Essential Power…Infinite Possibilities

January 20, 2006

Cobalt Project Drilling Update

Vancouver, B.C., January 20, 2006, Formation Capital Corporation (Formation, FCO-TSX) (the “Company”), is pleased to provide an update on the core drilling program currently in progress on its 100% owned Idaho Cobalt Project (ICP). Pursuant to the Company’s October 17th, 2005 news release, the 2005/2006 drill program, as recommended by Mine Development Associates (MDA), is designed to gain additional geotechnical data to optimize mine stope design, to obtain mineralized samples for confirmation of metallurgical test work and to increase mine life through the augmentation of reserves and resources. The results of the analysis of this data are ongoing and will be incorporated into the Definitive Feasibility Study currently in progress. The Definitive Feasibility Study is a comprehensive engineering document designed to evaluate, among other things, the economic parameters of the deposit to the satisfaction of financiers for the purpose of securing funds for mine development.

To date 6,678.5 feet have been drilled in 11 drill holes. Drill holes R05-04, R05-05 and R05-06 intersected the main mineralized horizon; however they did not yield ore grade results due to extensive local oxidation. The geotechnical data collected from these holes will be utilized in the mine design. Clear evidence exists that the target zone is present in drill hole R05-05 collared on Section 12+00S and confirms that the Ram Deposit remains open to south. The table below outlines the weighted average grades for the ore zone in drill holes R05-07, R05-08, and R05-09.

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R05-07 was drilled for the purpose of further defining the ore zone intersected in R04-09. This drill hole intersected 14.3 feet (true width) of 0.98% cobalt, 0.19% copper, and 0.0521 ounces per ton gold between 386.1 feet and 401.3 feet (Table 1). These results confirm the continuity of substantial ore grade material in this high level portion of Section 8+00S.

R05-08 was targeted 480 feet down dip from the horizon intersected in R04-13 on Section 8+00S. This drill hole intersected 10.3 feet (true width) of 0.31% cobalt, 0.80% copper, and 0.0300 ounces per ton gold between 1,190.5 feet and 1201.2 feet (Table 1). The results of this drill hole confirm the continuation of ore grade cobalt mineralization in Section 8+00S over a distance of more than 1,000 feet down dip.

R05-09 was drilled at an angle off section and was designed to intersect the main mineralized horizon on Section 10+00S 200 feet down dip from the oxidized horizon encountered in R05-06. It returned significant results grading 0.70% cobalt, 1.35% copper and 0.0172 ounces per ton gold as outlined in Table 1.

Formation Capital Corporation, News Release, January 20, 2006, Page 2

R06-01 was drilled on Section 8+00S and targeted the horizon equidistant between the horizons in R04-13 and R05-08. Results from this hole are pending.

R06-02 was drilled obliquely to intersect the main mineralized horizon 200 feet down dip from the intercept in R05-09 on Section 10+00 S. This hole is currently in progress with 430 feet completed to date.

Results from these drill holes continue to demonstrate an additional increase in the measured and indicated resource for the ICP. Quantification of these results by MDA is underway and will be incorporated into the Definitive Feasibility Study currently in progress.

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Mr. George King, B.Sc., P.Geo., is the Qualified Person working directly on the project and has reviewed the contents of this release. Quality control is maintained through a strict sampling procedure and the submission of blanks, duplicates and standards to the assay laboratory. Split drill core samples were sent to ALS Chemex Labs in Vancouver, B.C. for assay. A current list of drill holes, intersections and location map is available from the Company directly. The Company will announce further results of the program when available.

Formation Capital Corporation is dedicated to the principles of environmentally sound mining and refining practices, and believes that environmental stewardship and mining can co-exist. The Company trades on the Toronto Stock Exchange under the symbol FCO.

Formation Capital Corporation

“Mari-Ann Green”

Mari-Ann Green
C.E.O.

For further information please contact:
Formation Capital Corporation
1510 - 999 West Hastings Street, Vancouver, BC, V6C 2W2
Head Office: 604-682-6229
Investor Relations: Contact Encompass Communications toll free 877-566-6592
Email: inform@formcap.com - Or visit our Web site at: formcap.com

The statements contained in this news release in regard to Formation Capital Corporation that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Formation Capital Corporation’s beliefs, expectations, hopes or intentions regarding the future. All forward-looking statements are made as of the date hereof and are based on information available to the parties as of such date. It is important to note that actual outcome and the actual results could differ from those in such forward-looking statements. Factors that could cause actual results to differ materially include risks and uncertainties such as technological, legislative, corporate, commodity price and marketplace changes.

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