Essential Power…Infinite Possibilities

January 6, 2011

Formation Signs EPCM Letter of Intent with JDS for Idaho Cobalt Project

Vancouver, B.C., January 6, 2011 Formation Metals Inc. (FCO-TSX) (“Formation”) announced today that its 100% owned subsidiary, Formation Capital Corporation, U.S., (the “Company”) has signed a Letter of Intent with JDS Energy & Mining Inc.’s subsidiary (“JDS”) for Engineering, Procurement and Construction Management services for the Idaho Cobalt Project (“ICP”).

“The Project Management Services JDS will provide are the cornerstone to a successful and economically sound mining project”, stated Mari-Ann Green, CEO of Formation Metals Inc. “After negotiating with JDS for quite some time, we are extremely pleased to now be working with such a well respected, sought after company in this endeavour with a comprehensive plan for the ICP in place”.

JDS will work on a target based project risk/reward basis that will include an on-budget, on schedule and no harm execution accountability. Project development will be approached in three stages; Stage 1: Comprehensive overall project design and execution review to enhance the Idaho Cobalt Project; Stage 2: Detailed design, procurement and contract execution, and; Stage 3: Construction management through to commissioning and handover. Formation is confident that together with JDS it can reduce the cost, reduce the risk and enhance the value potential and long term success of the ICP.

Through the leadership of Mari-Ann Green and her team, this project has developed into a resource that can now be fully realized” says Jeff Stibbard President, JDS Energy & Mining. “We welcome the opportunity to participate in Formation’s Cobalt Project”.

Ms. Green further commented, “With JDS’s technical support on the project, Management is focusing its efforts on ICP mine finance. This includes securing a credit facility necessary for the release of the US $77.7 million in proceeds, held in trust, from the recently issued Recovery Zone Facility Bonds [see December 31, 2010 Formation news release].” These funds will be used for the construction of the ICP.


About JDS Energy & Mining Inc.:
JDS has extensive experience with successful large-scale resource developments in Canada, including a diamond mine in the Arctic, major oil sands projects in Alberta and a copper mine in Yukon, among many other projects throughout the world. Their team consists of about 25 full-time specialists and four industry associates who work together on a project-specific basis. Their motto is “You have a resource. You have a vision. We get it done”. They extract maximum value from their projects while balancing guiding management principles. More information can be found on their company website at www.jdsmining.ca.

Jeff Stibbard, P.Eng., President & CEO
Jeff is the Founder and President of JDS Energy & Mining. He is a Mining Engineer with expertise in mine design, construction and operation. Mr. Stibbard has served or continues to serve as a Technical Advisor to numerous mining companies including Capstone Mining Corp. (formerly Sherwood Copper Corp.), Stornoway Diamond Corp., Tenajon Resources Corp. and MegaMoly Corp. His extensive experience includes: Mining Manager, BHP Ekati Diamond Mine which included initial design, permit and construction of the project. He served as the General Manager of Mining, Albian Sands Energy Inc., Fort McMurray. He was accountable for leading the design, construction and operation of the 450,000 tpd Muskeg River Oilsand Mine and Tailings Dyke. Prior to Albian Sands, he was one of the original founding members of Western Oilsands Inc. a 20% partner in the development of the Shell Muskeg River Mine, Fort McMurray. Since founding JDS in 2005, the company has been involved in the design, permit, construction, operation and maintenance of multiple successful projects. He has also served as a Director of Stornoway Diamond Corp. Mr. Stibbard received a BASc. in Mining Engineering, from the Montana School of Mines in 1987.

Gordon Bussieres
V.P. Construction
A long term JDS employee, Gordon has been with the company since its inception and has participated in every major JDS project undertaken. Over-seeing all JDS field operations with particular attention to project reporting, site safety and logistics management, Gordon’s attention to detail and organizational control ensures projects remain on budget and on schedule. He has over 20 years of industry experience with a proven track record for completing of projects on time and within budget. Gord worked as a Project Manager on Farallon Resources’ $150M G-9 Project in Mexico. He was a Construction Manager at Capstone Mining Corp. (formerly Sherwood Copper Corp.), $100M Minto Mine and before that he was Mine Manager and Expansion Manager at the $2B Muskeg River Mine in Alberta.

Wayne Corso
V.P. Engineering
Wayne has been with JDS since 2007, but has had a long professional relationship with the principles of the company. He received his Mining Engineering degree from the Colorado School of Mines in 1984 and got his start in the Mining industry underground at Homestake Mining. Since then Wayne has, through positions of increasing responsibility, planned, coordinated, and directed resources and activities for a wide variety of projects first for Homestake and later for BHP Minerals. From the BHP Minerals Mine services group, he supported exploration, new business development and operations with engineering analysis and economic evaluations for various projects. He was eventually recruited to join the bulk sampling and development team at Ekati Diamonds in Canada’s NWT where he played an instrumental part in the permitting and development of the project. Wayne brings engineering and management skills to the team along with a dose of practical creativity aimed at making projects work. He brings knowledge from a diverse portfolio of experience ranging from successfully managing high-tech projects with a low-tech mindset, to getting the most out of a local gravel operation, to keeping a team focused on the prize in multi-million dollar projects.

About the Idaho Cobalt Project:
The 100% owned Idaho Cobalt Project is a unique, fully environmentally 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:
December 31st, 2010, Formation Metals Closes $77.7 Million Bond Issue for Idaho Cobalt Project
View the main News Releases page.
View the Next News Release:
January 21st, 2011, Formation Metals Extends Cobalt Deposit Strike by 14%