Mongolia signals it will not pay $100 mln to Canadian miner

Sol Strategies

27/04/2015 23:21

(Repeats story published late Monday; no changes to text) 
    By Terrence Edwards 
    ULAN BATOR, April 27 (Reuters) - Mongolia signaled on Monday 
it will not abide by an international tribunal's order to pay 
more than $100 million to Canadian uranium explorer Khan 
Resources Inc  KRI.CD . 
    A decision not to pay the sum, awarded to Khan in a 
licensing dispute, could set back efforts by the government of 
the landlocked Asian nation to lure back foreign investors by 
resolving longstanding quarrels with miners such as Rio Tinto 
 RIO.AX   RIO.L . 
    "The Mongolian government, in order to protect its own 
interests, will work for the invalidation of the arbitration 
award," a statement by the justice minister, dated Monday, said. 
 
     The move comes just days after Jim Doak, Khan's chairman 
and a well-known figure in Canada's financial industry, died in 
Ulan Bator from reasons deemed to be natural causes on April 23, 
a day after talks between the two sides ended.  ID:nL1N0XL0WB  
    An international tribunal ordered Mongolia to pay about $100 
million to Khan last month as compensation for having canceled 
its licenses to mine the Dornod uranium project in 2009 and 
instead granting the rights to Russia's ARMZ. 
    Khan said in an April 24 statement that it had hired a 
"specialist" to assist in collecting the award, which then 
totaled $104 million, including interest. 
    Khan shares slid 1 Canadian cent to 54 Canadian cents in 
early trading on the Canadian Securities Exchange on Monday. 
    Refusing to pay, according to analysts, would likely come at 
the cost of investor appetite after some three years of falling 
foreign investment in Mongolia because of disputes with mining 
companies and a pullback in commodity prices. 
    "Long-term losses from this damage would far outweigh any 
short-term questionable benefit," said Dale Choi, head of 
Independent Mongolian Metal and Mining Research, in an email to 
clients. 
    "It would appear to us that Mongolia could be on the path to 
follow the company of countries which are not held in high 
regard by international financial market, such as Venezuela and 
Argentina," he said. 
 
 (Editing by Peter Galloway) 
 ((euan.rocha@thomsonreuters.com; +1 416 941 8185; Reuters 
Messaging: euan.rocha.reuters.com@reuters.net)) 
 
Keywords: MONGOLIA KHAN RESOURCES/