After a seven year battle Khan Resources announces it’s set to receive US$70 million as compensation from the government of Mongolia for the expropriation, without compensation, of the Dornod uranium mine.
On Wednesday, Khan and the Government of Mongolia signed the “settlement documentation” required for the release of a US$70 million payment to Khan from the New York-based escrow agent. In a release, Khan said with the execution of that agreement, “joint instructions will be issued to the escrow agent to transmit the funds to Khan.” In addition, counsel to Khan, will secure a “dismissal order” from the U.S. district court, “of Khan’s petition for certification of the international arbitration award,” that was rendered in March 2015.
The settlement comes about one year after the death of Khan’s chairman’s Jim Doak, a highly respected Bay Street figure, who passed away in Mongolia following meetings with representatives of the Mongolian government.
Daniel Lloyd, a hedge fund manager, a business partner of Doak in Sui Generis Investment Partners, and a Khan investor, said, “the hard work and determination of the board has been vindicated. However the receipt of this award is bittersweet as we are unable to celebrate it with our friend and former partner Jim Doak.”
Loudon F. McL. Owen, a Khan Resources director, said that the company “was intrepid in its pursuit of a fair outcome. This is the type of courage and tenacity that has been responsible for Canada’s leadership in the mining industry for generations. While it does not always result in a mine, it does mean that property rights and international law were respected, even if it took very hard work to get there,” he said.
Owen, who is no stranger to protracted disputes — having spent a few years pursuing a US$315 million patent infringement award for i4i, a small Toronto software company against Microsoft that went all the way to the US Supreme Court — noted that “the Mongolian Government is clearly serious about change and progress in dealing with foreign investors and I applaud their commitment to opening the country to more foreign capital and expertise.”
Owen, along with Khan’s chief executive, Grant Edey, was a key player in the negotiations with the Mongolian government.
With the proceeds almost in hand, Khan will continue its investigation into how to distribute the funds to its shareholders in “a tax-efficient and timely manner. The process may entail multiple tranches,” it said.