Essential Power…Infinite Possibilities

May 7, 2010

Formation Metals Raises $10 Million

THIS NEWS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.

Vancouver, BC, May 07, 2010, Formation Metals Inc. (FCO-TSX) (the “Company” or “Formation”) is pleased to announce the successful completion of financings totalling $10 million. The proceeds of these transactions are intended to be used by Formation to finance the further development of its Idaho Cobalt Project and for other general corporate purposes and working capital. The financings were comprised of non-brokered private placements of an unsecured convertible debenture and units comprised of common shares and common share purchase warrants at $1.50 Unit.

“We are pleased to be able to conclude this interim financing”, stated Mari-Ann Green, CEO of Formation Metals Inc. She continued, “With Stage I timber clearing recently completed at the Idaho Cobalt Project we are eager to continue with Stage II Construction. These funds will provide capital to further prepare the mine site and provide working capital as we continue to evaluate the most favourable project construction financing options.”

The Debenture Offering

The Company has sold, on a non-brokered private placement basis, an $8,000,000 unsecured convertible debenture (the “Debenture”) to Coalcorp Mining Inc. (“Coalcorp”). Coalcorp is a Toronto Stock Exchange listed company (CCJ-TSX) that capitalizes on the mining sector expertise of its board members and management and uses its cash resources to pursue early-stage opportunities in the mining, metallurgical and mineral industries.

The Debenture will have an initial term of 18 months with an interest rate of 12% per annum (the “First Term”) and may be extended in whole or in part, (the “Extended Debenture”) by either party for an additional term of 18 months (the “Second Term”). If the First Term is extended by Formation, the Extended Debenture will bear interest at the rate of 15% per annum. Interest on the Debenture or Extended Debenture will be calculated daily and is payable quarterly, subject to regulatory approval, in common shares of Formation at a price per share equal to the 5 day volume weighted average trading price (the “Market Price”) at the time of issue.

Coalcorp may, at any time during the First Term, convert the Debenture into common shares of Formation at $1.50 per share and, during the Second Term, subject to regulatory approval, convert the Extended Debenture into common shares of Formation at the Market Price of the shares at the end of the First Term. In addition, Formation has the right to call or redeem the Debenture and the Extended Debenture upon payment of a penalty, subject to certain conditions and, in certain circumstances, regulatory approval.

Formation appreciates the support of Coalcorp and welcomes the appointment of Dr. Charles Entrekin, who sits on the board of directors of Coalcorp, to Formation’s board of directors. Dr. Entrekin has over 35 years of experience in the more exotic non-ferrous metal industries including cobalt.

The Company has agreed to pay a finder’s fee, in cash in an amount to be negotiated, in connection with the Debenture.

The Unit Offering

The Company has closed the previously announced non-brokered private placement of 1,333,375 Units at a price of $1.50 per Unit (the “Unit Offering”) resulting in gross proceeds of $2,000,063. Each Unit is comprised of one common share and one-half of one transferable common share purchase warrant, each whole common share purchase warrant entitling the purchase of one common share of the Company at a price of $1.60 per share until May 06, 2012, subject to the Company’s right to accelerate the expiry date in certain circumstances.

The common shares and warrants issued in connection with the Unit Offering and any common shares issued pursuant to the terms of the Debenture, have not been registered under the United States Securities Act of 1933, as amended, and may not be sold or offered for sale in the United States or otherwise distributed in the United States, except in reliance on available registration exemptions.

No finder’s fees were paid in connection to the Unit Offering.

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 Metals Inc. trades on the Toronto Stock Exchange under the symbol FCO.

Formation Metals Inc.
“Mari-Ann Green”
Mari-Ann Green,
C.E.O.

For further information please contact:
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

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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 such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “planned”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may” ,”could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic conditions, legislative and regulatory developments, the nature of our customers and rates of default, and competition as well as those factors discussed in the Company’s documents filed on SEDAR (www.sedar.com).

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:
April 30th, 2010, Formation Metals Concludes Stage I Construction on Idaho Cobalt Mine
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June 15th, 2010, Formation Metals Finalizes Agreement for Powerline Right of Way on Idaho Cobalt Project