Formation Capital drills Idaho Cobalt (October 11, 2004)

Vancouver — Encouraging grades from ongoing diamond drilling at Formation Capital‘s (FCO-T) Idaho Cobalt project are expected to result in an improved resource estimate.

The company is half-way through its 7,500-metre program on the project, in Idaho’s east-central region.

Drilling continues to test along strike and downdip on the Ram deposit, as well as mineralization in the hangingwall.

Highlights include hole 5, which intersected multiple horizons of mineralization in the Ram deposit, in particular 0.6 metre (from 292 metres) grading 0.57% cobalt and 2.2 metres (from 294 metres) of 0.41% cobalt. The main zone was encountered farther down-hole, returning 2.5 metres (from 371 metres) of 0.32% cobalt and 0.64% copper, then 3.9 metres (from 379 metres) of 0.77% cobalt and 1.26% copper, and then 2 metres (from 386 metres) of 1.41% cobalt and 0.33% copper. Beneath the main zone, drill crews encountered a 1.25-metre intercept of 0.57% cobalt and 0.29% copper.

Hole 7 returned 1.5 metres (from 86 metres) of 0.55% cobalt.

Multiple mineralized horizons were encountered in hole 8, including 0.6 metre (from 203 metres) of 4% cobalt and 1.3 grams gold per tonne, followed by a 1-metre section (from 215 metres) of 0.85% cobalt and 0.37% copper, and then 1.2 metres (at 319 metres) of 1.05% cobalt, followed by 1.2 metres (from 384 metres) grading 0.39% cobalt and 0.68% copper. Farther down-hole, drilling in the main zone returned 1.3 metres (from 394 metres) grading 0.37% cobalt and 0.57% copper, plus 2.1 metres (from 414 metres) of 1.17% cobalt and 0.84% copper, and 3.4 metres (at 424 metres) of 0.38% cobalt and 0.52% copper.

Drilling has extended the mineralization downdip in the Ram deposit, some 120 metres along strike.

Formation Capital is carrying out a feasibility study, and permitting is advanced. A prefeasibility study outlined diluted proven and probable reserves of 1.14 million tonnes grading 0.641% cobalt, 0.49% copper and 0.6 gram gold per tonne. Diluted inferred resources consist of 1.72 million tonnes grading 0.57% cobalt, 0.42% copper and 0.7 gram gold.

Plans call for an underground mine focused on the thin, high-grade cobalt horizons. The mine is projected to produce 1,500 tonnes per year, or about 4% of global cobalt supply; it could also satisfy roughly 10% of cobalt demand in the U.S.

Since acquiring the project in 1994, Formation Capital has carried out extensive exploration, including core drilling, on the Sunshine, East Sunshine and Ram deposits. The prefeasibility study and resource estimate were conducted in the late 1990s, then revised in 2001.

In 2000, the company entered an agreement to acquire the Big Creek hydrometallurgical complex, near Kellogg, Idaho, from Sunshine Mining & Refining. The acquisition was completed in 2002 for a total of US$1.275 million. The precious metals refinery is to be retrofitted in order to process cobalt concentrate from anticipated Idaho Cobalt production.

Also, in mid-2004, Formation Capital reopened the facility’s precious metals refining circuit, with annual capacity of 10 million oz. silver and 350,000 oz. gold, and is now actively processing material from customers.

Buoyant cobalt prices of US$24 per lb. augur well for the operation. The rally is due to supply shortfalls and concerns over production from unstable countries, particularly the Democratic Republic of Congo, which has been a major supplier.