Khan Resources has announced that its 58%-owned Mongolian subsidiary, Central Asian Uranium Company (CAUC), has received a formal notice from the State Property Committee of Mongolia (SPC) requiring CAUC to propose to its shareholders a resolution to approve an increase of the Mongolian State ownership in CAUC to 51%. The notice provides that if a favorable resolution is not provided to SPC by January 31, 2010, CAUC”s mining license may be in danger of revocation.

“We view this notice as part of the process of implementing the new Nuclear Energy Law,” said Mr. Martin Quick, President and Chief Executive Officer of Khan. “We have been working cooperatively with representatives of the Mongolian Government in an effort to reach a mutually satisfactory arrangement that will provide the framework which allows the Government of Mongolia to achieve its goals while also protecting Khan”s investment in the project and enabling us as the operator to proceed with the development of the mine. Our discussions have been constructive, and are continuing. As set out in our Directors” Circular, we believe that even with 51%-Government participation, the Dornod property is highly valuable to Khan and that value is not recognized in the ARMZ hostile bid.”