Khan Commences International Arbitration Against the Government of Mongolia

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TORONTO, ONTARIO--(Marketwire - Jan. 10, 2011) - Khan Resources Inc. (TSX:KRI) ("Khan") announced today that it has formally commenced an international arbitration action against the Government of Mongolia for its expropriatory and unlawful treatment of Khan in relation to the Dornod uranium deposit located in northeastern Mongolia. The Nuclear Energy Agency of Mongolia announced in November 2010 that it would not reinstate the licenses that the Company holds on the Dornod uranium property, but which the Government illegally cancelled so that it could pursue the project without Khan.


The arbitration, which is brought by Khan and several of its subsidiaries, will take place under the Arbitration Rules of the United Nations Commission on International Trade Law, and asserts claims under the Energy Charter Treaty, the Foreign Investment Law of Mongolia, and the Founding Agreement between Khan and the Mongolian Government. The claim has been today served on various officials of the Government of Mongolia.


The claim seeks over US$200 million in compensation for losses and damages.


An arbitration Tribunal of three will be appointed in the near future. Each side will appoint an arbitrator followed by the selection of president of the Tribunal by the two appointed arbitrators. Mr. L. Yves Fortier, Canada's former Ambassador to the United Nations, has agreed to be Khan's appointment to the Tribunal. Mr. Fortier is a senior and highly respected member of the international arbitration community with over 30 investor-state arbitrations to his credit. The Government of Mongolia has 30 days to appoint their arbitrator.


Crowell & Moring, a highly-experienced Washington, D.C. based law firm, will represent Khan in this matter.


Mr. Grant Edey, President and CEO of Khan, commented "We are disappointed that the Government of Mongolia has left us no alternative other than international arbitration. The Nuclear Energy Agency of Mongolia continues to falsely denounce us in Mongolia while simultaneously entering into an agreement with ARMZ of Russia for the development of the Dornod deposit, thereby excluding Khan of its rightful interests. We have a very strong case of expropriation without compensation which is illegal under the various laws governing this matter. We intend to vigorously press the process to its conclusion and ensure that Khan's rights under International Law and Mongolian Law are fully vindicated".


The Notice of Arbitration served against the Government of Mongolia is available on the Company's website www.khanresources.com.



Khan Resources Inc. (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 northeastern Mongolia. Khan holds interests in the Main Dornod Property and in the Additional Dornod Property