An international arbitration tribunal has ruled in favour of Khan Resources’ pursuit of a $200 million damages claim against the Mongolian government.
In April this year, the Canadian uranium company was forced to suspend its lawsuit against Atomredmetzoloto JSC (ARMZ) and the Mongolian government, which Khan cited were colluding on a takeover of its Dornod uranium property.
Khan’s statement of claim substantiated a campaign of exclusion began in 2009, while ARMZ attempted to form an agreement with the Mongolian and Russian governments to takeover and jointly develop the Dornod uranium region. Khan says ARMZ even used tactics including temporary licence suspensions for alleged breaches of Mongolian laws through the Mineral Resources Authority to delay the development.
The international arbitration decision means objections by the Mongolian government to the continuance of the suit have been dismissed, and the action will progress to a panel which will decide the merits of the arbitral claims and the amount of damages suffered.
Khan’s president Grant Edey says, “We are pleased that the Tribunal has validated our initiatives to achieve recourse to damages suffered by our shareholders arising from the Mongolian Government’s expropriatory and unlawful treatment in relation to the Dornod uranium deposit in northeast Mongolia. Our treasury is well-funded and we will continue to vigorously pursue this action to its logical end to receive value for our investments in Mongolia. Khan will immediately commence preparatory activities for the upcoming damages phase of the proceedings.”
Khan and ARMZ, through their subsidiaries, became joint venture partners in 1995 to undertake exploration and development of the Dornod uranium property, one of the most significant and strategic undeveloped uranium resources of its kind in the world. Since acquiring the mining licence in 2003 Khan has spent $21 million to develop and explore the property, establish power, build a permanent camp, conduct a definitive feasibility study and various NI 43-101 instruments, while ARMZ has contributed virtually nothing. The property is estimated to have an annual production rate of 3.5 million pounds of uranium oxide over a 15 year mine life.