Barrick CEO optimistic Reko Diq gold-copper project will go ahead

Aaron Regent said Tuesday the company is continuing to have discussions with the Baluchistan government but added a resolution could take months

NEW YORK (Reuters)  - 

Barrick Gold (ABX.TO) Chief Executive Aaron Regent is optimistic the company can reach an agreement to develop the massive Reko Diq gold-copper project in Pakistan, he said on Tuesday.

The future of the $3 billion project, which is majority-owned by a joint venture of Barrick and Chilean copper company Antofagasta (ANTO.L), has been in doubt since the local government threatened to essentially cancel it -- by not granting a mining license -- because of misgivings about the share of benefits.

The project holds more than 11 billion pounds of copper and 9 million ounces of gold. Barrick and Antofagasta each own 37.5 percent of the project, while the provincial government of Baluchistan holds the remaining 25 percent.

"We have had discussions with (the government) and are going to continue to have a dialogue with them with the objective of getting a mining lease and I believe that we'll be able to do that," Regent said at the Reuters Global Mining and Steel Summit in New York. He added that any resolution could take months to conclude.

Reko Diq is one of a group of projects Barrick would seek to bring to production after its current generation of development projects, which includes the Pascua-Lama project on the border of Chile and Argentina, and Pueblo Viejo in the Dominican Republic.

With several big builds already in the pipeline, Regent said, the company would eye undeveloped projects as possible acquisition targets, rather than advance-stage projects or producing mines.

"Our focus is really more on greenfield type projects, projects that have a higher degree of uncertainty around them, whether they be technical risks or permitting risks, and that I think plays to the strengths," he said.

He noted Barrick's growth ambitions would not be thwarted by lack of funding, as the company generates rich cash flows, and holds $2.6 billion in cash and a $1.5 billion undrawn line of credit.

"We've got lots of financial capacity to fund the projects that we're currently constructing, or fund an acquisition if we want," he said.

If opportunities to deploy capital -- in other words acquire assets -- don't materialize, he said, share buybacks or a hike to the shareholder dividend would be "on the table."

Barrick currently pays a semi-annual dividend of 20 cents per share. The payout was last raised in May 2008.

Regent said he was optimistic on the price of gold, which peaked above $1,200 an ounce in early December, but has since pulled back somewhat. It was at $1,120 an ounce on Tuesday.

"There seems to be pretty significant support for gold around the $1,100 level. We have seen gold drop down slightly below that, and there seemed to be pretty firm purchasing from places like India and China," where there is good demand for physical gold, he said.

(Additional reporting by Frank Tang; Editing by Walter Bagley)

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