Oil and Gas Development Company Limited (OGDCL), one of Pakistan’s largest exploration and production (E&P) firms, has approved a significant increase in its funding commitment for the Reko Diq project, raising it to $627 million.
The announcement was made in a notice to the Pakistan Stock Exchange (PSX) on Tuesday.
“The Board of Directors of the company has approved an increase in the company’s funding commitment with respect to the project, reflecting its pro rata share of total capital investment, inclusive of project financing costs, to $627 million (to be adjusted for actual project financing costs and inflation),” the notice read.
The decision follows an updated feasibility study, which outlines a 37-year mine life split into two phases. Phase 1 is estimated to require a total capital investment of $5.6 billion, excluding financing costs and inflation. The capital for this phase is planned to be secured through a limited-recourse project financing facility of up to $3 billion, with the remaining amount covered by shareholder contributions.
“Phase 1 is planned to be funded through a limited-recourse project financing facility of up to $3 billion with the remaining funded through shareholder contributions,” the notice added.
OGDCL also highlighted that the project would leverage five of the 15 identified porphyry surface expressions within the current mining lease, indicating substantial future growth potential. Negotiations for the proposed project financing are still ongoing, the company stated.
Phase 2 of the project will be funded through a mix of revenue generation, additional project financing, and, if necessary, further shareholder contributions.
The updated feasibility study indicates that Phase 1 will process 45 million tonnes of mill feed annually (Mtpa) starting from 2028. By 2034, Phase 2 is expected to double the processing capacity to 90 Mtpa.
“Based on existing reserves, the Reko Diq project is expected to yield production of 13.1 million tonnes of copper and 17.9 million ounces of gold over the life of the mine (100% basis),” the company stated.
OGDCL further noted that the recent increase in copper and gold prices had more than offset the impact of higher project costs. The Board of Directors has also granted in-principle approval to secure project financing, with expected shareholder equity contributions of $349 million, subject to project financing costs and inflation.
The company emphasized that the approvals remain subject to shareholders’ and regulatory approval.
It is noteworthy that OGDCL’s share of the Reko Diq project stands at 8.33%, part of the collective 25% held by three Pakistani state-owned enterprises (SOEs), including Pakistan Petroleum Limited (PPL) and Government Holdings (Private) Limited. The SOEs hold their interest through Pakistan Minerals (Private) Limited. The remaining 75% of the project is split between the Government of Balochistan (25%) and Barrick Gold Corporation (50%), which operates the mine.
Barrick has long considered the Reko Diq mine one of the world’s largest underdeveloped copper-gold deposits, and its development is expected to significantly impact Pakistan’s struggling economy.
PPL follows suit with increased funding commitment
Similarly, Pakistan Petroleum Limited (PPL) also announced an increase in its funding commitment for the Reko Diq project, mirroring OGDCL’s move. PPL’s Board of Directors approved a pro rata share of total capital investment, raising its commitment to $627 million. The Board has also granted in-principle approval to secure project financing.
“The shareholder equity contributions by the company after taking into account project financing are expected to be $349 million,” PPL stated in its notice to the bourse.
