TORONTO, ONTARIO--(Marketwire - Feb. 26, 2010) - JSC Atomredmetzoloto ("ARMZ") announced today that it will not increase or extend its offer (the "Offer") to acquire all of the outstanding common shares (each, a "Khan Share") of Khan Resources Inc. ("Khan"). The Offer, which provides for all-cash consideration of C$0.65 per Khan Share is set to expire at 5:00 p.m. (Toronto time) on March 1, 2010.
The decision by ARMZ to allow its Offer to expire comes as a result of an announcement issued on February 23, 2010 by a working group established by the Security and Foreign Policy Standing Committee of the State Great Khural, the Mongolian Parliament, that it has concluded that a number of uranium exploration and exploitation licenses in Dornod province, including licenses pertaining to the Dornod Uranium Property ("Dornod"), should be invalidated based on infringements of Mongolian law, including the Mineral Law and the Law on Mineral Energy.
As a result, ARMZ has decided to allow its Offer to expire at its current expiration time of 5:00 p.m. (Toronto time) on March 1, 2010, at which time the Offer will be terminated. ARMZ has instructed CIBC Mellon Trust Company, the Depositary for the Offer, to promptly return any deposited Khan Shares in accordance with the Offer.
"In light of the announcement by the working group of the Mongolian Parliament, ARMZ has determined that continuing our Offer at the current time is not prudent", acknowledged Vadim Zhivov, Director General of ARMZ. "We have always maintained that our Offer represents full and fair value for the Khan Shares based on the significant licensing and ownership issues that remain with respect to Dornod, as demonstrated by this most recent announcement. ARMZ remains committed to its strategic goal of building a diversified and highly efficient global uranium mining corporation".
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 fully controlled subsidiary PIMCU ("Priargunsky"), ARMZ partially owns the Mongolian joint venture Central Asian Uranium Company ("CAUC"), established between Khan (current interest 58%), Priargunsky (21%) and the Mongolian government (21%).