Khan Resources has won a court challenge to a Mongolian decision to invalidate a key mining license held by a subsidiary of the company, it said on Monday. The Mongolian Capital City Administrative Court has ruled in favor of Central Asian Uranium Company (CAUC), in which Khan owns 58%, “and declared that the previous purported decision by the Mongolian Nuclear Energy Agency (NEA) to invalidate CAUC's mining license 237A is itself invalid and illegal”, the firm said.
In April, both CAUC and Khan's 100%-owned Mongolian subsidiary Khan Mongolia received notices from the NEA, which said that their respective licenses had been invalidated as of October 2009, based on unspecified violations of Mongolian law. CAUC holds the license for the Dornod uranium project, and Khan Mongolia has an exploration license for an adjoining property.
Khan said at the time that it planned to challenge the notices in Mongolian court, and then-CEO Martin Quick suggested that Mongolian officials were acting under pressure from Russia, which wants to participate in the development of the Dornod project.  "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," Khan CEO Grant Edey said.
NEA has the right to appeal the decision within two weeks. A separate case to consider the Khan Mongolia license is still pending, with a hearing scheduled for July 22.
Although CAUC's mining license is no longer considered invalidated, the company will need to wait for it to be approved for re-registration under Mongolia's new nuclear energy law. CAUC applied in November last year to have the license reregistered.
“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,” the company said.

Last year, Russian State-owned miner Atomredmetzoloto (ARMZ), which owns 21% of CAUC, launched a hostile bid for Khan, which the company rejected as opportunistic. ARMZ backed off the offer in February, after Khan agreed to be acquired by China National Nuclear Corp. However, the CNNC offer was dropped in May, after the Chinese group failed to get regulatory approval in China for the CAD0.96 a share offer.