Formation Metals Inc.

Published : October 24th, 2008

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Keywords :   Cobalt |

Re:        News - Thursday, October 23, 2008
Title:     Formation Capital Update on Operations

NOTE: This update was sent to the Company's list of shareholders and interested parties via email on October 23, 2008.

This is Not an Official Company News Release - For the Information of Shareholders & Interested Parties Only



Dear Shareholder,

Management would like to provide its shareholders and interested parties with an update on the Company's activities, and how the current world financial crisis has affected its operations. As a result of the declining liquidity and credit crunch of the financial markets, management is aggressively taking steps to preserve existing capital and protect its shareholders in the event the current financial crisis continues for a prolonged period of time. It is worthy of note that the Company has no debt that could expose it to crippling settlement conditions.

In early October the Company announced that the Record of Decision (ROD) on the company's Idaho Cobalt Project (ICP) was remanded by the Regional Forester and it would be necessary for the Salmon Challis National Forest to issue a new ROD. Management understands that a new ROD will be issued in mid November, 2008 and remains confident that this new ROD will, this time, be upheld by the Regional Forester. As well, the new ROD is expected to better protect the Forest Service from any potential future litigation, and as a consequence, help ensure a continued uninterrupted production schedule for the ICP in the years to come. As reported in the Company's news release, the Forest Service noted "the importance of the project to the community and pledged to address the clarification issues outlined in the remand as promptly as possible". This delay in the upholding of the ROD also provides the Company additional time to work with any potential appellants with the goal of having the new ROD issued with no appeals, thus avoiding a possible additional 45 day appeal resolution period.

The overturning of the ROD was not expected by the Company and was an extremely disappointing turn of events. The Company had been aggressively pursuing mine financing in the hopes of beginning mine construction earlier this fall. With the ROD overturned the Company had no alternative but to put the financing on hold until the New Year when the new ROD is expected to be upheld. At that time the Company intends to resume its efforts to finance the construction of the ICP.

The delay in the ROD could be viewed as having a silver lining. One thing is certain; the financial lending markets and equity markets are in a tumultuous down turn the likes of which have never been seen before. As markets are invariably cyclical, more favorable debt and equity finance terms can be expected to be negotiated at some time in the future. Another positive outcome of the delayed ROD is the Company's in house team of mining engineers, metallurgists and other professionals are now afforded the luxury of additional time to review the ICP's detailed engineering and procurement of mining equipment to assess where changes can be made to save time and money.

Although falling commodity prices are proving detrimental for those companies already in production, it can be expected to be advantageous for those companies, such as ourselves, that require the same commodities to build their facilities. Our team is monitoring the commodity prices for such items as steel with the intent of reducing cash outlays for construction materials.

Perhaps one of the most significant cost savings measures of the capitalization expenditures for the ICP is the avoidance of winter construction. Construction under the harsh conditions of winter are estimated to be twice the cost, with half the productivity, and is also considered quite dangerous for workers where there is a much higher probability of workers being seriously injured or worse.

As at August 31,2008 and reported in the Company's latest available financial statements, the Company reported just over $14 million in current assets, with $5.6 million of that in cash and an additional $4.4 million in precious metals inventory. As previously mentioned, management has implemented procedures to conserve this cash. In addition, as of August 31, 2008, the Company reported total assets of approximately $72.7 million, with total liabilities of approximately $2.5 million.

The economics of the ICP remain very positive. Despite falling commodity prices, cobalt, and in particular high purity cobalt metal, has remained relatively resilient with prices in the mid US $30 per pound vicinity making us more attractive than a number of other potential commodity producers seeking construction financing. In addition, our location in Idaho remains an attractive and stable one for financiers, compared to some other projects outside of North America in less stable political environments.

Although the delay in the ROD coupled with the current financial crisis has had a direct effect on our ability to secure an immediate mine financing, there are several openings in this cloud of worldwide financial crisis as pointed out above. Management will continue to do all in its power to move the ICP forward, conserve cash and protect its shareholders during these uncertain times.

Formation Capital Corporation

"Mari-Ann Green"

Mari-Ann Green, C.E.O.

October 23, 2008

Copyright � 2008 FORMATION CAPITAL CORPORATION (FCO) All rights reserved. For more information visit our website at http://www.formcap.com/ or send email to inform@formcap.com ..
Message sent on Thu Oct 23, 2008 at 5:38:12 PM Pacific Time

Formation Metals Inc.

DEVELOPMENT STAGE
CODE : FCO.TO
ISIN : CA34637V1013
CUSIP : 34637L
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Formation Metals is a cobalt development stage company based in Canada.

Formation Metals develops cobalt, copper and gold in USA, and holds various exploration projects in Canada.

Its main asset in development is IDAHO COBALT PROJECT in USA and its main exploration properties are QUEEN OF THE HILLS in USA, COMPASS LAKE, KERNAGHAN LAKE, BIG CREEK HYDROMETALLURGICAL COMPLEX, VIRGIN RIVER, BLACK PINE and MORNING GLORY in Canada and EL MILAGRO in Mexico.

Formation Metals is listed in Canada, in Germany and in United States of America. Its market capitalisation is CA$ 60.3 millions as of today (US$ 46.3 millions, € 41.5 millions).

Its stock quote reached its highest recent level on June 05, 1998 at CA$ 9.94, and its lowest recent point on June 14, 2013 at CA$ 0.06.

Formation Metals has 105 702 405 shares outstanding.

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Corporate Presentations of Formation Metals Inc.
11/17/2007Research Report on Formation Capital
Financings of Formation Metals Inc.
4/13/2011Proposes to Extend Warrants
3/10/2011Completes $80 Million Equity Financing
3/3/2011Prices up to $80 Million Equity Offering
2/24/2011on $80,000,000 equity offering
12/20/2007Flow Through Financing Completed for Formation's Saskatchewa...
Nominations of Formation Metals Inc.
6/13/2013Leading Independent Proxy Advisory Firms Recommend Formation...
1/8/2008(Idaho Cobalt Project) Hires General Manager for Idaho Cobalt Project
Project news of Formation Metals Inc.
5/2/2013(Idaho Cobalt Project)' Defers Underground Development Decision for Idaho Cobalt P...
12/12/2012(Idaho Cobalt Project)' Idaho Cobalt Project Minesite and Refinery Update
7/12/2012(Idaho Cobalt Project)' Idaho Cobalt Project and Hydrometallurgical Plant Update
3/29/2012(Idaho Cobalt Project)' Idaho Cobalt Project Construction Update
12/21/2011(Idaho Cobalt Project)' Idaho Cobalt Project Geotechnical Drilling Complete
12/6/2011(Idaho Cobalt Project)' Idaho Cobalt Project Construction Update
10/6/2011(Idaho Cobalt Project)' Bond Issuers Extend Date for Idaho Cobalt Project Credit F...
9/14/2011(Idaho Cobalt Project)' Idaho Cobalt Project Construction Crew Resume Operations
9/8/2011(Idaho Cobalt Project)Provides Construction Update on Idaho Cobalt Project
7/26/2011(Idaho Cobalt Project)Begins Earthworks Construction at Idaho Cobalt Project Mine ...
5/31/2011(Virgin River)Drilling on Formation Metals' Uranium Project To Commence in...
5/13/2011(Idaho Cobalt Project)Idaho Cobalt Mine Construction on Track for Q2, 2011
4/28/2011(El Milagro)' Mexican Subsidiary Acquires Central Core Land Position on ...
4/7/2011(Idaho Cobalt Project)Cobalt Mine Commencement of Construction Targeted for Q2, 20...
1/21/2011(Idaho Cobalt Project)Extends Cobalt Deposit Strike by 14%
1/6/2011(Idaho Cobalt Project)Signs EPCM Letter of Intent with JDS for Idaho Cobalt Projec...
7/28/2010(Idaho Cobalt Project)Drills to Optimize Mine Design and Assess Rare Earth Element...
11/6/2009(Idaho Cobalt Project)Critical Path to Finalize Formation's Idaho Cobalt Project M...
9/15/2009(Idaho Cobalt Project)Permanent Access Across Blackbird Mine Site Authorized for F...
6/30/2009(Virgin River)Conceptual Studies Commence on Formation Capital's Virgin Ri...
2/11/2009(Idaho Cobalt Project)Receives NPDES Permit and 401 Certification for Idaho Cobalt...
2/3/2009(Idaho Cobalt Project)Record of Decision Describes Conditions Approving Formation'...
1/21/2009(Idaho Cobalt Project)Forest Service Issues Revised Positive Record of Decision fo...
11/28/2008(Idaho Cobalt Project)Expects Idaho Cobalt Project new Record of Decision in mid J...
11/17/2008(Idaho Cobalt Project)Resolves Appeals with Environmental Groups on Idaho Cobalt P...
9/8/2008(Idaho Cobalt Project)Idaho Cobalt Project 78% Complete on Engineering and Procure...
8/26/2008(Idaho Cobalt Project)Idaho Cobalt Project Appeal Resolution Process Underway
8/7/2008(Idaho Cobalt Project)Completes Modified Mine Plan of Operations on Idaho Cobalt P...
7/25/2008(Idaho Cobalt Project)Idaho Cobalt Project's Record of Decision Outlines Measures ...
6/27/2008(Virgin River)In-Fill Drilling on Virgin River Uranium Project Confirms Co...
5/29/2008(Idaho Cobalt Project)Biological Opinions Grant Endangered Species Act; Exemption ...
5/1/2008(Idaho Cobalt Project)Detailed Design and Procurement of Idaho Cobalt Project Mine...
3/13/2008(Idaho Cobalt Project)Receives Water Right Permit for Idaho Cobalt Project
3/7/2008(Virgin River)Highest Grade Uranium Mineralization to date Encountered on ...
1/9/2008(Idaho Cobalt Project)Completed Biological Assessment Significantly Advances Permi...
12/14/2007(Virgin River)Highest Grade Uranium Mineralization Encountered to Date on ...
11/15/2007(Idaho Cobalt Project)Engineering & Procurement Progressing Well on Formation's Id...
10/30/2007(Idaho Cobalt Project) Drops Water Right Notice of Protest on Formation's Cobalt P...
10/27/2007(Idaho Cobalt Project) Announces Court Ruling in Arizona is not Expected to Delay ...
Corporate news of Formation Metals Inc.
7/7/2016Formation Appoints Red Cloud as Capital Markets Advisor
6/21/2016Feasibility Study on Formation's Idaho Cobalt Project Awarde...
6/1/2016Formation Metals Completes Oversubscribed $4.4M Private Plac...
5/10/2016Private Placement Amendment: Granting Of Up-size Option To A...
5/4/2016Formation Metals Announces $3 Million Private Placement
4/23/2015/R E P E A T -- Formation Metals Announces Positive Results ...
4/22/2015Formation Metals Announces Positive Results from a Prelimina...
10/11/2013Secures Proceeds of US$12 Million From Sale of Refinery
9/16/2013to Sell Refinery for US$12 Million
7/5/2013Executes Mutual Release with Waterton
7/5/2013Executes Mutual Release with Waterton
6/6/2013Enters Binding Letter Agreement to Sell Refinery for US$9.0 ...
5/28/2013Welcomes New Board Member Gregory Hahn
5/13/2013Redeems US$43.6 in Bond Debt
10/17/2012Issues US$5 Million Convertible Note as Part of Larger Plann...
5/14/2012Capital Corporation, U.S. and Idaho Conservation League Anno...
5/2/2012Begins Processing Silver & Gold Concentrates
4/4/2012Drilling on Formation Metals' Uranium Project Continues to R...
3/22/2012' Cobalt Project Finance Update
2/29/2012Commences Trading on the OTCQX Market
2/7/2012Union Bank Takes Over as Lead Arranger for Formation Metals'...
1/12/2012Drilling on Formation Metals' Uranium Project to Continue in...
8/29/2011Signs Agreement for Underground Mining Operations and Provid...
7/29/2011(Idaho Cobalt Project)Receives Commitment for Financing of Idaho Cobalt Project
6/16/2011' Earthworks Contractor Mobilizing Equipment for Idaho Cobal...
5/12/2010Grandich Client Update - Formation Metals
3/26/2010Peter Grandich Client Update on Formation Metals
11/10/2009Announces Name Change and Share Consolidation
2/27/2009Endorses Lemhi County Commissioners Establishment of Industr...
2/19/2009U.S. and Idaho Conservation League Announce Grantees of Cons...
2/5/2009Boom in battery sector anticipated
12/30/2008Closes Financing for Saskatchewan Uranium Projects
12/17/2008Receives Air Permit Pre-Construction Authorization
12/15/2008Receives Platinum Award for Corporate Excellence
9/15/2008No Material Reason for Share Price Decline
9/9/2008Courts Grant Formation Capital Access Across Blackbird Mine ...
8/18/2008and Idaho Conservation League Release Details of Conservatio...
8/14/2008and Idaho Conservation League Reach Agreement on Environment...
7/16/2008Clarifying News Release - Continuous Disclosure Review
7/10/2008Hires Key Personnel to Help Expedite Cobalt Project Engineer...
6/16/2008Forest Service Record of Decision Signals Green Light for Id...
4/2/2008 Receives Annexation Approval for Staging Property
1/15/2008Cobalt price soars as stockpiles run low
12/19/2007Former Idaho Governor & Secretary of the Interior Elected to...
11/27/2007Cobalt nears record $35 per lb
4/4/2007Sullivan Deeps SD3 Drilling Update; Top of the Lower Aldridg...
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TORONTO (FCO.TO)Other OTC (FCACF)
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