ANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 31, 2010) - Formation Metals Inc. (TSX:FCO) ("Formation") is pleased to announce that its wholly owned subsidiaries, Formation Capital Corporation, U.S. (the "Company") and Essential Metals Corporation, will be the sole beneficiaries of US $77.7 million in Federal Stimulus Program Recovery Zone Facility Bonds that were issued prior to their December 31, 2010 deadline (see Formation News Release dated December 16, 2010). Proceeds from the sale of the bonds are to be used exclusively for the development of its 100% owned Idaho Cobalt Project ("ICP"). Formation continues to work to secure credit approval for long term bank financing (see news release dated November 30, 2010) and raise the additional capital required to complete construction of the ICP. The capital costs of the project are estimated in the ICP feasibility study at $138.7 million.

The bonds were issued by The Industrial Development Corporation of Lemhi County, Idaho and The Industrial Development Corporation of Shoshone County, Idaho, after meetings were held on December 27 and December 30, 2010 in Lemhi and Shoshone Counties respectively. The investment bankers Thornton Farish Inc, acted as the underwriter for the Recovery Zone Facility Bonds.

"I am pleased that we were able to get these bonds issued before they expired," stated Mari-Ann Green, Formation's Chairman and C.E.O. She continued, "These types of bonds are ideally suited for mine financing, as many tax exempt bonds carry low floating interest rates which typically use the SIFMA Municipal Swap Index as a benchmark and are long term, in our case in excess of 25 years. Having this money in place will go a long way to helping the Company secure the credit approval and the remaining funds required. I am excited for the people of Idaho and in particular, the local Lemhi and Shoshone County residents that will benefit from the 200 or so jobs the cobalt project is expected to generate during the life of the mine as well as the additional positions that will be required for construction. We expect construction will begin in earnest this spring."

The 100% owned Idaho Cobalt Project is a unique, fully 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.