December 12, 2012
Formation Metals' Idaho Cobalt Project Minesite and Refinery Update
Vancouver, B.C., December 12, 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”), 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 retrofit and construction of an electrowinning cobalt production facility in Shoshone County, near Kellogg, Idaho, U.S.A.
The following information outlines progress made on the ICP since our last update provided on October 4, 2012 and reflects the use of proceeds from our US$5.0 million debenture announced on October 17, 2012. Construction at the mine site concentrated on time critical construction tasks to prepare the project for underground development and winterization of the construction site. These tasks included access road upgrades, portal bench construction and the preparation of the Tailings Waste Storage Facility (“TWSF”) to accept waste rock from underground development. Underground excavation to the ore face will commence once the time critical construction tasks are completed and additional mine finance is secured. The building of the required processing facilities such as the mill, concentrator and water treatment plant are expected to begin concurrently with underground development. Initial production is expected to begin between 9 and 14 months from the commencement of underground development.
Idaho Cobalt Project Mine and Concentrator Site, near Salmon, Idaho:
Specific tasks accomplished over the past several weeks include:
- Excavation and sub-grade preparation and installation of the foundation-drain piping of the south half of the TWSF
- Installation of a portion of the liners in the south half the TWSF
- Excavation and sub-grade preparation of the Water Management Pond (“WMP”)
- Septic system drain field excavation
- Installation of pipeline from Portal Bench to Big Deer Creek for treated water discharge, including the in-stream diffuser, air release valves and reclamation seeding and mulching of the completed right of way
- Work completed on the portal access road, TWSF haul road, soil stockpile road and the WMP access road
- Repaired the 7900 level surface water diversion ditch
- Completed drilling of all monitoring and capture wells
- Security gate installed at the property boundary on the Big Flat area The mine site has been winterized and construction efforts will continue upon the successful conclusion of mine financing. Big Creek Hydrometallurgical Refining Complex, outside of Kellogg, Idaho: Engineering and construction efforts at the refinery focused on the development of the Piping and Instrumentation Diagrams (“P&ID’s”) and General Arrangement (“GA”) drawings at the Cobalt Production Facility (“CPF”). In addition, modifications of the silver refinery progressed to accommodate the requisite modifications for third party copper / silver concentrates as well as cobalt concentrates from the ICP. P&IDs show the connectivity of equipment, sensors, and valves in a control system. P&ID’s also provide the basis for the conceptual layout of the CPF. Activities related to these engineering efforts include the following:
- Initiated Process Hazard Assessment of CPF designs
- Prepared and reviewed budget support documentation and project execution strategy as part of ICP finance due diligence
- Placed cobalt electrowinning cells on the CPF foundation beams and covered them for winter
- Prepared an engineering schedule for completion of P&ID review and GA drawings for completion in January, 2013
- Review of P&ID & Control Philosophy by the Company and JDS is underway. Over half of P&ID’s and their related sections of control philosophy were finalized.
- Revised CPF layout for expansion and optimization. Several photos have been posted on the Company’s website documenting the above work and can be viewed at http://www.formationmetals.com/s/ConstructionGallery.asp. In addition, video updates dated October 2012 of construction progress at both the mine site and at the refinery have been posted on the Company’s website at http://ecobalt.com/investors/presentations. Mine Finance: Management continues to work with potential financiers on securing mine financing. As disclosed in the Company’s update to shareholders dated October 4, 2012, financing efforts include securing a credit facility for issued tax exempt industrial bonds, securing a high yield debt facility and / or an off-take arrangement with an end user. Also deemed reasonable by management is an alliance with capable strategic partners with interests in Formation Metals’ corporate growth. “Securing the final mine finance continues to be our top priority”, stated Mari-Ann Green, CEO of Formation Metals Inc. She continued, “The [US] $5 million raised in October has allowed us to initiate time critical construction activities to prepare the site for underground development. The decision to begin processing third party copper / silver concentrates at the refinery has required some engineering design modifications, and this in turn has required additional reviews from potential lenders’ engineering teams, which of course, all takes time. Although construction activities have been curtailed for the winter, engineering activities and equipment preparation continue.” 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.
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
This information update 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 information update 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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