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By Yuriy Humber

April 14 (Bloomberg) -- Mongolia will develop its biggest untapped uranium field in a venture with Russia after revoking Khan Resources Inc.’s permit to exploit the Dornod resource.

The Asian country’s state-owned KOO MonAtom will hold at least 51 percent in a venture with Russia’s government-run ARMZ Uranium Holding and possible partners from Japan or China, according to Mongolia’s Nuclear Energy Agency. Bayarbayasgalan Tudevbazar, nuclear materials chief at the agency, commented in an e-mailed response to questions on April 9.

Toronto-based Khan Resources said yesterday a unit had its Dornod license annulled after accusations it failed to deal with breaches of the law. The company denied any violations and said it would challenge the agency’s decision. Spokesman Jonathan Buick didn’t respond to e-mails seeking comment.

Development of some of the world’s largest untapped mineral resources has been delayed in Mongolia by political infighting and a lack of funds. The nation plans to set up companies to manage the resources and may sell shares to global investors, Prime Minister Sukhbaatar Batbold said in February.

The uranium venture, called Dornod Uranium, will be registered in Mongolia “in the very near future,” Tudevbazar said, confirming the cancellation of Khan’s license.

In November, ARMZ bid 65 Canadian cents a share for Khan, to see it trumped by China National Nuclear Corp. with a 96-cent offer this year. ARMZ let its offer lapse, Khan said in March.