ARM forms JV with Vale to develop TEAL assets

* Acquisition price of C$3 per common share

* Teal expects to complete deal before March 30, 2009

(Adds details, ARM statement)

JOHANNESBURG (Reuters) - South African-based Teal Exploration and Mining (TELJ.J) and African Rainbow Minerals (ARM) (ARIJ.J) said on Wednesday they had agreed for ARM to buy all outstanding shares it does not own of Teal.

South African diversified mining group ARM said it would form a 50-50 joint venture with Brazilian miner Vale (VALE5.SA) for the future development and operations of TEAL's assets.

Teal said the acquisition cash price would be C$3 per share, funded through an equity investment by Vale into Teal's operations, first by buying the 35 percent minority stake and then a 15 percent stake from ARM.

"These assets include exploration and development programmes for copper and cobalt in Zambia and the Democratic Republic of Congo, as well as a gold exploration programme in Namibia," it said in a statement.

Teal said it expects to complete the deal before March 30, 2009.

ARM said TEAL would then be delisted from the Toronto and Johannesburg Stock Exchanges as its share price performance did not allow for raising capital as initially hoped for.

The inability to raise equity capital has been further hit by the credit crunch, forcing ARM to provide ongoing financial support to TEAL, disproportionate to its level of shareholding.

But ARM said it remains confident about TEAL's role in its future operations.

"TEAL remains key to ARM's long term diversification plans, being ARM's chosen vehicle for expanding its copper interests in Africa," it said.

(Reporting by Serena Chaudhry and Agnieszka Flak; Editing by Rupert Winchester)