VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 12, 2011) - Formation Metals Inc. (TSX:FCO) ("Formation") announced today that its 100% owned subsidiary, Formation Capital Corporation, U.S., (the "Company") has provided Formation with an update on its 100% owned Idaho Cobalt Project ("ICP"). Pursuant to Formation's news release dated April 6, 2011, the Company's Project and Construction Managers JDS Energy & Mining Inc. ("JDS"), have now been fully integrated into the Company's management, in-house and out-sourced engineering, technical and administrative teams at both the ICP's mine site in Salmon, Idaho, and Cobalt Production Facility ("CPF") in Kellogg, Idaho. The pre-construction activities on the ICP are continuing with site earth works scheduled to begin in late May, 2011.

In preparation for the commencement of site earth works, JDS has concentrated its efforts over the last several weeks on finalizing budgets, engineering and procurement tasks involving several areas at the mine, concentrator and cobalt production facilities. These tasks are broken down and summarized as follows:

ENGINEERING:

Detailed engineering is underway with a number of sub-contracted firms involved in design finalization of the portal bench pad, paste backfill, tailings waste storage facility ("TWSF"), concentrator site, buildings, equipment and tram foundations, powerline layout and site roads.

-- Transportation & Roads:

The transportation road improvements Scope of Work was completed by the Company utilizing design specifications from contract engineers and the lead permitting agency, and has been sent out to contractors for bid.

-- Site Work:

The site roads engineering package was completed at the end of April. Geo-technical drilling and test pit excavations were completed around the proposed portal bench area for geo-technical evaluation. Final TWSF design is progressing well and the application for the dam was completed and submitted to Idaho State government agencies.

-- Tram:

Engineers coordinated the design effort of the tram re-alignment to accommodate the optimized portal pad location. As a result, the concentrator site area layout was also modified to accommodate updated engineering plans for the tram.

-- Concentrator:

Plant civil and structural engineering progress included the finalization of ball mill design and crusher foundation design. This included paste backfill design coordination and review of the current electrical instrumentation and load study for the plant and underground as well as a review of electrical bid packages.

-- Paste Backfill Design

Engineers have completed the design criteria including a hydraulic analysis of the paste backfill system, pumps and piping. Equipment specifications for the pump, mixer, and cement silo have been reviewed and approved and engineers are finalizing bid documents for cement and backfill equipment.

-- Cobalt Production Facility (Kellogg, Idaho)

Engineering emphasis continued on flowsheet development and refinements to the heat and water balances. Specifications for the CPF have begun as well as initial equipment sizing and layout design. The planned CPF building and the existing refinery collectively comprise the Big Creek Hydrometallurgical Complex.

PROCUREMENT:

A number of Purchase Orders ("PO") were executed over the past several weeks with numerous bid quotations having been received.

-- Site Works:

The contract PO's for geo-technical drilling and snow removal were executed and the work is now complete. In addition, numerous quotations for construction equipment were received.

-- Concentrator:

All electrical equipment has been quoted and purchase orders will be finalized once underground electrical mine loads have been confirmed. PO's for the pumps, crusher and thickener have been awarded. Additional PO's expected to be awarded include those for dust collector equipment, conveyors and electrical equipment.

CONSTRUCTION:

The Company and JDS conducted pre-bid qualification meetings that were held with approximately 20 separate contractors over the course of several days. Each contractor made a presentation outlining their safety program, skills and availability to commence work on schedule. The results of these evaluations are currently under review.

Over the course of the next several weeks, it's expected that several additional sub-contracts will be awarded. These include the portal bench construction and concentrator site earth work and underground mining contracts.

The above engineering, procurement and construction efforts also included project engineers working closely with the engineering due diligence team of the Company's mandated lead arranger for a senior secured debt facility. The mandated lead arranger (see November 30, 2010 Company news release) is expected, in due course, to provide a form of credit facility supporting the tax exempt recovery zone facility bonds held in trust for the Company (see December 31, 2010 news release). The due diligence process is expected to conclude over the course of the next several weeks.

"We are very pleased with the development of the project to date and are eager to commence earth works on the ICP," commented Mari-Ann Green, CEO of Formation Metals Inc. She continued, "The $80 million raised in March of this year has put construction plans into high gear and we expect to make very good progress over the spring and summer."

Formation Metals Inc.

Mari-Ann Green, C.E.O.

About the Idaho Cobalt Project

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 aerospace sectors.

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 Toronto Stock Exchange under the symbol FCO.

About JDS Energy & Mining Inc.

JDS has extensive experience with successful large-scale resource developments in Canada, including a diamond mine in the Arctic, major oil sands projects in Alberta and a copper mine in Yukon, among many other projects throughout the world. Their team consists of about 25 full-time specialists and four industry associates who work together on a project-specific basis. They extract maximum value from their projects while balancing guiding management principles.

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 http://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.