Barrick Gold (TSX:ABX) (NYSE:GOLD) has revealed plans to develop the Reko Diq copper-gold deposit in Balochistan, Pakistan, in two stages. The first stage will be an almost 40Mtpa plant. The company will look to double the capacity of the plant in the next five years.
If everything goes as planned, Barrick Gold predicts that the mine’s first output will arrive within five to six years. The two-phase construction of the mine is said to optimize profits, reduce execution risks, manage upfront capital, and provide cash flows in the long run for the miner.
The development is expected to result in 7,500 employment opportunities during the peak construction period and over 4,000 long-term positions after it begins operating. Furthermore, Barrick was considering solar, wind, and battery systems to boost the renewable power generation at the operation.
Barrick Gold has a 50 percent stake in the project and will act as the operator. The remaining share is owned by Pakistani state-owned companies which have 25%, and the Balochistan government which holds a 25% stake.
Barrick CEO Mark Bristow said on an investor call: “Offering a unique combination of large scale, low strip and good grade, Reko Diq will be a multi-generational mine, with a life of at least 40 years. The contemplated mine plan is based on four porphyry deposits within our land package and our exploration licence area holds additional deposits with future upside potential.”
The project was put on hold in 2011 owing to a long-running dispute with Pakistan over the licensing procedure the jobs. However, Barrick Gold agreed to resume work on the project and get the mine back on track after reaching an out-of-court settlement, under which the previous $11 billion penalty against Pakistan was forgiven.
Bristow continued: “At Barrick, we know that our long-term success depends on sharing the benefits we create equitably with our host governments and communities. That’s why we wanted Balochistan’s share of the venture to be fully funded, 10% by the project and 15% by the Government of Pakistan.
2022 Inflationary Headwinds
Barrick Gold Corp. has far outpaced the rest of the bullion industry in surviving a soaring costs dilemma in 2021 and 2022, but it is now facing inflationary headwinds for the first time.
Barrick announced a preliminary statement Thursday, in which it said gold production for the first quarter was lower than the previous quarter, according to its earlier forecast. At the same time, all-in sustaining costs per ounce are anticipated to be 19-21% greater than in the fourth quarter. Apart from a 20% decrease in gold ounces produced and sold, the company didn’t provide further guidance.