The invalidations purport to be effective as of October 8, 2009 and purport to be based on a failure by CAUC and Khan to address violations of Mongolian law stemming from a July 2009 report issued by an inspection team appointed by the Mongolian State Specialized Inspection Agency (SSIA) in respect of the Mining License.

Khan continues to believe that it and its Mongolian subsidiaries have always operated and continue to operate in compliance with all applicable Mongolian laws, including the Nuclear Energy Law, and there is no legal basis for the NEA invalidation notices.

Khan said that it intends to challenge the NEA’s actions through all legally available means. In Khan’s view, the actions by the NEA are a clear violation of Khan’s rights and interests under the laws and Constitution of Mongolia, and are in breach of Mongolia’s obligations under international law.

Khan and its legal counsel intend to defend its rights and interests, and to pursue all available rights and remedies in the Canadian and Mongolian courts and, if necessary, in international arbitration.

Martin Quick, president and CEO of Khan, said: “It is entirely unclear and completely non-sensical as to why the SSIA would continue to inspect the Dornod licenses and engage in communications and discussions with Khan and its subsidiaries concerning the Dornod licenses with a view to coming to a formal decision at some point in the future, if in fact that licenses were invalidated in October 2009, as the NEA now alleges.

We view the NEA decision to invalidate the Dornod licenses as without any legitimate or legal foundation and may be politically motivated.”