China National Nuclear bids for Khan Resources, offers more than Russian rival

TORONTO - China National Nuclear Corp. has emerged as a white-knight suitor for Khan Resources Inc. (TSX:KRI), a junior Canadian company that is focused on exploring and developing uranium properties in Mongolia.


The Toronto-based company announced Monday that it has agreed to support a takeover bid of 96 cents per share from CNNC Overseas Uranium Holding Ltd. That values Khan at $51.8 million, based on the number of shares outstanding


Khan had been the target of a hostile takeover bid by Russian uranium producer Atomredmetzoloto JSC, also known as ARMZ, which offered 65 cents, or $35 million based on the number of shares outstanding.


The Russian was announced in November and expires at 5 p.m. Toronto time on Monday.


CNNC's offer has the support of directors and officers of Khan who collectively hold about six per cent of the company's shares on a fully diluted basis.


The Khan board has agreed to pay CNNC a termination fee of $1.6 million if the friendly deal is not completed in certain circumstances. The Chinese company will also have the right to match any superior offer from another bidder.

CNNC's offer is conditional on getting at least two-thirds of Khan's shares.


"The CNNC offer is far superior to the unsolicited ARMZ bid," Khan president and chief executive Martin Quick said Monday.


"We look forward to working with CNNC to build upon the progress we have made in Mongolia towards establishing a stable platform for developing the Dornod uranium project and bringing it into operation. CNNC brings a lot to the table, with its deep expertise in nuclear energy, financial strength and strong political ties with Mongolia."


Khan shares gained 11 cents at the Toronto Stock Exchange to trade at 97 cents following the announcement.

Source:The Canadian Press