Vancouver,
B.C., July 12, 2012, Formation Metals Inc. (FCO-TSX) (the "Company") is
providing an update on the progress of construction on its 100% owned Idaho
Cobalt Project ("ICP"), which is managed by JDS Energy & Mining. The ICP is
comprised of the development of a mine and construction of a concentrator at a
primary cobalt deposit in Lemhi County near the town of Salmon, Idaho, and the
construction of an electrowinning cobalt production facility in Shoshone County,
near Kellogg, Idaho, U.S.A.
Mine & Concentrator Site Construction
Progress Summary
Construction activities at the minesite are concentrated on the
construction of a new access and haul road recently approved by the agencies
overseeing the mine plan of operations. The importance of this new road is that
it provides an additional access between the mine portal and mill apart from the
proposed tram line and eliminates two miles of haul road dedicated to mine
traffic between the portal bench and mill which is expected to have a positive
impact on the cost per ton to process the ICP ore.
Major re-alignment work on a section of the access road known as "Buddy's
Grade" has also been completed at the minesite. This work was designed to reduce
the degree of its grade and curve to accommodate the safe and efficient passage
of the concentrate haul trucks travelling to the Company's hydrometallurgical
refining complex outside of Kellogg, Idaho. Concurrently, the construction of an
emergency safety on-site helipad and the clearing of approximately 7.2 acres of
land for new road access are underway. This summer's work to date has involved
the movement of approximately 14,000 cubic yards of earthworks and the placement
of approximately 1,740 cubic yards of new gravel on Buddy's Grade, the heli-pad
and berms along access roads. In addition, road improvements along Meadow Creek
required grading and the placement of a further 1,570 cubic yards of gravel.
Cobalt Production Facility Construction Progress Summary
Engineering, construction and procurement continued on the ICP
concentrate refining circuits. This included the engineering and procurement of
a dedicated continuous process hydrometallurgical circuit to process cobalt
concentrate, the preparation for re-starting of the copper electrowinning
circuits to process copper and the preparation of the gold circuits design.
Plans to re-start the copper electro-winning circuits are in place using all
cells with the ability to expand to the design capacity of 8 million pounds of
copper annually.
As discussed in the Company's news release dated May 2, 2012, the decision to
utilize a new continuous process hydrometallurgical circuit to process ICP
cobalt concentrate has allowed the three existing batch process autoclaves to be
available for processing third party silver, copper and gold concentrates. These
existing autoclaves have recently been x-rayed, pressure tested and certified
for commercial use. Commissioning of these existing autoclaves is in process and
is proceeding as anticipated.
Third party concentrate is now being delivered to the refinery on a daily
basis with the leach section expected to soon be operational. Management at the
refinery is evaluating cost estimates for the required sections for this new
concentrate processing business and is working toward commissioning the refining
complex up to its design capacity of 30 tons per day of concentrate material.
As a result of the expanding business at the refinery, the Company recently
hired Mr. Donnie Murrell, M.B.A., as the Sunshine Precious Metals Refinery
Manager. He has significant experience in sales, commercial real estate and has
experience in multiple management positions, including contract management and
operations management. Mr. Murrell's key responsibilities include developing
goals, objectives, policies and procedures related to activities, developing and
administering budgets, and conducting short and long range planning. Mr. Murrell
will also work in expanding the customer base while meeting existing customer
contract deadlines.
"Construction activities continue at both the minesite and the refining
complex utilizing cash on hand to keep critical construction activities moving
forward while we continue to concentrate on closing the final stage of mine
financing" stated Mari-Ann Green, Chairman and CEO of the Company. She
continued, "Once we have secured the funds required to complete the construction
of the ICP we will commence Phase III Construction. Phase III is expected to
take between 9 and 14 months from the commencement of underground operations to
access the ore and commence commercial production of high purity cobalt and
byproduct copper and gold."
Formation Metals Inc. is a well-established, mineral exploration, development
and refining company that 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.
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