KARACHI, PAKISTAN: Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL) and Government Holdings (Private) Limited (GHPL) have proposed to jointly form an associated special purpose vehicle (SPV), which will acquire shareholding in Tethyan Copper Company Pakistan (Pvt) Limited at an aggregate consideration of $562.5 million. The SPV bearing the name of Pakistan Minerals (Private) Limited will participate in the Reconstituted Reko Diq Project.

The total issued and paid-up capital of the proposed special purpose vehicle (SPV) shall be equally subscribed by each participant.

The SPV i.e. Pakistan Minerals (Private) Limited has also proposed to acquire shareholding in Tethyan Copper Company Pakistan (Pvt) Limited, to be re-named as Reko Diq Mining Company (Private) Limited, from its present holding company Tethyan Copper Company Pty Limited (TCCA).

In consideration for the share purchase, the SPV shall pay an aggregate sale consideration amounting to $562.5 million plus an interest accrued at the rate of US PRIME plus 2% for the period commencing June 30, 2022 until completion of payment to TCCA.

The proportionate share of each company including OGDC, PPL and Government Holdings in the sale consideration representing 1/3rd of the total sale consideration shall amount to $187.5 million plus proportionate Accrued Interest.

The Proportionate Share of Sale Consideration in entirety shall be funded and contributed by each company on behalf of the SPV by utilizing the funds deposited in the Escrow Account on or around March 31, 2022 together with subsequent payments in respect of the Accrued Interest by each of the participant company.

Further, upon payment of the respective Proportionate Share of Sale Consideration, the corresponding amount contributed shall be recorded as investment by way of equity in the paid-up capital of the SPV, Pakistan Minerals (Private) Limited.

Pursuant to the terms of the definitive transaction agreements relating to the Reconstituted Reko Diq Project, the foregoing transaction shall be subject to the satisfaction of conditions precedent specified in the Definitive Agreements.

With respect to the structure of the project, it was agreed amongst the members of the proposed SPV that a two-tiered holding company structure would be utilized for bankability reasons. The mining operations would be conducted through a project company, Tethyan Copper Company Pakistan (Pvt) Limited to be renamed as Reko Diq Mining Company (Pvt.) Limited, which would be 90% owned by a holding company incorporated in Jersey (Holdco1) with the remaining 10% held by the Government of Baluchistan (GOB) as free carried non-contributory interest.

Holdco1 will in turn be wholly owned by a second holding company incorporated in Jersey (Holdco2), and Holdco2 will ultimately be 55.5556% owned by Barrick, 16.6667% by an entity owned by Government of Balochistan (GOB SPV) and 27.7778% owned by a company jointly incorporated by OGDC, PPL and Government Holdings wherein the companies will each have equal shareholding.

Ultimately, OGDC, PPL and Government Holdings shall have a 25% effective equity interest in the Project (27.7778% contributory interest) in the form of class A shares, Barrick through its subsidiary company (Barrick Shareholder) shall have an effective 50% equity interest in the Project in the form of class A shares, GOB SPV shall have an effective 15% equity interest in the Project in the form of class A shares and the GOB shall hold an effective 10% free carried non-contributory interest in the form of class B shares.