Franklin Mining, Inc. (FMNJ)

[TradeForProfits]

MEMORANDUM TO THE SHAREHOLDERS



QUESTIONS MOST FREQUENTLY ASKED (FAQ)
February 2009 – Part I Clarification





Before moving forward with Part 2 of my February 2009 Memo, it is important that I clarify issues that have been raised following last Thursday’s Press Release.



n Franklin Mining’s Board of Directors approved a recommendation that the company consider the sale of its investment(s) in energy; this news was announced in a Press Release dated February 26, 2009.



n The company’s business structure and top management was reorganized effective November 18, 2008, splitting the mining and energy divisions and appointing Howard Dunn, PE to the position of President, Franklin Oil & Gas Division; the reorganization was announced in a Press Release on the same date.



n As President of our Oil & Gas Division, Mr. Dunn has been responsible for the oversight, coordination and development of Franklin’s energy projects.



n Mr. Dunn worked with Fernando Infante, Franklin Mining’s Executive Vice-President and Consultant Dr. Isaac Rahmim, President, E-MetaVenture, Inc. as he developed his plan to expand and strengthen our Oil & Gas Division.



n Franklin Oil & Gas, Inc. is a private corporation formed in Nevada on March 24, 2008. Franklin Oil & Gas currently has no material assets.



n Franklin Mining is Franklin Oil & Gas’ majority shareholder as a result of having provided the cash required for formation and operating expense.



n Rationale for forming Franklin Oil & Gas was that our energy projects were showing signs of becoming large enough to require a separate organization.



n Rationale for considering the recommendation that Franklin Mining sell the Oil & Gas Division was multi-fold. Collectively,



… future value of the company’s energy projects is potentially significant.

… time required by top management is rapidly escalating.

… securing the necessary capital was a potential conflict with capital requirements in the mining division.



BOTTOMLINE: In the unanimous opinion of the Franklin Mining Board of Directors, it appears to be in the best interest of shareholders for the company to divest itself of its energy investments so that full attention and resources – including the human capital of executives and managers – can be devoted to the full and complete development of our current mining joint-venture in Bolivia – Mina Escala I – as well as potential additional mining opportunities in South America.



IF FRANKLIN MINING’S INVESTMENT IN ENERGY IS SOLD, WHAT WILL BE THE IMMEDIATE BENEFIT TO SHAREHOLDERS: As stated in the February 26, 2009 Press Release, a proposal to purchase our oil and gas investments – including our Texas and South American LOI’s, MOU’s and other assets under negotiation – has been positively received pending a formal proposal.



In the event this or any other proposal for the purchase of our oil and gas investment is accepted, the Board of Directors’ commitment is that Franklin Mining, Inc. shareholders will receive the full benefit of the divestiture.



Franklin Mining’s Directors envision that an acceptable divestiture of the company’s oil and gas investments would likely include:



1. Cash (immediate and/or Promissory Note)

2. Equity in another public company (common stock)

3. Royalties (cash participation in future earnings)



From any of the above three probabilities – including a combination of two or even all three – shareholders will benefit in one or more ways:



1. Cash received immediately will be reserved exclusively for investing in capital equipment at the Escala Mine.

2. Future cash receipts will be reserved exclusively for expanding the capital base of a currently operating mine or acquiring an additional mining opportunity.

3. Common stock will be distributed to Franklin Mining’s shareholders – these shares would then be held in addition to current FMNJ shares … in other words, Franklin Mining shareholders would also be shareholders in the company which acquires our oil and gas investments – it would be your choice to hold or sell those shares – it would also be your choice to purchase additional shares in the acquiring company.



IN SUMMARY: Let me assure you that your Board is seeking the single best option for your participation in the future benefit and value of our investment in energy as well as returning its focus to mining and concentrating on the expansion of our joint-venture in Bolivia.



At this time, I do not anticipate there will be another announcement concerning the potential disposition of Franklin Mining’s Oil & Gas Division until after the Board has received and thoroughly considered the next proposal.



Sincerely,



William A. Petty

Chairman, CEO & President