Pakistan Petroleum Ltd (PPL) has signed the Barytes, Lead & Zinc (BLZ) Project with the Government of Balochistan, integrating a Lead and Zinc mining lease in Khuzdar. Operated through its mining arm, Bolan Mining Enterprises (BME), the joint venture with GoB aims to generate US$144mn in annual revenue over a 32-year mine life, with an NPV of US$356mn, as per the notice. Furthermore, PPL will also finance GoB’s share via internal cash flows.

Background: BME (Joint venture between PPL and GoB) produces drilling-grade barytes that meet American Petroleum Institute (API 13A) standards, which is considered the benchmark quality. The JV previously owned four mining leases: Khuzdar Barytes, Pachinkoh Iron Ore, Chigendik (Nokkundi) Iron Ore and Dilband Iron Ore. The Khuzdar lease covers 90% of the country’s barytes reserves, making BME a price setter in the domestic market.

BME project to bolster valuation: Baryte mining operations contributed PkR1.8bn to PPL’s topline during FY24. With the BLZ Project now in early development stages, this is expected to scale up to PkR23.0bn in revenues once fully operational. Incorporating our assumptions of project commencement by FY27, cost of equity at 17%, and an exchange rate of PkR300/US$, we estimate an earnings/valuation impact of ~PkR3.0/21 per share, respectively. We have not incorporated the said development into our base valuation.

Investment Perspective: We have a ‘BUY’ stance on PPL at a Dec’25 TP of PkR281/sh, offering an upside of 61% from current levels. Our stance remains anchored in the backdrop of ongoing structural gas price reforms, progress on circular debt resolution, stake in PIOL, i.e. Abu Dhabi Offshore Block-5 and PPL’s diversification into mining assets, namely Reko Diq, BLZ Project, and exploration licenses (E.L.) in Chagai.

Courtesy – AKD Research