January 27, 2011
Formation Metals Announces Preliminary Short Form Prospectus Equity Offering
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Vancouver, B.C., January 27, 2011, Formation Metals Inc. (FCO-TSX) (the “Company”) announced today that it has obtained a receipt for the filing of a preliminary short form prospectus dated January 26, 2011, in all of the provinces of Canada, except Québec, in respect of an offering (the “Offering”) of units of the Company (the “Units”) for gross proceeds of up to $80,000,000. Each Unit will be comprised of one common share in the capital of the Company (a “Common Share”) and one half of one Common Share purchase warrant, the price of which will be determined in negotiations between the Company and the Agents (as defined herein) in the context of the market conditions at the time of filing the final short form prospectus. Each whole Common Share purchase warrant (a “Warrant”) will entitle the holder to purchase one Common Share for 24 months following the closing of the Offering. The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the acceptance of the Toronto Stock Exchange.
The Offering will be conducted on a best efforts agency basis. Byron Securities Limited and Cormark Securities Inc. are the co-lead agents of a syndicate that includes Jennings Capital Inc. (collectively, the “Agents”). The Agents will be granted an option, exercisable at any time until 30 days following the closing of the Offering, to purchase additional Units equal to 15% of the number of Units sold pursuant to the Offering at the issue price of the Units, to cover over-allotments, if any and for market stabilization purposes.
In consideration for the services to be rendered by the Agents under the Offering, the Agents will receive a cash commission of 6% of the gross proceeds of the Offering (including any Units issued as a result of the exercise of the Agents’ over-allotment option). The Agents will also receive broker warrants to purchase an aggregate number of Common Shares equal to 6% of the number of Units issued under the Offering (including Units issued upon exercise of the Agents’ over-allotment option).
The Company plans to use the proceeds of the Offering to fund the continuation of engineering, procurement and construction at the Idaho Cobalt Project, for reclamation bonding requirements, for the repurchase of an unsecured convertible debenture and for general corporate purposes.
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. The Company trades on the Toronto Stock Exchange under the symbol FCO.
FORMATION METALS INC.
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: email@example.com — 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 www.sedar.com.
The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any state of the United States, and may not be offered or sold, directly or indirectly, in the United States unless registered under the U.S. Securities Act and applicable securities laws of any state of the United States or in reliance on an exemption from such registration requirements. This news release does not constitute an offer to sell, a solicitation of an offer to buy any of the Company’s securities set out herein in the United States.
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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