UPDATE 2-China's CNNC to buy Khan Resources for C$56.5 mln
Mon, Feb 1 2010
* Offer price at C$0.96/shr
* Offer at premium of 12 pct to co's Friday close
* Shares up as much as 16 pct (Recasts, adds details and share movement)
Feb 1 (Reuters) - Canada's Khan Resources Inc <KRI.TO> agreed to be bought by Beijing-based CNNC Overseas Uranium Holding Ltd in a deal that values the uranium explorer at C$56.5 million ($52.9 million) and gives the Chinese firm access to the Dornod field in Mongolia.
Khan Resources said CNNC, a subsidiary of China National Nuclear Corp, will pay 96 Canadian cents per share, which represents a 12 percent premium to Khan Resources closing price on Friday.
Khan Resources, which holds a 58 percent stake in Dornod, has been looking to renew its licenses for the project, following the Mongolian government's decision to regulate uranium mining.
Dornod has uranium reserves of about 22,000 tons and this amount could be significantly increased with further exploration.
Mongolia's uranium deposits are currently ranked 15th in the world, but are attracting increasing attention as climate change concerns and China's rapid growth spur construction of nuclear power plants worldwide.
In December, Khan Resources had rejected an offer of 65 Canadian cents a share from Russian state uranium miner ARMZ, or AtomRedMetZoloto, which owns a 21 percent stake in Dornod. [ID:nGEE5AT12O]
The company said CNNC has the right to match any superior offer made by another bidder and will be paid a termination fee of C$1.6 million if the deal falls through in certain circumstances.
Khan Resources shares, which have surged about 213 percent in the last three months, were up 14 Canadian cents Monday morning on the Toronto Stock Exchange. They touched a 52-week high of C$1 earlier in the session. ($1=1.069 Canadian dollar) (Reporting by R. Manikandan in Bangalore; Editing by Aradhana Aravindan)
