Vancouver’s Formation Metals (TSX:FCO) saw its stock tank 16% Thursday morning, after a European bank backed out of a US$79.5 million line of credit to help build the company’s mine.
Formation said the credit facility, which BNP Paribas had committed to, was terminated without the closing of the subject financing.
The loan was meant to support recovery zone facility revenue bonds issued for the construction of the company’s flagship Idaho Cobalt project.
“It is disappointing that the company has expended so much time and energy on the BNP facility only to come to this decision,” said Mari-Ann Green, Formation’s chief executive.
The company signed the financing agreement with BNP in July after construction of the mine had already started.
Despite the setback, Green noted the company had a $54.7 million cash balance at the end of the last quarter.
The mine is expected to cost approximately US$142 million to build.
Formation has said it will consider alternative financing options and review its construction schedule.
At press time, Formation’s shares were valued at $0.52.
Joel McKay
@jmckaybiv