November 22, 2011
Formation Metals Secures Letter of Credit to Support Low Interest Bonds for Idaho Cobalt Project Construction
Vancouver, B.C., November 22, 2011 Formation Metals Inc. (FCO-TSX)
(“Formation” or “the Company”) announced today that it has secured a
Letter of Credit in support of US$43.6 million of the US$77.7 million in
proceeds the Company previously raised from the sale of Federal
Stimulus Program Recovery Zone Facility Bonds (the “Bonds”) (see news
release dated December 31, 2010). The US$77.7 million has been held in
trust in the Company’s Idaho Cobalt Project (“ICP”) construction account
pending a letter of credit supporting the Bonds.
With the Letter of Credit in place approximately US$43.6 million can now
be withdrawn from the construction account and used to reimburse
Formation for certain construction expenditures at its 100% owned ICP.
To date, Formation has approximately US$19.3 million in ICP construction
expenditures that have been withdrawn from the construction account to
replenish the Company’s treasury. As the Company advances construction
on the ICP and incurs additional expenditures, further withdrawals can
be made from the construction account.
The Letter of Credit, provided by BMO Bank of Montreal, was secured with
the Company’s cash on hand. The balance of US$34.1 million from the
initial US$77.7 million in Bonds remains in trust. This preserves 100%
of the Bond debt financing. In the longer term, in lieu of cash
security, the Company intends to use the Idaho Cobalt Project to secure a
letter of credit for the full US$77.7 million.
The Boards of Directors of the Bonds’ issuers, The Industrial
Development Corporation of Lemhi County, and The Industrial Development
Corporation of Shoshone County, Idaho, both met in special sessions late
last week to approve the Amended and Restated Indentures of Trust which
authorized this modified bond structure.
“This is not bank debt - this is bond debt” stated Mari-Ann Green,
C.E.O. of Formation Metals Inc. She continued, “Therefore, including
the interest on the letter of credit, the debt carries a floating
interest rate which is currently less than 60 basis points. The bonds
mature in 28 years and there is no obligation to repay the principal
until maturity. In addition, they can be redeemed by the Company at par
at any time.”
The 100% owned Idaho Cobalt Project is a unique, fully permitted,
primary cobalt deposit under construction 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.
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: firstname.lastname@example.org — 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
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