Pakistan closer to letting Barrick Gold proceed with $7bn project

According to Mining News Pro - Pakistan’s Supreme Court endorsed on Friday a settlement between the country’s government and Barrick Gold (NYSE: GOLD) (TSX: ABX), which allows the Canadian miner to resume work at its Reko Diq copper and gold project.

The favourable court decision is vital to securing parliamentary support for the $7 billion project, which is the final approval Barrick would need to kick off construction at Reko Diq.

The project, which hosts one of the world’s largest undeveloped copper-gold deposits, has been on hold since 2011 due to a dispute over the legality of its licensing process.

Barrick solved the long-running clash with Pakistan earlier this year, reaching a preliminary out-of-court deal that cleared the path for a final agreement on how to run the mine and profit-sharing arrangements.

The proposed mine would be one of the largest foreign investments in Pakistan and one of Barrick’s key projects for this decade.

Two-phased plan

The Canadian gold giant plans to deliver production as early as 2027-2028 from Phase 1 at a cost of around $4 billion, with Phase 2 to follow in five years at a cost of roughly $3 billion.

The conceptual design calls for an open pit with a life of more than 40 years. It would be built in two phases, starting with a plant that will be able to process about 40 million tonnes of ore per annum, which could be doubled in five years.

The latest plan is double the annual throughput capacity and more than twice the investment estimated in an unpublished 2010 feasibility study.

During peak construction, the project is expected to employ 7,500 people and once in production it will create 4,000 long-term jobs during the expected 40-year life of the mine.

Pakistan is now a 50% partner in Reko Diq — with 25% held by the Balochistan Provincial Government and 25% by Pakistani state-owned enterprises.

Barrick adopted a similar model before, in Papua New Guinea. These type of arrangements give host nations a more direct interest in ensuring a project’s success.