Blog > Editor's Pic > Play commodities volatility with Khan Resources Inc. (KRI)
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Play commodities volatility with Khan Resources Inc. (KRI)

Today's Financial News - Posted October 1, 2009

bigRight now, uranium miner Canadian Khan Resources Inc. (TSE:KRI) is trading for less than 30 cents, but with the growing need for uranium, this risky investment could pay off.

by Laura Cadden

Baltimore, MD — TFN: Canadian Khan Resources Inc. (TSE:KRI) is preparing to develop uranium properties in the Dornod district of Mongolia. After a struggling through miles of red tape, it now looks like things might actually start moving for this company!

Khan owns a 58% joint venture interest in Central Asian Uranium Company (CAUC) that controls the mining license for the Main Dornod Property. It’s also a joint venture partner with Russian state-owned JSC Priargunsky which has a 21% interest in CAUC and Mongolian state-run MonAtom which holds the remaining 21%. Kahn has a 100% interest in the adjacent area called the Additional Dornod Property.

This summer, Mongolia’s Parliament passed its Nuclear Energy Law. It gives the Mongolian Government the right to take ownership without payment of not less than 51% of the shares of a project if uranium resources were revealed through exploration with State funding, or not less than 34% if State funding was not used.

That new legislation hit Kahn hard. Share prices took a hit.

But recently, other mining outfits, like Rio Tinto and Ivanhoe, have hammered out investment agreements with the Mongolian government — giving the company new hope: Kahn and CAUC are re-registering their exploration and mining licenses. As well they should…

Estimates are that to meet growing global need, the production of uranium will have to double over the next 20 years. In that period, the amount of nuclear power plants is expected to practically double from the current 435. Leading the way will most likely be China and India.

Though prices are now just around $43 per pound, many see the commodity rising to $65 per pound long-term. (In 2007, during the commodities hyper bull market, uranium hit a high of $136 per pound.

Now, things may not work out for Kahn, and exploration companies are always a risky investment.

Not to mention that we here at TFN don’t particularly like to recommend stocks that trade below $1. (Simply for fear of creating artificial price-volume spikes!)

But I see the potential for massive long-term gains. And thus would be willing to gamble some speculative capital!


Next Article: Hype thrills… and kills

Posted by Laura Cadden · Filed Under Editor's Pic 

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