Khan Resources Inc.
TSX : KRI

Khan Resources Inc.

March 11, 2009 09:15 ET

Khan Resources Releases Definitive Feasibility Study Results for Dornod Uranium Project in Mongolia

TORONTO, ONTARIO--(Marketwire - March 11, 2009) - Khan Resources Inc. (TSX:KRI) today announced the results of its Definitive Feasibility Study (DFS) for its Dornod Uranium Project in north eastern Mongolia. The study, jointly completed by engineering consultants, Aker Metals, a division of Aker Solutions, and resource consultants, Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA"), has resulted in a study confirming the previous economic robustness of the Dornod Uranium Project. A complete technical report will be posted on SEDAR within 45 days of this announcement.

The study was based on the National Instrument 43-101 (NI 43-101) compliant indicated mineral resource previously reported for the project, prepared by Scott Wilson RPA, of 25.3 million tonnes at an average grade of 0.116% uranium oxide (U3O8) for 64.3 million lbs of U3O8 and an inferred mineral resource of 2.2 million tonnes at an average grade of 0.050% U3O8 for 2.4 million lbs of U3O8.

The 2008 probable mineral reserve, prepared by P&E Mining Consultants Inc., for the No. 2 open pit and No. 7 underground deposits is 18.0 million tonnes at an average grade of 0.133% U3O8 for 52.9 million lbs of U3O8 out of the 64.3 million lbs of indicated mineral resources. Khan has a 58% interest in the No. 2 deposit and two-thirds of the No. 7 deposit, plus a 100% interest in the remaining one-third of the No. 7 deposit. This ownership gives Khan an overall interest of 69% of the uranium contained in both deposits.

The study assumes a long-term uranium price of US$65 per lb U3O8, and a through-put of 3,500 tonnes per day over a 15 year mine life, which will generate an average annual production rate of 3.0 million lbs U3O8, at a cost of US$23.22 per lb U3O8 or US$58.26 per tonne of ore. The initial capital cost of the project is projected to be approximately US$333 million. The above parameters yield a project internal rate of return ("IRR") after tax of 29.1% and a net present value (NPV) at a 10% discount rate of US$276 million. The after tax NPV at 10% using a uranium price of US$70 per lb U3O8 is US$339 million and the IRR after tax increases to 32.5%.

President and CEO of Khan Resources, Martin Quick, said "We are delighted with the results of this study, which further demonstrates the high quality of this deposit. The Company intends to proceed with the negotiation of an Investment Agreement with the Government of Mongolia at the earliest possible date."

James Doak, Chairman of Khan Resources noted, "With the current long term price of uranium at $70 per pound U3O8, and likely to increase significantly over the next several years, this puts Khan in the enviable position of having one of the best new uranium projects in the world. The results of the Definitive Feasibility Study demonstrate that the share price of Khan is trading at a substantial discount to the intrinsic value of its assets."

The Dornod project implementation schedule is conservatively estimated to be approximately 36 months from the start of the Detail Engineering to the start of plant production. While this timeline is predicated on the purchase of new equipment, Khan expects to reduce the time-frame significantly by the purchase of used equipment. In addition, the results of the DFS will be further optimized with respect to cost and schedule during Detail Engineering. This step is expected to commence in the fourth quarter of 2009, assuming successful negotiations for an Investment Agreement with the Government of Mongolia.

Qualified Persons under NI 43-101:

Hrayr Agnerian, P.Geo., Associate Consulting Geologist at Scott Wilson Roscoe Postle Associates Inc., E.J. (Gene) Puritch, P.Eng. and Malcolm Buck, P.Eng., P&E Mining Consultants Inc., and Les Heymann, P.Eng., Senior Process Consultant, Aker Solutions, are the qualified persons (as defined under NI 43-101) on the project and supervised the preparation of the technical information in this release.

Forward-Looking Statements

This press release may contain forward-looking statements, which are subject to certain risks, uncertainties and assumptions. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such forward-looking statements are made as at the date of this news release, and Khan Resources assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

Khan Resources (TSX:KRI) is a Canadian company engaged in the acquisition, exploration and development of uranium properties. Its current activities are focused on the Dornod area in north eastern Mongolia, the site of a former Russian open-pit uranium mine. Khan holds interests in the Main Dornod Property, licensed for mining, and in the Additional Dornod Property, licensed for exploration. The Company's website is www.khanresources.com.

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