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  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 5/27/05  Formation Capital Corp/FI         40FR12B               57:1023                                   1176256

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Exhibit 99.5

ANNUAL INFORMATION FORM

2004

Formation Capital Corporation

1510 – 999 West Hastings Street

Vancouver, British Columbia

V6C 2W2

May 21, 2004

TABLE OF CONTENTS

1.

Corporate Structure

1

Name and Incorporation

1

Intercorporate Relationships

1

2.

General Development of the Business

2

Three-Year History

2

3.

Narrative Description of the Business

2

Idaho Cobalt Project, Idaho

2

Big Creek Hydrometallurgical Complex

10

Black Pine and Morning Glory Properties, Idaho

11

Mexican Properties

13

Other Properties

14

Aggregate Exploration and Development Expenditures

15

Risk Factors

15

4.

Selected Consolidated Financial Information

17

Five Year Financial Information

17

Quarterly Financial Information

18

Dividends

19

5.

Management’s Discussion and Analysis

19

6.

Market for Securities

26

7.

Directors and Officers

26

8.

Additional Information

28

Certain statements in this Annual Information Form and in certain documents incorporated by reference in this Annual Information Form constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and as that term and terms of similar content are elsewhere used.  Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate” or “believe” or the negative thereof, or variations thereon or similar terminology.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  Forward-looking statements involve unknown and uncertain risks, uncertainties and other factors which may cause the actual results to differ materially from any future results expressed or implied by such forward-looking statements.  Formation Capital Corporation undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

1.

CORPORATE STRUCTURE

1.1

Name and Incorporation

Formation Capital Corporation (the "Company") was incorporated under the laws of the Province of British Columbia on June 13, 1988.  The head office of the Company is located at Suite 1510 – 999 West Hastings Street, Vancouver, British Columbia, Canada, V6C 2W2, and the registered and records office is located at Suite 1550, 1185 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4E6.

The Company amended its Memorandum by Special Resolution dated December 20, 1988 to increase its authorized capital from 10,000,000 common shares without par value to 20,000,000 common shares without par value.  At the same time, its Articles were replaced in their entirety with updated Articles.  The Memorandum was also amended by Special Resolution dated August 18, 1995 to increase the authorized capital of the Company to 150,000,000 shares divided into 100,000,000 common shares without par value and 50,000,000 Preference Shares without par value. The Memorandum was again amended by Special Resolution dated August 23, 2002 to increase the authorized capital of the Company to 300,000,000 shares divided into 250,000,000 common shares without par value and 50,000,000 Preference Shares without par value.  The Articles were also amended to add special rights and restrictions to the Preference Shares, and to implement staggered terms for the board of directors pursuant to which the directors are designated as Class I, II, or III, each holding office for three-year terms expiring in different years.

1.2

Intercorporate Relationships

The Company has four subsidiaries, namely; 100% owned Formation Capital Corporation, U.S. ("Formation U.S."), incorporated as a subsidiary of the Company under the laws of the State of Nevada, U.S.A. on July 26, 1988 for the purpose of holding the Company's United States mineral exploration and development properties, 99.98% owned Minera Terranova, S.A. de C.V. ("Minera Terranova"), incorporated as a subsidiary of the Company in Sonora, Mexico on October 16, 1996 for the purpose of holding the Company's Mexican mineral exploration and development properties, 100% owned Formation Chemicals, Inc. ("FCI"), incorporated as a subsidiary of the Company under the laws of the State of Idaho, U.S.A. on August 20, 2002 for the purposes of purchasing, holding and operating the Company's Big Creek Hydrometallurgical Complex (“Complex”) and 100% owned Coronation Mines Ltd. ("Coronation"), incorporated pursuant to the laws of the province of Saskatchewan on January 6, 1988 and which became a subsidiary of the Company pursuant to a take-over agreement dated May 21, 1992 for the purpose of Canadian mineral exploration and development.  On December 31, 1996, Coronation sold 450,000 flow-through shares in its capital stock for total proceeds of $112,500.  In fiscal 1999 Coronation issued an additional 15,000 shares for a resource property transaction.  As a result of the sale of the flow-through shares and the property transaction, Coronation ceased to be a wholly-owned subsidiary of the Company and became 82.3% owned by the Company.  On November 19, 1999 pursuant to an exempt take-over bid the Company issued 93,000 common shares to acquire all of the issued shares of Coronation not then owned by the Company and control the subsidiary 100%.  Coronation was continued into British Columbia pursuant to the Company Act (British Columbia) on March 6, 1998.

- 3 -

2.

GENERAL DEVELOPMENT OF THE BUSINESS

2.1

Three-Year History

The Company is engaged in the acquisition and exploration of mineral resource properties and, if warranted, the development of these properties.  Currently, the Company holds properties in Canada, the United States and Mexico.  The Company, either directly or through its three subsidiaries, Coronation, Formation U.S. and Minera Terranova, has for the past three years and prior, been engaged in the business of exploring for minerals in Canada, the United States and Mexico.  Resource property acquisition and exploration expenditures to February 29, 2004 update are approximately $21.6 million.  More recently the Company has set up a fourth wholly owned subsidiary, Formation Chemicals, Inc. that has successfully completed the purchase of the Big Creek Hydrometallurgical Complex.  This expenditure of $3.0 million includes the acquisition and all associated due diligence, legal and initial start-up costs of the precious metals refining section of the Complex.  Expenditures in the Idaho Cobalt Belt account for over 80% of all mineral property expenditures, where the Company's Idaho Cobalt Project (“ICP”) has reached the permitting and feasibility stages.

3.

NARRATIVE DESCRIPTION OF THE BUSINESS

Significant Acquisitions and Significant Dispositions

Idaho Cobalt Project, Idaho

Terms of Acquisition

Pursuant to an agreement dated July 1, 1994, Formation U.S. was granted an option from Northwest Minerals Inc. ("Northwest") to earn an undivided 100% interest in the ICP consisting of 71 unpatented mining claims (currently 119 claims) located in Lemhi County, Idaho.  In order to maintain the option and earn its interest, the Company must:

1)

make cash payments (as to US$20,000) and forgive loans (as to US$6,805) made to Northwest in the aggregate sum of US$26,805 (paid);

2)

pay Northwest US$2,130 on or before July 1st in each of 1995 through 2004 inclusive  (paid).

An aggregate US$30,530 has been paid to Northwest to date through cash payments for the annual payment noted in (2) above and associated expenses.  As at February 29, 2004, the Company owns a 100% interest in the claims.

In addition to the above, in order to exercise the option, Formation U.S. must pay Northwest US$100 per claim for each claim making up the Idaho Cobalt Project that it wishes to acquire.  For each claim so acquired, the annual payment referred to in 2) above will be reduced by US$30.  Northwest is controlled by J. Scott Bending, a director and officer of the Company.  The consideration paid by Formation U.S. to Northwest is equal to the costs incurred by Northwest in acquiring the 71 claims (currently 118 claims) that made up the ICP claims at the time of the agreement.  Formation U.S. subsequently staked additional claims bringing the total of the ICP to 145 claims.  The claims staked by Formation U.S. are bound by an area of influence clause with Northwest and are subject to the same terms and conditions as the original 71 claims.  Annual holding costs associated with the 145 ICP claims total US$14,500 payable to the Bureau of Land Management and a minor payment to Lemhi County.

- 4 -

*

amended

Location and Access

The approximately 2,362 acre ICP is situated in Lemhi County, Idaho, approximately 21 miles west in a direct line from the town of Salmon.  Salmon has a population of 3,000, is the county seat and is a centre for much of the transportation, mining, ranching and logging industry in this region.  A small airport exists just outside of town, with semi-weekly service to Boise and daily flights to Idaho Falls.  The nearest railhead is at Dubois, about 100 miles to the southeast.  Geographic coordinates for the centre of the property are 45º-07'-50" North latitude and 114º-21'-42" West longitude.  This is within the Gant Mountain 7.5 minute quadrangle.

The ICP can be reached via a series of well-maintained gravel roads leading west from a point on Highway 93 south of Salmon.  Within the property, numerous gravel roads extending outwards from Noranda Inc.’s Blackbird Mine site are passable for most of the snow-free months.

History of Work

In 1995, 1996, 1997 and 1999, Formation U.S. carried out programs of exploration work including diamond drilling, grid-based soil sampling, geological mapping and prospecting on various parts of the property.  The bulk of the diamond drilling concentrated on three deposits, the Sunshine, the East Sunshine and the Ram.  The Company drilled 48 diamond drill holes in the Sunshine totaling 29,144 feet, 24 diamond drill holes in the East Sunshine totaling 14,723 feet, and 31 diamond drill holes totaling 17,256 feet in the Ram.  Formation also drilled 8 RC/core holes into the Ram in order to collect material for metallurgical testing during 2000.  In addition, Noranda Exploration had previously drilled 29 diamond drill holes in the Sunshine area totaling 17,826 feet.  Formation U.S. re-logged and sampled a substantial portion of Noranda Inc.'s old drill core.  In 1998, Mine Development Associates (“MDA”) of Reno, Nevada, was contracted by the Company to audit the combined cobalt, copper and gold resources of the Sunshine, East Sunshine and Ram deposits. MDA also carried out a Pre-Feasibility study of the project at that time.  During 2001 MDA completed a revised audit of the Ram deposit’s resources and an updated Pre-Feasibility on the ICP property.

- 5 -

Revised Audit of Resource

For the revised audit, MDA visited the field office in Salmon, Idaho, reviewed all the data, checked the data posting with original assay sheets, and reviewed and sampled portions of the core. The audit broke down the Ram’s resources into indicated and inferred categories in accordance with standard classifications utilized by the Society of Mining Engineers, Canadian Institute of Mining and the Australian Institute of Mining, as outlined in the British Columbia Securities Commission National Instrument 44-101.

The revised resource estimate on the Ram deposit was calculated utilizing cross sections on 100-foot intervals to build long sections of 7 of the mineralized horizons, which comprise the main, foot/wall (f/w) and hanging/wall (h/w) zones.  Their previous resource estimate on the Sunshine deposit utilized cross sections on 50-foot intervals to build long sections of the main and hanging wall horizons.  A polygonal estimate in the plan of each horizon was used to estimate measured, indicated, and inferred resources.  MDA checked all the areas and block grades for the sectional estimate, checked for errors, and tabulated the resource from the Formation U.S. cross sections.  In addition, MDA calculated a krigged estimate for the Sunshine deposit, which was about the same tonnage and slightly higher grade than the Formation U.S. resource estimate.  The total diluted resource estimates for the Ram (0.3% cobalt cutoff) and Sunshine (0.2% cobalt cutoff) deposits are summarized in the following tables:

Measured and Indicated Resources

Inferred Resources

According to MDA, the potential to increase the size of the resources with additional drilling on the ICP property, especially at the Ram deposit, is considered good.  Many untested geochemical anomalies exist on the property and all of the deposits are open in at least two directions.  Two zones, the Northfield and the East Sunshine, have several drill holes indicating significant cobalt-copper-gold mineralization.  The resources of these zones were not included in the calculations of MDA.

In the resource, the continuity of mineralization is generally good, even though much of it occurs in narrow horizons.  A considerable portion (approximately 61%) of the total resource is classed as inferred material, due mainly to drill hole spacing and down hole projection of the mineralized zones.  The majority of inferred material is located at the Ram deposit.

Subsequent to MDA's revised audit of the resource, MDA was retained to continue its independent engineering evaluation of the ICP in the form of an updated pre-feasibility study, which incorporated a preliminary economic evaluation of two of the ICP deposits (Ram and Sunshine).

Updated Pre-feasibility Report

In May of 2001, the Company received an updated pre-feasibility report on the ICP property from MDA.  The Executive Summary of this report was SEDAR filed in July 2001 under project number 374816.  This report provided the Company with a preliminary economic evaluation of the ICP, based on two deposits - the Ram and the Sunshine.  As the report provided economic data, and, in accordance with standard classifications utilized by the Society of Mining Engineers, Canadian Institute of Mining and the Australian Institute of Mining, the audited reserves/resources were broken down into (diluted) proven and probable reserves, and (diluted) inferred resources.  Measured and Indicated diluted resources become the Proven and Probable ore, respectively, if they can be mined for a profit.  MDA based their estimations, as shown below, on a NSR cut-off of US$65/ton.  These Net Smelter Return (NSR) calculations were based upon cobalt at US$15/lb. (less refining @$2.00/lb.), copper at US$0.80/lb. (less refining @$0.118/lb.), gold at US$275/ounce and metal recoveries for cobalt (92.7% Mill; 95% Complex), copper (92.8% Mill; 90% Complex) and gold (79.2% Mill; 90% Complex).

Ram and Sunshine Deposits’ Proven and Probable Reserves

- 6 -

Ram and Sunshine Deposits’ Proven and Probable Reserves & Inferred Resources

Mining of the Ram hanging/wall zone was not evaluated for mining purposes by MDA at this time.

MDA estimated the cost of completing the mine permitting and the final feasibility study to be US$3 to $4 million.  This would include definition drilling to increase the Ram deposit’s reserves.  The initial capital costs for the project, including the refurbishing and the final purchase price of US$1 million for an off-site Hydrometallurgical Plant, total US$48.449 million, which includes a 20% contingency on most items.  This budget would cover the cost of construction of the mill/office/warehouse complex, tailings facility, water management reservoir, the Ram’s underground development, the aerial tram and the purchase of the required mining equipment.  Depending on the cut-off utilized, the estimated operating costs for the proven and probable is US$68.73 per ton (US$100 NSR cut-off) or US$69.31 per ton (US$65 NSR cut-off).  Concentrate transportation, hydrometallurgical plant costs and hydrometallurgical plant waste disposal add a total of US$29.50 or US$27.89 per ton of ore, depending on the cut-off utilized.

The study outlines the following project operation based on the current reserves/resources:  The mine permitting and the final feasibility study was anticipated to be completed by July of 2002; however due to the lack of available funds and the Company’s decision to concentrate its financial resources on completing the purchase of the Big Creek Hydrometallurgical Complex, this date has been advanced to the last quarter of fiscal 2005  The subsequent Construction phase (mill/office/warehouse complex, tailings facility, water management reservoir, aerial tram and pre-mining underground development) of the project is estimated to be finished in approximately 15 months; the ore will be mined using underground ramp-and-fill or cut-and-fill methods from the Ram and Sunshine deposits; ore will be processed at an initial rate of 400 tons per day and build up to a rate of 800 tons per day, or 280,000 tons per year; the ore will be hauled from the underground by truck, via a decline, to an aerial tram which will move the ore to the mill; (the sunshine ore will be hauled by truck only) the flotation mill is expected to produce a single concentrate grading 14.4% cobalt, 7.4% copper, with gold credits; the tailings will be filtered and dewatered with approximately 50% being permanently stored underground and the rest being dry stacked in an on site tailings facility; the operation is designed to be “zero discharge”, so that no process or mine waters will be allowed to discharge to surface waters; the concentrate will be hauled by truck to an offsite hydrometallurgical plant for refining.

- 7 -

MDA concluded that the Company’s ICP property is economic based upon pre-feasibility estimates and assumptions. They estimated that the Net Present Value (“NPV”) (discounted 8%) of the current Proven and Probable reserves (US$65 NSR cut-off), at a price of US$12/pound cobalt, is over US$36.94 million, pre-tax.  MDA also calculated that the NPV (8%) of the Proven, Probable reserves and Inferred resources (US$100 NSR cut-off), at the US$12/pound cobalt price, is US$120.14 million, pre-tax.  MDA feels that additional definition drilling at the Ram deposit should successfully increase the tonnages in the reserve and resource categories.

Cobalt prices have averaged, approximately, US$16 per pound in 1999 and US$15.31 per pound during 2000, and approximately US$8.50 per pound in 2001.  In mid 2003 cobalt broke through the US$10/lb mark and rose sharply to the US$30 per pound by early 2004 and has since levelled of at approximately US$25/lb.  Overall, 99.8% purity cobalt prices are expected to range between US$12 and US$18 per pound during the next two to three years with occasional short-term variations (Bending, 2001).

Related ICP Property Developments

In August of 1998, the Company retained the services of Mr. Brent Bailey, to act as Manager of Permitting and Development Logistics.  Mr. Bailey's previous work history included Director, Environmental Services (USA) for Noranda Minerals Corp., where he worked with Mr. Robert Metka, then a director of Noranda Minerals Corp., on negotiating the settlement of the Blackbird Mine reclamation agreement.  The Blackbird Mine is adjacent to the Company's Project.

In November of 1998, the Company retained the services of Mr. Patrick Fadyshen, to act as Manager of Cobalt Marketing and Sales.  Mr. Fadyshen has approximately 25 years of metal alloy, cobalt and nickel marketing experience.  Mr. Fadyshen was previously employed with Sherritt Gordon Limited where he served as Sales Manager, Metals Division from 1986 until 1991, where he was responsible for all direct sales of cobalt on a worldwide basis.  He also represented Metals Resources Group where he remained until 1997 when he continued with his own metal sales company, NiCo Metals Sales Inc.

In August of 1999, the Company commenced a diamond drill program on the ICP and completed a draft Plan of Study for environmental Baseline Data.  These initiatives corresponded with recommendations of MDA and were adopted to begin the permitting and final feasibility stages of the Project.  The drill program concentrated on the Ram Deposit’s strike extension and depth, which continue to remain open in both directions and at depth.  The drilling was intended to augment the existing reserve/resource base as well as provide rock and water quality data.

In September of 1999, the Company announced the appointment of an Engineer of Mines, Mr. Joseph A. Scheuering of Missoula, Montana.  He was engaged to assist with the development of the ICP.  He is a graduate of the Colorado School of Mines and has over 30 years of experience gained with Asarco, Magma Copper and Noranda.  His responsibilities have included all aspects of mine development including preparation of feasibility studies, upgrading of ore reserves, project permitting, contractor selection and project administration, as well as reclamation and closure.  Most recently, he held a position with Noranda as General Manager for the adjacent Blackbird Mine.  Mr. Scheuering will consult with the Company’s technical team and share the responsibility for the IPC as it develops through the feasibility and permitting process.   Also in September of 1999 Mr. Robert J. Quinn joined the Board of Directors.

1  Assumed production of cobalt oxide, which carries a price premium of US$5/lb. or a factor of 1.41, whichever is greater, over the price for cobalt metal.

2  Canadian National Instrument 43-101 considers an economic evaluation that inferred resources a "Preliminary Assessment".  This requires the company to acknowledge that "Inferred resources are considered too speculative geologically to have economic conditions applied to them that would enable them to be categorized as a mineral reserve, and there is no certainty that the Preliminary Assessment will be realized".

- 8 -

Mr. Quinn is presently a partner with Quinn & Brooks LLP, a law firm located in AustinTexas, USA, covering domestic and international mining transactions, development and operations, with a special emphasis on environmental permitting and compliance.  

Upon completion of diamond drilling MDA was retained to complete a Reserve and Economic Update of the earlier Pre-feasibility Study on the Project.  The results from this work were completed in December 1999 and announced in January 2000.  

This study was subsequently updated, and included in the more comprehensive Pre-feasibility Study received in May of 2001.  Also during December 1999, additional metallurgical work was undertaken by the Centre for Advanced Metallurgical Processing (CAMP) under the direction of Dr. C. Anderson.  This work helped confirm earlier work completed on behalf of the Company and others as well as producing cobalt hydroxide test product.  Groundwater monitoring wells were completed on December 20^th 1999, which will be in place for the duration of the life of the mine.

To date, reserves and resources remain open, and exploration drilling has occurred on only four of over twenty-five identified target zones situated within the Project.

In early 2000, the Company initiated the permitting studies for the ICP with the commencement of the Scope of Work Study.  This study involved the evaluation of fifteen areas including water resources and quality, waste rock and tailings characterization, wetlands, wildlife, vegetation and air quality.  This led directly to the commencement of the Environmental Assessment Program in June of 2000, overseen by the Company’s Manager of Environmental Affairs, Mr. Brent Bailey.  The program included a wetlands inventory, a sensitive plant survey, the instalment of a meteorological station for the collection of weather data and both ground and surface water surveys for water resources and quality.  The gathering of this data allowed for a detailed evaluation of the optimal placement of the mill and tailings facilities prior to the submittal of the Plan of Operations.  The data was also necessary to help minimize the environmental footprint of the proposed mine facilities.

Concurrent with the Environmental Assessment Program, large diameter core drilling was initiated on the property for the purpose of obtaining fresh ore for additional metallurgical, geochemical and rheological test work.  The material collected was used in studies designed to refine the previously developed mill flow sheet and to assess the most advantageous disposal system for the project (i.e. dry stacked tailings versus conventional backfill and tailings).  These environmental, permitting and metallurgical studies were designed to ensure that the Submittal of the Plan of Operations, essentially the final document that commences the official permitting process, was as comprehensive as possible.  Management had initially planned on submitting the Plan of Operations in March of 2000, but decided to minimize any future permitting delays by conducting further studies prior to submitting the Plan.  Although this delay of the submittal of the Plan of Operations has moved the earliest possible projected production date into 2004-2005, in the long run Management believes this is in the best interest of the successful completion of the Project.

On May 10^th, 2002, the Company announced that Dr. David Stone, P.E., P.Eng., has been appointed to the Company’s Board of Directors.  Dr. Stone is an internationally recognized expert in mine backfilling and has authored numerous technical papers on the subject.  He is a mining/geotechnical engineer with over 18 years of experience in underground and surface mining in some 40 projects in 17 countries.  Dr. Stone's primary expertise is in mining rock mechanics.  In this area he has provided geotechnical designs for both open pit and underground mines, as well as providing ongoing consulting services to several operating mines.  He has participated in due diligence teams and has spearheaded mine scoping and feasibility studies for open pit and underground projects worldwide.

Permitting efforts throughout fiscal 2003 and 2004 continued to advance.  The Company initiated the formal permitting process, known as the National Environmental Policy Act (NEPA), with the submittal of the Plan of Operations to the United States Department of Agriculture Forest Service in January of 2001.  Under NEPA the Forest Service is required to prepare an Environmental Impact Statement (“EIS”) evaluating the potential impacts of the project on the environment.  An integral part of the preparation of an EIS is the collection of baseline information on the site.  During the calendar year 2001 field season extensive studies were conducted and reports prepared.  Much of this information has been submitted to the Forest Service to be used in the preparation of technical reports that serve as the foundation for the EIS.

Concurrent to the collection of baseline studies the Company participated with the Forest Service in public meetings, several agency field reviews and meetings and gave presentations to the Salmon Chamber of Commerce, the Challis Chamber of Commerce and the Shoshone-Bannock Indian Tribe.  Public scoping meetings are a necessary step in the EIS process whereby the public has an opportunity to ask questions and voice their support or concern over the project.  Strong support for the ICP is evidenced by the positive comments provided by the public to the Forest Service and Formation U.S.

Based on discussion with the Forest Service, other agencies and the Company consultants, Formation U.S. has elected to enhance the Plan of Operations through the addition of land application for the disposal of excess water.  This measure was taken to eliminate the need to apply for a surface water discharge permit.  In addition, Formation U.S. has relocated a waste rock pile so that it is well away from any drainage area.  These decisions were supported by supplemental studies commissioned by Formation Capital Corporation in support of the Company’s Plan of Operations.

While Formation U.S. has continued to advance the permitting of the ICP, economic conditions have slowed this effort.  Ownership of the Third Party contractor responsible for writing the EIS changed hands during fiscal 2002 requiring contract negotiations that diverted effort from preparation of the EIS.  These problems were exacerbated by Formation Capital Corporation’s financial position.  Issues with the Third Party contractor have been resolved.  

In fiscal 2002, an on-going engineering study by Mine Development and Associates Inc (MDA) of Reno, Nevada, resulted in an updated Pre-feasibility Study received in May of 2001.  This independent report incorporates a number of additions and changes that enhance the economics of the Project and reduce its environmental footprint.  This includes new metallurgical data, permitting considerations and updated methods and costs related to mining, ore handling, milling and tailings management.  The report was subsequently updated in fiscal 2003 to reflect revised economics of the Complex regarding the disposal of waste rock.  Management was very encouraged with MDA’s report, which may be summarized as follows:

The diluted Proven and Probable Reserves using a US$65 NSR cutoff now stand at 1,093,188 tons grading 0.652% cobalt, 0.49% copper and 0.018 opt gold.  The diluted Proven, Probable Reserves and Inferred Resources now stand at 3,155,280 tons of similar grade.  The Net Present Value, utilizing US$12/lb cobalt producing oxide (pre-tax, discounted 8%) is US$120.1 million, with an Internal Rate of Return of 67.57%.  Utilizing US15/lb cobalt producing oxide, the economics are a NPV of US$190.4 million with an IRR of 92.79%.

MDA also recommended that the program leading to final feasibility be continued.

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In December of 2003, the Company announced it had retained Shaw Environmental & Infrastructure, Inc., (Shaw E & I) one of the largest full-service Environmental Consulting/Engineering contractors in the United States, to assist with the overseeing, coordination, and management of the Company’s permitting program under the National Environmental Policy Act process.  This process governs the procedures to complete the Environmental Impact Statement and receive a Record of Decision from the United States Department of Agriculture Forest Service in regards to the permitting of the Company’s Idaho Cobalt Project located in Lemhi County Idaho.  Shaw E & I is to work closely with the Company’s existing consultants and environmental team to expedite the permitting process.

Concurrent with the permitting efforts, the Company continues to conduct engineering and development work for the purpose of compiling a National Instrument 44-101 compliant Final Feasibility Study.  Portions of this work include a 7,500 metre drill program that commenced in May of 2004.  As well, the Company has received notification that three well-established and respected engineering firms intend to bid on the contract to complete the Final Feasibility Study on the project with the awarding of the contract expected in the near future.

Big Creek Hydrometallurgical Complex

In October of 2000, the Company announced that it had entered into a Standstill Agreement to purchase a hydrometallurgical silver refinery complex.  Subsequent to this, a Heads of Agreement was executed with definitive agreements to follow for the purchase of certain refining facilities and property located near Kellogg, Idaho, more fully described below.  The definitive agreement was signed on August 16, 2001.  In addition to the hydrometallurgical silver refinery the Company acquired an option to purchase an associated hydrometallurgical alkaline leach plant and a tailings facility.

Upon retrofitting, the 36,000 square foot acid pressure leach hydrometallurgical plant will be ideally suited to treat cobalt concentrate from the ICP.  The hydrometallurgical plant, currently outfitted to refine silver and recover copper, is centered around a nitrogen species catalyzed sulphuric acid pressure leach system.  The plant also contains innovative downstream processing steps, which include silver chloride processing steps as well as copper solvent extraction and copper electrowinning.  As mentioned above, the facility also includes a unique 24,000 square foot hydrometallurgical alkaline leach plant, capable of processing a wide variety of materials.  In addition, the Complex includes a large, fully compliant, permitted, modern tailings facility.

The Complex is currently outfitted to produce 10 million ounces of silver, 10,000 ounces of gold and 4 million pounds of copper annually.  Upon retro-fitting for acceptance of ICP concentrate, the facility will be capable of producing 3.3 million pounds of cobalt annually, equivalent to 5 - 8 million pounds of value-added cobalt chemicals used in a variety of applications such as the rapidly expanding re-chargeable battery sector.

On August 17, September 28 and December 15 of 2001, the Company made equal lease option to purchase payments of US$200,000 each totaling US$600,000.  On April 23, 2002 the Company announced that it had negotiated an amendment to the original Agreement between Sunshine Precious Metals Inc. and Formation Capital Corporation dated August 16, 2001.  The amended agreement, among other things, decreased the total purchase price for the facilities from US$2.5 million to US$1.575 million.

Subsequently, on July 9, 2002, the Company announced that it had reached agreement with Sunshine Precious Metals Inc. to pay a reduced early purchase amount for the final purchase of all the facilities under option.  The new agreement waived a June 30, 2002 payment and replaced it with one final lump sum payment of US$600,000 on title closing.

On September 16, 2002, Formation Capital announced it had placed the final US$600,000 payment in escrow for the closing of the purchase of the Big Creek Hydrometallurgical Complex (the “Complex”) from Sunshine Mining and Refining Company Ltd. (“Sunshine”).  At that time, all terms and conditions of the sale had been met, other than one outstanding obligation by Sunshine relating to the removal of certain materials from the site, which were subsequently removed.

Then on September 24, 2002, the Company announced it had completed the purchase of the Complex.  The total purchase price had been further reduced to US$1.275 million from the amended agreement purchase price of US$1.575 million announced April 23, 2002.  The Company now owns the Complex 100%.

Subsequent to the successful closing of the Company’s $10 million financing in December of 2003, the re-staring of the precious metals refining section of the Big Creek Hydrometallurgical Complex, known as the Sunshine Precious Metals Refinery, began in earnest.  On June 1^st, 2004, the Company announced that the refinery was open for business and accepting feed material.

In early July, 2004, to assist in the sourcing of feed material, the Company’s wholly owned subsidiary, Formation Chemicals, Inc. engaged Auramet Trading, LLC (Auramet) as its marketing advisor for the newly refurbished Sunshine Precious Metals Refinery in Kellogg, Idaho.  Under the terms of the engagement, Auramet will develop a comprehensive marketing strategy for the Refinery, as well as assist in its financing needs.

Auramet is to provide a comprehensive array of services for the Company including physical metals trading, hedging, merchant banking, structured finance and advisory services.  Auramet's principals include Jim Verraster, CEO, who built and led the Mining Finance and Precious Metals Marketing team for Standard Bank in New York, Mark Edelstein who has 15 years industry experience and was the former head of Standard Bank's Corporate Finance Department in New York and Justin Sullivan, a well respected commodities lawyer who has nearly 20 years legal experience in the private sector and was a partner with Edwards & Angell, LLP.

Black Pine and Morning Glory Properties, Idaho

Formation U.S. holds a 100% interest in 29 unpatented mining claims that it acquired through staking and has the right to acquire a 100% interest in 36 unpatented mining claims, 4 patented claims and 10 mill site claims (collectively, the "Black Pine Property"), and holds a 100% interest in 17 unpatented mining claims and an option to acquire a 100% interest in an additional 20 claims contiguous to the 17 unpatented claims (collectively, the "Morning Glory Property"), all located in Lemhi County, Idaho, and more particularly described below:

Black Pine 65 Unpatented Mining Claims

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Black Pine 4 Patented Claims (Hold Right to acquire 100% interest)

Morning Glory 37 Unpatented Claims

Pursuant to a lease option agreement dated June 19, 1992 between Formation U.S. and Frederick C. Lyon and Jeanne James, Formation U.S. can acquire the 50 claims, which are included in the Black Pine Property by paying US$5,000 (paid), making advance royalty payments totaling US$327,500 by 2006 (of which US$67,500 has been paid), incurring an aggregate US$710,000 on exploration of the 50 claims (incurred) and paying a sliding scale net smelter return royalty of between 1% and 5% based on the realized price of copper between US$1.25 and US$2.00 per lb.  Once an aggregate of US$2,000,000, including royalty, advance royalty and other cash payments, but not including exploration expenditures, has been paid, title to the 50 claims will vest in Formation U.S.

During the year ended February 28, 1999 an amendment to the agreement was negotiated which requires payments of nil if the average price of copper trades below US$0.85, US$10,000 if the average price of copper trades between US$0.85 to US$0.89 and US$20,000 if the average price of copper trades above US$0.90.  There have been no payments due since the amended agreement was concluded.  During the year ended February 29, 2004, the Company again amended the option agreement to extend the term for two-five year increments, and share on a 50/50 basis with the Optionor any payments received from any joint venture partner.

Formation U.S. holds the right to acquire the 20 claims, which are included in the Morning Glory Property pursuant to two lease option agreements, each having an initial term of 10 years commencing December 31, 1989.  Prior to the expiry of these agreements, both were subsequently re-negotiated and extended for an additional ten year time period.  To exercise the options, Formation U.S. must pay US$1,000,000 for each option, inclusive of payments, if any, under a 3 - 5% sliding scale net smelter returns royalty based on the realized price of gold between US$400-$500, and advance royalty payments of an aggregate of US$3,000 per year.  All payments, including advance royalties, are credited toward a final purchase price of US$2,000,000.   During the year ended February 28, 2001, the terms of the lease option were amended from a required minimum annual advance royalty payment of US$3,000 to annual payments based on the price of gold ranging from no payments to US$3,000.

In addition to the above option costs, annual holding costs associated with the Black Pine and Morning Glory Properties are $6,500 and $3,700, respectively, payable to the Bureau of Land Management and a minor payment to Lemhi County.

Black Pine Property - Previous Work

In 1992, Formation U.S. optioned the Black Pine Property and shortly thereafter staked additional claims.  Since the acquisition of the Black Pine Property, Formation U.S. has spent US$2,250,000 on property payments and exploration, including geological mapping, soil geochemistry, geophysical surveys, trenching and drilling programs.  Since 1993, Formation U.S. has completed 100 diamond drill holes totaling 44,954 feet, and 100 reverse circulation holes totaling 15,625 feet.

Morning Glory Property - Previous Work

In 1988, Formation U.S. acquired an option on the Morning Glory Property and conducted a program of mapping, rock and soil sampling.  Based on encouraging results from the initial program, Formation U.S. successfully exercised its option on the Morning Glory Property.  Past optionees have held the Morning Glory Property under option from Formation U.S. more or less continually from 1989 through to 1995.  During this time, property wide reconnaissance was instigated, additional soil sampling programs were completed, geophysical surveys were undertaken, preliminary trenching initiated, old mine workings were rehabilitated and a total of 23 RC drill holes were completed.

Of the 9 targets located on the Morning Glory Property, only two have been drill tested.  Outcrop scale mapping of the targets has yet to be completed.  Only two of the targets have been partially geophysically surveyed.  Additional trenching is required on most of the prospects.  Only two of the target areas have been soil sampled and 4 miles of prospective shear have only been reconnaissance scale mapped.

The Morning Glory Property hosts Beartrack style bulk mineable gold mineralization of potential economic merit.  Its proximity to the recently producing and permitted Beartrack Mine provides economic and other informa