BMSG Drops Water Right Notice of Protest

VANCOUVER, BC - Formation Capital Corporation reported that its wholly owned subsidiary Formation Capital Corporation U.S. is in receipt of an order issued by the Department of Water Resources of the State of Idaho accepting stipulation for withdrawal of protests on certain water rights. What this means is the Blackbird Mine Site Group (BMSG) has withdrawn its notice of protest which it filed in January 2006 against the Company's application to the Department for a water right for its 100% owned Idaho Cobalt project, located in east central Idaho.

The order states, among other things, that "the application to appropriate water ..., filed by Formation Capital Corporation U.S. shall be processed in due course as a non protested application". A hearing scheduled to review the details of the protest has therefore been cancelled. The Compnay expects a water right will be issued once administrative processes are completed.

BMSG is the "doing business as" name of the subsidiaries of several companies, apparently including Alcan, Inc. and Xstrata PLC., which, collectively, are liable to the United States for on-going and past discharges of hazardous substances (primarily metals) from the old Blackbird Mine site to local streams, rivers and ground water. The BMSG has raised concerns about Formation's future mining operations interfering with remedial work at the site which prompted their original water rights protest. The Company maintains its belief that these claims are unfounded.

The company's address is Suite 1510, 999 West Hastings Street, Vancouver, BC V6C 2W2, (604) 682-6229, fax: (604) 682-6205.