 1947.  The Company acquires, explores, and develops mineral properties in North America.  The Company’s principal mineral property interest, the Montanore Project, is held by its wholly owned subsidiaries, Newhi Inc. and Montanore Minerals Corp.  The Company’s properties, including the Montanore property are currently in the exploration stage; none of its properties are currently in production.  The Company has commenced re-permitting of the Montanore Project and is determining its feasibility for development.  Approval by regulatory agencies will be required before the Montanore Project can proceed with exploration and project development.  The Company’s business, operations and financial condition are subject to significant risks and uncertainties, including failing to secure additional funding to continue its business or execute its planned advanced evaluation and delineation drilling program at the Montanore Project.

Summary of Significant Accounting Policies:

These unaudited interim financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, as well as the instructions to Form 10-Q.  Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting solely of normal recurring adjustments) considered necessary for a fair presentation of the interim financial statements have been included.

The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s condensed consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company’s consolidated financial position and results of operations. Operating results for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015.

For further information, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

(a)Going concern

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern and do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. The Company is an exploration stage company and has incurred losses since the inception of its exploration stage.  The Company currently does not have a recurring source of revenue sufficient to fund normal operations and its ability to continue as a going concern is dependent on the Company’s ability to secure sufficient funding for its future exploration and working capital requirements, which may include the sale of its equity or debt securities, and the eventual profitable exploitation of its mining properties.  The Company’s plans for the long-term continuation as a going concern include securing additional external funding and the eventual profitable operation of its mining property.  There can be no assurance that the Company will succeed in securing additional funding on terms acceptable to the Company or at all, or in generating future profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

(b)Mining properties, exploration and development costs

All exploration expenditures are expensed as incurred.  Significant property acquisition payments for active exploration properties are capitalized, including payments to acquire mineral rights.  Once a feasibility study has been completed and approved by management, and a decision is made to put the ore body into production, 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 the units of production basis over proven and probable reserves.  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.

5

(c)Fair value measurements

The Company discloses the inputs used to develop the fair value measurements for the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as well as the level within the fair value hierarchy in which the fair value measurements in their entirety fall.  The three levels of the fair value hierarchy are as follows:

Level 1:  Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2:  Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

Level 3:  Unobservable inputs due to the fact that there is little or no market activity.

(d)Stock compensation

The Company measures and records 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.  Compensation cost is recognized for awards granted and for awards modified, repurchased or cancelled.

(e)Net loss per share

Basic earnings or loss per share is computed on the basis of the weighted average number of shares outstanding during the period.  Diluted earnings or loss per share is calculated on the basis of the weighted average number of shares outstanding during the period plus the effect of potential dilutive shares during the period.  Potential dilutive shares include outstanding stock options and warrants.  For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive.  Therefore, basic loss per share is the same as diluted loss per share for the periods ended June 30, 2015 and 2014.

(f)Recent Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued guidance with regard to Development Stage Entities which eliminates the requirement for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The Company adopted the provisions of this guidance effective January 1, 2015. Adoption of this update is expected to affect only the presentation and disclosures of the Company’s consolidated financial statements.

In August 2014, the FASB issued a new going concern standard which defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Adoption of this update is expected to affect only the presentation and disclosures of the Company’s consolidated financial statements.

(g)Subsequent events

The Company evaluated events and transactions subsequent to the balance sheet date of June 30, 2015 for potential recognition or disclosure in the condensed consolidated financial statements.

NOTE 2 — CERTIFICATE OF DEPOSIT:

The Company has a certificate of deposit in the amount of $1,124,055 pledged as security for a Letter of Credit to the Montana Department of Environmental Quality as a reclamation guarantee for the Montanore expansion evaluation program.  This certificate matures on January 3, 2016, bears interest at the rate of 0.40% and renews automatically each year.  This certificate of deposit is included with reclamation deposits on the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014.

6

NOTE 3 — AVAILABLE-FOR-SALE SECURITIES:

Available-for-sale securities are comprised of common stocks which have been valued using quoted market prices in active markets.  The following table summarizes the Company’s available-for-sale securities:

	June 30, 2015			December 31, 2014
Cost	$	11,165		$	11,165
Unrealized Losses	(6,091		)	(8,698		)
Fair Market Value	$	5,074		$	2,467

NOTE 4 — FAIR VALUE MEASUREMENTS:

The following table summarizes the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2015, and the fair value calculation input hierarchy level determined to apply to each asset and liability category. Quoted market prices were used to determine the fair value of available-for-sale securities. The Company has no financial assets or liabilities that are measured at fair value on a nonrecurring basis.

	June 30, 2015		December 31, 2014		Input Hierarchy Level
Assets:
Available-for-sale securities	$	5,074	$	2,467	Level 1
Liabilities:
Asset retirement obligation	$	515,511	$	503,279	Level 3

The following table presents the fair value reconciliation of Level 3 liabilities measured at fair value during the six months ended June 30, 2015 and 2014:

	Asset Retirement Obligation
	2015		2014
Balance January 1	$	503,279	$	479,488
Accretion expense	6,046		5,760
Balance March 31	509,325		485,248
Accretion expense	6,186		5,894
Balance June 30	$	515,511	$	491,142

NOTE 5 — CONCENTRATION OF CREDIT RISK:

The Company maintains most of its cash and cash equivalents in one financial institution.  To date, the Company has not experienced a material loss or lack of access to its invested cash or cash equivalents; however, no assurance can be provided that access to the Company’s invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets. The total uninsured bank deposit balance on the Company’s bank statements was approximately $2,050,000 as of June 30, 2015.

NOTE 6 — STOCKHOLDERS’ EQUITY:

Common Shares:

For a description of the public offerings and sales of common stock that occurred prior to 2014, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Preferred Shares:

The Company sold to one investor 4,000 units consisting of one share of the Company’s Series B 6% convertible preferred stock, no par value, and a warrant to purchase the Company’s common stock, par value $0.001 per share, at a stated value of $1,000 per unit.  Each share of Series B convertible preferred stock is immediately convertible into shares of common stock at a conversion rate of approximately 1,271 shares of common stock for each share of Series B convertible preferred stock (equivalent to a conversion price of $0.7866 per share of common stock).  The conversion rate is subject to downward adjustment upon the Company issuing or selling shares of the Company’s common stock for a per share price less than the then applicable conversion rate.  The offering yielded gross proceeds, before offering expenses, of $4.0 million (net proceeds of $3.5 million after deducting placement agent and investor fees

7

and expenses and other offering expenses).  The preferred stock has no voting rights but will entitle the holders to receive cumulative dividends at the rate of 6% per annum per share, payable quarterly.  The dividends are payable in either cash or common stock at the Company’s discretion.  As of June 30, 2015, 474 shares of the Series B 6% convertible preferred stock had been converted into 602,592 shares of common stock.  Upon the occurrence of certain events the Company believes are within its control, the holders of the preferred shares may have the option to require the Company to redeem them at a price greater than the stated value, convert them into common shares at penalty rates or increase the dividend rate to 18% per annum.

Warrants:  Each warrant is immediately exercisable and allows the holder to purchase approximately 636 shares of the Company’s common stock.  The warrants are not listed on a national securities exchange and do not have the rights or privileges of a holder of common stock, including any voting rights, until the holder exercises the warrant.  Upon the occurrence of a Fundamental Transaction, as defined in the warrant, the Company or its successor may be required to purchase the unexercised portion of the warrant from the warrant holder.  The Company does not currently anticipate that this will occur.  The following table summarizes exercise prices and expiration dates of outstanding common stock purchase warrants as of June 30, 2015.

Number of Warrants	Exercise Price Per Share		Expiration Date
4,000	$	1.0816	November 30, 2018

Liquidation:  Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of the preferred stock are entitled to receive distributions out of the Company’s assets, whether capital or surplus, before any distributions may be made on any other outstanding classes of stock.  The amount received by holders of the preferred stock will be equal to the stated value of $1,000 per share of preferred stock plus any accrued and unpaid dividends thereon, and any other fees or liquidated damages then due and owing.

NOTE 7 — STOCK OPTIONS:

For a description of the Company’s Equity Incentive Plans, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. A summary of the option activity under the Company’s Equity Incentive Plans as of June 30, 2015, and changes during the period then ended, is presented below:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2015	4,876,000		$	1.31
Forfeited or expired	(539,000	)	$	2.48
Outstanding at March 31, 2015 and June 30, 2015	4,337,000		$	1.16	2.82	$	—
Exercisable at June 30, 2015	3,987,000		$	1.21	2.65	$	—

The fair value for each option award is estimated at the date of grant using the Black-Scholes option-pricing model. Volatility for the periods presented is based on the historical volatility of the Company’s common shares over the expected life of the option. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company does not foresee the payment of dividends in the near term.

8

	Three Months Ended June 30,					Six Months Ended June 30,
	2015(1)		2014			2015(1)		2014
Weighted average risk-free interest rate	—		0.91		%	—		0.91		%
Weighted average volatility	—		73.08		%	—		73.08		%
Expected dividend yield	—		—			—		—
Weighted average expected life (in years)	—		3.0			—		3.0
Weighted average grant-date fair value	$	—	$	0.44		$	—	$	0.44

(1)No options were granted during the six months ended June 30, 2015.

During the six months ended June 30, 2015 there were no stock options exercised.  During the three months ended June 30, 2014, there were 50,000 stock options exercised with a weighted average exercise price of $0.99 and a total intrinsic value of $3,000.  During the six months ended June 30, 2014, there were 237,000 stock options exercised with a weighted average exercise price of $0.90 and a total intrinsic value of $88,724.

A summary of the status of the Company’s nonvested options as of June 30, 2015 and changes during the period then ended is presented below:

	Number of Options		Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2015 and March 31, 2015	900,000		$	0.28
Vested	(550,000	)		0.31
Nonvested at June 30, 2015	350,000			0.24

As of June 30, 2015, there was $11,273 of unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Company’s Equity Incentive Plans.  The cost is expected to be recognized over a weighted-average period of less than one year.

Total compensation costs recognized for stock-based employee compensation awards was $37,376 and $96,556 for the three months ended June 30, 2015 and 2014, respectively. Total compensation costs recognized for stock-based employee compensation awards was $165,176 and $133,842 for the six months ended June 30, 2015 and 2014, respectively. These costs were included in general and administrative expenses and technical services and exploration expenses on the Condensed Consolidated Statements of Operations.  Total costs recognized for stock-based compensation awards for services performed by outside parties were $0 and $3,677 during the three months ended June 30, 2015 and 2014, respectively.  Total costs recognized for stock-based compensation awards for services performed by outside parties were $0 and $9,196 during the six months ended June 30, 2015 and 2014, respectively.  Cash received from options exercised under all share-based payment arrangements during the six months ended June 30, 2015 and 2014 was $0 and $177,750, respectively.

NOTE 8 — SUBSEQUENT EVENTS:

On July 1, 2015, the Company received a letter from NYSE MKT LLC (“NYSE MKT” or the “Exchange”) stating that it is not in compliance with the continued listing standards as set forth in Section 1003(a)(i-iv) of the NYSE MKT Company Guide. In order to maintain its listing, the Company submitted a plan on August 3, 2015, in accordance with the Exchange’s requirement, which addresses how it intends to regain compliance with Section 1003(a)(i-iv) of the Company Guide by December 31, 2016 for equity standards and December 31, 2015 for the financial impairment standard.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2014, as well as with the financial statements and related notes and the other information appearing elsewhere in this report.  As used in this report, unless the context otherwise indicates, references to “we,” “our,” the “Company” and “us” refer to Mines Management, Inc. and its subsidiaries collectively.

Mines Management, Inc. is an exploration stage company with a large silver-copper project, the Montanore Project, located in northwestern Montana.  The Montanore Project continues to be the Company’s main focus.  The Company’s goal is to become a mid-tier producer of precious or base metals, or to pursue a joint venture of the Montanore project or other strategic alternatives.  During 2015, the Company has continued to plan for the advanced exploration and delineation drilling program at the Montanore Project, and has continued its pursuit of federal and state agency permitting approvals.

Overview

·The Company’s cash reserves as of June 30, 2015 are estimated to be sufficient to continue operations through mid-September 2015.  Accordingly, the Company is seeking financing and may consider a joint venture of

9

the Montanore Project or other strategic alternatives.  If the Company were to issue equity at the current stock price, the conversion price of the existing Series B 6% convertible preferred stock, would be adjusted downward to equal the issuance price, resulting in an increase in the number of shares of common stock issuable on conversion of the convertible preferred stock.  There can be no assurance that the Company will be successful in obtaining financing or entering into another type of transaction that will permit it to continue its business, or that the terms of any such financing or transaction would not make future financings or transactions more difficult or otherwise limit the Company’s flexibility or opportunities in the future.  Although third parties have expressed interest in various transactions regarding the Company or the Montanore Project, and the Company has also sought indications of interest from third parties, the Board has not considered any proposals received to be in the best interests of the Company’s stockholders.

·The U.S. Forest Service (“USFS”) and the Montana Department of Environmental Quality (“MDEQ”) provided legal notice to the public on April 1, 2015 announcing the availability of the Final Environmental Impact Statement (“EIS”) and Draft Record of Decision (“ROD”).  This initiated a 45 day public objection and resolution process, which ended May 15, 2015.  The USFS has completed its review of the comments and issued a response letter requiring clarifying comments to be added to the Final EIS and Final ROD.  The Company expects the permitting to be completed by late 2015 or early 2016.

·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 Final EIS and although not required for the Final EIS, it is required prior to beginning construction of the tailings impoundment dam.

·In May 2015, the Commissioners appointed by the U.S. District Court for the District of Montana, Missoula Division to determine just compensation for the Company’s easements across certain unpatented non- mineralized claims in the area of the Montanore Project following the conclusion of the trial in April, 2015, reported that claim-holders have lost no value and are due no compensation from the Company.  On August 7, 2015, the U.S. District Court issued its final ruling affirming the Commissioners’ report.  See Part II, Item 1, Legal Proceedings for further details.

·On July 1, 2015, the Company received a letter from NYSE MKT LLC (“NYSE MKT” or the “Exchange”) stating that it is not in compliance with the continued listing standards as set forth in Section 1003(a)(i-iv) of the NYSE MKT Company Guide. In order to maintain its listing, the Company submitted a plan on August 3, 2015, in accordance with the Exchange’s requirement, which addresses how it intends to regain compliance with Section 1003(a)(i-iv) of the Company Guide by December 31, 2016 for equity standards and December 31, 2015 for the financial impairment standard.

Montanore Permitting and Environmental

Approval by regulatory agencies is 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 Final EIS before a ROD is issued by the USFS and MDEQ.  The Final EIS 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 Final EIS is used by the State of Montana to support issuance of the ROD and other permits.

On April 1, 2015, the USFS and MDEQ provided legal notice to the public announcing the availability of the Final EIS and Draft ROD.  Following this public notice, the objection process commenced.  The objection process is a new program replacing the previous USFS appeal program.  Under the objection process, individuals or organizations with legal standing had 45 days, or until May 15, 2015, to provide the agencies with objections to the Final EIS and Draft ROD and their proposed resolutions to address their concern.  The USFS has completed its review of the comments and issued a response letter requiring clarifying comments to be added to the Final EIS and Final ROD.  After this has been completed, the USFS should file a Notice of Availability in the Federal Register indicating that the Final EIS and Final ROD have been issued.  The State of Montana will then issue its version of the Final ROD in accordance with the Montana Environmental Policy Act.  Receipt of the federal and Montana Final RODs provide the necessary authorizations for the Company to complete dewatering and proceed with underground drilling at the Montanore Project contingent upon meeting environmental mitigation requirements.

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 U.S. are impacted by a proposed action, in this case by the project tailings impoundment.  The Company completed a compensatory mitigation plan for aquatic resources affected by the proposed tailings impoundment which was accepted by the USACE as complete during 2014.  It is anticipated the USACE will make a permit decision shortly after the Final EIS is issued.  The State of Montana must certify the USACE Section 404 authorization through the Section 401 certification process before the USACE

10

can issue a permit.  The State has been involved throughout the 404 review process and continues to work with the USACE during 2015.  The Company expects the 404 permit will be issued subsequent to the issuance of the Final 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, the Company expects these permits to be issued following issuance of the Final EIS and ROD.

In June 2015, Save Our Cabinets, Earthworks, and Defenders of Wildlife filed a complaint in the United States District Court for the District of Montana challenging the issuance of the Biological Opinion regarding the Montanore Project by the USFWS.  The USFWS has not yet responded to the complaint.  The Company is not a party to this litigation.  The Company does not currently expect that this litigation will delay the USFS objection and resolution process related to the issuance of the Final ROD.

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 June 30, 2015

The Company reported operating expenses of $1.2 million compared to $1.8 million for the quarters ended June 30, 2015 and 2014, respectively, which is a decrease of $0.6 million.  The decrease in operating expenditures includes a $0.2 million decrease in general and administrative expenses which was primarily due to decreases in director compensation and stock compensation costs during 2015.  There was also a $0.2 million decrease in technical services primarily associated with a reduction in fees paid to contractors and consultants working on the Environmental impact Study (“EIS”) as well as a decrease in the baseline studies associated with the EIS, and a reduction in stock compensation cost during 2015.  The $0.2 million decrease in depreciation was a result of assets reaching the end of their depreciable lives and limited acquisitions of property and equipment during the past few years.

Six Months Ended June 30, 2015

The Company reported a decrease in operating expenses of $0.6 million during the six months ended June 30, 2015 compared to the six months ended June 30, 2014.  The decrease in operating expenses consisted of a $0.2 million decrease in each of general and administrative expenses and technical services, a decrease of $0.4 million in depreciation, offset by an increase of $0.2 million in legal, accounting, and consulting expenditures.  The $0.2 million decrease in general and administrative expenses included a decrease in payroll expenditures of $0.1 million as a result of having one less employee during the first six months of 2015 compared to the first six months of 2014 and a $0.1 million decrease in director compensation during 2015 compared to 2014.  The $0.2 million decrease in technical services during 2015 primarily consisted of a reduction in fees paid to contractors and consultants working on the EIS as well as a reduction in the baseline studies associated with the EIS.  The $0.4 million decrease in depreciation resulted from assets reaching the end of their depreciable lives with limited acquisitions of property and equipment during the past few years. The increase of $0.2 million in legal, accounting, and consulting expenditures primarily resulted from the litigation matter described in Part II, Item I, Legal Proceedings.

Liquidity

During the six months ended June 30, 2015, the net cash used in operating activities was approximately $2.6 million, which was comparable to the same period in the prior year.  Net cash utilized by financing activities during the six months ended June 30, 2015 consisted of the payment of $0.1 million cumulative preferred stock dividends. The Company’s cash and cash equivalents decreased during the six months ended June 30, 2015 from $3.9 million at December 31, 2014 to approximately $1.1 million at June 30, 2015.  Net cash provided by investing and financing activities amounted to $1.8 million during the six months ended June 30, 2014 and included certificates of deposit maturing and proceeds from common stock options exercised.

We do not currently have enough cash on hand to fund ongoing operating expenses, estimated at approximately $2.2 million for the final two quarters of 2015, consisting of approximately $0.6 million in each quarter for ongoing operating, legal, and general administrative expenses and $0.6 and $0.4 million in the third and fourth quarters, respectively, for permitting, environmental, engineering, and geologic studies for the Montanore Project.  Additional financing will be required for the Company to continue its business and operations.  Accordingly, the Company is seeking financing and may consider a joint venture of the Montanore Project or other strategic alternatives.  Although third parties have expressed interest in various transactions regarding the Company or the Montanore Project, and the Company has also sought indications of interest from third parties, the Board has not considered any proposals received to be in the best interests of the Company’s stockholders.  There can be no assurance that the Company will be successful in obtaining financing or entering into another type of transaction that will permit it to continue its business, or that the terms of any such financing or transaction would not make future financings or transactions more difficult or otherwise limit the Company’s flexibility or opportunities in the future.  There can be no assurance that any financing obtained will

11

not be highly dilutive to existing stockholders.  In addition, it is uncertain that the amount of any available financing would enable the Company to continue its business and operations for more than a few months, which would be unlikely to satisfy the NYSE MKT listing requirements.  In addition, if the financing involves the sale of equity securities at the current market price or at a discount to the current market price, the conversion price of the existing Series B 6% convertible preferred stock would be adjusted downward to equal the sale price of the financing, resulting in an increase in the number of shares of common stock issuable on conversion of the convertible preferred stock.  Following any such financing, we would still be required to obtain external financing in the range of $25 million to $30 million to complete the evaluation drilling program at the Montanore Project and a bankable feasibility study.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our cash balances and our long term investment certificates of deposit are denominated in U.S. dollars in local and national banking institutions.  We manage the timing of cash required for review of the permitting and engineering of the Montanore Project and for general corporate purposes utilizing our money market account.  Our policy is to invest only in government 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 include expectations with regard to the rate of inflation, the exchange rates of the U.S. 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, the value of the Company’s Montanore Project could decline and the Company might not be able to recover its investment in that project.  Any 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

Our management, with the participation of the Company’s Chief Executive Officer and the Company’s Controller and Principal Financial Officer, has evaluated the Company’s disclosure controls and procedures as of June 30, 2015.  Based upon this evaluation, the Chief Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures are designed and were effective as of June 30, 2015 to give reasonable assurances that the information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is also accumulated and communicated to the Company’s management, including its Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2015 that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

In September 2007, we filed a declaratory judgment action, Mines Management, Inc., Newhi, Inc. and Montanore Minerals Corp. v. Tracie Fus et al., Cause No. DV 07-248 in Montana Nineteenth Judicial District Court, Lincoln County. In this action we sought a Court judgment against certain of the defendants that the unpatented mining claims of such defendants, allegedly located above portions of our Libby adit and overlapping certain of our patented and unpatented mining claims, mill sites and tunnel sites are invalid. The defendants subsequently asserted trespass claims against us relating to our use of certain of our mining claims, mill sites and the adit. The parties participated in a mediation in 2009 which resulted in a settlement with seven of the ten defendants. On March 21, 2013, the Court issued an order (i) enforcing the settlement with seven of the ten defendants, (ii) enjoining us from trespassing on certain mining claims owned by one of the defendants, and (iii) finding that the mining claim of another defendant is valid and superior to certain of our claims. The claims with respect to which we were enjoined from trespass do not overlap the adit.  The mining claim that the Court determined was valid and superior to certain of our claims overlaps portions of the adit and portions of certain of our patented claims and unpatented mill sites and tunnel sites. We do not believe that this order affects our ability to use the adit or to conduct exploration and development operations as currently planned once we have obtained the required permits.

The Company appealed to the Montana Supreme Court, Case No. DA 13-0240, certain portions of the order.  In January 2014, the Supreme Court ruled in favor of the Company remanding the case to the District Court with instructions to vacate the injunction and to conduct further proceedings.  The Supreme Court reversed the District Court on the basis of lack of findings, existence of an issue of fact, lack of evidence regarding trespass and misplaced reliance on evidence that the District Court relied upon with respect to claim validity.

On remand, the Company filed a motion to substitute the District Court judge, which was denied by the same District Court judge. The Company appealed this denial to the Montana Supreme Court.  The Company’s appeal was denied in September 2014.  No trial date in this matter has been set.

On June 28, 2013 the Company filed a condemnation action, Montanore Minerals Corp. v. Easements and Rights of Way under through and across those certain unpatented lode mining claims et al., Cause No. CV-00133-DLC, in the United States District Court for the District of Montana, Missoula Division. In this action we sought to acquire easements and rights of way for the Montanore Project including for use of the adit and the construction and use of another underground tunnel and related equipment that are contemplated by the draft environment impact statement for the Montanore Project and other draft permits. The defendants include the defendant in the case referenced in the preceding paragraphs whose claim was determined to be valid and overlaps the existing adit. We filed a motion for a preliminary condemnation order and injunction to obtain immediate access to the easements and rights-of-way and a motion to have the court declare the subject mining claims void for failure to comply with an essential federal filing requirement. The primary defendant filed a motion requesting the court to dismiss without prejudice or stay the condemnation proceeding on abstention grounds and a motion to dismiss one of the two condemnation counts.

On April 29, 2014, the U.S. District Court in Missoula granted the Company’s motion for a preliminary condemnation order, which affirms the Company’s right of access through the Libby adit, and its right to construct another tunnel that is planned in connection with the potential construction of a mine.  In addition, the U.S. District Court granted the Company’s motion for a preliminary injunction for immediate right of possession, thereby preserving the Company’s ongoing access through the adit.  Our motion to declare the subject mining claims void was denied on abstention grounds.  The primary defendant’s motions to dismiss without prejudice or stay the condemnation proceeding on abstention grounds was denied.  The primary defendant’s motion to dismiss one of the condemnation counts was denied as moot.  The court decisions referenced in this paragraph are subject to appeal. The trial on the compensation phase of the condemnation case was held in April 2015. In their report issued in May 2015, the Commissioners appointed by the court to determine the just compensation for the taking resulting from the court’s preliminary condemnation order concluded that the amount of just compensation to the defendants is $0.

On August 7, 2015, the U.S. District Court issued its final ruling affirming the Commission’s decision.  The Court’s ruling remains subject to appeal.

13

ITEM 1A.RISK FACTORS

None.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURES

None.

ITEM 5.OTHER INFORMATION

None.

ITEM 6.EXHIBITS

Exhibit No.	Title of Exhibit
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of Controller and Principal 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) (furnished herewith)
32.2	Certification of Controller and Principal Financial Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act) (furnished herewith)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Definition Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

14

SIGNATURES

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

	MINES MANAGEMENT, INC.
Date: August 14, 2015	By:	/s/ Glenn M. Dobbs
		Glenn M. Dobbs
		Chief Executive Officer
Date: August 14, 2015	By:	/s/ Nicole Altenburg
		Nicole Altenburg
		Principal Financial Officer

15

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Glenn M. Dobbs, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Mines Management, Inc. for the quarter ended June 30, 2015;

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.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

d.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 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 officers 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 registrant’s board of directors:

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: August 14, 2015
	/s/ Glenn M. Dobbs
	Glenn M. Dobbs
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Nicole Altenburg, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Mines Management, Inc. for the quarter ended June 30, 2015;

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.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

d.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 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 officers 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 registrant’s board of directors:

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: August 14, 2015
	/s/ Nicole Altenburg
	Nicole Altenburg
	Principal Financial Officer

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 quarter ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), 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

August 14, 2015

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.

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 quarter ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), 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/ Nicole Altenburg

Nicole Altenburg

Principal Financial Officer

August 14, 2015

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.

XML

STOCKHOLDERS' EQUITY: (Details) $ / shares in Units, $ in Millions		6 Months Ended	12 Months Ended
	Jul. 30, 2014 USD ($) item $ / shares shares	Jun. 30, 2015 $ / shares shares	Dec. 31, 2014 $ / shares shares
Preferred Stock and Common Shares:
Common stock, par value (in dollars per share)		$ 0.001	$ 0.001
Preferred Shares:
Preferred stock, dividend rate (as a percent)		6.00%	6.00%
Preferred stock, stated value (in dollars per share)		$ 1,000	$ 1,000
Number of units sold or outstanding | shares		3,526	3,526
Preferred stock, par value (in dollars per share)		$ 0	$ 0
Maximum
Preferred Shares:
Preferred stock, dividend rate (as a percent)		18.00%
Convertible Preferred Stock
Preferred Shares:
Number of preferred shares converted | shares		474
Number of investor | item	1
Number of units sold or outstanding | shares	4,000
Preferred stock, par value (in dollars per share)	$ 0
Issue price (in dollars per share)	$ 1,000
Gross proceeds before offering expenses | $	$ 4.0
Net proceeds after deducting other offering expenses | $	$ 3.5
Warrants
Warrants
Number of shares of common stock that can be purchased on exercise of warrants | shares	636	636	636
Number of shares associated with a specific exercise price per share and expiration date | shares	4,000	4,000	4,000
Exercise Price (in dollars per share)	$ 1.0816	$ 1.0816	$ 1.0816
Common Stock
Preferred Stock and Common Shares:
Common stock, par value (in dollars per share)	$ 0.001
Number of common shares received for each share of preferred stock on any given date | shares	1,271
Common stock issued at conversion of preferred stock, shares | shares		602,592
Conversion price per share of common stock (in dollars per share)	$ 0.7866	$ 0.7866	$ 0.7866

XML

AVAILABLE-FOR-SALE SECURITIES

6 Months Ended

Jun. 30, 2015

AVAILABLE-FOR-SALE SECURITIES.

AVAILABLE-FOR-SALE SECURITIES

NOTE 3 — AVAILABLE-FOR-SALE SECURITIES:

Available-for-sale securities are comprised of common stocks which have been valued using quoted market prices in active markets.  The following table summarizes the Company’s available-for-sale securities:

	June 30, 2015			December 31, 2014
Cost	$	11,165		$	11,165
Unrealized Losses	(6,091		)	(8,698		)
Fair Market Value	$	5,074		$	2,467

XML

STOCKHOLDERS' EQUITY (Details)		6 Months Ended		12 Months Ended
	Jul. 30, 2014 USD ($) item $ / shares shares	Jun. 30, 2015 $ / shares shares	Jun. 30, 2014 USD ($)	Dec. 31, 2014 $ / shares shares
Preferred Stock and Common Shares:
Net proceeds | $			$ 177,750
Common stock, par value (in dollars per share)		$ 0.001		$ 0.001
Preferred Shares:
Preferred stock, dividend rate (as a percent)		6.00%		6.00%
Authorized preferred shares | shares		10,000,000		10,000,000
Preferred stock, par value (in dollars per share)		$ 0		$ 0
Preferred stock, stated value (in dollars per share)		$ 1,000		$ 1,000
Number of units sold or outstanding | shares		3,526		3,526
Maximum
Preferred Shares:
Preferred stock, dividend rate (as a percent)		18.00%
Convertible Preferred Stock
Preferred Stock and Common Shares:
Issue price (in dollars per share)	$ 1,000
Preferred Shares:
Number of investor | item	1
Preferred stock, par value (in dollars per share)	$ 0
Number of units sold or outstanding | shares	4,000
Issue price (in dollars per share)	$ 1,000
Gross proceeds before offering expenses | $	$ 4,000,000
Net proceeds after deducting other offering expenses | $	$ 3,500,000
Warrants
Warrants
Number of shares of common stock that can be purchased on exercise of warrants | shares	636	636		636
Exercise Price (in dollars per share)	$ 1.0816	$ 1.0816		$ 1.0816
Common Stock
Preferred Stock and Common Shares:
Common stock, par value (in dollars per share)	0.001
Conversion price per share of common stock (in dollars per share)	$ 0.7866	$ 0.7866		$ 0.7866

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CERTIFICATE OF DEPOSIT

6 Months Ended

Jun. 30, 2015

CERTIFICATES OF DEPOSIT

CERTIFICATES OF DEPOSIT

NOTE 2 — CERTIFICATE OF DEPOSIT:

The Company has a certificate of deposit in the amount of $1,124,055 pledged as security for a Letter of Credit to the Montana Department of Environmental Quality as a reclamation guarantee for the Montanore expansion evaluation program.  This certificate matures on January 3, 2016, bears interest at the rate of 0.40% and renews automatically each year.  This certificate of deposit is included with reclamation deposits on the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014.

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2015	Dec. 31, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 1,111,410	$ 3,862,462
Interest receivable	2,205	4,484
Prepaid expenses and deposits	356,836	307,951
Total current assets	1,470,451	4,174,897
PROPERTY AND EQUIPMENT:
Buildings and leasehold improvements	836,454	836,454
Equipment	6,361,318	6,361,318
Office equipment	344,657	343,897
Total property and equipment, gross	7,542,429	7,541,669
Less accumulated depreciation	7,040,555	6,997,153
Total property and equipment, net	501,874	544,516
OTHER ASSETS:
Available-for-sale securities	5,074	2,467
Reclamation deposits	1,184,966	1,184,966
Total other assets	1,190,040	1,187,433
Total assets	3,162,365	5,906,846
CURRENT LIABILITIES:
Accounts payable	258,865	326,570
Payroll and payroll taxes payable	17,474	18,141
Dividends payable	52,890	52,890
Total current liabilities	329,229	397,601
LONG-TERM LIABILITIES:
Asset retirement obligation	515,511	503,279
Total liabilities	$ 844,740	$ 900,880
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred shares - no par value, 10,000,000 shares authorized; Series B 6% convertible preferred shares - $1,000 stated value, 3,526 shares issued and outstanding	$ 3,526,000	$ 3,526,000
Common shares - $0.001 par value, 100,000,000 shares authorized; 29,814,040 shares issued and outstanding	29,814	29,814
Additional paid-in capital	87,850,408	87,685,232
Accumulated deficit	(89,082,506)	(86,226,382)
Accumulated other comprehensive losses	(6,091)	(8,698)
Total stockholders' equity	2,317,625	5,005,966
Total liabilities and stockholders' equity	$ 3,162,365	$ 5,906,846

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (1,236,331)	$ (2,750,344)	$ (3,366,048)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		165,176	143,038
Depreciation	15,565	43,402	412,792
Accretion of asset retirement obligation		12,232	11,654
Gain on sale of property and equipment			(11,900)
Changes in assets and liabilities:
Interest receivable		2,279	4,783
Prepaid expenses and deposits		(48,885)	(62,605)
Accounts payable		(67,705)	301,211
Payroll and payroll taxes payable		(667)	5,852
Net cash used in operating activities		(2,644,512)	(2,561,223)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of property and equipment			12,213
Purchase of property and equipment		(760)
Proceeds from certificates of deposit			1,565,577
Net cash provided by (used in) investing activities		(760)	1,577,790
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sales of common stock			177,750
Cumulative preferred stock dividends		(105,780)
Net cash provided by (used in) financing activities		(105,780)	177,750
NET DECREASE IN CASH AND CASH EQUIVALENTS		(2,751,052)	(805,683)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		3,862,462	4,145,092
CASH AND CASH EQUIVALENTS, END OF PERIOD	1,111,410	1,111,410	$ 3,339,409
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
Accrual of cumulative preferred stock dividends	$ 52,890	$ 52,890

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FAIR VALUE MEASUREMENTS (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
FAIR VALUE MEASUREMENTS
Financial assets that are measured at fair value on a nonrecurring basis	$ 0	$ 0
Financial liabilities that are measured at fair value on a nonrecurring basis	0
Assets:
Available-for-sale securities	5,074	2,467
Liabilities:
Asset retirement obligation	515,511	503,279
Recurring basis | Level 1
Assets:
Available-for-sale securities	5,074	2,467
Recurring basis | Level 3
Liabilities:
Asset retirement obligation	$ 515,511	$ 503,279

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CONCENTRATION OF CREDIT RISK (Details) - Jun. 30, 2015 - Cash and cash equivalents - Concentration of credit risk	USD ($) item
CONCENTRATION OF CREDIT RISK:
Number of financial institutions | item	1
Uninsured bank deposit balance	$ 2,050,000

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2015

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Operations:

Mines Management, Inc. (the Company) is an Idaho corporation incorporated in 1947.  The Company acquires, explores, and develops mineral properties in North America.  The Company’s principal mineral property interest, the Montanore Project, is held by its wholly owned subsidiaries, Newhi Inc. and Montanore Minerals Corp.  The Company’s properties, including the Montanore property are currently in the exploration stage; none of its properties are currently in production.  The Company has commenced re-permitting of the Montanore Project and is determining its feasibility for development.  Approval by regulatory agencies will be required before the Montanore Project can proceed with exploration and project development.  The Company’s business, operations and financial condition are subject to significant risks and uncertainties, including failing to secure additional funding to continue its business or execute its planned advanced evaluation and delineation drilling program at the Montanore Project.

Summary of Significant Accounting Policies:

These unaudited interim financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, as well as the instructions to Form 10-Q.  Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of the Company’s management, all adjustments (consisting solely of normal recurring adjustments) considered necessary for a fair presentation of the interim financial statements have been included.

The preparation of financial statements in accordance with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company’s condensed consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company’s consolidated financial position and results of operations. Operating results for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015.

For further information, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

(a) Going concern

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern and do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. The Company is an exploration stage company and has incurred losses since the inception of its exploration stage.  The Company currently does not have a recurring source of revenue sufficient to fund normal operations and its ability to continue as a going concern is dependent on the Company’s ability to secure sufficient funding for its future exploration and working capital requirements, which may include the sale of its equity or debt securities, and the eventual profitable exploitation of its mining properties.  The Company’s plans for the long-term continuation as a going concern include securing additional external funding and the eventual profitable operation of its mining property.  There can be no assurance that the Company will succeed in securing additional funding on terms acceptable to the Company or at all, or in generating future profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

(b) Mining properties, exploration and development costs

All exploration expenditures are expensed as incurred.  Significant property acquisition payments for active exploration properties are capitalized, including payments to acquire mineral rights.  Once a feasibility study has been completed and approved by management, and a decision is made to put the ore body into production, 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 the units of production basis over proven and probable reserves.  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) Fair value measurements

The Company discloses the inputs used to develop the fair value measurements for the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as well as the level within the fair value hierarchy in which the fair value measurements in their entirety fall.  The three levels of the fair value hierarchy are as follows:

Level 1:  Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2:  Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

Level 3:  Unobservable inputs due to the fact that there is little or no market activity.

(d) Stock compensation

The Company measures and records 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.  Compensation cost is recognized for awards granted and for awards modified, repurchased or cancelled.

(e) Net loss per share

Basic earnings or loss per share is computed on the basis of the weighted average number of shares outstanding during the period.  Diluted earnings or loss per share is calculated on the basis of the weighted average number of shares outstanding during the period plus the effect of potential dilutive shares during the period.  Potential dilutive shares include outstanding stock options and warrants.  For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive.  Therefore, basic loss per share is the same as diluted loss per share for the periods ended June 30, 2015 and 2014.

(f) Recent Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued guidance with regard to Development Stage Entities which eliminates the requirement for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The Company adopted the provisions of this guidance effective January 1, 2015. Adoption of this update is expected to affect only the presentation and disclosures of the Company’s consolidated financial statements.

In August 2014, the FASB issued a new going concern standard which defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Adoption of this update is expected to affect only the presentation and disclosures of the Company’s consolidated financial statements.

(g) Subsequent events

The Company evaluated events and transactions subsequent to the balance sheet date of June 30, 2015 for potential recognition or disclosure in the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, dividend rate (as a percent)	6.00%	6.00%
Preferred stock, stated value (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares issued	3,526	3,526
Preferred stock, shares outstanding	3,526	3,526
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	29,814,040	29,814,040
Common stock, shares outstanding	29,814,040	29,814,040

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2015

FAIR VALUE MEASUREMENTS

Schedule of financial assets and liabilities accounted for at fair value on a recurring basis

	June 30, 2015		December 31, 2014		Input Hierarchy Level
Assets:
Available-for-sale securities	$	5,074	$	2,467	Level 1
Liabilities:
Asset retirement obligation	$	515,511	$	503,279	Level 3

Schedule of fair value reconciliation of level 3 liabilities measured at fair value

	Asset Retirement Obligation
	2015		2014
Balance January 1	$	503,279	$	479,488
Accretion expense	6,046		5,760
Balance March 31	509,325		485,248
Accretion expense	6,186		5,894
Balance June 30	$	515,511	$	491,142

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 14, 2015
Document and Entity Information
Entity Registrant Name	MINES MANAGEMENT INC
Entity Central Index Key	0000066649
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		29,814,040
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

XML

STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2015

STOCKHOLDERS' EQUITY

Schedule of exercise prices and expiration dates of the Company's outstanding common share purchase warrants

The following table summarizes exercise prices and expiration dates of outstanding common stock purchase warrants as of June 30, 2015.

Number of Warrants	Exercise Price Per Share		Expiration Date
4,000	$	1.0816	November 30, 2018

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
REVENUE:
Royalties		$ 7,627		$ 14,918
OPERATING EXPENSES:
General and administrative	$ 509,478	700,228	$ 1,061,380	1,291,863
Technical services	418,416	604,421	841,374	1,086,339
Depreciation	15,565	206,091	43,402	412,792
Legal, accounting, and consulting	291,865	328,208	757,489	534,912
Fees, filing, and licenses	2,560	5,397	50,360	73,166
Total operating expenses	1,237,884	1,844,345	2,754,005	3,399,072
LOSS FROM OPERATIONS	(1,237,884)	(1,836,718)	(2,754,005)	(3,384,154)
OTHER INCOME:
Gain from sale of property and equipment		11,900		11,900
Interest income, net	1,553	2,481	3,661	6,206
Total other income	1,553	14,381	3,661	18,106
NET LOSS	(1,236,331)	(1,822,337)	(2,750,344)	(3,366,048)
CUMULATIVE PREFERRED STOCK DIVIDENDS	(52,890)		(105,780)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (1,289,221)	$ (1,822,337)	$ (2,856,124)	$ (3,366,048)
NET LOSS PER SHARE (basic and diluted) (in dollars per share)	$ (0.04)	$ (0.06)	$ (0.09)	$ (0.12)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (basic and diluted)	29,814,040	29,179,030	29,814,040	29,108,403

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2015

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 6 — STOCKHOLDERS’ EQUITY:

Common Shares:

For a description of the public offerings and sales of common stock that occurred prior to 2014, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Preferred Shares:

The Company sold to one investor 4,000 units consisting of one share of the Company’s Series B 6% convertible preferred stock, no par value, and a warrant to purchase the Company’s common stock, par value $0.001 per share, at a stated value of $1,000 per unit.  Each share of Series B convertible preferred stock is immediately convertible into shares of common stock at a conversion rate of approximately 1,271 shares of common stock for each share of Series B convertible preferred stock (equivalent to a conversion price of $0.7866 per share of common stock).  The conversion rate is subject to downward adjustment upon the Company issuing or selling shares of the Company’s common stock for a per share price less than the then applicable conversion rate.  The offering yielded gross proceeds, before offering expenses, of $4.0 million (net proceeds of $3.5 million after deducting placement agent and investor fees and expenses and other offering expenses).  The preferred stock has no voting rights but will entitle the holders to receive cumulative dividends at the rate of 6% per annum per share, payable quarterly.  The dividends are payable in either cash or common stock at the Company’s discretion.  As of June 30, 2015, 474 shares of the Series B 6% convertible preferred stock had been converted into 602,592 shares of common stock.  Upon the occurrence of certain events the Company believes are within its control, the holders of the preferred shares may have the option to require the Company to redeem them at a price greater than the stated value, convert them into common shares at penalty rates or increase the dividend rate to 18% per annum.

Warrants:  Each warrant is immediately exercisable and allows the holder to purchase approximately 636 shares of the Company’s common stock.  The warrants are not listed on a national securities exchange and do not have the rights or privileges of a holder of common stock, including any voting rights, until the holder exercises the warrant.  Upon the occurrence of a Fundamental Transaction, as defined in the warrant, the Company or its successor may be required to purchase the unexercised portion of the warrant from the warrant holder.  The Company does not currently anticipate that this will occur.  The following table summarizes exercise prices and expiration dates of outstanding common stock purchase warrants as of June 30, 2015.

Number of Warrants	Exercise Price Per Share		Expiration Date
4,000	$	1.0816	November 30, 2018

Liquidation:  Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of the preferred stock are entitled to receive distributions out of the Company’s assets, whether capital or surplus, before any distributions may be made on any other outstanding classes of stock.  The amount received by holders of the preferred stock will be equal to the stated value of $1,000 per share of preferred stock plus any accrued and unpaid dividends thereon, and any other fees or liquidated damages then due and owing.

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CONCENTRATION OF CREDIT RISK

6 Months Ended

Jun. 30, 2015

CONCENTRATION OF CREDIT RISK.

CONCENTRATION OF CREDIT RISK

NOTE 5 — CONCENTRATION OF CREDIT RISK:

The Company maintains most of its cash and cash equivalents in one financial institution.  To date, the Company has not experienced a material loss or lack of access to its invested cash or cash equivalents; however, no assurance can be provided that access to the Company’s invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets. The total uninsured bank deposit balance on the Company’s bank statements was approximately $2,050,000 as of June 30, 2015.

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FAIR VALUE MEASUREMENTS (Details 2) - Asset Retirement Obligation - USD ($)	3 Months Ended
	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2014	Mar. 31, 2014
Fair value reconciliation of level 3 liabilities measured at fair value
Balance at the beginning of the period	$ 509,325	$ 503,279	$ 485,248	$ 479,488
Accretion expense	6,186	6,046	5,894	5,760
Balance at the end of the period	$ 515,511	$ 509,325	$ 491,142	$ 485,248

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STOCK OPTIONS (Tables)

6 Months Ended

Jun. 30, 2015

STOCK OPTIONS

Summary of stock option activity

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2015	4,876,000		$	1.31
Forfeited or expired	(539,000	)	$	2.48
Outstanding at March 31, 2015 and June 30, 2015	4,337,000		$	1.16	2.82	$	—
Exercisable at June 30, 2015	3,987,000		$	1.21	2.65	$	—

Schedule of assumptions used to estimate the fair value of stock options

	Three Months Ended June 30,					Six Months Ended June 30,
	2015(1)		2014			2015(1)		2014
Weighted average risk-free interest rate	—		0.91		%	—		0.91		%
Weighted average volatility	—		73.08		%	—		73.08		%
Expected dividend yield	—		—			—		—
Weighted average expected life (in years)	—		3.0			—		3.0
Weighted average grant-date fair value	$	—	$	0.44		$	—	$	0.44

(1) No options were granted during the six months ended June 30, 2015.

Summary of nonvested options

	Number of Options		Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2015 and March 31, 2015	900,000		$	0.28
Vested	(550,000	)	$	0.31
Nonvested at June 30, 2015	350,000		$	0.24

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2015

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Going concern

(a)          Going concern

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern and do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. The Company is an exploration stage company and has incurred losses since the inception of its exploration stage.  The Company currently does not have a recurring source of revenue sufficient to fund normal operations and its ability to continue as a going concern is dependent on the Company’s ability to secure sufficient funding for its future exploration and working capital requirements, which may include the sale of its equity or debt securities, and the eventual profitable exploitation of its mining properties.  The Company’s plans for the long-term continuation as a going concern include securing additional external funding and the eventual profitable operation of its mining property.  There can be no assurance that the Company will succeed in securing additional funding on terms acceptable to the Company or at all, or in generating future profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Mining properties, exploration and development costs

(b)          Mining properties, exploration and development costs

All exploration expenditures are expensed as incurred.  Significant property acquisition payments for active exploration properties are capitalized, including payments to acquire mineral rights.  Once a feasibility study has been completed and approved by management, and a decision is made to put the ore body into production, 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 the units of production basis over proven and probable reserves.  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.

Fair value measurements

(c)          Fair value measurements

The Company discloses the inputs used to develop the fair value measurements for the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as well as the level within the fair value hierarchy in which the fair value measurements in their entirety fall.  The three levels of the fair value hierarchy are as follows:

Level 1:  Unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2:  Quoted prices in inactive markets for identical assets or liabilities, quoted prices for similar assets or liabilities in active markets, or other observable inputs either directly related to the asset or liability or derived principally from corroborated observable market data.

Level 3:  Unobservable inputs due to the fact that there is little or no market activity.

Stock compensation

(d)          Stock compensation

The Company measures and records 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.  Compensation cost is recognized for awards granted and for awards modified, repurchased or cancelled.

Net loss per share

(e)          Net loss per share

Basic earnings or loss per share is computed on the basis of the weighted average number of shares outstanding during the period.  Diluted earnings or loss per share is calculated on the basis of the weighted average number of shares outstanding during the period plus the effect of potential dilutive shares during the period.  Potential dilutive shares include outstanding stock options and warrants.  For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive.  Therefore, basic loss per share is the same as diluted loss per share for the periods ended June 30, 2015 and 2014.

Recent Accounting Pronouncements

(f)          Recent Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued guidance with regard to Development Stage Entities which eliminates the requirement for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The Company adopted the provisions of this guidance effective January 1, 2015. Adoption of this update is expected to affect only the presentation and disclosures of the Company’s consolidated financial statements.

In August 2014, the FASB issued a new going concern standard which defines management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Adoption of this update is expected to affect only the presentation and disclosures of the Company’s consolidated financial statements.

Subsequent events

(g)          Subsequent events

The Company evaluated events and transactions subsequent to the balance sheet date of June 30, 2015 for potential recognition or disclosure in the condensed consolidated financial statements.

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STOCK OPTIONS

6 Months Ended

Jun. 30, 2015

STOCK OPTIONS

STOCK OPTIONS

NOTE 7 — STOCK OPTIONS:

For a description of the Company’s Equity Incentive Plans, refer to the consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. A summary of the option activity under the Company’s Equity Incentive Plans as of June 30, 2015, and changes during the period then ended, is presented below:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2015	4,876,000		$	1.31
Forfeited or expired	(539,000	)	$	2.48
Outstanding at March 31, 2015 and June 30, 2015	4,337,000		$	1.16	2.82	$	—
Exercisable at June 30, 2015	3,987,000		$	1.21	2.65	$	—

The fair value for each option award is estimated at the date of grant using the Black-Scholes option-pricing model. Volatility for the periods presented is based on the historical volatility of the Company’s common shares over the expected life of the option. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company does not foresee the payment of dividends in the near term.

	Three Months Ended June 30,					Six Months Ended June 30,
	2015(1)		2014			2015(1)		2014
Weighted average risk-free interest rate	—		0.91		%	—		0.91		%
Weighted average volatility	—		73.08		%	—		73.08		%
Expected dividend yield	—		—			—		—
Weighted average expected life (in years)	—		3.0			—		3.0
Weighted average grant-date fair value	$	—	$	0.44		$	—	$	0.44

(1) No options were granted during the six months ended June 30, 2015.

During the six months ended June 30, 2015 there were no stock options exercised.  During the three months ended June 30, 2014, there were 50,000 stock options exercised with a weighted average exercise price of $0.99 and a total intrinsic value of $3,000.  During the six months ended June 30, 2014, there were 237,000 stock options exercised with a weighted average exercise price of $0.90 and a total intrinsic value of $88,724.

A summary of the status of the Company’s nonvested options as of June 30, 2015 and changes during the period then ended is presented below:

	Number of Options		Weighted- Average Grant-Date Fair Value
Nonvested at January 1, 2015 and March 31, 2015	900,000		$	0.28
Vested	(550,000	)	$	0.31
Nonvested at June 30, 2015	350,000		$	0.24

As of June 30, 2015, there was $11,273 of unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Company’s Equity Incentive Plans.  The cost is expected to be recognized over a weighted-average period of less than one year.

Total compensation costs recognized for stock-based employee compensation awards was $37,376 and $96,556 for the three months ended June 30, 2015 and 2014, respectively. Total compensation costs recognized for stock-based employee compensation awards was $165,176 and $133,842 for the six months ended June 30, 2015 and 2014, respectively. These costs were included in general and administrative expenses and technical services and exploration expenses on the Condensed Consolidated Statements of Operations.  Total costs recognized for stock-based compensation awards for services performed by outside parties were $0 and $3,677 during the three months ended June 30, 2015 and 2014, respectively.  Total costs recognized for stock-based compensation awards for services performed by outside parties were $0 and $9,196 during the six months ended June 30, 2015 and 2014, respectively.  Cash received from options exercised under all share-based payment arrangements during the six months ended June 30, 2015 and 2014 was $0 and $177,750, respectively.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2015

SUBSEQUENT EVENTS:

SUBSEQUENT EVENTS:

NOTE 8 — SUBSEQUENT EVENTS:

On July 1, 2015, the Company received a letter from NYSE MKT LLC (“NYSE MKT” or the “Exchange”) stating that it is not in compliance with the continued listing standards as set forth in Section 1003(a)(i-iv) of the NYSE MKT Company Guide. In order to maintain its listing, the Company submitted a plan on August 3, 2015, in accordance with the Exchange’s requirement, which addresses how it intends to regain compliance with Section 1003(a)(i-iv) of the Company Guide by December 31, 2016 for equity standards and December 31, 2015 for the financial impairment standard.

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AVAILABLE-FOR-SALE SECURITIES (Tables)

6 Months Ended

Jun. 30, 2015

AVAILABLE-FOR-SALE SECURITIES.

Schedule of the Company's available-for-sale securities

	June 30, 2015			December 31, 2014
Cost	$	11,165		$	11,165
Unrealized Losses	(6,091		)	(8,698		)
Fair Market Value	$	5,074		$	2,467

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AVAILABLE-FOR-SALE SECURITIES: (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
AVAILABLE-FOR-SALE SECURITIES.
Cost	$ 11,165	$ 11,165
Unrealized Losses	(6,091)	(8,698)
Fair Market Value	$ 5,074	$ 2,467

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STOCK OPTIONS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Number of Options
Outstanding at the beginning of the period (in shares)			4,876,000
Forfeited or expired (in shares)			(539,000)
Outstanding at the end of the period (in shares)	4,337,000		4,337,000
Exercisable at the end of the period (in shares)	3,987,000		3,987,000
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)			$ 1.31
Forfeited or expired (in dollars per share)			2.48
Outstanding at the end of the period (in dollars per share)	$ 1.16		1.16
Exercisable at the end of the period (in dollars per share)	$ 1.21		$ 1.21
Weighted-Average Remaining Contractual Term
Outstanding at the end of the period			2 years 9 months 26 days
Exercisable at the end of the period			2 years 7 months 24 days
Assumptions used to estimate the fair value of stock options
Weighted average risk-free interest rate (as a percent)		0.91%		0.91%
Weighted average volatility (as a percent)		73.08%		73.08%
Weighted average expected life		3 years		3 years
Weighted-average grant-date fair value (in dollars per share)		$ 0.44		$ 0.44
Exercised (in shares)		50,000	0	237,000
Weighted average exercised (in dollars per share)		$ 0.99		$ 0.90
Total intrinsic value		$ 3,000		$ 88,724
Number of Options
Nonvested at the beginning of the period (in shares)			900,000
Vested (in shares)			(550,000)
Nonvested at the end of the period (in shares)	350,000		350,000
Weighted-Average Grant-Date Fair Value
Nonvested at the beginning of the period (in dollars per share)			$ 0.28
Vested (in dollars per share)			0.31
Nonvested at the end of the period (in dollars per share)	$ 0.24		$ 0.24
Disclosures for share-based compensation cost
Unrecognized compensation expense related to nonvested share-based compensation arrangements	$ 11,273		$ 11,273
Expected weighted-average period of recognition of unrecognized compensation cost related to nonvested share-based compensation arrangements			1 year
Total compensation costs recognized for stock-based employee compensation awards	37,376	96,556	$ 165,176	133,842
Costs recognized for stock-based compensation awards for services performed by outside parties	$ 0	$ 3,677	0	9,196
Cash received from options exercised			$ 0	$ 177,750

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (1,236,331)	$ (1,822,337)	$ (2,750,344)	$ (3,366,048)
Adjustment to net unrealized gain (loss) on marketable securities	1,627	964	2,607	(6,977)
COMPREHENSIVE LOSS	$ (1,234,704)	$ (1,821,373)	$ (2,747,737)	$ (3,373,025)

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2015

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 4 — FAIR VALUE MEASUREMENTS:

The following table summarizes the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2015, and the fair value calculation input hierarchy level determined to apply to each asset and liability category. Quoted market prices were used to determine the fair value of available-for-sale securities. The Company has no financial assets or liabilities that are measured at fair value on a nonrecurring basis.

	June 30, 2015		December 31, 2014		Input Hierarchy Level
Assets:
Available-for-sale securities	$	5,074	$	2,467	Level 1
Liabilities:
Asset retirement obligation	$	515,511	$	503,279	Level 3

The following table presents the fair value reconciliation of Level 3 liabilities measured at fair value during the six months ended June 30, 2015 and 2014:

	Asset Retirement Obligation
	2015		2014
Balance January 1	$	503,279	$	479,488
Accretion expense	6,046		5,760
Balance March 31	509,325		485,248
Accretion expense	6,186		5,894
Balance June 30	$	515,511	$	491,142

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CONCENTRATION OF CREDIT RISK: (Details) - 10Q - Jun. 30, 2015 - Cash and cash equivalents - Concentration of credit risk	USD ($) item
CONCENTRATION OF CREDIT RISK:
Number of financial institutions | item	1
Uninsured bank deposit balance	$ 2,050,000

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CERTIFICATE OF DEPOSIT: (Details) - USD ($)	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
CERTIFICATES OF DEPOSIT:
Reclamation deposits	$ 1,184,966	$ 1,184,966
Certificates of deposit maturing on January 3, 2016
CERTIFICATES OF DEPOSIT:
Reclamation deposits	$ 1,124,055
Interest rate (as a percent)	0.40%