Barrick warns of “significant increases” to budget, timeline for Pakistan copper project

Barrick Mining (NYSE:B)(TSX:ABX) said on Thursday that it anticipates that there could be “significant increases” to the previously disclosed total estimated capital budget and timeline for its Reko Diq copper project in Pakistan.  

On March 26, Barrick said it will slow its development of the Reko Diq deposit and extend the project’s review period, citing security concerns in the Middle East. 

Reko Diq, one of the world’s largest undeveloped deposits of the metal, is in the remote, insurgency-hit western province of Balochistan and held in an equal partnership between the company and the Pakistani authorities. 

The previously disclosed total estimated capital cost of Phase 1 was between $5.6 billion and $6.0 billion (100% basis, exclusive of capitalization of financing costs) and of Phase 2 was between $3.3 billion and $3.6 billion (100% basis, exclusive of capitalization of financing costs), with first production targeted by the end of 2028. 

“Barrick continues to believe in the long-term value of Reko Diq. Following the preliminary findings of the review and the further escalation of security issues in Pakistan and the region, the company considers it necessary to slow the development activity and continue the project review until mid-2027,” the Canadian miner said in a statement released just after market close in Toronto.  

Barrick has viewed Reko Diq — with an estimated 15 million tonnes of copper reserves — as a key pillar of its strategy to become a Tier 1 producer of the metal. 

The continued review will allow the company to assess in a comprehensive manner the evolving security situation, capital requirements, project financing, project scope and timeline, it said.  

“While development activity will be slowed, the project will remain under active management with a reduced capital spend,” Barrick said.  “Development of Phase 1 of the Reko Diq project was approved on this basis. Barrick recognizes its important role in the local community and intends to continue to invest in and honor its existing in-country community and social programs.” 

Barrick, which has been developing the project in partnership with the governments of Pakistan and Balochistan for years, initially planned for the project to come online in 2028, subject to financing.   

Once operational, the mine is forecast to generate over $70 billion in free cash flow and $90 billion in operating cash flow over a 37-year lifespan.