OGDCL Board greenlights increased Reko Diq investment

March 25, 2025 (MLN): The Board of Directors of Oil and Gas Development Company Limited (PSX: OGDC) has approved an increase in the company's funding commitment for the Reko Diq project, reflecting its pro rata share of total capital investment, including project financing costs, to $627 million.

This amount will be adjusted based on actual project financing costs and inflation.

According to estimates, the rise in copper and gold prices has offset the impact of higher project costs, the company's filing on PSX revealed today. 

Additionally, the board has given an in-principle approval to obtain project financing, with shareholder equity contributions expected at $349m, subject to adjustments for financing costs and inflation.

OGDCL holds an 8.33% share in the project as part of the collective 25% stake held by three Pakistani State-Owned Enterprises (SOEs), including Pakistan Petroleum Limited and Government Holdings (Private) Limited, through Pakistan Minerals (Private) Limited.

The Government of Balochistan holds 25%, with 15% fully funded through Balochistan Mineral Resources Limited and 10% on a free-carried basis.

The remaining 50% share is held by Barrick Gold Corporation, which serves as the operator of the project.

The updated feasibility study outlines a 37-year mine life, divided into two phases.

Phase 1 has an estimated total capital outlay of $5.6 billion, excluding financing costs and inflation.

This phase is planned to be funded through a limited-recourse project financing facility of up to $3bn, with the remainder covered by shareholder contributions.

Phase 2 will be financed through project revenue, additional project financing, and shareholder contributions if needed.

The project will utilize five of the fifteen currently identified porphyry surface expressions within the mining lease, showcasing significant growth potential.

Negotiations for project financing are ongoing.

Under the updated feasibility study, Phase 1 is scheduled to process 45m tonnes of mill feed annually (Mtpa) starting in 2028, while Phase 2 will double processing capacity to 90 Mtpa by 2034.

Based on existing reserves, the Reko Diq project is expected to produce 13.1m tonnes of copper and 17.9m ounces of gold over its lifetime on a 100% basis.

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