23 May, 2016

Mongolia to pay $70 million owed to Canada’s Khan Resources

Mongolia’s foreign direct investment tumbled to $195.1 million last year from $4.45 billion in 2012. A series of long-standing disputes and a drop in commodity prices also slowed the country’s growth to 2.3%, compared with 17% in 2011.

The government of Mongolia is ready to pay $70 million to Canada’s Khan Resources (TSX:KRI) for revoking a uranium mining licence, putting an end to seven years of negotiations and legal battles that scared investors away from the country once considered a top mining destination.

Speaking under condition of anonymity, a government source told Reuters that Prime Minister Chimed Saikhanbileg will be taking further measures soon to improve Mongolia’s relationships and tarnished reputation.

The move comes just weeks after the Asian country launched a new program aimed to attract a fresh wave of mining exploration.

It also comes on the heels of Rio Tinto’s decision to resume work on a $5.3 billion expansion of the Oyu Tolgoi copper mine, following a three-year delay due to disputes with the Mongolian government.

Khan had pursued the claim after Mongolia nationalized its Dornod uranium deposit. Initially, the Toronto-based company sought $326 million in compensation for having its mining licenses cancelled by Mongolia and given to Russian producer ARMZ, but the tribunal lowered the payout to $100 million, including interest and costs, based on previous offers made for the asset.

At a meeting during a major mining conference in Toronto in March, the parts finally settled on a payment of $70 million.

Mongolia’s foreign direct investment tumbled to $195.1 million last year from $4.45 billion in 2012. A series of long-standing disputes and a drop in commodity prices also slowed the country’s growth to 2.3%, compared with 17% in 2011.

Source: Mining