UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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ACT OF 1934
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ACT OF 1934
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.
Steel starts
here.
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023.
TABLE OF CONTENTS
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Coronado Global Resources Inc.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
(In US$ thousands, except share data)
Assets
Note
(Unaudited)
December 31,
2022
Current assets:
Cash and restricted cash
$
$
Trade receivables, net
Inventories
5
Other current assets
Assets held for sale
4
Total current assets
Non-current assets:
Property, plant and equipment, net
6
Right of use asset – operating leases, net
Goodwill
Intangible assets, net
Restricted deposits
15
Other non-current assets
Total assets
$
$
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
$
Accrued expenses and other current liabilities
7
Dividends payable
8
Income tax payable
Asset retirement obligations
Contract obligations
Lease liabilities
Other current financial liabilities
Liabilities held for sale
4
Total current liabilities
Non-current liabilities:
Asset retirement obligations
Contract obligations
Deferred consideration liability
Interest bearing liabilities
9
Other financial liabilities
Lease liabilities
Deferred income tax liabilities
Other non-current liabilities
Total liabilities
$
$
Common stock $
authorized,
2023 and December 31, 2022
Series A Preferred stock $
authorized,
December 31, 2022
—
—
Additional paid-in capital
Accumulated other comprehensive losses
13
(95,926 )
(91,423 )
Retained earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
See accompanying notes to unaudited condensed consolidated financial statements.
Coronado Global Resources Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
(In US$ thousands, except share data)
Three months ended
Note
2023
2022
Revenues:
Coal revenues
$
$
Other revenues
Total revenues
3
Costs and expenses:
Cost of coal revenues (exclusive of items shown separately below)
Depreciation, depletion and amortization
Freight expenses
Stanwell rebate
Other royalties
Selling, general, and administrative expenses
Total costs and expenses
Other (expense) income:
Interest expense, net
(14,665 )
(17,332 )
Decrease (increase) in provision for discounting and credit losses
(428 )
Other, net
(2,790 )
Total other income, net
(7,635 )
(20,550 )
Income before tax
Income tax expense
10
(34,030 )
(81,943 )
Net income attributable to Coronado Global Resources Inc.
$
$
Other comprehensive income, net of income taxes:
Foreign currency translation adjustments
13
(4,503 )
Total other comprehensive (loss) income
(4,503 )
Total comprehensive income attributable to Coronado Global
Resources Inc.
$
$
Earnings per share of common stock
Basic
11
Diluted
11
See accompanying notes to unaudited condensed consolidated financial statements.
Coronado Global Resources Inc.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(In US$ thousands, except share data)
Common stock
Preferred stock
Additional
Accumulated other
Total
paid in
comprehensive
Retained
stockholders
Shares
Amount
Series A
Amount
capital
losses
earnings
equity
Balance December 31, 2022
$
$
$
$
(91,423 )
$
$
Net income
—
—
Other comprehensive loss
—
—
(4,503 )
(4,503 )
Total comprehensive (loss) income
—
—
(4,503 )
Share-based compensation for equity
classified awards
—
—
(308 )
(308 )
Dividends
—
—
(8,382 )
(8,382 )
Balance March 31, 2023
$
$
$
$
(95,926 )
$
$
Common stock
Preferred stock
Additional
Accumulated other
Total
paid in
comprehensive
Retained
stockholders
Shares
Amount
Series A
Amount
capital
losses
earnings
equity
Balance December 31, 2021
$
$
$
$
(44,228 )
$
$
Net income
—
—
Other comprehensive income
—
—
Total comprehensive income
—
—
Share-based compensation for equity
classified awards
—
—
Dividends
—
—
(150,881 )
(150,881 )
Balance March 31, 2022
$
$
$
$
(27,970 )
$
$
See accompanying notes to unaudited condensed consolidated financial statements.
Coronado Global Resources Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In US$ thousands)
Three months ended
March 31,
2023
2022
Cash flows from operating activities:
Net income
$
$
Adjustments to reconcile net income to cash and restricted cash provided by
operating activities:
Depreciation, depletion and amortization
Amortization of right of use asset - operating leases
Amortization of deferred financing costs
Non-cash interest expense
Amortization of contract obligations
(7,201 )
(8,670 )
Loss on disposal of property, plant and equipment
Equity-based compensation expense
(308 )
Deferred income taxes
Reclamation of asset retirement obligations
(737 )
(1,156 )
(Decrease) increase in provision for discounting and credit losses
(3,988 )
Changes in operating assets and liabilities:
Accounts receivable
(226,983 )
Inventories
(28,039 )
(10,574 )
Other assets
Accounts payable
(34,488 )
Accrued expenses and other current liabilities
(11,883 )
Operating lease liabilities
(2,080 )
Income tax payable
(8,510 )
(2,086 )
Change in other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
(54,839 )
(37,768 )
Purchase of restricted deposits
(2,403 )
(3,548 )
Redemption of restricted deposits
Net cash used in investing activities
(54,147 )
(41,176 )
Cash flows from financing activities:
Principal payments on interest bearing liabilities and other financial liabilities
(920 )
(4,773 )
Principal payments on finance lease obligations
(31 )
(21 )
Premiums paid on early redemption of debt
(22 )
Net cash used in financing activities
(951 )
(4,816 )
Net increase in cash and restricted cash
Effect of exchange rate changes on cash and restricted cash
(4,857 )
Cash and restricted cash at beginning of period
Cash and restricted cash at end of period
$
$
Supplemental disclosure of cash flow information:
Cash payments for interest
$
$
Cash paid for taxes
$
$
Restricted cash
$
$
See accompanying notes to unaudited condensed consolidated financial statements.
Coronado Global Resources Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business, Basis of Presentation
(a)
Description of the Business
Coronado Global Resources Inc. is a global producer, marketer, and exporter of a full range of metallurgical
coals, an essential element in the production of steel. The Company has a portfolio of operating mines and
development projects in Queensland, Australia, and in the states of Pennsylvania, Virginia and West Virginia in
the United States, or U.S.
(b)
Basis of Presentation
The interim unaudited condensed consolidated financial statements have been prepared in accordance with the
requirements of U.S. generally accepted accounting principles, or U.S. GAAP, and with the instructions to Form
10-Q and Article 10 of Regulation S-X related to interim financial reporting issued by the Securities and Exchange
Commission, or the SEC. Accordingly, they do not include all of the information and footnotes required by U.S.
GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC and the
Australian Securities Exchange, or the ASX, on February 21, 2023.
The interim unaudited condensed consolidated financial statements are presented in U.S. dollars, unless
otherwise stated. They include the accounts of Coronado Global Resources Inc. and its wholly-owned
subsidiaries. References to “US$” or “USD” are references to U.S. dollars. References to “A$” or “AUD” are
references to Australian dollars, the lawful currency of the Commonwealth of Australia. The “Company” and
“Coronado” are used interchangeably to refer to Coronado Global Resources Inc. and its subsidiaries,
collectively, or to Coronado Global Resources Inc., as appropriate to the context. All intercompany balances and
transactions have been eliminated upon consolidation.
In the opinion of management, these interim financial statements reflect all normal, recurring adjustments
necessary for the fair presentation of the Company’s financial position, results of operations, comprehensive
income, cash flows and changes in equity for the periods presented. Balance sheet information presented herein
as of December 31, 2022 has been derived from the Company’s audited consolidated balance sheet at that date.
The Company’s results of operations for the three months ended March 31, 2023 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2023.
2. Summary of Significant Accounting Policies
Please see Note 2 “Summary of Significant Accounting Policies” contained in the audited consolidated financial
statements for the year ended December 31, 2022 included in Coronado Global Resources Inc.’s Annual Report
on Form 10-K filed with the SEC and ASX on February 21, 2023.
(a) Newly Adopted Accounting Standards
During the period, there has been no new Accounting Standards Update issued by the Financial Accounting
Standards Board that had a material impact on the Company’s consolidated financial statements.
3. Segment Information
The Company has a portfolio of operating mines and development projects in Queensland, Australia, and in the
states of Pennsylvania, Virginia and West Virginia in the U.S. The operations in Australia, or Australian
Operations, comprise the 100%-owned Curragh producing mine complex. The operations in the United States,
or U.S. Operations, comprise
owned idled mine complex (Greenbrier) and
The Company operates its business along
organization of the
CODM, manages and allocates resources to the various components of the Company’s business.
The CODM uses Adjusted EBITDA as the primary metric to measure each segment’s operating performance.
Adjusted EBITDA is not a measure of financial performance in accordance with U.S. GAAP. Investors should be
aware that the Company’s presentation of Adjusted EBITDA may not be comparable to similarly titled financial
measures used by other companies.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, depletion and amortization and other
foreign exchange losses. Adjusted EBITDA is also adjusted for certain discrete items that management exclude
in analyzing each of the Company’s segments’ operating performance. “Other and corporate” relates to additional
financial information for the corporate function such as accounting, treasury, legal, human resources, compliance,
and tax. As such, the corporate function is not determined to be a reportable segment but is discretely disclosed
for purposes of reconciliation to the Company’s unaudited Condensed Consolidated Financial Statements.
Reportable segment results as of and for the three months ended March 31, 2023 and 2022 are presented below:
(in US$ thousands)
Australia
United
States
Other and
Corporate
Total
Three months ended March 31, 2023
Total revenues
$
$
$
$
Adjusted EBITDA
(7,526 )
Total assets
Capital expenditures
Three months ended March 31, 2022
Total revenues
$
$
$
$
Adjusted EBITDA
(7,880 )
Total assets
Capital expenditures
The reconciliations of Adjusted EBITDA to net income attributable to the Company for the three months ended
March 31, 2023 and 2022 are as follows:
Three months ended
March 31,
(in US$ thousands)
2023
2022
Net income
$
$
Depreciation, depletion and amortization
Interest expense (net of income)
Income tax expense
Other foreign exchange (gains) losses
(1)
(2,992 )
Losses on idled assets held for sale
(2)
(Decrease) increase in provision for discounting and credit losses
(3,988 )
Consolidated Adjusted EBITDA
$
$
(1)
certain entities within the group that are denominated in currencies other than their respective functional currencies. These gains and losses
are included in “Other, net” on the unaudited Consolidated Statement of Operations and Comprehensive Income.
(2)
The reconciliations of capital expenditures per the Company’s segment information to capital expenditures
disclosed on the unaudited Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2023 and 2022 are as follows:
Three months ended March 31,
(in US$ thousands)
2023
2022
Capital expenditures per unaudited Condensed Consolidated Statements of
Cash Flows
$
$
Accruals for capital expenditures
Payment for capital acquired in prior periods
(11,242 )
(7,475 )
Advance payment to acquire long lead capital items
(6,242 )
Capital expenditures per segment detail
$
$
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
Disaggregation of Revenue
The Company disaggregates the revenue from contracts with customers by major product group for each of the
Company’s reportable segments, as the Company believes it best depicts the nature, amount, timing and
uncertainty of revenues and cash flows. All revenue is recognized at a point in time.
Three months ended March 31, 2023
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total coal revenue
Other
(1)
Total
$
$
$
Three months ended March 31, 2022
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total coal revenue
Other
(1)
Total
$
$
$
(1) Other revenue for the Australian segment includes the amortization of the Stanwell non-market coal supply contract obligation liability.
4. Assets Held for Sale
During the fourth quarter of 2020, the Company committed to a plan to sell the Greenbrier mining asset and
determined that all of the criteria to classify assets and liabilities as held for sale were met. The asset is part of
our U.S. segment, located in the State of Virginia in the United States. The Greenbrier asset does not form part
of the Company’s core business strategy and has been idled since April 1, 2020.
The Company remains committed to a plan to sell the Greenbrier mining asset, however, the timing of the sale
within the next twelve months is uncertain. As such, Greenbrier mining asset no longer meets the criteria for
classification as held for sale and has been reclassified as held for use as of March 31, 2023, however it remains
idle.
The assets and liabilities of Greenbrier met the criteria for classification as held for sale as of December 31, 2022,
therefore the Condensed Consolidated Balance Sheet continues to reflect these assets and liabilities as held for
sale as of that date.
5. Inventories
(in US$ thousands)
March 31,
2023
December 31,
2022
Raw coal
$
$
Saleable coal
To
tal coal inventories
Supplies inventory
To
tal inventories
$
$
Coal inventories measured at its net realizable value were $
million
and $
December 31, 2022, respectively, and relates to coal designated for deliveries under the Stanwell non-market
coal supply agreement.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
6. Property, Plant and Equipment
(in US$ thousands)
March 31,
2023
December 31,
2022
Land
$
$
Buildings and improvements
Plant, machinery, mining equipment and transportation vehicles
Mineral rights and reserves
Office and computer equipment
Mine development
Asset retirement obligation asset
Construction in process
To
tal cost of property, plant and equipment
Less accumulated depreciation, depletion and amortization
Property, plant and equipment, net
$
$
7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
(in US$ thousands)
March 31,
2023
December 31,
2022
Wages and employee benefits
$
$
Taxes other than income taxes
Accrued royalties
Accrued freight costs
Accrued mining fees
Acquisition related accruals
Other liabilities
Total accrued expenses and other current liabilities
$
$
Acquisition related accruals is an accrual for the estimated remaining stamp duty payable on the Curragh
acquisition of $
8. Dividends payable
On February 21, 2023, the Company’s Board of Directors declared a bi-annual fully franked fixed ordinary
dividend of $
foreign exchange gain on payment of dividends to certain CDI holders who elected to be paid in Australian dollars.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
9. Interest Bearing Liabilities
The following is a summary of interest-bearing liabilities at March 31, 2023:
March 31, 2023
December 31, 2022
Weighted Average
Interest Rate at
March 31, 2023
Final
Maturity
% Senior Secured Notes
$
$
%
(2)
ABL Facility
Discount and debt issuance costs
(1)
(8,803 )
(9,373 )
Total interest bearing liabilities
$
$
(1)
Debt issuance costs incurred on the establishment of the ABL Facility has been included within "Other non-current assets" on the
unaudited Condensed Consolidated Balance Sheet.
(2)
Senior Secured Notes
As of March 31, 2023, the Company’s aggregate principal amount of the
% Senior Secured Notes due
2026, or the Notes, outstanding was $
obligations of the Company.
The terms of the Notes are governed by an indenture, dated as of May 12, 2021, or the Indenture, among
Coronado Finance Pty Ltd, an Australian proprietary company, as issuer, Coronado, as parent guarantor, the
other guarantors party thereto and Wilmington Trust, National Association, as trustee. The Indenture contains
customary covenants for high yield bonds, including, but not limited to, limitations on investments, liens,
indebtedness, asset sales, transactions with affiliates and restricted payments, including payment of dividends
on capital stock. As of March 31, 2023, the Company was in compliance with all applicable covenants under the
Indenture.
The carrying value of debt issuance costs, recorded as a direct deduction from the face amount of the Notes,
were $
ABL Facility
On May 12, 2021, the Company entered into a senior secured asset-based revolving credit agreement providing
for a multi-currency asset-based-loan facility, or ABL Facility, in an initial principal amount of $
including a $
time outstanding, subject to borrowing base availability. The ABL Facility matures on
.
Borrowings under the ABL Facility bear interest at a rate equal to a Bank Bill Swap Bid, or BBSY, rate plus an
applicable margin. In addition to paying interest on the outstanding borrowings under the ABL Facility, the
Company is also required to pay a fee in respect of unutilized commitments, on amounts available to be drawn
under outstanding letters of credit and certain administrative fees.
As at March 31, 2023,
As at March 31, 2023, the Company was in compliance with all applicable covenants under the ABL Facility.
The carrying value of debt issuance costs, recorded as “Other non-current assets” in the unaudited Consolidated
Balance Sheets, were $
million and $
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
10. Income Taxes
For the three months ended March 31, 2023 and 2022, the Company estimated its annual effective tax rate and
applied this effective tax rate to its year-to-date pretax income at the end of the interim reporting period. The tax
effects of unusual or infrequently occurring items, including effects of changes in tax laws or rates and changes
in judgment about the realizability of deferred tax assets, are reported in the interim period in which they occur.
The Company’s 2023 estimated annual effective tax rate is
%, which has been favorably impacted by mine
depletion deductions in the United States.
The Company had an income tax expense of $
an income before tax of $
Income tax expense of $
estimated annual effective tax rate of
% for the period.
The Company utilizes the “more likely than not” standard in recognizing a tax benefit in its financial statements.
For the three months ended March 31, 2023, the Company had
interest or penalties is required, it is the Company’s policy to include these as a component of income tax
expense.
The Company is subject to taxation in the U.S. and its various states, as well as Australia and its various localities.
In the U.S. and Australia, the first tax return was lodged for the year ended December 31, 2018. In the U.S.,
companies are subject to open tax audits for a period of seven years at the federal level and five years at the
state level. In Australia, companies are subject to open tax audits for a period of four years from the date of
assessment.
The Company assessed the need for valuation allowances by evaluating future taxable income, available for tax
strategies and the reversal of temporary tax differences.
11. Earnings per Share
Basic earnings per share of common stock is computed by dividing net income attributable to the Company for
the period, by the weighted-average number of shares of common stock outstanding during the same period.
Diluted earnings per share of common stock is computed by dividing net income attributable to the Company by
the weighted-average number of shares of common stock outstanding adjusted to give effect to potentially dilutive
securities.
Basic and diluted earnings per share was calculated as follows (in thousands, except per share data):
Three months ended March 31,
(in US$ thousands, except per share data)
2023
2022
Numerator:
Net income attributable to Company stockholders
$
$
Denominator (in thousands):
Weighted-average shares of common stock outstanding
Effects of dilutive shares
Weighted average diluted shares of common stock outstanding
Earnings Per Share (US$):
Basic
Dilutive
12. Fair Value Measurement
The fair value of a financial instrument is the amount that will be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. The fair values of financial
instruments involve uncertainty and cannot be determined with precision.
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs to the extent possible. The Company determines fair value based on assumptions that
market participants would use in pricing an asset or liability in the market. When considering market participant
assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and
unobservable inputs, which are categorized in one of the following levels:
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the
reporting entity at the measurement date.
Level 2 Inputs: Other than quoted prices that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that
observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity
for the asset or liability at measurement date.
Financial Instruments Measured on a Recurring Basis
As of March 31, 2023, there were
basis.
Other Financial Instruments
The following methods and assumptions are used to estimate the fair value of other financial instruments as of
March 31, 2023 and December 31, 2022:
●
and other current financial liabilities: The carrying amounts reported in the unaudited Condensed
Consolidated Balance Sheets approximate fair value due to the short maturity of these instruments.
●
values approximate the carrying values reported in the unaudited Condensed Consolidated Balance
Sheets.
●
cost. As of March 31, 2023, there were
fair value of the Notes as of March 31, 2023 was approximately $
prices in a market that is not considered active (Level 2).
13. Accumulated Other Comprehensive Losses
Accumulated other comprehensive losses consisted of the following at March 31, 2023:
(in US$ thousands)
Foreign
currency
translation
adjustments
Balance at December 31, 2022
$
(91,423 )
Net current-period other comprehensive income (loss):
Loss in other comprehensive income before reclassifications
(807 )
Loss on long-term intra-entity foreign currency transactions
(3,696 )
Total net current-period other comprehensive loss
(4,503 )
Balance at March 31, 2023
$
(95,926 )
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
14. Commitments
(a) Mineral Leases
The Company leases mineral interests and surface rights from land owners under various terms and royalty
rates. The future minimum royalties under these leases as of March 31, 2023 are as follows:
(in US$ thousands)
Amount
Year ending December 31,
2023
$
2024
2025
2026
2027
Thereafter
Total
$
Mineral leases are not in scope of ASC 842 and continue to be accounted for under the guidance in ASC 932,
Extractive Activities – Mining.
(b) Other commitments
As of March 31, 2023, purchase commitments for capital expenditures were $
within the next twelve months.
In Australia, the Company has generally secured the ability to transport coal through rail contracts and coal export
terminal contracts that are primarily funded through take-or-pay arrangements with terms ranging up to
.
In the U.S., the Company typically negotiates its rail and coal terminal access on an annual basis. As of March
31, 2023, these Australian and U.S. commitments under take-or-pay arrangements totaled $
approximately $
15. Contingencies
In the normal course of business, the Company is a party to certain guarantees and financial instruments with
off-balance sheet risk, such as letters of credit and performance or surety bonds.
arrangements are reflected in the Company’s unaudited Condensed Consolidated Balance Sheets. Management
does not expect any material losses to result from these guarantees or off-balance sheet financial instruments.
As required by certain agreements, the Company had cash collateral in the form of deposits in the amount of
$
back support for bank guarantees, financial payments, other performance obligations, various other operating
agreements and contractual obligations under workers compensation insurance. These deposits are restricted
and classified as long-term assets in the unaudited Condensed Consolidated Balance Sheets.
In accordance with the terms of the ABL Facility, the Company may be required to cash collateralize the ABL
Facility to the extent of outstanding letters of credit after the expiration or termination date of such letter of credit.
As of March 31, 2023,
For the U.S. Operations in order to provide the required financial assurance, the Company generally uses surety
bonds for post-mining reclamation. The Company can also use bank letters of credit to collateralize certain
obligations. As of March 31, 2023, the Company had outstanding surety bonds of $
credit of $
compensation insurance and to secure other obligations and commitments.
For the Australian Operations, the Company had bank guarantees outstanding of $
2023, primarily in respect of certain rail and port arrangements of the Company.
As at March 31, 2023, the Company had total outstanding bank guarantees provided of $
obligations and commitments. Future regulatory changes relating to these obligations could result in increased
obligations, additional costs or additional collateral requirements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
Stamp duty on Curragh acquisition
On September 27, 2022, the Company received from the Queensland Revenue Office, or QRO, an assessment
of the stamp duty payable on its acquisition of the Curragh mine in March 2018. The QRO assessed the stamp
duty on this acquisition at an amount of $
(A$
awaiting the outcome of this objection. The outcome of this objection is uncertain.
The Company continues to maintain its position and the estimated accrual $
duty payable on the Curragh acquisition based on legal and valuation advice obtained. The Company made a
partial payment to date of the stamp duty reducing the estimated accrual to $
is included within “Accrued Expenses and Other Current Liabilities” in its unaudited Condensed Consolidated
Balance sheet, as at March 31, 2023.
From time to time, the Company becomes a party to other legal proceedings in the ordinary course of business
in Australia, the U.S. and other countries where the Company does business. Based on current information, the
Company believes that such other pending or threatened proceedings are likely to be resolved without a material
adverse effect on its financial condition, results of operations or cash flows. In management’s opinion, the
Company is not currently involved in any legal proceedings, which individually or in the aggregate could have a
material effect on the financial condition, results of operations and/or liquidity of the Company.
16. Subsequent Events
New asset-based revolving credit facility
On May 8, 2023, or the Signing Date, the Company, Coronado Coal Corporation, a Delaware corporation and
wholly owned subsidiary of the Company, Coronado Finance Pty Ltd, an Australian proprietary company and a
wholly owned subsidiary of the Company, or an Australian Borrower, Coronado Curragh Pty Ltd, an Australian
proprietary company and wholly owned subsidiary of the Company, or an Australian Borrower and, together with
the other Australian Borrower, the Borrowers, and the other guarantors party thereto, collectively with the
Company, the Guarantors and, together with the Borrowers, the Loan Parties, entered into a senior secured
asset-based revolving credit agreement in an initial aggregate amount of $
with Global Loan Agency Services Australia Pty Ltd, as the Administrative Agent, Global Loan Agency Services
Australia Nominees Pty Ltd, as the Collateral Agent, the Hongkong and Shanghai Banking Corporation Limited,
Sydney Branch, as the Lender, and DBS Bank Limited, Australia Branch, as the Lender and, together with the
other Lender, the Lenders.
Upon satisfaction of the stipulated conditions precedent to closing under the New ABL Facility, which conditions
include, among other things, completion of a field examination by an independent third-party assessor, and
satisfactory right of entry arrangements being entered into in relation to certain Australian ports utilized by the
Company for shipment of coal, the New ABL Facility will replace the predecessor ABL Facility. The conditions
precedent under the New ABL Facility need to be satisfied, or waived, on or before the date that falls 60 days
after the Signing Date, or such later date as agreed between the Company and each lender under the New ABL
Facility.
The New ABL Facility will mature
borrowings, including a $
revolving credit facility. Availability under the New ABL Facility is limited to an eligible borrowing base, determined
by applying customary advance rates to eligible accounts receivable and inventory.
The New ABL Facility is guaranteed by the Guarantors. Amounts outstanding under the New ABL Facility are
secured by (i) first priority lien in the accounts receivable and other rights to payment, inventory, intercompany
indebtedness, certain general intangibles and commercial tort claims, commodities accounts, deposit accounts,
securities accounts and other related assets and proceeds and products of each of the foregoing, collectively,
the New ABL Collateral, and (ii) a second-priority lien on substantially all of the Company’s assets and the assets
of the guarantors, other than the New ABL Collateral, and (iii) solely in the case of the obligations of the Australian
Borrower, a featherweight floating security interest over certain assets of the Australian Borrower, in each case,
subject to certain customary exceptions
Borrowings under the New ABL Facility bear interest at a rate per annum equal to applicable rate of
% and
BBSY, for loans denominated in A$, or SOFR, for loans denominated in U$, at the Borrower’s election.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATE MENTS (Continued)
Coronado Global Resources Inc.
The New ABL Facility contains customary representations and warranties and affirmative and negative covenants
including, among others, a covenant regarding the maintenance of leverage ratio to be less than
covenant regarding maintenance of interest coverage ratio to be more than
payment of dividends, or purchase or redemption of, with respect to any Equity Interests of Holdings or any of its
Subsidiaries, covenants relating to financial reporting, covenants relating to the incurrence of liens or
encumbrances, covenants relating to the incurrence or prepayment of certain debt, compliance with laws, use of
proceeds, maintenance of properties, maintenance of insurance, payment obligations, financial accommodation,
mergers and sales of all or substantially all of the Borrowers and Guarantors’, collectively the Loan Parties, assets
and limitations on changes in the nature of the Loan Parties’ business.
The New ABL Facility provides for customary events of default, including, among other things, the event of
nonpayment of principal, interest, fees, or other amounts, a representation or warranty proving to have been
materially incorrect when made, failure to perform or observe certain covenants within a specified period of time,
a cross-default to certain material indebtedness, the bankruptcy or insolvency of the Company and certain of its
subsidiaries, monetary judgment defaults of a specified amount, invalidity of any loan documentation, and
Employee Retirement Income Security Act, or ERISA, defaults resulting in liability of a material amount. In the
event of a default by the Borrowers (beyond any applicable grace or cure period, if any), the Administrative Agent
may and, at the direction of the requisite number of Lenders, shall declare all amounts owing under the New ABL
Facility immediately due and payable, terminate such Lenders’ commitments to make loans under the New ABL
Facility, require the Borrowers to cash collateralize any letter of credit obligations and/or exercise any and all
remedies and other rights under the New ABL Facility. For certain defaults related to insolvency and receivership,
the commitments of the Lenders will be automatically terminated, and all outstanding loans and other amounts
will become immediately due and payable. A review event will occur under the New ABL Facility if any one or
more of the following occurs: (a) downgrade of the credit rating by S&P or Moody’s in respect of a Loan Party
which applies as at the Closing Date; (b) change of control occurs; or (c) delisting of any listed Loan Party from
the relevant stock exchange on which it was listed or a trading halt in respect of such Loan Party for more than
5 business days. Following the occurrence of a review event, the Borrowers must promptly meet and consult in
good faith with the Administrative Agent and the Lenders to agree a strategy to address the relevant review event.
If at the end of a period of 20 business days after the occurrence of the review event, the Lenders are not satisfied
with the result of their discussion or meeting with the Borrowers or do not wish to continue to provide their
commitments, the Lenders may declare all amounts owing under the New ABL Facility immediately due and
payable, terminate such Lenders’ commitments to make loans under the New ABL Facility, require the Borrowers
to cash collateralize any letter of credit obligations and/or exercise any and all remedies and other rights under
the New ABL Facility.
Curragh Housing Transaction
On May 8, 2023, the Company entered into an agreement for accommodation services and to sell and leaseback
housing and accommodation assets included in property, plant and equipment. The transaction did not satisfy
the sale criteria under ASC 606 – Revenues with Contracts with Customers and was deemed a financing
arrangement. As a result, the Company continued to recognize the underlying property, plant and equipment on
its condensed consolidated balance sheet. The proceeds of $
transaction will be recorded as “Other Financial Liabilities” on the Company’s condensed consolidated balance
sheet. The term of the financing arrangement is
%.
In connection with this transaction, the Company borrowed an additional amount of $
which will be recorded in “Interest Bearing Liabilities”. The term of the arrangement is
interest rate of
%.
In line with the Company’s capital management strategy, the above transactions provide additional liquidity. In
addition, the accommodation services component of the arrangement is anticipated to enhance the level of
service for our employees at our Curragh mine.
Coronado Global Resources Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Coronado Global Resources Inc.
Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed consolidated balance sheet of Coronado Global Resources
Inc. (the Company) as of March 31, 2023, the related condensed consolidated statements of operations and
comprehensive income for the three-month periods ended March 31, 2023 and 2022, the condensed
consolidated statements of stockholders’ equity for the three-month period ended March 31, 2023 and 2022, the
condensed consolidated statements of cash flows for the three-month period ended March 31, 2023 and 2022,
and the related notes (collectively referred to as the “condensed consolidated interim financial statements”).
Based on our reviews, we are not aware of any material modifications that should be made to the condensed
consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting
principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2022, the
related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows
for the year then ended, and the related notes (not presented herein), and in our report dated February 21, 2023,
we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2022, is
fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These financial statements are the responsibility of the Company's management. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We
conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements
consists principally of applying analytical procedures and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards
of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as
a whole. Accordingly, we do not express such an opinion.
/s/ Ernst & Young
Brisbane, Australia
May 8, 2023.
Coronado Global Resources Inc.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following Management’s Discussion and Analysis of our Financial Condition and Results of Operations, or
MD&A, should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the
related notes to those statements included elsewhere in this Form 10-Q. In addition, this Form 10-Q report should
be read in conjunction with the Consolidated Financial Statements for year ended December 31, 2022 included
in Coronado Global Resources Inc.’s Annual Report on Form 10-K for the year ended December 31, 2022, filed
with the U.S. Securities and Exchange Commission, or SEC, and the Australian Securities Exchange, or the
ASX, on February 21, 2023.
Unless otherwise noted, references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “Company,” or
“Coronado” refer to Coronado Global Resources Inc. and its consolidated subsidiaries and associates, unless
the context indicates otherwise.
All production and sales volumes contained in this Quarterly Report on Form 10-Q are expressed in metric tons,
or Mt, millions of metric tons, or MMt, or millions of metric tons per annum, or MMtpa, except where otherwise
stated. One Mt (1,000 kilograms) is equal to 2,204.62 pounds and is equivalent to 1.10231 short tons. In addition,
all dollar amounts contained herein are expressed in United States dollars, or US$, except where otherwise
stated. References to “A$” are references to Australian dollars, the lawful currency of the Commonwealth of
Australia. Some numerical figures included in this Quarterly Report on Form 10-Q have been subject to rounding
adjustments. Accordingly, numerical figures shown as totals in certain tables may not equal the sum of the figures
that precede them.
CAUTIONARY NOTICE REGARDING FORWARD -LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
or the Exchange Act, concerning our business, operations, financial performance and condition, the coal, steel
and other industries, as well as our plans, objectives and expectations for our business, operations, financial
performance and condition. Forward-looking statements may be identified by words such as “may,” “could,”
“believes,” “estimates,” “expects,” “intends,” “plans,” “anticipate,” “forecast,” “outlook,” “target,” “likely,”
“considers” and other similar words.
Any forward-looking statements involve known and unknown risks, uncertainties, assumptions and other
important factors that could cause actual results, performance, events or outcomes to differ materially from the
results, performance, events or outcomes expressed or anticipated in these statements, many of which are
beyond our control. Such forward-looking statements are based on an assessment of present economic and
operating conditions on a number of best estimate assumptions regarding future events and actions. These
factors are difficult to accurately predict and may be beyond our control. Factors that could affect our results, our
announced plans, or an investment in our securities include, but are not limited to:
●
●
Ukraine war, as well as risks related to government actions with respect to trade agreements, treaties or
policies;
●
as diesel fuel, steel, explosives and tires, as the result of inflationary pressures or otherwise;
●
developments. For example, the amendments to the coal royalty regime implemented by the Queensland
state Government in Australia in 2022 introducing higher tiers to the coal royalty rates applicable to our
Australian Operations;
●
due to future public health crisis (such as the COVID-19 pandemic), of one or more of our major
customers, including customers in the steel industry, key suppliers/contractors, which among other
adverse effects, could lead to reduced demand for our coal, increased difficulty collecting receivables
and customers and/or suppliers asserting force majeure or other reasons for not performing their
contractual obligations to us;
●
Coronado Global Resources Inc.
●
governing such indebtedness;
●
performance or otherwise;
●
●
coal deliveries, or increase the cost of operating our business;
●
●
●
●
●
●
●
arrangements with rail and port operators;
●
●
●
●
any exposure to hazardous substances caused by our operations, as well as any environmental
contamination our properties may have or our operations may cause;
●
●
regulations;
●
●
climate issues, which could result in increased regulation of coal combustion and requirements to reduce
greenhouse gas, or GHG, emissions in many jurisdictions, which could significantly affect demand for
our products or our securities and reduced access to capital and insurance;
●
proprietary or confidential information about us, our customers or other third parties;
●
require us to recognize impairment charges related to those assets;
●
●
impact our reported financial results; and
●
Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q.
We make many of our forward-looking statements based on our operating budgets and forecasts, which are
based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is
Coronado Global Resources Inc.
very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could
affect our actual results.
See Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022,
filed with the SEC and ASX on February 21, 2023, for a more complete discussion of the risks and uncertainties
mentioned above and for discussion of other risks and uncertainties we face that could cause actual results to
differ materially from those expressed or implied by these forward-looking statements.
All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary
statements, as well as others made in this Quarterly Report on Form 10-Q and hereafter in our other filings with
the SEC and public communications. You should evaluate all forward-looking statements made by us in the
context of these risks and uncertainties.
We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to
you. You should not interpret the disclosure of any risk to imply that the risk has not already materialized.
Furthermore, the forward-looking statements included in this Quarterly Report on Form 10-Q are made only as
of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a
result of new information, future events, or otherwise, except as required by applicable law.
Overview
We are a global producer, marketer and exporter of a full range of Met coal products. We own a portfolio of
operating mines and development projects in Queensland, Australia, and in the states of Virginia, West Virginia
and Pennsylvania in the United States.
Our Australian Operations comprise the 100%-owned Curragh producing mine complex. Our U.S. Operations
comprise two 100%-owned producing mine complexes (Buchanan and Logan), one 100%-owned idled mine
complex (Greenbrier) and two development properties (Mon Valley and Russell County). In addition to Met coal,
our Australian Operations sell thermal coal domestically, which is used to generate electricity, to Stanwell and
some thermal coal in the export market. Our U.S. Operations primarily focus on the production of Met coal for
the North American domestic and seaborne export markets and also produce and sell some thermal coal that is
extracted in the process of mining Met coal.
Coking coal index prices have continued to increase in the first quarter of 2023 compared to fourth quarter of
2022, primarily driven by supply constraints in key Met coal markets caused by wet weather amidst mild demand
recovery from Indian and Southeast Asian steelmakers. The Australian Premium Low Volume Index averaged
$335 per Mt during Q1 2023, $60 per Mt above Q4 2022, however, $153 per Mt below Q1 2022.
Coronado has continued to take advantage of its unique geographical diversification as a Met coal supplier of
scale to meet the requirements of steel customers across the globe. Our U.S. Operations have taken advantage
of current unique market fundamentals created by the trade restrictions on Russian coal by switching coal sales
from China to Europe providing higher returns for our products.
Our results for the three months ended March 31, 2023, were adversely impacted by (1) significant wet weather
events impacting production at our Australian Operations , (2) continued inflationary pressure (3) reduced coal
availability from equipment breakdown, (4) a train derailment on the Blackwater line which impacted our sales
volume, (5) lower average realized Met price per Mt sold compared to first quarter of 2022 and (6) higher sales
related costs (royalties and freight costs).
For the three months ended March 31, 2023, we produced and sold 3.7 MMt of coal. Met coal sales represented
74.7% of our total volume of coal sold and 88.8% of total coal revenues for the three months ended March 31,
2023.
Coal revenues of $738.3 million for the three months ended March 31, 2023, decreased by 21.2% compared to
the same period in 2022, driven by decreased average realized Met price per Mt sold from $266.5 to $239.7.
Sales volumes were lower for the three months ended March 31, 2023, compared to the same period in 2022
due to lower production primarily driven by higher than anticipated wet weather resulting in lower coal availability
at our Australian Operations combined with shipping delays from adverse weather at our U.S. Operations.
Operating costs for the three months ended March 31, 2023, were $569.0 million, or 7.6%, higher compared to
the corresponding period in 2022 primarily driven by inflationary pressure on supply, contractors and fuel costs,
additional fleets mobilized since March 31, 2022 and unplanned equipment breakdown at our Australian
Operations and higher freight costs at our U.S. Operations .
Liquidity
As of March 31, 2023, the Company’s net cash position, comprising of $498.0 million cash (excluding restricted
cash) less $242.3 million aggregate principal amount of Notes outstanding, was $255.7 million. Coronado has
Coronado Global Resources Inc.
available liquidity of $598.0 million as of March 31, 2023, consisting of cash (excluding restricted cash) and
$100.0 million availability under our ABL facility, which remains fully undrawn.
Safety
For our Australian Operations, the twelve-month rolling average Total Reportable Injury Frequency Rate, or
TRIFR, at March 31, 2023 was 3.18
compared to a rate of 3.92 at the end of December 31, 2022. At our U.S.
Operations, the twelve-month rolling average Total Reportable Incident Rate, or TRIR, at March 31, 2023 was
2.43
compared to a rate of 2.42 at the end of December 31, 2022. Reportable rates for our Australian and U.S.
Operations are below the relevant industry benchmarks.
The safety of our workforce is our number one priority and Coronado remains focused on the safety and wellbeing
of all employees and contracting parties.
Segment Reporting
In accordance with Accounting Standards Codification, or ASC, 280, Segment Reporting, we have adopted the
following reporting segments: Australia and the United States. In addition, “Other and Corporate” is not a reporting
segment but is disclosed for the purposes of reconciliation to our consolidated financial statements.
Results of Operations
How We Evaluate Our Operations
We evaluate our operations based on the volume of coal we can safely produce and sell in compliance with
regulatory standards, and the prices we receive for our coal. Our sales volume and sales prices are largely
dependent upon the terms of our coal sales contracts, for which prices generally are set based on daily index
averages, on a quarterly basis or annual fixed price contracts.
Our management uses a variety of financial and operating metrics to analyze our performance. These metrics
are significant factors in assessing our operating results and profitability. These financial and operating metrics
include: (i) safety and environmental metrics; (ii) Adjusted EBITDA; (iii) total sales volumes and average realized
price per Mt sold, which we define as total coal revenues divided by total sales volume; (iv) Met coal sales
volumes and average realized Met price per Mt sold, which we define as Met coal revenues divided by Met coal
sales volume; (v) average segment mining costs per Mt sold, which we define as mining costs divided by sales
volumes (excluding non-produced coal) for the respective segment; (vi) average segment operating costs per Mt
sold, which we define as segment operating costs divided by sales volumes for the respective segment; and (vii)
net cash, which we define as cash and cash equivalents (excluding restricted cash) less outstanding aggregate
principal amount of 10.750% senior secure notes due 2026.
Coal revenues are shown on our statement of operations and comprehensive income exclusive of other
revenues. Generally, export sale contracts for our Australian Operations require us to bear the cost of freight
from our mines to the applicable outbound shipping port, while freight costs from the port to the end destination
are typically borne by the customer. Sales to the export market from our U.S. Operations are generally recognized
when title to the coal passes to the customer at the mine load out similar to a domestic sale. For our domestic
sales, customers typically bear the cost of freight. As such, freight expenses are excluded from cost of coal
revenues to allow for consistency and comparability in evaluating our operating performance.
Non-GAAP Financial Measures; Other Measures
The following discussion of our results includes references to and analysis of Adjusted EBITDA, Segment
Adjusted EBITDA and mining costs, which are financial measures not recognized in accordance with U.S. GAAP.
Non-GAAP financial measures, including Adjusted EBITDA, Segment Adjusted EBITDA and mining costs, are
used by investors to measure our operating performance.
Adjusted EBITDA, a non-GAAP measure, is defined as earnings before interest, tax, depreciation, depletion and
amortization and other foreign exchange losses. Adjusted EBITDA is also adjusted for certain discrete non-
recurring items that we exclude in analyzing each of our segments’ operating performance. Adjusted EBITDA is
not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to
similarly titled measures presented by other companies. A reconciliation of Adjusted EBITDA to its most directly
comparable measure under U.S. GAAP is included below.
Coronado Global Resources Inc.
Segment Adjusted EBITDA is defined as Adjusted EBITDA by operating and reporting segment, adjusted for
certain transactions, eliminations or adjustments that our CODM does not consider for making decisions to
allocate resources among segments or assessing segment performance. Segment Adjusted EBITDA is used as
a supplemental financial measure by management and by external users of our financial statements, such as
investors, industry analysts and lenders, to assess the operating performance of the business.
Mining costs, a non-GAAP measure, is based on reported cost of coal revenues, which is shown on our statement
of operations and comprehensive income exclusive of freight expense, Stanwell rebate, other royalties,
depreciation, depletion and amortization, and selling, general and administrative expenses, adjusted for other
items that do not relate directly to the costs incurred to produce coal at a mine. Mining costs excludes these cost
components as our CODM does not view these costs as directly attributable to the production of coal. Mining
costs is used as a supplemental financial measure by management, providing an accurate view of the costs
directly attributable to the production of coal at our mining segments, and by external users of our financial
statements, such as investors, industry analysts and ratings agencies, to assess our mine operating performance
in comparison to the mine operating performance of other companies in the coal industry.
Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
Summary
The financial and operational highlights for the three months ended March 31, 2023 include:
●
compared to $269.9 million for the three months ended March 31, 2022. This was driven by lower
revenues due to lower average realized Met coal price per Mt sold, lower sales volume and by higher
operating costs.
●
three months ended March 31, 2022. The lower sales volumes were largely driven by the impact of wet
weather and equipment breakdown on production performance and coal availability at our Australian
Operations, and a train derailment on the Blackwater line resulting in coal not being railed for two weeks
while repairs were undertaken.
●
lower compared to $266.5 per Mt sold for the same period in 2022 as the Met coal supply has readjusted
following the impact of Russia and Ukraine war on the global coal supply chain and supply constraints in
key Met coal markets during the first half of 2022.
●
million compared to $411.0 million for the three months ended March 31, 2022, due to lower coal sales
revenues and higher operating costs.
●
million cash (excluding restricted cash) and $100.0 million of availability under the ABL Facility.
Coronado Global Resources Inc.
Three months ended March 31,
2023
2022
Change
%
(in US$ thousands)
Revenues:
Coal revenues
$
738,345
$
936,628
$
(198,283)
(21.2%)
Other revenues
27,369
10,497
16,872
160.7%
Total revenues
765,714
947,125
(181,411)
(19.2%)
Costs and expenses:
Cost of coal revenues (exclusive of items
shown separately below)
380,474
357,500
22,974
6.4%
Depreciation, depletion and amortization
39,423
38,009
1,414
3.7%
Freight expenses
63,353
59,264
4,089
6.9%
Stanwell rebate
39,208
29,053
10,155
35.0%
Other royalties
85,957
83,032
2,925
3.5%
Selling, general, and administrative expenses
7,774
7,876
(102)
(1.3%)
Total costs and expenses
616,189
574,734
41,455
7.2%
Other income (expenses):
Interest expense, net
(14,665)
(17,332)
2,667
(15.4%)
discounting and credit losses
3,988
(428)
4,416
(1,031.8%)
Other, net
3,042
(2,790)
5,832
(209.0%)
Total other expenses, net
(7,635)
(20,550)
12,915
(62.8%)
Net income before tax
141,890
351,841
(209,951)
(59.7%)
Income tax expense
(34,030)
(81,943)
47,913
(58.5%)
Net income attributable to Coronado Global
Resources, Inc.
$
107,860
$
269,898
$
(162,038)
(60.0%)
Coal Revenues
Coal revenues were $738.3 million for the three months ended March 31, 2023, a decrease of $198.3 million,
compared to $936.6 million for the three months ended March 31, 2022. The decrease was driven by lower
average realized Met coal price of $239.7 per Mt sold for the three months ended March 31, 2023, compared to
$266.5 per Mt sold for the same period in 2022 and lower coal sales volume. Coal sales volume at our Australian
Operations were down by 0.6 MMt due to reduced production from higher than anticipated wet weather and
equipment breakdown, while sales volume for our U.S. Operations were 0.1 MMt higher.
Other revenues
Other revenues were $27.4 million for the three months ended March 31, 2023, an increase of $16.9 million
compared to $10.5 million for the three months ended March 31, 2022. This increase was primarily driven by a
one-off termination fee revenue from a coal sales contract cancelled at our U.S. Operations.
Cost of Coal Revenues (Exclusive of Items Shown Separately Below)
Cost of coal revenues comprise costs related to produced tons sold, along with changes in both the volumes and
carrying values of coal inventory. Cost of coal revenues include items such as direct operating costs, which
includes employee-related costs, materials and supplies, contractor services, coal handling and preparation costs
and production taxes.
Total cost of coal revenues were $380.5 million for the three months ended March 31, 2023, $23.0 million, or
6.4% higher, compared to $357.5 million for the three months ended March 31, 2022.
Our Australian Operations contributed $12.0 million to the increase in total cost of coal revenues, largely driven
by the impact of continued inflationary pressure on contractors’ costs, fuel, and other supply costs and additional
fleet mobilized in February 2022, partially offset by lower purchased coal cost and favorable average foreign
exchange rate on translation of the Australian Operations for the three months ended March 31, 2023, of A$/US$:
0.68 compared to 0.72 for the same period in 2022. Cost of coal revenues for our U.S Operations for the three
months ended March 31, 2023, was $11.0 million higher compared to the three months ended March 31, 2022,
largely due to the continued impact of inflation on labor and supply costs.
Coronado Global Resources Inc.
Freight Expenses
Freight expenses relate to costs associated with rail and port providers, including take-or-pay commitments at
our Australian Operations, and demurrage costs. Freight expenses totaled $63.4 million for the three months
ended March 31, 2023, an increase of $4.1 million, compared to $59.3 million for the three months ended March
31, 2022. Our U.S. Operations’ freight cost contributed $10.0 million to this increase, driven by coal sales under
certain contracts for which we arrange and pay for transportation to port that did not exist to the same extent
during the three months ended March 31, 2022, partially offset by lower sales volume and a favorable foreign
exchange rate on translation of our Australian Operations.
Stanwell Rebate
The Stanwell rebate was $39.2 million for the three months ended March 31, 2023, an increase of $10.1 million,
compared to $29.1 million for the three months ended March 31, 2022. The increase was largely driven by higher
realized export reference coal pricing for the prior twelve -month period used to calculate the rebate.
Other Royalties
Other royalties were $86.0 million in the three months ended March 31, 2023, an increase of $2.9 million, as
compared to $83.0 million for the three months ended March 31, 2022. Royalties have increased compared to a
significant decline in coal revenues due to the adverse impact of the new Queensland Government royalty regime
effective from July 1, 2022 to our Australian Operations, partially offset by lower sales volumes and favorable
foreign exchange rate on translation of our Australian Operations. The new royalty regime has resulted in $29.0
million additional royalty costs for the three months ended March 31, 2023.
Decrease (increase) in Provision for Discounting and Credit Losses
Decrease in provision for discounting and credit losses of $3.9 million in the three months ended March 31, 2023,
a favorable movement of $4.4 million compared to increase in provision for discounting and credit losses of $0.4
million for the three months ended March 31, 2022. The lower provision was primarily driven by timely collection
of trade receivables during the three months ended March 31, 2023.
Interest Expense, net
Interest expense, net was $14.7 million in the three months ended March 31, 2023, a decrease of $2.7 million
compared to $17.3 million for the three months ended March 31, 2022. The decrease was due to lower Notes
outstanding during the three months ended March 31, 2023, following redemptions since March 31, 2023.
Income Tax Expense
Income tax expense of $34.0 million for the three months ended March 31, 2023, decreased by $47.9 million,
compared to a tax expense of $81.9 million for the three months ended March 31, 2022, driven by lower income
before tax in the 2023 period.
The income tax expense for the three months ended March 31, 2023, is based on an annual effective tax rate of
24.0%.
Coronado Global Resources Inc.
Supplemental Segment Financial Data
Three months ended March 31, 2023 compared to three months ended March 31, 2022
Australia
Three months ended March 31,
2023
2022
Change
%
(in US$ thousands)
Sales volume (MMt)
2.2
2.8
(0.6)
(21.6)%
Total revenues ($)
398,661
605,298
(206,637)
(34.1)%
Coal revenues ($)
390,804
596,298
(205,494)
(34.5)%
Average realized price per Mt sold ($/Mt)
178.9
214.1
(35.2)
(16.4)%
Met sales volume (MMt)
1.5
1.8
(0.3)
(15.0)%
Met coal revenues ($)
372,519
554,009
(181,490)
(32.8)%
Average realized Met price per Mt sold ($/Mt)
241.9
305.8
(63.9)
(20.9)%
Mining costs ($)
236,056
202,018
34,038
16.8%
Mining cost per Mt sold ($/Mt)
108.5
76.1
32.4
42.6%
Operating costs ($)
385,226
365,707
19,519
5.3%
Operating costs per Mt sold ($/Mt)
176.4
131.3
45.1
34.3%
Segment Adjusted EBITDA ($)
13,233
238,968
(225,735)
(94.5)%
Coal revenues for our Australian Operations, for the three months ended March 31, 2023, were $390.8 million, a
decrease of $205.5 million or 34.5%, compared to $596.3 million for the three months ended March 31, 2022.
This decrease was driven by lower average realized Met coal price per Mt sold of $241.9 for the three months
ended March 31, 2023, $63.9 lower than the $305.8 per Mt sold for the same period in 2022 as Met coal price
index readjusts from record highs achieved in the first half of 2022. The decrease was exacerbated by lower
sales volume of 0.6 MMt due to higher than planned wet weather and equipment breakdown and co-shipper
delays.
Operating costs increased by $19.5 million, or 5.3%, for the three months ended March 31, 2023, compared to
the three months ended March 31, 2022. The increase was largely driven by higher mining costs, higher Stanwell
rebate and higher royalties as a result of the new royalty regime introduced by the Queensland government from
July 1, 2022. Mining costs were $34.0 million, or 16.8%, higher for the three months ended March 31, 2023,
compared to the same period in 2022, primarily due to additional fleet mobilized in February 2022 and continued
inflationary pressures on costs including contractor costs and fuel costs. This combined with lower sales volu me
resulted to a higher Mining and Operating cost per Mt sold of $32.4 and $45.1, respectively, compared to the
same period in 2022.
Segment Adjusted EBITDA of $13.2 million for the three months ended March 31, 2023, decreased by $225.7
million compared to Adjusted EBITDA of $239.0 million for the three months ended March 31, 2022, which was
driven by lower coal revenues and higher operating costs.
Coronado Global Resources Inc.
United States
Three months ended March 31,
2023
2022
Change
%
(in US$ thousands)
Sales volume (MMt)
1.5
1.6
(0.1)
(5.8)%
Total revenues ($)
367,053
341,827
25,226
7.4%
Coal revenues ($)
347,541
340,330
7,211
2.1%
Average realized price per Mt sold ($/Mt)
235.1
217.0
18.1
8.3%
Met sales volume (MMt)
1.2
1.5
(0.3)
(22.2)%
Met coal revenues ($)
283,023
337,720
(54,697)
(16.2)%
Average realized Met price per Mt sold ($/Mt)
236.9
220.0
16.9
7.7%
Mining costs ($)
128,120
115,263
12,857
11.2%
Mining cost per Mt sold ($/Mt)
90.8
76.7
14.1
18.4%
Operating costs ($)
183,766
163,142
20,624
12.6%
Operating costs per Mt sold ($/Mt)
124.3
104.0
20.3
19.5%
Segment Adjusted EBITDA ($)
185,042
179,899
5,143
2.9%
Coal revenues increased by $7.2 million, or 2.1%, to $347.5 million for the three months ended March 31, 2023
compared to $340.3 million for the three months ended March 31, 2022. This increase was largely driven by a
higher average realized Met price per Mt sold for the three months ended March 31, 2023 of $236.9, compared
to $220.0 per Mt sold for the same period in 2022, primarily due to higher prices achieved from annual domestic
fixed price contracts compared to 2022.
Operating costs increased by $20.6 million, or 12.6%, to $183.8 million for the three months ended March 31,
2023, compared to operating costs of $163.1 million for the three months ended March 31, 2022. The increase
was due to higher purchased coal to meet sales commitments and higher mining costs of $12.8 million, primarily
due to the continued impact of inflation on supplies and labor costs.
Segment Adjusted EBITDA of $185.0 million for the three months ended March 31, 2023, increased by $5.1
million compared to $179.9 million for the three months ended March 31, 2022, primarily driven by a higher
average realized Met price per Mt sold, partially offset by higher operating costs.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:
Three months ended March 31,
2023
2022
Change
%
(in US$ thousands)
Selling, general, and administrative expenses
$
7,774
$
7,876
$
(102)
(1.3)%
Other, net
(248)
4
(252)
n/m
Total Corporate and Other Adjusted EBITDA
$
7,526
$
7,880
$
(354)
(4.5)%
n/m – Not meaningful for comparison.
Corporate and other costs of $7.8 million for the three months ended March 31, 2023 remained largely consistent
compared to $7.9 million for the three months ended March 31, 2022.
Coronado Global Resources Inc.
Mining and operating costs for the three months ended March 31, 2023 compared to three months ended
March 31, 2022
A
reconciliation of segment costs and expenses, segment operating costs, and segment mining costs is shown
below:
Three months ended March 31, 2023
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and expenses
$
403,868
$
204,263
$
8,058
$
616,189
Less: Selling, general and administrative
expense
—
—
(7,774)
(7,774)
Less: Depreciation, depletion and amortization
(18,642)
(20,497)
(284)
(39,423)
Total operating costs
385,226
183,766
—
568,992
Less: Other royalties
(72,993)
(12,964)
—
(85,957)
Less: Stanwell rebate
(39,208)
—
—
(39,208)
Less: Freight expenses
(33,819)
(29,534)
—
(63,353)
Less: Other non-mining costs
(3,150)
(13,148)
—
(16,298)
Total mining costs
236,056
128,120
—
364,176
Sales Volume excluding non-produced coal
(MMt)
2.2
1.4
—
3.6
Mining cost per Mt sold ($/Mt)
108.5
90.8
—
101.6
Three months ended March 31, 2022
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and expenses
$
384,380
$
182,183
$
8,171
$
574,734
Less: Selling, general and administrative
expense
—
—
(7,876)
(7,876)
Less: Depreciation, depletion and amortization
(18,673)
(19,041)
(295)
(38,009)
Total operating costs
365,707
163,142
—
528,849
Less: Other royalties
(69,692)
(13,340)
—
(83,032)
Less: Stanwell rebate
(29,053)
—
—
(29,053)
Less: Freight expenses
(39,767)
(19,497)
—
(59,264)
Less: Other non-mining costs
(25,177)
(15,042)
—
(40,219)
Total mining costs
202,018
115,263
—
317,281
Sales Volume excluding non-produced coal
(MMt)
2.7
1.5
—
4.2
Mining cost per Mt sold ($/Mt)
76.1
76.7
—
76.3
Average realized Met price per Mt sold for the three months ended March 31, 2023 compared to three
months ended March 31, 2022
A reconciliation of the Company’s average realized Met price per Mt sold is shown below:
Three months ended March 31,
2023
2022
Change
%
(in US$ thousands)
Met sales volume (MMt)
2.7
3.3
(0.6)
(18.3)%
Met coal revenues ($)
655,542
891,729
(236,187)
(26.5)%
Average realized Met price per Mt sold ($/Mt)
239.7
266.5
(26.8)
(10.1)%
Coronado Global Resources Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
Three months ended March 31,
(in US$ thousands)
2023
2022
Reconciliation to Adjusted EBITDA:
Net income
$
107,860
$
269,898
Add: Depreciation, depletion and amortization
39,423
38,009
Add: Interest expense (net of income)
14,665
17,332
Add: Other foreign exchange (gains) losses
(2,992)
1,991
Add: Income tax expense
34,030
81,943
Add: Losses on idled assets held for sale
1,751
1,386
Add: (Decrease) increase in provision for discounting and credit losses
(3,988)
428
Adjusted EBITDA
$
190,749
$
410,987
Liquidity and Capital Resources
Overview
Our objective is to maintain a prudent capital structure and to ensure that sufficient liquid assets and funding is
available to meet both anticipated and unanticipated financial obligations, including unforeseen events that could
have an adverse impact on revenues or costs. Our principal sources of funds are cash and cash equivalents,
cash flow from operations and availability under our debt facilities.
Our main uses of cash have historically been, and are expected to continue to be, the funding of our operations,
working capital, capital expenditure, debt service obligations, business or assets acquisitions and payment of
dividends. Based on our outlook for the next twelve months, which is subject to continued changing demand from
our customers, volatility in coal prices, ongoing interruptions and uncertainties surrounding China’s import
restrictions, such as trade barriers imposed by China on Australian sourced coal and the uncertainty of impacts
from the Russia and Ukraine war on the global supply chain, we believe expected cash generated from operations
together with available borrowing facilities and other strategic and financial initiatives, will be sufficient to meet
the needs of our existing operations, capital expenditure, service our debt obligations and, if declared, payment
of dividends.
Our ability to generate sufficient cash depends on our future performance which may be subject to a number of
factors beyond our control, including general economic, financial and competitive conditions and other risks
described in this document , and Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year
ended December 31, 2022, filed with the SEC and ASX on February 21, 2023.
Liquidity as of March 31, 2023 and December 31, 2022 was as follows:
(in US$ thousands)
March 31,
2023
December 31,
2022
Cash, excluding restricted cash
$
498,048
$
334,378
Availability under ABL Facility
(1)
100,000
100,000
Total
$
598,048
$
434,378
(1)
The ABL Facility contains a springing fixed charge coverage ratio of not less than 1.00 to 1.00, which ratio is tested if
availability under the ABL facility is less than $17.5 million for five consecutive business days or less than $15.0 million on
any business day.
Our total indebtedness as of March 31, 2023 and December 31, 2022 consisted of the following:
(in US$ thousands)
March 31,
2023
December 31,
2022
Current instalments of interest bearing liabilities
$
242,326
$
242,326
Current instalments of other financial liabilities and finance lease obligations
4,304
4,585
Other financial liabilities and finance lease obligations, excluding current
instalments
7,532
8,336
Total
$
254,162
$
255,247
Coronado Global Resources Inc.
Liquidity
As of March 31, 2023, available liquidity was $598.0 million, comprising of cash and cash equivalents (excluding
restricted cash) of $498.0 million and $100.0 million of available borrowings under our ABL Facility.
As of December 31, 2022, available liquidity was $434.4 million, comprising cash and cash equivalents (excluding
restricted cash) of $334.4 million and $100.0 million of available borrowings under our ABL Facility.
Cash
Cash is held in multicurrency interest bearing bank accounts available to be used to service the working capital
needs of the Company. Cash balances surplus to immediate working capital requirements are invested in short-
term interest-bearing deposit accounts or used to repay interest bearing liabilities.
Senior Secured Notes
As of March 31, 2023, the outstanding principal amount of our Notes was $242.3 million. Interest on the Notes is
payable semi-annually in arrears on May 15 and November 15 of each year. The Notes mature on May 15, 2026
and are senior secured obligations of the Company.
The Notes are guaranteed on a senior secured basis by the Company and its wholly-owned subsidiaries (other
than the Issuer) (subject to certain exceptions and permitted liens) and secured by (i) a first-priority lien on
substantially all of the Company’s assets and the assets of the other guarantors (other than accounts receivable
and other rights to payment, inventory, intercompany indebtedness, certain general intangibles and commercial
tort claims, commodities accounts, deposit accounts, securities accounts and other related assets and proceeds
and products of each of the foregoing, or, collectively, the ABL Collateral), or the Notes Collateral, and (ii) a
second-priority lien on the ABL Collateral, which is junior to a first-priority lien, for the benefit of the lenders under
the ABL Facility.
The terms of the Notes are governed by the Indenture. The Indenture contains customary covenants for high
yield bonds, including, but not limited to, limitations on investments, liens, indebtedness, asset sales, transactions
with affiliates and restricted payments, including payment of dividends on capital stock.
The Company may redeem some or all of the Notes at the redemption prices and on the terms specified in the
Indenture. In addition, the Company may, from time to time, seek to retire or purchase outstanding debt through
open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be upon
such terms and at such prices as the Company may determine, and will depend on prevailing market conditions,
liquidity requirements, contractual restrictions and other factors.
As of March 31, 2023, we were in compliance with all applicable covenants under the Indenture.
ABL Facility
The ABL Facility, dated May 12, 2021, is for an aggregate multi-currency lender commitment of up to $100.0
million, including a $30.0 million sublimit for the issuance of letters of credit and $5.0 million for swingline loans,
at any time outstanding, subject to borrowing base availability. The ABL Facility will mature on May 12, 2024.
Borrowings under the ABL Facility bear interest at a rate equal to a BBSY rate plus an applicable margin. As at
March 31, 2023, no amounts were drawn and no letters of credit were outstanding under the ABL Facility.
As of March 31, 2023, we were in compliance with all applicable covenants under the ABL Facility.
Refinancing update
On April 28, 2023, we entered into a Syndicated Facility Agreement, or SFA, which will provide for up to $150.0
million in borrowings, including a $100.0 million sublimit for the issuance of letters of credit and $70.0 million
sublimit for revolving credit facility. The SFA replaced the ABL Facility.
Availability under the SFA is limited to an eligible borrowing base, determined by applying advance rates to
eligible accounts receivable and inventory.
Bank Guarantees and Surety Bonds
We are required to provide financial assurances and securities to satisfy contractual and other requirements
generated in the normal course of business. Some of these assurances are provided to comply with state or other
government agencies’ statutes and regulations.
Coronado Global Resources Inc.
As required by certain agreements, we had cash collateral in the form of deposits in the amount of $86.5 million
and $89.1 million as of March 31, 2023, and December 31, 2022, respectively, to provide back-to-back support
for bank guarantees, financial payments, other performance obligations, various other operating agreements and
contractual obligations under workers compensation insurance. These deposits are restricted and classified as
long-term assets in the unaudited Condensed Consolidated Balance Sheets.
In accordance with the terms of the ABL Facility, we may be required to cash collateralize the ABL Facility to the
extent of outstanding letters of credit after the expiration or termination date of such letter of credit. As of March
31, 2023, no letter of credit was outstanding and no cash collateral was required.
For the U.S. Operations in order to provide the required financial assurance, we generally use surety bonds for
post-mining reclamation. We can also use bank letters of credit to collateralize certain obligations. As of March
31, 2023, we had outstanding surety bonds of $37.6 million and letters of credit of $16.8 million issued from our
available bank guarantees, to meet contractual obligations under workers compensation insurance and to secure
other obligations and commitments.
For the Australian Operations, we had bank guarantees outstanding of $25.5 million as at March 31, 2023,
primarily in respect of certain rail and port arrangements of the Company.
As at March 31, 2023, we had total outstanding bank guarantees provided of $42.3 million to secure obligations
and commitments. Future regulatory changes relating to these obligations could result in increased obligations,
additional costs or additional collateral requirements.
Dividend
On February 21, 2023, our Board of Directors declared a bi-annual fully franked fixed ordinary dividend of $8.4
million, or 0.5 cents per CDI. On April 5, 2023, the Company paid $8.3 million, net of $0.1 million foreign exchange
gain on payment of dividends to certain CDI holders who elected to be paid in Australian dollars.
On April 28, 2023, we announced that the Company would not declare any dividends to stockholders for the fiscal
quarter ended March 31, 2023. Subject to the assessments and outcomes of potential in-organic growth options
in the future, and on-going operational performance and market conditions, our Board of Directors may declare
dividends in future quarters. Coronado’s dividend policy remains unchanged to distribute between 60% - 100%
of Free Cashflow.
Capital Requirements
Our main uses of cash have historically been the funding of our operations, working capital, capital expenditure,
the payment of interest and dividends. We intend to use cash to fund debt service payments on our Notes, the
ABL Facility and our other indebtedness, to fund operating activities, working capital, capital expenditures, partial
redemption of the Notes, business or assets acquisitions and, if declared, payment of dividends.
Historical Cash Flows
The following table summarizes our cash flows for the three months ended March 31, 2023 and 2022, as reported
in the accompanying consolidated financial statements:
Cash Flow
Three months ended March 31,
(in US$ thousands)
2023
2022
Net cash provided by operating activities
$
223,626
$
171,849
Net cash used in investing activities
(54,147)
(41,176)
Net cash used in financing activities
(951)
(4,816)
Net change in cash and cash equivalents
168,528
125,857
Effect of exchange rate changes on cash and restricted cash
(4,857)
7,679
Cash and restricted cash at beginning of period
334,629
437,931
Cash and restricted cash at end of period
$
498,300
$
571,467
Operating activities
Net cash provided by operating activities was $223.6 million for the three months ended March 31, 2023,
compared to $171.8 million for the three months ended March 31, 2022. Higher operating cash flows were driven
by the favorable movement in working capital due to higher collection of trade receivables partially offset by
higher operating costs.
Coronado Global Resources Inc.
Investing activities
Net cash used in investing activities was $54.1 million
for the three months ended March 31, 2023, compared to
$41.2 million for the three months ended March 31, 2022. Cash spent on capital expenditures for the three months
ended March 31, 2023 was $54.8 million, of which $14.6 million related to the Australian Operations and $40.2
million related to the U.S. Operations. During the three months ended March 31, 2023, a net $0.7 million restricted
deposits was redeemed relating to our Australian Operations.
Financing activities
Net cash used in financing activities was $1.0 million
for the three months ended March 31, 2023, compared to
cash used in financing activities of $4.8 million for the three months ended March 31, 2022. The net cash used
in financing activities for the three months ended March 31, 2022 and March 31, 2023, largely related to
repayment of borrowings and other financial liabilities.
Contractual Obligations
There were no material changes to our contractual obligations from the information previously provided in Item
7. “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” of our Annual
Report on Form 10-K for the year ended December 31, 2022, filed with the SEC and ASX on February 21, 2023.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with U.S. GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate
our estimates. Our estimates are based on historical experience and various other assumptions that we believe
are appropriate, the results of which form the basis for making judgements about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. All
of these accounting estimates and assumptions, as well as the resulting impact to our financial statements, have
been discussed with the Audit Committee of our Board of Directors.
Our critical accounting policies are discussed in Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022,
filed with the SEC and ASX on February 21, 2023.
Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented
See Note 2. (a) “Newly Adopted Accounting Standards” to our unaudited condensed consolidated financial
statements for a discussion of newly adopted accounting standards. As of March 31, 2023, there were no
accounting standards not yet implemented.
Coronado Global Resources Inc.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our activities expose us to a variety of financial risks, such as commodity price risk, interest rate risk, foreign
currency risk, liquidity risk and credit risk. The overall risk management objective is to minimize potential adverse
effects on our financial performance from those risks which are not coal price related.
We manage financial risk through policies and procedures approved by our Board of Directors. These specify
the responsibility of the Board of Directors and management with regard to the management of financial risk.
Financial risks are managed centrally by our finance team under the direction of the Group Chief Financial Officer.
The finance team manages risk exposures primarily through delegated authority limits approved by the Board of
Directors. The finance team regularly monitors our exposure to these financial risks and reports to management
and the Board of Directors on a regular basis. Policies are reviewed at least annually and amended where
appropriate.
We may use derivative financial instruments such as forward fixed price commodity contracts, interest rate swaps
and foreign exchange rate contracts to hedge certain risk exposures. Derivatives for speculative purposes is
strictly prohibited by the Treasury Risk Management Policy approved by our Board of Directors. We use different
methods to measure the extent to which we are exposed to various financial risks. These methods include
sensitivity analysis in the case of interest rates, foreign exchange and other price risks and aging analysis for
credit risk.
Commodity Price Risk
Coal Price Risk
We are exposed to domestic and global coal prices. Our principal philosophy is that our investors would not
consider hedging of coal prices to be in the long-term interest of our stockholders. Therefore, any potential
hedging of coal prices through long-term fixed price contracts is subject to the approval of our Board of Directors
and would only be adopted in exceptional circumstances.
The expectation of future prices for coal depends upon many factors beyond our control. Met coal has been
volatile commodity over the past ten years. Recently, in the second quarter of 2022, seaborne prices reached
record levels with both the Australian and U.S. Met coal price indices exceeding $600 per Mt, largely as result of
supply concerns in key Met coal markets and continued trade flow disruptions caused by geopolitical tensions
following Russian invasion of Ukraine. The demand and supply in the Met coal industry changes from time to
time. There are no assurances that oversupply will not occur, that demand will not decrease or that overcapacity
will not occur, which could cause declines in the prices of coal, which could have a material adverse effect on
our financial condition and results of operations.
Access to international markets may be subject to ongoing interruptions and trade barriers due to policies and
tariffs of individual countries. For example, the imposition of tariffs and import quota restrictions by China on U.S.
and Australian coal imports, respectively, may in the future have a negative impact on our profitability. We may
or may not be able to access alternate markets of our coal should additional interruptions or trade barriers occur
in the future. An inability for metallurgical coal suppliers to access international markets, including China, would
likely result in an oversupply of Met coal and may result in a decrease in prices and or the curtailment of
production.
We manage our commodity price risk for our non-trading, thermal coal sales through the use of long-term coal
supply agreements in our U.S. Operations. In Australia, thermal coal is sold to Stanwell on a supply contract. See
Item 1A. “Risk Factors—Risks related to the Supply Deed with Stanwell may adversely affect our financial
condition and results of operations” in our Annual Report on Form 10-K filed with the SEC and ASX on February
21, 2023.
Sales commitments in the Met coal market are typically not long-term in nature, and we are therefore subject to
fluctuations in market pricing. Certain coal sales in our Australian Operations are provisionally priced initially.
Provisionally priced sales are those for which price finalization, referenced to the relevant index, is outstanding
at the reporting date. The final sales price is determined within 7 to 90 days after delivery to the customer. As of
March 31, 2023, we had $57.8 million of outstanding provisionally priced receivables subject to changes in the
relevant price index. If prices decreased 10%, these provisionally priced receivables would decrease by $5.8
million. See Item 1A. “Risk Factors—Our profitability depends upon the prices we receive for our coal. Prices for
coal are volatile and can fluctuate widely based upon a number of factors beyond our control” in our Annual
Report on Form 10-K filed with the SEC and ASX on February 21, 2023.
Coronado Global Resources Inc.
Diesel Fuel
We may be exposed to price risk in relation to other commodities from time to time arising from raw materials
used in our operations (such as gas or diesel). These commodities may be hedged through financial instruments
if the exposure is considered material and where the exposure cannot be mitigated through fixed price supply
agreements.
The fuel required for our operations for the remainder of fiscal year 2023 will be purchased under fixed-price
contracts or on a spot basis.
Interest Rate Risk
Interest rate risk is the risk that a change in interest rates on our borrowing facilities will have an adverse impact
on our financial performance, investment decisions and stockholder return. Our objectives in managing our
exposure to interest rates include minimizing interest costs in the long term, providing a reliable estimate of
interest costs for the annual work program and budget and ensuring that changes in interest rates will not have
a material impact on our financial performance.
As of March 31, 2023, we had $254.4 million of fixed rate borrowings and Notes and no variable-rate borrowings
outstanding.
We currently do not hedge against interest rate fluctuations.
Foreign Exchange Risk
A significant portion of our sales are denominated in US$. Foreign exchange risk is the risk that our earnings or
cash flows are adversely impacted by movements in exchange rates of currencies that are not in US$.
Our main exposure is to the A$-US$ exchange rate through our Australian Operations, which have predominantly
A$ denominated costs. Greater than 60% of expenses incurred at our Australian Operations are denominated in
A$. Approximately 40% of our Australian Operations’ purchases are made with reference to US$, which provides
a natural hedge against foreign exchange movements on these purchases (including fuel, several port handling
charges, demurrage, purchased coal and some insurance premiums). Appreciation of the A$ against US$ will
increase our Australian Operations’ US$ reported cost base and reduce US$ reported net income. For the portion
of US$ required to purchase A$ to settle our Australian Operations’ operating costs, a 10% increase in the A$ to
US$ exchange rate would increase reported total costs and expenses by approximately $25.7 million for the three
months ended March 31, 2023, respectively.
Under normal market conditions, we generally do not consider it necessary to hedge our exposure to this foreign
exchange risk. However, there may be specific commercial circumstances, such as the hedging of significant
capital expenditure, acquisitions, disposals and other financial transactions, where we may deem foreign
exchange hedging as appropriate and where a US$ contract cannot be negotiated directly with suppliers and
other third parties.
For our Australian Operations, we translate all monetary assets and liabilities at the period-end exchange rate,
all nonmonetary assets and liabilities at historical rates and revenue and expenses at the average exchange
rates in effect during the periods. The net effect of these translation adjustments is shown in the accompanying
consolidated financial statements within components of net income.
We currently do not hedge our non-US$ exposures against exchange rate fluctuations.
Credit Risk
Credit risk is the risk of sustaining a financial loss as a result of a counterparty not meeting its obligations under
a financial instrument or customer contract.
We are exposed to credit risk when we have financial derivatives, cash deposits, lines of credit, letters of credit
or bank guarantees in place with financial institutions. To mitigate against credit risk from financial counterparties,
we have minimum credit rating requirements with financial institutions where we transact.
We are also exposed to counterparty credit risk arising from our operating activities, primarily from trade
receivables. Customers who wish to trade on credit terms are subject to credit verification procedures, including
an assessment of their independent credit rating, financial position, past experience and industry reputation. We
monitor the financial performance of counterparties on a routine basis to ensure credit thresholds are achieved.
Where required, we will request additional credit support, such as letters of credit, to mitigate against credit risk.
Credit risk is monitored regularly, and performance reports are provided to our management and Board of
Directors.
As of March 31, 2023, we had financial assets of $896.7 million, comprising of cash and restricted cash, trade
receivables and restricted deposits, which are exposed to counterparty credit risk. These financial assets have
been assessed under ASC 326, Financial Instruments – Credit Losses, and a provision for discounting and credit
losses of $1.1 million was recorded as of March 31, 2023 .
Coronado Global Resources Inc.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our
management, including the Chief Executive Officer and the Group Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure based solely on the definition of “disclosure controls and
procedures” in Rule 13a-15(e) promulgated under the Exchange Act. In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and
management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under
the supervision and with the participation of our management, including the Chief Executive Officer and the Group
Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
Based on the foregoing, the Chief Executive Officer and the Group Chief Financial Officer concluded that our
disclosure controls and procedures were effective.
Changes to Internal Control over Financial Reporting
During the fiscal quarter covered by this Quarterly Report on Form 10-Q, there were no changes in the Company's
internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act, that
materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial
reporting.
Coronado Global Resources Inc.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject to various legal and regulatory proceedings. For a description of our significant legal proceedings
refer to Note 14. “Contingencies” to the unaudited condensed consolidated financial statements included in
Part I, Item 1. “Financial Statements” of this Quarterly Report, which information is incorporated by reference
herein.
ITEM 1A. RISK FACTORS
Except as set forth below, there were no material changes to the risk factors previously disclosed in Part I, Item
1A, “Risk Factors”, of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC
and ASX on February 21, 2023:
Concerns about the environmental impacts of coal combustion, including possible impacts on global
climate issues, are resulting in increased regulation of coal combustion and coal mining in many
jurisdictions, which could significantly affect demand for our products or our securities and reduce
access to capital and insurance.
Global considerations regarding climate change continue to attract attention, particularly in relation to the coal
industry. Greenhouse Gas, or GHG, emissions from coal consumption, both directly and indirectly, and from coal
mining itself are subject to existing, pending and proposed regulation as part of initiatives to address global
climate change. A number of countries, including Australia and the United States, have already introduced, or
are contemplating the introduction of, regulatory responses to GHG emissions, including the extraction and
combustion of fossil fuels, to address the impacts of climate change.
For example, the Australian Government is reforming the existing Safeguard Mechanism that was established
under the National Greenhouse and Energy Reporting Act 2007, or NGER Act, to incentivize emissions
reductions, through declining emissions limits, called baselines, predictably and gradually on a trajectory
consistent with achieving the Government’s emissions reduction target of 43% below 2005 levels by 2030 and
net zero by 2050. On March 31, 2023, the Australian Federal Parliament passed the Safeguard Mechanism
(Crediting) Amendment Bill 2023 amending the NGER Act and other legislation, to establish the framework to
give effect to key elements of the reforms, such as introducing credits to the scheme to provide an incentive to
companies to go below their baselines.
The Safeguard Mechanism applies to industrial facilities emitting more than 100,000 tons of carbon dioxide
equivalent per year, including in electricity, mining, oil and gas production, manufacturing, transport and waste
facilities.
In accordance with Safeguard Mechanism, under this reformed legislation and once the Federal Government’s
finalises the National Greenhouse and Energy Reporting (Safeguard Mechanism) Amendment (Reforms) Rule
2023, Curragh must establish a new baseline for covered emissions (Scope 1). Curragh must take action to keep
its net Scope 1 emissions at or below the baseline through emissions reduction, purchasing emissions reductions
from another facility to which the Safeguard Mechanism applies, or purchasing and surrendering Australian
Carbon Credit Units, or ACCUs, or face enforcement measures.
The potential direct and indirect financial impact on us from existing laws, regulations policies, including the
Safeguard Mechanism, and future laws, regulations, policies, and technology developments may depend upon
the degree to which any such laws, regulations and developments result in reduced reliance on coal as a fuel
source. Such developments could result in adverse impacts on our financial condition or results of operations.
For further information see Part I, Item 1A, “Risk Factors”, of our Annual Report on Form 10-K for the year ended
December 31, 2022, filed with the SEC and ASX on February 21, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Coronado Global Resources Inc.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Safety is the cornerstone of the Company’s values and is the number one priority for all employees at Coronado
Global Resources Inc.
Our U.S. Operations include multiple mining complexes across three states and are regulated by both the U.S.
Mine Safety and Health Administration, or MSHA, and state regulatory agencies. Under regulations mandated
by the Federal Mine Safety and Health Act of 1977, or the Mine Act, MSHA inspects our U.S. mines on a regular
basis and issues various citations and orders when it believes a violation has occurred under the Mine Act.
In accordance with Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
Item 104 of Regulation S-K (17 CFR 229.104), each operator of a coal or other mine in the United States is
required to report certain mine safety results in its periodic reports filed with the SEC under the Exchange Act.
Information pertaining to mine safety matters is included in Exhibit 95.1 attached to this Quarterly Report on
Form 10-Q. The disclosures reflect the United States mining operations only, as these requirements do not apply
to our mines operated outside the United States.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following documents are filed as exhibits hereto:
Exhibit No.
Description of Document
3.1
3.2
15.1
31.1
31.2
32.1
95.1
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
___________________________
Coronado Global Resources Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Coronado Global Resources Inc.
By:
/s/ Gerhard Ziems
Gerhard Ziems
Group Chief Financial Officer (as duly authorized officer
and as principal financial officer of the registrant)
Date: May 8, 2023