Khan Launches Appeal in $300 million Suit

Khan Resources Inc. (TSX:KRI)  announced that it has filed an appeal with the Court of Appeal for Ontario in relation to the March 9, 2012 decision of the Ontario Superior Court of Justice that allowed an appeal by Atomredmetzoloto JSC ("ARMZ") and dismissed Khan's motion to validate, substitute or dispense with service of the Statement of Claim in Khan's $300 million lawsuit for damages against ARMZ.

As set out in the Notice of Appeal filed with the Court of Appeal, Khan seeks to, among other things, restore a prior order of the Superior Court of Justice that validated service of the Statement of Claim on ARMZ.

Khan has been attempting to effect service on ARMZ since late 2010 in connection with its $300 million lawsuit against ARMZ. After following the necessary procedures in Russia to serve ARMZ, Khan's attempts at service were stymied when the Russian Ministry of Justice refused to effect service on ARMZ. The Russian Ministry of Justice cited Article 13 of the Hague Convention that provides that the State addressed may refuse to effect service "only if it deems that compliance would infringe its sovereignty or security". The Ministry of Justice provided no reason or explanation for why service would infringe Russian sovereignty or security. On October 31, 2011, Khan announced that it had obtained an order of the Ontario Superior Court of Justice validating service on ARMZ which was appealed by ARMZ. On March 9, 2012, the appeal was allowed.

Mr. Grant Edey, President and Chief Executive Officer of Khan, commented, "It is grossly unfair that the Russian Government has been able to shield ARMZ from having to answer to a Canadian court for harm done to Khan and its shareholders based on alleged concerns about Russian sovereignty or security. This unfairness demands an appeal, and we intend to continue to vigorously defend our shareholders' rights and interests."

Posted April 20, 2012

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