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Given recent headlines, it is hard to imagine that Khan Resources Inc. was ever in an enviable position. But in early 2010, it really was.
The tiny Toronto-based exploration company, which owned a uranium deposit in Mongolia, was the target of a bidding war between massive, state-owned entities from China and Russia that were chasing foreign uranium reserves. It was exactly the sort of scenario that shareholders dreamed of when Khan went public in 2006. The company appeared to have overcome nationalization concerns in Mongolia and set up a decent outcome for shareholders.
“I don’t know if they’ll be fighting over us. But it has the makings of one trying to outbid the other,” then-chief executive Martin Quick predicted. Of course, that isn’t what happened. Instead of engaging in a market-driven takeover battle, the Russians appeared to apply political pressure behind the scenes, forcing Khan off the uranium project without paying its investors a dime.
The case ended up in international arbitration, with Khan actually winning a US$100-million award. Mongolia, an extremely poor country, signaled it would challenge the decision.