October 17, 2012
Formation Metals Issues US$5M Convertible Note as Part of Larger Planned Project Financing
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR
DISSEMINATION IN THE UNITED STATES
Vancouver, B.C., October, 17, 2012, Formation Metals Inc. (FCO-TSX) (the “Company”) announced today that it has issued a secured convertible note (the “Note”) in the principal amount of US$5,000,000 to a strategic private investor (the “Investor”).
“We are encouraged by this development” stated Mari-Ann Green, CEO of Formation Metals Inc. “This is a small, but important, part of the overall financing that the Company is pursuing to raise the balance of the capital necessary to complete construction of the Idaho Cobalt Project. With this funding the Company can continue the work this fall necessary to prepare the project for underground development. Once additional funding for the project is secured our plan is to resume full construction.”
The Company is carefully considering various sources for additional funding. One potential source is a further investment from the Investor by way of joint venture or other arrangement. At present, discussions between the Company and the Investor as to such an investment are on-going and no assurance can be given that a definitive agreement with respect to such an investment will be concluded. Further, any such investment would be subject to the Company obtaining acceptable additional debt or equity financing to fully fund the Idaho Cobalt Project.
The Note bears interest at 8% per annum. It matures one year from the date of issuance, subject to acceleration in certain events and the Company’s right to prepay the Note (in whole) at any time, without premium or penalty. The Note is convertible, in whole or in part, at the option of the Investor into common shares of the Company at a conversion price of US$0.50 per share (or, in the case of interest, the greater of US$0.50 per share and the market price of the shares at the time of conversion). The Investor does not have the right to convert amounts under the Note into more than 9.9% of the Company’s outstanding common shares. The Note is secured by certain assets of the Company. Such security will be released upon repayment or conversion of all amounts due on the Note.
The Note purchase has been approved by the Toronto Stock Exchange, subject to satisfaction of certain conditions of the exchange.
About Formation Metals Inc.:
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 TSX under the symbol FCO.
Additional information on the Company can be found on the Company’s website at www.formationmetals.com and by reviewing the Company’s profile on SEDAR at www.sedar.com.
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
Cautionary Statement on Forward-Looking Information
This news release contains “forward-looking information”, which includes, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects and the Company’s sources of financing for those projects. Often, but not always, forward-looking statements can be identified by the use of words such as “planned”, “potential”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, without limitation, the risk that the Company and the Investor may not reach agreement with respect to additional funding of the Company and even if such an agreement is reached the conditions of closing may not be satisfied, including without limitation the condition that acceptable additional debt or equity financing to fully fund the Idaho Cobalt Project is obtained. Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management’s estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements.
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News Release:July 12th, 2012, Formation Metals' Idaho Cobalt Project and Hydrometallurgical Plant Update
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News Release:December 12th, 2012, Formation Metals' Idaho Cobalt Project Minesite and Refinery Update