* Khan Resources rejects C$0.65/shr bid

* Says offer inadequate, undermines assets

* Khan Resources shares flat (Adds details, Khan Resources CEO comments, updates share movement)

BANGALORE, Dec 15 - Canada's Khan Resources (KRI.TO) said it rejected an unsolicited bid from Russian state uranium miner ARMZ to acquire Khan for 65 Canadian cents a share, saying the offer was inadequate and contained objectionable terms.

The company urged shareholders not to tender their shares to the ARMZ offer, which needs about 67 percent of outstanding shares for a successful bid.

We have over 30 percent shareholders who would not tender. So, I think their offer is dead, Martin Quick, chief executive officer of Khan Resources, told Reuters.

ARMZ had offered to buy Khan Resources for $33 million cash in an attempt to acquire the Canadian company's stake in the Dornod uranium deposit in Mongolia. [ID:nGEE5AT12O]

Khan Resources, which holds a 58 percent stake in Dornod, has been looking to renew its licenses for the project, following the Mongolian government's decision to regulate uranium mining.

Dornod, a deposit once explored by Soviet geologists, has uranium reserves of about 22,000 tons and this amount could be significantly increased with further exploration.

Quick expects Dornod to be operational within three years.

ARMZ, or AtomRedMetZoloto, which is the world's fifth-largest uranium producer, owns a 21 percent stake in Dornod.

Russia, holder of more than a tenth of global uranium reserves, is positioning itself as a major player in meeting growing demand for the metal from its nuclear power industry and looking abroad to secure valuable raw materials.

Khan Resources shares, which hit a year-high of 64 Canadian cents last Friday, were flat at 63 Canadian cents in afternoon trade Tuesday on the Toronto Stock Exchange. (Editing by Ratul Ray Chaudhuri, Anne Pallivathuckal)