UPDATE 1-Khan Resources sues Russia's ARMZ for C$300 mln

Fri Aug 20, 2010 4:28pm EDT

* Sues ARMZ in Ontario Superior Court

* Alleges interference in JV with Mongolia govt

* Alleges interference in takeover offer by CNNC

* Alleges intent to eliminate mining license in Mongolia

Aug 20 (Reuters) - Khan Resources Inc KRI.TO has sued Russia's state-owned uranium miner ARMZ in the Ontario Superior Court seeking C$300 million in damages for alleged unlawful interferences in the Canadian explorer's Mongolian operations.

In a statement, Khan alleged that ARMZ and its affiliates interfered in the joint venture between Khan and MonAtom LLC -- Mongolia's state-owned entity -- and sought to eliminate Khan's mining and exploration licenses in the country, to help ARMZ proceed with its own joint venture with the Mongolian firm.

Khan has been facing problems from Mongolian authorities with regard to its flagship Dornod uranium project in the country. [ID:nSGE6780HO]

"ARMZ has made no secret of its desire to acquire control of the Dornod uranium property in Mongolia," Khan's Chief Executive Grant Edey said in the statement.

A spokesperson said ARMZ had no immediate comment.

Khan, which had rejected an acquisition offer from ARMZ in December [ID:nSGE5BE0K4], also said it was seeking damages for ARMZ's interference in a takeover bid by a unit of China National Nuclear Corp.

In May, Khan said its proposed C$56.5 million acquisition by CNNC Overseas Uranium Holding Ltd would not go ahead as the Chinese company had failed to obtain regulatory approval. [ID:nSGE64K0JP]

Khan said it will continue to defend its rights and interests, including pursuing all available rights and remedies in Canada, Mongolia and elsewhere.

Khan's stock, which has shed about 55 percent of its value so far this year, closed up 14 percent at 32.5 Canadian cents Friday on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Maju Samuel)

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