Today, on 6th May 2019, Aurizon Holdings Limited (ASX: AZJ) announced an agreement with customers on revised UT5 access undertaking for the Central Queensland Coal Network (CQCN). The break-through agreements follow months of negotiation and will provide greater commercial and operational certainty for all users of the CQCN. Customers signed to the agreements represent more than 90% of railed tonnes in the Central Queensland Coal Network. It includes BHP Billiton Limited (ASX: BHP), Anglo American, Glencore, Coronado, Jellinbah, Idemitsu, Middlemount, Kestrel, QCoal, Peabody and Yancoal.
The proposed revised access undertaking includes specific key points, which are extending the term of the Access Undertaking to ten years (July 1, 2017, to June 30, 2027). The weighted average cost of capital (WACC) of 5.9% will increase to 6.3% (subject to a reset on July 1, 2023) on completion of specified milestones, as compared to the WACC of 5.7% in UT5. The development of mechanisms will provide supply chain value through improved supply chain stability and improved maintenance and asset renewal programs.
Further detail on the proposed revised Access Undertaking is provided in the Investor Presentation pack. A draft amending Access Undertaking will be submitted to the Queensland Competition Authority (QCA) to amend the current UT5 Access Undertaking. The above-named mining companies will be submitting agreed letters of support to the QCA. Aurizon Network and customers will engage with the QCA for it to fully consider, and if appropriate, approve the draft amending Access Undertaking in accordance with its standard procedures, including consultation with stakeholders.
Aurizon’s MD & CEO, Andrew Harding, stated that with the encouragement of the QCA, the group has been working constructively with customers to address respective concerns regarding the Access Undertaking. Mr Harding further added that this development is an essential step in the development of an Undertaking that better addresses customer needs and provides longer term certainty for the Queensland resources sector.
In a previous update, AZJ published March 2019 quarterly report, where it highlighted that the total above rail volumes was 1% lower (-0.8mt) than pcp due to lower volumes in bulk with the cessation of two iron ore contracts and weather impacts from the flood event in North Queensland during the quarter, which was partly offset by higher coal volumes. The coal volume guidance for FY19 remains in the range of 215 to 225 mt. AZJ’s half yearly Report could be read here.
On the stock information front, at market close on 6th May 2019, the stock of Aurizon Holdings was trading at $4.815, down 1.534% with a market capitalisation of ~$9.45 billion. Its current PE multiple is at 19.11x, and its last EPS was noted at A0.249. Its annual dividend yield has been noted at 5.16%. Today, it touched day’s high at $4.910 and day’s low at $4.800, with a daily volume of 2,517,655. Its 52 weeks high price stands at $4.910, and 52 weeks low price at $3.900. Its absolute returns for the past one year, six months and three months are 4.63%, 14.18%, and 8.94%, respectively.
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