KA RACHI: Two state-owned energy companies announced separately on Tuesday they`ll seek approval from their respective shareholders to subscribe to 33.3 per cent shares of Pakistan Minerals Ltd for taking part in the reconstituted Reko Dig project.

The reconstituted project, which will excavate gold and copper reserves in Balochistan, has saved the country from an $11 billion penalty in the Reko Dig case.

Pakistan Minerals Ltd will then buy a 25pc shareholding in Tethyan Copper Company Pakistan Ltd to be re-named as Reko Diq Mining Company Ltd from itspresent holding company Tethyan Copper Company Ltd.

Under the new agreement, Barrick Gold Corporation will get a share of 50pc and the Balochistan government will hold a 25pc stake in the project. The rest of the 25pc shareholding will be controlled equally (8.33pc each) by the three state-owned enterprises namely Oil and Gas Development Company Ltd (OGDC), Pakistan Petroleum Ltd (PPL) and nonlisted Government Holdings Ltd through the special-purpose vehicle (SPV) of Pakistan Minerals Ltd.

The newly created SPV will pay $562.5 million plus accrued interest for a stake in the project. It means each of the three com-panies will have to fork over $187.5m for a chunk of Reko Diq Mining Company.

Speaking to Dawn, Topline Securities Associate Director for Research Umair Naseer said the two energy exploration and production companies have joined the project for the long haul. `Taking on such risks is part of their mandate of exploring natural resources. It`s a capital-intensive endeavour. There`s no guarantee that the investment will pay off. That`s the nature of this business,` he said.

His brokerage house hasn`t yet incorporated the impact of the heavy investment by OGDC and PPL on their respective cash flows, he said.

The two companies have also soughtshareholders` approval for an investment in the SPV of up to $398m `from time to time` (plus inflation). The third, non-listed stateowned enterprise will also concurrently invest up to $398m. Hence, the shareholders` contribution will collectively be up to $1.19bn plus inflation in the long run.

The initial focus will be on Phase-1 that`ll develop 40m tonnes per year ore-processing capacity. The construction for Phase-1 will start in the third year af ter the signing of definitive agreements and end in the fifth year, the two companies told their investors.Any failure to fund the committed expenditures will result in the dilution of the defaulting shareholder`s interest in the project.