Formation Metals Inc.

Formation Metals Inc.

December 11, 2009 06:30 ET

Formation Metals Inc. Announces Amended and Restated Preliminary Short Form Prospectus for Debt and Equity Offering

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 11, 2009) -


Formation Metals Inc. (formerly "Formation Capital Corporation") (TSX:FCO) (the "Company") is pleased to announce it has obtained a receipt for the filing of an amended and restated preliminary short form prospectus dated December 10, 2009, in all of the provinces of Canada, except Quebec, in respect of an amended and restated offering (the "Offering) which consists of units (the "Units") and common shares ("Common Shares") of the Company.

Each Unit consists of one senior secured note ("the Note") in the principal amount of US$1,000 and 150 share purchase warrants (each, a "Warrant"). The Notes will bear interest at the rate of 10% per annum for the first two years and at the rate of 12% per annum thereafter, payable semi-annually in arrears. The full amount of interest payable on the Notes for the first two years (the first four interest payments) will be held in escrow for payment in accordance with the terms of the Notes. The Notes will mature on the fifth anniversary of their issuance at par, plus accrued and unpaid interest. The Company may, after the second anniversary of the issuance of the Notes, redeem all or part of the then outstanding Notes in denominations of US$1,000 or multiples thereof at US$1,050 (second anniversary), US$1,040 (third anniversary), US$1,030 (fourth anniversary), US$1,000 (fifth anniversary), per US$1,000 principal amount Note, plus accrued and unpaid interest.

Under the Offering, up to 102,041 Units will be offered at a price of US$980 per Unit for aggregate proceeds of up to US$100,000,180 and C$60,000,000 of Common Shares. The amount and issue price of the Common Shares and the exercise price of the Warrants will be determined at the time of filing the final short form prospectus. The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the acceptance of the Toronto Stock Exchange.

The Offering is expected to close on or about December 22, 2009. The Offering will be conducted on a best efforts agency basis. Jennings Capital Inc. is the lead agent of a syndicate that includes Blackmont Capital Inc. and Acumen Capital Finance Partners Limited (collectively, the "Agents"). The Agents will be granted an option to purchase up to 15% of the number of Common Shares sold up to 30 days after closing and up to 15% of the number of Units sold up to 48 hours prior to closing to cover over-allotments, if any and for market stabilization purposes.

In consideration for the services to be rendered by the Agents under the Offering, the Agents will receive a cash commission of 4% of the gross proceeds of the Units, and 5.5% of the gross proceeds of the Common Shares, sold under the Offering and including any Units or Common Shares sold as a result of the exercise of the Agents' over-allotment option. The Company will also issue agents' warrants to purchase up to 4% of the number of Warrants sold under the Offering and 5.5% of the number of Common Shares sold under the Offering including the Warrants and Common Shares issuable upon exercise of the Agents' over-allotment option.

The Company plans to use the proceeds of the Offering to fund construction at the Idaho Cobalt Project and the Big Creek Hydrometallurgical Complex, for bonding requirements, for general corporate purposes, and to provide for the escrow of interest on the Notes.

"With the recent approval of our plan of operation, we are now in a position to construct the Idaho Cobalt Project," stated Mari-Ann Green, C.E.O. of Formation Metals. "This financing will provide all the funds necessary to put the project into production in 2011. Upon closing the financing we will immediately commence site clearing in accordance with the schedule in the bankable feasibility study."

The Idaho Cobalt Project envisages 10 years of mining operations from the Ram deposit. The Company will be also be evaluating other adjacent targets which may be developed in the future to extend the mining operations beyond the current 10 year mine life.

These securities have not been registered under the United States Securities Act of 1933, as amended, (the "US Securities Act") or any state securities law, and they may not be sold in the United States or to or for the account or benefit of "US persons" as defined in Regulation S under the US Securities Act unless an exemption from registration is available. This press release does not constitute an offer to sell or a solicitation of an offer to buy these securities in the United States or to US persons.

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. The Company trades on the Toronto Stock Exchange under the symbol FCO.

Formation Metals Inc.

Mari-Ann Green, CEO

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 such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "planned", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may" ,"could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic conditions, legislative and regulatory developments, the nature of our customers and rates of default, and competition as well as those factors discussed in the Company's documents filed on SEDAR (

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

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.

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