Letter To Investors Re Franklin Mining Inc ( FMNJ )

Dear Investor, 

There are great opportunities in international mining and the Franklin Mining Corporation is one of the few American companies venturing into some of the world’s most mineral dense regions.  FMC has ongoing extractive and exploration projects for copper, gold,  and lithium in parts of South America’s central Andes in which half  the planet’s known reserves of rare earth minerals, ferrous and precious metals are located. Global markets driven by  new high tech industries, energy transition, the war in Ukraine, inflation and the erosion of the US dollar’s reserve status, are creating an unprecedented demand for  these commodities but South America’s political uncertainty and cut throat competition from China and Russia are scaring away many  investors.

Recently, Bill Gates’ company, Lilac solutions, lost a bid for Bolivia’s main lithium concession  to a Chinese consortium. Nationalizing moves by Chile’s government have similarly frozen some planned US ventures. Nevertheless,  the vast local experience and network of  contacts developed by FMC during decades of operating in the southern Andes, is enabling the company to expand its presence  and  discover new opportunities.  

Aside from operating gold mines in Bolivia’s Yuyo province north of La Paz which produced and sold 4.2 tons of gold in 2022, FMC is actively seeking antimony and zinc mines. The company is also  initiating a major new copper project in Argentina where a more decentralized system can be advantageous to American investors that know how to  operate with local partners

Last month, FMC signed a joint venture agreement with the private Argentine company AMA Resources Inc. to mine for copper over a span of 55,000 hectares in the mineral rich province of Neuquen. According to geological surveys, 300 hectares within the assigned area have already been tested and proven viable for commercialization under JORC drilling standards. FMC ceased a lithium exploration project initiated last year in northern Argentina due to the low mineral densities indicated  by initial  testing but there are possibilities that lithium deposits may be found at its new concession in Neuquen.

 There have been about 10 different bids for Lithium in northern Argentina by mostly Chinese companies with whom it’s  difficult to compete under current circumstances. American companies operate at a disadvantage as they are required to observe US legal requirements to raise capital such as assessments of political risk, environmental standards and  Corrupt Practices Act provisions that don’t exist in China or in other foreign countries whose companies are still allowed to list on the U.S. stock exchange. 

Furthermore, China’s primary objective of gaining control of natural resources to secure their flow and leverage world prices is attractive to populist governments seeking quick results to show the public. But such top heavy deals  risk alienating local communities in the long run.  Recent history shows that technology  promised for industrialization and value added projects often fails to get delivered, generating underemployment and discontent among local communities that  often resent being ignored in  government negotiations.

FMC works through private partners and local communities to gain mineral concessions and secure positions in the market that will allow an expansion into new areas once state projects fail and major concessions again become available.

While Chinese influenced socialist governments have tended to dominate South America’s politics over recent years, the trend is changing and most countries are likely to return to free market policies in the near future. Chilean voters just defeated a government proposed socialist constitution in a referendum that indicated surging support for free market conservatives. Peru’s moderate centrist government has successfully resisted a far left insurrection. Paraguay elected a conservative government last month and  Argentina has elections scheduled for later this year, in which a strong pro-free market candidate stands a good chance of beating the governing Peronistas who have been in power for over twenty years  

FMC predicts  an improving business climate for US investment in South America, especialy  if current regional trends are complemented by US regulatory policies aimed at protecting American business from unfair competition by China and other foreign interests.

Martin Arostegui

Director of Risk Analysis