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TSX:KRI & Mongolia: President Suspends Issuance of New Mining Permits

The Mongolian President, Elbegdorj Tsakhia, ordered all new mining permits and transfers to be halted in Mongolia until a new law can be passed to prevent attempts to “exert pressure on and influence our sovereign policies.”

The President issued the decree on 23rd April 2010 and criticised the culture of unlawfulness which dogs the mining industry in Mongolia:

Almost half of exploration license holders neglect their legal duty to provide their annual exploration reports. Ignorant of their main duty to explore for minerals, the license holders have turned mineral licenses into a money-making tool for foreign and national groups. It is possible that corruption and bribery are committed in those circles.

The Nuclear Energy Agency has also declined to issue new uranium mining permits to Central Asian Uranium Company, LLC (“CAUC”) and its 100%-owned Mongolian subsidiary, Khan Resources LLC, under a law enacted in the Mongolian Parliament last year which required uranium mining companies to re-register for licences to mine in Mongolia.

Martin Quick, President and CEO of Khan, said:

We view the NEA decision to invalidate the Dornod licenses as without any legitimate or legal foundation and may be politically motivated. The NEA’s intention appears to be to invalidate our licenses, as well as potentially those held by other foreign companies operating in the region, with a view to transferring all of the mineral rights and interests in the entire Dornod uranium region to a ‘Dornod Uranium joint venture’ that is purportedly being established between the Russian and Mongolian Governments, with complete disregard to Khan’s rights and interests.

In a letter to the Mongolian Prime Minister, Sukhbaatar Batbold, dated April 15 2010, Mr Quick also stated:

…the regulatory uncertainty associated with our licences in Mongolia has significantly affected our stock price and our ability to raise financing over the past few years. The latest action by the NEA has caused many of our investors to sell their shares and has driven our stock price down by about 45%. Meanwhile, development of the Dornod uranium project continues to be delayed…

There is currently a friendly takeover bid of Khan by the China National Nuclear Corporation (a Chinese state-owned entity) to to acquire the outstanding common shares of Khan at a price of C$0.96 in cash per share – an offer which has been extended until May 25 2010.

The Mongolian National Mining Association meets on April 30th 2010 at 4pm at the meeting hall of the Tengeriin Tsag Center which will include a discussion on the legal environment and problems of the Mongolian mining sector.

On 28th April – 3rd May 2010, the Mongolian President will travel to China for a State visit at the invitation of Hu Jintao, President of the People’s Republic of China.

Mongolia shares its borders with both Russia and China. The population of 3 million has a per capita GDP of $3,200 – despite many rich mineral deposits.

Dornod Uranium

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News Desk
Editors and staff from the News Desk at The Global Herald.

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