Formation Metals Announces Preliminary Short Form Prospectus Equity Offering
February 24, 2010
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NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Vancouver, B.C., February 24, 2010, Formation Metals Inc. (FCO-TSX) (the "Company") is pleased to announce it has obtained a receipt for the filing of a preliminary short form prospectus dated February 23, 2010, in all of the provinces of Canada, except Québec, in respect of an offering (the "Offering") of up to 18,750,000 units (the "Units") of the Company for gross proceeds of up to $30,000,000. Each Unit will be comprised of one common share in the capital of the Company (a "Common Share") and one half of one Common Share purchase warrant. Each whole Common Share purchase warrant (a "Warrant") will entitle the holder to purchase one Common Share at a price of $2.00 for 24 months from closing of the Offering. 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 March 11, 2010. The Offering will be conducted on a best efforts agency basis. Jennings Capital Inc. is the lead agent of a syndicate that includes CI Capital Markets Inc. and Acumen Capital Finance Partners Limited (collectively, the "Agents"). The Agents will be granted an option, exercisable at any time until 30 days following the closing of the Offering, to purchase up to 2,812,500 additional Units (in any combination of Units or Warrants not to exceed 2,812,500 Units or 1,406,250 Warrants) 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 6.5% of the gross proceeds of the Units (including any Units issued as a result of the exercise of the Agents' over-allotment option). The Agents will also receive broker warrants to purchase an aggregate number of common shares (the "Broker Shares") equal to 6.5% of the number of Units issued under the Offering (including Units issued 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 and for general corporate purposes.
The offering contemplated in the Amended and Restated Preliminary Short Form Prospectus of the Company dated December 10, 2009 will not be proceeding and such prospectus has been withdrawn.
"After successfully completing the permitting process in November of last year, we are now very pleased to be raising funds to commence construction of our high purity cobalt project. The Company and its financial advisor determined, after lengthy negotiation, that the current market for high yield debt was prohibitive and the project is likely more suitable to conventional bank financing under less onerous terms" stated Mari-Ann Green, CEO of Formation Metals Inc. She continued, "Accordingly, the Company is also pleased to report it is in discussions with several banks for project financing. In addition to banks, discussions have commenced with cobalt end users, off-takers, and metal trading houses. These discussions will continue during construction." Ms. Green concluded, "We are on target to commence initial production of high purity cobalt metal in the first or second quarter of 2011".
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"
Mari-Ann Green,
CEO
For further information please contact:
E.R. (Rick) Honsinger, P.Geo. V.P. Corporate Communications
Formation Metals Inc., 1730 -- 999 West Hastings Street, Vancouver, BC, V6C 2W2
Tel: 604-682-6229 - Email: inform@FormationMetals.com -- Web: FormationMetals.com
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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 (www.sedar.com).
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.
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