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Cotton &Amp; Western Mining, Inc. Shareholder Update

Posted on: Thursday, 7 September 2006, 09:20 CDT

Robert L. Cotton, President & CEO of Cotton & Western Mining, Inc. (PINKSHEETS: CWRN), addresses Shareholders' questions and concerns in an open letter format.

To our Shareholders, Investors and Observers:

I would like to thank each of you for being a vital part of our iron mining organization. Many of you have taken time from your busy schedules to write me directly and have asked many questions, ranging from the value of your shares to complex geology and the technical mineralization of the company's iron deposits, and the most frequently asked question, "When will the company begin shipping Iron Ore?"

Below are several questions we felt were not only relevant to our Shareholders, but meaningful as well as to keep you informed about the company and its prospects for becoming a successful venture. Before we answer those questions, I would like to announce two significant appointments.

First, effective September 5, 2006, Mrs. Milina Castillo Rincon was appointed as the president of Nexus Pacific Mining, S.A. de C.V. Nexus is one of our in-country affiliates, and together with Cotton & Western Mining, Inc. owns the mineral rights to the Rio Fox Iron Mine, located in the state of Colima, Mexico. Cotton & Western Mining, Inc. invested approximately 1.5 million dollars into the infrastructure, building a 17km heavy haul road, stripping the mine, and conducting exploratory works there in 2005. Operations were suspended on December 20, 2005. The total reserve is less than 3,000,000 metric tons. Cotton & Western has concentrated its financial resources toward the development of the company's Pacific Pearl Mining Complex, and has chosen to farm out Rio Fox in Mexico to another mining company. Nexus is negotiating with local mining companies on a joint venture basis.

Secondly, Cotton & Western Mining, Inc. has appointed Standart Capital S.A. Inc. of West Palm Beach, Florida as it Financial Engineers, in support of funding for the Mindoro Island Project, where the company has approximately 76,000,000 metric tons of iron ore reserves. Mindoro Island is located in the Philippines, and is strategically located to the Asian and Chinese Iron Ore Seaborne Trade Routes. Diamond core drilling of the mines is scheduled to begin no later than September 20th, 2006, with anticipation of infrastructure work beginning by October 15th, 2006.

Frequent Questions from CWRN Shareholders:

 --  What happened to the shipment of iron ore from Los Crestones iron     mine?      

Los Crestones was a farm-in contract for Cotton & Western Pacific Mining, S.A. de C.V., an in-country affiliate. The iron content of the mine was basically better in the outcrops than under the surface; we finished the production there and stock-piled approximately 50,000 metric tons of fines and lump crude iron ore (pictures of the mining activity are on our website). Only 20,000 metric tons met the client specification, mostly due to high content of the trace element sulfur, in addition to lower Fe (iron content values). The materials need to be concentrated by magnetic scrubbing, (a process where a magnetic pulley is used to drive a conveyor belt, and the non-magnetic materials are separated from the magnetite iron minerals). It is now the rainy season in Colima, and the mountain roads will not support trucking until October. So for now, the materials are inventoried only.

 --  How does the company market its product?      

This is an area that is hard for people not in the mining industry to grasp. We have no active marketing department, nor do we need one at this particular period in the raw steel making materials sector. We turn down potential buyers on a weekly basis. Therefore we do not wish to execute any buy and sell agreements until we are near ready to make a shipment.

 --  When will Cotton & Western open the Pacific Pearl Mines?      

We first have to pick what we feel is the best iron deposit, based on the quality of the magnetite and the infrastructure associated with opening a mine. On Mindoro Island we have four iron deposits; all four are located within 5 kilometers of each other. The mine that will require the least amount of infrastructure with the highest quantity of iron minerals over 65% Fe will be the first to open. We are now preparing to begin diamond core drilling within the next 10 to 15 days. Upon completion of that, the core samples will be analyzed for content of Fe, together with trace elements of other minerals. Once that is completed, we will pick a mine to begin with, and then design a mining plan and complete the heavy haul access road. There are two rivers that run near the mines, the Mamburao River and the Pagbahan River. A road will be constructed along the river that is nearest to the deposit we chose to open. Three of the deposits are located on the upper reaches of the Mamburao River and one deposit, Dayap, is located on the upper reaches of the Pagbahan River. Based on the magnetic surveys and chemical analysis of the outcrops, our first choice is the Nagsabongan deposit. Nagsabongan is a deposit of approximately 12,000,000 metric tons, and it has a large cliff 40 meters high (130 ft) that is parallel to the Nagsabongan Creek, a tributary of the Nagsabongan River. This mine will require less mine preparation since the cliff can be blasted down into the dry creek bed.

 --  When will the first revenues come in from Mindoro Island?      

It is our deepest desire to get one small shipment of 15,000 metric tons out of the Wawa Port on the Verde Island Passage before the end of 2006. This goal can be reached, provided we can begin excavation and crushing no later than December 5, 2006. It would take about 10 working days to process 15,000 metric tons with a small scale mining operation. Revenues from each 15k/mt shipment would be $600,000.00. Until such time as we can build a jetty and ship-loader on the South China Sea, only small vessels can be loaded on the north side of the Island. Both the South China Sea and Verde Island Passage are approximately 30 kilometers from the mines.

 --  Does Cotton & Western Mining have the funds to operate the iron mines     the company has in the Philippines?      

At this time we do not; however, we do have funds available to take us through the mining plan and road building phases. We are working now with Standart Capital as stated above to secure Project funding, and in addition to that we have buyers who have shown an interest in advancing payment against long term off-take agreements. We would prefer not to give discounts on ore pricing for funding, but will do what it takes to get the deposits open and start producing revenues.

 --  When will the company start reporting?      

At this time we are putting together all the accounts from exploration and mine development for the auditors. Hopefully this is something we can get completed with in the near future.

 --  Why is the share price so low now?      

I wish I had the answer for that one. It may be a combination of events that have happened with some other mining ventures that have picked up marginal mineral leases and never turned the first shovel of dirt, thus leaving a large group of investors disenchanted with any mining concern that is not producing. In our case we have produced some products but have not sold any. I strongly believe the share value will increase once we demonstrate to you, the shareholder, that the company's mineral properties are producing iron ore and generating revenues.

Again I want to thank each of you for your continued support as a valued shareholder of Cotton & Western Mining, Inc. It is our intention to get additional news to you on a timely basis, so that you may continue to be apprised of our activities.

Respectfully,

 Robert L. Cotton President & Chief Executive Officer Cotton & Western Mining, Inc. 

About Cotton & Western Mining, Inc.:

Cotton & Western Mining, Inc. (PINKSHEETS: CWRN) is a U.S. corporation structured to produce and sell iron ore on a global scale. Currently, the Company is engaged in several mining activities and provides the Asia Pacific Steel Manufacturing Sector with high grade A raw crude iron ore products.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Except for historical information, the forward-looking matters discussed in this news release are subject to certain risks and uncertainties which could cause the Company's actual results and financial condition to differ materially from those anticipated by the forward-looking statements including, but not limited to, the Company's liquidity and the ability to obtain financing, the timing of regulatory approvals, uncertainties related to corporate partners or third-parties, product liability, the dependence on third parties for manufacturing and marketing, patent risk, copyright risk, competition, and the early stage of products being marketed or under development, as well as other risks indicated from time to time in the Company's filings with the Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

 Contact: Cotton & Western Mining, Inc. www.cottonwestern.com (281) 232-8410  

SOURCE: Cotton & Western Mining, Inc.

Source: MARKET WIRE

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