LONDON (Reuters) - A joint venture between miners Antofagasta and Barrick Gold expects a decision on a key mining licence in Pakistan by mid-September, potentially paving the way for a major copper and gold project in the countrys poorest region. Tim Livesey, chief executive of the Tethyan Copper Company (TCC) which has a 75 per cent interest in the Reko Diq project in the south western Balochistan province, said the group was still awaiting a formal response from the provincial government after filing a feasibility study a year ago and a mining lease application in February. But he said Tethyan had been in meetings with the federal and provincial governments in recent weeks and was confident a decision would be reached by the September 22 deadline. The response, which should come within 120 days of an initial application, has been delayed by the Supreme Court, which had barred the Baluchistan government from giving approval for the Reko Diq license until a separate investigation ended. The court in May, however, allowed the provincial government the right to decide on the lease. We are hopeful we will receive formal notification on the mining licence in September and that will allow us to then carry out the detailed discussion with the government of Baluchistan, as a partner rather than as a regulatory body, and also with the federal government, to ratify taxation agreements and so on, Livesey said. We are hopeful, and we have indication, that we will get positive feedback ... We hope that they see the sense in delivering an opportunity for us to answer any questions they may have, so that we can move forward. Livesey said Tethyan would negotiate but would not increase the provincial governments equity stake, on the grounds the project would cease to make economic sense. The economics dictate that a 25 percent stake already gives the government of Baluchistan and the government of Pakistan more than 50 percent of the returns on the project, he said. He added the venture could still negotiate on how returns are distributed between royalty and equity and work out a means of reducing the government of Baluchistans liability. We are looking at our financial models. We have not had a formal reply from the government of Baluchistan, so we do not know exactly what their issues are, but once we get that we will be looking at them one by one. Barrick and Chilean partner Antofagasta spent $200 million in 2006 buying the exploration licence from rival BHP . Construction is projected to cost $3.4b, though that is based on 2009 numbers and is likely to rise, given higher costs faced by the industry for everything from steel and labour to energy, particularly in remote areas. Reko Diq which will be only the second significant project in the mineral-rich region, along with smaller, Chinese-operated Saindak holds an estimated 5.9 billion tonnes of mineral resources, with an average copper grade of 0.41 percent and an average gold grade of 0.22 grams a tonne. A potentially lucrative project, there have long been concerns the mine was in danger of being used as a bargaining tool by officials to gain favour with China, which is a major investor in Pakistan and a key ally. But Livesey dismissed the concerns, adding the military establishment was supportive of Tethyan. Baluchistan, where there has been growing anger about outsiders exploiting natural resources, has said it wants to export a more value-added product, but Tethyan has indicated it has no plans to build a refinery. It would, however, sell concentrate to the provincial government, which plans to build the facility itself, on a commercial basis. Reko Diq will mark the largest foreign direct investment into Pakistan mining and a major investment in Baluchistan, which Tethyan says could transform the region. At its peak, it is likely to employ 11,000 people. The impact of this project in Baluchistan and Pakistan really cant be underestimated, Livesey said. It would be the first step in creating a new mining industry in Pakistan. Separatist guerrillas in Baluchistan, on the border with Iran and Afghanistan, have for decades been fighting a low-level insurgency for control of the provincial gas and mineral resources, which they say are unfairly exploited by the countrys richer and more powerful provinces. The project, which will produce 200,000 tonnes of copper and some 250,000 ounces of gold a year, will no longer begin production in 2015. The date has been pushed back by a year or two due to delays over the mining licence. Livesey warned that despite a mine life of 56 years, delaying the project further could see the venture missing out on copper prices currently at cyclical highs. The opportunity cost is huge. In the mining industry, the ideal situation is to construct when metals prices are low and to be producing when metals prices are high, he said.