Barrick Eyes Pakistan for Super-Giant Potential

With a resource inventory of more than 21.3 million oz. gold and 26.6 billion lbs. copper, and counting, the Reko Diq copper-gold porphyry project in southwestern Pakistan has “super-giant” proportions written all over it.

Reko Diq is a recent addition to Barrick Gold (ABX-T, ABX-N) and its pipeline of advanced-stage exploration projects. Barrick is developing the project with Chilean copper producer Antofagasta (ANFGY-O, ANTO-L) through a 50-50 ownership of Tethyan Copper Co., whose main asset is a 75% interest in the 980-sq.-km exploration licence covering the mineralized Reko Diq intrusive complex. The local provincial government holds the remaining 25% stake in the project, which consists of a series of porphyry deposits in the Chagai Hills provincial region of Balochistan. The government’s interest is carried through to completion of a bankable feasibility study.

“Representatives from Barrick and Antofagasta have held a number of meetings with senior officials from both the provincial and the federal government, and both governments are very supportive of the project, and in fact, of Barrick and Antofagasta as well,” Rob Krcmarov, Barrick’s vice-president of global exploration, told analysts during a recent presentation.

Reko Diq sits just inside western Pakistan near the borders of Iran and Afghanistan in a very remote and sparsely populated part of the desert, away from the population centres of Balochistan and the rest of Pakistan. Balochistan is Pakistan’s most undeveloped province and carries the reputation of being a wild, tribal and inhospitable place. In the past, tribal groups have been blamed for blowing up the Sui gas pipelines, and for attacks on the Gwadar port and the Saindak copper mine, 50 km from Reko Diq.

The project hosts a unique mix of identified resources in the Tanjeel and Western Porphyries, advanced drill-ready targets and blue sky potential. With a resource inventory verified by Barrick, Reko Diq is estimated to contain an indicated 1.27 billion tonnes grading 0.54% copper and 0.24 gram gold, the equivalent of 15.1 billion lbs. copper and 9.6 million oz. gold in the ground. Another 1.08 billion tonnes of 0.48% copper and 0.34 gram gold, equal to a contained 11.5 billion lbs. copper and 11.7 million oz. gold, is inferred. Price assumptions of US95-per-lb. copper and US$400-per-oz. gold were used by consulting firm Snowden Mining in the original resource modelling.

Krcmarov noted that, despite the remote setting, regional infrastructure and access is excellent, with an existing sealed road and rail line passing just 30 km south of Reko Diq. Proposed upgrades and new construction of connecting road infrastructure to the recently opened deep sea port at Gwadar on the Arabian Sea will reduce the distance between Reko Diq and the new port to about 600 km. Ground breaking on a proposed airstrip at the project is planned for 2007.

“The area has absolute tremendous upside,” said Alex Davidson, Barrick’s executive vice-president of exploration and corporate development, during a recent investor seminar. “Our joint venture on that property is with Antofagasta, a major player in the copper business, and we, of course, bring gold experience to the table as well as international development experience.”

Project history

Antofagasta launched its bid for Tethyan Copper in early 2006, with the backing of Barrick. Tethyan Copper was an Australian-listed junior that had been spun out from Mincor Resources (MCR-A, MCRZF-O) several years previously.

BHP Billiton (BHP-N) first formed a joint venture with the provincial government of Balochistan in 1993 to explore the Chagai range. Efforts were focused on the Reko Diq intrusive complex based on the positive results of regional geochemical sampling work that comprised 5,000 samples collected from a 12,000-sq.-km area. BHP eventually completed 21,000 metres of drilling at Reko Diq, spending a total of US$6 million before turning its interest in the project over to Mincor Resources in May 2000. Tethyan Copper was created as a vehicle to carry the project forward.

Antofagasta acquired Tethyan at A$1.40 per share for a total cost of US$230 million, including US$60 million payable to BHP Billiton for the cancellation of certain claw-back rights to Reko Diq. As part of the deal, Barrick agreed to reimburse Antofagasta half of the acquisition costs in return for a 50% joint-venture interest. Both partners have joint control of the Tethyan board and equal representation on the technical committee.

“Our two companies are working well together on this resource and we are absolutely convinced that Reko Diq will be a world-class orebody,” Davidson said.

“It’s a huge copper-gold porphyry mineral resource on the Tethyan belt, which extends for thousands of kilometres to the west and contains numerous giant porphyry copper-gold deposits,” Krcmarov explained.

The Chagai Hills are part of the Tethyan magmatic arc, which extends from Pakistan through Iran and Turkey. The Tethyan belt hosts numerous porphyry deposits, including the Sar Chesmeh mine in Iran and the Saindak mine, 50 km west of Reko Diq. The Saindak copper operation was constructed in 1995 and has been managed since 2003 by the Metallurgical Construction Corp. of China in joint venture with the Pakistan government.

The Reko Diq intrusive complex is an ancient volcanic system that hosts some 19 known porphyry deposits in a 15 by 10-km area. It comprises an older, central porphyry surrounded by younger intrusives. Krcmarov says it’s worth noting that many of the mineralized porphyries have no holes or too few holes to have been included in the resource inventory. A few of the better intercepts from some of the porphyries excluded from the resource estimate include: 183 metres at 0.52% copper and 0.76 gram gold per tonne; 135 metres of 0.45% copper and 0.54 gram gold; 228 metres of 0.5% copper and 0.4 gram gold in porphyry H-8; 60 metres at 0.4% copper and 1.39 grams gold in porphyry H-36; and 65 metres of 0.43% copper and 0.68 gram gold in porphyry H-9.

Tanjeel

The H-4 complex, also known as Tanjeel, is the only oxide orebody identified at Reko Diq today. It is developed over the central porphyry. This deposit contains no gold, but it does have higher-grade copper than the other complexes and was the basis of the original feasibility work carried out by Tethyan Copper. The company identified it as a starter project, with low capital expenditures and quick cash flow. It’s currently under review by the management team of Barrick and Antofagasta as part of the scoping and starter options at Reko Diq.

Supergene enriched copper mineralization occurs at Tanjeel under 30 to 50 metres of barren leached cap. Metallurgical work shows 90% of the copper is in the form of chalcocite and digenite, and suggests the oxide mineralization is amenable to heap-leach and solvent extraction-electrowinning treatment. Tanjeel sits with probable reserves of 129 million tonnes grading 0.7% copper.

The Western Porphyries, which contain the bulk of the defined resource at Reko Diq, is comprised of three adjacent porphyry bodies — H-13, H-14 and H-15. Barrick is encouraged by recent drilling results, which show the Western Porphyries are open at depth with increasing grade, below what is reflected in the resource. The current resource is defined to a depth of about 450 metres.

A recent hole into H-14 showed the deposit was open to a depth of at least 700 metres. From 273 to 700 metres, the hole averaged 0.64% copper and 0.44 gram gold across 427 metres.

“That means we have identified significant mineralization more than 250 metres below the current resource,” Krcmarov said.

Likewise, a recent deep hole into H-15 extended the mineralization to a depth of 900 metres. The hole returned 552 metres of 0.74% copper and 0.44 gram gold from 254 metres down-hole, before ending in 31 metres of 0.51% copper and 0.4 gram gold at 900 metres.

Krcmarov notes that a 100-metre increase i
n vertical depth in the Western Porphyries is equivalent to a resource increase of about 300 million tonnes. Lying at an elevation of 1,300 metres in very friendly topography, the stripping ratio at the Western Porphyries could potentially be less than 1.

Although Barrick and Antofagasta only began working together formally in September 2006, Krcmarov says progress has been made on the work program in the last few months of the year.

“We’ve done a lot of drilling in a short space of time and overall, the results that we’re getting are exceeding our expectations,” he said.

Roughly 25,000 metres of drilling was completed in 2006, along with 419 line-km of detailed geophysics.

Barrick and Antofagasta have budgeted a US$30-million program over an 18-month period for the project. An aggressive infill drill program on the Western Porphyries is under way and a scoping study has begun to evaluate various starter options, including an assessment of the higher-grade Tanjeel deposit.

Exploration efforts will also focus on nearby targets generated by geophysics and geological mapping. The mineralized porphyries are geophysically responsive.

“Given the proximity to Western Porphyries and Tanjeel, they represent tremendous targets and these will be investigated as we move forward with our exploration efforts,” Krcmarov explained. “There are also many targets identified by BHP previously but ignored due to scale or whatever, so there is potential to add to the resources as additional tonnage to the existing deposits.”

Tethyan Copper holds a 100% interest in adjoining licences in the region.

“We have an extensive licence holding along the main trend of mineralization and there are many untested geophysical targets under gravel cover, which our geologists think could be porphyries of the right age,” Krcmarov said. He added that, while currently focused on drilling the Western Porphyries, the company is eager to see what else it might find on the property.

“This is a very exciting project that is going to play out over the next three to five years and really has the potential to be one of our future core districts.”