Essential Power…Infinite Possibilities

September 16, 2010

Formation Metals Receives Stimulus Act Recovery Zone Facility Bond Allocation of $46.7 Million from State of Idaho

Vancouver, B.C., September 16, 2010 Formation Metals Inc. (FCO-TSX) (“Formation”) is pleased to announce that its 100% owned subsidiary, Formation Capital Corporation, U.S., (the “Company”) has received two Certificates of Allocation from the State of Idaho authorizing a total of $46.7 million in Recovery Zone Facility Bond volume cap to the Company as Ultimate Beneficiary to be issued by The Industrial Development Corporation of Lemhi County, Idaho and the Industrial Development Corporation of Shoshone County, Idaho. The Company’s 100% owned Idaho Cobalt Project mine site is located in Lemhi, County and its hydrometallurgical facility is located in Shoshone, County (the “ICP”).

“This is excellent news”, stated Mari-Ann Green, Formation’s Chairman and C.E.O. “We are very pleased that Idaho’s Department of Commerce has reviewed its many applications and allocated a total of [US] $46.7 million to Formation for the development of its ICP in the form of tax exempt Recovery Zone Facility Bonds to be issued by the local Industrial Development Corporations of these two counties. That was the first step. In addition, it is anticipated that the bonds will be structured on a variable rate basis with weekly interest rate adjustments and will be secured by a letter of credit. The Company is in the process of establishing which institution, or institutions, would be best to provide that support.” The bonds must be issued and completed prior to a December 31, 2010 expiration date applicable to the Recovery Zone Program.

In addition, the Company is finalizing the amount of ICP project capital costs eligible for financing with solid waste private activity bonds (“SWBs”). This amount is expected to be US$45.4 million. Commenting on the SWBs, Ms. Green stated that “together with the Recovery Zone Facility bonds the amount would total US$92.1 million, which accounts for approximately 66% of the $138.7 million capital expenditures estimated in the ICP feasibility study. In addition to a letter of credit supporting the Recovery Zone Bonds, a letter of credit must also be secured to support the SWBs. Once we can determine that a letter of credit can be secured for both types of bonds, the Company will apply to the State for allocation in connection with the SWBs.” Ms Green further noted that “the SWBs do not have the December 31, 2010 expiration date”.

The Company intends to engage Thornton Farish Inc, Investment Bankers as the underwriter for the recovery zone facility and solid waste bonds. Thornton Farish is widely recognized as one of the early pioneers of industrial revenue bond financing. The firm has extensive expertise and experience in all forms of tax-exempt bond financing, particularly with solid waste financing in many industrial and agricultural sectors.

The Company is confident that it will be successful in its endeavours and that it will be able to secure the additional funds required utilizing minimally dilutive means.

The 100% owned Idaho Cobalt Project is a unique, fully 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 aero-space 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.
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. 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.

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July 28th, 2010, Formation Metals Drills to Optimize Mine Design and Assess Rare Earth Elements on Cobalt Project
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September 27th, 2010, Formation Metals Engages Auramet for Cobalt Mine Finance