March 29, 2012
Formation Metals' Idaho Cobalt Project Construction Update
Vancouver, B.C., March 29, 2012 Formation Metals Inc. (FCO-TSX) (the “Company”) is providing an update on the progress of construction on its 100% owned Idaho Cobalt Project (“ICP”), which is managed by JDS Energy & Mining (“JDS”). The ICP is comprised of the development of a mine and construction of a concentrator at a primary cobalt deposit in Lemhi County near the town of Salmon, Idaho, and the construction of an electrowinning cobalt production facility in Shoshone County, near Kellogg, Idaho, U.S.A.
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The updates are based on progress reports submitted to the Company by JDS since January, 2012, and are broken out into two separate sections; one highlighting construction progress at the Mine & Concentrator Site, and the other on construction progress at the Cobalt Production Facility.
Mine & Concentrator Site Construction Progress Executive Summary
Significant progress was made since the beginning of the year on concluding engineering studies and releasing Issued for Construction (“IFC”) drawings and specifications. Detailed engineering at the mine and concentrator site is now 95% complete. In January, JDS conducted a year-end executive review and a strategy for success meeting was held later that month. Procurement activities included the release of the contract for rock bolting and the creation of additional trade contract Request for Proposal (“RFP”) packages. Working with the agencies to receive approval on design packages in order to resume construction activities was, and continues to be, a primary focus of the team moving forward. Construction activities during February included safety improvements that included brush and timber clearing for vision enhancements along the transportation route.
Specific activities relating to the mine and concentrator site included:
• Samuel Engineering, Inc. (“SE”) completed final interdisciplinary checks and released all IFC drawings and specifications in the steel, piping, and electrical disciplines.
• Langston & Associates released IFC drawings and specifications for the portal bench high-wall stabilization (rock bolting) activities. The contract terms and conditions have been finalized and the contract was executed in February.
• JDS and the Company compiled and released information to Micon Engineering to support due diligence activities by various mine finance lending groups.
• SE released all IFC drawings and specifications for items within the crusher and concentrator buildings.
• Mine Development Associates completed the underground mine block model for review.
• Two RFP packages were released for bid (building erection and tram foundation design-build) and additional RFP packages are expected to be issued in March.
Cobalt Production Facility Construction Progress Executive Summary
Significant progress on beneficiation engineering analysis was completed. These studies have shown that the installation of a new autoclave in the Cobalt Production Facility in lieu of modifying the existing autoclaves will benefit project economics by allowing the existing autoclaves to be utilized for other precious and base metals’ leaching by the Company’s 100% owned Sunshine Precious Metals Refinery. SE completed a review of the autoclave design and specifications and is preparing bids.
Process Operating Procedures have been finalized. These engineering specifications were locked and flow sheets were finalized and provided to Micon Engineering to support mine finance due diligence activities. Meetings were held at the end of February between JDS, SE and the Company which provided SE with direction to prioritize purchasing and vendor data acquisition to best suit construction sequencing. SE was also provided a directive to begin detailed engineering of the gold-leach circuit.
Specific activities relating to the Cobalt Production Facility included:
• The cobalt resolution process operating plan was signed off, resulting in five of the six operating plans being completed. The concentrate leaching plan was updated to reflect the new autoclave.
• Mechanical equipment package purchase orders were issued and quotations were received for five equipment packages.
• Refurbishment work of existing copper SX-EW circuits and other equipment continued.
• Cobalt electro winning cells for the Cobalt Production Facility arrived at the port of Seattle and will be delivered to site after customs processing.
• Existing autoclave re-certification process nearing completion.
Additional progress at the Cobalt Production facility included the re-location of gas lines, pad preparation for additional concrete pouring, running of power line, phones and Internet to various new construction offices, installation of the parking lot, the refurbishment of the ball mill including motor rebuild, the installation and repair of new and existing gates, fences, ditches and sumps, the relining of the copper electrolyte circulating tanks and electrowinning cells and the development of an improved cobalt cathode handling and treatment process.
The Company continues to work with Union Bank as its Mandated Lead Arranger to secure a credit facility (in the form of a letter of credit and debt) for the ICP, while JDS continues to provide up-to-date, optimized engineering plans to assist the lenders in their due diligence. Additional updates will be made available as construction progresses on the ICP.
Formation Metals Inc. is a well-established, mineral exploration, development and refining company that 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.
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
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.
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