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MEMORANDUM TO THE SHAREHOLDERS
ANSWERS TO QUESTIONS MOST FREQUENTLY ASKED (FAQ)
First let me say, going into the new year, we are already two months in. Time flies. I want to express thanks for your continuing support.
QUESTIONS AND ANSWERS (Q&A)
Many of the calls and e-mails we receive are in reference to the following questions:
Q) Why do you continue to issue shares?
A) The expenses of the company in maintaining all three offices and personnel continue to grow. The company has to continue to raise capital. The only way to avoid the need for issuing additional stock is as follows: We would require a large convertible debenture, which at the end, would kill us.
Q) How is the company currently raising capital?
A) We have qualified investors that prepay for the stock under the administration of lawyers.
Q) How do you get the share price up? [Good Question]
A) It is not in our hands. However, after studying many companies that trade on the Pink Sheet, all I can determine is, TRADES. One company that I have been studying, for example, has 2 Trillion Shares outstanding and around 203 Million Shares in the float. However, the difference is, that we do 20 or 30 trades per day, where they do 3,000 trades per day and it is reflected in the price.
QUESTIONS REGARDING STATUS OF PROJECTS
I. ARGENTINA GTL (Gas To Liquid)
The status of our contract is currently on hold as Argentina has agreed to a methanol project after an offer of a three year advance payment for the natural gas which has required us to renegotiate our natural gas allocation. These negotiations are currently underway as we remain in close contact with Argentine officials.
PROSPECTIVE PARTNERS ON GTL PROJECT
After meeting with two companies that have some technology, our goal is to have a partner that has proven technology for the production we would require and who would be able to assist in funding the project.
Please remember that all of our projects are based on our partners in the LOI’s (Letters Of Intent) being able to produce the required natural gas for each project.
II. SANTA CRUZ
The only thing to report at this time, is to inform you that we have prepared all of the documentation that has been requested and we will soon have a presentation.
III. ESCALA
It may seem that this project is taking a very long time. However, it is important to remember that we have only been working in Escala for 15 months, even though Franklin Mining has been in Bolivia much longer. We have only worked with Escala as the law allows.
Our contract required that we satisfy two elements. We were required to invest $200,000 (US) from November 2006 through March 2007, which we have satisfied. After fulfilling the investor requirement to Comibol, the second element was to register the contract with the Minister of Mines, which has been completed.
With these two elements complete, we have only the Metallurgical study remaining. The completion of this study is also necessary to obtain data needed to fill in a few remaining blanks that are required for the completion of any other reports that are currently incomplete. Once this last study has been completed, the cost of which is $21,000 (US), we have two major lenders who are ready to review our final analysis. In addition, we have a Chinese company that is interested in purchasing our Zinc content.
PROGRESS REPORT:
Escala is progressing on a day to day basis. Each issue that has arisen within the last 15 months has been addressed in a timely manner and a solution has been found. Therefore, the situation changes daily. Escala must now have an Environmental License, which will take approximately 3 months to obtain from start to finish. With the addition of Dr. Biste to our company, this process should be completed in a expedient manner.
REVENUE:
The most important question of all pertains to REVENUE. We continue to work very hard on this. Among our options are the following:
Our current ground transportation from Escala to Potosi is approximately 150km to process our inventory and make sales. Potosi has approximately 40 buyers.
Because of transportation and diesel prices we, would loose a small amount of revenue each trip.The cost per ton for transportation is approx. $40 (US). BUT WE WOULD HAVE REVENUE.
It was only brought to my attention, from an outside engineer, on my last trip to Bolivia that there may be a 200 ton plant around 30 km from Escala, which would calculate to only $7 (US) per ton in transportation cost.
This coming week, the same outside engineer and a member of our staff will go to review the 200 ton plant and to try to obtain a processing contract. I will keep you up to date as this develops.
Finally, if you have any other questions, please e-mail us and we will get back with you at our earliest opportunity.
Please remember that the office staff in San Antonio is not the PR firm. This is the operational office that coordinates all business conducted in South America. If they do not answer your phone call in a timely manner, it is because they are either, in conference or on a conference call or are unable to at that time because they have a limited amount of time to fulfill their obligations under their assigned positions.
Sincerely,
William A. Petty
Chmn, CEO & President
February 20, 2009
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