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Payout prospect another Antofagasta tick

Pakistan has been told to pay the copper miner's subsidiary $5.8bn over 2011 licence refusal, but is unlikely to hand over full amount
July 15, 2019

A World Bank arbitration board has ordered Pakistan to hand over $5.8bn (£4.6bn) to an Antofagasta (ANTO) and Barrick Gold (CAN:ABX) joint venture for the “unlawful denial of a mining lease” covering the Reko Diq copper and gold project in 2011.

IC TIP: Buy at 905p

The case has been rumbling on since 2012, after the province of Balochistan denied the companies’ jointly-owned developer Tethyan Copper a licence. The International Centre for Settlement of Investment Disputes decided in Tethyan’s favour in 2017 and has concluded Pakistan should pay $4.09bn for the value of Reko Diq when the licence was denied and $1.75bn in interest. 

It is unlikely Pakistan, in the midst of an International Monetary Fund bailout, will just hand over the cash. Tethyan chairman William Hayes said a “negotiated settlement” was a possibility. Bank of Montreal analyst Edward Sterck said in a note the amount awarded appeared “unfeasibly high” and would likely be reduced in the actual settlement. Antofagasta has said it would not add its share of the owed money to the balance sheet until it actually had the cash.