Gold prices warm up to stimulate capacity expansion! GOLD.US plans to restart a copper and gold project at a cost of $7 billion

GOLD.US 's first attempt to build a copper and gold mine in Pakistan was blocked by the government's refusal to approve it. Ten years later, the company is making a bolder attempt.

The Toronto-based mining company on Tuesday announced revised plans to develop a large Reko Diq copper and gold mine in a desert near the Iranian-Afghan border, Zhitong Financial APP learned.

The Reko Diq copper project in Pakistan, which is known to have one of the largest undeveloped copper and gold deposits in the world, was suspended in 2011 after Pakistan refused permission from Barrick and Antofagasta from Chile to develop the project.

According to the conceptual design, the project, which will cost about $7 billion, will be built in two phases, each with a capacity to process about 40 million tons of ore per year, and production will begin as early as 2027, Barrick Gold said in a description on its website. The latest plan is to double annual production capacity and more than double the investment projected in the 2010 feasibility study.

Barrick Gold is currently increasing its investment in Pakistan, while its Chilean partner Antofagasta Plc gives priority to projects in safer and closer jurisdictions in the Americas.

Barrick Gold says one of the important reasons for investing in Pakistan is the generous return: the project will produce about 200000 tons of copper a year at a time of global copper shortages, and given the copper use of electric vehicles and renewable energy, copper will play a key role in the clean energy transformation.

In addition, it is worth noting that gold prices have been hovering near highs recently, and the gold mining ETF has reached a 52-week high. As tensions between Russia and Ukraine are likely to escalate again, gold will continue to play the role of a safe haven.

Adam Koos, the Libertas wealth management company, said: "Gold prices continue to benefit from the positive inflation data, including data released on Tuesday showing that the consumer price index hit its highest level since 1981 in March, which some see as an outpost peaking. Even the rise in interest rates and the dollar does not seem to stop the price of gold from rising. "

With supply shortages looming, copper prices hover near all-time highs

Moreover, globally, even in traditionally safer countries such as Chile and Peru, new mining projects are becoming increasingly difficult, expensive and politically risky. As a result, Pakistan looks relatively risk-free as the new prime minister takes office.

Pakistan is now a 50 per cent partner in the Reko Diq project, with Barrick Gold holding the remaining 50 per cent. Barrick Gold has also adopted this arrangement in Papua New Guinea which gives the host country a more direct interest. Barrick Gold plans to make a comprehensive update of the Reko Diq feasibility study after reaching an agreement with Pakistan last month.

Barrick Gold's two-stage approach to conceptual design provides the company with another path to reduce risk while speeding up the scale of the first batch of production. The first phase of the project, at a cost of US $4 billion, will cover the initial crushing, grinding and flotation processes and is expected to achieve output in 2027-2028. The second phase, at a cost of US $3 billion, will include circuit construction, and the route will be launched more than five years after the first phase is launched.

The latest conceptual design also shows that the life of the mine can reach more than 40 years, compared with 56 years identified in the 2010 feasibility study and an initial cost of US $3.3 billion.

Barrick also sees the project as "a springboard for further exploration and discovery of other mineral projects in the promising Tethyan metallogenic belt." The company is expected to reach a final agreement with Pakistan in the second half of the year and complete the feasibility study update in 2023-2024. Meanwhile, Barrick and its partners are seeking to raise "limited" recourse financing for the first phase.