Barrick revives Reko Diq, Antofagasta exits

Barrick Gold has announced a deal with the governments of Pakistan and Balochistan for a framework to provide a pathway for the open pit Reko Diq porphyry copper-gold project in Balochistan province to advance. The project was suspended in 2011 due to a dispute over the legality of its licensing process.

 Reko Diq in Pakistan

Reko Diq in Pakistan

Barrick's former joint venture partner Antofagasta Minerals decided not to participate in the reconstituted project as its growth strategy is focused on the production of copper and by-products in the Americas. Antofagasta acquired the project in February 2006 through the acquisition of Tethyan Copper for US$140 million and simultaneously entered into a 50:50 joint venture with Barrick Gold. Tethyan has a 75% interest in Reko Diq with the government of Baluchistan holding the remaining 25%.

Under the agreement, Reko Diq will be reconstituted under Tethyan Copper Company (TCC), a JV held equally by Antofagasta and Barrick. The 2019 US$5.8 billion arbitration award the partners received by the International Centre for the Settlement of Investment Disputes (ICSID) in their investment dispute against Pakistan will be resolved.

Antofagasta's position will be acquired by a consortium of Pakistani state-owned enterprises for $900 million. The reconstituted project will be held 50% by Barrick and 50% by Pakistan, including a 10% free-carried, non-contributing share held by the government of Balochistan, 15% held by a special purpose company owned by the government of Balochistan and 25% owned by other federal state-owned enterprises, with Barrick as operator.

Reko Diq hosts an estimated 5.9 billion tonnes grading 0.41% copper and 0.22 grams per tonne gold. Barrick previously said Reko Diq would cost $6 billion to build and would produce 400,000-500,000oz/y gold and 400-400 tonnes per year copper for 50-years.

In February, Bristow told Mining Journal that he saw fully sharing the benefits of a project as a key to unlocking the development of stranded projects. The Reko Diq agreement follows similar deals struck to unblock the Porgera operation in Papua New Guinea and the mines in Tanzania formerly operated by Acacia. In October 2019, Barrick agreed to share the economic benefits with the government of Tanzania on a 50:50 basis. A similar agreement in 2021 with the government of Papua New Guinea saw a joint venture formed which is 51% owned by the country.

Barrick is to be granted a mining lease, exploration license, surface rights and a mineral agreement stabilising the fiscal regime applicable to the project for a specified period. The process to complete and approve a definitive will involve the federal and provincial governments, as well as the Supreme Court of Pakistan.

"Barrick has successfully partnered with host countries worldwide and our philosophy of sharing the economic benefits our mines generate equitably with core stakeholders is also evident in the ownership structure of the new Reko Diq," said Barrick Gold president and CEO Mark Bristow.

Upon closing, Barrick will start a full update of the project's 2010 feasibility and 2011 expansion pre-feasibility studies, which envisaged a conventional truck-and-shovel open pit operation with comminution and flotation processing facilities producing a high-quality copper-gold concentrate.

Bristow said that if all went according to plan, Reko Diq could be in production within five to six years. The deposit hosts more than 11 billion pounds of copper and 9 million ounces of gold.

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