VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 3, 2011) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Formation Metals Inc. (TSX:FCO) (the "Company") announced today that it has entered into an agency agreement with Byron Capital Markets Ltd. and Cormark Securities Inc., as co-lead agents, and Jennings Capital Inc. (collectively, the "Agents") in respect of the offering contemplated by the preliminary short form prospectus of the Company dated January 26, 2011. Under the terms of the agency agreement, the Agents will offer (the "Offering") on a best efforts basis, units of the Company (the "Units") for gross proceeds of up to a maximum of $80,000,000 (see Company News Release dated January 27, 2011). Each Unit is comprised of one common share in the capital of the Company (a "Common Share") and one half of one Common Share purchase warrant, at a price of $1.50 per Unit. Each whole Common Share purchase warrant (a "Warrant") will entitle the holder to purchase one Common Share at a price of $2.00 for a period of 36 months following the closing of the Offering expected to take place on March 10, 2011 or as otherwise agreed upon by the Company and the Agents.

The Agents have been 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). At the Agent's option, the commission may be paid to the Agents in whole or in part, by the issuance of Units. In no case will the number or principal amount of the securities issued as compensation to the Agents, on an as-if-converted basis, in the aggregate exceed 10% of the total of the Offering plus any securities that would be acquired upon the exercise of the 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).

A final short form prospectus dated March 02, 2011 containing important information relating to the Offering has been filed with the securities commissions or similar authorities in all of the provinces of Canada, except Quebec. The Company expects to receive a receipt for the final short form prospectus in due course. 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 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.

Mari-Ann Green, CEO