Mongolian government stalls uranium development

The Mongolian government has extended the suspension of uranium licences for Khan Resources (KRI-T) and Western Prospector Group (WNP-V).

The government notified the companies that their respective licences were being suspended for three months due to alleged violations.

Neither Khan nor Western Prospector has received details of exactly what those violations are but Khan says management is confident that it and its joint venture partners have complied with the terms of its mining licence and that once the violations have been specified, they will be corrected.

Khan is joint ventured on the Main Dornod uranium property through the Central Asia Uranium Corporation (CAUC), which is made up of Khan (58%), a Russian company Priargunsky (21%), and the government of Mongolia (21%).

The mining licence suspended is one of the two primary licenses for the Dornod deposit.

News of the suspension pushed Khan shares down 19% or 10¢ to 42¢ on 350,000 shares traded.

As for Western Prospector the news was less damaging to the company’s share price.

In Toronto on July 15 Western shares were off  just 1¢ to 55¢ on 37,000 shares traded.

That is because the suspension is not expected to affect its deal with China National Nuclear Cooperation (CNNC) —  the Chinese state owned corporation that plans to privatize Western once it acquires it.

On March 25th Western announced that CNNC had made an all cash offer that valued the company at $31 million. CNNC took a 69% stake in the company at the end of June and will acquire the remaining 31% if Western shareholders give their approval on August 14.

A spokesperson for Western says it will take the heft of the Chinese government to get any uranium project off the ground in Mongolia.

“The Chinese government or Russian governments are the only ones able to deal with the Mongolia government,” Angel Law, a spokesperson for Western says.

The government first told Western that its licences were being suspended back in early April. It said at the time that after three months the government had the right to either continue the suspension or cancel the licences out right.