Downer EDI $2 billion Coal Mines

Australian engineering company, Downer EDI (ASX:DOW) has announced that the company has closed a $2 billion contract agreement for works at a BHP Billiton Mitsubishi Alliance coal mining project including projects at Goonyella Riverside and Norwich Park coal mines, both located at the Bower Basin in central Queensland. The project will run until June 2015.

Downer EDI Project

The contracted project work includes drill and blast services at the Goonyella mine and the load and haul of pre-strip and similarly at Norwich mine site. New equipment worth $190 million will be deployed at both coal mine sites and funded by Downer EDI's operating cash flow.

Downer EDI have stated that the company is well positioned to reach its target leverage range of 25 to 35 percent. Downer also said it was the the preferred bidder for another project with Fortescue Metals Group Ltd.

Downer EDI Share Price Recovery

Downer EDI shares had tumbled from a record high of $9.35 on January 1 to $3.42 on July 1. Downer EDI shares increased 27 cents on yesterday's news, or 5.9 percent, to $4.82, its highest close since June 1 when it closed at $4.58. The slump in share price in June was due to a downgraded credit rating to one notch above junk bond status after reports were released about a substantial cost blowout for its Waratah train project and tax impairments on other assets.