Khan wins another favorable ruling in Mongolia, shrs up

By Ashutosh Joshi
BANGALORE (REUTERS)-Canada's Khan Resources Inc , which is caught in a legal tangle with Mongolian authorities over its uranium mining licenses in the country, received another court ruling in its favor, sending its shares up 23 percent.

The 7-month long dispute is over Khan's license to explore uranium at Dornod -- Mongolia's biggest uranium deposit.

"We think we qualify in every respect of the Mongolian nuclear energy law. We have complied with all Mongolian laws. So there is no valid reason as to why they cannot reissue the license," Chief Executive Grant Edey told Reuters.

Khan, through its units, owns the licenses to explore uranium at Dornod.

In April, the company challenged -- through two different cases -- a decision by the Nuclear Energy Agency (NEA), the country's regulator, to invalidate the licenses.

Khan has already received a favorable verdict in one of the cases.

On Wednesday, the junior miner said the Mongolian appellate court upheld a decision, given in July, by the Capital City Administrative Court in the second case.

Mongolia has drawn attention from global investors after the deal between Ivanhoe Mines and Rio Tinto to develop Oyu Tolgoi mine, one of the world's biggest untapped copper and gold deposits.

Mongolia's domestic companies are seeking foreign capital to help them expand, and the government is trying to connect local companies and its stock market with the rest of Asia.

However, doing business in mineral-rich Mongolia is often a tightrope walk as geopolitics hangs heavy over business in a nation caught between China and Russia.

The NEA can appeal the latest appellate court ruling within 30 days, Khan said in a statement.

"They may continue this appeal process and ... I think they can appeal at least two, may be three more times," CEO Edey said.

The company had submitted applications for re-registration of the mining and exploration licenses in November 2009, after Mongolia changed rules relating to ownership of such assets.

Shares of Toronto, Ontario-based Khan were up 6 Canadian cents at 44.5 Canadian cents Wednesday afternoon on the Toronto Stock Exchange. They have lost 38 percent of their value year to date.

(Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Aradhana Aravindan)


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