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Ram Resources agrees on revised terms for acquiring remaining 49% of Motzfeldt rare earths project

Ram Resources agrees on revised terms for acquiring remaining 49% of Motzfeldt rare earths project

Ram Resources (ASX: RMR) has signed an agreement with the minority shareholders of Greenland Resources Limited (GRL) to vary terms for the acquisition of the remaining 49% of Motzfeldt multi element project in Southern Greenland.

Ram, which already holds 51% of the project, will have a 12 month option to acquire the remaining 49% in one transaction by issuing 200 million shares to the Vendor.

The variation offers improved terms for the acquisition, reduced complexity and greater flexibility in negotiating future corporate transactions in relation to development of the project.

Mike Drew, Ram managing director, said "if Ram is able to establish a Mineral Resource at its Aries Prospect at the end of the upcoming 2011 field season, a greater focus will be placed on potential development of the Motzfeldt Project.

"We believe that the option of moving to full ownership of the Project in one simple transaction will provide better opportunities to introduce a joint venture partner into the Project, particularly one who may have existing capability in the processing of complex, multi element concentrates and the extraction of REE (rare earth elements) oxides.”

Ram Resources entered into a share sale and purchase agreement (SSPA) pursuant to which Ram agreed to acquire, in four stages, all of the issued capital of GRL on  1 October 2010.

The parties have agreed to work together to negotiate formal agreements by 31 May 2011, in line with the key terms as set out in the non binding memorandum of understanding (MOU).

Drew added “the revised terms are considerably more advantageous to Ram than the existing arrangements in that, under the current terms (to acquire 49%) the company would be required to pay to the vendor a minimum of $54 million in cash (over a number of years) and possibly up to a further 100 million fully paid ordinary shares as deferred consideration, compared to issuing 200 million shares within a 12 month period.

"Previously we were looking at a situation when Ram may not have exercised the option to acquire the final 20% of the Project because of the hefty price tag, now with the new option, it’s much more viable to move to 100%.

“This new option structure also offers the best of both worlds, in that we can choose to exercise within the 12 month period, or in fact do nothing and the existing arrangements continue.”

Once formal agreements have been reached shareholder approval will be sought.

The company is planning to commence field work in early July and expects to include a drilling program of about 3,500 metres at the Aries Prospect.

This aims to generate data to use in calculating the maiden Inferred Mineral Resource, as well as a follow-up program on regional targets.

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