Khan Resources Reaches US$70 Million Settlement with Government of Mongolia
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Khan Resources Inc. has received a notice of discontinuance from the Paris Court of Appeal that the annulment proceedings initiated by the Government of Mongolia against the international arbitration award rendered in favor of Khan are now terminated. Proceedings in the US District Court for recognition of the award have now been stayed pending receipt of the settlement amount of US$70 million.
“Khan and the Government of Mongolia are continuing to progress in good faith towards the receipt of the settlement amount on May 15, 2016,” said Grant Edey, president and CEO of Khan Resources.
About Khan Resources
Khan Resources Inc., and its predecessor companies, were involved in the development of the Dornod uranium property in Mongolia since 1995. Khan completed a full definitive feasibility study on the property in the spring of 2009, which demonstrated highly positive economics for the project. However, in January 2009, Mongolia and Russia had announced their intention to form a new Mongolian-Russian joint venture to replace Khan in mining the Dornod property. In July 2009, the Government of Mongolia promulgated its Nuclear Energy law, which among other items, provided the State with 51 percent of the Dornod property without compensation to prior owners.
Further, in 2010, the Government of Mongolia refused to reissue to Khan the required licenses for the Dornod property which effectively resulted in 100 percent expropriation of the asset without any compensation. As a result of these actions, Khan launched an international arbitration action against Mongolia for the illegal expropriation of its asset in January, 2011. On March 5, 2015, the international arbitration tribunal rendered an award in favor of Khan of US$80 million plus costs of US$9 million plus interest at LIBOR plus 2 percent from July 2009 to the date the award is paid. The award aggregated to approximately US$103 million as of the award date. Although the award is due and payable, the Government of Mongolia has been recalcitrant in making payment and enforcement procedures have been initiated.
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