Union Bank Takes Over as Lead Arranger for Formation Metals' Cobalt Project's US$80 Million Credit Facility

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/07/12 -- Formation Metals Inc. (TSX: FCO) ('Formation') (the 'Company') announced today it has signed an agreement with Union Bank, N.A. ('UB') mandating UB as Lead Arranger to provide a credit facility supporting the Company's US$77.7 million in tax exempt Recovery Zone Facility Bonds (the 'Bonds').

A portion of the proceeds from the sale of the Bonds is being used to finance the development of Formation's Idaho Cobalt Project (the 'ICP') with the remaining portion held in trust in the Company's construction account. The credit facility will provide letter of credit support, which will free restricted cash from the Bonds for the further development of the ICP. It is expected that the transaction will close on or about March 15, 2012. The ICP consists of the mine and concentrator near Salmon, Idaho and a cobalt production facility near Kellogg, Idaho.

UB was involved as one of the key syndicate members in a previously structured credit facility with a major Eurozone bank as the lead arranger. The facility could not be finalized due to the prevailing Eurozone debt market turmoil. During the previous structuring efforts, a favorable independent engineering report was completed along with two positive independent cobalt market studies. Extensive legal due diligence was also successfully completed. UB is proposing to arrange a club of underwriters that will include themselves and at their discretion, additional lenders.

'Although the Eurozone situation has impacted the financial markets in general, as a US institution that is part of the Mitsubishi UFJ Financial Group, Union Bank has been far less impacted by the Eurozone situation than the Eurozone banks,' commented Mari-Ann Green, CEO of Formation Metals. 'We are very pleased to be able to work with Union Bank. Their prior involvement as a syndicate member will allow them to quickly move forward on structuring the new facility.'

Initial production from the ICP is targeted for Q4 of this year. During the winter months, Formation has continued to advance construction and engineering on the ICP, including: additional detailed engineering, concrete work, refurbishing the copper circuits at the cobalt production facility, mine portal bench work and rock bolting at the mine site.

About UnionBanCal Corporation & Union Bank, N.A.

Headquartered in San Francisco, UnionBanCal Corporation is a financial holding company with assets of $84 billion at September 30, 2011. Its primary subsidiary, Union Bank, N.A., is a full-service commercial bank providing an array of financial services to individuals, small businesses, middle-market companies, and major corporations. The bank operated 404 full-service branches in California, Washington, Oregon and Texas, as well as two international offices, on September 30, 2011. UnionBanCal Corporation is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group, Inc. Union Bank is a proud member of the Mitsubishi UFJ Financial Group (MUFG) (NYSE: MTU), one of the world's largest financial organizations. Visit www.unionbank.com for more information.

About Formation Metals, Inc.

Formation is a well-established mineral exploration, development and refining company who, through its 100% owned subsidiary, Formation Capital Corporation, U.S., is developing the ICP. The ICP is a 100% owned primary cobalt deposit located in Idaho. Through its wholly owned subsidiaries, Formation has additional interests in base, precious metal and uranium projects in Canada, the United States and Mexico. Formation is dedicated to the principles of environmentally sound mining and refining practices, and believes that environmental stewardship and mining can co-exist. Formation trades on the Toronto Stock Exchange under the symbol FCO.

About the Idaho Cobalt Project

The 100% owned ICP is a unique, 'shovel ready' and fully environmentally permitted primary cobalt deposit and refining facility currently under construction. The ICP will be capable of producing high purity cobalt metal suitable for critical applications in the superalloy sector, as well as by-product copper and gold. Cobalt is used in a wide variety of environmental and high-tech applications, including re-chargeable batteries and superalloys required in the aerospace sectors. Currently, the United States is the world's second largest consumer of cobalt and is totally reliant on foreign sources for this essential metal.

Formation Metals Inc.

Mari-Ann Green, C.E.O.

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. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. 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 www.sedar.com.

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.

Contacts:

Formation Metals Inc.

E.R. (Rick) Honsinger, P.Geo.

V.P. Corporate Communications

604-682-6229
inform@formationmetals.com
www.formationmetals.com