Three state-owned energy sisters have more than raised their investment commitment near to $1.9 billion, while a formal feasibility assessment revealed more than $60 billion worth of copper and gold deposits at the Reko Diq project in Balochistan at existing rates.
Originally pledging roughly $300 million each to the project, three SOEs—Government Holdings (Pvt) Ltd (GHPL), Pakistan Petroleum Ltd (PPL) and Oil and Gas Development Comprising LTD (OGDCL)—have now raised $627m apiece. From roughly $900m originally intended, informed sources told Dawn, the trio’s overall funding has now risen to roughly $1.88bn.
The Reko Diq project is estimated to produce 13.1 million copper and 17.9 million ounces of gold over the lifetime of the mine, according to state-run OGDCL, based on current reserves (100pc basis).
informed sources said that the feasibility study has also confirmed a profitable 25pc rate of return on investment on one of the largest copper-gold projects. Furthermore, the project operations would be run entirely on solar energy, so rendering the only green project of the type so far in use worldwide.
Three energy titans increase their project budget from double to $1.9 billion.
The overall yield comes out to be over $60bn, comprising $54 billion of gold and $6 billion of copper, an official said, at current market pricing of $3,016 per ounce of gold and $9,815 per tonne of copper.
Phase 1 under the revised feasibility study is scheduled to handle 45 million tonnes of mill feed annual (Mtpa) from 2028. It was thought to be somewhat close to 40 million tonnes in the past. Phase 2 is expected to double the processing capacity to 90Mtpa by 2034, the OGDCL added.
The revised feasibility study details two phases of a 37-year mine life. Beginning operations in 2028, Phase 1 of the project has an estimated capital outlay of $5.6bn (excluding of finance costs and inflation).
Negotiations for the project finance were under way; a limited-recourse project financing facility of up to $3 billion is being sought, with the remaining paid by shareholder contributions, OGDCL added.
Using five of the recently found 15 porphyry surface expressions within the current mining lease, the project will highlight significant future expansion possibilities. Phase 2 is expected to be funded by a combination of project income, further project funding (when necessary), and shareholder contributions.
Reflecting its proportional part of overall capital investment, the OGDCL’s board of directors approved an increase in the company’s funding commitment to $627m, inclusive of project finance expenses, in view of these developments.
This explains the expected rise in copper and gold prices, which have helped to balance increased project expenses. After considering project financing, the Company’s shareholder equity contributions are projected to be $349m; these will be modified for inflation and actual project financing costs, the OGDCL added.
Reflecting its pro rata share of total capital investment to $627m, PPL also said in a similar release that its board of directors had authorized increase in finance commitment to the project. The board “has also given an in-principle approval to obtain project financing,” it stated adding that the shareholder equity contributions by the company after considering project finance are projected to be $349m.
According to informed sources, the GHPL had likewise taken a similar stance.
Declaring “the completion of the revised feasibility study for the Reko Diq Project,” OGDCL marks a major turning point in Pakistan’s path toward releasing one of the world’s most underdeveloped copper-gold deposits. Part of a collective 25pc interest held by three Pakistani SOEs, including PPL and GHPL, OGDCL holds an 8.33pc share in the project.
Pakistan Minerals (Private) LTD manages the SOEs’ interest. Of the remaining stake, Barrick Gold Corporation, the project operator, holds 50pc; 25pc is held by the Government of Balochistan (15pc on a fully funded basis through Balochistan Mineral Resources Ltd and 10pc on a free carrying basis).
