Mumbai: GVK Coal Infrastructure (Singapore) Pte Ltd (GVK Hancock) and Aurizon Holdings Ltd of Australia, on Monday said they have reached an agreement to jointly develop a railway line and a new coal terminal at the existing Abbot Point Port to transport coal from GVK Hancock’s mines in Australia’s Galilee Basin.

In March 2013, GVK Hancock has agreed to sell a 51% stake in its rail and port projects in Australia to Queensland-based Aurizon Holdings Ltd for an undisclosed sum.

India’s GVK group invested in the Alpha, Alpha West and Kevin’s Corner mines in Queensland that have total resources of 8 billion tonnes of thermal coal, in addition to the rail and port facilities.

“The proposed arrangement is intended to provide sufficient equity and debt funding (including through third party debt finance) for the projects to reach financial close," GVK Group said in a statement. “The parties have made further progress over the last few months and have reached alignment on a rail solution and on the commercial terms for the proposed transaction such as governance, timing of milestones, funding and conditions for completion."

This proposed rail link will allow a phased development at Abbot Point’s third terminal to match volumes and ramp-up, thereby materially reducing the initial cost of infrastructure.

“Whilst the proposal remains non-binding and with further diligence to be undertaken, the parties are aligned on these key aspects of the proposal, with drafting of definitive legal documents now being undertaken," the statement said.

Collectively the proposed development of the rail and port infrastructure is expected to attract an investment for Queensland in the order of $6 billion and provide over 1,300 jobs during construction and around 300 long-term jobs once operational, it added.

Completion of the proposed transaction, including the upfront consideration from Aurizon, would be subject to a number of conditions including satisfactory due diligence, final board approvals, third-party approvals (some of which are outside the control of the parties) and negotiation of final terms and definitive documentation.

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