"Sign of the Times" - "risk by potential financiers in these turbulent markets has made financing costs unattractive".
Formation Metals (FCO-T) will not start Idaho underground development
May 2nd, 2013 - News Release
Formation Metals Inc. will not be proceeding, at this time, with the underground development on its 100-per-cent-owned Idaho cobalt project or any related construction as was anticipated in the company's news release dated Dec. 12, 2012.
"Although cobalt prices have recently exhibited signs of recovery, the weak prices seen over the last year, coupled with enhanced adversity to risk by potential financiers in these turbulent markets has made financing costs unattractive for the further development of the ICP at this time," stated Mari-Ann Green, chief executive officer of Formation Metals. She continued: "We have been working hard to reduce capital costs and increase recoveries at the ICP and we will be ready when the markets recover. This way we can preserve Formation's cobalt, copper and gold resources until economic circumstances merit their extraction. In the meantime we will pursue those projects that have the best likelihoods of realizing cash flow in the shortest time possible under current market conditions. The ICP is a valuable asset and we intend to preserve it for future development once conditions improve."
In addition, to ensure the financial health of the company's existing treasury, Formation has been eliminating and is continuing to eliminate all non-essential capital and operating spending and is targeting significant savings over the next year. Formation has implemented cost savings measures and has been reducing general and administrative costs at its office locations through salary reductions and the redeployment and elimination of positions. The company sincerely appreciates the commitment and many contributions made by all its employees as well as the team that has been diligently developing the ICP. In particular, Formation acknowledges the forthrightness and co-operation of JDS Energy and Mining Inc., which managed the engineering, procurement and construction of the ICP.
Management intends to focus its efforts on the advancement of the business at the Sunshine precious metals refinery to increase cash flow, and on a strategic review of its precious metals properties. The refinery business consists of the established precious metals refining of high-content silver materials, such as dore, the copper SX-EW refinery and the retrofit and start-up of the hydrometallurgical plant to process concentrates. Silver bullion produced at the refinery is accepted as good delivery on the COMEX. These businesses operate separately from the company's ICP.
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