THIS IS NOT AN OFFICIAL COMPANY NEWS RELEASE
– FOR THE INFORMATION OF SHAREHOLDERS AND INTERESTED PARTIES ONLY –
Formation Metals Inc. (TSX:FCO) is providing the following update on our Idaho Cobalt Project to all our stakeholders. This information reflects progress made since our last official news release dated July 12, 2012.
Efforts concentrated on accomplishing time critical tasks of Stage II construction. Stage III construction will commence once mine finance is concluded. This stage of construction involves underground excavation to the ore face and the building of the required facilities such as the mill, concentrator and water treatment plant. Initial production is expected to begin between 9 and 14 months from the commencement of Stage III construction.
Idaho Cobalt Project Mine and Concentrator Site, near Salmon, Idaho:
Modular administration offices were mobilized and assembled for permanent use at the mine site and are now being used to coordinate mine construction activities. These activities included the following:
- Construction of a new haul road resulted in eliminating the need to use the portion of Bucktail Road on the neighbouring Noranda property and shortening the haul distance from the portal bench by approximately two miles. This is expected to result in additional savings in mining costs per ton.
- Concurrent with the above roadwork, the installation of several extensive guardrails and berms on roads and gates to restricted areas were completed. These measures were implemented to reduce road maintenance and enhance the safety of the mine workers.
- Placement of new surfacing material on all new and existing roads is currently underway and is approximately 50% complete. In addition, in collaboration with the United States Department of Agriculture Forest Service and Lemhi County, maintenance of the transportation route to the project site was conducted. This included blading, watering and rolling of approximately 10 miles of surface on Williams Creek Road for safety and road surface protection purposes.
- Drilling of water capture and monitoring wells was also initiated. This included the installation of two monitoring wells which is nearing completion. The drilling and installation of water capture wells along Bucktail Creek is also underway with three out of seven wells completed. Once concluded, the installation of all monitoring wells required on the mine site and capture wells offsite will be complete.
Several photos have been posted on the Company’s website documenting the above work and can be viewed athttp://www.formationmetals.com/s/ConstructionGallery.asp
In addition to physical earthworks and other construction efforts, the Company’s development team of operations, process and outsourced engineers continued mine optimization studies. These studies are ongoing and are being developed to demonstrate additional economic potential outside of the scope of the Bankable Feasibility Study, primarily for mine financing purposes.
Big Creek Hydrometallurgical Refining Complex, outside of Kellogg, Idaho:
Additional concrete construction began in July at the Cobalt Production Facility and was completed in August. This work concentrated on the foundations for the cobalt electrowinning cells and crane structures, and constructing the oxygen tank pad. Other tasks accomplished or in progress include the following:
- Engineering focused on completing piping and instrument design which was completed and is currently under engineering review for final design. Work was also conducted with safety consultants to conduct Process Hazard Analysis of the Cobalt Production Facility, one of OSHA’s requirements to ensure plant safety, based on having a completed set of designs for the piping and instrumentation.
- Design of the Leach Residue Repository facility progressed, with the water management area being surveyed, and information on geo-tube layout design was received from one of the Company’s engineering consultants. Geo-tube requests for proposals were released in August to determine the recommended vendor. Hydrology engineers will then work with the chosen vendor on final geo-tube layout design.
- Concentrate delivery from the Crescent Mine ceased at the end of August. This was a result of United Silver Corporations’ decision to scale back pre-development activities while they continue to become more knowledgeable about the characteristics of the silver-bearing mineralization at the Crescent Mine, which was more fully disclosed in their August 24 news release (http://www.unitedsilvercorp.com/s/NewsReleases.asp?ReportID=543797
As a result of non-delivery of concentrate to the refinery, the agreement was terminated on Oct 1, 2012. Formation Metals expects to negotiate a new contract once United Silver re-commences milling activities. This development was more recently covered in an article in the Shoshone News Press posted on the Company’s website at http://www.formationmetals.com/s/CobaltNews.asp?ReportID=550909
Mine Finance:
Financing efforts over the summer months consisted primarily of conducting due diligence site visits at both the mine site and refinery for potential lenders’ teams of engineers and consultants in conjunction with the Company’s operations and process technical staff. There were no fatal flaws or serious operational concerns that arose from the due diligence studies. The Company anticipates these efforts will result in a mine finance transaction. As previously disclosed, financing efforts include securing a credit facility for issued tax exempt industrial bonds, securing off-take and / or securing a high yield debt facility. Also deemed reasonable by management is the alliance with capable strategic partners with interests in Formation’s corporate growth. Once material agreements are entered into, management will issue a news release outlining the structure of any such agreements.
Formation Metals Inc.
This information update 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 information update 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.