Khan Resources JV wins Mongolian lawsuit


2010-07-19 12:47 ET - News Release

Mr. Grant Edey reports

KHAN WINS MONGOLIAN COURT CASE

Khan Resources Inc. has received the Mongolian Capital City Administrative Court's ruling in favour of its 58-per-cent-owned joint venture subsidiary, Central Asian Uranium Company LLC. The court declared that the previous purported decision by the Mongolian Nuclear Energy Agency to invalidate CAUC's mining licence No. 237A is invalid and illegal.

As previously announced in April, 2010, both CAUC and Khan's 100-per-cent-owned Mongolian subsidiary, Khan Resources LLC, the respective holders of mining licence 237A and exploration licence 9282X, both in respect of the Dornod uranium property, received notices from the NEA purporting to invalidate the licences effective as of October 8, 2009, allegedly based on unspecified violations of Mongolian law. Subsequently, each of CAUC and Khan Mongolia filed and has since been pursuing separate formal claims in the court, challenging the legal bases for the notices. Their claims assert among other things that the NEA had no legal authority to make a decision to invalidate the licences, and that the NEA's purported decision to do so violated the provisions of Mongolian law and was therefore invalid.

Grant Edey, president and chief executive officer of Khan, commented: "We are extremely pleased that the court accepted all of CAUC's claims and unequivocally affirmed that the NEA's actions were unlawful and illegal."

As a result of the court's decision, CAUC's mining licence is no longer considered invalidated. It is therefore pending reregistration by the NEA under the Nuclear Energy Law in accordance with CAUC's November, 2009, application to have the licence reregistered. Khan expects to receive the court's written decision within the next week or so. In the meantime, the NEA has the right to appeal the court's decision within the next two weeks. Currently, Khan Mongolia's corresponding claim remains pending before the court. Now that the court has ruled in favour of CAUC, Khan is hopeful that a similar decision will be rendered in favour of Khan Mongolia. The Khan Mongolia hearing is currently scheduled for July 22, 2010.

Khan continues to believe that it and its Mongolian subsidiaries have always operated in compliance with applicable Mongolian laws. Khan intends to continue to vigorously challenge the NEA's action, including any appeals the NEA may bring, through all legally available means. Khan will provide further updates as more information becomes available.

We seek Safe Harbor.