Due Diligence on a Pakistan Mining JV: What Overseas Investors Actually Need to Check

Last month a group from Shenzhen sat in my office in Islamabad with a 40-page checklist. Good checklist. But three of the most important questions weren't on it. That's the problem I want to write about.

I've watched serious buyers — Chinese state-linked traders, a Turkish smelter group, one German family office — walk into Pakistan mining deals with a template designed for Chile or the DRC. It doesn't fit. Some of what matters here isn't on the standard list, and some of what's on the standard list doesn't matter as much as they think.

So here's what I'd actually check if I were writing the cheque.

Start with the licence, not the rock

Everyone wants to see assay results first. I get it. The grade is exciting. But in Pakistan a beautiful drill core is worth nothing if the concession title is wobbly, and I've seen at least four JVs collapse in the last three years because the foreign partner didn't verify the licence chain properly.

In Gilgit-Baltistan specifically, mineral rights sit under the GB Mineral Rules 2016 (amended), administered by the GB Department of Mineral Development in Gilgit — not the federal government, not the Provincial Mines Departments you'd deal with in Balochistan or KP. That distinction matters. A lot of overseas advisors get this wrong on day one because they've done Reko Diq-style paperwork and assume it's the same regime. It isn't.

What to actually pull:

• The original grant letter and the current renewal status (exploration licences run 3 years, renewable; mining leases up to 30)
• Payment history on annual rentals — arrears can void a licence quietly
• Any overlapping claims, especially older prospecting permits that were never formally surrendered
• Local jirga or community agreements. These aren't legal documents in the Western sense but if they don't exist, your trucks won't move

Honestly, that last one is where I've seen more deals die than any grade dispute. A concession can be perfectly legal in Gilgit and completely un-workable on the ground if the village at the mouth of the valley says no.

The geology work most buyers skip

Here's where I got something wrong early on. I used to think foreign buyers wanted JORC or NI 43-101 compliant resources before they'd talk. Some do. Most, at the exploration and early off-take stage, actually want something more basic — they want to know if the numbers you're showing them were generated by someone independent.

Most concessions in GB, including several of ours, sit at the pre-resource stage. That's just the reality of a frontier jurisdiction where systematic exploration only really started in the last 15 years. So the mining due diligence Pakistan question isn't "show me a bankable feasibility study." It's:

• Who took the samples? Was it the seller, or an independent geologist?
• Which lab? SGS Islamabad and Bureau Veritas Karachi are the two that international buyers trust. In-house PCSIR results are fine as a first pass but shouldn't anchor a deal.
• How many samples, over what strike length, and were duplicates and blanks run?
• Is there a proper geological map with structural interpretation, or just a satellite image with dots on it?

For our antimony and tungsten prospects around Chilas and the Kohistan arc, we run everything through SGS with a 1-in-20 blank ratio. If a Pakistani seller can't tell you their QA/QC protocol in one sentence, that tells you something.

Ask to see the raw certificates. Not the summary table. The actual lab PDFs with sample IDs. If they hesitate, walk.

Logistics, security and the boring stuff that kills margins

This is where pakistan mining investment risk gets misread most often. Foreign investors either panic about it (usually because of headlines) or ignore it entirely (usually because someone in Islamabad told them not to worry). Both are wrong.

The real risks are logistical and seasonal, not what CNN thinks they are.

From a concession in upper Hunza to the port at Karachi is roughly 1,750 km. The Karakoram Highway is the only road. It closes — not often, but it closes — for landslides, particularly between Chilas and Besham in monsoon months. Winter shuts down high-altitude sites from late November through March at most elevations above 3,000 m. If your off-take contract has monthly delivery obligations that don't account for this, you'll breach it in year one.

Sagar port at Karachi and the dry port at Sost (on the Chinese border, for KKH shipments north) are the two realistic export points. Sost is faster to Kashgar but has tonnage limits and customs quirks. Karachi is slower but handles containerised and bulk without drama.

Other things worth verifying properly:

• Power. Most sites in GB are off-grid. Your capex model needs diesel gensets or hybrid solar built in, not assumed away.
• Water rights. Placer operations especially — Indus and Gilgit river alluvials — need seasonal water use agreements with local authorities.
• Security. For most of GB it's genuinely fine, better than the international perception. But get a current, written FCO/State Department-style assessment for the specific valley, not the country. Astore is not Diamer is not Ghizer.
• Currency and repatriation. SBP rules on foreign investment repatriation are workable but slow. Build 90-day lag into cash flow assumptions.

The question I wish more buyers asked

One thing that separates the serious mineral JV due diligence teams from the tourists: the serious ones ask about the exit before they ask about the entry.

What happens if the JV fails? Which jurisdiction governs the shareholder agreement (LCIA London and SIAC Singapore are both accepted and enforceable here — Pakistani courts will recognise foreign arbitral awards under the New York Convention, which Pakistan ratified in 2005). Who owns the drill data if you walk? What's the buy-out mechanism if a partner defaults?

We've structured our recent JV term sheets with SIAC as the seat, because most of our conversations are with East Asian counterparties and it's neutral ground everyone accepts. A German group last year pushed for Zurich. Fine, also workable. What isn't workable is leaving it silent, or defaulting to Pakistani courts for a commercial dispute — nobody wins that fight, including us.

One last thing. If a Pakistani partner tells you every box is ticked and there are no problems, that's the biggest red flag on the list. Every concession has friction somewhere — a boundary dispute, a pending renewal, a community that needs more consultation, an assay result that came back weaker than expected. The operators worth partnering with will tell you what those problems are in the first meeting.

The ones who don't, you'll find out later. Usually after the wire has cleared.