Vancouver – The Mineral and Petroleum Resources Authority of Mongolia’s (MPRAM) chairman Luvsanvandan Bold has gone on record to clarify that no licences had been invalidated by him and also that the government agency was still anxious to see foreign exploration capital continuing to flow into the country.
The announcement was welcome news to aspiring uranium developers Khan Resources (KRI-T, KHRIF-O) and Western Prospector Group (WNP-V) that saw its market values sent tumbling in mid-August when it appeared certain key exploration licences in its Mongolian holdings were deemed invalid.
The MPRAM chairman called the earlier notice of revocation an “unlawful revision of these licenses” and issued a formal statement to quell industry concern over the licence invalidation issue.
Luvsanvandan Bold acknowledged that the initial revocation notice came following recommendations by the State Audit Board after it discovered areas covered by 34 exploration licences (out of more than 6,000 currently effective licences in the country) had undergone past exploration funded by the state budget. Under the new mineral policy passed by Mongolian Parliament in mid-2006, those exploration licenses had to be revoked as they covered mineral deposits ready for development.
The apparent remedy to the situation is for the exploration licence holders to convert them to exploitation, pre-exploitation or production licences. Chairman Bold points out that under the new mineral policy companies can no longer continue to hold exploration licences in areas “where exploration has finalized long ago and instead they are obliged to move on to develop the deposits.”
While the motive for the policy is straight forward in that the government is anxious to see development of the countrys mineral deposits, what is not so clear is exactly who decides when exploration has been finalized.
Needless to say both Khan Resources, at its Dornod uranium project, and Western Prospector Group, at its Saddle Hills project, are now both moving to conform to the edict and convert all affected special exploration licences to mining licences.
Khan has been planning to commence a full feasibility study at Dornod in Fall-2007.
Located in northeastern Mongolia, Dornod is a past producing open pit uranium mine that was operated by the Russians from 1988-1995. A pre-feasibility study recently completed by Khan reviewed an indicated resource of 25.3 million tonnes averaging 0.116% U3O8, for about 64.3 million contained lbs. U3O8. An additional 2.2 million inferred tonnes of 0.05% U3O8 was also tabled.
Within the indicated resource, the study delineated a probable reserve of 18.2 million tonnes of 0.122% U3O8 in the No. 2 and No. 7 deposits for about 49.1 million contained lbs. U3O8.
Khan has a 58% joint venture interest in the No. 2 deposit, 58% of a two-thirds interest in the No. 7 deposit, and a 100% interest in the remaining third.
Adjacent to Dornod is Western Prospector Group’s Saddle Hills project that also underwent past Russian development and contains several uranium deposits, the largest and most advanced being Gurvanbulag that saw extensive underground development.
An indicated resource of 2.83 million tonnes grading 0.22% U3O8 has been reviewed at Gurvanbulag for about 13.6 million contained lbs. U3O8 plus an additional 2.67 million inferred tonnes at 0.15% U3O8 (about 8.6 million contained lbs. U3O8).
Shares of Khan gained about 35% after the MPRAM licence clarification, gaining about 60 apiece to close at the $2.30-level. Western Prospector saw its shares surge 81% following the news to gain $1.21, closing at the $2.70-level.
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