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Canada's Barrick Gold Corp on Sunday said it has agreed a deal with authorities in Pakistan that will see work at the Reko Diq copper and gold mine resume, though peer Antofagasta PLC will eventually step aside as a stakeholder.
Antofagasta will exit the project and be replaced by state-owned enterprises in Pakistan.
Work at the asset was suspended back in 2011 due to a dispute about the legality of the licensing process.
Antofagasta's exit process will see the project reconstituted under Tethyan Copper Co Pty Ltd, a joint-venture controlled by Antofagasta and Barrick.
A consortium of state-owned firms in Pakistan will then acquire shares in the TCC unit that owns the project, in a $900 million deal.
‘Proceeds will be distributed to Antofagasta in return for its exit from the TCC holding structure,’ London-listed Antofagasta said.
‘If the conditions to closing are satisfied during 2022, the company would expect to receive those proceeds during 2023,’ it said.
‘The company notes that, although this agreement in principle is an important step towards its exit from the Reko Diq project and the resolution of the International Centre for the Settlement of Investment Disputes litigation announced in July 2019, there can be no certainty that definitive agreements will be finalised or approved, or that the conditions to closing will be satisfied.’
The Chilean miner said the project does not fit into its strategy, which is focused on copper by-products in the Americas.
In addition, a roughly $11 billion penalty imposed on Pakistan by the International Centre for the Settlement of Investment Disputes, part of the World Bank, will be waived, Pakistan Prime Minister Imran Khan tweeted.
The project will be jointly held by Barrick and Pakistan.
‘Barrick will be the operator of the project which will be granted a mining lease, exploration licence, 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,’ Barrick explained.
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