Khan Resources (KRI, $0.43) is a small mining company based in Canada with a market cap of $32 million. Two months ago the company was awarded over $100 million in an international arbitration case. At this point you’re probably tempted to stop reading, open your online broker and start buying shares. While that isn’t the worst idea in the world, this investment certainly isn’t for everybody.
To summarize how Khan got to this point, in 1995 they entered into a joint venture (JV) to develop a uranium mine in Mongolia. The JV consisted of Khan as a 58% owner, a Mongolian state owned company owning 21% and a company majority owned by the Russian government with the other 21%. Importantly, Khan owned 100% of the corresponding exploration license and, through the JV, owned 58% of the mining license. In 2010, the governments of Mongolia and Russia decided to develop the mine themselves and expropriated Khan. Along with this, Mongolia cancelled Khan’s mining and exploration licenses.
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