Mongolia settles row with Canadian miner, pays $70 million
The government of Mongolia has settled a dispute over an arbitration award that required it to pay more than $100 million to Canada’s Khan Resources (TSX:KRI) for revoking a uranium mining licence.
The parts, which came together at PDAC —a major mining conference in Toronto — this week, have settled on a payment of $70 million.
The move comes as the Asian country is launching a new program this week that aims to attract a fresh wave of mining exploration.
“The government of Mongolia and Khan Resources Inc. successfully reached an agreement that effectively resolves all outstanding issues in regards to the international arbitration awards,” Mongolian Finance Minister Bolor Bayarbaatbar said, according to a company’s release.
“The settlement demonstrates the government’s ongoing commitment to improving the investment climate,” he added.
The stock climbed 26 cents to 73 cents at 11:02 a.m. ET, after hitting as much as 80 cents, the most intraday since the company began trading in May 2012.
Former chairman Jim Doak, a prominent figure in the Toronto financial industry, was found dead in a hotel room in April last year. He had travelled to Ulaanbaatar to negotiate the payment of such amount awarded to the firm earlier in the year.
An autopsy performed in Canada found his death to be from natural causes related to the late-onset Type 1 diabetes he suffered for almost 40 years.
Khan had pursued the claim after Mongolia nationalized in 2010 the Dornod uranium deposit it was developing. Initially the miner had sought $326 million in compensation for having its mining licenses cancelled by Mongolia and given to Russian producer ARMZ, but the tribunal lowered the payout to $100 million, including interest and costs, based on previous offers made for the asset.
Mongolia’s prime minister has promised to put and end to several high profile disputes with overseas companies, which have pushed investors away and damaged the nation’s economic growth.
The Asian Development Bank has forecast a 3% percent expansion for 2015 from 7.8% the previous year.