5 April 2005
Canadian Pacific Railway
and Elk Valley Coal Reach Five-Year Agreement
Canadian Pacific Railway
(TSX/NYSE: CP) and Fording Canadian Coal Trust (TSX:FDG.UN, NYSE:FDG) today announced CPR and Elk
Valley Coal Corporation have reached a five-year agreement for the transportation of
metallurgical coal from all of Elk Valley Coal's mines in southeast British Columbia to Vancouver area
ports for export.
The key elements of the confidential contract are:
- A five-year deal covering Elk Valley Coal's five mines in southeast B.C. that is
retroactive to 1 Apr 2004, and extends to 31 Mar 2009;
- A commitment to increase the base volumes of coal to be moved in line with Elk Valley Coal's
planned capacity increases;
- A framework for the movement of additional tonnes above the base volume during the
2006-2008 coal years, with a rate premium on the additional tonnes;
- Fixed coal year rates for the first three years of the contract, with the 2004 rate being
approximately 20% higher than the 2003 rate and the 2005 and 2006 rates being in the order of 60%
higher than the 2003 rate;
- Rates for the 2007 and 2008 coal years that will be linked to Elk Valley Coal's price for coal
with a floor and ceiling rate, both of which will be higher than the 2004 rate;
- A fuel cost adjustment mechanism for the last two years of the contract.
In addition, the parties resolved a number of other operations and commercial issues. CPR and Elk
Valley Coal have agreed to discontinue all legal and regulatory proceedings relating to their previous
contract dispute over the transportation of coal from Elk Valley Coal's five coal mines in southeast
British Columbia to Vancouver area ports for export.
"We are very pleased to have finalized this new contract with Elk Valley Coal," said Rob
Ritchie, CPR President and CEO. "This contract provides clarity and stability in our operational
and financial relationship. Both parties can now work together to take full advantage of the
increasing global demand for metallurgical coal."
As a result of this contract signing, CPR projects an increase of $0.55 to $0.60 in 2005 earnings per
share1 (EPS) and, therefore, is increasing its 2005 EPS1 guidance to a range of $3.15 to $3.25. This
would represent an increase in the range of 38% to 43%, compared with 2004 results.
CPR will discuss the impact of this agreement with analysts and the media in a short conference call
and webcast beginning at 10:00 a.m. EDT (8:00 a.m. MDT) on 5 Apr 2005.
- Conference call access:
Dial-in numbers: 1-800-814-4857 or 416-640-4127. Callers should dial
in 10 minutes prior to the call to register.
A replay of the conference call will be available by phone through 12 Apr 2005, at
1-877-289-8525 or 416-640-1917, pass code 21120239#
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