Pakistan has reached an out-of-court deal with a foreign firm that has agreed to waive $11 billion in penalties and revive a mining project stalled since 2011, officials said on Sunday.

The consortium Tethyan Copper company — of which Canadian gold firm Barrick and Chile's Antofagasta Minerals control 37.5 percent each — had found vast gold and copper deposits at Reko Diq in Balochistan.

The hugely lucrative open-pit mine project came to a standstill in 2011 after the local government refused to renew Tethyan Copper's lease, and in 2013 Supreme Court declared it invalid.

In 2019, the World Bank's arbitration tribunal committee imposed a penalty on Pakistan for unlawful denial of mining.

After a decade-long legal battle, Pakistani officials announced the out-of-court settlement with Barrick Gold on Sunday.

“The agreement has nullified the award of around $11 billion on us and secondly Barrick and its partners will invest $10 billion,” Finance Minister Shaukat Tarin said during a press conference.

“It will benefit Pakistan and Balochistan for the next 100 years,” he added.

Prime Minister Imran Khan said the project “will potentially be the largest gold & copper mine in the world”.

“It will liberate us from crippling debt & usher in a new era of development & prosperity,” he said in a statement.

Balochistan — which borders Iran and Afghanistan — has abundance of natural resources.

Mining in Balochistan is dominated by small companies focused primarily on marble and granite, experts have said, which waste up to 80pc of potential yield because of poor extraction techniques.

Legal expert Osama Malik told AFP that Pakistan's settlement was the only solution and best deal for the provincial Balochistan government.

“There were no further appeals available for the Pakistani side. The country also didn't have the resources to pay the exorbitant damages, one of the highest ever granted by the World Bank's arbitration forum,” he said.

After reconstitution of the project, Barrick will own 50pc, the Pakistan federal government enterprises 25 percent, and the Balochistan government 25 percent.