|OMB APPROVAL                                                                                        
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10  KSB/A

Amendment No. 1

(Mark One)



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

For the fiscal year ended December 31, 2003

OR

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

1934  For the transition period from



Commission File Number 000-29786



MINES MANAGEMENT, INC.

(Exact Name of Registrant as specified in its charter)



|IDAHO
(State or other jurisdiction of incorporation or organization) |  | 91-0538859
(I.R.S. Employer Identification Number)
|-------------------------------------------------------------------- |  | --------------------------------------------------



905 W. Riverside Avenue, Suite 311

Spokane, Washington

99201

(Address of principal Executive Office)

(Zip Code)



Registrants telephone number, including area code:

(509) 838-6050



Securities Registered pursuant to Section 12 (g) of the Act:

Common Stock, Par Value $0.01

(Title of Class)



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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 ninety (90) days.   YesX           No



Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  (  )



State issuers revenues for its most recent fiscal year.                 $6,038



State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days.  Based upon the price at which the common equity was sold at February 20, 2004 ($7.30) the aggregate market value was $65,530,596



State the number of shares outstanding of each of the issuers classes of common equity as of February 24, 2004,  9,874,708 sharesof Common Stock



DOCUMENTS INCORPORATED BY REFERENCE: None



Transitional Small Business Disclosure Format (check one):   Yes ()       No(X)



|SEC 2337 (12-03) | Persons who potentially are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
|---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PART I



ITEM 1.

DESCRIPTION OF BUSINESS



General



Mines Management, Inc.  (together with its subsidiaries, MMI or the Company), is engaged in the business of acquiring, exploring, and developing mineral properties, primarily those containing silver and associated base and precious metals. The Company was incorporated under the laws of the State of Idaho on February 20, 1947.  The Company has a wholly owned subsidiary, Newhi, Inc.  Newhi, Inc. was incorporated under the laws of the State of Washington on November 3, 1987.  The Companys executive offices are located at 905 W Riverside, Suite 311, Spokane, WA 99201.



With the exception of historical matters, the matters discussed in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein.  Such forward-looking statements include statements regarding planned levels of exploration and other expenditures, anticipated mine lives, timing of production and schedules for development.  Factors that could cause actual results to differ materially include, among others, metals price volatility.  Most of these factors are beyond the Companys ability to predict or control.  The Company disclaims any obligation to update any forward-looking statement made herein.  Readers are cautioned not to put undue reliance on forward-looking statements. (See: Investment Considerations).



The Companys properties are currently in the exploration stage except for the Montanore property, which is in the stage of determining feasibility for development.  No property is currently in production.



The Companys principal mineral property interest is held by its wholly owned subsidiary, Newhi, Inc., and is referred to as the Montanore Project.  The Montanore Project is located in northwestern Montana, USA, and between 1988 and 2002 was operated by Noranda Minerals Corp.  During that time the project received an approved Environmental Impact Statement and all of its primary environmental permits.  Noranda Minerals reported a geologic resource of 135 million tons containing 0.74% copper and 1.92 ounces of silver per ton.  From 1988 to 2002 the Company held royalty rights to a portion of the deposit.  In 2002 Noranda announced that it was abandoning the project, and subsequently gave the Company quit claim deeds to mining claims that control the mineral rights, and all core and intellectual property generated during its 14 years of geologic, environmental and engineering studies.



The Companys principal focus is to continue with the development of the project by undertaking environmental and engineering studies aimed at determining an economically viable operational design, and re-establishing the previously issued environmental permits.  Although the Company may engage in mining operations at some future time, substantially all of the Companys financial support is expected to be derived from equity financing through sales of its shares.  The Company also has a small royalty income from a working interest royalty, acquired more than 40 years ago, for several producing oil wells located in Kansas, USA.



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The Company continues to hold its Iroquois and Advance zinc-lead properties in Washington on a care and maintenance basis.



Competition



There is aggressive competition within the minerals industry to discover and acquire properties considered to have commercial potential.  The Company competes for the opportunity to participate in promising exploration projects with other entities, many of which have greater resources than the Company.  In addition, the Company competes with others in efforts to obtain financing to explore and develop mineral properties.



Employees



During the year ending December 31, 2003, the Company had three full-time employees located in Spokane, Washington. The Companys employees are not subject to a union labor contract or collective bargaining agreement. On occasion, directors perform consulting services to the Company at their usual and customary rates.



Regulation



The Companys activities in the United States are subject to various federal, state, and local laws and regulations governing prospecting, development, production, labor standards, occupational health and mine safety, control of toxic substances, and other matters involving environmental protection and taxation.  It is possible that future changes in these laws or regulations could have a significant impact on the Companys business, causing those activities to be economically reevaluated at that time.



Investment Considerations



The following Investment Considerations, together with other information set forth in this Form 10-KSB, should be carefully considered by current and future investors in the Companys securities.



Risks Inherent in the Mining Industry



At present, the Companys principal asset is its interest in the Montanore property.  The Companys success is dependent on the extent to which Montanore proves to be successful and on the extent to which the Company is able to acquire or create other property interests.



Mineral exploration and development is highly speculative and capital intensive.  The operations of the Company are also indirectly subject to all of the hazards and risks normally incident to developing and operating mining properties.  These risks include insufficient ore reserves, fluctuations in production costs that may make mining of reserves uneconomic; significant environmental and other regulatory restrictions; labor disputes; geological problems; failure of pit walls or dams; force majeure events; and the risk of injury to persons, property or the environment.



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Uncertainty of Reserves and Mineralization Estimates



There are numerous uncertainties inherent in estimating proven and probable reserves and mineralization, including many factors beyond the control of the Company.  The estimation of reserves and mineralization is a subjective process and the accuracy of any such estimates is a function of the quality of available data and of engineering and geological interpretation and judgment.  Results of drilling, metallurgical testing and production and the evaluation of mine plans subsequent to the date of any estimate may justify revision of such estimates.  No assurances can be given that the volume and grade of reserves recovered and rates of production will not be less than anticipated.  Assumptions about prices are subject to greater uncertainty and metals prices have fluctuated widely in the past.  Declines in the market price of base or precious metals also may render reserves or mineralization containing relatively lower grades of ore uneconomic to exploit.  Changes in operating and capital costs and other factors including, but not limited to, short-term operating factors such as the need for sequential development of ore bodies and the processing of new or different ore grades, may materially and adversely affect reserves.



Permitting



In the ordinary course of business, mining companies are required to seek governmental permits for expansion of existing operations or for the commencement of new operations. The Company will be required to obtain numerous permits for its Montanore Project. Obtaining the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings.t.  The duration and success of the Companys efforts to obtain permits are contingent upon many variables not within its control. Obtaining environmental protection permits, including the approval of reclamation plans, may increase costs and cause delays depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority.  There can be no assurance that all necessary permits will be obtained and, if obtained, that the costs involved will not exceed those that had been previously estimated.  It is possible that the costs and delays associated with the compliance with such standards and regulations could become such that the Company would not proceed with the development or operation of a mine or mines.



Federal Legislation



From time to time the U.S. Congress may consider revisions in its mining and environmental laws. It remains unclear to what extent any such new legislation may affect existing mining claims or operations.  The effect of any such revisions on the Companys operations cannot be determined conclusively until such revision is enacted; however, such legislation could materially increase costs on properties located on federal lands, and such revision could also impair the Companys ability to develop its mineral projects.



Fluctuations in the Market Price of Minerals



The profitability of mining operations is directly related to the market price of the metals being mined.  The market price of base and precious metals such as copper and silver fluctuate widely and is affected by numerous factors beyond the control of any mining company.  These factors include expectations with respect to the rate of inflation, the exchange rates of the dollar and other currencies, interest rates, global or regional political, economic or banking crises, and a number of other factors.  If the market

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price of silver or copper should drop dramatically, the value of the Companys Montanore Project could also drop dramatically, and the Company might not be able to recover its investment in that project.  The determination to develop or construct a mine, to place it into production, and the dedication of funds necessary to achieve such purposes are decisions that must be made long before the first revenues from production will be received.  Price fluctuations between the time that such decisions are made and the commencement of production can drastically affect the economics of a mine.



The volatility in metals prices is illustrated by the following table, which sets forth, for the periods indicated, the yearly high and low prices in U.S. dollars per ounce for silver and the high and low yearly average prices for copper in U.S. dollars per pound.



Year

Silver Price Per Ounce

Copper Price Per Pound

High

Low



High

Low

1996

$5.79

$4.67

$1.17

$0.91

1997

$6.39

$4.18

$1.14

$0.87

1998

$7.09

$4.80

$0.85

$0.65

1999

$5.71

$4.93

$0.83

$0.62

2000

$5.36

$4.61

$0.91

$0.75

2001

$4.80

$4.07

$0.82

$0.60

2002

$5.15

$4.30

$0.76

$0.65

2003

$5.95

$3.34

$1.04

$0.68



Environmental Risks



Mining is subject to potential risks and liabilities associated with pollution of the environment and the disposal of waste products occurring as a result of mineral exploration and production.  Insurance against environmental risk (including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production) is not generally available to the Company (or to other companies in the minerals industry) at a reasonable price.  To the extent that the Company becomes subject to environmental liabilities, the satisfaction of any such liabilities would reduce funds otherwise available to the Company and could have a material adverse effect on the Company.  Laws and regulations intended to ensure the protection of the environment are constantly changing, and are generally becoming more restrictive.



Title to Properties



Although the Montanore deposit is held by patented mining claims, a significant portion of the Companys holdings consist of unpatented lode and mill site claims.  The validity of unpatented mining claims is often uncertain, and such validity is always subject to contest.  Unpatented mining claims are unique property interests and are generally considered subject to greater title risk than patented mining claims, or real property interests that are owned in fee simple.  The Company has not filed a patent application for any of unpatented claims that are located on federal public lands in the United States and, under possible future legislation to change the General Mining Law, patents may be hard to obtain.  Although the Company has attempted to acquire satisfactory title to its undeveloped properties, the Company does not generally obtain title opinions until financing is sought to develop a property, with the attendant risk that title to some properties, particularly title to undeveloped properties, may be defective.

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ITEM 2.

DESCRIPTION OF PROPERTIES



The significant properties in which the Company has an interest are described below.  Reference is made to footnotes in the financial statements for more information on the properties.  For its assessment of the Montanore Project the Company relies on the considerable body of technical, environmental, and legal data generated by Noranda Minerals, who owned and operated the Montanore Project from 1988 through 2002.



Montanore Property



The Montanore Project is located in Sanders and Lincoln Counties, northwestern Montana.  Landholdings include a number of patented and unpatented lode mining claims and mill sites, which cover approximately 1700 acres.  The unpatented lode claims and mill sites are owned outright by the Company and are held subject to a $100 per claim annual payment to the Federal Government.  The Montanore deposit can be reached from Noxon, the nearest town, by taking State Highway 200 about 2 miles to the east and thence north about 5 miles on a secondary graveled road to the junction of the west and east forks of Rock Creek.  From this point it is about a 4-mile hike up a Jeep trail behind a locked U.S. Forest Service gate to the deposit outcrop.  The deposit outcrops near the border of, and lies entirely within the Cabinet Wilderness Area. The Companys holdings for operational access and infrastructure support for the project are located to the east, south of the town of Libby, and are accessed from that major supply point by about 16 miles of secondary road up Libby Creek.



The deposit occurs within rocks of the Belt Super Group, Precambrian metasediments that crop out over much of western Montana, northern Idaho, and parts of adjacent British Columbia.  The Montanore is one of 3 similar deposits to have been found within Revett Formation quartzite of the Belt Supergroup.  These include the Troy deposit, which was mined between 1981 and 1992, and the Rock Creek deposit, located less than 1 mile to the west of Montanore, which is currently under environmental assessment.



Silver and copper values within the Revett Formation are disseminated, and confined to one or more adjacent quartzite strata separated by unmineralized beds.  The deposits are characterized by great lateral extent, relatively uniform grades, and thicknesses that range up to 100 feet.  Often the deposits are bounded by a paleo growth fault, considered to have been active during rock sedimentation and mineral deposition.  Mineralization consists in varying parts of bornite, primary chalcocite, and chalcopyrite.



The Montanore deposit has been defined as being at least 12,500 feet long and varies between 500 and 4,000 feet in width.  The long axis of the deposit trends in a northwesterly direction parallel with a regional fault that bounds the mineralization of the southwest.  The deposit dips approximately 12 degrees to the northwest, parallel with its long axis.  Mineralization occurs within two mineralized beds over much of the deposits length.  Overall the upper zone averages 29.9 feet in thickness and the lower zone 34.8 feet.  Unmineralized strata between beds varies between 20 and 200 feet thick.  On the basis of 27 surface drill holes Noranda has reported a deposit containing and estimated 135 million tons and averaging 0.74% copper and 1.92 ounces of silver to the ton.  The deposit remains open to the Northwest within the Companys extra-lateral rights.

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The Companys ownership of the Montanore deposit stems primarily from its ownership of 2 patented mining claims which cover the surface outcrop or apex of the gently dipping mineralized beds.  According to US mining law, claims covering the apex of a dipping, tabular deposit own the minerals to depth, even if the deposit passes from beneath the apex claim.  For the Companys claims at Montanore these extralateral rights have been confirmed by the US Secretaries of Agriculture and Interior and upheld in US District Court.  In addition to the patented apex claims, the Company owns unpatented claims located along the fault which bounds the southwestern margin of the deposit, and which extend outside of the western border of the Cabinet Wilderness Area.



In 1988, Newhi, Inc., a Washington corporation and wholly owned subsidiary of Mines Management, Inc. acquired the assets of Heidelberg Silver Mining Co., Inc. through a corporate merger.  The assets acquired by the Company consisted primarily of 34 unpatented mining claims located along the fault that borders the Montanore deposit, and a 4 acre patented mill site.  In 1993 the Company determined that 18 of the mining claims were immaterial to the maintenance of its interest in the Montanore project and these claims were dropped.  Of the remaining 16 claims owned by the Company, 11 claims were leased to Noranda Minerals Corp. who was responsible for their yearly upkeep.  Under terms of the lease agreement, the Company was paid an annual payment of $25,000, and was to receive a percentage of the net profits for material taken from beneath its claims.



In 1983, U.S. Borax and Chemical Corporation discovered a major silver/copper deposit, later to be named the Montanore deposit, which extended in part beneath what is now the Companys property.  In 1984 a lease agreement, relative to 11 claims, was entered into between U.S. Borax and the Companys predecessor, Heidelberg.  Subsequently U.S. Borax conducted more than 70,000 feet of core drilling from the surface, which outlined the bedded silver/copper mineralization.



In 1988, U.S. Borax and partners sold their interest in the project to a Joint Venture made up of Noranda Minerals Corp. and Montana Reserves Co.  Noranda became the project operator, and the project name was changed to Montanore.  In 1993 the Joint Venture was dissolved with Noranda retaining rights to the project.



In late 1989, Noranda began a major tunneling program from a point east of the Cabinet Wilderness Area.  The purpose of the program was to more accurately define and develop a portion of the deposit containing approximately 30 million tons.  The proposed work was to include a 3-mile long decline and approximately 2,000 feet of lateral development in the vicinity of the deposit.  Close spaced drilling was planned from these workings and bulk metallurgical samples were to be taken during this phase.  In December 1991, tunneling was stopped at approximately 14,000 feet, or about 2,000 feet short of the deposit, pending the completion of the projects Environmental Impact Statement (EIS).  Also during the year Noranda completed the process to acquire patents to the two apex claims controlling the deposit.



During 1993 the project Environmental Impact Statement (EIS) was approved and all of the important permits for the mine were granted.  As part of the EIS process, this approval was subject to appeal, and several appeals were made.  In 1994, after due consideration, the US Forest Service denied all appeals.



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In 1991 an environmental group had brought suit against Noranda and the US Forest Service concerning the validation of Norandas apex claims.  In 1993 the US Secretary of Agriculture found that Norandas mining claims were valid, and in 1997 the Federal District Court hearing the case also ruled that Norandas claims were valid.  The court decision was appealed and in March, 1999 the U.S. Court of Appeals for the Ninth Circuit upheld the U.S. District Court decision.  In 2001 The U.S. Government issued patents for the two claims covering the apex of the deposit and thus assuring Noranda ownership of the Montanore deposit.



In 2002, Noranda gave notice to the Company that it was abandoning its rights to the project.  Under terms of its agreement Noranda was bound to quit claim deed any claims that overlapped the original Heidelberg claims to the Company.  As the newly patented apex claims were overlapping, Noranda deeded these key claims to the Companys subsidiary, Newhi, Inc. in August 2002. The mineral rights acquired by the Company are subject to a $0.20 per ton royalty, and a 5% Net Profits royalty  which would commence after the operator has recovered all of its exploration and development costs. In December 2002, Noranda gave the Company a quit claim deed to all geologic, environmental, and engineering data generated during their 14 year management of the project.  Over 70,000 feet of drill core were deeded to the Company in addition to the intellectual property.



Advance and Iroquois Properties



The Company owns the Advance and Iroquois zinc-lead properties located in northeastern Washington State, approximately 6 miles south of the Canadian border.  The properties are situated 5 miles apart along a belt of Cambrian carbonate sediments that have acted as host rocks for several former mines.  Both properties are easily accessible on secondary graveled roads by two wheel drive vehicles.  A large zinc smelter and refinery is located at Trail, British Columbia, Canada, approximately 17 miles distant over excellent roads.



The Company was originally formed in 1947 to explore the Advance and Iroquois properties.  Since that time, Mines Management has leased its holdings to major companies including: Rare Metals, Inc. (El Paso Natural Gas) 1959-65, The Bunker Hill Company 1962-65, Cominco American, Inc. 1966-67 and 1974-75, Brinco, Ltd. (RTZ Group) 1977-78, and Equinox Resources Ltd.  1989-91.  Total expenditures on the properties to date are estimated to be at least $1,500,000.



The Advance and Iroquois properties are located along the Deep Lake Trend, a northeast-striking belt of Cambrian carbonate rocks collectively designated as the Metaline Limestone.  Rocks of the Deep Lake Trend have been strongly folded and faulted by numerous high-angle as well as thrust faults.  As a result the Metaline Limestone has a complex outcrop pattern, with steeply overturned bedding.



Zones of brecciation are found throughout the Metaline Limestone and are often, but not always, the location of zinc and lead sulfide mineralization.  These features are predominantly stratabound and have gradational, often irregular borders.  Individual breccia bodies are crudely lensoid in cross section and have third dimensions that attain considerable length.  The zones often occur in an enechelon, and sometimes interconnected, pattern.  A variety of evidence suggests that the breccia bodies are solution collapse features controlled by favorable stratigraphy or lithologic facies.



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Mineralization consists of irregular bands, lenses, and fine disseminations of sphalerite and galena accompanied by varying amounts of pyrite.  The mineralization is considered to have been localized by permeable zones within and peripheral to breccia bodies created by solution collapse. The sulfide minerals are found in white dolomite that makes up the breccia matrix and fills other voids, and also as selective replacements of the host carbonate rocks.  Individual deposits have irregular gradational borders and are crudely lensoidal to oval in outline. Their elongated third dimension parallels the regional strike of the host rocks, and often plunge at low angles.  Cross sectional widths up to 80 feet and heights of as much as 150 feet have been noted in the more prominent zones.  Lengths of mineralization vary up to 650 feet.  The deposits have a tendency to occur together in an enechelon pattern over a stratigraphic interval of as much as 300 feet.  Such groupings of deposits may be more or less interconnected and have composite lengths of as much as 5000 feet.  Metal values generally decrease outward thus necessitating a border to be established by economic consideration.  Although individual sample values within a deposit may be as high as 20% zinc, average values for a deposit will usually range up to 7% zinc and 1% lead depending upon the assay border selected.



The Advance property consists of 720 acres of patented mineral rights, located approximately 5 miles east of the town of Northport.  The property is reached from Northport, the nearest town, by taking the paved Deep Lake road south for 4 miles to the graveled Black Canyon road and thence north for 3 miles.  The Metaline Formation is the principal rock unit to crop out on the Advance property.  Exploration consisting of soil sampling, drilling, trenching, and tunneling has shown that several zones of low-grade, disseminated zinc mineralization occur on the property.  The Advance property is considered to be of an exploratory nature, and is held by the Company on a maintenance basis.



The Iroquois property consists of 62 acres of patented mineral and surface rights, and  15 unpatented mining claims containing about  300 acres.  The property is reached from Northport, the nearest town, by taking the paved Deep Lake road south and east for 19 miles to the graveled road marked Iroquois Mine Road, and thence northeast for three miles.  The unpatented mining claims are held subject to a $100 per claim annual payment to the Federal government.  More than 25,000 feet of drilling and approximately 2,600 feet of tunneling have shown low-grade mineralization to occur in multiple zones, extending for the entire 5,000 foot length of the property.  Most of the exploration has been concentrated in one area where a mineralized zone of disseminated zinc with associated lead values has been outlined over approximately 900 feet in length and within 300 feet of the surface.  The property is considered to be of an exploratory nature and is held by the company on a maintenance basis.



Oil Interests



The Company receives income from a 10.16% working interest in 4 oil wells on the Clark lease in Sumner County, Kansas.  Although the lease has now produced for more than 40 years, independent consultants calculated the Companys 1981 share of the remaining reserves available through primary and secondary recovery to be at least 20,000 barrels.  Production since 1981 has totaled approximately 9600 barrels to the Companys account.



ITEM 3.

LEGAL PROCEEDINGS



None



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ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.



PART II



ITEM 5.

MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER  MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES



The Common Stock of the Company is traded in the over the counter market on the NASDAQ supervised Bulletin Board under the symbol MNMM.  The following table shows the high and low closing sales prices for the Common Stock for each quarter since January 1, 2002.  The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.



Fiscal Year

High Closing

Low Closing



2002:

First Quarter

$0.13

$0.05

Second Quarter

$0.22

$0.05

Third Quarter

$0.83

$0.15

Fourth Quarter

$1.25

$0.73



2003:

First Quarter

$2.65

$1.60

Second Quarter

$1.80

$1.20

Third Quarter

$3.70

$3.04

Fourth Quarter

$7.25

$3.04



Holders



As of February 24, 2004 there were 1,047 shareholders of record of the Companys common stock and approximately 1,415 additional shareholders whose shares are held through brokerage firms or other institutions.



Dividends



The Company has never paid any dividends and does not anticipate the payment of dividends in the foreseeable future.





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Securities Authorized for Issuance Under Equity Compensation Plans.



|Plan Category                                          | Number of securities to be issued upon exercise of outstanding options, warrants and rights


(a) | Weighted-average exercise price of outstanding options, warrants and rights


(b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|------------------------------------------------------ | ------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by shareholders     | 1,300,000                                                                                         | $3.33                                                                             | -0-                                                                                                                                            
|Equity compensation plans not approved by shareholders | 270,000                                                                                           | $4.73                                                                             | 1,230,000 (1)                                                                                                                                  
|Total                                                  | 1,570,000                                                                                         |                                                                                   | 1,230,000                                                                                                                                      

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(1)  The Companys 2003 Stock Option Plan has been amended  by the Board of Directors to increase the total number of options issuable pursuant to the plans from 1,200,000 to 3,000,000. The amendment to the plan will be, but has not yet been, submitted to the shareholders for approval.   Options in excess of the 1,200,000 may be granted but not exercised until receipt of shareholder approval.



Stock Option Plans



2003 Stock Option Plan



The 2003 Stock Option Plan is structured as so that both incentive stock options qualified under the Internal Revenue Code and non qualified stock options may be issued.  The Plan is administered under the auspices of the Board of Directors.  It is intended, that to the extent possible, the exercise of Stock Options will be exempt from the operation of Section 16(b) of the Securities Exchange Act of 1934, as amended.



Options are exercisable for a maximum of ten (10) years.  Transferability is prohibited except for limited circumstances regarding the demise of an Optionee. The maximum number of shares available for issue upon the exercise under the plan was originally set at 1,200,000 shares. As noted above, this number has been increased to 3,000,000 subject to shareholder approval. The number of shares issuable pursuant to the plan is subject to proportionate adjustment in the event of any stock dividend or split, recapitalization, merger, consolidation, spin-off, reorganization, combination or exchange of shares or other similar corporate change.





The option exercise price for Incentive Stock Options may be no less than the fair market value on the date of grant of the Option, except that the exercise price for any ten percent (10%) shareholder must be 110% of the fair market value on the date of grant.  The option price for the Non-Qualified Stock Options is the lowest allowable price under applicable law.



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Consultant Stock Compensation Plan



The Mines Management, Inc. 2003 Consultant Stock Compensation Plan is intended to promote the interests of the Company by offering those outside consultants or advisors of the Company who assist, or, as determined in the sole discretion of the Board, can assist in the development and success of the business of the Company, the opportunity to participate in a compensation plan designed to reward them for their services and to encourage and/or retain them  to provide services to the Company.



Options are exercisable for a maximum of ten (10) years.  Transferability is prohibited except for limited circumstances regarding the demise of an Optionee. The maximum number of shares was originally set at 400,000. This number has been increased by the Board of Directors to 700,000. The number of shares issuable pursuant to the plan is subject to proportionate adjustment in the event of any stock dividend or split, recapitalization, merger, consolidation, spin-off, reorganization, combination or exchange of shares or other similar corporate change.



Recent Sales of Unregistered Securities



In February, 2004, the Company completed an offering of 1,100,000 shares of common stock at a price of $5.00 per share.  Each purchaser in the offering received a common stock purchase warrant pursuant to which the purchaser has the right to acquire up to the number of shares of common stock equal to 25% of the shares to be issued to such purchaser. The stock purchase warrants are valid to purchase shares of the Companys common stock for a period of five years at a price of $7.25 per share. The Company has agreed to register the shares of common stock and common stock underlying the common stock purchase warrants.  Each purchaser has a right to purchaser up to 100% of any subsequent financing by the Company of its common stock or common stock equivalents for the 12 months following completion of the offering.



The Shemano Group, Inc, received a finders fee in the amount of seven percent of the gross proceeds ($385,000) and 165,000 common stock purchase warrants.  The warrant pricing,  terms and registration rights are identical to those rights accorded purchasers in the offering. After payment of approximately $50,000 of legal fee in connection with the offering, net proceeds to the Company were approximately $5,065,000.  As additional consideration Shemano received a right of first refusal to act as the Companys investment banker in connection with any private placement or registered offering of any type for debt or equity of not less than $5 million for a period of one year.



The shares were offered and sold to institutional investors. None of the shares were offered by means of advertising or general solicitation. Each of the sales by the Company was made pursuant to exemptions from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) and Rule 506 of Regulation D. Each of the certificates issued in connection with the above sales contained restrictive language on its face and each certificate had a restrictive legend in substantially the following form:



THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND. ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER  THE SECURITIES ACT OR PURSUANT TO AN

---

AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.



The Company is currently engaged in the offer and sale of up to 250,000 Units of the Companys common stock at a price of  $5.00 per Unit. Each unit consists of one share of common stock and one common stock purchase warrant, exercisable for five years from the initial exercise date, to purchase up to 25% of the shares purchased at a price of $7.25 per share. The Company has agreed to register the shares of common stock and common stock underlying the common stock purchase warrants at the same time the securities sold by the Shemano Group are registered.



Offers and sales are being made by the officers and directors of the Company. Although the Company may pay finders fees in connection with the offering, no fees will be paid to officers, directors or employees of the Company.  At February 24, 2004 the Company has offered and sold 155,800 Units for gross proceeds of $779,000. The Units have been sold to 10 purchasers, each of whom is an accredited or institutional investor.



None of the shares were offered by means of advertising or general solicitation. Each of the sales by the Company was made pursuant to exemptions from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) and Rule 506 of Regulation D. Each of the certificates issued in connection with the above sales containes a restrictive legend in substantially the same form as set forth above.



ITEM 6.      MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



Plan of Operation



The Companys plan of operation for the next twelve months will consist of a continuing examination of the geologic, environmental, and engineering data previously generated by Noranda for the Montanore Project, including the completion of a Mining Plan and Feasibility Report, an independent resource calculation and hiring of additional technical staff.  It is anticipated that the Company will also undertake the re-permitting of the Montanore project sometime in 2004.



It is the Companys intention to begin the process of identifying and acquiring additional properties for the exploration and development of precious and related base metals.



With the completion of the $5,500,000 private placement in February, 2004 the Company has adequate financial resources to meet its cash needs for the next twelve months.



Although the Company anticipates that it will hire additional employees during the next twelve months much of the anticipated work will be accomplished through the employment of consultants.



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ITEM 7.

FINANCIAL STATEMENTS























MINES MANAGEMENT, INC.

AND SUBSIDIARY





Consolidated Financial Statements and

Independent Auditors Report



December 31, 2003 and 2002























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Mines Management, Inc. and Subsidiary

Contents





Page



INDEPENDENT AUDITORS REPORT

2





FINANCIAL STATEMENTS:



Consolidated balance sheets

3



Consolidated statements of income

4



Consolidated statements of stockholders equity

5



Consolidated statements of cash flows

6



Notes to consolidated financial statements

7-14





















































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INDEPENDENT AUDITORS REPORT





Board of Directors

Mines Management, Inc.

Spokane, Washington





We have audited the accompanying consolidated balance sheets of Mines Management, Inc. (an Idaho Corporation) and Subsidiary as of December 31, 2003 and 2002, and the related consolidated statements of income, stockholders equity, and cash flows for the years then ended.  These consolidated financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mines Management, Inc. and Subsidiary as of December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.



As discussed in note 1 to the consolidated financial statements, Mines Management, Inc., changed its method of accounting for stock-based compensation in 2003.



/s/ LeMASTER & DANIELS PLLC

Spokane, Washington

February 19, 2004

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|Mines Management, Inc. and Subsidiary

Consolidated Balance Sheets
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|Assets                                                            
|                                                                  
|CURRENT ASSETS:                                                   
|                                                                  
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|MINERAL PROPERTIES                                                
|                                                                  
|PROPERTY AND EQUIPMENT:                                           
|                                                                  
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|                                                                  
|INVESTMENTS:                                                      
|                                                                  
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|                                                                  
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|                                                                  
|                                                                  
|                                                                  



See accompanying notes to financial statements.

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|Mines Management, Inc. and Subsidiary

Consolidated Balance Sheets
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|                                                                  
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|Liabilities and Stockholders Equity                              
|                                                                  
|CURRENT LIABILITIES:                                              
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|                                                                  
|OTHER LIABILITIES:                                                
|                                                                  
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|COMMITMENTS                                                       
|                                                                  
|STOCKHOLDERS EQUITY:                                             
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|                                                                  
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See accompanying notes to financial statements.

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|Mines Management, Inc. and Subsidiary

Consolidated Statements of Income
|------------------------------------------------------------------------
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|REVENUE:                                                                
|                                                                        
|                                                                        
|OPERATING EXPENSES:                                                     
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|LOSS FROM OPERATIONS                                                    
|                                                                        
|OTHER INCOME:                                                           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|NET LOSS                                                                
|                                                                        
|NET LOSS PER SHARE                                                      
|                                                                        
|WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING                              



See accompanying notes to financial statements.



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|Mines Management, Inc. and Subsidiary

Consolidated Statements of Stockholders Equity
Years Ended December 31, 2003 and 2002
|-----------------------------------------------------------------------------------------------------------------------------
|                                                                                                                             
|                                                                                                                             
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|BALANCES, DECEMBER 31, 2001                                                                                                  
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|Comprehensive loss                                                                                                           
|BALANCES, DECEMBER 31, 2002 - restated                                                                                       
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|Comprehensive loss                                                                                                           
|BALANCES, DECEMBER 31, 2003                                                                                                  



See accompanying notes to financial statements.



---



|Mines Management, Inc. and Subsidiary
Consolidated Statements of Cash Flows
|---------------------------------------------------------------------------
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Increase (Decrease) in Cash and Cash Equivalents                           
|CASH FLOWS FROM OPERATING ACTIVITIES:                                      
|                                                                           
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|                                                                           
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|CASH FLOWS FROM INVESTING ACTIVITIES:                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                      
|                                                                           
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                  
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                               
|CASH AND CASH EQUIVALENTS, END OF YEAR                                     
|                                                                           
|Supplemental Disclosure of Cash Flows Information:                         
|                                                                           
|                                                                           
|Noncash Financing Activity:                                                
|                                                                           



See accompanying notes to financial statements.

---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE 1  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

<r>

Organization:



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



Summary of Significant Accounting Policies:



a.

The accompanying consolidated financial statements include the accounts of Mines Management, Inc., and its wholly-owned subsidiary, Newhi, Inc.  Intercompany balances and transactions have been eliminated.  Newhi, Inc., was formed by the Company for the purpose of merger with Heidelberg Silver Mining Company, Inc.  In the merger, completed on April 15, 1988, Heidelberg Silver Mining Company, Inc., was merged into Newhi, Inc.  To effect the merger, the Company issued 367,844 shares of its previously unissued common stock. Also in connection with this merger, the Company issued 11,117 shares of common stock and paid $4,446 as a finders fee.

b.

The Company capitalizes acquisition and exploration costs on nonoperating mining properties.  Costs to maintain the mineral rights and leases are expensed as incurred.  Upon commencement of operations, the capitalized costs will be amortized based on proven or probable reserves.  Capitalized costs are charged to operations as impairment losses when title to the property has expired or when management believes the properties are not economically feasible to develop or hold for future development.

c.

In accordance with Financial Accounting Standards Board (FASB) Statement No. 144, Accounting for Impairment of Long-Lived Assets, the Company reviews its long-lived assets quarterly to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable.  Management does not believe that any impairment adjustment is needed to the carrying value of assets at December 31, 2003.

d.

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

e.

Basic and diluted loss per share are computed using the weighted average number of shares outstanding during the year (7,234,703 and 5,472,460 in 2003 and 2002, respectively).  Stock options and warrants outstanding are antidilutive and are not considered in the computation.

f.

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



---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



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



Summary of Significant Accounting Policies (continued):



g.

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



h.

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



i.

Certain reclassifications of 2002 amounts have been made to conform with the 2003 financial statement presentation with no effect on previously reported net loss.



j.

At December 31, 2003, the Company has four stock option plans, which are described more fully in note 6.  Prior to 2003, the Company accounted for stock options issued under the recognition and measurement provisions of Accounting Principles Board (APB) Opinion No. 25,Accounting for Stock Issued to Employees.  No stock-based employee compensation was recognized in previously reported financial statements under APB No. 25, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of the grant. Effective January 1, 2003, the Company adopted the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, for all stock-based employee compensation.  In adopting FASB No. 123, the Company elected to restate the prior year presented (2002) to reflect the compensation cost that would have been recognized had the recognition provisions of FASB No. 123 been applied to the stock options granted for that year.  The restatement resulted in a $52,480 increase in the previously reported 2002 net loss ($0.01 per share) and in additional paid-in capital.



NOTE 2  STOCKHOLDERS EQUITY:



Common Stock:



In 2002, the Company sold 370,000 common shares for $37,000 ($0.10 per share).  In connection with the stock sales, the Company granted warrants to purchase up to 370,000 common shares at $0.20 per share through June 10, 2003.  As of December 31, 2002, warrants for 50,000 shares had been exercised, and the remaining warrants for 320,000 shares were exercised in 2003.



In 2002, the Company sold 366,000 common shares for $256,200 ($0.70 per share).  In connection with the stock sales, the Company granted warrants to purchase up to 366,000 common shares at $0.80 per share through November 23, 2003.  During 2003, warrants for 316,000 were exercised.

---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE 2  STOCKHOLDERS EQUITY (continued):



Common Stock (continued):



In 2003, the Company sold 1,152,007 common shares for $1,267,207 ($1.10 per share).  In connection with the stock sales, the Company granted warrants to purchase up to 1,152,007 common shares at $1.20 per share through two years from the date of issue.  During 2003, warrants for 122,501 shares had been exercised.



At December 31, 2003, warrants to purchase 1,029,506 common shares at $1.20 per share were outstanding.



Preferred Stock:



The Company has authorized 10,000,000 shares of no-par-value preferred stock.  Through December 31, 2003, the Company had not issued any of the authorized preferred stock.



NOTE 3  MINING PROPERTIES:



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



December 31,



2003

2002

Montanore

$

278,519

$

142,708

Advance

2,139

2,139

Iroquois

223,834

223,834

$

504,492

$

368,681







The Montanore property (formerly the Noxon property) located in northwestern Montana includes 18 mining claims covering 355 acres plus one 5-acre patented mill site.  In August 2002 the Company acquired controlling interest of the Montanore silver copper deposit in Sanders County, Montana.  The Company received a quitclaim deed from Noranda Mineral Corp. (Noranda) that elected to withdraw from the project.  The mineral rights acquired by the Company are subject to a $0.20 per ton royalty, and a 5% net profits royalty which would commence after the operator has recovered all of its exploration and development costs.  Between 1988 and 2002 Noranda carried out extensive geological, environmental, and engineering studies related to the project that is considered to be one of the largest silver deposits in the world.  This work led to Norandas definition of a resource of 135 million tons containing 260 million ounces of silver and 2 billion pounds of copper.  In December 2002, the Company received a quitclaim deed to all intellectual property connected with studies that Noranda carried out on the project.



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



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

---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE 4  INVESTMENTS:



The Company owns ten $100,000 certificates of deposit.  These investments mature in 2008 and earn interest at rates from 3.3% to 3.64%.



The Company owns 45,000 free-trading shares of Bitterroot Resources, Ltd. (BTT) a public Canadian corporation traded on the Toronto Venture Exchange.  The shares are held as available for sale.  This investment is being recorded at fair market value with a corresponding adjustment to stockholders equity.  The 45,000 free-trading shares at December 31, 2003 and 2002, have an approximate market value of $20,893 and $3,133 U.S. funds, respectively.  The Company also owns 196,000 free-trading shares of Centram Exploration Ltd., a public Canadian corporation traded on the Toronto Venture Exchange.  The shares are held as available for sale.  The shares were received in year 2002 in exchange for administrative services provided by Mines Management, Inc.  The 196,000 free-trading shares at December 31, 2003 and 2002, have an approximate market value of $33,367 and $11,165 U.S. funds, respectively.



NOTE 5  SEVERANCE AGREEMENT:



During the year ended December 31, 2003, the Company entered into a severance agreement with a former officer.  The agreement provides for annual severance payments, payable in equal monthly installments, through April 30, 2006.  As of December 31, 2003, the Company had the following obligations under the agreement:



Years Ending

December 31,

Amount



2004

$

60,000

2005

60,000

2006

20,000



$

140,000





NOTE 6  STOCK OPTIONS:



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

---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE 6  STOCK OPTIONS (continued):



At December 31, 2003, the following 1998 nonqualified plan options were outstanding:



|Optionee    | Number of
Shares Granted | Option Price    | Option Period | Expiration        
|----------- | ------------------------ | --------------- | ------------- | ------------------
|            |                          |                 |               |                   
|Directors:  |                          |                 |               |                   
|Jerry Pogue | 100,000                  | $0.40 per share | 5 years       | September 15, 2007



Under the 1998 qualified plan, the Company may grant options to purchase up to 460,000 shares of common stock.  The option price shall not be less than the fair market value on the date of grant of the shares.  Stock options shall be exercisable within ten years from the date of the grant of the option.  Options granted under the qualified plan to date were fully vested upon grant.



At December 31, 2003, the following 1998 qualified plan options were outstanding:



|Optionee    | Number of
Shares Granted | Option Price    | Option Period | Expiration      
|----------- | ------------------------ | --------------- | ------------- | ----------------
|            |                          |                 |               |                 
|Glenn Dobbs | 100,000                  | $0.82 per share | 5 years       | December 4, 2007



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



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



---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE 6  STOCK OPTIONS (continued):



At December 31, 2003, the following options were outstanding under the 2003 Stock Option Plan:



|Optionee       | Number of
Shares Granted | Option Price    | Option Period | Expiration     
|-------------- | ------------------------ | --------------- | ------------- | ---------------
|               |                          |                 |               |                
|Glenn Dobbs    | 500,000                  | $1.60 per share | 5 years       | March 4, 2008  
|Douglas Dobbs  | 40,000                   | $1.60 per share | 5 years       | March 4, 2008  
|Samantha Pitts | 10,000                   | $1.60 per share | 5 years       | March 4, 2008  
|Roy Franklin   | 10,000                   | $1.85 per share | 5 years       | August 27, 2008
|Bob Russell    | 100,000                  | $1.85 per share | 5 years       | August 27, 2008
|Glenn Dobbs    | 100,000                  | $1.85 per share | 5 years       | August 27, 2008
|               |                          |                 |               |                
|               | 760,000                  |                 |               |                



At December 31, 2003, the following options were outstanding under the 2003 Consultant Stock Compensation Plan:



|Optionee    | Number of
Shares Granted | Option Price    | Option Period | Expiration     
|----------- | ------------------------ | --------------- | ------------- | ---------------
|            |                          |                 |               |                
|Jerry Pogue | 100,000                  | $1.85 per share | 5 years       | August 27, 2008



See note 9 regarding subsequent option grants and changes to the 2003 plans.



The fair value of each grant is estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions from grants in 2002 and 2003, respectively: dividend rate of 0% for both years, price volatility of 35% and 95%, risk-free interest rates of 3.03 and 1.69, and expected lives of five years for 1998 Plan options issued before December 31, 2002, and one year for the 1998 Plan options issued during 2003, and two years for the 2003 Plan options.







---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE 6  STOCK OPTIONS (continued):



The following summarizes option activity for the years presented:



Weighted-Average

Shares

Exercise Price

Under Option

Per Share



Balance, at January 1, 2002

450,000

0.38

Issued

410,000

0.51

Forfeited

-

-

Exercised

-

-



Balance at December 31, 2002

860,000

0.44

Issued

920,000

1.66

Forfeited

-

-

Exercised

(720,000)

0.46



Balance at December 31, 2003

1,060,000

1.49







Options outstanding at December 31, 2003, have a remaining contractual life of approximately four years.



NOTE 7  CONCENTRATION OF CREDIT RISK:



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



NOTE 8  DEFERRED INCOME TAX:



At December 31, 2003 and 2002, the Company had deferred tax assets which were fully reserved by valuation allowances.  Following are the components of such assets and allowances:



December 31,



2003

2002

Deferred tax assets arising from:

Net operating loss carryforwards

$

185,000

$

114,000

Stock option compensation

96,000

8,000

Accrued severance compensation

21,000

-

302,000

122,000

Less valuation allowance

302,000

122,000

Net deferred tax assets

$

-

$

-





---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE 8  DEFERRED INCOME TAX (continued):



For the years the presented, the effective income tax rate differed from the expected rate because of the effects of annual changes in the deferred tax asset valuation allowance.  Changes in the deferred tax asset valuation allowance for 2003 and 2002 relate only to corresponding changes in deferred tax assets for those years.



At December 31, 2002, the Company had federal tax-basis net operating loss carryforwards totaling approximately $1,230,000, which will expire in various amounts from 2004 through 2023.





NOTE 9  SUBSEQUENT EVENTS:



Subsequent to December 31, 2003, the following events occurred:



1.

The Company completed a private placement stock offering in which 1,100,000 shares were issued at $5 per share for a total of $5,500,000 gross proceeds.  In addition, the Company granted the purchasers warrants allowing the purchase of 275,000 shares at $7.25.  The warrants expire five years from issuance.  The Company paid finders fee of 7% cash ($385,000) and warrants to purchase 165,000 common shares at $7.25 per share.



2.

The Company commenced (but did not close) a second private placement stock offering in which up to 250,000 shares may be issued at $5 per share.  In addition, the Company will grant one warrant for four shares sold allowing the purchase a common share at $7.25.



3.

The Board of Directors granted options to purchase 650,000 common shares under the 2003 Stock Option Plan.  The Board also approved, subject to stockholder approval, increases in the maximum number of common shares available under the 2003 Stock Option Plan to 3,000,000 shares and 700,000 shares under the 2003 Consultant Stock Compensation Plan.



The Company has agreed to file a registration statement covering the above private placement shares with the Securities and Exchange Commission within seven days following the acceptance of the Companys application to trade on the American Stock Exchange.



The following is an unaudited consolidated pro forma balance sheet as of December 31, 2003, giving effect to the funds raised during January and February 2004.









---

Mines Management, Inc. and Subsidiary

Notes to Consolidated Financial Statements



NOTE 9  SUBSEQUENT EVENTS (continued):



Pro Forma

Unaudited

Historical

Adjustment

Pro Forma

Assets

CURRENT ASSETS:

Cash and cash equivalents

$

282,637

$

5,115,000

$

5,397,637

Interest receivable

15,742

-

15,742

Prepaid expenses

7,500

-

7,500

Total current assets

305,879

5,115,000

5,420,879

MINERAL PROPERTIES

504,492

-

504,492



PROPERTY AND EQUIPMENT:

Mine buildings

12,926

-

12,926

Equipment

44,098

-

44,098

Office equipment

35,141

-

35,141

92,165

-

92,165

Less accumulated depreciation

67,061

-

67,061

25,104

-

25,104



INVESTMENTS:

Certificates of deposit

1,000,000

-

1,000,000

Available-for-sale securities

54,260

-

54,260

1,054,260

-

1,054,260



$

1,889,735

$

5,115,000

$

7,004,735







Liabilities and Stockholders Equity



CURRENT LIABILITIES:

Accounts payable

$

26,869

$

-

$

26,869

State income taxes payable

800

-

800

Due to officer

12,583

-

12,583

Severance currently payable

60,000

-

60,000

Payroll taxes payable

8,404

-

8,404

Total current liabilities

108,656

-

108,656



OTHER LIABILITIES:

Severance payable, long term

80,000

-

80,000

Total liabilities

188,656

-

188,656



COMMITMENTS



STOCKHOLDERS EQUITY:

Common stock  100,000,000 shares, $0.01 par value, authorized

87,247

11,000

98,247

Preferred stock  10,000,000 shares, no par value, authorized

-

-

-

Additional paid-in capital

4,186,497

5,104,000

9,290,497

Retained earnings (deficit)

(2,615,760)

-

(2,615,760)

Accumulated other comprehensive income

43,095

-

43,095

Total stockholders equity

1,701,079

5,115,000

6,816,079

$

1,889,735

$

5,115,000

$

7,004,735







</r>



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ITEM 8.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



There have been no disagreements between the Company and its accountants regarding any matter or accounting principles or practices or financial statement disclosures.  The Company elected to engage the services of LeMaster & Daniels PLLC to undertake its audit for the Year ended December 31, 2003.



ITEM 8-A.

CONTROLS AND PROCEDURES



Glenn M. Dobbs , the Registrants President and acting Principal Accounting Officer has evaluated the Registrants disclosure controls and procedures within 90 days of the filing date of this annual report.  Based upon this evaluation, the Registrants President and Principal Accounting Officer concluded that the Registrants disclosure controls and procedures are effective in ensuring that material information required to be disclosed is included in the reports that it files with the Securities and Exchange commission.



There were no significant changes in the Registrants internal controls or, to the knowledge of the management of the Registrant, in other factors that could significantly affect these controls subsequent to the evaluation date.



PART III



ITEM 9.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT



Directors and Officers



Name

Age

Office with the Company

Appointed to Office



Glenn M. Dobbs (1)

60

President, Chief Executive Officer

2003

and  Treasurer

Roy G. Franklin (2)(3)

68

Director

1988



Robert L. Russell (2)(3) 70

Director

1999



Jerry Pogue

62

Director

1999



Russell C. Babcock (3)

67

Director

2004

________________________

(1)

Glenn M. Dobbs served as the Companys Vice-President from December 2002 until his appointment as President and Chief Executive Officer in January 2003 and Treasurer in 2004.

(2)

Member of Compensation Committee.

(3)

Member of Audit Committee.



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The directors are elected for a one-year term and until their successors have been elected and qualified.  Executive Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of shareholders and until their successors have been elected and qualified.  There are no arrangements or understandings between any of the directors, executive officers, and other persons pursuant to which any of the foregoing persons were named as Directors or executive officers.  There is no family relationship between any Director, Executive Officer, or person nominated or chosen by the Registrant to become a Director or Executive Officer.



Glenn Dobbs has broad experience in international finance, investment banking, natural resource financing and as a business development consultant.  Mr. Dobbs was the founder of the Alpha Commodities Fund in 1976, founder and Board Chairman of First American Bank in 1978, Dallas regional manager for Monex International, founder of the InterGold (Hedge) Fund in 1996, and a former member of the Washington State House of Representatives.  Mr. Dobbs has written and lectured extensively on precious metals sector investing, resource development and financing.



Robert L. Russell, a Professional Engineer, has been a director of the Company since March, 1999. Since September 1998 Mr. Russell has provided mining management consulting services through his consulting company, R.L. Russell Associates. Mr. Russell has held positions with Exxon Minerals and Freeport McMoRan Copper and Gold, where he served as Vice President of Mining.  Mr. Russell acted as General Manager of Freeports Indonesian operations, which have become the largest gold mine in the world.  From 1995 to 1998 Mr. Russell was employed by Zambia Consolidated Copper Mines, most recently as General Manager of the Nchanga Division. In that position Mr. Russell was responsible for all functions of two operating mines and several metallurgical facilities. Under Mr. Russell, the Nchanga Division had 8700 employees and produced 150,000 tons of copper and 3500 tons (about 12% of the worlds supply) of cobalt per year.



Jerry G. Pogue is a businessman with an extensive background in the management and financing of junior resource companies.  He has managed a large sales organization, has worked as a highly successful stockbroker and investment analyst, and has financed and managed a number of companies in the resource and technology sectors.  He frequently lectures at international mining investment conferences.



Roy G. Franklin is a certified public accountant with 30 years experience in small company administration and finance.  He was formerly a director of Heidelberg Silver Mining Company and is a principal in the accounting firm of Oswalt, Teel, and Franklin, P.S.



Russell C. Babcock received a B.S. degree from Lawrence College, Appleton, Wisconsin, in 1957 and an M.S. degree from the University of Wisconsin, Madison, in 1959.  He joined Kennecotts exploration subsidiary, Bear Creek Mining Company, part time in 1956 and full time in 1959 as an exploration geologist.  He was appointed Director of Exploration for Kennecott in Salt Lake City in January, 1986.  In November, 1990, he became Chief Geologist for Kennecott.  Mr. Babcock retired from Kennecott in 1994 and is currently a consulting economic geologist, specializing in exploration for and evaluation of base and precious metal deposits worldwide.  In 2003 he was the recipient of the Society for Mining Metallurgy, and Exploration Ben Dickerson Award.



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None of the Directors is also a director of any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to Section 15(d) of the Act, or of any company registered under the Investment Company Act of 1940.



No Director, or person nominated to become a Director or Executive Officer, has been involved in any legal action involving the Company during the past five years.



Promoters and Control Person: Not Applicable



Compliance with Section 16(a) of the Exchange Act



Based solely upon a review of forms 3 and 4 and amendments thereto furnished to the Registrant pursuant to Section 240.16a-3 during the most recent fiscal year, and Form 5 and amendments thereto furnished to the Registrant with respect to the most recent fiscal year, no person who at any time during the fiscal year was a director, officer, or beneficial owner or more than ten percent of any class of equity securities of the Registrant registered pursuant to Section 12 of the Exchange Act, or any other person subject to Section 16 of the Exchange Act with respect to the Registrant because of the requirements of Section 30 of the Investment Company Act or Section 17 of the Public Utility Holding Company Act (Areporting person) failed to file on a timely basis, as disclosed in the above Forms, reports required by Section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years, except William R. Green (one report, 1 transaction), Glenn Dobbs (one report, 4 transactions), Robert L  Russell (one report, 8 transactions) and Jerry Pogue (one report, 9 transactions).



Board Committees



The compensation committee, which was appointed in 2003, is composed of Messrs. Franklin and Russell. The entire board performs the functions of the Nominating  Committee.



Glenn Dobbs, Roy B. Franklin, Robert L. Russell and Jerry G. Pogue, comprising the entire Board of Directors, performed the functions of the Audit Committee during the year ended December 31, 2003. The audit committee recommends a firm of independent certified public accountants to audit the annual financial statements, discusses with the auditors and approves in advance the scope of the audit, reviews with the independent auditors their independence, the financial statements and their audit report, reviews management's administration of the system of internal accounting controls, and reviews the Company's procedures relating to business ethics. Messrs Franklin, Russell and Pogue are deemed to be independent directors as that term is defined in Rule 4200(a)(14) of the NASDs listing standards.



Subsequent to year end the Company has appointed an audit committee comprised of Roy G. Franklin, Robert L. Russell and Russell C. Babcock.  Each member of the audit committee is deemed to be independent director as that term is defined in Rule 4200(a)(14) of the NASDs listing standards. The Company did not have a written audit committee charter during 2003 but has adopted a written audit committee charter in connection with the appointment of the audit committee.



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ITEM 10.

EXECUTIVE COMPENSATION



A summary of cash and other compensation for the Companys President and Chief Executive Officer for each of the Companys last completed three fiscal years is as follows:



Summary Compensation Table



Long-Term Compensation

Annual Compensation

Awards

Payouts

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

Name

Other

Restricted

Securities



and

Annual

Stock

Underlying

LTIP

All Other

Principal

Year

Salary

Bonus

Comp.

Awards(1)

Options/

Payouts

Comp.

Position

($)

($)

($)

($)

SARs(#)

($)

($)

____________________________________________________________________________________________



William R. Green

2001

$  9,500

$0

$0

$ 0

-0-

$0

$0

President

2002

$13,649

$0

$0

$30,000

100,000

$0

$0



2003

$20,000

$0

$0

$0

-0-

$0

$40,000



Glenn M. Dobbs

2002

$0

$0

$0

$0

100,000

$0

$0

President and

2003

$70,000

$0

$0

$0

600,000

$0

$0

Chief Executive Officer



Option/SAR Grants In Last Fiscal Year



Individual Grants

|(a)




Name   | (b)
Number of Securities Underlying Options/SARs Granted (#) | (c)
% of Total Options/SARs Granted to Employees in Fiscal Year | (d)

Exercise or Base Price ($/Sh) | (e)



Expiration Date
|-------------- | ------------------------------------------------------------ | --------------------------------------------------------------- | ---------------------------------- | ----------------------
|Glenn M. Dobbs | 500,000                                                      | 52.1%                                                           | $1.60                              | 03/04/08              
|Glenn M. Dobbs | 100,000                                                      | 10.4%                                                           | $1.85                              | 08/27/08              



Director Compensation For Last Fiscal Year



During the fiscal year ended December 31, 2003 each of the Companys non-employee directors was awarded stock options as set forth in the following table.



|Number of
Shares Granted | Optionee          | Option Price    | Option Period | Expiration     
|------------------------ | ----------------- | --------------- | ------------- | ---------------
|10,000                   | Roy Franklin      | $1.85 per share | 5 years       | August 27, 2008
|100,000                  | Jerry Pogue(1)    | $1,85 per share | 5 years       | August 17, 2998
|100,000                  | Robert L. Russell | $1.85 per share | 5 years       | August 27, 2008
|110,000                  | Total             | $1.85 per share | 5 years       | August 27, 2008

__________________________________

(1)    Mr. Pogues options were issued in consideration for consulting services rendered to the Company.

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ITEM 11.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND     MANAGEMENT



Security Ownership of Certain Beneficial Owners



The following table sets forth information as of  February 24, 2004 regarding any person known to the Company to be the beneficial owner of more than five percent of any class of the Companys voting securities.



|Title of Class | Name of Beneficial owner | Amount and nature of Beneficial Ownership | Percent of Class (1)
|-------------- | ------------------------ | ----------------------------------------- | --------------------
|Common         | William R. Green         | 575,345                                   | 5.83%               
|Common         | Terry Tyson              | 526,000                                   | 5.33%               

___________________________

(1)  Based on 9,874,708 shares outstanding



Security Ownership of Management



The following table sets forth certain information as of February 24, 2004 regarding the number and percentage of shares of Common Stock of the Company or any of its parents or subsidiaries beneficially owned (as such term is defined in Rule 13d-3 under the Exchange Act) by each director, each of the named executive officers and directors and executive officers as a group:



|Title of Class | Name of Beneficial Owner                            | Amount and Nature of Beneficial Ownership | Percent of Class(1)
|-------------- | --------------------------------------------------- | ----------------------------------------- | -------------------
|Common         | Glenn M. Dobbs                                      | 430,919 shares (2)
850,000 vested options | 4.36%              
|Common         | Roy G. Franklin                                     | 246,281 shares
50,000 vested options      | 2.49 %             
|Common         | Robert L. Russell                                   | 113,857 shares
150,000 vested options     | 1.15%              
|Common         | Jerry G. Pogue                                      | 106,857 shares
250,000 vested options     | 1.08 %             
|Common         | Russell C. Babcock                                  | --
25,000 vested options                  | --                 
|Common         | Total of all officers and directors (5 individuals) | 897,914 shares
1,375,000 vested options   | 9.09 %             

______________________________

(1)

Based on 9,874,708 shares outstanding

(2)

Include 241,500 shares held of record by Intergold Fund Limited



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Changes in Control



There are no arrangements known to the Registrant the operation of which may at a subsequent time result in the change of control of the Registrant.



ITEM 12.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



On January 15, 2003 the Company entered onto a severance agreement with Dr. William R. Green. Dr. Green had served as the President of the Company since 1965. Under the terms of the severance agreement, Dr. Green remained an employee of the Company until April 30, 2003 to assist in the transition of the new President and Chief Executive Officer. Thereafter, Dr. Green will receive the sum of $60,000 per year, payable in monthly installments, for the next 36 months.



On August 18, 2004, Jerry Pogue, a director of the Company was issued options to acquire 100,000 shares of stock at a price of $1.85 per share for consulting services rendered to the Company . The options are fully vested and expire on August 17, 2008.



Douglas Dobbs, son of Glenn Dobbs, President and a director of the Company, is employed by the Company as Director of Corporate Development and Investor Relations. Douglas Dobbs was employed by the Company prior to Glenn Dobbs becoming an officer or director of the Company.  During the year ended December 31, 2003 Mr. Dobbs received a salary of  $52,000 and was granted 40,000 options exercisable for 5 years at the then market price of $1.60 per share.



Except as set forth above, there have been no transactions or series of transactions, or proposed transactions during the last two years to which the Registrant is a party in which any director, nominee for election as a director, executive officer or beneficial owner of five percent or more of the Registrants common stock, or any member of the immediate family of the foregoing had or is to have a direct or indirect material interest exceeding $60,000.



ITEM 13.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.



(a) the  following documents are filed as part of the report:



1. Financial Statements

Accountants' Report



Consolidated Balance Sheets

December 31,  2003 and  2002



Consolidated Statements of Operations and Comprehensive Income

for the years ended December 31,  2003 and 2002



Consolidated Statement of Changes in Stockholders' Equity

for the years ended December 31,  2003, and  2002



Consolidated Statements of Cash Flows

for the years ended December 31,  2003, and  2002



Notes to  Financial Statements

---

<r>

2. Exhibits required by Item 601

(2)

Plan of Acquisition, reorganization, arrangement,

liquidation or succession.(1)

(3)(i)

Articles of Incorporation(2)

(3)(ii)

Bylaws.(2)

(4)

Instruments defining the rights of security holders,

including indentures.

(4) (i)

Mines Management, Inc., 1998 Stock Option Plan(2)

(4) (ii)

Mines Management, Inc., 1998 Incentive Stock Option Plan(2)

(4) (iii) Mines Management, Inc., 2003 Stock Option Plan(2)

(4) (iv)

Mines Management, Inc., 2003 Consultant Stock Compensation Plan(2)

(9)

Voting trust agreements.(1)

(1)

Material contracts.

(10)(i)

William R. Green Separation Agreement (2)

(10)(ii)  Glenn Dobbs Executive Compensation Agreement (2)

(11)

Statement re:  computation of per share earnings.(1)

(12)

Statements re:  computation of ratios.(1)

(13)

Annual report to security holders, Form 10Q

or quarterly report to security holders.(1)

(14)

Code of Ethics (2)

(1)

Rule 13a-14(a)/15d-14(a) Certifications

(31)(i)

Certification of Glenn Dobbs

(2)

Section 1350 Certifications

(32)(i)

Certification of Glenn Dobbs

(16)

Letter re:  change in certifying accountant. (1)

(18)

Letter re:  change in accounting principles.(1)

(19)

Subsidiaries of the Registrant. (2)

(22)

Publisher report regarding matters submitted

to vote of security holders. (1)

(99)

Additional Exhibits.

(99)(i)  Audit Committee Charter (2)

(99)(ii) Form of Audit Committee Pre-approval Policies (2)



(1) These items have either been omitted or are not applicable

(2) Incorporated by reference to previous filing

</r>

(b)

Reports on Form 8-K.  No reports on Form 8-K have been filed during the last quarter of the period covered by this report.



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ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit Fees



The aggregate fees billed for professional services rendered by the Companys principal accountant for the audit of the Companys annual financial statements for the fiscal years ended December 31, 2003 and 2002 were $26,800 and $7,000 respectively.



Audit Related Fees



The Company incurred no fees during the last two fiscal years for assurance and related services by the Companys principal accountant that were reasonably related to the performance of the audit of the Companys financial statements.



Tax Fees



The Company incurred fees totaling $1,500 and $1,000 during the fiscal years ended December 31, 2003 and 2002, respectively, for professional services rendered by the Companys principal accountant for tax compliance, tax advice and tax planning.



All Other Fees



The Company incurred no other fees during the last two fiscal years for products and services rendered by the Companys principal accountant.







SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS



Not Applicable



---

SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



MINES MANAGEMENT, INC.



/s/ Glenn M. Dobbs

By:



GLENN M. DOBBS

President (Principal Executive Officer)

Treasurer  (Principal Financial Officer)



Date:

March 5, 2004



In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



/s/ Glenn M. Dobbs



GLENN M. DOBBS, Director

Date:

March 5, 2004



/s/ Roy G. Franklin



ROY G. FRANKLIN, Director

Date:

March 5, 2004



/s/Robert L. Russell



ROBERT L. RUSSELL, Director

Date:

March 5, 2004



Jerry G;. Pogue



JERRY G. POGUE, Director

Date:

March 5, 2004