Acknowledging the intention of Atomredmetzoloto JSC (ARMZ), a Russian state-owned nuclear energy corporation, to withdraw its unsolicited offer to purchase all outstanding common shares of Khan Resources, the company  has said “it is unclear” if the reasons cited by ARMZ for the abandonment are based on fact. ARMZ said its decision was influenced by the recent announcement by the working group established by the Standing Committee on Security and Foreign Policy that a number of uranium exploration and mining licenses in the Dornod province should be invalidated because of alleged and unspecified violations of Mongolian law. It is unclear if the licenses held by Khan”s Mongolian subsidiaries are implicated in these allegations as Khan has received no notifications from the Government of Mongolia on this matter.

Khan believes that it and its Mongolian subsidiaries have always operated and continue to operate in strict compliance with all applicable Mongolian laws, including the Mineral Law and the Law on Mineral Energy, as well as the more recent Nuclear Energy Law. Khan says it has learnt that ARMZ has alleged in the Russian media that Khan”s licenses have been annulled and further, that it plans to proceed with a joint venture with Mongolia, called the Dornod Uranium joint venture, which agreement was signed in August 2009 and excludes any mention of Khan’s legitimate property rights to the Dornod property.

“Although unsolicited, we were hopeful that ARMZ’s offer for Khan demonstrated their recognition of the validity of transparent Western rules designed to protect shareholders and their investment in public companies,” said Martin Quick, CEO of Khan. “Instead, it is clear that ARMZ plans to continue to advance its interests in the Dornod property through opaque political maneuvering and unsubstantiated allegations without recognizing Khan’s or its shareholders’ rights.”