Khan Resources Incorporated has had a good story to tell and the market has responded to it in a favourable manner.

This is a play in Mongolia, which geopolitically appears reasonably safe for investment purposes. The star property in Khans portfolio is the Dornod Uranium Property. This property is in a previously mined uranium area where their studies have shown that 4 to 5 million pounds of uranium per year can be mined over a 10 year mine life span, which is all good solid exciting data.

Khan does not own all of it, but through its subsidiary CAUC Holding Company Limited holds a 58% interest in the Central Asian Uranium Company, which in turn is the owner of the Dornod Uranium mining license 237A in northeastern Mongolia covering 261hectares. Geographically this is very well located for the markets of China and Russia. We also understand that the beds for the rail tracks are still there and will not be overly difficult to rebuild.

There are 48 million shares outstanding when fully diluted at $C4.40 gives us a market capitalization of around $C180 million.

Is it a buy you ask? Well as with all investments timing is pivotal to success. We need to take a look at the chart and try to understand where it has been, where it is now and where we think we can confidently predict it is going. The technical indicators such as the RSI, MACD and the Stockastics are all lurking at the top end of their respective scales. These indicators considered in isolation would tell us the Khan is in the sell zone. However, when we take a look at the volume we can see that there has been a fairly dramatic increase in the volume of shares traded just recently. So, when you expect some retrenchment in the stock price the volume suddenly jumps up to throw a spanner into what might have been a reasonably logical conclusion. The jump in volume tells us that just may be someone out there knows a little more than we do at the moment. Could be some good news yet to make the headlines or it could be that this market in uranium stocks is catching the imagination of more and more investors and they are hoping to catch the right train to financial success.

We think that Khan is worthy our investment dollars, however, the chart suggests that we wait. Most of the euphoria attached to this story is already out there and built into the stock price, in our humble opinion. We will try to be patient and wait for the profit takers to cause a pull back thus presenting us with a suitable entry point.

If we owned this uranium stock, and we don’t, we think that we would stick with it for now.

And finally a quote from Tradetech.com:

“TradeTech’s spot price indicator remains unchanged from last week at $75.00 per pound U3O8 with limited activities reported. Market participants are focused on the upcoming auction by a US producer, who is expected to enter the market later this month offering approximately 100 thousand pounds U3O8 for sale”.

If this auction should result in a significant rise in the price of uranium then Khan Resources will move just as swiftly as other uranium stocks of a similar nature.

Khan Resources Incorporated trades on the TSX under the symbol of KRI

16 February 07