Essential Power…Infinite Possibilities

December 16, 2010

Formation's Stimulus Act Recovery Zone Bond Allocation Increased to US $77.7 Million by State of Idaho

Vancouver, B.C., December 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 been issued two revised Certificates of Allocation from the State of Idaho authorizing an additional US $31 million in Federal Stimulus Program Recovery Zone Facility Bonds with the Company as Ultimate Beneficiary. The bonds are to be issued by The Industrial Development Corporation of Lemhi County, Idaho and the Industrial Development Corporation of Shoshone County, Idaho. Any funds received from the sale of tax exempt bonds will be used to develop the Company’s 100% owned Idaho Cobalt Project mine located in Lemhi County and retro-fit its hydrometallurgical facility located in Shoshone County, Idaho (the “ICP”).

“This [US] $31 million is in addition to the allocation of [US] $46.7 million granted by Idaho’s Department of Commerce to the Company in September”, stated Mari-Ann Green, Formation’s Chairman and C.E.O. (see Company news release dated September 16, 2010). “The Company, along with the two Industrial Development Corporations and the bond underwriter, can now concentrate its efforts on getting the Recovery Zone Facility Bonds issued prior to the December 31, 2010 expiration date for this category of bonds. This affords the Company the flexibility to apply for approximately [US] $45.4 million in Solid Waste Private Activity Bonds at a future date, as these types of bonds do not have an expiry date. Following the expected issuance of the Recovery Zone Facility Bonds, the Company will continue to work to secure credit approval for long term bank project financing as outlined in the Company’s news release dated November 30, 2010”, Ms. Green concluded.

The Company has engaged Thornton Farish Inc, Investment Bankers as the underwriter for the Recovery Zone Facility 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; including recovery zone facility bonds and solid waste bonds.

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.

View the Previous News Release:
November 30th, 2010, Formation Metals Mandates BNP Paribas to Arrange Idaho Cobalt Project Debt
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December 31st, 2010, Formation Metals Closes $77.7 Million Bond Issue for Idaho Cobalt Project