UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☒
ACT OF 1934
For the quarterly period ended
OR
☐
ACT OF 1934
For the transition period from to
Commission File Number:
1-16247
Coronado Global Resources Inc.
(Exact name of registrant as specified in its charter)
Delaware
83-1780608
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Level 33, Central Plaza One
,
345 Queen Street
Brisbane, Queensland
,
Australia
4000
(Address of principal executive offices)
(Zip Code)
(
61
)
7
3031 7777
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
None
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes
☒
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes
☒
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonnon-accelerated -accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
☒
The registrant’s common stock is publicly traded on the Australian Securities Exchange in the form of CHESS Depositary Interests, or
CDIs, convertible at the option of the holders into shares of the registrant’s common stock on a 10-for-1 basis. The total number of shares
of theregistrant's commonstock, par value $0.01 value $0.01per share,outstanding on JulyOctober 31, 2023, includingshares ofcommon stockunderlying
CDIs, was
167,645,373
.
Steel starts
here.
Quarterly Report on Form 10-Q for the quarterly period ended Juneended September 30, 2023.
TABLE OF CONTENTS
Page
4
5
6
49
Coronado Global Resources Inc.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
(In US$ thousands, except share data)
Assets
Note
(Unaudited)
2023
December 31,
2022
Current assets:
Cash and restricted cash
$
$
334,629
Trade receivables, net
409,979
Income tax receivable
—
Inventories
5
158,018
Other current assets
7
60,188
Assets held for sale
4
—
26,214
Total current assets
989,028
Non-current assets:
Property, plant and equipment, net
6
1,389,548
Right of use asset – operating leases, net
17,385
Goodwill
28,008
28,008
Intangible assets, net
3,311
Restricted deposits
89,062
Deferred income tax assets
1,567
—
Other non-current assets
33,585
Total assets
$
$
2,549,927
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
$
61,780
Accrued expenses and other current liabilities
343,691
Income tax payable
119,981
Asset retirement obligations
10,646
Contract obligations
40,343
Lease liabilities
7,720
Other current financial liabilities
4,458
Liabilities held for sale
4
—
12,241
Total current liabilities
600,860
Non-current liabilities:
Asset retirement obligations
127,844
Contract obligations
94,525
Deferred consideration liability
243,191
Interest bearing liabilities
232,953
Other financial liabilities
8,268
Lease liabilities
15,573
Deferred income tax liabilities
95,671
Other non-current liabilities
27,952
Total liabilities
$
$
1,446,837
Common stock $
0.01
1,000,000,000
authorized,
167,645,373
September 30,
2023 and December 31, 2022
1,677
1,677
Series A Preferred stock $
0.01
100,000,000
authorized,
1
and December 31, 2022
—
—
Additional paid-in capital
1,092,282
Accumulated other comprehensive losses
(91,423)
Retained earnings
100,554
Total stockholders’ equity
1,103,090
Total liabilities and stockholders’ equity
$
$
2,549,927
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
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
(1,385)
—
(1,385)
—
Decrease (increase) in provision for
discounting and credit losses
Other, net
Total other (expense) income, net
Income tax expensebenefit (expense)
Net (loss) income attributable to Coronado
Coronado Global Resources Inc.
$
$
$
$
Other comprehensive income,loss, net of income
taxes:
Foreign currency translation adjustments
Total other comprehensive loss
Total comprehensive (loss) income attributable
attributable to Coronado Global
Resources Inc.
$
$
$
$
Basic
Diluted
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
167,645,373
$
1,677
1
$
—
$
1,092,282
$
(91,423)
$
100,554
$
1,103,090
Net income
—
—
—
—
—
—
107,860
107,860
Other comprehensive loss
—
—
—
—
—
(4,503)
—
(4,503)
Total comprehensive (loss) income
—
—
—
—
—
(4,503)
107,860
103,357
Share-based compensation for equity
classified awards
—
—
—
—
(308)
—
—
(308)
Dividends
—
—
—
—
—
—
(8,382)
(8,382)
Balance March 31, 2023
167,645,373
$
1,677
1
$
—
$
1,091,974
$
(95,926)
$
200,032
$
1,197,757
Net income
—
—
—
—
—
—
91,311
91,311
Other comprehensive loss
—
—
—
—
—
(7,797)
—
(7,797)
Total comprehensive (loss) income
—
—
—
—
—
(7,797)
91,311
83,514
Share-based compensation for equity
classified awards
—
—
—
—
1,289
—
—
1,289
Balance June 30, 2023
167,645,373
$
1,677
1
$
—
$
1,093,263
$
(103,723)
$
291,343
$
1,282,560
Net loss
—
—
—
—
—
—
(21,083)
(21,083)
Other comprehensive loss
—
—
—
—
—
(18,247)
—
(18,247)
Totalcomprehensive loss
—
—
—
—
—
(18,247)
(21,083)
(39,330)
Share-based compensation for equity
classified awards
—
—
—
—
582
—
—
582
Dividends
—
—
—
—
—
—
(8,382)
(8,382)
Balance September 30, 2023
167,645,373
$
1,677
1
$
—
$
1,093,845
$
(121,970)
$
261,878
$
1,235,430
Coronado Global Resources Inc.
Form 10-Q September 30, 20237
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
167,645,373
$
1,677
1
$
—
$
1,089,547
$
(44,228)
$
30,506
$
1,077,502
Net income
—
—
—
—
—
—
269,898
269,898
Other comprehensive income
—
—
—
—
—
16,258
—
16,258
Total comprehensive income
—
—
—
—
—
16,258
269,898
286,156
Share-based compensation for equity
classified awards
—
—
—
—
84
—
—
84
Dividends
—
—
—
—
—
—
(150,881)
(150,881)
Balance March 31, 2022
167,645,373
$
1,677
1
$
—
$
1,089,631
$
(27,970)
$
149,523
$
1,212,861
Net income
—
—
—
—
—
—
291,995
291,995
Other comprehensive loss
—
—
—
—
—
(50,168)
—
(50,168)
Total comprehensive (loss) income
—
—
—
—
—
(50,168)
291,995
241,827
Share-based compensation for equity
classified awards
—
—
—
—
1,731
—
—
1,731
Dividends
—
—
—
—
—
—
(200,040)
(200,040)
Balance June 30, 2022
167,645,373
$
1,677
1
$
—
$
1,091,362
$
(78,138)
$
241,478
$
1,256,379
Net income
—
—
—
—
—
—
150,575
150,575
Other comprehensive loss
—
—
—
—
—
(41,998)
—
(41,998)
Totalcomprehensive (loss) income
—
—
—
—
—
(41,998)
150,575
108,577
Share-based compensation for equity
classified awards
—
—
—
—
289
—
—
289
Dividends
—
—
—
—
—
—
(125,734)
(125,734)
Balance September 30, 2022
167,645,373
$
1,677
1
$
—
$
1,091,651
$
(120,136)
$
266,319
$
1,239,511
See accompanying notes to unaudited condensed consolidated financial statements.
Coronado Global Resources Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In US$ thousands)
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
Loss on debt extinguishment
1,385
—
Non-cash interest expense
Amortization of contract obligations
Loss on disposal of property, plant and equipment
Equity-based compensation expense
Deferred income taxes
Reclamation of asset retirement obligations
(Decrease) increase in provision for discounting and credit losses
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Other assets
Accounts payable
Accrued expenses and other current liabilities
Operating lease liabilities
Income tax payable
Change in other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Purchase of restricted and other deposits
Redemption of restricted and other deposits
Net cash used in investing activities
Cash flows from financing activities:
Debt issuance costs and other financing costs
(3,420)
—
Principal payments on interest bearing liabilities and other financial liabilities
Principal payments on finance lease obligations
Premiums paid on early redemption of debt
—
Dividends paid
Net cash used in financing activities
Net increase in cash and restricted cash
Effect of exchange rate changes on cash and restricted cash
Cash and restricted cash at beginning of period
334,629
437,931
Cash and restricted cash at end of period
$
$
Supplemental disclosure of cash flow information:
Cash payments for interest
$
$
Cash paid for taxes
$
$
Restricted cash
$
251
$
251
See accompanying notes to unaudited condensed consolidated 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 equityfor 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 and sixnine months ended JuneSeptember 30, 2023 are notnecessarily
necessarily indicative of the results that may be expected forthe yearending 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
two
one
owned idled mine complex (Greenbrier) and
two
The Company operates its business along
two
organization of the
two
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 STATEMENTS (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 a reportable segment but is discretely disclosed
for purposes of reconciliation to the Company’s unaudited Condensed Consolidated Financial Statements.
Reportable segmentresults asof and for for the three and six months and ninemonths ended JuneSeptember 30,2023 and 2022 are presented
presented below:
(in US$ thousands)
Australia
United
States
Other and
Corporate
Total
Three months ended JuneSeptember 30, 2023
Total revenues
$
$
$
—
$
Adjusted EBITDA
Total assets
Capital expenditures
Three months ended JuneSeptember 30, 2022
Total revenues
$
$
$
—
$
Adjusted EBITDA
(10,349)
Total assets
Capital expenditures
Total revenues
$
$
$
—
$
Adjusted EBITDA
Total assets
Capital expenditures
Total revenues
$
$
$
—
$
Adjusted EBITDA
Total assets
Capital expenditures
The reconciliations of Adjusted EBITDA tonet income attributable to the the Company for thethree and sixnine months
ended JuneSeptember 30, 2023 and 2022 are as follows:
Three months ended
(in US$ thousands)
2023
2022
2023
2022
Net (loss) income
$
$
$
$
Depreciation, depletion and amortization
Interest expense (net of interest income)
Income tax (benefit) expense
Other foreign exchange gains
(1)
Loss on extinguishment of debt
1,385
—
1,385
—
Losses (gains) on idled assets
(2)
456
(Decrease) increase in provision for
discounting and credit losses
Consolidated Adjusted EBITDA
$
$
$
$
(1)
certain entities within the group that are denominated in currencies other than their respective functional currencies. These gains gains and losses
are included in “Other, net” on the unaudited Consolidated Statement of Operations and Comprehensive Income.
(2)
assets that were classified as held for sale. Refer to Note 4 “Assets held for sale” for further details.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Coronado Global Resources Inc.
The reconciliations of capital expenditures per the Company’s segment information to capital expenditures
disclosedontheunaudited CondensedConsolidatedStatements ofCashFlowsfor the six months ended Juneninemonthsended
September 30, 2023 and 2022 are as follows:
(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
(11,241)
(7,475)
Advance payment to acquire long lead capital items
—
Capital expenditures per segment detail
$
$
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 JuneSeptember 30, 2023
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total coal revenue
Other
(1)
Total
$
$
$
Three months ended JuneSeptember 30, 2022
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total coal revenue
Other
(1)
Total
$
$
$
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total coal revenue
Other
(1)
Total
$
$
$
(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.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Coronado Global Resources Inc.
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 idle since April 1, 2020.
The Company remains committed to a plan to sell the asset, however, on March 31, 2023, the Company
concluded that the timing of the sale within the next twelve months is uncertain. As such, the Greenbrier mining
asset has been reclassified as held and used since March 31, 2023, as it does not meet the criteria for
classification as held for sale.
The Greenbrier mining asset remains idle and the Company does not intend to recommence operations at the
mine.
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)
2023
December 31,
2022
Raw coal
$
$
50,604
Saleable coal
45,913
Total coal inventories
96,517
Supplies inventory
61,501
$
$
158,018
Coal inventories measured atits net realizable value were $
million
and $
5.0
and December 31, 2022, 2022, respectively, and primarily relates to coaldesignated for deliveries underthe Stanwellnon-market
non-market coal supply agreement.
6. Property, Plant and Equipment
(in US$ thousands)
2023
December 31,
2022
Land
$
$
27,711
Buildings and improvements
91,336
Plant, machinery, mining equipment and transportation vehicles
1,012,844
Mineral rights and reserves
390,394
373,309
Office and computer equipment
9,488
Mine development
565,106
Asset retirement obligation asset
87,877
Construction in process
82,713
2,250,384
Less accumulated depreciation, depletion and amortization
860,836
Property, plant and equipment, net
$
$
1,389,548
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Coronado Global Resources Inc.
7. Other Assets
(in US$ thousands)
September 30,
2023
December 31,
2022
Other current assets
Prepayments
$
33,761
$
26,831
Long service leave receivable
7,901
7,884
Taxcredits receivable
4,183
4,183
Deposits to acquire capital items
33,289
—
Short term deposits
21,618
—
Other
17,670
21,290
Totalother current assets
$
118,422
$
60,188
The Company hasother current assetswhich includes prepayments,favorable mineral leases,long service leave
receivable,equipmentdeposits,shorttermdepositsandcoalfieldemploymentenhancementtaxcredit
receivable.
Short term deposits are term deposits that do not meetthe cash and cash equivalents criteria.
8. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
(in US$ thousands)
2023
December 31,
2022
Wages and employee benefits
$
$
38,687
Taxes other than income taxes
5,988
Accrued royalties
117,131
Accrued freight costs
44,496
Accrued mining fees
103,492
Acquisition related accruals
11,669
Other liabilities
22,228
Total accrued expenses and other current liabilities
$
$
343,691
Acquisition related accruals is an accrual for the estimated remaining stamp duty payable on the Curragh
acquisition,includingpenaltyinterest,of$
further details.
From time to time, the Company enters into mining services contracts, which may include embedded leases of
mining equipment and other contractual agreements to lease mining equipment and facilities. Based upon the
Company’sassessment of theterms within termsof aspecificlease agreement,these agreements, the Company classifies classifies a lease as leaseeither finance as eitheror
During thethree nine months period ended September 30, June30, 2023,the Companyentered into a number of agreements
to a numberleaseminingequipment.Onmobilization of agreements to
assets and operating lease liabilities of $
As of September 30,2023, there are additionaloperating leases ofmining equipment, whichhave not yet been
mobilized, that havea present valueof minimum leasepayments of approximately $
34.0
million. These operating
leases have commenced in October 2023 with lease termsof
5
years.
Information related to the Company’s right-ofright-of-use use assets and related lease liabilities are as follows:
NOTES TO UNAUDITED CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS(Continued)
Coronado Global Resources Inc.
Form 10-Q September 30, 202314
Three months ended
Nine months ended
(in US$ thousands)
September 30,
2023
September 30,
2022
September 30,
2023
September 30,
2022
Operating lease costs
$
5,200
$
1,699
$
9,697
$
6,514
Cash paid for operating lease liabilities
4,310
2,039
9,311
6,202
Finance lease costs:
Amortization of right of use assets
32
31
92
130
Interest on lease liabilities
2
4
8
21
Totalfinance lease costs
$
34
$
35
$
100
$
151
(in US$ thousands)
2023
December 31,
2022
Operating leases:
Operating lease right-of-use assets
$
$
17,385
Finance leases:
Property and equipment
360
371
Accumulated depreciation
(186)
Property and equipment, net
185
Current operating lease obligations
7,593
Operating lease liabilities, less current portion
15,505
Total operating lease liabilities
23,098
Current finance lease obligations
127
Finance lease liabilities, less current portion
—
68
Total Finance lease liabilities
195
Current lease obligation
7,720
Non-current lease obligation
15,573
Total Lease liability
$
$
23,293
September 30,
2023
December 31,
2022
Weighted Average RemainingLease Term (Years)
Weighted average remaining lease term – financeleases
0.75
1.52
Weighted average remaining lease term – operatingleases
3.19
4.11
Weighted Average DiscountRate
Weighted discount rate – finance lease
7.60%
7.60%
Weighted discount rate – operating lease
9.00%
8.94%
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Coronado Global Resources Inc.
The Company’s operating leases have remaining lease terms of
1
5
to extend the terms where the Company deems it is reasonably certain the options will be exercised. Maturities
of lease liabilities as at JuneSeptember 30, 2023, are as follows:
(in US$ thousands)
Operating
Lease
Finance
Lease
Year ending December 31,
2023
$
$
2024
2025
—
2026
—
2027
—
Thereafter
—
Total lease payments
Less imputed interest
Total lease liability
$
$
The following is a summary of interest-bearing liabilities at JuneSeptember 30, 2023:
December 31, 2022
Weighted Average
Interest Rate at
Final
Maturity
10.75
% Senior Secured Notes
$
242,326
$
242,326
12.14
%
(2)
2026
New ABL Facility
—
—
Discount and debt issuance costs
(1)
(9,373)
Total interest bearing liabilities
$
$
232,953
(1)
Debt issuance costs incurred on the establishment of the ABL Facility has been included within "Other non-current assets" in the
unaudited Condensed Consolidated Balance Sheet.
(2)
Senior Secured Notes
Asof JuneSeptember 30, 2023,the Company’s aggregateprincipal amountof the
10.750
%Senior Secured Notes
due2026,orthe Notes, dueoutstandingwas2026, or the Notes, outstanding was $
242.3
May 15, 2026
secured 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 As of JuneSeptember 30, 2023, theCompany was in compliance with allapplicable covenants under
the Indenture.
Under the terms of theIndenture, upon the occurrence of a “Changeof Control” (as defined in theIndenture), the
issuerisrequiredtomakeanoffer,oraChangeofControlOffer,torepurchasetheNotesat
101
%of the
date. Alternatively,if theissuer electsto redeemall ofthe Notes,during the12-month periodcommencingon
May 15 ofthe years setforth below atthe redemptionprices (expressedin percentages ofprincipal amount on
the redemption date) set forth below, plus accrued and unpaid interest to,but not including, the redemption date,
the issuer is not required to make a Change of ControlOffer:
108.06%
2024
104.03%
2025 and $thereafter
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Coronado Global Resources Inc.
On May8, 2023,the Company, Coronado CoalCorporation, a Delawarecorporation and whollyowned subsidiary
of the Company,Coronado Finance PtyLtd, an Australianproprietary companyand a whollyowned subsidiary
of the Company,or an AustralianBorrower, CoronadoCurragh Pty Ltd,an Australian proprietarycompany and
whollyownedsubsidiaryoftheCompany,oranAustralianBorrowerand,togetherwiththeotherAustralian
Borrower, the Borrowers,and the other guarantors partythereto, collectively with theCompany,the Guarantors
and, togetherwith theBorrowers, theLoan Parties,entered intoa seniorsecured asset-basedrevolving credit
agreement inan initialaggregate amountof $
150.0
Services AustraliaPty Ltd,as theAdministrative Agent,Global LoanAgency ServicesAustralia NomineesPty
Ltd, as theCollateral Agent,the Hongkong andShanghai Banking CorporationLimited, SydneyBranch, as the
Lender, and DBS BankLimited, Australia Branch,as theLender and, togetherwith the otherLender, the Lenders.
On August 3, 2023, the Companysatisfied all conditions precedentunder the New ABL Facility,at which time it
became effective and replaced the predecessorABL Facility.
The NewABL Facilitymatures inAugust 2026and providesfor upto $
150.0
million inOn May 12, 2021, the Company entered into a senior secured asset-based revolving credit agreement providingforborrowings, including a multi-currencymillion sublimit for the issuance asset-based-loanof letters of credit and $ facility,million sublimit as a revolvingcredit facility.100.020 million,including a $30.05.0time outstanding, subject to borrowing base availability.Theunder the ABL Facility matures onMay 12, 2024.
$
100.0
70.0
Availability under the NewABL Facility islimited to aneligible borrowing base, determinedby applying customary
advance rates to eligible accounts receivable and inventory.
Borrowings underthe NewABL Facilitybear interestat arate perannum equalto anapplicable rateof
2.80
%
plus BBSY,for loans denominated in A$, or SOFR, for loans denominatedin US$, at the Borrower’s election.
The NewABL Facilityis guaranteedby theGuarantors.Amounts outstandingunder theNew ABLFacility are
secured by(i) firstpriority lienin theaccounts receivableand otherrights topayment, inventory,intercompany
indebtedness, certain generalintangibles and commercial tortclaims, commodities accounts,deposit accounts,
securities accountsand otherrelated assetsand proceedsand productsof eachof theforegoing, collectively,
the New ABL Collateral, (ii)a second-priority lien on substantiallyall of the Company’sassets and the assetsof
the guarantors, other than the New ABLCollateral, and (iii) solely in the case ofthe obligations of the Australian
Borrower, a featherweightfloating security interest over certainassets of the Australian Borrower,in each case,
subject to certain customary exceptions.
The NewABL Facilitycontains customary representationsand warrantiesand affirmative andnegative covenants
including, amongothers, acovenant regardingthe maintenanceof leverageratio tobe lessthan
3.00
times, a
covenant regarding maintenance of interest coverage ratio to be more than
3.00
times, covenants relating to the
payment of dividends, or purchase or redemption of, with respect to any Equity Interests of Holdings orany of its
Subsidiaries,covenantsrelatingtofinancialreporting,covenantsrelatingtotheincurrenceofliens 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 andsales of allor substantially allof the Borrowersand Guarantors’, collectivelythe Loan Parties,assets
and limitations on changes in the nature of the Loan Parties’business.
Subjecttocustomarygraceperiodsandnoticerequirements,theNew ABL Facility inalso ancontains initialcustomary
events of default.
Under the terms of New ABL Facility, principala Review Event (as defined in the New ABL Facility) is triggered if, among
other matters, a “change of control” (as defined in the amountNew ABL Facility) occurs.
Following theoccurrence ofa ReviewEvent, theBorrowers mustpromptly meetand consultin goodfaith with
the Administrative Agent and the Lenders to agree astrategy to address the relevant Review Event including but
not limited to a restructure of the terms of the New ABL Facility to the satisfaction of the Lenders.If at the end of
a period of$
business days million sublimit forafter theoccurrenceof theReview Event, the issuance ofLenders lettersare notsatisfiedwith the
result of credittheir discussion or meeting with the Borrowers or do not wish to and $continue to provide their commitments,
the Lenders may declare all amounts owing million for swinglineloans, at any
immediately due and payable, terminate such
letter of credit obligations and/or exercise any and all remediesand other rights under the New ABL Facility.
To establishthe New ABL Facility, the Company incurred debt issuance costs of $
3.4
million. The Company has
elected an accountingpolicy to paypresent debtissuance costs incurredbefore the debt liabilityis recognized (e.g.
before the debtproceeds are received)as an assetwhich will beamortized ratablyover the termof the facility.
The costswill notbe subsequentlyreclassified as a feedirectdeduction ofthe liability.The carryingvalue ofdebt
issuance costs, recordedas “Othernon-current assets” in respect of unutilizedthe unaudited Condensed commitments, on amountsConsolidated Balance Sheet
was $
2.9
million as at September 30, 2023.
NOTES TO UNAUDITED CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS(Continued)
Coronado Global Resources Inc.
Form 10-Q September 30, 202317
Asat JuneSeptember 30,2023,theletterofcreditsublimithadbeenpartiallyusedtoissue$
21.6
millionofbank
guarantees onbehalf ofthe Companyand
no
under letters of creditthe revolving were outstandingcredit sublimit under theof New
ABL Facility. ABL Facility.
As at JuneSeptember 30,2023, the Company was in compliance compliance with all applicable covenants under the
New ABL Facility.
OnAugust3,2023, the unaudited ConsolidatedNewABLFacilityreplacedthepredecessorABLFacility.Asaresultoftheearly
in its unauditedCondensed ConsolidatedStatement ofOperations andComprehensive Incomefor eachof the
three and nine months ended September 30, 2023 and December 31, 2022, respectively.2023.
Forthe sixnine monthsended JuneSeptember 30,2023and 2022,theCompanyestimated itsannualeffective taxrateand
and applied this effective tax rate to itsyear-to-date pretax income at the endof the interim reporting period. The tax
taxeffectsofunusualor infrequentlyoccurringitems, includingeffectsofchanges intaxlawsor ratesand changes
changes in judgment about the realizability of deferredtax assets, arereported in the interim period in the interimperiod in which theyoccur.
occur. The Company’s 2023 estimatedannual effective tax rateis
%, which has been favorablyimpacted by mine
mine depletion deductions in the United States.
The Company had an an income tax expense of of $
on million for the six months ended June 30, 2023.anincomeIncomebefore taxexpense of $
discrete benefit of $
2.1
million relating to the prior year for Australia.
Income tax expense of$
235.4
million for the ninemonths ended September30, 2022 was calculated basedonan
an 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 sixnine months ended Juneended September 30,2023, the Company Company had
no
interestorpenaltiesisrequired,itistheCompany’spolicy toincludetheseasacomponentofincometax
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.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Coronado Global Resources Inc.
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 JuneSeptember 30,
(in US$ thousands, except per share data)
2023
2022
2023
2022
Numerator:
Net (loss) income attributable to Company
stockholders
$
$
$
$
Denominator (in thousands):
Weighted-average shares of common stock
outstanding
167,645
167,645
167,645
167,645
Effects of dilutive shares
Weighted average diluted shares of common
stock outstanding
(Loss) Earnings Per Share (US$):
Basic
Dilutive
The Company’s common stock is publicly traded on the ASX in the form of CDIs, convertible at the option of the
holders into shares of the Company’s common stock on a
10-for-1 basis
.
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:
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
AsofSeptember30,2023,therewere
no
financialinstrumentsrequiredtobemeasuredatfairvalueona
recurring basis.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Coronado Global Resources Inc.
Other Financial Instruments
The following methods and assumptions are used to estimate the fair value of other financial instruments as of
●
and other current financial liabilities: The carrying amounts reported in the
unaudited Condensed Consolidated unauditedCondensed
these instruments.
●
values approximate the carrying values reported in the unaudited Condensed Consolidated Balance
Sheets.
●
cost. As of JuneSeptember 30, 2023,there were
no
New ABL ABL Facility. The estimated251.7249.6 million based upon quoted market
fair valueof theNotes asof June September30, 2023was approximately
$
prices in a marketthat is not considered active (Level 2).
The Company’s Accumulated Other Comprehensive Losses consists of foreign currency translation adjustment
of subsidiaries for which the functional currency is different of the Group’s functional currency in U.S. dollar.
Accumulated other comprehensive losses consisted of the following at JuneSeptember 30, 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
Loss on long-term intra-entity foreign currency transactions
Total net current-period other comprehensive loss
Balance at JuneSeptember 30, 2023
$
(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 JuneSeptember 30, 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 Accounting Standards Codification, or ASC, 842 and continue to be
accounted for under the guidance in ASC 932, Extractive Activities – Mining.
(b) Other commitments
As of June September30, 2023,purchasecommitmentsforcapital expenditureswere $
obligated within the next twelve months.
NOTES TO UNAUDITED CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS(Continued)
Coronado Global Resources Inc.
Form 10-Q September 30, 202320
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
13 years
.
IntheU.S., theCompany typicallynegotiates itsrailand coalterminal accesson anannual basis. As of Juneof
September30,2023,theseAustralianandU.S. commitmentsundertake-or-pay arrangementstotaled
$
approximately $
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.
No
arrangements are reflected in the Company’s unaudited Condensed Consolidated Balance Sheets. 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
$
89.1
agreements and contractual obligations under workers compensation insurance.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 ABLNew ABL Facility, the Company may be required to to cashcollateralize the
New ABL
Facility tothe extent of outstanding letters ofcredit after the expiration ortermination date of such letter
of credit. letter ofcredit wasoutstanding afterthe expirationor terminationdate cash collateral was required.40.840.9 million and letters24.224.1 million, including$
As of JuneSeptember 30,2023,
no
and
no
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 June 30, September 30, 2023,the Company had outstanding outstanding suretybonds of $
of credit million issued from our available bank guarantees undertheNewABLFacility,to meetcontractualobligationsunder workers
of $
16.8
compensation insuranceand tosecure other obligations and commitments.
For theAustralian Operations,the Companyhad bankguarantees outstanding of of $
4.9
million issued fromthe New ABLFacility,as at June September30, 2023, primarilyprimarily in respect ofcertain rail and port arrangements of the Company.port41.021.6 million toissued secureobligations andfor the commitments. FutureNew ABL Facility.Future
arrangements.
As at September 30, 2023, the Company June 30,in aggregate had total outstanding bank 2023, theguarantees provided of $
40.9
million to Company hadsecure obligations total outstandingand commitments, bank guaranteesprovided ofincluding $
regulatory changes relating to these obligations could could result in in increased
obligations, additionalcosts oradditional
collateral requirements.
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 $
82.2
(A$
12.1
awaiting the outcome of this objection. The outcome of this this objection remains uncertain.
The Company continues to maintain its position and the estimated accrual of $
43.0
dutypayable onthe Curraghacquisition basedon legaland valuationadvice obtained. The InOctober2022,the
Company madea
partial payment followingfiling of theobjection reducingthe estimated accrualto $
(A$
17.3
which is included within “Accrued Expenses and Other Current Liabilities” in its unauditedCondensed
Condensed Consolidated Balance sheet, as at JuneSeptember 30, 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.
NOTES TO UNAUDITED CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS(Continued)
Coronado Global Resources Inc.
Form 10-Q September 30, 202321
‑
Party Transactions
On MaySeptember 25, 2023, Energy & 8, 2023,Minerals Group, the Company’s controlling stockholder through its ownership
of Coronado GroupLLC, including throughcertain of itsaffiliates and managedfunds (the Sellers),advised the
Companythatithadenteredintoamembershipinterestpurchaseagreement,orMIPA,withSev.enGlobal
Investmentsa.s.,orSGI.Acopyof the Company, Coronado Coal Corporation, a DelawareMIPA corporation and whollyhas owned subsidiary
Committee Borrowerreferred and,to togetherbelow withasof the otherdate Australian
understands that, pursuantto the other guarantors partythereto, collectively with the Company,terms of the Guarantors
Group LLC toa wholly-ownedsubsidiary ofSGI. Werefer to the Borrowers, theLoan Parties,entered intoa seniorsecured asset-basedrevolving credit
The Global LoanCompany Agency Servicesalso Australia Nomineesunderstands Ptythat,underLtd, as the Collateral Agent,MIPA, the Hongkong and Shanghai BankingSGI Corporation Limited,Transaction Sydney Branch, asis the
conditions including regulatory approvals in the U.S. and togetherwith the otherLender, the Lenders.
The NewBoard of ABL FacilityDirectors has appointed matures ina special committee August 2026of independentdirectors, or theSpecial Committee,
to, among other things, assessthe impact and consequences of theSGI Transaction on theCompany and take
such actions as the Special Committee deems appropriatein connection with the SGI Transaction.
The Energy andMinerals Grouphas reported thatfollowing theclosing ofthe SGI Transaction,SGI willbe the
direct or indirect owner ofCoronado Group LLC. As of thedate of this Quarterly Report onForm 10-Q, Coronado
Group LLCis currentlythe directowner of
845,061,399
CDIs (representinga beneficialinterest in
84,506,140
sharesof commonstock,or
50.4
% ofthe Company’soutstandingtotal commonstock) and providesfor upto $the
Share.
Based on information that the Company is currently aware of,on completion of the SGI Transaction, a change of
Liabilities” for further information. limited to an
Under the eligible borrowing base, determinedCompany’s by applying customary
completionoftheSGITransaction,howevertheCompensationandNominatingCommitteeoftheBoardof
Directors, at itssole discretion, will determinehow the outstanding awardsunder the planwill be dealtwith, which
may include acceleration of the vesting conditions.
Inaddition,certaincontractcounterparties,includingStanwell,customers,suppliersandthird-partyproviders
may assertcontractual rights, suchas consent ortermination rights thatmay be triggered by the Guarantors.Amounts outstandingunder theNew ABLFacility arechange of control
For a number of customers and the assets
Transaction Collateral, and (iii)may solely in triggerafinancialorsuitabilityassessmentbythe case of counterparty,whichmayentitlethe
counterpartytoterminatethe obligations of agreement,requestfurthersecurityorseekamendmentstothe Australian
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Coronado Global Resources Inc.
Curragh Housing Transaction
On May 8, 2023, the Company entered into an agreement, the Curragh Housing 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 from Contracts with
Customers
underlying property, plant and equipment on its condensed consolidated balance sheet. Upon completion, the
proceeds of $
34.6
Liabilities” on theCompany’s condensedconsolidated balance sheet.Condensed Consolidated Balance Sheet. The term of the the financing arrangementis
ten years
12.8
%.
In connectionwith thistransaction, the Company Company borrowedwill borrow anadditional amount of$
40.4
which will be recorded in “Interest Bearing Liabilities” on completion date. The term of the arrangement is
ten
years
with an effective interest rate of
12.8
%.
The Curragh Housing Agreement is subject to conditions precedent not completed as at JuneSeptember 30, 2023.
In line with the Company’s capital management strategy, the above transactions provide additional liquidity. In
addition, the accommodation services component of the Curragh Housing Agreement 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 (the Company)as ofJune September 30,2023,the relatedcondensedconsolidatedstatementsofoperationsand
comprehensive income for the three and six-monthnine-month periods ended JuneSeptember 30, 2023 and 2022, thecondensed
condensed consolidated statements of stockholders’ equity equity for the three-months periods ended ended March 31,June
30 and JuneSeptember 30, 2023
and 2022, the condensed consolidated statements of cash flows forthe six-month nine-month
periods ended June September30, 2023
and2022, andtherelated notes(collectively (collectively referred to as the “condensed
consolidated interim financial asthe“condensedconsolidatedinterimfinancial
statements”). Based on our reviews, we arenot aware of of any material modifications
that should be made to thecondensed consolidated interim financial statements for them to be interim financialstatements forthem tobe inconformity with
U.S. generallyacceptedaccounting 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 standardsof the PCAOB.A review of the PCAOB. Areview of interimfinancial 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
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 includednotes to thosestatementsincluded elsewherein this QuarterlyReporton Form 10-Q. 10-Q.In addition, this
Quarterly Report on Form 10-Q reportshould
be read in conjunctionwith the ConsolidatedFinancial Statements
foryear ended December 31, 2022 included
in Coronado GlobalResources Inc.’s Annual Annual Report on Form 10-K
for the year the year ended December31, 2022, filed filed
withtheU.S. Securitiesand ExchangeCommission, orSEC, andtheAustralianSecuritiesExchange,orthe
the Australian Securities Exchange, or the ASX, on February21, 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 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:
●
●
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;
●
relating to mining activities, including possible impacts on global climate issues, which could result in
increased regulation of coal combustion and requirements to reduce GHG emissions in many
jurisdictions, including federal and state government initiatives to control GHG emissions could increase
costs associated withcoal productionand consumption, suchas costs foradditional controls toreduce
carbondioxideemissionsorcoststopurchaseemissionsreductioncreditstocomplywithfuture
emissionstradingprograms, which could significantly affectdemandforimpact our productsfinancial oroursecuritiescondition and reducedresultsof
operations, affect demandfor our productsor oursecurities and reducedaccess to capitaland insurance;
Coronado Global Resources Inc.
●
the impact of the SGI Transaction, including the impact of the SGI Transactionon change of control and
related provisions in material agreements;
●
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 collectingreceivables
and customers and/or suppliers asserting force majeure or other reasons for not performing their
contractual obligations to us;
●
●
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;
●
●
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
Coronado Global Resources Inc.
Form 10-Q September 30, 202326
●
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
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, and Part II, Item 1A. “Risk Factors” of our Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2023, filed with SEC and ASX on May 8, 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 10-Q and hereafter in our other filings 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.
control,includingadversegeologicalconditionsatourU.S.Operationsimpactingproductionratesyieldand
unexpected downtime forrepairs and maintenancefollowing a mechanicalfailure of oneof the draglinesat our
AustralianOperations.Inaddition,coalproductionratesatourAustralianOperationswerelowerin the Companythird
planned maintenance on the two coal preparation plants. Overall, these events contributed to the lower saleable
production of 0.8 MMt comparedto the three months ended March 31, 2023. The AUS PLV HCC averaged $293.8 per Mt for the
volume compared to the six months ended June 30, 2022.
inventory built in the previous quarter.
Cokingcoalindexpricesimprovedinthethirdquarterof2023comparedtothepreviousquarterduetoa
combinationoftightsupplyfromtheAustraliancoalmarket,whichwasimpactednegativelyby continuedrail
constraints and soldplanned 7.6maintenance MMtdisruptions ofto coal.operations Metcoalsales
demand from Indian steel mills restocking raw material asthe monsoon season comes to an end. The Australian
Premium LowVolatileHard CokingCoal, orAUS PLVHCC, indexprice averaged$263.6 perMt for the sixmonths endedthree
TheAUS PLVHCCaveraged$283.5perMtforthenine monthsendedSeptember30,2023,$109.0perMt
lower, compared to the nine months ended September 30, 2022. The spot price of AUS PLV HCC reached $333
per Mt during the three months ended September 30, 2023.
OurresultsfortheninemonthsendedSeptember30,2023,wereadverselyimpactedby average realized(1) loweraverage
realized Metprice per Mt sold which was $65.7compared per Mt lowerto the than the
deployed to compared to therecover pre-strip same period inoverburden removal, 2022, largely due(3) significant to significant
wetweather events duringthe firstquarter of
2023 and equipment breakdowns,breakdownatourAustralianOperations impacting production, performance(4)railconstraints and
disruption coalto availability,port andoperationsimpactingtimingofsalesatourAustralianOperations,(5)adversegeological
Coronado Global Resources Inc.
30, 2023, and (6) continued inflationary pressure on labor and meet salescommitments atour AustralianOperations during
sales represented 75.8%of our totalvolume of coalsold and 91.0%of total coalrevenues for thenine months
ended September 30, 2023, were $723.8 compared to 78.4% and 96.2%, respectively, for the nine months ended September
30, 2022.
Coalrevenuesof$2,163.1million or $12.0fortheninemonthsendedSeptember30,2023,decreasedby23.3%
compared to the same period in 2022, driven by average realized Met price per Mt sold, highercomparedwhich was $57.9 per Mt
Additionally,sales volumes were 0.7 Mt lowerfor the nine months ended September30, 2023, compared to the
same period in 2022, primarily driven by inflationarylower pressuresproduction andas thewell impactsas fromrequired lowercoalqualitiestomeetsales
Mining costs for the nine months ended September 30, 2023, deferredwere $1,210.4 million or $105.5 per Mt sold, $17.9
per Mt sold higher compared to subsequent quarters following the abovecorresponding period in average wet weather
conditions atour U.S.Operationsand additionalfleetsmobilizedat ourAustralian Operationsduring thenine
months ended September 30, 2023.
Dividends
In September2023, theCompany settledits previouslydeclared dividendsof $8.4 million,which werepaid to
stockholders from available cash.
Liquidity
As of September June 30, 2023, 2023, ournet cash position, comprising of $434.1$336.8 million cash (excluding restricted restricted cash)less
liquidity of $534.1$486.8 million as of JuneSeptember 30, 2023, consisting of cash (excluding restricted cash), unrestricted
short term deposits of $21.6 million and $100.0$128.4 million2.05,compared to a rate of2.42 at the endof December 31, 2022. These strong resultsyear to date
availability under our New ABL facility fully undrawn.facility.
Safety
For our Australian Operations, the twelve-month rolling average Total Reportable Injury Frequency Rate, or
TRIFR, at JuneSeptember 30, 2023 was 2.52,2.43,
compared to a rate of of 3.92at the end of December 31, 2022. At ourU.S.
U.S. Operations, the twelve twelve-month-month rolling averageTotal ReportableIncident Rate,or TRIR, at JuneSeptember 30,
2023 was 1.60, compared 2023was
reflect arecordsafetyrateat ourU.S. Operationsand thebest safetyrate sinceJuly2018 forour Australian
Operations. Reportable rates forour Australian andU.S.
Operations arebelow the relevant industrybenchmarks.
Our Logan mining complex at our U.S. Operations, which includes multiple underground and surface mines,
achieved one1.5 million hours Lost Time Injury, Injury, orLTI, free during the quarter.
Thehealth andsafety ofour workforceis ournumber onepriority andCoronado continues to advance severalimplementsafety
initiatives to improve our safety rates every quarter.
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 pricecontracts.
Our management uses a variety of financial and operating metrics to analyze our performance. These metrics
are significant factors in assessing our 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
Coronado Global Resources Inc.
Form 10-Q September 30, 202328
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 less outstanding aggregate
principal amount of 10.750% senior secured notes due 2026.the Notes.
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 the applicable outbound shipping shipping port, while freight costs costs from the portto theend destination
are typically borne by the customer. Sales to the export market from our U.S. Operations are generally recognized
when titleto the coalpasses to the coal passesto 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 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 mining costs, which are financial financial measures not recognized in in accordance with U.S. GAAP. 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.
Non-GAAP financial measures are intended to provide additional information only and do not have any standard
meaning prescribed by U.S. GAAP.These measures should not be consideredin isolation or as a substitute for
measures of performance prepared in accordance withU.S. GAAP.
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 to serveas an alternative toU.S. GAAP measures measures of performance and may notincluding total revenues, total
costs and expenses,net income orcash flows fromoperating activities asthose terms aredefined by U.S.GAAP.
Adjusted EBITDA maytherefore not becomparable to
similarly titled measurespresented by other other companies.
A reconciliation of of Adjusted EBITDA to its its mostdirectly
comparable measureunder U.S. GAAP isincluded below.
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 a non-GAAP measure, is 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 attributableattributable 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 companies in the coal industry.
Coronado Global Resources Inc.
Form 10-Q September 30, 202329
Three Months Ended JuneSeptember 30, 2023 Comparedto ThreeMonths Ended JuneSeptember 30, 2022
Summary
The financial and operational highlights for the three months ended Juneended September 30, 2023 include:
●
compared tonet incomeof $150.6million forthe threemonths endedSeptember 30, 2022.This decrease
wasdrivenbylowercoalrevenuesdue to loweraveragerealizedMetcoalpriceperMtsold,higher
miningandoperatingcosts,partiallyoffsetbytaxbenefitof$292.018.2 millioninthethirdquarterof2023
compared to an income tax expense of $51.4 million forthe same period in 2022.
●
Average realized Met priceper Mt sold of $207.4 forthe three months ended September30, 2023, was
$45.6 per Mtlower compared toaverage realized price of$253.0 per Mtsold for thesame period in2022.
Although coking coalindex prices improvedduring the thirdquarter of2023 due totight supply,coking
coal prices were significantly lower than the same period in 2022 when supply in globalmet coal market
was readjusting from the impact of the Russia and Ukrainewar.
●
Despite lower saleable production,sales volume of 4.1 MMtfor the three monthsended September 30,
2023, increased 0.1 MMt as compared tothe same period in 2022, as the Companydrew down on coal
inventory built in the second quarter of 2023.
●
AdjustedEBITDA for the three months ended JuneSeptember 30, 2022. This2023,of$3.4million,a decrease wasof
$220.2
million, drivenby
to lower coal
sales revenues partially offset by lowerand higher operating costs.costs.
●
$336.8millioncash (excluding (excludingrestrictedcash),$21.6millionofunrestrictedshort-termdepositsand $100.0
$128.4 million of availabilityunder the New ABL Facility.
Coronado Global Resources Inc.
Three months ended JuneSeptember 30,
2023
2022
Change
%
(in US$ thousands)
Revenues:
Coal revenues
$
$
$
Other revenues
Total revenues
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 income (expenses):
Interest expense, net
(1,385)
—
(1,385)
100.0%
Decrease in provision for discounting and credit
credit losses
Other, net
Total other expenses,(expenses) income, net
Net (loss) income before tax
Income tax expensebenefit (expense)
Net (loss) income attributable to Coronado Global
Resources, Inc.
$
$
$
Coal Revenues
Coal revenueswere $717.4707.3 millionfor thethreemonths endedJune September 30, 2023,a decreaseof$303.6 $156.4 million,
compared to$1,021.0 $863.7 million for thethree months ended JuneSeptember 30, 2022. The decreaseLower Met coal price was largelyindices, due
to varied a resultmarket conditions compared tothe thirdquarter of2022, sawlowerthe averagerealized Met coal price of$219.5 per Mt sold for
the three months months ended JuneSeptember 30, 2023,reduced by $45.6to $207.4 perMt sold comparedto $253.0 per
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 revenueswas $381.0$501.5 million for thethree months ended September30, 2023, $116.0million,
or 30.1% higher,compared to $385.5 million for the three months ended June 30, 2023, $16.5 million, or 4.2%
Cost of coalrevenues for our U.SU.S. Operations for the the three months ended June September30, 2023, was $12.9$38.8 million lower
highercomparedtothethree months ended June September30, 2022, largely due to lower sales volume largelyduedrawdownof 0.1 MMt, partially offset
previous quarter,as salesvolume exceededsaleable productionin the2023 period,combined withcontinued
impact ofinflation on labor, contractor and other supply costs.OurAustralianOperationscontributed$3.6milliontothe
millionofthe three monthsended June30, 2023,of A$/US$:0.67 comparedto 0.72for
resulting fromsales volumeexceeding saleableproduction inthe 2023period. Increasein costswere partially
offset by favorableaverage foreign exchange rate on translation of the Australian Australian Operations partially offset byfor additional equipmentthe three months
Depreciation, Depletion and Amortization
Depreciation, depletionand amortizationwas $34.7million forthe threemonths since JuneendedSeptember 30, 2023, a
decreaseof$2.8million,comparedto$37.5millionforthethreemonthsendedSeptember30,2022.The
decreasewasassociatedwithassetsfullydepreciated,lowerdepreciationratesfollowingannualusefullife
Coronado Global Resources Inc.
review atthebeginningof2023 andfavorableaverageforeign exchangerate ontranslation oftheAustralian
Operations,partiallyoffsetbyadditionalequipmentbroughtintoserviceduringthetwelvemonthssince
September 30, 2022.
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 $57.471.7 million for the three months
ended June September30, 2023, a decreasean increase of $9.68.7 million,compared to $67.0$63.0 millionfor the three months ended June
September 30,
2022. OurAustralian Operations’ freight costscontributed $11.8million to the increaseprimarily
driven by penalties incurred due to underutilizationof rail capacity.This was partially offset by freightcost at our
U.S. Operations’ freight cost contributed $8.1 Operations,whichdecreasedby$3.1million, to this decrease, drivenby lowercoalsalesunderFreeFree on Board,or FOB,
terms, compared to the three months ended September compared tothe threemonths endedJune 30,2022, combinedwith favorable
Stanwell Rebate
The Stanwellrebate was $29.0$37.1 million for the threemonths ended JuneSeptember 30, 2023, a decrease of $11.5$17.5
million, comparedto $54.6 million forcompared to $40.5 million for the threemonths ended JuneSeptember 30,2022. Thedecrease waslargelyrealized export realized reference coal pricing for the the prior twelve-month period applicable twelve-month periodapplicable tothree months ended JuneOther Royalties have increasedlargely due to theadverse impactof the newQueensland Governmentroyalty regimeeffectivefrom July1, 2022to ourAustralian Operations,partially offsetdriven by favorable foreign exchangelower rate ontranslation of ouraverage Australian Operations.realized The new royaltyregime hasresulted in$29.4 million additionalroyaltycosts for the three months ended June 30, 2023, comparedto the same period in 2022.Interest Expense, netInterest expense,net was$14.2 millionin thethreemonths endedJune 30,2023, adecreaseof $3.3millioncomparedto $17.5millionprices, for the three months ended Notesoutstandingoutstanding duringthethreemonthsended June September30,2023, followingredemptionssince June
driven by lower
September 30, 2023, used tocalculate the rebate compared compared tothe same period in 2022, 2022, andfavorable foreignexchange
exchange rate on translation of our Australian Operations.
Other Royalties
Other royalties were royaltieswere $89.9$92.7 million in thethreemonths ended JuneSeptember 30, 30, 2023,anincrease a decrease of $10.6$44.6 million,as
compared to $79.3137.3 million for the three months ended JuneSeptember 30, 2022. Despite theThe decrease decrease in Otherroyalties
wasduetolower coal revenues,
September 30, 2023, June compared to thesame period in2022, combined withfavorable foreign exchangerate on
translation of our Australian Operations.
Interest Expense, net
Interestexpense,netwas$14.5millioninthethreemonthsendedSeptember30, 2023,adecreaseof$2.7
million comparedto $17.2million forthe threemonthsended September30, 2022. The decrease was due due to
lowerSeptember 30, 2022.
compared to a$32.9 million for the three months ended September30, 2022. The decrease was largely driven by
lower exchangelosses on translationof short-terminter-entity balancesin certainentities withinthe groupthat
are denominated in currencies other than their respectivefunctional currencies.
Income Tax Benefit (Expense)
Income tax expensebenefit of $102.0$18.2 millionfor the three monthsended JuneSeptember30, 2023,variance of$69.7 million,
compared to the income tax expense of $51.4 million for the threemonths ended September 30, 2022, driven bylower income
net loss before tax in the 2023 period.
Coronado Global Resources Inc.
Summary
The financial and operational highlights for the sixnine months ended ended JuneSeptember 30, 2023 include:
●
million, from
and higher operating costs partiallyoffset by lower incometax expense.
●
the sixnine months ended JuneSeptember 30, 2023, or0.7 MMt2022. The lower thanthe six
of wet ofwet
weather andequipment breakdowns onproduction performance, andcoalavailability, delayonand required
conditions caused by a rock intrusion at our U.S. Operations.Operations.
●
20.7% lower compared to $279.4 $292.8 per Mt sold for sold forthe nine months ended September30, 2022, as the six months endedMet
coal price index June 30, 2022,rebalanced from record as the Methighs achieved in coal supply2022, particularly inhas readjusted following the impact of the Russia and Ukraine war on the global coal supply chain in theAsia and Europe.quarter of 2023, the Met coalprices trended upwards,however, Adjusted EBITDA of of $352.3$355.7 million for the nine months endedSeptember 30, 2023,was $717.3 millioncompared to $849.3 million for the six months endedJune 30, 2022. This decrease was Asof June September30,2023, theCompanyhadnetcash of $191.8 $94.5million,consisting ofaclosingcash balanceSixNine months ended JuneSeptember 30,1,455,7902,163,0931,957,6252,821,334(501,835)(658,241)(25.6%(23.3%)37,45047,97722,20433,15215,24614,82568.7%44.7%1,493,2402,211,0701,979,8292,854,486(486,589)(643,416)(24.6%(22.5%)761,4361,262,907754,9631,140,4676,473122,4400.9%10.7%78,303113,05289,393126,901(11,090)(13,849)(12.4%(10.9%)120,796192,542126,290189,316(5,494)3,226(4.4%)1.7%68,257105,35769,585124,160(1,328)(18,803)(1.9%(15.1%)175,906268,606162,380299,71113,526(31,105)8.3%(10.4%)17,75529,97618,25228,657(497)1,319(2.7%)4.6%1,222,4531,972,4401,220,8631,909,2121,59063,2280.1%3.3%(28,845)(43,341)(34,814)(52,034)5,9698,693(17.1%(16.7%)3,7194,255(584)(572)4,3034,827(736.8%(843.9%)9,51517,70422,29355,191(12,778)(37,487)(57.3%(67.9%)(15,611)(22,767)(13,105)2,585(2,506)(25,352)19.1%(980.7%)255,176215,863745,861947,859(490,685)(731,996)(65.8%(77.2%)(56,005)(37,775)(183,968)(235,391)127,963197,616(69.6%(84.0%)199,171178,088561,893712,468(362,722)(534,380)(64.6%(75.0%)199,171178,088561,893712,468(362,722)(534,380)(64.6%(75.0%)
first halfof 2022, combinedas
steel demand with improved supply fromweakened. Australia and weak demand fromDuring the third steelmakers in
the Company was not ableto take full advantage ofthis due to the three-month lag in pricerealizations
for certain sales contracts at our Australian Operation.
●
lower compared to $1,072.9 million for the sixnine months endedJune September 30, 2023, was$497.1 millionlower
a result of lower
coal revenues and higher operating costs.
●
balance(excludingrestrictedcash) of $434.1 $336.8millionand $242.3millionaggregate principal amount outstanding
outstanding of the Notes.
2023
2022
Change
%
(in US$ thousands)
Revenues:
Coal revenues
$
$
$
Other revenues
Total revenues
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 income (expenses):
Interest expense, net
Loss on debt extinguishment
(1,385)
—
(1,385)
100.0%
Decrease (increase) in provision for discounting
and credit losses
Other, net
Total other (expenses) income, (expenses), net
Net income (loss) before tax
Income tax (expense) benefitexpense
Net income (loss)
Net income (loss) attributable to Coronado Global
Resources, Inc.
$
$
$
Coronado Global Resources Inc.
Coal Revenues
Coal revenues were $1,455.82,163.1 million for the sixnine months ended JuneSeptember 30, 2023, a decrease of $501.8million,658.2
million, compared to $1,957.6$2,821.3 million for the sixnine monthsended JuneSeptember 30, 2022. Thedecrease was largely
driven by unfavorable
months ended September 30, 2022, combined with 0.7 MMt lower sales volume compared to thesame period in
2022.
Other Revenues
Otherrevenueswere$37.5 $48.0 millionforthesix nine monthsendedJune September 30,2023,anincreaseof$15.3 $14.8 million,
comparedto$22.2 $33.2 millionforthesix nine monthsendedJune September 30,2022. Thisincreasewasprimarilydrivenbya
a termination fee revenue from a coal sales contract cancelled at our U.S. Operations.
Cost of Coal Revenues (Exclusive of Items Shown Separately Below)
Total cost of coal revenues was $1,262.9 million for the nine monthsended September 30, 2023, an increase of
$122.4 million, compared to $1,140.5 million for the ninemonths ended September 30, 2022.
Cost of coal revenues forour Australian Operations inthe nine months ended September30, 2023, were $85.6
million higher comparedto the sameperiod in 2022,primarily drivenby additionalfleets mobilizedduring 2023
to advance pre-strip overburden removal,the continued impact of inflationon labor,contractor and other supply
costs, highermaintenanceexpenses followinga draglinepropel failure,partially offsetby asignificantbuild in
coalinventoriesfromsaleableproductionexceedingsalesvolumeinperiod comparedtoa drawdowninthe
same periodin 2022,lower purchasecoal and favorableforeign exchangerate ontranslation ofour Australian
OperationsfortheninemonthsendedSeptember30,2023,ofA$/US$:0.67comparedto0.71for thesame
periodin2022.Cost of coal revenues wasforourU.S.Operationswere $761.436.8 millionhigher for the sixnine months
endedenvironmentandhigherconsumablesandmaintenancecostsfollowinga rockintrusioninthequarterended
September 30, 2023.
Depreciation, Depletion and Amortization
Depreciation, depletionand amortizationwas $113.1million for thenine monthsended September 30,2023, a
decrease of$13.8 million,as comparedto $126.9million forthe ninemonths endedSeptember 30,2022. The
decreasewasassociatedwithassetsfullydepreciated,lowerdepreciationratesfollowingannualusefullife
review atthebeginning of $6.5
Freight Expenses
Freight expenses totaled $120.8192.5 million for the sixnine months ended June30,2023,adecreaseof$5.5million,
million, comparedto $189.3 millionfor the ninemonths endedSeptember 30,2022. Our AustralianOperations
contributed$4.4 million as
underutilization ofrail capacitiesin ourAustralian Operations,partially offsetby lowersales volumesreducing
freight costs at our Australian Operations and U.S. Operations.
Stanwell Rebate
The Stanwellrebate was$162.4105.4 million for the sixnine months ended JuneSeptember 30, 2022.2023, Royalties havea decrease increasedof $18.8
million, as compared to a$124.2 millionfor the ninemonths endedSeptember 30,2022. The decreasewas due
September 30, 2023, usedto calculate the rebatecompared to the adverse impactsameperiod in 2022 andfavorable average
foreign exchange rate on translation of the newAustralian royalty regime effective since from JulyOperations.
Other royalties were $268.6 million for the nine months ended September 30, 2023, a decrease partially offset by of $31.1 million,
ascomparedto$299.7millionfortheninemonthsendedSeptember30,2022.OurAustralianOperations
contributedto$27.7millionof thedecreaseduetolower sales volumesaveragerealizedexportpricingfortheninemonths
ended September 30, 2023,compared to the same period in 2022 and favorable average foreign exchange rate
on translation of ourthe Australian Operations.Operations, partially offsetby theadverseimpactthat thenew royaltyregime,
which waseffective fromJuly 1,2022, hadin thefirst halfof 2023 comparedto thefirst halfof 2022under the
old regime. The newroyalty regimeresultedin $58.7 million additionalroyalty
costs for the six months ended June 30, 2023 comparedto the same period in 2022.
Coronado Global Resources Inc.
Interest expense, net was six$43.3 million inthe nine months ended JuneSeptember 30, 2023, adecrease of $8.7million
compared to $52.0 millionfor the nine monthsended September 30, 2022. The decrease was dueto lower Notes
outstanding following redemptions since September 30,2022.
Decrease (increase) in Provision for Discounting andCredit Losses
Decrease in provision fordiscounting and creditlosses of $4.3 millionin the nine monthsended September 30,
2023, a favorablemovement of $4.8million compared toincrease in provision for discounting andcredit losses
of $0.6 million forthe nine months ended September30, 2022. The lowerprovision was primarily driven by by timely collectionof
collection of certain overdue trade receivablesat December 31, 2022 during the the sixnine months ended June September
30, 2023.
Other, net
Other, net was $9.5$17.7 million inthe ninemonths ended September30, 2023,a decrease of$37.5 million incompared
to the six months ended June 30, 2023, a decrease of $12.8 million compared to the
net gain of$22.3 $55.2 million for the the sixnine months ended JuneSeptember 30, 2022.The decrease was driven bylowerforeign
lower foreign exchangegainsontranslationofshort-terminter-entitybalancesincertainentitieswithinthegroupthatare
that are denominated in currencies other than their respective respective functional currencies.
Income Tax Expense
Income tax expenseof $37.8 millionfor the ninemonths ended September30, 2023 decreasedby $197.6 million,
comparedto$235.4million tax expense of$56.0millionfor the sixnine months ended JuneSeptember 30, 2023decreasedby$128.0million,
lower net income before tax in the 2023 period.
The incometax expensefor thesix nine monthsendedJune September 30, 2023is based on an annual effective tax rate
of 18.5%, which includes a discrete benefit of $2.1 million an annualeffectivetax rateof
Supplemental Segment Financial Data
Three months ended JuneSeptember 30, 2023 compared tothree monthsended JuneSeptember 30, 2022
Australia
Three months ended JuneSeptember 30,
2023
2022
Change
%
(in US$ thousands)
Sales volume (MMt)
0.2
Total revenues ($)
Coal revenues ($)
Average realized price per Mt sold ($/Mt)
Met sales volume (MMt)
1.8
1.7
Met coal revenues ($)
Average realized Met price per Mt sold ($/Mt)
Mining costs ($)
Mining cost per Mt sold ($/Mt)
Operating costs ($)
Operating costs per Mt sold ($/Mt)
Segment Adjusted EBITDA ($)
Coal revenues for our Australian Operations,for the three monthsended June 30, 2023,were $423.1 million,a
million, a decrease of$90.4 million, or 16.8%, compared to $537.3 million for the three months ended September
30, 2022. This decrease was driven by lower average realized Met coal price per Mt sold of $236.2 for the three
months ended September30, 2023, compared to$313.0 per Mt soldfor the same periodin 2022, when supply
in globalmet coalmarket wasreadjusting fromthe impactof theRussia andUkraine war.The lowerrealized
pricing was partially offset by higher sales volume of 0.2 MMt compared to the same period in 2022. Production,
and sales, performance in2022,largelydrivenbygreaterpre-stripactivityandcontinuedinflationary
Operating costs were $487.9million, an increase of$29.5 million or6.4%, for thethree months ended September
30, 2023, decreased bycompared to $458.4 million for the three $1.5 and $11.6 to $92.6 and $152.6 per Mtsold, respectively, which benefitted from
Coronado Global Resources Inc.
pressureson contractorand supplycosts, higherfreight expenseandincreasedthird-partycoal purchasesto
meet sales commitments. This was partially offset by favorable average foreign exchange rates on translation of
the AustralianOperations. Miningcost perMt sold for the three months ended ended JuneSeptember 30, 2023, decreasedincreased
by $21.9 to $121.7,compared to the sameperiod in 2022, driven by $141.6
sales volumes.
Segment Adjusted EBITDAdecreased by $120.4million, or 136.8%, to an EBITDA $196.3loss of $32.4 million for the
three months ended September 30, 2023, compared to $88.0 million for the three months ended September 30,
2022, largely driven by lower coal revenues and higher thethreemonthsendedJune30,2022,largelydrivenbylowercoal
United States
Three months ended JuneSeptember 30,
2023
2022
Change
%
(in US$ thousands)
Sales volume (MMt)
1.5
Total revenues ($)
Coal revenues ($)
Average realized price per Mt sold ($/Mt)
Met sales volume (MMt)
1.6
Met coal revenues ($)
Average realized Met price per Mt sold ($/Mt)
Mining costs ($)
Mining cost per Mt sold ($/Mt)
Operating costs ($)
Operating costs per Mt sold ($/Mt)
Segment Adjusted EBITDA ($)
Coal revenuesdecreased by $158.3$66.0 million, or 35%20.2%, to $294.3 million to $260.5million forthe threemonths ended June 30, 2023,September
30,2023,compared to $452.7326.5 million for the three months ended JuneSeptember 30, 2022. This decrease was
primarily aresult of loweraverageaverage realized Metpriceper Mt soldforthethreemonthsendedSeptember30,
2023, which was$20.5 per Mtsold below forthe sameperiod in2022, due tolower coalprice indicesalbeit at
the back of a less volatile coal market. Coal revenues were also impacted by lower sales volume of 0.2 MMt due
to adverse geological conditions impacting productionat our Buchanan mine complex.
Operating costsincreased by$33.1 million,or 18.2%,to $215.2 millionfor the threemonths endedSeptember
30, 2023, comparedto operatingcosts of$182.0 million for the three months ended JuneSeptember 30, 2023, of2022. $196.0 perThe
increase Mt soldwas largely compared
lower salesvolume whencomparing thethird quarterof 2023to thethird quarterof 2022.Sales volume exceeding
saleable production in the period. The increase in mining costs was partially offset by lower freight expense from
lower sales on FOB terms and lower royalties as a resultof lower coal revenues.
Segment Adjusted EBITDA of 0.1$47.6 million for MMtthe three months ended duetosales
average realized Met price per Mt sold and higher operating partially offset by lower operating costs.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:
Three months ended JuneSeptember 30,
2023
2022
Change
%
(in US$ thousands)
Selling, general, and administrative expenses
$
$
$
Other, net
n/m
Total Corporate and Other Adjusted EBITDA
$
$
10,349
$
n/m – Not meaningful for comparison.
Coronado Global Resources Inc.
corporate costs.
MiningandoperatingcostsforthethreemonthsendedSeptember30,2023comparedtothree
months ended September 30, 2022
A reconciliation of segment costs and expenses, segment operating costs, and segment mining costs is shown
below:
Three months ended JuneSeptember 30, 2023
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and expenses
$
$
$
$
Less: Selling, general and administrative
expense
—
—
Less: Depreciation, depletion and amortization
Totaloperating costs
—
Less: Other royalties
—
Less: Stanwell rebate
—
—
Less: Freight expenses
—
Less: Other non-mining costs
—
Total mining costs
—
Sales Volume excluding non-produced coal
(MMt)
—
Mining cost per Mt sold ($/Mt)
—
Three months ended JuneSeptember 30, 2022
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and expenses
$
$
$
$
Less: Selling, general and administrative
expense
—
—
Less: Depreciation, depletion and amortization
Total operating costs
—
Less: Other royalties
—
Less: Stanwell rebate
—
—
Less: Freight expenses
—
Less: Other non-mining costs
—
Total mining costs
—
Sales Volume excluding non-produced coal
(MMt)
—
Mining cost per Mt sold ($/Mt)
—
AveragerealizedMetpriceper Mtsoldforthethreemonths endedJune September 30,2023 comparedtothree
three months ended JuneSeptember 30, 2022
A reconciliation of the Company’s average realized Met price per Mt sold is shown below:
Three months ended JuneSeptember 30,
2023
2022
Change
%
(in US$ thousands)
Met sales volume (MMt)
3.1
(4.3)%
Met coal revenues ($)
Average realized Met price per Mt sold ($/Mt)
Coronado Global Resources Inc.
Australia
2023
2022
Change
%
(in US$ thousands)
Sales volume (MMt)
Total revenues ($)
Coal revenues ($)
Average realized price per Mt sold ($/Mt)
Met sales volume (MMt)
Met coal revenues ($)
Average realized Met price per Mt sold ($/Mt)
Mining costs ($)
Mining cost per Mt sold ($/Mt)
Operating costs ($)
Operating costs per Mt sold ($/Mt)
Segment Adjusted EBITDA ($)
Coal revenues for our Australian Operations for the sixnine months ended JuneSeptember 30, 2023, were $813.91,260.7
million,adecreaseof$441.2 million, a
September 30, 2022. This
decrease was driven by lower average realized realized Met price per Mt sold of $238.5, $239.7, $89.785.4
per Mt lower compared to $329.4
$323.9 per Mt sold for the nine months ended September the six30, 2022, as Met coal price
index months endedrebalanced June 30,fromrecordhighsachievedin 2022, due toparticularly decline in coal indicesthefirsthalfof2022, as supply chain withinsteel thedemand
and their associated
recovery timeon productionperformance resultingin lower sales volumes 0.3 MMt lower compared to of 4.7MMt, 0.4MMt lowerthan the
September 30, 2022.
Operating costs increased by $43.5 million, or 3.6%, for the nine by $14.0 million,months ended September 30, 2023, compared
Mining costs were $123.6 million higher for the ninemonths ended September 30, 2023, compareddue to additionalfleets
mobilized in 2023 to the
supply costs, and costsassociatedwith equipmentbreakdown. Thisincrease waspartially offsetby favorable
averageforeignexchangeontranslationofourAustralianOperationsandlowerStanwellrebateandother
royalties expense. Mining costs
increased by $18.5 and $12.4, respectively, improvingcoalavailabilityforthesecondhalfof
in 2022.
For the six months ended June nine monthsended September30, 2023,Adjusted EBITDAof $35.6million, were $67.9487.7 million were $367.4 million lower compared
compared to $435.3$523.3 million for the sixnine monthsended JuneSeptember 30, 2022.This decrease was a result of lower
coal revenueshigher mining and operating costs.
United States
2023
2022
Change
%
(in US$ thousands)
Sales volume (MMt)
Total revenues ($)
Coal revenues ($)
Average realized price per Mt sold ($/Mt)
Met sales volume (MMt)
Met coal revenues ($)
Average realized Met price per Mt sold ($/Mt)
Mining costs ($)
Mining cost per Mt sold ($/Mt)
Operating costs ($)
Operating costs per Mt sold ($/Mt)
Segment Adjusted EBITDA ($)
Coal revenuesdecreased by$217.1 million,or 19.4%,to $902.4 millionfor the ninemonths endedSeptember
30,2023,comparedto$1,119.4millionfortheninemonthsendedSeptember30,2022.Thisdecreasewas
Coronado Global Resources Inc.
average realized Met price per Mt sold forthe nine months ended September30, 2023 of
$199.5 compared to $232.4 per Mt sold for for the sixmonths endedJune 30,2023 of$215.5 comparedto $253.5
Met coaland lowersales volume driven bylower productionwhich wasimpacted byadverse geologicalconditions
and wet weather events
Operating costs of $364.8 million remained consistent compared to $365.6580.0 million were$32.3 million highercompared to $547.6 millionfor the six ninemonths ended
September June
30, 2022.2023. Mining costs contributed$41.3millionof theincreasedrivenbycontinuedinflationary
impact onlabor andsupplycostsand unplannedmaintenancecosts. Miningand Operatingcosts perMt sold
increased by $16.6and $16.5, respectively, due tolower sales volumeand higher costsin thenine months ended
September 30, 2023.
Adjusted EBITDA of $349.2million decreased by $229.0million, or 39.6%, forthe nine months endedSeptember
30,2023,comparedto$262.0578.2 million for the sixnine months ended JuneSeptember 30, 20232022. wereThis $2.2decrease millionlowerwas
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:
2023
2022
Change
%
(in US$ thousands)
Selling, general, and administrative expenses
$
$
$
Other, net
n/m
Total Corporate and Other Adjusted EBITDA
$
$
$
n/m – Not meaningful for comparison.
Corporateand othercosts of $29.1million forthe ninemonthsended September30, 2023,were $0.5million
highercomparedto $17.228.6 million for the sixnine months ended JuneSeptember 30, 2023,2022, weredue $1.0to milliontiming lower
corporate costs.
Coronado Global Resources Inc.
Mining and operating costs for for the Six Ninemonths ended JuneSeptember 30, 2023 compared to Six months endedNine Junemonths
ended September 30, 2022
A reconciliation of segment costs and expenses, segment operating operating costs, and segment segment mining costs is is shown
below:
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and expenses
$
$
$
$
Less: Selling, general and administrative
expense
—
—
Less: Depreciation, depletion and amortization
Total operating costs
—
Less: Other royalties
—
Less: Stanwell rebate
—
—
Less: Freight expenses
—
Less: Other non-mining costs
—
Total mining costs
—
Sales Volume excluding non-produced coal
(MMt)
—
Mining cost per Mt sold ($/Mt)
—
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and expenses
$
$
$
$
Less: Selling, general and administrative
expense
—
—
Less: Depreciation, depletion and amortization
Total operating costs
—
Less: Other royalties
—
Less: Stanwell rebate
—
—
Less: Freight expenses
—
Less: Other non-mining costs
—
Total mining costs
—
Sales Volume excluding non-produced coal
(MMt)
—
Mining cost per Mt sold ($/Mt)
—
Average realized Metprice per Mtsold for the the SixNine months endedSeptember 30, 2023compared to
Nine months ended June 30,2023 compared to Six months
A reconciliation of the Company’s average realized Met price per Mt sold is shown below:
2023
2022
Change
%
(in US$ thousands)
Met sales volume (MMt)
Met coal revenues ($)
Average realized Met price per Mt sold ($/Mt)
Coronado Global Resources Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
Three months ended June September
30,
30,
(in US$ thousands)
2023
2022
2023
2022
Reconciliation to Adjusted EBITDA:
Net (loss) income
$
$
$
$
Add: Depreciation, depletion and amortization
Add: Interest expense (net of interest income)
Add: Other foreign exchange gains
Add: Loss on extinguishment of debt
1,385
—
1,385
—
Add: Income tax expense
Add: Losses on idled assets
456
621
Add: Increase (decrease)(Decrease) increase in provision for
discounting and credit losses
Adjusted EBITDA
$
$
$
$
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 debtfacilities.
Our main uses of cash have historically been, and are expected to continue to be, the funding of ouroperations,
working capital, capital expenditure, debt service obligations, business or assets acquisitions and payment of
dividends. Basedon our outlook forthe next twelve months,which is subject subject tocompletion ofthe SGITransaction,
continued changing demand from our customers, volatility in coal prices, ongoing interruptions and uncertainties
the customers,uncertainty volatilityof inimpacts coalprices,from ongoing interruptionscivilunrest and uncertaintieswars, surroundingwe China’sbelieve import
operations together with available borrowing facilities and the uncertainty ofimpacts
to meet be sufficientthe needs to meet
payment of dividends.
UndertheSeniorSecuredNotesIndenture,uponachangeofcontrol,wearerequiredtomakeanofferto
purchase the Notes from the holders at aprice of 101% of the principal amount thereof,plus accrued and unpaid
interest.
Under the New ABL Facility,a change of control constitutes a Review Event pursuant to which the Lenders may
request to meetand consult withus to agreea strategy toaddress the relevantReview Event includingbut not
limited to a restructureof the terms of theNew ABL Facility tothe satisfaction of theLenders. Refer to Note10.
“Interest Bearing Liabilities” for further information.
Our ability to generate sufficient cash sufficient cash dependson our future performance, which may be subjectto a numberof
factors beyond our control, including general economic, financial and competitive conditions and other risks
described in this document ,document, and Part and Part I, Item 1A. “Risk 1A. “Risk Factors” of our of our Annual Report on Report on Form10-K for theyear
ended December 31, 2022, filed with the SEC and ASX on February 21, 2023 , and Part II, Item 1A. “Risk Factors”
of our Quarterly Report on Form 10-Q for the the quarterly period ended March 31, 31, 2023, filed with the the SEC and ASX
on May 8, 2023.
Coronado Global Resources Inc.
Liquidity as of September 30, 2023 and December 31,2022 was as follows:
(in US$ thousands)
September 30,
2023
December 31,
2022
Cash, excluding restricted cash
$
336,845
$
334,378
Short term deposits
21,618
—
Availability under the Predecessor ABL Facility
—
100,000
Availability under the New ABL Facility
(1)
128,382
—
Total
$
486,845
$
434,378
(1)
The New ABL Facilityprovides for up to$150.0 million in borrowings,including a $100.0 millionsublimit for the issuance
of letters of credit,of which $21.6 millionhas been issued, and$70.0 million sublimit asa revolving credit facility.The letter
of credit sublimit contributes to our liquidity as the Company has the abilityto replace cash collateral, provided in the form of
restricted deposits, with letters of credit allowing the release of such restricted deposits to cash and cash equivalents.
Our total indebtedness as of JuneSeptember 30, 2023 and December December 31, 2022 consisted of the following:
(in US$ thousands)
2023
December 31,
2022
Current installments of interest bearing liabilities
$
242,326
$
242,326
Current installments of other financial liabilities and finance lease obligations
4,585
Other financial liabilities and finance lease obligations, excludingcurrent
installments
8,336
Total
$
$
255,247
Liquidity
Asof JuneSeptember 30,2023,available liquiditywas $534.1486.8 million,comprised ofcash andcash equivalents (excluding
(excluding restricted cash) of $434.1$336.8million, unrestricted short term depositsof $21.6 million and $100.0$128.4 million
ofavailable borrowings under our New ABL Facility.
As of December 31, 2022, available liquidity was $434.4 million, comprised of 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 to be used to service 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 June September30,2023, theoutstandingprincipalamount ofour Noteswas$242.3 million.Interest on the outstanding principal amount
payable semi-annually in arrears on May 15 and November 15 of each year. 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 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 customarycovenants for high
yield bonds, including, but not limited to, limitations on investments, liens, indebtedness, asset sales, transactions
with affiliates and restricted payments, including payment 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 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.
Coronado Global Resources Inc.
as defined underthe terms ofthe Notes mayoccur. Refer to PartI, ItemI. Financial Statements,Note 10. “Interest
Bearing Liabilities” for further information.
As of September 30, 2023, we were in compliance withall applicable covenants under the Indenture.
New ABL Facility
On May 8, 2023, we entered into entered intoa senior secured asset-based revolving credit agreement inan initial aggregate
amount of $150.0 million, or the New ABL Facility.
On August 3, 2023, the Companysatisfied all conditions precedentunder the New ABL Facility,at which time it
became effective and replaced the predecessorABL Facility.
The NewABL Facilitymatures inAugust 2026and providesfor upto $150.0million inborrowings, includinga
$100.0 million sublimit for the issuanceof letters of credit and $70.0million sublimit as a revolvingcredit facility.
Availability under the New ABL Facility which willis provide for up to $150.0million in borrowings,
BBSY,for loans denominated in 2026.A$, or SOFR, for loans denominated in US$, at the Borrower’s election.
Subjecttocustomarygraceperiodsandnoticerequirements,theNewABLFacilityalsocontainscustomary
events of default.
Based on informationthat we arecurrently aware of,on completion ofthe SGI Transaction,a “Change ofControl”
as defined under the terms of theNew ABL Facility may occur. Refer to Part I, Item I.Financial Statements, Note
10. “Interest Bearing Liabilities” for further information.
AsatSeptember30,2023,letterofcreditsublimithadbeenpartiallyusedtoissue$21.6millionofbank
guaranteesonbehalfoftheCompanyandnoamountswere drawnandnolettersof creditwereoutstanding
undertherevolvingcreditsublimitofNewABLFacility.AsatSeptember30,2023,theCompanywasin
compliance with all applicable covenants under the NewABL Facility.
Predecessor ABL Facility
On August 3, 2023, the Company satisfied allthe conditions precedent under the New ABL Facility agreementwere satisfied, at which
time the
New ABL Facility became effective andreplaced the predecessor ABL Facility.As a result of theearly termination ofthe predecessor
ABL Facility, was terminatedthe Companyrecorded aloss ondebt extinguishmentof $1.4million in accordance with its terms.unauditedCondensed
Consolidated Statement of Operations and Comprehensive Income for each ofthe three and nine months ended
September 30, 2023.
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.
As required by certain agreements, we had cash collateral in the form of deposits in the amount of $89.5$67.9 million
and $89.1 $89.1millionasof JuneSeptember 30,2023,andDecember31,2022,respectively,toprovideback-to-back support for
supportforbankguarantees, financial payments,other performance obligations,various other operating operating
agreements and and
contractual obligations under workers compensation insurance. These deposits are restricted
and classifiedaslong-term assets in the unaudited Condensed Consolidated Consolidated Balance Sheets.
In accordance with the terms of the ABL Facility, we may be required to cash collateralize the ABL Facility to the
extentof outstandingletters ofcredit afterthe expirationor terminationdate ofsuch letterof credit.As of June
collateral was required.
For the U.S. Operations in order to provide provide the required financial financial assurance, we generallyuse surety bondsfor
post-mining ofreclamation. $40.8We millioncan andalsousebank letters of credit tocollateralizecertainobligations.Asof
September 30, 2023,we had outstandingsurety bonds of $16.840.9 million and letters of creditof $16.8 million issued
from our available frombank guarantees our
compensation insurance and to secure other obligations secure
Coronado Global Resources Inc.
Form 10-Q September 30, 202343
For the Australian Australian Operations, wehad bank guarantees outstanding of $24.1 $24.2million,including $4.9 million asissued
from the New ABL at JuneFacility, as at September 30, 2023, 2023, primarily
in respectof certain rail andport arrangements
of the Company.
Asat JuneSeptember 30,2023, wehadtotal outstandingbank guaranteesprovided of $41.0$40.9 millionto secure obligations
obligations andcommitments. Future regulatory changes relating relating tothese obligations could result in in increased obligations,
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 $0.1 million foreign exchange
gain on payment of dividends to certain CDI holderswho electedto be paid in Australian dollars.
OnAugust7,2023, the Company’sour BoardofDirectorsdeclaredabi-annual fully franked fixed ordinary dividend
million, or 0.5 cents per CDI.
exchange loss on payment of dividends to certain CDI CDIswillbequoted“ex”dividendonSeptember28,2023,Australiatime.Thetotalordinary
Capital Requirements
Our main uses of cash have historically been the funding funding of our operations, working capital, capital expenditure,
the payment of interest and dividends. We intend to use cash to fund debt service payments on our Notes, the
New ABL Facility and our other indebtedness, to fund operating activities, working capital, capital expenditures,
partial redemption of the Notes, business or assets acquisitions and, if declared, payment of dividends.
Historical Cash Flows
The followingtable summarizesour cashflows forthe six ninemonths ended JuneSeptember 30,2023 and 2022, as
reported in
the accompanying consolidated financial statements:
Cash Flow
(in US$ thousands)
2023
2022
Net cash provided by operating activities
$
$
Net cash used in investing activities
Net cash used in financing activities
Net change in cash and cash equivalents
Effect of exchange rate changes on cash and restricted cash
Cash and restricted cash at beginning of period
334,629
437,931
Cash and restricted cash at end of period
$
$
Operating activities
Net cashprovided byoperating activities was $223.9 million for the six months ended June 30, 2023, compared
compared to $945.4 millionfor the ninemonths ended September 30, 2022. Thedecrease in cash from operating
activities was drivenby the lowercoal revenues, higher operating activitiescosts and wasincome tax paidduring the period,
Investing activities
Netcash usedin investingactivities was $105.1$183.0 million
fortheninemonthsendedSeptember30,2023,
compared to $150.7 million for the nine months ended September 30, 2022. Cash spent on capital expenditures
for the sixnine months ended JuneSeptember 30, 2023 compared to
Australian Operations and $ 138.1 million was related Australian Operationsand $77.4
Financing activities
Net cash usedin financing activities was $9.9 $23.0 million
for the six ninemonths ended JuneSeptember 30,2023, compared
to cashused infinancingactivitiesof $483.9million forthe ninemonths endedSeptember 30,2022. Thenet
cashused in financing activities of$355.6millionfor the sixnine months ended JuneSeptember 30, 2022.2023 Thenetcashusedin
payment of $8.4$16.8 million, payment ofdeferred debt issuancecosts for theNew ABL Facilityof $3.4 millionand
Coronado Global Resources Inc.
Form 10-Q September 30, 202344
Included in net cash used in financing activities financing activities for the sixnine months ended June September30, 2022,were dividends
paid of
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
statementsfor adiscussion ofnewly adoptedaccounting standards.As ofJune September 30,2023, therewere 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 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 Financial Officer.
The finance team manages risk exposures primarily through delegated authority limits approvedby the Board of
Directors. The finance team regularly monitorsour exposureto these financial risks and reportsto 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 analysisfor
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 commodityover thepast ten years. Recently,In the second quarter of in 2022, seaborne prices reached record levels
withboththe second quarterAustralianandU.S.Metcoalpriceindicesexceeding$600perMt,largelyasresult of 2022, seaborne pricesreachedsupply
are Met coalno industry changesassurances from timethat tooversupplywilltime. There are no assurances that oversupply will not occur, that demand will not decrease or that overcapacitywill not occur,thatdemandwillnotdecreaseorthatovercapacitywillnotour financial condition and results of operations.
occur, which couldcause declines inthe pricesof coal, which could cause declineshave a in theprices ofcoal, whichcould havea materialadverse effect on ourfinancial
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 interruptionsor trade barriersoccur
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 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 90 days after delivery delivery to the customer. As of June 30,September 30, 2023,we had $13
$26.7 .7
million of outstanding provisionally pricedreceivables subject tochanges in the relevant price index. Ifprices
prices decreased10%,theseprovisionally pricedreceivableswoulddecreaseby $1.42.7 million.SeeItem 1A.“Risk “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.
Diesel Fuel
We may be exposed to price risk in relation to other commodities from time to time arising from raw materials
used in ouroperations (suchas gas or or diesel).The expectationof futureprices fordiesel dependsupon many
factorsbeyondourcontrol.ThecurrentIsrael-Palestineconflictcouldcreatesignificantuncertaintyregarding
interruptions to global oil supply causing significantvolatility in prices of related commodities,including the price
Coronado Global Resources Inc.
Form 10-Q September 30, 202346
of diesel fuel wepurchase. These commoditiesmay be hedgedthrough financial instruments
considered material and where the exposure cannot be mitigated throughfixed pricesupply
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 ensuring that changes in interest in interest rates willnot have
a material impact on our financial performance.
Asof June September30, 2023,wehad $253.4$252.1 millionoffixedrate borrowingsandNotesand novariable-rate borrowings
borrowings outstanding.
We currently do not hedge against interest rate fluctuations.
Foreign Exchange Risk
A significant portion of our sales are denominated in US$. 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$. Approximately 40%of ourAustralian Operations’ purchases aremade withreference to US$,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 $26.034.4 million and $51.7$86.1
million for the three and sixnine months ended June September30, 2023, respectively.respectively.
Under normal market conditions, we generally do not consider it necessary to hedge our exposure to this foreign
exchange risk. However, there may be specificcommercial circumstances, such as the hedging of significant
capital expenditure, acquisitions, disposals and other financial transactions, where we may deem foreign
exchange hedging as appropriate and where a US$ 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 obligationsunder
a financial instrument or customer contract.
We are exposed to credit risk when we have financial derivatives, cash deposits, lines of credit, letters 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 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 JuneSeptember 30, 2023, we had financial assets of $823.4690.1 million, comprising of cash and restricted cash,trade
trade receivables and restricted deposits,and other deposits, which are exposed to counterparty counterparty creditrisk. These financial
assets havebeenbeen assessedunderASC 326,
FinancialInstruments–CreditLosses
,andaprovision for
discounting and credit
losses of $1.4$0.8 million was recordedas of JuneSeptember 30, 2023.2023.
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 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 and regulatory proceedings. For a description ofour significant legalproceedings
refer to Note 15.16. “Contingencies” to the unaudited condensed consolidated financial statements included in
Part I,Item 1. “Financial Statements”of thisQuarterly Report onForm 10-Q, whichinformation isincorporatedbyreference
by reference herein.
ITEM 1A. RISK FACTORS
Annual Report on Form 10-K for the the year endedDecember 31, 2022, filed with the the SEC
and ASX on February 21, 2023 and ASX onFebruary
quarterly period ended
March 31, 2023, filed with theSEC and ASX on May 8, 2023.
Consummationof theproposed SGITransactionmay constitutea changeof controlunder ourSenior
SecuredNotesIndentureandourNewABLFacility,whichcouldmateriallyandadverselyaffectour
business, financial condition and results of operations.
On September25, 2023,the Sellersadvised theCompany thatthe Sellershad enteredinto aMIPAwith SGI.
The Company understands that, pursuant to the terms of theMIPA, the Sellers agreed to sell all of their interests
inCoronadoGroupLLCtoawholly-ownedsubsidiaryofSGIintheSGITransaction.Foramoredetailed
description ofthe SGITransactionrefer toNote 17.“Related PartyTransactions”to theunaudited condensed
consolidated financialstatements includedin PartI, Item1. “FinancialStatements” ofthis QuarterlyReport on
Form 10-Q, which information is incorporated by referenceherein.
Energy & Minerals Group hasreported that following the closingof the SGI Transaction,the timing of which the
Company is not aware, SGI will be the direct or indirect owner of Coronado Group LLC. Coronado Group LLCis
currentlythedirectownerof845,061,399CDIs(representingabeneficialinterestin84,506,140sharesof
common stock, or 50.4% of the Company’soutstanding total common stock) and the one SeriesA Share.
The consummationof theproposed SGITransactionmay constitutea changeof controlunder theCompany’s
Senior SecuredNotesIndenture,dated asof May12,2021, pursuantto whichthe Companyhas issuedand
outstanding approximately $242.3 millionaggregate principal amount ofits 10.750% Senior Secured Notesdue
2026, or the Notes, as of September 30, 2023. Upon a change of control, CoronadoFinance Pty Ltd., the issuer
of theNotes, isrequired toofferto repurchaseall orany partof aholder’s Notesat apurchase pricein cash
equal to101% ofthe principalamount thereof,plus accruedand unpaidinterest, ifany,to, butexcluding, the
dateofrepurchase,subjecttothetermsandconditionsoftheindenture.Failuretoconsummatearequired
repurchaseoffer,whetheras aresultof lackof sufficientfundsor otherwise,is aneventof defaultunderthe
Senior SecuredNotes Indenturethat wouldaccelerate thematurity ofthe Notesand permitholders topursue
available remedies.
The consummation of the proposedSGI Transaction may also constitute a change ofcontrol under our New ABL
Facility.Achangeofcontrol,undertheNewABLFacilityconstitutesaReviewEvent,pursuanttowhichthe
LendersmayrequesttomeetandconsultwithustoagreeastrategytoaddresstherelevantReviewEvent
including but not limitedto, a restructure ofthe terms of theNew ABL Facility tothe satisfaction of theLenders,
forexampleanyunpaidamountsmaybecomedueandpayableorexistingundrawncommitmentsmaybe
cancelled. As of September 30,2023, the Company had drawndown $21.6 million ofborrowings and had $128.4
million of undrawn commitments under our New ABLFacility.
Should these potentialevents collectively occur,we may needto seek torefinance the Notes,replace the New
ABL Facility,raise newcapital througha publicoffering ormodify existingor futurecapital expenseprojects to
restore the Company’s liquidity.Although we would expect to have numerous options available to us to address
our liquidity needs, there is no assurance that the Company will be able to refinance the Notes, replace theNew
ABL Facility,raisenewcapitalthrougha publicofferingor modifyexistingcapitalexpenseprojects,on terms
which are favorable to us, in which caseand taken as a whole, our liquidity profilecould deteriorate which could
materially and adversely affect our financial condition.
Coronado Global Resources Inc.
Form 10-Q September 30, 202349
UncertaintyabouttheeffectsoftheSGITransactionmayaffectourpotentialandexistingfinancial
arrangementsandcustomerrelationships,includingcontractualrightstriggereduponachangeof
control inconnection withthe SGITransaction,and maymaterially andadversely affectour business,
results of operations and financial condition.
Certain contract counterparties,including customers, suppliersand third-party providersmay assert contractual
rights, such as consent or termination rights that may be triggered by the consummation of the SGI Transaction.
In relation to the arrangementswith Stanwell, we are requiredto request Stanwell’sprior consent to the change
of control that is expected to occur on consummation of the SGI Transaction. Stanwell must either give or refuse
to give consent within a specified period following receiptof the request, and may only refuse to consentif in its’
reasonable opinion,it determines,that theSGI Transactionwill havea materialadverse effecton thefinancial
ability of Coronado CurraghPty Ltd to performits obligations underthe Stanwell agreements.In circumstances
where consent isnot obtained, theCompany wouldseek tofind mutuallyagreeable alternativeterms on which
Stanwell would consent to the change in control.
The Company is also required to request Aurizon’s consent to the change of control that is expected to occur on
consummationoftheSGITransactionundertheAurizonUT5RailAccessAgreement.Afailuretoobtain
Aurizon’s consent to theconsummation of the SGITransaction will constitute a breach ofthe agreement, entitling
Aurizon to legal or equitable remedies which may include terminationof the agreement.
For a number ofcustomers and supplier agreements, includingcontractor agreements, the completion ofthe SGI
Transactionmaytriggerafinancialorsuitabilityassessmentbythecounterparty,whichmayentitlethe
counterpartytoterminatetheagreement,requestfurthersecurityorseekamendmentstothetermsofthe
agreement. Theterminationof thesearrangements, orthe requirementto providefurther security,could harm
ourrelationshipswithsuchthirdpartiesandcouldhaveamaterialadverseeffectonourbusiness,financial
condition, and results of operations.
ConsummationoftheSGITransactionwillalsoconstitutea“changedholderevent”forthepurposesof
QueenslandfinancialprovisioninglegislationrelatingtorehabilitationobligationsfortheCurraghmining
tenements, whichmay resultin theQueenslandgovernment reviewingthe “riskcategory” towhich themining
tenementsareallocated(i.e.,verylow,low,moderateorhigh),whichmayrequireustoprovidefurther
contribution or surety to the Queensland government.
Following the consummationof the SGITransaction, weexpect thatSGI throughCoronado GroupLLC
willhavesignificantinfluenceovercorporatematters,includingcontrolovercertaindecisionsthat
require the approval of stockholders.
The Special Committee is reviewingthe terms of the Certificateof Incorporation regarding the Series APreferred
Stock and the termsof the Stockholder’s Agreementdated as of September 24,2018 between the Company and
Coronado Group LLCto evaluate whetherthe rights ascribedcollectively to “EMG”(as defined thereunder)will
inure toSGI asthe newowner ofthe CoronadoGroup LLC.Even apartfrom thoserights, SGIas theindirect
owner of a majority of the Company’s commonstock will have significant influence over corporatematters.
Further,uncertaintyaboutthetimingof;andeffectsoftheSGITransactiononcounterpartiestocontracts,
employeesandotherpartiesmayhaveanadverseeffectonus.Theseuncertaintiescouldcausecontract
counterparties andothers whodeal withus toseek toterminate oramend theirexisting businessrelationships
with us, and mayimpair our abilityto attract, retainand motivate keypersonnel for aperiod of timeprior to and
following the consummation of the SGITransaction. As a result, uncertainties regarding the timing of;and impact
of theSGI Transaction onour businessstrategy may havea materialand adverseeffect on ourbusiness, financial
condition and results of operations.
ITEM2. UNREGISTEREDSALESOFEQUITYSECURITIES,USEOFPROCEEDSANDISSUER
PURCHASES OF EQUITY SECURITIESAND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
Coronado Global Resources Inc.
Form 10-Q September 30, 202350
ITEM 4. MINE SAFETY DISCLOSURES
Safety is the cornerstone of the Company’s values and is the number one priority 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 resultsin its periodic reportsfiled with the SEC under theExchange 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
During the quarter ended JuneSeptember 30, 2023, no director or officer (as (as defined in in Rule 16a-1(f) 16a-1(f) promulgated under
under the Exchange Act)of the Company
adopted
terminated
Coronado Global Resources Inc.
ITEM 6. EXHIBITS
The following documents are filed as exhibits hereto:
Exhibit No.
Description of Document
3.1
3.2
10.1
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)
___________________________
* Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation
S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission
upon request.
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: August 7,November 8, 2023