CNNC Overseas Uranium Holding Ltd (CNNC) is buying Canadian mineral exploration firm Khan Resources Inc in a C$56.5 million (US$52.9 million) deal that gives it access to the Dornod field in Mongolia.

CNNC, a subsidiary under China National Nuclear Corp, will pay 96 Canadian cents per share, representing a 12 percent premium to Khan Resources' closing price on Friday.

Khan Resources is primarily focused on Dornod area in northeastern Mongolia. According to estimates the Dornod field may hold uranium reserves of around 22,000 tons with possibilities of further output enhancement after exploration.

Analysts said domestic companies are accelerating their overseas development of uranium resources, driven largely by the rapid growth of the nuclear power industry in the country.

China set a target in 2005 to increase its installed nuclear power capacity to 40 gW in 2020, accounting for 4 percent of the country's total power capacity. However, in line with the quick development of the sector, the target was later raised to 70 gW.

According to the National Energy Administration (NEA), the country's energy regulator, China has 20 nuclear reactors under construction with a total capacity of 21.92 gW.

"We should pay equal attention to uranium resources, compared with oil and natural gas, as nuclear energy is going to be an integral part of China's energy mix," said Han Xiaoping, chief information officer of China5e.com, a leading energy website in the country.

Mongolia's uranium deposits are currently ranked 15th in the world, and are attracting increasing attention. In December, Khan Resources rejected an offer of 65 Canadian cents per share from Russian state uranium miner AtomRedMetZoloto (ARMZ), which owns a 21 percent stake in Dornod.

"The CNNC offer is far superior to the unsolicited ARMZ bid," said Martin Quick, president and CEO of Khan Resources. "CNNC brings a lot to the table, with its expertise in nuclear energy, financial muscle and strong political ties with Mongolia."

As China's major uranium developer, China National Nuclear Corp is now developing uranium resources in countries like Niger, Kazakhstan, Mongolia and Namibia, the company said.

China Guangdong Nuclear Power Holding Corp, another nuclear power developer in the country, last year paid A$83.6-million ($76 million) to buy a 70 percent stake in Australian uranium explorer Energy Metals Ltd.

China now has a total of 11 nuclear reactors in operation, with a combined installed capacity of 9,080 mW, according to the China Electricity Council. The country has developed three nuclear power bases - Qinshan in Zhejiang province, Daya Bay in Guangdong province and Tianwan in Jiangsu province.