According to Google Finance the market capitalisation of Khan Resources Incorporated stands at $20.03 million with the balance sheet of the 30 June 2008 showing cash and short-term investments standing at $28.81 million. True we could do with an updated balance sheet but this is still an odd situation in that this company is valued less than the cash that it currently holds.

There are a few companies in similar positions in the junior mining sector that are trading for less then their cash holdings which reflects the investment communities view of their prospects. We can only conclude that the market perceives their future as exceptionally dull or they have become so oversold as to present us with opportunities at bargain prices.

Khan Resources could be one of those opportunities, however with uranium being out of favour and the political situation in Mongolia proving difficult to resolve the company has been hit with a double whammy. But just maybe there is some light at the end of this tunnel as Martin Quick, President and CEO of Khan Resources, said in a recent news release:

“These recent developments in Mongolia are encouraging and we look forward to progressing in our discussions with the Mongolian government. Khan Resources has a strong financial position and a world-class uranium deposit. Therefore, regardless of market conditions, we feel that the Company is significantly undervalued”

He was referring to the opening speech that the President Nambaryn Enkhbayar gave to the Mongolian Parliament when he said

“It is the reality that Mongolians cannot invest in deposit independently, introduce advanced technology and provide qualified experts. Therefore, there is no other way than attracting major investors, their financial resources, technology and experts. Investors would want to calculate their investment returns and control expenditures of their investment. They would aspire to recover their investment and make profit. This is natural.” President Enkhbayar continued, “Therefore, there is no other way than for all parties concerned to accept market principles of allowing the investors to own more than 51% of the deposit”

Well it appears to us that the President has recognised the importance of outside investment and technical expertise so it now remains to be seen just how this situation will unfold. In the mean time Khan Resources has launched a US$5 million project to build a power line and a sedimentation pond for the Dornod Uranium Project as announced on September 18, 2008.

As we own this uranium stock it would be nice to see a mutually beneficial agreement forged so that the project could proceed with some momentum.

Khan Resources Incorporated trades on the Toronto Stock Exchange under the symbol of KRI and the stock closed at $0.37 last week.

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