Barrick set to develop Pakistan gold-copper mine
Barrick Gold Corp. [ABX-TSX, GOLD-NYSE] has announced details of a framework deal that sets the stage for development of the Reko Diq project in Pakistan.
The project, which was suspended in 2011 due to a dispute over the legality of the licensing process, hosts one of the world’s largest undeveloped open pit copper-gold porphyry deposits. Published reports stay it is capable of producing 200,000 tonnes of copper and 250,000 ounces of gold annually for half a century.
The project was suspended in 2011 after Pakistan denied Barrick and Antofagasta Plc a license to develop Reko Diq. Under an out-of-court deal, an US$11 billion penalty slapped against Pakistan by the World Bank arbitration court and other liabilities will be waived and Barrick and its partners will invest US$10 billion in the project, said Pakistan Finance Minister Shaukat Tarin.
Barrick said the reconstituted project will be held 50% by Barrick and 50% by Pakistan shareholders, consisting of a 10% free-carried interest, non contributing share held by the government of the Balochistan province where the mine is located, an additional 15% interest held by a special purpose company owned by the government of Balochistan, and 25% by other state-owned enterprises.
A separate agreement provides for Barrick’s partner Antofasgasta to be replaced in the project by the Pakistan parties.
Barrick will be the operator of the project, which will be granted a mining lease, exploration license, surface rights and a mineral agreement stabilizing the fiscal regime applicable to the project for a specified period. The process to finalize and approve definitive agreements, including the stabilization of the fiscal regime pursuant to the mineral agreement will be fully transparent and involve the federal and provincial governments, as well as the Supreme Court of Pakistan.
If the definitive agreements are executed and the conditions to closing are satisfied, the project will be reconstituted, including the resolution of the damages originally awarded by the International Centre for the Settlement of Investment Disputes and disputed in the International Chamber of Commerce.
Barrick President and CEO Mark Bristow hailed the agreement as an important step towards the development and operation of Reko Diq, and a tribute to the decisions of all parties to work towards a mutually beneficial outcome in the spirit of partnership.
On Monday, Barrick shares advanced on the news, rising 2.2% or 65 cents to $30.65 on volume of 1.68 million. The shares currently trade in a 52-week range of $33.50 and $22.30