Saudi Arabia is said to be close to reaching a deal to acquire a minority stake in Pakistan鈥檚 $7 billion Reko Diq copper and gold mine, controlled by Barrick Gold (TSX:ABX)(NYSE:GOLD).
According to Bloomberg, the kingdom鈥檚 investment fund Manara Minerals intends to invest close to $1 billion in the project and it may announce a preliminary agreement on the transaction terms within weeks.
The Saudi company might gradually raise its stake in Reko Diq, in which the government of Pakistan has a 25% interest and the province of Balochistan has the remaining 25%.听
Discussions are at a very early stage and could still collapse or be postponed, sources close to the matter told Bloomberg.听
Barrick chief executive Mark Bristow has said in recent interviews that he doesn鈥檛 want to 鈥渄ilute鈥� the company鈥檚 stake in the project, but 鈥渨ould not mind鈥� if Saudi Arabia鈥檚 Public Investment Fund (PIF) wants to buy out the equity of the Pakistan government. Pakistan has not publicly stated whether it is considering selling its part in the project.
Barrick, the world鈥檚 No.2 gold producer, believes that the proposed mine is one of the prospects.
The project, in the Balochistan region bordering Afghanistan and Iran, has the capacity to produce 200,000 tonnes of copper and 250,000 ounces of gold annually year for more than 50 years. Production is expected to begin in 2029.
Manara was established as part of Saudi Arabia鈥檚 efforts to diversify its economy from oil, tapping its vast resources of phosphate, gold, copper and bauxite while buying minority stakes of up to 20% in assets overseas. It is a joint venture between state-owned miner Ma鈥檃den聽and the PIF.
Manara鈥檚 first major venture overseas was (NYSE: VALE) last July to become a 10% shareholder in the Brazilian miner鈥檚聽$26 billion copper and nickel spin-off Vale Base Metals.
(With files from Bloomberg and Reuters)