Khan Resources Inc., and its predecessor companies, have been actively involved in the development of the Dornod uranium property in Mongolia since 1995. Khan completed a full Definitive Feasibility Study on the property in the spring of 2009, which demonstrated highly positive economics for the project. However, in January 2009, Mongolia and Russia had announced their intention to form a new Mongolian-Russian joint venture to replace Khan in mining the Dornod property. In July 2009, the Government of Mongolia promulgated its Nuclear Energy law, which among other items, provided the State with 51% of the Dornod property without compensation to prior owners.  

Further, in 2010, the Government of Mongolia refused to reissue to Khan the required licenses for the Dornod property which effectively resulted in 100% expropriation of the asset without any compensation. As a result of these actions, Khan has launched 1) a US$300 million lawsuit against Atomredmetzoloto (“ARMZ”), the Russian joint venture partner for the Dornod property in August, 2010, and 2) a US$200 million international arbitration action against Mongolia for the illegal expropriation of its asset in January, 2011. The lawsuit and international arbitration action are currently in process. Khan is well funded and will continue with these legal actions to recover value for its shareholders from this illegal expropriation.