October 1, 2014
Formation Metals Responds to BCSC Clarification Request and Technical Disclosure Review
Vancouver, B.C., October 1, 2014, Formation Metals Inc. (FCO-TSX) (“Formation” or “the Company”) reports that as a result of a recent technical disclosure review by the British Columbia Securities Commission (“BCSC”), the Company is issuing the following news release to clarify certain disclosures.
Specifically, the Company is addressing the following disclosure and filing issues:
Since the filing of the June 23, 2008 amended technical report (the “Technical Report”) on the Idaho Cobalt Project (the “ICP”), the Company has spent US$65.3 million and completed two phases of the ICP construction program that commenced in June 2011 and completed in December 2012. Subsequent to the filing of the Technical Report, the Company has undertaken substantial work and optimization studies on the ICP. This optimization data was derived from regular feedback and progress reports received from its Engineering, Procurement and Construction Manager during phases I and II of construction. Phase III of construction involves the commencement of underground development and is contingent upon the successful conclusion of mine financing.
In light of improving financial markets and positive developments in the cobalt sector, the Company announced in July 2014 that it was pursuing several opportunities resulting from the significant increase in the long term demand for cobalt used in rechargeable batteries required for electric and hybrid electric vehicles where cobalt is one of the key components. The Company intends to file a new National Instrument 43-101 (“NI 43-101”) compliant technical report on SEDAR and the Company’s website before the end of February 2015.
However until such time as the new technical report is released, when relying on the Technical Report, readers are cautioned regarding the following changes that have occurred since the filing of said report:
- The completion of the 2010 mine plan optimization drilling program;
- Work in progress to update the resources, mine plan and production schedule;
- Flowsheet changes to reflect several shifts in focus in metals recoveries and producing final products:
- At the concentrator, the addition of a flotation circuit to produce Copper concentrate to be sold;
- At the Cobalt Production Facility (the “CPF”), addition of Copper Sulfate production to be sold;
- At the CPF, addition of Cobalt Sulfate production (battery grade cobalt); and
- At the CPF, addition of Gold circuit.
- Relocation of the CPF; a new location has not been determined yet;
- Cobalt prices have varied dramatically since 2008; ranging from a high of US$50.00/lb. to a low of US$12.00/lb. The Technical Report utilized a base price of US$22.52/lb. Current cobalt pricing ranges between US$14.00-$16.00/lb.;
- Capital cost of equipment, both mine and process;
- Operating cost estimates, both mine and process;
- Construction cost estimates; and
- The new requirement to provide post tax economic analysis.
A number of risks including metals price, metals recovery, plant performance, additional resources, and permitting were identified in the Technical Report. As discussed above, the changes since the filing of the Technical Report have also changed and increased these risks. The readers are cautioned to not solely rely on the Technical Report without consideration of the impact these changes have on the risks of the project. These risks remain uncertain until a new NI 43-101 compliant technical report is completed incorporating these changes.
As announced in the Company’s July 9, 2014 news release, Requests for Proposals were solicited to various engineering firms to review internal optimization studies and economic assumptions applied on its ICP. Samuel Engineering, Inc. (“Samuel”), of Denver, Colorado, was awarded the independent engineering contract to conduct the internal studies review. Samuel has worked on projects worldwide and provides expert services at all stages of project development from feasibility studies to detail design, construction and commissioning.
The scope of work is to be conducted in stages, with each subsequent stage dependent on the outcome and recommendations of the previous stage. The purpose of the initial stage of work, currently underway, is to determine the viability of producing battery grade cobalt chemicals at its proposed CPF and to review a new mine plan and the internal economic assumptions applied by the Company’s engineers, geologists and consultants.
The ICP remains the sole near term, fully permitted primary cobalt deposit in the United States.
This news release has been prepared, reviewed and approved by Vice President of the Company E.R. (Rick) Honsinger, P.Geo., the Qualified Person for the Company as defined by NI 43-101.
Formation Metals Inc.
For further information please contact:
“J. Paul Farquharson”
J. Paul Farquharson
President & CEO
Diane Mann, B.Sc., Investor Relations Manager
Formation Metals Inc., 1810 — 999 West Hastings Street, Vancouver, BC, V6C 2W2
Tel: 604-682-6229 - Email: email@example.com — Web: formationmetals.com
This news 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 based on assumptions and address future events and conditions and 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. Assumptions include that the Company will be able to file a new NI 43-101 compliant technical report before the end of February 2015 and the risks and uncertainties include that such a new technical report will not be filed by the end of February 2015 or at all. Further information regarding risks and uncertainties which may cause results to differ from those contained in forward-looking statements are included in filings by the Company with securities regulatory authorities and are available at 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.
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 Formation Metals Inc. 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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