Grant A. Edey, President of Khan Resources: The Nuclear Energy Authority cancelled our license without legal groundings
Grant A. Edey, President and CEO of Khan Resources: The Nuclear Energy Authority cancelled our license without legal groundings
It is an interview made by Daily Newspaper on July 31 2010. However, the legal sue is still undergoing. Therefore, business-mongolia.com decides to deliver this interview to its readers.
Q: Can you share with us on Khan Resource’s background and its operation in Mongolia?
G.Edey: Khan Resources is an open and publicly listed company deals with uranium exploration and mining. Khan Resources has been developing uranium deposit in Dornod aimag in last 14 years.
Q: Can you update us with current developments at Khan Resources?
G.Edey: Right at the moment we stopped our mining operations due to cancelation of our mining and exploration licenses by the related authority claiming that we breached laws and regulations of Mongolia
Q: So did Khan Resources breach the law?
G.Edey: Of course not. Khan Resources hasn’t breached any laws and regulations of Mongolia.
Q: So why the Nuclear Energy Authority canceled your licenses? What are the main reasons or explanations of such act?
G.Edey: The accusations are not well reasoned. In 2007, Khan Resources raised fund to invest in uranium deposit in Dornod, but this act breached legal provisions of Law on Nuclear Energy which was adopted only in 2009. Another accusation is that storage for drill cores is located in the territory of special protected area. Actually, these drill cores were dumped by Russians in Dornod and we offered to remove these drill cores to safer place. We can’t accept these wrong accusations.
Q: What was the key factor to cancel you licenses?
G.Edey: Our licenses were suspended in summer of 2009. In summer of 2009, Russia and Mongolia made agreement on joint exploitation of radioactive minerals in Dornod region. Later on we found out that this agreement was built to start joint exploitation on the licensed areas where Khan Resources has been developing for last 14 years. We don’t believe that it is just an accident.
Q: Who owns Khan Resources?
G.Edey: Khan Resources Inc. is listed at TSX and owned by around 3500 shareholders. Khan Resource management and its Board controls its one third of interest.
Q: Did Khan Resources try to sell its shares to the Russians?
G.Edey: No. Russians made their offer directly to our shareholders. In market economy, anyone can offer their proposal to buy certain shares
Q: Did CNNC Corp. offer to buy your shares?
G.Edey: Yes. CNNC bid was 50% higher than offer of the Russian ARMZ. But any of them buy our shares. They wouldn’t offer to buy our shares if licenses of Khan Resources weren’t canceled.
Q: What is your next plan or what is your intention in the future?
G.Edey: We want to exploit Dornod uranium deposit together with the Mongolian Government and its MonAtom LLC.
Q: Did Russians and Khan Resources agree to accept the resolution of acquiring 51% of uranium properties according to the Law on Nuclear Energy?
G.Edey: Russians didn’t, but Khan Resources, principally, agreed on November 2009 and accepted the Mongolian State ownership of 51% during its signature of MOU in January 2010.
Q: How big difference exists between plans prepared by Russians and Khan Resources?
G.Edey: It has big difference for Mongolia. Khan Resources developed feasibility study for Dornod uranium deposits and planned to pay $337 million tax income to Mongolia during its 15 years of exploitation. But Russians plan to transport its ore to its factory located in 200 kms from this deposit via railway. According to this plan, it will create far less workplaces in Mongolia.
Q: If Mongolia grants licenses which were owned by Khan Resources to Russians, what outcome is expected?
G.Edey: Mongolia would lose its reputation to the world business community, leading decrease in the size of investment and number of workplaces. Since the cancelation of Khan Resources licenses from the Nuclear Energy Authority, negative articles and columns on Mongolian investment environment were appeared on the international media channels. Will you invest in house project where the Government wants to ruin that building?
Q: How Canada supports foreign investment?
G.Edey: Canada has open door policy and freely allows foreign companies to deal with uranium exploration and exploitation. Foreign companies can offer bid for the Canadian companies. Through supporting all types of investment, Canada exploits 30% of world uranium mines and has strong uranium development companies.
Q: There are some news floating around that Khan Resources would sue against the Mongolian Government at the International Arbitrage Court on cancelation of its licenses. How certain is it?
G.Edey: Khan Resources has started legal actions to solve this issue according to the law and it may bring us to the International Arbitrage Court. We are approaching to the court with purpose of gaining fair evaluation on our expenses spent on the canceled licenses. This evaluation is $150 million and even could reach $200 million. We are confident that we will win the case.
Q: Do you have any comments to add?
G.Edey: Khan Resources has been operating in Mongolia for 14 years and invested $20 million to Dornod uranium deposits. But we were mistreated for breaching the Mongolian laws and regulations and lost our licenses. We think that this cancelation was committed with clear intention and purpose of granting the mentioned licenses to the Russians. It is faulty acts that Mongolia breaches international laws and conventions. Also, Russia will gain more than Mongolia from it.