Reko Diq to Produce 13.1M Tons Copper, 17.9M Oz Gold
Staff Report
Reko Diq is projected to produce 13.1 million tons of copper and 17.9 million ounces of gold over its 37-year life. Following project financing, OGDC and PPL’s equity contributions are estimated at $349 million (Rs98 billion) each. As of December 2024, OGDC and PPL had cash and cash equivalents of Rs263 billion and Rs140 billion, respectively.
Oil and Gas Development Company (OGDC) and Pakistan Petroleum (PPL) have completed the feasibility study for the Reko Diq project.
State-Owned Enterprises (SOEs), including OGDC, PPL, and Government Holdings Private (GHPL), collectively hold a 25% stake in Reko Diq through a Special Purpose Vehicle (SPV), with each company owning an equal 8.33% share.
The study outlines a 37-year project lifespan in two phases. Phase 1 requires a total capital outlay of $5.6 billion, funded through a $3 billion limited-recourse financing facility and $2.6 billion in shareholder contributions. Operations are expected to begin in 2028 with an annual processing capacity of 45 million tons of mill feed. Phase 2, planned for 2034, aims to double capacity to 90 million tons through revenue generation, additional financing, and potential shareholder contributions.
With the feasibility study completed, the government is expected to proceed with selling its stake to Saudi Arabia. Reports indicate optimism from the Saudi side, with a final decision on the stake sale anticipated after the feasibility study is finalized this month.
Reko Diq’s earnings contribution to OGDC and PPL is projected at Rs4.8 per share (11 Reko Diq to Produce 13.1M Tons Copper, 17.9M Oz Gold
% of earnings) and Rs7.7 per share (28% of earnings), respectively, in FY29, based on a 21% dollar IRR.
We maintain a Buy stance on OGDC and PPL, with both stocks trading at an FY25E P/E of 5.3x and 5.0x, respectively, Topline Research said.
