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Barrick Gold targets first production in Pakistan
Barrick Gold Corp. [ABX-TSX, GOLD-NYSE] is targeting initial production from its Reko Diq copper-gold project…
Barrick Gold Corp. [ABX-TSX, GOLD-NYSE] is targeting initial production from its Reko Diq copper-gold project in Pakistan by 2028. During peak construction, the project is expected to employ 7,500 people and once in production will create around 4,000 long term jobs, the company said.
The announcement comes after Barrick said it had completed the reconstitution of the huge project, having received a favourable opinion from the Supreme Court of Pakistan and the required legislation having been passed into law.
Reko Diq is a partnership between the company, the Balochistan provincial government and Pakistan state-owned enterprises.
Barrick believes Reko Diq to be a tier one copper-gold asset that meets its investment criteria (greater than 15% IRR at US$2.75 per pound copper and US$1,300 an ounce gold) and sees the project fitting into its development pipeline, along with the Donlin Gold Project in Alaska.
Now that the project has been given the all clear and necessary legalization steps taken, Barrick has said it will update the original feasibility study, a process expected to take two years. Construction of the first phase will follow, with the first production of copper and gold expected in 2027 to 2028.
Barrick President and CEO Mark Bristow saidthe completion of the legal processes was key step to progressing the development of Reko Diq into a world-class, long-life mine, which would substantially expand the company’s significant copper portfolio and benefit its Pakistani shareholders for generations to come.
“With its unique combination of large scale, low strip and good grade, Reko Diq is expected to have a life of 40 years,’’ Bristow said. “We envisage a truck-and-shovel open pit operation with processing facilities producing a high-quality copper-gold concentrate,’’ he said. “We expect it to be constructed in two phases with a combined process capacity of 80 million tonnes per annum.’’
Bristow has said that in negotiations, Barrick and the Government of Pakistan had worked to ensure that Balochistan will receive a substantial share of the benefits generated by Reko Diq.
Bristow said social contributions are estimated to amount to around $70 million over the construction period, including upfront commitments of up to $3 million in the first year following closing and up to $7 million in year two.
In addition, Bristow said Reko Diq will advance royalties to the Government of Balochistan of up to $5 million in the first year following closing, up to $7.5 million in the second and up to $10 million per year thereafter until commercial production starts, subject to a cumulative $50 million of advance payments.
On December 15, Barrick shares closed at $22.76. The shares are currently trading in a 52-week range of $33.50 and $17.88.
