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Franconia Minerals Corporation: Minnesota To Provide US$1.5 To US$2.5 Million Loan For Birch Lake

Letter of Intent for Matching Technical Development Funds

Franconia Minerals Corporation (TSX VENTURE:FRA)(OFEX:FRA) ("Franconia" or the "Company") announces that it has received a Letter of Intent ("LOI") from the State of Minnesota, which would provide a loan of a minimum of US$1.5 million to help develop the Company's copper-nickel-PGM resource project at Birch Lake in the Duluth Complex of northeastern Minnesota. Discussions are underway to increase the maximum of the loan to $2.5 million (all amounts are US$). Under the terms of this tentative agreement, the Company also agrees to contribute matching funds - based on a one-to-three ratio - up to a maximum of approximately US$7.5 million (at the possible maximum loan limit of $2.5 million). The US$10 million total would be used for a two-phase technical development program aimed at advancing Birch Lake towards becoming a producing mine.

Completion of the formal agreement is subject to a number of terms, including the State's due diligence as well as finalization of term sheets and financing documents.

Under the terms of the LOI, the State - through its two economic development entities, Iron Range Resources and the Department of Employment and Economic Development - would lend the Company approximately $0.2 million for work to be completed in the third quarter of 2006. Franconia would contribute an additional $0.6 million for the same period. Further State funding of approximately $2.3 million would be matched against $6.9 million from the Company for work to be completed late in 2007 or the first quarter of 2008. In its discussions with the State agencies, Franconia has proposed that the loan be repaid from production and would be appropriately collateralized, with details still to be worked out.

All of these funds would be earmarked primarily for in-fill drilling to further define the Birch Lake resource as well as to provide metallurgical samples for improving nickel recoveries to concentrate and conducting feasibility level metallurgical testing of both concentrate production and hydrometallurgical treatment of concentrates to produce saleable nickel-cobalt and PGM intermediates for refining and SXEW cathode copper on site. A small part of the funds would be utilized for related environmental review and permitting along with conceptual mine design for the Birch Lake project. The Company currently expects to apply for mining and related permits and to undertake a bankable feasibility study in 2008.

According to the LOI, the State "is keenly interested in working with companies that seek to explore and develop Minnesota's mineral resources." The LOI also noted that the State looks to Franconia to help protect Minnesota's "environment and quality of life while stimulating our economy and creating jobs for our citizens."

Brian Gavin, Franconia's president said, "This tentative agreement provides us with far more than money - it is also a concrete statement that Minnesota is mine-friendly and very willing to work with serious mining and exploration companies like ours who want to see all stakeholders benefit from the State's natural resources."

The planned technical development and feasibility studies at Birch Lake follow the Company's filing of an independent NI43-101 technical report on the project (See Franconia Press Release of November 18, 2005 as well as the Company's documents filled on Sedar at www.sedar.com.)

Franconia Minerals Corporation trades on both the TSX-V in Canada and OFEX in the UK under the symbol FRA. The directors of Franconia Minerals Corporation accept responsibility for this announcement. Franconia presently has 31,787,135 shares issued and outstanding. (For additional information see www.franconiaminerals.com.)

FRANCONIA MINERALS CORPORATION

Brian Gavin, President

This document, which has been issued by Franconia Minerals Corporation (Franconia), has been approved solely for the purposes of Section 21 of the Financial Services and Markets Act 2000, by Lion Capital Corporation Limited (Lion), 4th Floor, 2 Cromwell Place, London SW7 2JE, who is authorised to carry on Investment Business by the Financial Services Authority. Lion, is acting as advisers for Franconia and to no-one else and will not be responsible to anyone other than Franconia for providing protections afforded to customers of Lion for providing advice in relation to any investment made pursuant to this announcement and makes no recommendation for the suitability of any investment, which is the subject of this announcement. FORWARD-LOOKING STATEMENT: Although Franconia Minerals Corporation believes many of its properties have promising potential, its properties are in the early stages of exploration. None have yet been shown to contain proven or probable mineral reserves. There can be no assurance that such reserves will be identified on any property, or that, if identified, any mineralization may be economically extracted. Incorporated in Alberta Canada No. 207953670

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