Mr. Mari-Ann Green reports

FORMATION METALS SECURES LETTER OF CREDIT TO SUPPORT LOW INTEREST BONDS FOR IDAHO COBALT PROJECT CONSTRUCTION

Formation Metals Inc. has secured a letter of credit in support of $43.6-million (U.S.) of the $77.7-million (U.S.) in proceeds the company previously raised from the sale of Federal stimulus program recovery zone facility bonds (see news release dated Dec. 31, 2010). The US$77.7 million has been held in trust in the Company's Idaho Cobalt Project ("ICP") construction account pending a letter of credit supporting the Bonds.

With the Letter of Credit in place approximately US$43.6 million can now be withdrawn from the construction account and used to reimburse Formation for certain construction expenditures at its 100% owned ICP. To date, Formation has approximately US$19.3 million in ICP construction expenditures that have been withdrawn from the construction account to replenish the Company's treasury. As the Company advances construction on the ICP and incurs additional expenditures, further withdrawals can be made from the construction account.

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