Overview

Formation Metals Inc. (TSX: FCO), formerly Formation Capital Corporation, is an exploration, development, and refining company with a focus on cobalt production in Idaho, USA.  Through its four wholly-owned subsidiaries, it has interests in cobalt, uranium, and other base and precious metals in Canada, the United States and Mexico.  Formation Capital Corporation, U.S., a subsidiary of Formation Metals Inc., owns the Idaho Cobalt Project.

The Company recently completed an $80 million equity financing and plans to commence Stage II construction before the end of Q2, 2011.  This 100% owned cobalt project recently received US$77.7M from the State of Idaho in a Stimulus Act Recovery Zone Facility Bond allocation for which it is currently seeking Letters of Credit for as a means to complete mine finance.  In addition, management expects an additional US$45.4M in Solid Waste Bond allocation to be used in the initial years of production.

Investment Highlights

  • A commitment to sustainable mining
  • Idaho Cobalt Project is estimated to produce 1,525 tons of high purity cobalt metal annually over a minimum ten-year span
  • Potential to meet almost %15 of North America’s cobalt’s demand

Chief Properties

Idaho Cobalt Project, Idaho, USA

Formation is 100% owner of the Idaho Cobalt Project in east central Idaho. This site holds high-grade, primary cobalt deposit metallurgically favourable for the production of high purity cobalt metal. This cobalt is suitable for next generation Lithium-Cobalt-Ion rechargeable batteries used in hybrid and electric vehicles and for critical applications in the super-alloy sector such as jet turbine blade production. Formation estimates that 1,525 tons of cobalt will be produced annually over a minimum ten-year span, feeding 14.9% of North America’s cobalt demands. As stated above, this project received stimulus fund bond allocation from the state. Construction started in early 2010 and production is expected to begin in late 2011 or early 2012.

Idaho Cobalt Project

Based on Samuel Engineering’s NI-43-101 compliant technical report of their Bankable Feasibility Study, utilizing a base case cobalt price of $22.52 per pound, and a 7.5% discount rate, the Net Present Value (NPV) is US$87.29 million with an Internal Rate of Return (IRR) of 22.30%. The average operating cost per pound of cobalt is US$7.73, with an average annual Net Cash Flow of US$34,162,100 over a ten year mine life. Total estimated capitalization expenditures for the mine, mill, and retrofitting of the hydrometallurgical refining facility are estimated at US$138.7 million.

Diluted, Proven and Probable Reserves of the project currently stand at 2.636 million tons @ 0.559% cobalt, 0.596% copper and 0.014 ounces per ton gold utilizing a 0.2% cobalt cut-off for a ten year mine life. In addition, there are inferred resources of 1.122 million tons grading 0.585% cobalt, 0.794% copper and 0.017 ounces per ton gold (after MDA, 2006) outlined on the project. This represents contained metals of 42.6 million pounds of cobalt, 49.1 million pounds of copper and 56 thousand ounces of gold.

Cobalt Ore

Sunshine Precious Metals Refinery, Idaho, USA

Owned by subsidiary Essential Metals Corporation, the Sunshine Precious Metals Refinery processes material containing silver, gold and copper from sources such as mining doré, industrial precious metal waste, recycled metals and other types of high content precious metal bearing materials. Operational as of 2004, it is a zero-discharge, expansion-capable facility that continues to escalate production. It specializes in high-purity refinement, with consistent fineness of 999.5 silver or better. High-quality premium silver can also be provided with a certified minimum quality of 999.99 fine silver.

The 36,000 square foot refinery also contains two additional circuits, the hydrometallurgical (hydromet) and solvent extraction electrowinning circuits (SX-EW). These circuits will be retro-fitted to accept Idaho Cobalt Project concentrate. The hydromet circuits will produce high 1,525 tons of high purity cobalt metal, while the SX-EW circuits will produce a similar amount of copper plate metal. Gold from the cobalt project concentrate will be processed at the exisiting precious metals refining circuits.

Pouring Bullion Bars

Black Pine Project, Idaho, USA

The Black Pine Property is proximal to Formation’s Idaho Cobalt Project. Stratiform sulphide mineralization is found in massive sections which typically contain pyrite and chalcopyrite. Aside from the copper rich strata, there are a number of narrower cobalt-gold rich arsenopyrite-bearing beds present in the copper mineralized section. In 1992, the company optioned the Black Pine property and shortly thereafter staked additional claims. Since the acquisition of Black Pine, Formation has spent $3.2 million on property payments and exploration including geological mapping, soil geochemistry, geophysical surveys, trenching and drilling programs. Formation has completed 100 diamond drill holes totaling 44,954 feet, and 100 reverse circulation holes totaling 15,625 feet.

Core drilling has defined a preliminary sulphide resource of 224,673 tons grading 4.17% copper, 0.013% cobalt and 1.269 grams per tonne (gm/T) (0.037 oz/t) gold has been calculated for the Swift East and Trench zones. Comparatively under-explored zones include the Regina zone where the best drill hole intersected a cobalt-rich horizon which assayed 1.133% cobalt. 0.02% copper and 1.920 gm/T (0.056 oz/t) gold over 17.5 feet and the Troll Zone where drilling intersected a copper-rich horizon grading 0.164% cobalt, 4.90% copper and 0.446 gm/T (0.013 oz/t) gold. over a 9.2 feet. All of these zones remain open in at least one direction.

Management (Selected)

Mari-Ann Green, B.A., B.Ed. - Director – Chairman & C.E.O.
Ms. Green, co-founder of Formation Metals Inc., has over 25 years experience in the resource sector in the areas of finance, management and corporate development. She has been responsible for the raising of over $90 million in equity funding for the Company and has assembled and directed a team of exceptional industry professionals. Since inception, she has kept the team focused on the corporate objective – to become an environmentally and socially responsible, profitable, primary metals miner and refiner.

J. Scott Bending, P.Geo., B.Sc. - Director – President.
Mr. Bending, also a co-founder, has over 23 years experience in mineral exploration and development within Canada, Mexico, United States and abroad and has 15 years experience in metal price forecasting and commodity analysis. Mr. Bending provides Formation with solid management expertise and has a proven track record of acquiring and evaluating high quality metal projects. Mr. Bending is also on the Board of Directors of the Northwest Mining Association.

W.G. (Bill) Scales, B.Sc. - Director — Executive V.P.
Mr. Scales, also a co-founder, has over 30 years experience in project management including 20 years in mineral exploration and development. His extensive knowledge of the Idaho Cobalt deposit gives him a solid background from which to oversee and review property development as Project Manager.