Pakistan Petroleum Limited (PSX: PPL) Tuesday announced that it ins increased pro-rata funding commitment for Phase 1 of the Reko Diq copper and gold project, including project financing costs, to $715 million.
In a notice to the Pakistan Stock Exchange (PSX), the company highlighted that it holds an 8.33 percent stake in the Reko Diq copper and gold project, which, when aggregated with the 8.33 percent stakes held by each of Oil and Gas Development Company Limited and Government Holdings (Private) Limited, comprises a collective 25 percent interest in the Project that is owned by the three Pakistani State-Owned Enterprises (SOEs).
The SOEs’ interest in the project company, i.e., Reko Diq Mining Company (Private) Limited (RDMC), is held indirectly via Pakistan Minerals (Private) Limited. Twenty-five percent of the shares in RDMC are held by the Government of Balochistan (15 percent on a fully funded basis, which is held indirectly through Balochistan Mineral Resources Limited, and 10 percent on a free-carried basis, which is held directly by the Government of Balochistan). The remaining 50 percent of the shares in RDMC are held (indirectly) by Barrick Mining Corporation (formerly Barrick Gold Corporation), which is the operator of the project.
Based on the updated feasibility study of the project, the Board of Directors of the company, on 25th March 2025, approved the company’s pro-rata funding commitment, including project financing costs, of $627 million (subject to adjustment for actual financing costs and inflation). The Board also granted in-principle approval to obtain project financing. At the time of the Board’s approval, and after accounting for the project financing expected to be obtained by RDMC, the company’s expected shareholder contributions were equal to $349 million. These approvals were granted contingent upon necessary shareholders’ and regulatory approvals.
Since the aforementioned approval, negotiations with the lenders of the project financing have considerably advanced. Furthermore, the Phase 1 development cost of the project has been revised, mainly on account of conservatism built in on the recommendation of the Independent Technical Consultant of the lenders with respect to the delay in commencement of production by six months to 2029 (compared with the earlier plan of 2028) and other cost contingencies. Additionally, financing costs have increased due to revisions in pricing and the rise in the level of project financing to $3,500 million from the previous estimate of $3,000 million. The project remains economically viable based on the revised assumptions.
Accordingly, on 18th August 2025, the Board of Directors of the company approved an increase in the company’s pro-rata funding commitment for Phase 1 of the project, including project financing costs, to $715 million (subject to adjustment for actual financing costs and inflation). After accounting for the project financing expected to be obtained by RDMC, the company’s expected shareholder contributions equal $391 million.
In connection with the project financing to be obtained by RDMC, the Board of Directors has also approved execution of the following agreements by the company, as well as other ancillary agreements and documents that may be necessary: (i) the SOE Completion Agreement; and (ii) the Transfer Restrictions Agreement.
The SOE Completion Agreement provides for a collective guarantee, on a joint and several guarantee basis, from the SOEs of their pro-rata contributory share (equal to 27.7778 percent) of the secured debt obligations of RDMC under the project financing. The guarantee will remain effective until the project achieves financial completion, i.e., the date on which the project satisfies certain criteria to demonstrate a requisite level of commercial operations.
The Transfer Restrictions Agreement provides for, among other things, minimum shareholding requirements for the project’s sponsors (including each of the SOEs), before and after financial completion, until the project debt has been fully repaid.
The above-mentioned approvals are subject to shareholders’ and regulatory approvals in accordance with law, the notice added.
