Dear Shareholder and 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 reserve status, are creating an unprecedented demand for these commodities but South America’s political uncertainty and cutthroat competition from China and Russia are scaring away many investors.
Recently, Bill Gates’s company, Lilac Solutions, lost a bid for Bolivia’s main lithium concession to a Chinese consortium. Nationalizing moves by the Chiles 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 its 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. Perus 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.
Director of Risk Analysis
Safe Harbor Act: This release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” describe future expectations, plans, results, or strategies and are generally preceded by words such as “may,” “future,” “plan” or “planned,” “will” or “should,” “expected,” “anticipates,” “draft,” “eventually” or “projected.” You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company’s annual report.