Atomredmetzoloto JSC

Atomredmetzoloto JSC

February 01, 2010 13:14 ET

CORRECTION: Atomredmetzoloto JSC Extends All-Cash Offer for Khan Resources

TORONTO, ONTARIO--(Marketwire - Feb. 1, 2010) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISTRIBUTION IN THE UNITED STATES

A correction is being issued with respect to the release that was disseminated on February 1, 2010 at 12:19 PM ET. Due to multiple changes a new version of the release is being disseminated. The complete and corrected release follows.

Atomredmetzoloto JSC ("ARMZ") today announced that it has extended its offer (the "Offer") to acquire all of the issued and outstanding common shares of Khan Resources Inc. ("Khan") for all-cash consideration of C$0.65 per common share of Khan (each, a "Khan Share") to 5:00 p.m. (Toronto time) on March 1, 2010, unless extended or withdrawn. Previously the Offer was set to expire at 5:00 p.m. (Toronto time) on February 1, 2010.

ARMZ has received notice that the Investment Review Division of Industry Canada did not complete its consideration of ARMZ's application in connection with its proposed acquisition of Khan within the initial 45 day period stipulated under the Investment Canada Act ("ICA"), which expired on January 18, 2010. The notice indicated that Industry Canada expects to complete its review by February 17, 2010, or within such further period as may be mutually agreed between ARMZ and Industry Canada. At the current time, ARMZ has not received notification of approval under the ICA.

ARMZ also acknowledges the announcement issued today by Khan that it has entered into a definitive agreement with CNNC Overseas Uranium Holding Ltd. ("CNNC"), an indirect wholly owned subsidiary of China National Nuclear Corporation, pursuant to which CNNC has agreed to make an offer to acquire all the issued and outstanding Khan Shares for C$0.96 in cash per Khan Share (the "CNNC Offer"). ARMZ is extending its Offer so that it can properly consider its alternatives in response to the CNNC Offer, in addition to allowing additional time to receive approval under the ICA, as referenced above.

In addition, ARMZ also notes that there continues to be contradictory disclosure regarding the licensing and ownership issues related to the Dornod Uranium Property. Specifically, the Mongolian Nuclear Energy Agency issued a news release on January 29, 2010 in response to the non-binding memorandum of understanding ("MOU") entered into between Khan and MonAtom LLC in which it states that some clauses of the MOU violate Mongolian state policies on radioactive mineral resources and nuclear energy and some provisions of the Mongolian Law on Atomic Energy and that, as a result, the MOU cannot be implemented.

In light of the news release by the Mongolian Nuclear Energy Agency, it appears that the MOU, including the clauses stipulating re-registration and approval of the mining license held by Central Asian Uranium Company and the exploration license held by Khan Mongolia, may not be duly authorized and may not comply with the applicable laws of Mongolia.

ARMZ also believes that the MOU was executed in violation of the international obligations of the Government of Mongolia under the inter-governmental treaty between Mongolia and Russia dated August 25, 2009 ("Inter-Governmental Treaty"), which stipulates the creation of a joint limited liability company, Dornod Uranium, through which the Dornod Uranium Property would be jointly developed by Mongolian and Russian interests.

ARMZ remains committed to strictly comply with the legal obligations of the Government of Russia under the Inter-Governmental Treaty and to pursue the development of the Mongolian uranium sector in cooperation with Mongolia and in accordance with applicable international treaties and Mongolian laws.

All other terms of the Offer described in the offer to purchase and related take-over bid circular dated November 30, 2009, remain unchanged.

ARMZ anticipates that the Notice of Extension will be mailed to beneficial holders of Khan Shares, and furnished to intermediaries for subsequent transmittal to beneficial holders of Khan Shares, on or about February 1, 2010.

About ARMZ

ARMZ is the world's fifth largest uranium producer with operating mines in Russia and Kazakhstan. During 2008, operations in which ARMZ is involved produced 3.687 tonnes of uranium (9.6 million pounds of U3O8). ARMZ is part of Rosatom - the Russian State Corporation controlling the Russian Federation's nuclear activities - and is appointed and authorized to supply natural uranium to the Russian nuclear industry. ARMZ is part of the civilian arm of the Russian nuclear sector and does not operate in the military sector. Together with its affiliates and subsidiaries, ARMZ employs over 14,000 people. Through its subsidiary PIMCU ("Priargunski"), ARMZ partially owns the Mongolian joint venture Central Asian Uranium Company ("CAUC"), established between Khan (58%), Priargunski (21%) and the Mongolian government (21%). CAUC is the corporate entity that owns the Dornod Uranium Property in Mongolia, which contains most of the uranium reserves of Khan.

Contact Information

  • Shareholder Inquiries:
    Laurel Hill Advisory Group (Information Agent)
    1-888-534-1152 (North American toll-free number)
    416-637-4661 (Banks and Brokers and collect calls outside
    North America)
    assistance@laurelhillag.com
    or
    CIBC Mellon Trust Company (Depositary)
    1-800-387-0825
    or
    Media Inquiries:
    Atomredmetzoloto JSC
    Dmitry O. Shulga
    Director, External Affairs & Investor Relations
    +7-495-508-8808, Ext. 310