At December 31, 2010, the balance of our cash and unrestricted certificates of deposit remained strong at over $6.4 million. We also had $3.7 million in equity securities that were available for sale. Our net cash expenditures for operating activities for 2010 totaled $6.7 million. Cash outlays were less than projected due to delays in the USFS approval of our EIS and the cessation of adit rehabilitation and dewatering until permits are received. Our cash position was augmented by the $15.1 million of net proceeds received from the common stock offering completed in April, 2011.

In 2011, we plan to continue to focus on planning for our exploration and delineation drilling program at the Montanore Project pending the final permitting approvals. The completion of the recent financing will provide sufficient cash to complete the permitting process and initiate the adit rehabilitation and drill station development. Additional financing will be required to complete the evaluation drilling program and a bankable feasibility study. Development activities could be deferred if the permitting process is delayed or if commodity prices make the project difficult to finance or increase the cost of such financing.

Financial and Operating Results

We reported a net loss for the year ended December 31, 2010 of $10.7 million or $0.46 per share compared to a loss of $9.4 million or $0.41 per share for the year ended December 31, 2009. The increase of $1.3 million in net loss between 2010 and 2009 was comprised of a reduction in project and administrative expenses of $0.8 million and an increase of $2.1 million in non-cash expenses. The following table summarizes expenditures by category and year:

Montanore Project Expense includes exploration, fees, filing and licenses, and technical services, including environmental, engineering and permitting expense. Montanore Project Expense decreased by $0.7 million during 2010 compared to 2009 for the following reasons: (i) decreased spending related to adit rehabilitation activity by $1.2 million during 2010 and (ii) an increase of $0.5 million in consultant fees paid in 2010 primarily to MQES to conduct the PEA.

Administrative Expense, which includes general overhead and office expense, legal, accounting, compensation, rent, taxes, and investor relations expense, decreased in 2010 by $0.1 million. The decrease was primarily due to a decline in legal, accounting, and consulting expenditures associated with a proposed public offering during 2009.

Non-Cash Stock Option Expense (which is included in general and administrative and technical services expenses in our statement of operations) increased by $1.4 million during 2010 primarily because of $1.8 million of expense associated with the grant of approximately 1.3 million options during 2010. The 2009 stock option expense was the result of recognizing additional compensation expense as options granted or re-priced in prior years vested.

The $0.7 million increase in Other Expense includes a $0.5 million increase in loss recognized due to a change in the fair market value of warrant derivatives and a decrease of $0.2 million in interest income during 2010 as a result of utilizing funds for operating activities during 2010.

Liquidity and Capital Resources

At December 31, 2010, our aggregate cash, short term investments, and long term investments totaled $10.1 million compared to $13.8 million at December 31, 2009. Cash flows provided by financing activities were $0.5 million in 2010 compared to $1.8 million utilized in 2009, primarily to pay off the balance on the line of credit. The net cash used for operating activities during 2010 was $6.7 million, which consisted primarily of permitting, environmental, exploration, and engineering expenses for the Montanore project and general and administrative expenses, compared with $7.4 million of cash used for operating activities in 2009. Cash provided by investing activities for 2010 was $4.9 million, primarily from the early withdrawal of funds from a certificate of deposit, compared with $0.1 million of cash used in investing activities in 2009. The net decrease in cash and cash equivalents for the year ending December 31, 2010 was $1.2 million.

We anticipate expenditures in 2011 of approximately $8.0 million, which we expect will consist of (i) $1.5 million in each quarter for ongoing operating and general administrative expenses and (ii) $0.5 million in each quarter for permitting, engineering and geologic studies to finalize our permitting of the Montanore Project. The recently completed public offering of $15.1 million net proceeds will provide adequate cash availability for years 2011 and 2012 to fund ongoing environmental, engineering, permitting and general and administrative expenses. The Company’s aggregate cash and liquid investments totaled $23.1 million as of April 29, 2011. Additional financing, however, will be required to complete the evaluation drilling program and a bankable feasibility study.

About Mines Management

Mines Management, Inc. is engaged in the business of acquiring and exploring, and if exploration is successful, developing mineral properties containing precious and base metals. The Company’s primary focus is on the advancement of the Montanore silver-copper project, an advanced stage exploration project, located in northwestern Montana.