London-based Antofagasta (ANTO-L, ANFGY-O) has confirmed that the government of Pakistan’s Balochistan province has rejected a mining lease application for the massive Reko Diq copper-gold project submitted by a subsidiary of its joint-venture company Tethyan Copper, a partnership between Antofagasta and Barrick Gold (ABX-T, ABX-N).
“This move now opens the door for Chinese entities who have been waiting in the wings to gain control of the asset,” Canaccord Wealth Management said in a note.
Both companies hold a 50% stake in Tethyan Copper, whose principal asset was its 75% interest in the exploration licence encompassing Reko Diq prospects in the Chagai Hills region of southwestern Pakistan, including the western porphyries. It submitted an application for the mining lease on Feb. 15.
Reko Diq has estimated resources of 5.9 billion tonnes with an average copper grade of 0.41% and an average gold grade of 0.22 gram per tonne. Antofagasta’s attributable share of the joint venture interest amounted to 2.2 billion tonnes.
The feasibility study (submitted in August 2010) demonstrated capital costs for the project of potentially about US$3.3 billion on a 100% basis, based on a 110,000-tonne-per-day plant, which would be capable of future expansions. The study outlined average annual production for the first five full years of operation of roughly 190,000 tonnes of copper and 270,000 ounces of gold on a 100% basis.
Cash costs before by-product credits were estimated at about 140¢ per lb., with the gold credit reducing net cash costs by an estimated 6.5¢ for every US$100 in the gold price.
Canaccord estimates the Antofagasta-Barrick Gold joint-venture spent roughly $220 million completing the feasibility study.
Be the first to comment on "Mining lease rejected for Reko Diq"