The Fraser West Project, described more fully in the Company's announcement of 21 September 2012, consists of three tenements with an area of 271 sq km in the Fraser Range area of Western Australia ("Tenements"). A conditional sale agreement was announced on 26 October 2012, with updates on 30 November 2012 and 1 March 2013, whereby Regency Mines Australasia Pty Ltd ("RGMA"), a wholly owned subsidiary of the Company, would sell an 80% ownership interest in the Fraser West Project to RAM, subject to retention of a royalty interest. The first two stages of the transaction (defined as Tranches A and B in the announcement of 26 October 2013) were fulfilled, 155,000,000 shares of RAM being issued to RGMA for a 10% interest in the Tenements, and William Charles Guy was appointed a director of RAM. It was announced that Regency was in discussion with potential investors and other stakeholders in Australia to expedite the remaining parts of the transaction.
Following these discussions, an Agreement for Sale and Purchase of Tenements was entered into between the parties on 30 June 2013, which supersedes all prior contracts and deals with the terms for acquisition of a 70% interest (being the remaining 70% of the interest in the Tenemants as RAM already holds 10%), subject to the royalty, in the Tenements ("Terms").
Under the Terms:
1. RAM will purchase 70% of RGMA's interest in the Tenements for the Share Consideration.
2. The Share Consideration will consist of:
a) Such number of RAM shares as will (together with the 155,000,000 RAM shares already held) represent a 19.9% holding in the enlarged issued capital of RAM at completion; b) 340,000,000 Class A Performance Shares to be convertible into RAM shares upon the declaration of a JORC Inferred Resource on the Tenements of a 300,000 oz gold equivalent (the "Resource Milestone"); and c) 340,000,000 Class B Performance Shares to be convertible into RAM shares upon a decision to mine on the Tenements (the "Decision to Mine").
3. The 20% interest in the Tenements to be retained by RGMA will (a) be free carried to Decision to Mine, but (b) may, at RGMA's election, be converted into RAM shares at the same time and price as any future new issue of RAM shares of RAM at the rate of AUD50,000 per percentage point, up to the time of the Resource Milestone, and (c) after the Resource Milestone is reached may be acquired at RAM's election at fair market value.
4. Completion is conditional on any required consents being received and on RAM raising not less than, in aggregate, AUD 1,500,000 new funding.
5. Upon completion, RGMA will appoint an additional director to RAM. Regency will retain a 1% gross revenue royalty in the Tenements.
6. There will be staged escrow holding periods of between four and twelve months on the new RAM shares (not including the 155,000,000 already held) issued under 2(a) above.
The price of RAM shares as at the close of business on 28 June 2013 was AUD 0.001 per share.
Regency Chairman Andrew Bell states: "Interest continues to increase in the Fraser Range, with drilling now right up to our boundary. This has been reflected in positive meetings with brokers and other potential investors, and has enabled us to restructure the deal to make it more attractive to investors while preserving our upside. We are very happy with these new terms."
RMR Price at posting:
3.0¢ Sentiment: None Disclosure: Not Held
