Sovereign risk has again hit Khan Resources' plans to develop Mongolian uranium deposits after the country's government suspended its licenses for the second time.
Khan's troubles began in July 2009 when the Mongolian government suddenly changed legislation and cancelled all foreign-held uranium exploration licences. Companies learnt that they had to negotiate with MonAtom to comply with a new Nuclear Energy Law that required the state to hold at least 51% of any uranium mining operation.
For Khan, the situation got worse with a Mongolian move to develop the Dornod deposit in a joint venture with AtomRedMetZoloto (ARMZ) of Russia instead. Next ARMZ made an offer to buy up all of Khan's outstanding shares.
Khan directors fought off the takeover and agreed a complex deal with MonAtom to solve all these issues in January, but are now complaining that their licenses have been suspended again. The company is accused of violating laws on the basis of reports dating back to July 2009 and has been told the Mongolian government considers Khan's licenses to be invalidated as of October 2009.
"In Khan's view, the actions by the Nuclear Energy Agency are a clear violation of Khan's rights and interests under the laws of the constitution of Mongolia, and are in breach of Mongolia's obligations under international law," said a statement. Khan vowed to battle the Mongolian government in its own courts, those of the company's native Canada and through international arbitration if necessary.
"It is entirely nonsensical," said Khan president and CEO Martin Quick, that Mongolian authorities had continued to inspect the company's licenses and discuss with Khan with a view to settling disputes, "if in fact the licenses were invalidated in October 2009 as the NEA now alleges."
Commenting on the affair, Steve Kidd of the World Nuclear Association said, "I think the conclusion from this is that no private company has much hope of developing a uranium mine in Mongolia - it can only be accomplished by direct dealings at governmental level."
Researched and written
by World Nuclear News