Downer EDI Ltd (ASX: DOW) lately came up with various key updates relating to inking new agreements and contract extension. These developments have highlighted the following aspects about the company in the recent past:
Strong performance demonstrated by contract extension at Meandu:DOW has signed a two-year extension to its existing contract to provide mining services at Meandu Mine in south-east Queensland owned by Stanwell. The mine delivers approximately 5.5 million tonnes of product coal every year to the nearby Tarong and Tarong North power stations. The company has been providing mining services at Meandu Mine since January 2013 and the date of completion of the original contract was June 2018. A two-year extension to June 2020 has now been concluded and is valued at approximately $ 250 million. Downer Chief Executive, Grant Fenn even said that the extension of the contract showed the strong performance of the company as well as its ongoing commitment to provide cost savings and operational improvements at the mine. The Meandu Mine has four working pits at the present and is capable of supplying up to 4 million t of coal a year which is sufficient to fuel the stations until at least 2037.
The total mining services provided by Downer since January 2013 are valued at around $ 600 million-$ 800 million and the total mining service contract covers mining management, planning, drilling, overburden removal, coal mining and processing and rehabilitation and maintenance of all mobile and fixed plant. In fact, gridComm has also entered into a teaming agreement with DOW such that Downer’s Next Generation Technologies business and gridComm will work to capitalize on Internet of Things opportunities in Australia and New Zealand.
Foot print expansion via focus on new market: The company has also signed a Technical Services Agreement with Adani Enterprises Ltd for the provision of mine planning, design and project execution services for AEL coalmines in India. The agreement has an initial value of $ 2 million and takes effect in July 2016, with an initial term of 12 months.
The services include technical and operational support for the existing coalmines and technical review of the bids for the Indian coal block auction. Mr Fenn said that the execution of the technical services agreement builds on the excellent relationship between the two parties and opens an opportunity in a new market for Downer.
Delivering complete service offerings: Bombardier Transportation’s Australian joint venture with Downer, namely, EDI Rail Bombardier Transportation Pty Ltd also received a contract by Western Australia’s Public Transport Authority (PTA), to supply an additional 10 three-car commuter trains (30 cars).
The maintenance contract will run until 2026 and in the place of the existing option rights available to the Public Transport Authority under the previous maintenance agreement. The new 10 X 3 car B Series will be manufactured at the company's facility in Maryborough Queensland and is scheduled for delivery to the Public Transport Authority, no later than December 2020.
The stock price is up 15.16% in the last three months as at July 11, 2016.
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