First Metals Inc.

First Metals Inc.

January 11, 2007 09:55 ET

First Metals Signs Letter of Intent with Xstrata Copper for Custom Milling

TORONTO, ONTARIO--(CCNMatthews - Jan. 11, 2007) - First Metals Inc. (TSX:FMA) is pleased to report that it has entered into a Letter of Intent with Xstrata Copper Canada ("Xstrata") to custom mill and produce a copper concentrate at the Horne Mill, located in Rouyn-Noranda, Quebec.

In order for First Metal's Fabie Bay ore to be processed at the Horne Mill, it will be necessary for the Mill and related facilities to be refurbished. Xstrata Copper Canada will undertake this refurbishment, working together with First Metals, and at the latter's cost. It is estimated that the costs associated with the Refurbishment Project will be approximately $4.5 Million, comprised of (i) $3.3.Million for refurbishment of the mill facility, (ii) $0.8 Million for the tailings effluent line and (iii) $0.4 Million (10%) for contingencies.

It is a condition of the transaction that First Metals demonstrate its financial ability to achieve the commencement of milling the Fabie Bay ore, as contemplated, prior to the commencement of work. In this regard, the Company is in advanced negotiations to secure term debt in order to satisfy this condition, as well as to supplement development and working capital requirements.

Chairman and C.E.O. James Beatty stated that: "Confirming the availability of a custom mill is regarded as a pivotal component in the rapid advancement of the Fabie Bay Project. We value the expertise being provided by Xstrata, and given the proximity of the deposit to the mill and the fact that test milling was successfully carried out there in the past, the Horne facilities were certainly our preferred solution."

First Metals is a development company currently focused on the Fabie Bay and Magusi River Copper, Zinc, Gold and Silver Projects, near Rouyn-Noranda, Quebec, Canada acquired from Globex Mining Enterprises, Inc. last year. The Company has 30.8 Million shares issued and outstanding and is listed on the Toronto Stock Exchange.

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