Barrick eyes over $2B in financing for Reko Diq

Barrick Gold (TSX: ABX; NYSE: GOLD) plans to secure more than $2 billion (C$2.84 billion) in financing for its Reko Diq copper and gold project in Pakistan, with term sheets expected by the third quarter, project director Tim Cribb said in an interview with Reuters.

Barrick, which is considering changing its name to Barrick Mining to reflect its push into copper, plans to tap government-backed or multilateral financial agencies to fund some of Reko Diq’s $5.6-billion stage one along these lines, according to Cribb: 

• $650 million from the World Bank’s International Finance Corp. and International Development Association;
• $500 million to $1 billion from the U.S. Export-Import Bank;
• $500 million from other development finance institutions including the Manila-based Asian Development Bank, Export Development Canada, and the Japan Bank for International Cooperation.

Reko Diq is considered one of the world’s largest undeveloped copper-gold deposits, projected to generate $70 billion in free cash flow and $90 billion in operating cash flow over its 37-year lifetime. Barrick owns half of the project with the other half split between the governments of Pakistan and the province of Balochistan.

Lenders are expected to secure offtake agreements as part of the financing terms. Potential buyers include countries in Asia such as Japan and South Korea, and European nations like Sweden and Germany, all seeking to lock in copper supply for industrial needs.

Expanded project

A recent feasibility study has expanded the scope of the project. Stage one throughput is now expected to reach 45 million tonnes per year, up from 40 million, while stage two is forecast to process 90 million tonnes annually, up from 80 million.

The increased throughput revises the lifespan down from 42 years, although unaccounted-for resources could extend it to as much as 80 years, the company said. Stage one’s estimated cost has risen from $4 billion.

The World Bank has also pledged to invest $2 billion annually in Pakistan’s infrastructure over the next decade, further reinforcing the country’s appeal for international development financing.

Financing Reko Diq marks another major step in Barrick’s strategic pivot toward copper. CEO Mark Bristow has long expressed interest in growing the company’s copper portfolio, including previously exploring takeovers of copper giants Freeport-McMoRan (NYSE: FCX) and First Quantum Minerals (TSX: FM) — deals that ultimately didn’t materialize.

Shares in Barrick Gold fell less than 1% on Tuesday to close at $24.98 apiece in Toronto as global markets endured a another day of sell-offs since April 3 over tariff concerns. The company has a market value of $43.1 billion.