Essential Power…Infinite Possibilities

January 21, 2011

Formation Metals Extends Cobalt Deposit Strike by 14%

Vancouver, B.C., January 21, 2011 Formation Metals Inc. (FCO-TSX) (“Formation”) announced today that its 100% owned subsidiary, Formation Capital Corporation, U.S., (the “Company”) has reported final assay results from its 2010 mine plan optimization drill program on its 100% owned Idaho Cobalt Project, located in Lemhi County, Idaho. These assays have confirmed economic ore grade mineralization an additional 390 feet along strike to the south and 200 feet down dip, representing a 14% increase in the known strike extension of the Ram deposit to 3,200 feet. These results are expected to increase the reserve / resource base and mine life of the project. A total of 5,727.5 feet were drilled in six holes in a previously untested area along the southern extension of the Ram deposit.

This program also reported the highest grade gold intercepts ever recorded from drilling on the Ram Deposit, with DDH-R10-05 returning 5.4 feet grading 1.267% cobalt, 3.57% copper and 0.289 oz/ton gold (9.0 grams per tonne). The high gold assays returned from this interval appear to be the result of a shear zone intersecting biotitic and siliceous ore of the main mineralized horizon. Gold revenues were not considered in the economic model of the Company’s original Feasibility Study. The Ram Deposit remains open along strike to the north and south and down dip.

Results from the drill program are providing data for mine plan optimization studies. The purpose of these studies are to demonstrate the viability of optimizing ore production as early in mine life as possible to maximize revenues while minimizing mining costs, that would result in an overall positive impact on the economics of the cobalt project. In addition, the drill program has provided additional samples for initial in-house Rare Earth Element (“REE”) metallurgical test work. Final results from the drill holes are tabulated below.

Table1: Ram 2010 final drill results:

click to enlarge

*Previously released

Metallurgical test work is required to determine the economic viability of extracting and separating the rare earths elements from the cobalt mineralized horizons to be mined from the deposit. Although the REE concentrations are generally low grade, the Company is pursuing the possibility of potential future REE production from these horizons as they would be considered by-product production with provisions for mining, milling and concentrating already included in the existing approved mine plan.

Mr. George King, B.Sc., P.Geo., is the Qualified Person working directly on the project and has reviewed the contents of this release. Cut drill core samples were sent to ALS Chemex Labs Ltd in North Vancouver, B.C. for assaying. The Company will announce further interpretive results of the program when available.

The 100% owned Idaho Cobalt Project is a unique, fully environmentally permitted primary cobalt deposit that will be capable of producing high purity cobalt metal. Cobalt is used in a wide variety of environmental and high-tech applications that include the re-chargeable battery and aerospace sectors.

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

FORMATION METALS INC.
“Mari-Ann Green”
Mari-Ann Green,
C.E.O.

E.R. (Rick) Honsinger, P.Geo., V.P. Corporate Communications
Formation Metals Inc., 1730 — 999 West Hastings Street, Vancouver, BC, V6C 2W2
Tel: 604-682-6229 - Email: inform@formationmetals.com — Web: formationmetals.com

________________________________________

This press release contains “forward-looking statements” within the meaning of applicable Canadian securities legislation. Generally, forward-looking statements can be identified by the use of forward- looking terminology. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws. Further information on the Company is available at www.sedar.com.

The statements contained in this news release in regard to Formation Metals Inc. that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Formation Metals Inc.’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.

View the Previous News Release:
January 6th, 2011, Formation Signs EPCM Letter of Intent with JDS for Idaho Cobalt Project
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January 27th, 2011, Formation Metals Announces Preliminary Short Form Prospectus Equity Offering