Unwelcome surprises for uranium firms

Thursday, 23 July 2009

There are sounds of alarm coming from uranium companies in Mongolia, after a series of unexpected moves from government.

Last week, Mongolian prime minister Sanjaa Bayar travelled to Japan to talk business - including uranium - with his counterpart Taro Aso. But at the same time, Canada-based Western Prospector complained that its 11 uranium exploration licenses had been "suspended for three months due to purported violations of various laws." The company said its Mongolian staff had recieved the notice from government and conveyed its content, but could not yet give details or a response to the supposed violations.

Now, another communication failure between Mongolian authorities and overseas investors has become apparent. Khan Resources has said it believes a Nuclear Energy Law has been passed by parliament, "in a surprise move last Friday 17th July."

 

Dornod: Quiet? Don't you believe it (Image: Khan)

 

In a release yesterday, ahead of the draft of the law, Khan complained that it "was not given any warning or opportunity to review, comment on or make constructive submissions" before the law was passed. Now it is "concerned about the lack of transparency in the legislative process."

Based on the unofficial reports which alerted Khan to the law, the compay said that some aspects of the new legislation are unclear. In particular, some clauses grant the government rights to take greater ownership and control of uranium mines and assets.

Khan said it appreciates and supports the country's need to ensure domestic benefit to uranium-based industry under a strong regulatory regime. However, it would be "seeking clarity as to the status and content" of the new law, while registering its concerns with Bayar and President Tsakhiagiin Elbegdorj. The company believes the law will come into effect on 15 August unless vetoed by Elbegdorj.

Khan has 58% and 100% interests in two uranium properties at Dornod in the north east of Mongolia, where earlier development and mining took place by the Soviet Union. Western Prospector has 11 contiguous licenses to explore for uranium in the Saddle Hills area, which covers seven known uranium deposits including Gurvanbulag, also previously exploited by the Soviet Union.

Other companies with interests in Mongolia include Denison, Red Hill and Mega Uranium while Century City has an agreement with China Nuclear Energy Industry Corporation (CNEIC) to explore and develop uranium resources. CNEIC is a subsidiary of China National Nuclear Corporation, which made a $25 million takeover offer for Western Prospector this March.