Formation Metals Inc.: Idaho Cobalt Project Senior Debt Facility Not Proceeding (ccnm)

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 3, 2011) - Formation Metals Inc. (TSX:FCO) (the "Company") announced today that the commitment (the "Commitment") received by the Company from BNP Paribas ("BNP") (see news release dated July 29, 2011) has terminated without the closing of the subject financing.

The Commitment provided for a US$79,500,000 Senior Secured Letter of Credit Facility in support of the Recovery Zone Facility Revenue Bonds issued for the construction and development of the Company's 100% owned Idaho Cobalt Project (the "ICP"). Notwithstanding extensive and positive technical, legal and cobalt market due diligence undertaken by BNP, BNP was unable to conclude the financing and the Company has decided to consider alternative financing options.

Mari-Ann Green, C.E.O. of Formation Metals, said: "It is disappointing that the Company has expended so much time and energy on the BNP facility only to come to this decision. However, the Company remains in a strong financial position with a current cash balance at the end of the last quarter of approximately $54.7 million." She concluded, "We will carefully consider alternative financing options."

Construction has been advancing on the ICP since the spring and significant progress has been made with engineering, procurement and construction. The Company will continue to advance the project and is reviewing the construction schedule. The Company will provide an update on construction when available.

The 100% owned ICP 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.