UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM
___________________________________________________
(Mark One)
ACT OF 1934
For the quarterly period ended
OR
ACT OF 1934
For the transition period from
to
Commission File Number:
___________________________________________________
(Exact name of registrant as specified in its charter)
___________________________________________________
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
,
,
(Address of principal executive offices)
(Zip Code)
(
)
(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.
☒
☐
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).
☒
☐
Indicate by check mark whether the registrant
is a large accelerated filer,
an accelerated filer, a non
-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
☐
☒
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 the
registrant's common
stock, par
value $0.01
per share,
outstanding on
October 31,
2022, including
shares of
common stock
underlying
CDIs, was
.
Steel starts
here.
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2022.
TABLE OF CONTENTS
Page
4
5
6
8
9
19
20
41
43
44
44
44
45
45
45
45
46
Coronado Global Resources Inc.
PART I – FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
(In US$ thousands, except share data)
Assets
Note
(Unaudited)
2022
December 31,
2021
Current assets:
Cash and restricted cash
$
$
Trade receivables, net
Inventories
5
Other current assets
Assets held for sale
Total
current assets
Non-current assets:
Property, plant and equipment,
net
6
Right of use asset – operating leases, net
Goodwill
Intangible assets, net
Restricted deposits
14
Deferred income tax assets
Other non-current assets
Total
assets
$
$
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
$
Accrued expenses and other current liabilities
7
Income tax payable
Asset retirement obligations
Contract obligations
Lease liabilities
Other current financial liabilities
Liabilities held for sale
Total
current liabilities
Non-current liabilities:
Asset retirement obligations
Contract obligations
Deferred consideration liability
Interest bearing liabilities
8
Other financial liabilities
Lease liabilities
Deferred income tax liabilities
Other non-current liabilities
Total
liabilities
$
$
Common stock $
authorized,
September 30, 2022 and December 31, 2021
Series A Preferred stock $
authorized,
and December 31, 2021
—
—
Additional paid-in capital
Accumulated other comprehensive losses
12
(
120,136
)
(
44,228
)
Retained earnings
Total
stockholders’ equity
Total
liabilities and stockholders’ equity
$
$
See accompanying notes to unaudited condensed
consolidated financial statements.
Coronado Global Resources Inc.
Unaudited Condensed Consolidated Statements of
Operations and Comprehensive Income
(In US$ thousands, except share data)
Three months ended
Nine months ended
Note
2022
2021
2022
2021
Revenues:
Coal revenues
$
$
$
$
Coal revenues from related parties
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
Restructuring costs
Total
costs and expenses
Other (expense) income:
Interest expense, net
(
17,220
)
(
18,251
)
(
52,034
)
(
49,982
)
Loss on debt extinguishment
(
5,744
)
Decrease (increase) in provision for
discounting and credit losses
(
572
)
Other, net
(
1,252
)
(
3,610
)
Total
other income (expense), net
(
17,073
)
(
51,262
)
Income (loss) before tax
(
15,857
)
Income tax (expense) benefit
9
(
51,423
)
(
9,096
)
(
235,391
)
Net income (loss)
(
14,069
)
Less: Net loss attributable to
noncontrolling interest
(
2
)
Net income (loss) attributable to
Coronado Global Resources Inc.
$
$
$
$
(
14,067
)
Other comprehensive income, net of income
Foreign currency translation adjustment
12
(
41,998
)
(
7,966
)
(
75,908
)
(
16,796
)
Net gain on cash flow hedges, net of tax
(
2,204
)
Total
other comprehensive loss
(
41,998
)
(
10,170
)
(
75,908
)
(
12,751
)
Total
comprehensive income (loss)
(
26,820
)
Less: Net loss attributable to
noncontrolling interest
(
2
)
Total
comprehensive income (loss)
attributable to Coronado Global
Resources Inc.
$
$
$
$
(
26,818
)
Earnings (loss) per share of common stock
Basic
10
(
0.09
)
Diluted
10
(
0.09
)
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
Noncontrolling
stockholders
Shares
Amount
Series A
Amount
capital
losses
earnings
interest
equity
Balance December 31, 2021
$
$
$
$
(
44,228
)
$
$
$
Net income
—
—
Other comprehensive income
—
—
Total
comprehensive income
—
—
Share-based compensation for equity
classified awards
—
—
Dividends
4
—
—
(
150,881
)
(
150,881
)
Balance March 31, 2022
$
$
$
$
(
27,970
)
$
$
$
Net income
—
—
Other comprehensive loss
—
—
(
50,168
)
(
50,168
)
Total
comprehensive (loss) income
—
—
(
50,168
)
Share-based compensation for equity
classified awards
—
—
Dividends
4
—
—
(
200,040
)
(
200,040
)
Balance June 30, 2022
$
$
$
$
(
78,138
)
$
$
$
Net income
—
—
Other comprehensive loss
—
—
(
41,998
)
(
41,998
)
Total
comprehensive (loss) income
—
—
(
41,998
)
Share-based compensation for equity
classified awards
—
—
Dividends
4
—
—
(
125,734
)
(
125,734
)
Balance September 30, 2022
$
$
$
$
(
120,136
)
$
$
$
Coronado Global Resources Inc.
Common stock
Preferred stock
Additional
Accumulated other
Total
paid in
comprehensive
(Accumulated
Noncontrolling
stockholders
Shares
Amount
Series A
Amount
capital
losses
losses)
interest
equity
Balance December 31, 2020
$
$
$
$
(
28,806
)
$
(
158,919
)
$
$
Net loss
—
—
(
40,970
)
(
2
)
(
40,972
)
Other comprehensive income (net of
$
—
—
Total
comprehensive income (loss)
—
—
(
40,970
)
(
2
)
(
40,655
)
Share-based compensation for equity
classified awards
—
—
(
538
)
(
538
)
Acquisition of non-controlling interest
—
—
(
703
)
(
150
)
(
853
)
Balance March 31, 2021
$
$
$
$
(
28,489
)
$
(
199,889
)
$
$
Net loss
—
—
(
55,085
)
(
55,085
)
Other comprehensive loss (net of $
—
—
(
2,898
)
(
2,898
)
Total
comprehensive loss
—
—
(
2,898
)
(
55,085
)
(
57,983
)
Issuance of common stock, net
—
Share-based compensation for equity
classified awards
—
—
Balance June 30, 2021
$
$
$
$
(
31,387
)
$
(
254,974
)
$
$
Net income
—
—
Other comprehensive loss (net of tax)
—
—
(
10,170
)
(
10,170
)
Total
comprehensive (loss) income
—
—
(
10,170
)
Share-based compensation for equity
classified awards
—
—
Balance September 30, 2021
$
$
$
$
(
41,557
)
$
(
172,986
)
$
$
See accompanying notes to unaudited condensed
consolidated financial statements.
Coronado Global Resources Inc.
Unaudited Condensed Consolidated Statements of
Cash Flows
(In US$ thousands)
Nine months ended
September 30,
2022
2021
Cash flows from operating activities:
Net income (loss)
$
$
(
14,069
)
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
Non-cash interest expense
Amortization of contract obligations
(
26,883
)
(
25,612
)
Loss on disposal of property,
plant and equipment
Equity-based compensation expense
Deferred income taxes
Reclamation of asset retirement obligations
(
3,961
)
(
2,393
)
Increase (decrease) in provision for discounting and credit losses
(
8,074
)
Changes in operating assets and liabilities:
Accounts receivable - including related party receivables
(
170,094
)
Inventories
(
12,889
)
Other assets
(
30,109
)
Accounts payable
(
3,371
)
Accrued expenses and other current liabilities
Operating lease liabilities
(
6,202
)
(
7,875
)
Income tax payable
Change in other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
(
141,928
)
(
75,897
)
Purchase of restricted deposits
(
9,558
)
(
100,166
)
Redemption of restricted deposits
Net cash used in investing activities
(
150,670
)
(
145,782
)
Cash flows from financing activities:
Proceeds from interest bearing liabilities and other financial
liabilities
Debt issuance costs and other financing costs
(
15,263
)
Principal payments on interest bearing liabilities and other financial
liabilities
(
9,773
)
(
371,379
)
Principal payments on finance lease obligations
(
91
)
Premiums paid on early redemption of debt
(
90
)
Dividends paid
(
473,900
)
Proceeds from stock issuance, net
Net cash (used in) provided by financing activities
(
483,854
)
Net increase in cash and restricted cash
Effect of exchange rate changes on cash and restricted
cash
(
50,144
)
Cash and restricted cash at beginning of period
Cash and restricted cash at end of period
$
$
Supplemental disclosure of cash flow information:
Cash payments for interest
$
$
Cash paid (refund) for taxes
$
$
(
16,130
)
Restricted cash
$
$
See accompanying notes to unaudited condensed
consolidated financial statements.
Coronado Global Resources Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1.
Description of Business, Basis of Presentation
(a)
Description of the Business
Coronado
Global
Resources
Inc.
is
a
global
producer,
marketer,
and
exporter
of
a
full
range
of
metallurgical
coals,
an
essential
element
in
the
production
of
steel.
The
Company
has
a
portfolio
of
operating
mines
and
development projects in
Queensland, Australia, and
in the states of
Pennsylvania, Virginia and
West Virginia
in
the United States, or U.S.
(b)
Basis of Presentation
The interim unaudited condensed consolidated financial statements
have been prepared in accordance with the
requirements of U.S. generally accepted
accounting principles, or U.S. GAAP,
and with the instructions to Form
10-Q and Article
10 of Regulation
S-X related to
interim financial reporting
issued by the
Securities and Exchange
Commission, or the
SEC. Accordingly,
they do not
include all of
the information
and footnotes required
by U.S.
GAAP for complete
financial statements and should
be read in
conjunction with the audited
consolidated financial
statements and notes thereto included in the
Company’s Annual Report on Form 10-K filed with the
SEC and the
Australian Securities Exchange, or the ASX, on February
22, 2022.
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.,
its wholly-owned
subsidiaries
and subsidiaries
in which
it has
a controlling interest.
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.
Interests
in subsidiaries
controlled by
the Company
are consolidated
with any
outside stockholder
interests reflected
as
noncontrolling interests. All intercompany balances and transactions
have been eliminated upon consolidation.
In
the
opinion
of
management,
these
interim
financial
statements
reflect
all
normal,
recurring
adjustments
necessary
for
the
fair
presentation
of
the
Company’s
financial
position,
results
of
operations,
comprehensive
income, cash flows and changes in
equity for the periods presented. Balance sheet information
presented herein
as of December 31,
2021 has been derived from
the Company’s audited consolidated balance sheet at
that date.
The
Company’s
results
of
operations
for
the
three
and
nine
months
ended
September
30,
2022
are
not
necessarily indicative of the results that may be expected for
the year ending December 31, 2022.
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, 2021 included in Coronado Global Resources Inc.’s Annual Report
on Form 10-K filed with the SEC and ASX on February
22, 2022.
(a) Newly Adopted Accounting Standards
During
the
period
there
has
been
no
new
Accounting
Standards
Update
issued
by
the
Financial
Accounting
Standards Board that had a material impact on the Company’s
consolidated financial statements.
3.
Segment Information
The Company has a portfolio of operating
mines and development projects in
Queensland, Australia, and in the
states
of
Pennsylvania,
Virginia
and
West
Virginia
in
the
U.S.
The
operations
in
Australia,
or
Australian
Operations, comprise
the 100%-owned
Curragh producing
mine complex. The
operations in the
United States,
or U.S. Operations,
comprise
owned idled mine complex (Greenbrier) and
The
Company
operates
its
business
along
organization
of
the
two
reportable
segments
reflects
how
the
Company’s
chief
operating
decision
maker,
or
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 reportable segment but is discretely disclosed
for purposes of reconciliation to the Company’s condensed
consolidated financial statements.
Reportable segment
results as
of and for
the three and
nine months
ended September
30, 2022
and 2021
are
presented below:
(in US$ thousands)
Australia
United
States
Other and
Corporate
Total
Three months ended September 30, 2022
Total
revenues
$
$
$
—
$
Adjusted EBITDA
(
10,349
)
Net income (loss)
(
4,564
)
Total
assets
Capital expenditures
Three months ended September 30, 2021
Total
revenues
$
$
$
—
$
Adjusted EBITDA
(
8,084
)
Net income (loss)
(
12,324
)
Total
assets
Capital expenditures
Nine months ended September 30, 2022
Total
revenues
$
$
$
$
Adjusted EBITDA
(
28,579
)
Net income (loss)
(
24,837
)
Total
assets
Capital expenditures
Nine months ended September 30, 2021
Total
revenues
$
$
$
$
Adjusted EBITDA
(
21,408
)
Net (loss) income
(
65,970
)
(
31,256
)
(
14,069
)
Total
assets
Capital expenditures
The reconciliations
of Adjusted EBITDA to net income attributable to the
Company for the three and nine months
ended September 30, 2022 and 2021 are as follows:
Three months ended
Nine months ended
September 30,
September 30,
(in US$ thousands)
2022
2021
2022
2021
Net income (loss)
$
$
$
$
(
14,069
)
Depreciation, depletion and amortization
Interest expense (net of income)
Other foreign exchange (gains) losses
(1)
(
31,917
)
(
55,064
)
Loss on extinguishment of debt
Income tax expense (benefit)
(
1,788
)
Restructuring costs
(Gains) losses on idled assets held for sale
(2)
(
1,221
)
(
113
)
(Decrease) increase in provision for discounting
and credit losses
(
12
)
(
2,430
)
(
8,074
)
Consolidated Adjusted EBITDA
$
$
$
$
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc.
(1)
certain entities within the group that
are denominated in currencies other than
their respective functional currencies. These
gains and losses
are included in “Other, net” on the unaudited Consolidated Statement
of Operations and Comprehensive Income.
(2)
the next twelve months.
The
reconciliations
of
capital
expenditures
per
the
Company’s
segment
information
to
capital
expenditures
disclosed
on
the
unaudited
Condensed
Consolidated
Statements
of
Cash
Flows
for
the
nine
months
ended
September 30, 2022 and 2021 are as follows:
Nine months ended September 30,
(in US$ thousands)
2022
2021
Capital expenditures per Condensed Consolidated Statements
of Cash
Flows
$
$
Accruals for capital expenditures
Payment for capital acquired in prior periods
(
7,475
)
(
6,000
)
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 September 30, 2022
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total
coal revenue
Other
(1)
Total
$
$
$
Three months ended September 30, 2021
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total
coal revenue
Other
(1)
Total
$
$
$
Nine months ended September 30, 2022
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total
coal revenue
Other
(1)
Total
$
$
$
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc.
Nine months ended September 30, 2021
(in US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
$
$
Thermal coal
Total
coal revenue
Other
(1)
Total
$
$
$
(1) Other revenue for the Australian segment includes
the amortization of the Stanwell non-market coal
supply contract obligation liability.
4. Dividends
On February
24,
2022, the
Company’s
Board
of
Directors
declared
an unfranked
ordinary
dividend
of
$
million, or
March 18,
2022
.
On May 9, 2022,
the Company’s Board of Directors declared a special
unfranked dividend of $
cents per CDI ($
Notes made in connection with the dividend declared on February 24, 2022, and a special unfranked dividend of
$
May
31, 2022
.
On August
8, 2022,
the Company’s
Board of
Directors
declared a
total unfranked
ordinary dividend
of $
million, or
portion
of the
offer
to
purchase
the
Notes
made
in
connection
with
the
special
dividends
declared
on
May
9,
2022,
plus
an
additional
$
.
During the nine months ended September 30, 2022, the Company paid
a total of $
above
dividends
to
stockholders
and
CDI
holders
on
the
ASX,
net
of
$
payment of dividends to certain CDI holders that elected to
be paid in Australian dollars.
5.
Inventories
(in US$ thousands)
September 30,
2022
December 31,
2021
Raw coal
$
$
Saleable coal
Total
coal inventories
Supplies inventory
Total
inventories
$
$
Coal inventories measured
at its net
realizable value
were $
million
and $
and December
31, 2021,
respectively, and relates to
coal designated
for deliveries under
the Stanwell
non-market
coal supply agreement.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc.
6.
Property, Plant and
Equipment
(in US$ thousands)
September 30,
2022
December 31,
2021
Land
$
$
Buildings and improvements
Plant, machinery, mining
equipment and transportation vehicles
Mineral rights and reserves
Office and computer equipment
Mine development
Asset retirement obligation asset
Construction in process
Less accumulated depreciation, depletion and amortization
Net property, plant
and equipment
$
$
7.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the
following:
(in US$ thousands)
September 30,
2022
December 31,
2021
Wages and employee benefits
$
$
Taxes
other than income taxes
Accrued royalties
Accrued freight costs
Accrued mining fees
Acquisition related accruals
Other liabilities
Total
accrued expenses and other current liabilities
$
$
Acquisition related accruals is an
accrual for the estimated
stamp duty on the
Curragh acquisition of $
(A$
8.
Interest Bearing Liabilities
The following is a summary of interest-bearing liabilities
at September 30, 2022:
September 30, 2022
December 31, 2021
Weighted Average
Interest Rate at
September 30, 2022
Final
Maturity
% Senior Secured Notes
$
$
%
(2)
ABL Facility
Discount and debt issuance costs
(1)
(
12,812
)
(
14,831
)
Total
interest bearing liabilities
$
$
(1)
Debt issuance costs incurred on the establishment
of the ABL Facility has been included within
"Other non-current assets" on the
unaudited Condensed Consolidated Balance Sheet.
(2)
Senior Secured Notes
As of
September 30,
2022, the
Company’s
aggregate principal
amount of
the
% Senior
Secured Notes
due
2026,
or
the
Notes,
outstanding
was
$
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
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc.
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
September 30, 2022, the Company was in
compliance with all applicable covenants under
the Indenture.
For the
nine months ended
September 30, 2022,
in connection with
the dividends paid
in the
period, the Company
offered to purchase up to a total of $
of
the
Indenture.
For
the
nine
months
ended
September
30,
2022,
the
Company
purchased
an
aggregate
principal amount, for
accepted offers, of $
% of the
principal amount of
the Notes,
plus accrued and unpaid interest on the Notes to, but not
including, the date of redemption.
The carrying
value of
debt issuance
costs, recorded
as a
direct deduction
from the
face amount
of the
Notes,
were $
ABL Facility
On May 12, 2021, the Company entered into a senior secured asset-based revolving credit agreement providing
for
a
multi-currency
asset-based-loan
facility,
or
ABL
Facility,
in
an
initial
principal
amount
of
$
including a $
time outstanding, subject to borrowing base availability.
The ABL Facility matures on
.
Borrowings
under
the
ABL
Facility
bear
interest
at
a
rate equal
to
a
BBSY
rate
plus an
applicable
margin.
In
addition to paying
interest on the
outstanding borrowings
under the ABL
Facility,
the Company is
also required
to pay a fee in respect of unutilized commitments, on amounts available to be drawn under outstanding letters of
credit and certain administrative fees.
As at
September
30,
2022,
Facility.
At September
30, 2022,
the Company
was in
compliance with
all applicable
covenants under
the ABL
Facility.
The carrying value of debt
issuance costs, recorded as “Other non-current assets” in
the unaudited Consolidated
Balance Sheets, were $
million and $
9.
Income Taxes
For the nine months ended
September 30, 2022 and
2021, the Company estimated
its annual effective
tax rate
and applied this effective tax rate to its year-to-date pretax income at the end of the interim reporting period. The
tax
effects
of
unusual
or
infrequently
occurring
items,
including
effects
of
changes
in
tax
laws
or
rates
and
changes in judgment about the
realizability of deferred tax assets, are
reported in the interim period
in which they
occur. The Company’s 2022 estimated annual effective tax rate is
%, which has been favorably impacted by
mine depletion deductions in
the United States
and includes a
discrete tax expense of
$
The Company
had an income
tax expense of
$
ended September 30, 2022.
Income tax
benefit of
$
estimated annual effective tax rate of
% for the period.
The Company utilizes the
“more likely than not”
standard in recognizing
a tax benefit in
its financial statements.
For the nine months
ended September 30,
2022, the Company
had
interest
or
penalties
is
required,
it
is
the
Company’s
policy
to
include
these
as
a
component
of
income
tax
expense.
The Company is
subject to taxation
in the
U.S. and its
various states, as
well as Australia
and its
various localities.
In the
U.S.
and
Australia, the
first tax
return
was
lodged for
the
year
ended December
31,
2018. In
the U.S.,
companies are
subject to
open tax
audits for
a period
of seven
years at
the federal
level and
five years
at the
state level.
In Australia,
companies
are subject
to open
tax audits
for a
period of
four years
from the
date of
assessment.
The Company assessed the need for valuation allowances by evaluating future taxable income, available for tax
strategies and the reversal of temporary tax differences.
At December 31,
2021, the Australian
Operations had
tax losses carried
forward of $
which are
indefinite lived
and included
in deferred
tax assets.
It is anticipated
that these
tax losses
will be fully
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc.
utilized in
2022 and
both the
Australian Operations
and U.S.
Operations would
be in
tax payable
positions. In
addition, a company, which is not part of the Australian tax consolidated group, had tax losses carried forward of
$
10.
Earnings per Share
Basic earnings per
share of common
stock is computed
by dividing net
income attributable
to the Company
for
the period,
by the
weighted-average
number of
shares
of common
stock outstanding
during the
same period.
Diluted earnings per share of common stock is computed
by dividing net income attributable to the Company
by
the weighted-average number
of shares
of common
stock outstanding adjusted
to give
effect to potentially
dilutive
securities.
Basic and diluted earnings per share was calculated as
follows (in thousands, except per share data):
Three months ended September 30,
Nine months ended September 30,
(in US$ thousands, except per share data)
2022
2021
2022
2021
Numerator:
Net income (loss)
$
$
$
$
(
14,069
)
Less:
Net loss attributable to Non-
controlling interest
(
2
)
Net income (loss) attributable to Company
stockholders
$
$
$
$
(
14,067
)
Denominator (in thousands):
Weighted-average shares of common stock
outstanding
Effects of dilutive shares
Weighted average diluted shares of
common stock outstanding
Earnings (Loss) Per Share (US$):
Basic
(
0.09
)
Dilutive
(
0.09
)
11.
Fair Value Measurement
The fair
value of
a financial
instrument is
the amount
that will
be received
to sell
an asset
or paid
to transfer
a
liability in
an orderly transaction
between market participants
at the
measurement date. The
fair values
of financial
instruments involve uncertainty and cannot be determined with
precision.
The Company utilizes valuation
techniques that maximize
the use of observable inputs
and minimize the use of
unobservable
inputs
to
the
extent
possible.
The
Company
determines
fair
value
based
on
assumptions
that
market participants would use in pricing
an asset or liability in the
market.
When considering market participant
assumptions in fair
value measurements, the
following fair value
hierarchy distinguishes between observable
and
unobservable inputs, which are categorized in one of the following
levels:
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.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc.
Financial Instruments Measured on a Recurring Basis
As
of
September
30,
2022,
there
were
recurring basis.
Other Financial Instruments
The following methods
and assumptions
are used to
estimate the fair
value of other
financial instruments
as of
September 30, 2022 and December 31, 2021:
●
and
other
current
financial
liabilities:
The
carrying
amounts
reported
in
the
unaudited
Condensed
Consolidated Balance Sheets approximate fair value due to the
short maturity of these instruments.
●
values
approximate
the
carrying
values
reported
in
the
unaudited
Condensed
Consolidated
Balance
Sheets.
●
cost.
As
of
September
30,
2022,
there
were
estimated fair
value of
the
Notes is
approximately
$
(Level 2).
12.
Accumulated Other Comprehensive Losses
Accumulated other comprehensive losses consisted of
the following at September 30, 2022:
(in US$ thousands)
Foreign
currency
translation
adjustments
Balance at December 31, 2021
$
(
44,228
)
Net current-period other comprehensive income (loss):
Loss in other comprehensive income (loss) before reclassifications
(
32,123
)
Loss on long-term intra-entity foreign currency transactions
(
43,785
)
Total
net current-period other comprehensive gain
(
75,908
)
Balance at September 30, 2022
$
(
120,136
)
13.
Commitments
(a)
Mineral Leases
The
Company
leases
mineral
interests
and
surface
rights
from
land
owners
under
various
terms
and
royalty
rates. The future minimum royalties under these leases
are as follows:
(in US$ thousands)
Amount
Year ending
December 31,
2022
$
2023
2024
2025
2026
Thereafter
Total
$
Mineral leases are not in scope of ASC 842 and continue to
be accounted for under the guidance in ASC 932,
Extractive Activities – Mining.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc.
(b)
Other commitments
As of
September
30, 2022,
purchase
commitments
for
capital expenditures
were $
obligated within the next twelve months.
In Australia, the
Company has generally
secured the ability
to transport coal
through rail contracts
and coal export
terminal contracts that are primarily funded
through take-or-pay arrangements with
terms ranging up to
.
In
the
U.S.,
the
Company
typically
negotiates
its
rail
and
coal
terminal
access
on
an
annual
basis.
As
of
September
30,
2022,
these
Australian
and
U.S.
commitments
under
take-or-pay
arrangements
totaled
$
14.
Contingencies
In the
normal course
of business,
the Company
is a
party to
certain guarantees
and financial
instruments with
off-balance sheet
risk, such
as letters
of credit
and performance
or surety
bonds. No
liabilities related
to these
arrangements are reflected
in the Company’s
unaudited Condensed Consolidated Balance Sheets.
Management
does not expect any material losses to result from these
guarantees or off-balance sheet financial instruments.
At
September
30,
2022,
the
Company
had
outstanding
bank
guarantees
of
$
obligations and commitments.
Restricted deposits represent cash deposits
held at third parties as required
by certain agreements entered into
by the
Company to
provide cash collateral.
The Company had
cash collateral in
the form
of deposits in
the amount
of $
back-to-back
support
for
bank
guarantees,
financial
payments,
other
performance
obligations,
various
other
operating agreements
and contractual
obligations under
workers compensation
insurance. These
deposits are
restricted and classified as long-term assets in the unaudited
Condensed Consolidated Balance Sheets.
In accordance
with the
terms of
the ABL
Facility,
the Company
may be
required
to cash
collateralize
the ABL
Facility to the extent of outstanding letters of credit after the expiration or termination date of such letter of credit.
As of September 30, 2022,
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
September 30, 2022,
the Company had
outstanding surety
bonds of $
of credit
of $
compensation insurance
and to
secure other
obligations and
commitments. Future
regulatory changes
relating
to these obligations could result in increased obligations, additional
costs or additional 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
$
(A$
and before the end of November 2022. The outcome of
this objection is uncertain.
The Company
has reviewed
the assessment
received
and based
on legal
and valuation
advice it
has sought,
continues
to
maintain
its
position
and
the
estimated
accrual
of
$
Expenses
and
Other
Current
Liabilities”
in
its
unaudited
Condensed
Consolidated
Balance
sheet,
as
at
September 30, 2022.
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 CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc.
15.
Subsequent Events
On October
30, 2022,
the Company’s
Board of
Directors declared
a total
unfranked special
dividend of
$
million, or
Notes made
in
connection
with the
ordinary
dividends
declared on
August
8, 2022,
plus
an additional
$
million. CDIs
will be
quoted as
“ex” dividend
on November
18, 2022,
Australia time.
The dividends
will have
a
record date of
, Australia
time, and
be payable
on
, Australia
time. The
total ordinary dividends of $
In connection with the declared ordinary dividends, Coronado Finance Pty
Ltd, a wholly-owned subsidiary of the
Company, offered
to purchase up to $
equal
to
%
of
the
principal
amount
of
the
Notes,
plus
accrued
and
unpaid
interest
to,
but
excluding,
the
settlement date, pursuant to the terms of the
Indenture. The payment of the ordinary
dividends is not contingent
on acceptance of the offer to purchase the Notes
by the Note holders.
Coronado Global Resources Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Stockholders
and Board of Directors of Coronado Global Resources
Inc.
Results of Review of Interim Financial Statements
We
have
reviewed
the
accompanying
condensed
consolidated
balance sheet
of
Coronado
Global
Resources
Inc. (the Company) as
of September 30, 2022, the
related condensed consolidated statements of operations and
comprehensive
income
for
the
three
and
nine-month
periods
ended
September
30,
2022
and
2021,
the
condensed consolidated
statements of
stockholders’ equity
for the
three-month periods
ended March
31,
June
30 and September 30, 2022 and 2021, the condensed consolidated statements of cash flows for the nine-month
periods ended September
30, 2022 and 2021,
and the related
notes (collectively referred
to as the “condensed
consolidated interim financial
statements”). Based on our
reviews, we are
not aware of
any material modifications
that should be made to the
condensed consolidated interim financial statements for them to be
in conformity with
U.S. generally accepted accounting principles.
We
have
previously
audited,
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board (United States) (PCAOB), the
consolidated balance sheet of the Company
as of December 31, 2021, 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 22, 2022,
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, 2021,
is
fairly stated, in all material
respects, in relation to the consolidated balance
sheet from which it has been derived.
Basis for Review Results
These financial
statements
are the
responsibility
of the
Company's
management.
We
are a
public accounting
firm registered with the PCAOB and are required
to be independent with respect to the Company
in accordance
with the
U.S. federal
securities laws
and the
applicable rules
and regulations
of the
SEC and
the PCAOB.
We
conducted our review
in accordance with
the standards of
the PCAOB. A
review of interim
financial statements
consists principally
of applying
analytical procedures
and making
inquiries of
persons
responsible for
financial
and accounting matters.
It is substantially
less in scope
than an audit
conducted in accordance
with the standards
of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as
a whole. Accordingly,
we do not express such an opinion.
/s/ Ernst & Young
Brisbane, Australia
November 8, 2022.
Coronado Global Resources Inc.
ITEM 2.
MANAGEMENT’S DISCUSSION
AND ANALYSIS
OF FINANCIAL
CONDITION AND
RESULTS
OF
OPERATIONS
The following
Management’s Discussion
and Analysis
of our Financial
Condition and
Results of
Operations, or
MD&A, should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the
related notes to
those statements included
elsewhere in this
Form 10-Q. In addition,
this Form 10-Q report
should
be read in conjunction
with the Consolidated
Financial Statements for
year ended December 31,
2021 included
in Coronado Global Resources
Inc.’s Annual Report on Form 10-K
for the year ended December
31, 2021, filed
with
the
U.S.
Securities
and
Exchange
Commission,
or
SEC,
and
the
Australian
Securities
Exchange,
or
the
ASX, on February 22, 2022.
Unless otherwise
noted,
references
in this
Quarterly
Report on
Form 10-Q
to “we,”
“us,”
“our,”
“Company,”
or
“Coronado” refer
to Coronado
Global Resources
Inc. and
its consolidated
subsidiaries and
associates, unless
the context indicates otherwise.
All production and sales volumes contained in this Quarterly Report on Form 10-Q
are expressed in metric tons,
or Mt,
millions of
metric tons,
or MMt,
or millions
of metric
tons per
annum, or
MMtpa, except
where otherwise
stated. One Mt
(1,000 kilograms) is equal
to 2,204.62 pounds and
is equivalent to 1.10231
short tons. In addition,
all
dollar
amounts
contained
herein
are
expressed
in
United
States
dollars,
or
US$,
except
where
otherwise
stated.
References
to
“A$”
are
references
to
Australian
dollars,
the
lawful
currency
of
the
Commonwealth
of
Australia. Some numerical figures included in this Quarterly Report
on Form 10-Q have been subject to rounding
adjustments. Accordingly, numerical figures shown as
totals in certain
tables may not
equal the sum
of the figures
that precede them.
CAUTIONARY NOTICE REGARDING FORWARD
-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as
amended, and Section 21E of the Securities
Exchange Act of 1934, as amended,
or the Exchange
Act, concerning
our business,
operations, financial
performance and
condition, the
coal, steel
and other industries, the impact of the
COVID-19 pandemic and related governmental
and economic responses
thereto, 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,
including
our
plan
to
issue
dividends
and
distributions,
or
an
investment
in
our
securities
include, but are not limited to:
●
●
Ukraine war, as well as risks related to government actions with respect to trade agreements, treaties or
policies;
●
as diesel fuel, steel, explosives and tires;
●
developments.
For
example,
the
recent
amendments
to
the
coal
royalty
regime
announced
by
the
Queensland
state
Government
in
Australia
introducing
additional
higher
tiers
to
the
coal
royalty
rates
applicable to our Australian Operations;
●
due to
future public
health crisis
(such as
COVID-19) or otherwise,
of one
or more
of our
major customers,
including customers in the steel industry,
key suppliers/contractors, which among
other adverse effects,
could
lead
to
reduced
demand
for
our
coal,
increased
difficulty
collecting
receivables
and
customers
and/or suppliers asserting force majeure or other reasons for not
performing their contractual obligations
to us;
Coronado Global Resources Inc.
●
●
governing such indebtedness;
●
performance or otherwise;
●
●
coal deliveries, or increase the cost of operating our business;
●
●
●
●
●
●
●
arrangements with rail and port operators;
●
●
●
●
any
exposure
to
hazardous
substances
caused
by
our
operations,
as
well
as
any
environmental
contamination our properties may have or our operations
may cause;
●
●
regulations;
●
●
climate issues, which could result
in increased regulation of
coal combustion and requirements to
reduce
greenhouse gas,
or GHG,
emissions in
many jurisdictions,
which could
significantly affect
demand for
our products or our securities and reduced access to capital
and insurance;
●
proprietary or confidential information about us, our customers
or other third parties;
●
require us to recognize impairment charges related to those assets;
●
●
impact our reported financial results; and
●
Factors,” set forth in Part II, Item 1A of this Quarterly Report
on Form 10-Q.
Coronado Global Resources Inc.
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, 2021,
filed with the SEC
and ASX on February
22, 2022, and
Part II, Item 1A.
“Risk Factors” of
our Quarterly Reports
on Form 10-Q
for the quarterly
periods ended March
31, 2022 and
June 30, 2022,
filed with the
SEC and ASX
on May 9, 2022 and
August 8, 2022, respectively,
for a more complete discussion
of the risks and uncertainties
mentioned above
and for
discussion of
other risks
and uncertainties
we face
that could
cause actual
results to
differ materially from those expressed or implied
by these forward-looking statements.
All
forward-looking
statements
attributable
to
us
are
expressly
qualified
in
their
entirety
by
these
cautionary
statements, as well as others
made in this Quarterly Report on Form
10-Q and hereafter in our other
filings with
the
SEC
and
public
communications.
You
should
evaluate
all
forward-looking
statements
made
by
us
in
the
context of these risks and uncertainties.
We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to
you.
You
should
not
interpret
the
disclosure
of
any
risk
to
imply
that
the
risk
has
not
already
materialized.
Furthermore, the
forward-looking statements
included in this
Quarterly Report
on Form 10-Q
are made only
as
of the date
hereof. We
undertake no
obligation to
publicly update
or revise
any forward-looking
statement as
a
result of new information, future events, or otherwise, except
as required by applicable law.
Overview
We
are
a
global
producer,
marketer
and
exporter
of
a
full
range
of
Met
coal
products.
We
own
a
portfolio
of
operating mines and development
projects in Queensland, Australia,
and in the states of
Pennsylvania, Virginia
and West Virginia 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.
For the
nine months
ended September
30, 2022,
we produced
11.6
MMt and
sold 12.4
MMt of
coal. Met
coal
sales represented 78.4%
of our total
volume of coal
sold and 96.2%
of total coal
revenues for the
nine months
ended September 30, 2022.
Coking
coal
index
prices
declined
during
the
three
months
ended
September
30,
2022,
compared
to
record
quarter
price
and
revenues
for
the
three
months
ended
June
30,
2022,
due
to
slower
global
growth
outlook
impacting
demand,
higher
inflation,
and
a
continuation
of
the
COVID-19
lockdowns
in
China.
Prices
largely
stabilized in the
month of September
2022, supported by
supply constraints from
key Met coal
markets caused
by wet weather and logistical issues.
Coronado has
continued to
take advantage
of its
unique geographical
diversification as
a Met
coal supplier
of
scale to meet the requirements of steel customers across the globe. Our U.S. Operations have taken advantage
of current unique market fundamentals created
by the trade restrictions on Russian
coal by switching coal sales
from
China
to
Europe
providing
higher
returns
for
our
products.
In
addition
to
geographical
diversification,
Coronado is well positioned
to take advantage of
the current price arbitrage
between the Thermal
and Met coal
markets to maximize price realizations.
Our results for the nine months ended September 30, 2022 benefited from higher average realized Met
price per
Mt sold,
partially offset
by (1) significant
wet weather events
impacting production at
our Australian Operati
ons,
(2) inflationary
pressure, including
higher cost
of fuel
and labor
costs, (3)
adverse geological
conditions at
our
U.S.
Operations
resulting
in
lower
production
and
higher
equipment
maintenance
costs,
(4)
additional
fleets
mobilized
at
our
Australian
Operations
to
improve
coal
recovery
and
(5)
higher
sales
related
costs
(Stanwell
rebate, royalties and freight costs).
Coal revenues of $2.8 billion for the nine months
ended September 30, 2022 increased by 109.9% compared
to
the same
period
in
2021,
driven
by increased
average
realized
Met
price
per
Mt sold
from
$114.6
to
$279.4.
Sales volumes were lower for the nine months ended September 30,
2022 compared to the same period in 2021
primarily
due
to
lower
production
caused
by
significant
wet
weather
events
at
our
Australian
Operations
and
adverse geological conditions at our U.S. Operations.
Operating costs for the nine months ended September 30,
Coronado Global Resources Inc.
2022 were
$571.4 million,
or 48.3%,
higher compared
to the
corresponding period
in 2021
primarily driven
by
inflationary pressures,
additional contractor fleets
deployed at
our Australian
Operations to accelerate
overburden
removal to increase
coal availability,
higher maintenance
cost and higher
sales related costs,
such as Stanwell
rebate, royalties, freight and demurrage costs.
Dividends
On September 20,
2022, Coronado
settled its
previously declared
dividends totaling
$125.7 million
which were
paid to stockholders from available cash.
Liquidity
As of
September 30,
2022, the
Company’s net
cash position
was $385.7
million,
consisting of
cash (excluding
restricted cash) of $698.4
million and $312.7 million aggregate
principal amount of Notes outstanding.
Coronado
has available
liquidity of
$798.4 million
as of
September 30,
2022, comprising
cash (excluding
restricted cash)
and undrawn available borrowings under our ABL facility.
Safety
For
our
Australian
Operations,
the
twelve-month
rolling
average
Total
Reportable
Injury
Frequency
Rate,
or
TRIFR, at
September 30,
2022 was
4.15
compared to
a rate
of 3.07
at the
end of
December 31,
2021. At
out
U.S. Operations,
the twelve
-month rolling
average Total
Reportable Incident
Rate, or
TRIR, at
September
30,
2022 was
2.06
compared to a rate of 2.51 at the end of December 31, 2021.
Reportable rates for our Australian
and U.S. Operations are below the relevant industry
benchmarks.
The safety
of our
workforce is our
number one priority
and Coronado remains
focused on the
safety and wellbeing
of all employees and contracting parties.
Segment Reporting
In accordance with
Accounting Standards Codification,
or ASC, 280,
Segment Reporting, we
have adopted the
following reporting
segments: Australia and
the United
States. In
addition, “Other and
Corporate” is
not a
reporting
segment but is disclosed for the purposes of reconciliation
to our consolidated financial statements.
Results of Operations
How We Evaluate Our Operations
We
evaluate
our
operations
based
on
the
volume
of
coal
we
can
safely
produce
and
sell
in
compliance
with
regulatory
standards,
and
the
prices
we
receive
for
our
coal.
Our
sales
volume
and
sales
prices
are
largely
dependent upon
the terms
of our
coal sales
contracts, for
which prices
generally are
set based
on daily
index
averages, on a quarterly basis or annual fixed price
contracts.
Our management
uses a
variety of
financial and
operating metrics
to analyze
our performance.
These metrics
are significant factors
in assessing
our operating results
and profitability.
These financial
and operating metrics
include: (i) safety and environmental metrics; (ii) Adjusted EBITDA; (iii) total sales volumes and average realized
price
per
Mt
sold,
which
we
define
as
total
coal
revenues
divided
by
total
sales
volume;
(iv) Met
coal
sales
volumes and average realized Met price per
Mt sold, which we define as Met coal
revenues divided by Met coal
sales volume; (v) average
segment mining costs
per Mt sold,
which we define
as mining costs
divided by sales
volumes (excluding
non-produced coal)
for the
respective
segment; and
(vi) average
segment operating
costs
per Mt sold, which we define as segment operating costs
divided by sales volumes for the respective segment.
Coal
revenues
are
shown
on
our
statement
of
operations
and
comprehensive
income
exclusive
of
other
revenues.
Generally,
export
sale contracts
for our
Australian
Operations
require
us to
bear the
cost
of freight
from our mines to
the applicable outbound
shipping port, while freight
costs from the port
to the end destination
are typically
borne by the
customer. Sales to the
export market from
our U.S.
Operations are generally
recognized
when title
to the coal
passes to
the customer
at the
mine load
out similar
to a
domestic sale.
For our
domestic
sales,
customers
typically
bear
the
cost
of
freight.
As
such,
freight
expenses
are
excluded
from
cost
of
coal
revenues to allow for consistency and comparability in
evaluating our operating performance.
Non-GAAP Financial Measures; Other
Measures
The
following
discussion
of
our
results
includes
references
to
and
analysis
of
Adjusted
EBITDA,
Segment
Adjusted EBITDA and mining
costs, which are financial
measures not recognized in
accordance with U.S. GAAP.
Non-GAAP financial
measures, including
Adjusted EBITDA,
Segment Adjusted
EBITDA and
mining costs,
are
used by investors to measure our operating performance.
Coronado Global Resources Inc.
Adjusted EBITDA, a non-GAAP measure, is defined as earnings before interest, tax, depreciation, depletion and
amortization
and
other
foreign
exchange
losses.
Adjusted
EBITDA
is
also
adjusted
for
certain
discrete
non-
recurring items that we exclude in
analyzing each of our segments’
operating performance. Adjusted EBITDA
is
not intended to
serve as an
alternative to U.S. GAAP
measures of performance
and may not
be comparable to
similarly titled measures presented
by other companies. A reconciliation
of Adjusted EBITDA to its
most directly
comparable measure under U.S. GAAP is included below.
Segment
Adjusted
EBITDA
is
defined
as
Adjusted
EBITDA
by
operating
and
reporting
segment,
adjusted
for
certain
transactions,
eliminations
or
adjustments
that
our
CODM
does
not
consider
for
making
decisions
to
allocate resources among segments or assessing segment performance.
Segment Adjusted EBITDA is used as
a supplemental
financial measure
by management
and by
external users
of our
financial statements,
such
as
investors, industry analysts and lenders, to assess the operating
performance of the business.
Mining costs, a
non-GAAP measure, is
based on
reported cost of
coal revenues, which
is shown
on our
statement
of
operations
and
comprehensive
income
exclusive
of
freight
expense,
Stanwell
rebate,
other
royalties,
depreciation,
depletion
and
amortization,
and selling,
general and
administrative
expenses,
adjusted for
other
items that do not relate directly to the costs incurred to produce coal at a mine. Mining costs excludes these cost
components as
our CODM
does not
view these
costs as
directly attributable
to the
production of
coal. Mining
costs
is
used
as
a
supplemental
financial
measure
by
management,
providing
an
accurate
view
of
the
costs
directly
attributable
to
the
production
of
coal
at
our
mining
segments,
and
by
external
users
of
our
financial
statements, such as
investors, industry analysts and
ratings agencies, to assess
our mine operating
performance
in comparison to the mine operating performance of other
companies in the coal industry.
Three Months Ended September 30, 2022 Compared
to Three Months Ended September 30, 2021
Summary
The financial and operational highlights for the three months
ended September 30, 2022 include:
●
from a net
income of $82.0
million for the
three months
ended September 30,
2021.
This increase was
driven by higher revenues partially offset by higher costs
and income tax expense.
●
remained above historical
averages and the
average for the
three months
ended September
30, 2021.
Elevated
pricing,
combined
with
the
fact
that
a
large
portion
of
our
Met
coal
sales
at
our
Australian
Operations is
priced on
a three-month
lag basis,
resulted in
average realized
Met price
per Mt
sold of
$253.0 for the three months
ended September 30, 2022, 75.7%
higher compared to $144.0
per Mt sold
for the same period in 2021.
●
for the
three months
ended September
30, 2021.
The lower
sales volumes
were largely
driven by
the
impact of unseasonal wet weather on production performance
at our Australian Operations.
●
million compared
to $147.7
million for
the three
months
ended September
30, 2021,
driven by
higher
coal sales revenues, partially offset by higher
operating costs.
●
$698.4 million cash
(excluding restricted
cash) and $100.0
million of availability
under the ABL
Facility.
The ABL
Facility
is subject
to a
springing
fixed
charge
coverage
ratio
test if
availability
is less
than
a
certain amount.
Coronado Global Resources Inc.
Three months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Revenues:
Coal revenues
$
863,709
$
563,287
$
300,422
53.3%
Other revenues
10,948
10,304
644
6.3%
Total
revenues
874,657
573,591
301,066
52.5%
Costs and expenses:
Cost of coal revenues (exclusive of items
shown separately below)
385,504
309,513
75,991
24.6%
Depreciation, depletion and amortization
37,508
38,461
(953)
(2.5%)
Freight expenses
63,026
58,043
4,983
8.6%
Stanwell rebate
54,575
12,274
42,301
344.6%
Other royalties
137,331
39,099
98,232
251.2%
Selling, general, and administrative expenses
10,405
8,044
2,361
29.4%
Total
costs and expenses
688,349
465,434
222,915
47.9%
Other income (expenses):
Interest expense, net
(17,220)
(18,251)
1,031
(5.6%)
discounting and credit losses
12
2,430
(2,418)
(99.5%)
Other, net
32,898
(1,252)
34,150
(2,727.6%)
Total
other income (expenses), net
15,690
(17,073)
32,763
(191.9%)
Net income before tax
201,998
91,084
110,914
121.8%
Income tax expense
(51,423)
(9,096)
(42,327)
465.3%
Net income attributable to Coronado Global
Resources, Inc.
$
150,575
$
81,988
$
68,587
83.7%
Coal Revenues
Coal
revenues
were
$863.7
million
for
the
three
months
ended
September
30,
2022,
an
increase
of
$300.4
million, compared
to $563.3 million for the
three months ended September
30, 2021. Supply concerns
from key
Met coal markets supported high index prices through the September 2022 quarter which resulted in an average
realized Met price
per Mt
sold of $253.0
for the
three months ended
September 30, 2022,
75.7% higher compared
to $144.0
per Mt
sold
for the
same
period
in 2021.
This
increase was
partially
offset
by lower
Met coal
sales
volume of 3.3 MMt for the three months
ended September 30, 2022, compared to 3.7 MMt in 2021,
primarily due
to above average rainfall impacting production at our Australian
Operations.
Cost of Coal Revenues (Exclusive of Items Shown
Separately Below)
Cost of coal revenues comprise costs related
to produced tons sold, along with
changes in both the volumes and
carrying
values
of
coal
inventory.
Cost
of
coal
revenues
include
items
such
as
direct
operating
costs,
which
includes employee-related costs,
materials and
supplies, contractor services,
coal handling
and preparation costs
and production taxes.
Total
cost of coal revenues
was $385.5 million
for the three months
ended September 30,
2022, an increase
of
$76.0 million, or 24.6%, compared to $309.5 million for
the three months ended September 30, 2021.
Our
Australian
Operations
contributed
$50.4
million
to
the
increase
in
total
cost
of
coal
revenues,
driven
by
additional
contractor
fleets
mobilized
to
accelerate
overburden
removal
to
increase
coal
availability,
and
inflationary
pressure,
including
higher
fuel
and
labor
costs,
partially
offset
by
a
favorable
average
foreign
exchange rate
on translation
of the
Australian Operations
for the
three months
ended September
30, 2022
of
A$/US$: 0.68
compared to
0.74 for
the same
period in
2021. Cost
of coal
revenues for
our U.S
Operations for
the three
months
ended September
30,
2022, was
$25.6
million
higher
compared
to the
three months
ended
September 30,
2021,
largely due
to the
impact of
inflation on
labor and
supply costs
and increased
purchased
coal transactions to meet sales commitments.
Coronado Global Resources Inc.
Freight Expenses
Freight
expenses
include
costs
associated
with
take-or-pay
commitments
for
rail
and
port
providers
and
demurrage costs.
Freight expenses
totaled $63.0
million for
the three
months ended
September
30, 2022,
an
increase of
$5.0 million,
compared to
$58.0 million
for the
three months
ended September
30, 2021.
Our U.S.
Operations’ freight cost contributed
$7.1 million to this increase,
driven by coal sales
under certain contracts for
which we arrange and pay for transportation to port that did not exist to the same extent during the three months
ended September 30, 2021 and
higher demurrage costs,
offset by a $2.1 million
decrease in freight cost for our
Australian
Operations
due
to
lower
sales
volume
and
a
favorable
foreign
exchange
rate
on
translation
of
the
Australian Operations.
Stanwell Rebate
The Stanwell
rebate was
$54.6 million
for the
three months
ended September
30, 2022,
an increase
of $42.3
million, compared
to $12.3
million for
the three
months ended
September 30,
2021. The
increase was
largely
driven by
higher realized
export
reference coal
pricing
for the
prior twelve
-month
period
used to
calculate
the
rebate partially offset by favorable average foreign
exchange rate on translation of the Australian
Operations.
Other Royalties
Other royalties were $137.3 million in the three months ended September 30, 2022, an
increase of $98.2 million,
as compared to
$39.1 million for
the three months
ended September 30,
2021. Higher royalties
were a product
of
higher
coal
revenues
compared
to
the
same
period
in
2021.
Effective
July
1,
2022,
the
Queensland
Government amended
Mineral Resources
Regulation 2013
(Qld) introducing
additional higher
tiers to
the coal
royalty
rates
which
resulted
in
additional
royalties
at
our
Australian
Operations
of
$58.7
million
for
the
three
months ended September 30, 2022.
Other, net
Other,
net
was
$32.9
million
in
the
three
months
ended
September
30,
2022,
an
increase
of
$34.2
million
compared
to net
loss
of $1.3
million
for the
three
months
ended
September
30,
2021. The
increase
primarily
relates
to
foreign
exchange
gains
recognized
in
the
translation
of
short-term
intra-entity
balances
in
certain
entities within the group that are denominated in currencies
other than their respective functional currencies.
Income Tax (Expense) Benefit
Income tax expense of $51.4 million for the
three months ended September 30, 2022 increased by $42.3 million,
compared to
a tax
expense of
$9.1 million
for the
three
months
ended September
30, 2021,
driven by
higher
income before tax in the 2022 period.
The income
tax expense
for the
three months
ended September
30, 2022
is based
on an
annual effective
tax
rate of 24.8%.
Coronado Global Resources Inc.
Nine months ended September 30, 2022 Compared
to Nine months ended September 30, 2021
Summary
The financial and operational highlights for the nine months
ended September 30, 2022 include:
●
from a net loss of
$14.1 million for the nine months
ended September 30, 2021.
The increase was driven
by revenues, partially offset by higher costs and higher
income tax expense.
●
Ukraine
on
global
supply
dynamics,
and
Met
coal
crossover
trades
into
the
thermal
market
caused
considerable volatility in coal pricing, resulting in average
realized Met price per Mt sold of
$279.4 for the
nine months
ended September
30, 2022,
143.8% higher
compared to
$114.6
per Mt
sold for
the nine
months ended September 30, 2021.
●
the nine
months ended September
30, 2021.
The lower sales
volumes were primarily
driven by
significant
wet weather
events at
our Australian
Operations and
adverse geological
conditions at
one of our
mine
complexes at our U.S. Operations.
●
$899.5 million, from Adjusted EBITDA of $173.4 million for the nine months ended September 30, 2021.
This increase was driven by higher coal revenues,
partially offset by higher operating costs.
●
an increase of $774.3 million compared to $171.1 million
for the same period in 2021.
●
balance
(excluding
restricted
cash)
of
$698.4
million
and
$312.7
million
aggregate
principal
amount
outstanding of the Notes.
Coronado Global Resources Inc.
Nine months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Revenues:
Coal revenues
$
2,821,334
$
1,344,253
$
1,477,081
109.9%
Other revenues
33,152
29,705
3,447
11.6%
Total
revenues
2,854,486
1,373,958
1,480,528
107.8%
Costs and expenses:
Cost of coal revenues (exclusive of items
shown separately below)
1,140,467
889,771
250,696
28.2%
Depreciation, depletion and amortization
126,901
132,754
(5,853)
(4.4%)
Freight expenses
189,316
166,090
23,226
14.0%
Stanwell rebate
124,160
43,169
80,991
187.6%
Other royalties
299,711
83,219
216,492
260.1%
Selling, general, and administrative expenses
28,657
21,250
7,407
34.9%
Restructuring costs
—
2,300
(2,300)
(100.0%)
Total
costs and expenses
1,909,212
1,338,553
570,659
42.6%
Other income (expenses):
Interest expense, net
(52,034)
(49,982)
(2,052)
4.1%
Loss on debt extinguishment
—
(5,744)
5,744
(100.0%)
(Increase) decrease in provision for discounting
and credit losses
(572)
8,074
(8,646)
(107.1%)
Other, net
55,191
(3,610)
58,801
(1,628.8%)
Total
other income (expenses), net
2,585
(51,262)
53,847
(105.0%)
Net income (loss) before tax
947,859
(15,857)
963,716
(6,077.5%)
Income tax (expense) benefit
(235,391)
1,788
(237,179)
(13,265.0%)
Net income (loss)
712,468
(14,069)
726,537
(5,164.1%)
Less: Net loss attributable to noncontrolling
—
(2)
2
(100.0%)
Net income (loss) attributable to Coronado Global
Resources, Inc.
$
712,468
$
(14,067)
$
726,535
(5,164.8%)
Coal Revenues
Coal revenues
were $2,821.3
million for
the nine
months ended
September 30,
2022, an
increase of
$1,477.1
million, compared to $1,344.3
million for the nine
months ended September 30,
2021. This increase was
driven
by favorable market conditions and higher coal indices, which
resulted in a higher average realized Met price per
Mt sold for the nine months ended September 30, 2022 of $279.4, compared to $114.
6
per Mt sold for the same
period in 2021.
Cost of Coal Revenues (Exclusive of Items Shown
Separately Below)
Total
cost of coal revenues was $1,140.5 million for the nine months
ended September 30, 2022, an increase of
$250.7 million,
or 28.2%,
compared to
$889.8 million
for the
nine months
ended September
30, 2021.
Cost of
coal revenues for
our U.S. Operations
in the nine
months ended September
30, 2022 increased
by $117.1 million,
as compared
to the
same period
in 2021,
driven by
the impact
of inflation
on labor
and supply
costs, adverse
geological
conditions
in
certain
mines
of
our
U.S.
Operations
resulting
in
unplanned
maintenance
costs,
and
increased
purchased
coal
transactions
to
meet
sales
commitments.
Cost
of
coal
revenues
for
our
Australian
Operations in
the nine
months ended
September 30,
2022 increased
by $133.6
million,
compared to
the same
period in 2021, due to additional fleets mobilized to accelerate overburden removal, inflationary pressure
on fuel
pricing
and
labor
costs
and
increased
purchased
coal
transactions
to
meet
sales
commitments.
Higher
costs
were partially offset by a favorable average foreign exchange rate on translation
of the Australian Operations for
the nine months ended September 30, 2022 of A$/US$:
0.71 compared to 0.76 for the same period in 2021.
Depreciation, Depletion and Amortization
Depreciation, depletion
and amortization
was $126.9
million for the
nine months
ended September 30,
2022, a
decrease of
$5.9 million,
as compared
to $132.8
million for
the nine
months ended
September
30, 2021.
The
decrease
was
associated
with
favorable
average
foreign
exchange
rate
on
translation
of
the
Australian
Operations,
partially
offset
by
additional
equipment
brought
into
service
during
the
twelve
months
since
September 30, 2021.
Coronado Global Resources Inc.
Freight Expenses
Freight expenses
totaled $189.3
million for
the nine
months ended
September 30,
2022, an
increase of
$23.2
million,
compared
to
$166.1
million
for
the
nine
months
ended
September
30,
2021.
Our
U.S.
Operations
contributed
to
$28.9
million
of
the
increase
due
to
certain
contracts
for
which
we
arrange
and
pay
for
transportation to port that
did not exist
to the same
extent in the nine
months ended September 30,
2021, partially
offset by the benefits of lower average foreign
exchange rate on translation of the Australian Operations.
Stanwell Rebate
The Stanwell
rebate was
$124.2 million
for the
nine months
ended September
30, 2022,
an increase
of $81.0
million, as compared to
$43.2 million for the
nine months ended September
30, 2021. The increase
was largely
driven by
higher realized
export
reference coal
pricing
for the
prior twelve
-month
period
used to
calculate
the
rebate, partially offset by
the favorable average foreign
exchange rate on
translation of the
Australian
Operations.
Other Royalties
Other royalties were
$299.7 million for
the nine months
ended September 30,
2022, an increase
of $216.5 million,
as compared to $83.2 million for the nine months ended September 30, 2021. Higher royalties were a product of
higher average realized export
pricing and the adverse impact
of the new royalty regime
applicable from July 1,
2022 to our Australian Operations.
Other, net
Other,
net
was
$55.2
million
in
the
nine
months
ended
September
30,
2022,
an
increase
of
$58.8
million
compared
to
a
net
loss
of
$3.6
million
for
the
nine
months
ended
September
30,
2021.
The
increase
largely
relates
to
foreign
exchange
gains
recognized
in
the
translation
of
short-term
inter-entity
balances
in
certain
entities within the group that are denominated in currencies
other than their respective functional currencies.
Income Tax (Expense) Benefit
Income tax
expense of
$235.4 million for
the nine
months ended September
30, 2022
increased by
$237.2 million,
as compared
to a
$1.8
million tax
benefit for
the nine
months ended
September
30, 2021,
primarily driven
by
higher income before tax in the 2022 period.
The income tax expense for the nine
months ended September 30, 2022 is based
on an annual effective tax
rate
of 24.8%.
Coronado Global Resources Inc.
Supplemental Segment Financial Data
Three months ended September 30, 2022 compared to
three months ended September 30, 2021
Australia
Three months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Sales volume (MMt)
2.4
2.8
(0.4)
(12.9)%
Total
revenues ($)
546,485
342,372
204,113
59.6%
Coal revenues ($)
537,256
332,558
204,698
61.6%
Average realized price per Mt sold ($/Mt)
221.8
119.7
102.1
85.3%
Met sales volume (MMt)
1.7
2.0
(0.3)
(16.2)%
Met coal revenues ($)
518,010
306,033
211,977
69.3%
Average realized Met price per Mt sold ($/Mt)
313.0
154.9
158.1
102.1%
Mining costs ($)
241,674
180,837
60,837
33.6%
Mining cost per Mt sold ($/Mt)
99.8
67.4
32.4
48.1%
Operating costs ($)
458,405
275,782
182,623
66.2%
Operating costs per Mt sold ($/Mt)
189.3
99.2
90.1
90.8%
Segment Adjusted EBITDA ($)
88,035
67,383
20,652
30.6%
Coal revenues for
our Australian Operations
for the
three months ended
September 30,
2022 were
$537.3 million,
an increase of
$204.7 million or
61.6%, compared
to $332.6 million
for the three
months ended September
30,
2021. This increase
was largely driven
by a higher
average realized Met
price per Mt
sold for the
three months
ended September 30,
2022 of
$313.0 compared to
$154.9 per Mt
sold for
the same period
in 2021
due to
elevated
prices resulting from the
impact of supply concerns
from key Met markets such
as Australia and Canada. Sales
volume
of
2.4
MMt
decreased
by
0.4
MMt,
compared
to
2.8
MMt
for
the
three
months
ended
September
30,
2021, largely
due to
above average
rainfall
at the
Curragh mine
complex
impacting coal
mining
activities
and
production.
Operating
costs
increased
by
$182.6
million,
or
66.2%,
for
the
three
months
ended
September
30,
2022,
compared to
the three
months ended
September
30, 2021.
The increase
was
largely
driven by
higher mining
costs, Stanwell rebate (mainly due to
higher realized coal pricing) and other
royalties due to higher revenues and
the new
royalty regime
introduced by
the Queensland
government from
July 1,
2022. Mining
costs were
$60.8
million, or 48.1%, higher for the three months ended September 30, 2022 compared to the same period in 2021,
primarily due
to inflationary
pressures
and additional
contractor
fleets mobilized
in the
first half
of 2022
at our
Australian
Operations,
partially
offset
by
favorable
average
foreign
exchange
on
translation
of
our
Australian
Operations to US$. Increased costs combined with lower sales volumes resulted in higher Mining and Operating
cost per Mt sold of $32.4 and $90.1, respectively,
compared to the same period in 2021.
Segment Adjusted EBITDA of $88.0 million for the three months ended September 30, 2022 increased by $20.6
million compared
to
Adjusted
EBITDA
of
$67.4 million
for the
three
months
ended
September
30,
2021. This
increase was primarily driven by higher coal revenues
partially offset by higher operating costs.
Coronado Global Resources Inc.
United States
Three months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Sales volume (MMt)
1.7
1.8
(0.1)
(5.7)%
Total
revenues ($)
328,172
231,219
96,953
41.9%
Coal revenues ($)
326,453
230,729
95,724
41.5%
Average realized price per Mt sold ($/Mt)
193.1
128.7
64.4
50.0%
Met sales volume (MMt)
1.6
1.7
(0.1)
(7.0)%
Met coal revenues ($)
309,609
228,561
81,048
35.5%
Average realized Met price per Mt sold ($/Mt)
191.6
131.6
60.0
45.6%
Mining costs ($)
132,380
109,385
22,995
21.0%
Mining cost per Mt sold ($/Mt)
81.4
62.7
18.7
29.8%
Operating costs ($)
182,031
143,145
38,886
27.2%
Operating costs per Mt sold ($/Mt)
107.7
79.9
27.8
34.8%
Segment Adjusted EBITDA ($)
145,890
88,441
57,449
65.0%
Coal revenues increased by $95.8 million,
or 41.5%, to $326.5 million for
the three months ended September 30,
2022 compared
to $230.7
million for
the three
months
ended September
30, 2021.
This
increase was
largely
driven by
a higher
average realized
Met price
per Mt
sold for
the three
months ended
September 30,
2022 of
$191.6, compared to $131.6 per Mt sold for the same period in 2021, due to continued strong U.S.-sourced
coal
demand, particularly into China and Europe due to continuing impacts
on global supply dynamics caused by the
Russia and Ukraine conflict. Additionally,
coal from our U.S. Operations continued to experience strong demand
from China as import restrictions on Australian coal remain
in place.
Operating costs
increased by
$38.9 million,
or 27.2%,
to $182.0 million
for the three
months ended
September
30, 2022, compared
to operating
costs of
$143.1 million
for the
three months
ended September
30, 2021.
The
increase was due to higher purchased coal to meet sales commitments and higher mining costs of $23.0 million,
as a result of higher production costs due to the impact
of inflation of supplies and labor costs.
Segment Adjusted EBITDA of
$145.9 million for the
three months ended September 30,
2022 increased by $57.5
million compared to
$88.4 million for
the three months
ended September 30,
2021,
primarily driven
by a higher
average realized Met price per Mt sold,
partially offset by higher operating costs.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components
of Corporate and Other Adjusted EBITDA:
Three months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Selling, general, and administrative expenses
$
10,405
$
8,042
$
2,363
29.4%
Other, net
(56)
42
(98)
n/m
Total
Corporate and Other Adjusted EBITDA
$
10,349
$
8,084
$
2,265
28.0%
n/m – Not meaningful for comparison.
Corporate and
other costs
of $10.4
million for
the three
months ended
September 30,
2022 increased
$2.3 million,
compared to $8.1 million for
the three months ended September
30, 2021. The increase in
selling, general, and
administrative
expenses
was
primarily
driven
by
corporate
activities
partially
resuming
to
pre-COVID-19
pandemic levels and timing of certain corporate costs.
Coronado Global Resources Inc.
Mining and operating
costs for the
three months
ended September
30, 2022 compared
to three
months
ended September 30, 2021
A reconciliation of
segment costs and
expenses, segment operating
costs, and segment
mining costs is
shown
below:
Three months ended September 30, 2022
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
$
475,496
$
202,167
$
10,686
$
688,349
Less: Selling, general and administrative
expense
—
—
(10,405)
(10,405)
Less: Depreciation, depletion and amortization
(17,091)
(20,136)
(281)
(37,508)
Total operating costs
458,405
182,031
—
640,436
Less: Other royalties
(122,820)
(14,511)
—
(137,331)
Less: Stanwell rebate
(54,575)
—
—
(54,575)
Less: Freight expenses
(37,885)
(25,141)
—
(63,026)
Less: Other non-mining costs
(1,451)
(9,999)
—
(11,450)
Total mining costs
241,674
132,380
—
374,054
Sales Volume excluding non-produced
coal
(MMt)
2.4
1.6
—
4.0
Mining cost per Mt sold ($/Mt)
99.8
81.4
—
92.4
Three months ended September 30, 2021
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
$
294,219
$
162,866
$
8,349
$
465,434
Less: Selling, general and administrative
expense
—
—
(8,044)
(8,044)
Less: Depreciation, depletion and amortization
(18,435)
(19,721)
(305)
(38,461)
Total operating costs
275,784
143,145
—
418,929
Less: Other royalties
(30,835)
(8,264)
—
(39,099)
Less: Stanwell rebate
(12,274)
—
—
(12,274)
Less: Freight expenses
(39,974)
(18,069)
—
(58,043)
Less: Other non-mining costs
(11,864)
(7,427)
—
(19,291)
Total mining costs
180,837
109,385
—
290,222
Sales Volume excluding non-produced
coal
(MMt)
2.7
1.7
—
4.4
Mining cost per Mt sold ($/Mt)
67.4
62.7
—
65.6
Average realized Met
price per Mt
sold for the
three months ended September
30, 2022 compared
to three
months ended September 30, 2021
A reconciliation of the Company’s average realized
Met price per Mt sold is shown below:
Three months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Met sales volume (MMt)
3.3
3.7
(0.4)
(11.9)%
Met coal revenues ($)
827,619
534,594
293,025
54.8%
Average realized Met price per Mt sold ($/Mt)
253.0
144.0
109.0
75.7%
Coronado Global Resources Inc.
Nine months ended September 30, 2022 compared to
Nine months ended September 30, 2021
Australia
Nine months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Sales volume (MMt)
7.5
8.5
(1.0)
(11.6)%
Total
revenues ($)
1,730,172
832,098
898,074
107.9%
Coal revenues ($)
1,701,901
804,757
897,144
111.5%
Average realized price per Mt sold ($/Mt)
225.9
94.5
131.4
139.2%
Met sales volume (MMt)
5.0
6.3
(1.3)
(20.5)%
Met coal revenues ($)
1,615,364
734,143
881,221
120.0%
Average realized Met price per Mt sold ($/Mt)
323.9
117.0
206.9
176.8%
Mining costs ($)
648,965
535,568
113,397
21.2%
Mining cost per Mt sold ($/Mt)
89.3
65.7
23.6
36.0%
Operating costs ($)
1,206,022
801,837
404,185
50.4%
Operating costs per Mt sold ($/Mt)
160.1
94.1
66.0
70.1%
Segment Adjusted EBITDA ($)
523,319
30,445
492,874
1,618.9%
Coal
revenues
for
our
Australian
Operations
for
the
nine
months
ended
September
30,
2022
were
$1,701.9
million,
an
increase
of
$897.1
million,
or
111.5%,
compared
to
$804.8
million
for
the
nine
months
ended
September 30,
2021. This
increase was
due to
a higher
average realized
Met price
per Mt
sold of
$323.9, an
increase
of
$206.9
per Mt
sold, compared
to
$117.0
per Mt
sold
during
the
same
period
in
2021. The
higher
realized
price
during
the
period
was
primarily
driven
by
disruption
in
supply
dynamics
caused
by
the
conflict
between Russia and Ukraine, as well as recent supply constraints from key Met coal markets due to unseasonal
wet weather and logistical issues. Sales volume of 7.5 MMt
was 1.0 MMt lower compared to 8.5 MMt for
the nine
months ended September 30,
2021, mainly driven
by significant wet
weather events experienced which
impacted
coal availability to during the 2022 period.
Operating
costs
increased
by
$404.2
million,
or
50.4%,
for
the
nine
months
ended
September
30,
2022,
compared
to
the
nine
months
ended
September
30,
2021.
The
increase
was
driven
by
higher
mining
costs,
increased
purchase
of
coal
costs
to
meet
sales
commitments,
higher
Stanwell
rebate
(mainly
due
to
higher
realized coal
pricing) and
greater royalties
due to
higher revenues
and adverse
impact of
the amended
royalty
regime
introduced
by
the
Queensland
Government
applicable
from
July
1,
2022.
Mining
costs
were
$113.4
million, or 48.1%, higher for
the nine months ended September
30, 2022 compared to the
same period in 2021,
primarily
due
to
inflationary
pressures
and
additional
contract
fleets
mobilized
during
first
half
of
2022
at
our
Australian
Operations,
partially
offset
by
favorable
average
foreign
exchange
on
translation
of
our
Australian
Operations to US$. Increased costs combined with lower sales volumes resulted in higher Mining and Operating
costs per Mt sold of $23.6 and $66.0, respectively,
compared to the same period in 2021.
For the
nine months
ended September
30, 2022,
Adjusted EBITDA
increased by
$492.9 million,
compared
to
Adjusted EBITDA of
$30.4 million for the
nine months ended
September 30, 2021.
This increase was
primarily
driven by higher coal revenues partially offset
by higher operating costs.
Coronado Global Resources Inc.
United States
Nine months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Sales volume (MMt)
4.9
4.9
—
(1.8)%
Total
revenues ($)
1,124,314
541,860
582,454
107.5%
Coal revenues ($)
1,119,433
539,496
579,937
107.5%
Average realized price per Mt sold ($/Mt)
230.5
109.0
121.5
111.4%
Met sales volume (MMt)
4.7
4.8
(0.1)
(1.4)%
Met coal revenues ($)
1,098,186
534,017
564,169
105.6%
Average realized Met price per Mt sold ($/Mt)
232.4
111.5
120.9
108.4%
Mining costs ($)
396,562
307,732
88,830
28.9%
Mining cost per Mt sold ($/Mt)
85.0
63.0
22.0
35.0%
Operating costs ($)
547,632
380,412
167,220
44.0%
Operating costs per Mt sold ($/Mt)
112.8
76.9
35.9
46.7%
Segment Adjusted EBITDA ($)
578,183
164,404
413,779
251.7%
Coal revenues increased by $579.9 million, or 107.5%, to
$1,119.4 million for the nine months ended September
30,
2022,
as
compared
to
$539.5
million
for
the
nine
months
ended
September
30,
2021.
This
increase
was
mainly driven by a higher average realized Met price per Mt sold for the nine
months ended September 30, 2022
of $232.4
compared
to $111.5
per Mt
sold for
the same
period
in 2021.
The increase
reflected a
strong price
environment and high demand of U.S.-sourced coal
into China and Europe.
Operating costs increased
by $167.2 million,
or 44.0%, to
$547.6
million for the
nine months ended
September
30, 2022,
compared to
operating costs
of $380.4
million for
the nine
months ended
September 30,
2021.
The
increase
was primarily
due
to
higher
mining
costs
of
$88.8
million,
increase
of
28.9%
compared
to
the
same
period in
2021, as
a result
of adverse
geological conditions
causing higher
maintenance costs,
an increase
in
purchase
coal
costs
to
meet
sales
commitments,
higher
subcontractor’s
cost
due
to
labor
shortages
and
inflationary pressure on labor,
materials and supplies.
Adjusted
EBITDA
increased
by
$413.8
million,
or
251.7%,
for
the
nine
months
ended
September
30,
2022
compared to Adjusted
EBITDA of $164.4
million for the
nine months ended
September 30, 2021. This
increase
was primarily driven by higher average realized Met price
per Mt sold,
partially offset by higher operating costs.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components
of Corporate and Other Adjusted EBITDA:
Nine months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Selling, general, and administrative expenses
$
28,657
$
21,244
$
7,413
34.9%
Other, net
(78)
164
(242)
(147.6)%
Total
Corporate and Other Adjusted EBITDA
$
28,579
$
21,408
$
7,171
33.5%
Corporate and other costs
increased $7.2 million to
$28.6 million for the
nine months ended September
30, 2022,
as compared to
$21.4 million for
the nine months
ended September
30, 2021. The
increase in selling,
general,
and
administrative
expenses
was
primarily
driven
by
corporate
activities
partially
resuming
to
pre-COVID-19
pandemic levels and timing of certain corporate costs.
Coronado Global Resources Inc.
Mining and
operating costs
for the
Nine months
ended September
30, 2022
compared to
Nine months
ended September 30, 2021
A reconciliation of
segment costs and
expenses, segment operating
costs, and segment
mining costs is
shown
below:
Nine months ended September 30, 2022
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
$
1,270,397
$
609,291
$
29,524
$
1,909,212
Less: Selling, general and administrative
—
—
(28,657)
(28,657)
Less: Depreciation, depletion and amortization
(64,375)
(61,659)
(867)
(126,901)
Total operating costs
1,206,022
547,632
—
1,753,654
Less: Other royalties
(259,140)
(40,571)
—
(299,711)
Less: Stanwell rebate
(124,160)
—
—
(124,160)
Less: Freight expenses
(116,386)
(72,930)
—
(189,316)
Less: Other non-mining costs
(57,371)
(37,569)
—
(94,940)
Total mining costs
648,965
396,562
—
1,045,527
Sales Volume excluding non-produced
coal
7.3
4.7
—
11.9
Mining cost per Mt sold ($/Mt)
89.3
85.0
—
87.6
Nine months ended September 30, 2021
(in US$ thousands)
Australia
United
States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
$
872,875
$
443,696
$
21,982
$
1,338,553
Less: Selling, general and administrative
expense
—
—
(21,250)
(21,250)
Less: Restructuring costs
(2,300)
—
—
(2,300)
Less: Depreciation, depletion and amortization
(68,738)
(63,284)
(732)
(132,754)
Total operating costs
801,837
380,412
—
1,182,249
Less: Other royalties
(63,873)
(19,346)
—
(83,219)
Less: Stanwell rebate
(43,169)
—
—
(43,169)
Less: Freight expenses
(122,061)
(44,029)
—
(166,090)
Less: Other non-mining costs
(37,166)
(9,305)
—
(46,471)
Total mining costs
535,568
307,732
—
843,300
Sales Volume excluding non-produced
coal
8.2
4.9
—
13.1
Mining cost per Mt sold ($/Mt)
65.7
63.0
—
64.7
Average realized Met price per Mt sold for the Nine months ended September 30, 2022 compared to Nine
months ended September 30, 2021
A reconciliation of the Company’s average realized
Met price per Mt sold is shown below:
Nine months ended September 30,
2022
2021
Change
%
(in US$ thousands)
Met sales volume (MMt)
9.7
11.1
(1.4)
(12.2)%
Met coal revenues ($)
2,713,550
1,268,160
1,445,390
114.0%
Average realized Met price per Mt sold ($/Mt)
279.4
114.6
164.8
143.8%
Coronado Global Resources Inc.
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
Three months ended September 30,
Nine months ended September 30,
(in US$ thousands)
2022
2021
2022
2021
Reconciliation to Adjusted EBITDA:
Net income (loss)
$
150,575
$
81,988
$
712,468
$
(14,069)
Add: Depreciation, depletion and
amortization
37,508
38,461
126,901
132,754
Add: Interest expense (net of income)
17,220
18,251
52,034
49,982
Add: Other foreign exchange (gains) losses
(31,917)
2,487
(55,064)
4,376
Add: Loss on extinguishment of debt
—
—
—
5,744
Add: Income tax expense (benefit)
51,423
9,096
235,391
(1,788)
Add: Restructuring costs
—
—
—
2,300
Add: (Gains) losses on idled assets held for
sale
(1,221)
(113)
621
2,216
Add: (Decrease) increase in provision for
discounting and credit losses
(12)
(2,430)
572
(8,074)
Adjusted EBITDA
$
223,576
$
147,740
$
1,072,923
$
173,441
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 the ABL
Facility.
Our main uses of cash have historically been, and are expected to continue to be, the funding of our
operations,
working capital,
capital
expenditure,
debt
service
obligations,
business
or assets
acquisitions
and
payment
of
dividends. Based on our
outlook for the next
twelve months, which is
subject to continued changing demand
from
our
customers,
volatility
in
coal
prices,
ongoing
interruptions
and
uncertainties
surrounding
China’s
import
restrictions, such as trade
barriers imposed by China
on Australian sourced coal
and the uncertainty of
impacts
from the
Russia and
Ukraine war
on the
global supply
chain, we
believe expected cash
generated from
operations
together with
available borrowing
facilities and
other strategic
and financial
initiatives, will
be sufficient
to meet
the needs of our existing
operations, capital expenditure,
service our debt obligations
and, if declared, payment
of dividends.
Our ability to generate
sufficient cash depends
on our future performance
which may be subject
to a number of
factors
beyond
our
control,
including
general
economic,
financial
and
competitive
conditions
and
other
risks
described in this document, Part I,
Item 1A. “Risk Factors” of our
Annual Report on Form 10-K
for the year ended
December 31,
2021, filed
with the
SEC and
ASX on
February 22,
2022, and
Part II,
Item 1A.
“Risk Factors”
of
our Quarterly
Reports
on Form
10-Q for
the quarterly
periods ended
March 31,
2022 and
June 30,
2022,
filed
with the SEC and ASX on May 9, 2022 and August 8,
2022, respectively.
Liquidity as of September 30, 2022 and December 31,
2021 was as follows:
(in US$ thousands)
September 30,
2022
December 31,
2021
Cash, excluding restricted cash
$
698,396
$
437,679
Availability under ABL Facility
(1)
100,000
100,000
Total
$
798,396
$
537,679
(1)
The ABL
Facility contains
a springing
fixed charge
coverage ratio
of not
less than
1.00 to
1.00, which
ratio is
tested if
availability under
the ABL facility
is less than
$17.5 million
for five consecutive
business days
or less
than $15.0 million
on
any business day.
Coronado Global Resources Inc.
Our total indebtedness as of September 30, 2022 and
December 31, 2021 consisted of the following:
(in US$ thousands)
September 30,
2022
December 31,
2021
Current installments of interest bearing liabilities
$
312,741
$
315,000
Current installments of other financial liabilities and finance
lease obligations
3,890
8,634
Other financial liabilities and finance lease obligations, excluding current
installments
9,639
14,031
Total
$
326,270
$
337,665
Liquidity
As
of
September
30,
2022,
available
liquidity
was
$798.4 million,
comprising
of
cash
and
cash
equivalents
(excluding restricted cash) of $698.4 million and $100.0
million of available borrowings under our ABL Facility.
As of
December 31,
2021, available liquidity
was $537.7 million,
comprising cash and
cash equivalents (excluding
restricted cash) of $437.7 million and $100.0 million of
available borrowings under our ABL Facility.
Cash
Cash is held in
multicurrency interest bearing
bank accounts available to
be used to service
the working capital
needs of the Company. Cash
balances surplus to immediate working capital requirements are invested
in short-
term interest-bearing deposit accounts or used to repay
interest bearing liabilities.
Senior Secured Notes
As of
September
30,
2022, the
outstanding
principal
amount of
our Notes
was
$312.7 million
.
Interest on
the
Notes is payable semi-annually in arrears on May 15 and November 15 of each year.
The Notes mature on May
15, 2026 and are senior secured obligations of the Company.
The Notes are guaranteed
on a senior secured
basis by the Company
and its wholly-owned
subsidiaries (other
than
the
Issuer)
(subject
to
certain
exceptions
and
permitted
liens)
and
secured
by
(i)
a
first-priority
lien
on
substantially all of the Company’s assets and the assets of the other guarantors (other than
accounts receivable
and other rights to payment,
inventory,
intercompany indebtedness, certain
general intangibles and commercial
tort claims, commodities accounts, deposit accounts, securities accounts and other related assets and proceeds
and
products
of
each
of
the
foregoing,
or,
collectively,
the
ABL
Collateral),
or
the
Notes
Collateral,
and
(ii)
a
second-priority lien on the ABL Collateral, which is
junior to a first-priority lien, for the
benefit of the lenders under
the ABL Facility.
The terms
of the
Notes are
governed
by the
Indenture.
The Indenture
contains
customary
covenants
for high
yield bonds, including,
but not limited
to, limitations on
investments, liens, indebtedness,
asset sales, transactions
with affiliates and restricted payments, including
payment of dividends on capital stock.
The Company may
redeem any of
the Notes beginning
on May 15,
2023. The initial
redemption price of
the Notes
is 108.063% of their principal amount, plus accrued and unpaid interest, if any, to,
but excluding, the redemption
date. The redemption
price will decline
each year after May
15, 2023, and will
be 100% of the
principal amount
of the
Notes, plus
accrued
and
unpaid
interest, beginning
on
May 15,
2025. The
Company
may also
redeem
some or all of the Notes
at any time and from
time to time prior to
May 15, 2023 at a
price equal to 100%
of the
principal amount thereof
plus a “make-whole”
premium, plus accrued
and unpaid interest,
if any, to, but
excluding,
the redemption date. The Company may also redeem a portion
of the Notes under certain circumstances prior to
May 15, 2023.
For the
nine months ended
September 30, 2022,
in connection with
the dividends paid
in the
period, the Company
offered to purchase up to a total of $225.8 million aggregate principal amount of the Notes pursuant to the terms
of
the
Indenture.
For
the
nine
months
ended
September
30,
2022,
the
Company
purchased
an
aggregate
principal amount, for
accepted offers, of $2.3
million at a
price equal to
104% of the
principal amount of
the Notes,
plus accrued and unpaid interest on the Notes to, but not
including, the date of redemption.
As of September 30, 2022, we were in compliance with
all applicable covenants under the Indenture.
Coronado Global Resources Inc.
ABL Facility
The ABL
Facility,
dated May
12, 2021,
is for
an aggregate
multi-currency
lender commitment
of up
to $100.0
million, including a $30.0 million
sublimit for the issuance
of letters of credit and
$5.0 million for swingline
loans,
at any
time outstanding,
subject to
borrowing
base availability.
The ABL
Facility
will mature
on May
12, 2024.
Borrowings under the ABL
Facility bear interest at
a rate equal to
a BBSY rate plus
an applicable margin. As
at
September 30, 2022, no amounts were drawn and no letters
of credit were outstanding under the ABL Facility.
As of September 30, 2022, we were in compliance with
all applicable covenants under the ABL Facility.
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
of September 30, 2022,
we had outstanding bank guarantees
of
$43.8
million
to
secure
various
obligations
and
commitments.
The
Company
provided
cash,
in
the
form
of
deposits, as collateral against these bank guarantees.
For the U.S. Operations, in
order to provide the required
financial assurance, we generally
use surety bonds for
post-mining
reclamation.
We
can
also
use
bank
letters
of
credit
to
collateralize
certain
obligations.
As
of
September 30, 2022,
we had outstanding
surety bonds of
$31.9 million and
letters of credit
of $16.8 million
issued
from our available bank guarantees,
to meet contractual obligations under workers compensation insurance and
to secure other
obligations and commitments.
Future regulatory changes relating
to these obligations could
result
in increased obligations, additional costs or additional
collateral requirements.
Dividend
On
February
24,
2022,
our
Board
of
Directors
declared
an
unfranked
ordinary
dividend
of
9.0
cents
per
CDI
(USD). The dividend had a record date of March 18, 2022
and was paid on April 8, 2022.
On April 26,
2022, we amended
our dividend policy
with plans to
pay a fixed
cash dividend
of 0.5 cent
per CDI
biannually (1.0
cent per
CDI annually),
in accordance
with our
over-arching distribution
policy.
The payment
of
dividends remains at the discretion of our Board of Directors.
On May 9, 2022, our
Board of Directors declared
a special unfranked dividend
of $99.5 million, or
5.9 cents per
CDI, reflecting
the unaccepted
portion of
the offer
to purchase
the Notes
made in
connection with
the dividend
declared on
February 24,
2022, and
a special
unfranked dividend
of $100.6
million, or
6.0 cents
per CDI.
The
dividend had a record date of May 31, 2022 and was
paid on June 21, 2022.
On August
8, 2022,
the Company’s
Board of
Directors
declared a
total unfranked
ordinary dividend
of $125.7
million, or
7.5 cents
per CDI,
comprising
$100.6 million
of the
unaccepted portion
of the
offer
to purchase
the
Notes made in connection
with the special dividends
declared on May 9,
2022, plus an additional
$25.2 million.
The dividend had a record date of August 30, 2022 and was paid
on September 20, 2022.
On October
30, 2022,
the Company’s
Board of
Directors declared
a total
unfranked special
dividend of
$225.0
million, or
13.4 cents
per CDI,
comprising
$23.5 million
of the
unaccepted
portion of
the offer
to purchase
the
Notes made
in
connection
with the
ordinary
dividends
declared on
August
8, 2022,
plus
an additional
$201.5
million. The
dividends will have
a record
date of November
21, 2022, Australia
time, and
be payable on
December
12, 2022, Australia time. The total ordinary dividends of
$ 225.0 million will be funded from available cash.
In connection with the declared ordinary dividends, Coronado Finance Pty
Ltd, a wholly-owned subsidiary of the
Company, offered
to purchase up to $200.0 million aggregate
principal amount of the Notes at a purchase
price
equal
to
104%
of
the
principal
amount
of
the
Notes,
plus
accrued
and
unpaid
interest
to,
but
excluding,
the
settlement date, pursuant to the terms of the
Indenture. The payment of the ordinary
dividends is not contingent
on acceptance of the offer to purchase the Notes
by the Note holders.
Capital Requirements
Our main uses of cash have historically been the
funding of our operations, working capital, capital expenditure,
the payment of
interest and dividends.
We intend
to use cash
to fund debt
service payments
on our Notes,
the
ABL Facility and our
other indebtedness, to fund operating
activities, working capital, capital expenditures, partial
redemption of the Notes, business or assets acquisitions
and, if declared, payment of dividends.
Coronado Global Resources Inc.
Historical Cash Flows
The following
table summarizes
our cash
flows for
the three
months ended
September 30,
2022 and
2021, as
reported in the accompanying consolidated financial statements:
Cash Flow
Nine months ended September 30,
(in US$ thousands)
2022
2021
Net cash provided by operating activities
$
945,384
$
171,115
Net cash used in investing activities
(150,670)
(145,782)
Net cash (used in) provided by financing activities
(483,854)
122,623
Net change in cash and cash equivalents
310,860
147,956
Effect of exchange rate changes on cash and restricted
cash
(50,144)
2,287
Cash and restricted cash at beginning of period
437,931
45,736
Cash and restricted cash at end of period
$
698,647
$
195,979
Operating activities
Net cash
provided
by operating
activities
was
$945.4 million
for the
nine months
ended
September
30, 2022
,
compared to $171.1 million
for the nine months
ended September 30, 2021.
The increase was driven
by higher
coal revenues due to increase in the average realized
Met coal pricing partially offset by higher operating
costs.
Investing activities
Net
cash
used
in
investing
activities
was
$150.7
million
for
the
nine
months
ended
September
30,
2022,
compared to $145.8 million for the nine months ended September 30, 2021. Cash spent on capital expenditures
for the
nine months ended
September 30, 2022
was $141.9
million, of
which $61.0 million
related to the
Australian
Operations, $80.5 million
related to the
U.S. Operations and
the remaining $0.4
million for other
and corporate.
During the nine months ended September 30, 2022, a net of $6.3 million of additional deposits were provided as
collateral
for
our
U.S.
workers
compensation
obligations
and
$2.4
million
of
additional
security
deposit
was
provided by our Australian Operations to satisfy contractual requirements
in the normal course of business.
Financing activities
Net
cash
used
in
financing
activities
was
$483.9
million
for
the
nine
months
ended
September
30,
2022,
compared to
cash provided
by financing
activities of
$122.6 million
for the
nine months
ended September
30,
2021. The net cash
used in financing activities
for the nine months
ended September 30, 2022, included
dividend
payments of $473.9, net of a $2.8 million foreign exchange gain on
settlement of dividends for shareholders who
elected to be paid in Australian dollars and the remainder
related to repayment of borrowings.
Included in
the net
cash used
in financing
activities for
the nine
months ended
September 30,
2021, were
net
proceeds from
borrowings of
$396.4 million,
repayment of
borrowings of
$371.4 million
and net
proceeds from
the stock issuance of $97.7 million.
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, 2021, filed with the SEC and
ASX on February 22, 2022.
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.
Coronado Global Resources Inc.
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, 2021,
filed with the SEC and ASX on February 22, 2022.
Newly Adopted Accounting Standards and Accounting
Standards Not Yet Implemented
See
Note
2.
(a)
“Newly
Adopted
Accounting
Standards”
to
our
unaudited
condensed
consolidated
financial
statements for
a discussion
of newly
adopted accounting
standards. As
of September
30, 2022,
there were
no
accounting standards not yet implemented.
Coronado Global Resources Inc.
ITEM 3.
QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Our activities
expose us
to
a variety
of financial
risks, such
as commodity
price risk,
interest rate
risk, foreign
currency risk, liquidity risk and credit
risk. The overall risk management objective is
to minimize potential adverse
effects on our financial performance from those
risks which are not coal price related.
We manage
financial risk
through policies
and procedures
approved by
our Board
of Directors.
These specify
the responsibility
of the
Board
of Directors
and
management
with regard
to the
management
of financial
risk.
Financial risks are
managed centrally by
our finance
team under the
direction of the
Group Chief Financial
Officer.
The finance team manages risk exposures primarily through delegated authority limits approved
by the Board of
Directors. The finance team regularly monitors
our exposure to these financial risks and reports
to management
and
the
Board
of
Directors
on
a
regular
basis.
Policies
are
reviewed
at
least
annually
and
amended
where
appropriate.
We may use
derivative financial instruments such
as forward fixed
price commodity contracts, interest
rate swaps
and
foreign
exchange
rate
contracts
to
hedge
certain
risk
exposures.
Derivatives
for
speculative
purposes
is
strictly prohibited by the Treasury Risk Management Policy approved by our Board of
Directors. We use different
methods
to
measure
the
extent
to
which
we
are
exposed
to
various
financial
risks.
These
methods
include
sensitivity analysis
in the
case of
interest rates,
foreign exchange
and other
price risks
and aging
analysis for
credit risk.
Commodity Price Risk
Coal Price Risk
We
are
exposed
to
domestic
and
global
coal
prices.
Our
principal
philosophy
is
that
our
investors
would
not
consider
hedging
of
coal
prices
to
be
in
the
long-term
interest
of
our
stockholders.
Therefore,
any
potential
hedging of coal prices through long-term fixed price contracts is subject to the approval of our Board of Directors
and would only be adopted in exceptional circumstances.
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,
including
the
ongoing
suspension
of
imports
of
Australian
coal
into
China,
may
in
the
future
have
a
negative
impact
on
our
profitability.
We
may
or
may
not
be
able
to
access
alternate markets of our coal should additional interruptions and trade barriers occur in the future. An inability for
metallurgical coal suppliers to access international markets, including China, would likely result in an oversupply
of Met coal and may result in a decrease in prices and
or the curtailment of production.
We manage
our commodity
price risk
for our non-trading,
thermal coal
sales through
the use
of long-term
coal
supply agreements in our
U.S. Operations. In Australia, thermal
coal is sold
to Stanwell on a
supply contract. See
Item
1A.
“Risk
Factors—Risks
related
to
the
Supply
Deed
with
Stanwell
may
adversely
affect
our
financial
condition and results of operations” in our Annual Report on Form 10-K filed with the SEC and ASX on February
22, 2022.
Sales commitments in the
Met coal market are typically
not long-term in nature,
and we are therefore subject
to
fluctuations
in
market
pricing.
Certain
coal
sales
in
our
Australian
Operations
are
provisionally
priced
initially.
Provisionally priced sales
are those for
which price
finalization, referenced
to the relevant
index, is outstanding
at the reporting date. The final sales price
is determined within 7 to 90 days after
delivery to the customer.
As of
September 30, 2022, we
had $53.2 million of
outstanding provisionally priced receivables
subject to changes in
the relevant price index. If prices decreased 10%, these provisionally priced receivables would decrease by $5.3
million. See Item 1A. “Risk Factors—Our profitability depends upon the prices we receive for our coal.
Prices for
coal
are
volatile
and
can
fluctuate
widely
based
upon
a
number
of
factors
beyond
our
control”
in
our
Annual
Report on Form 10-K filed with the SEC and ASX on
February 22, 2022.
Diesel Fuel
We may
be exposed
to price
risk in
relation to
other commodities
from time
to time
arising from
raw materials
used in our operations (such as gas or
diesel). These commodities may be hedged through financial instruments
if the
exposure is
considered material
and where
the exposure
cannot be
mitigated through
fixed price
supply
agreements.
The fuel
required
for
our operations
for
the remainder
of fiscal
year
2022
will
be
purchased
under
fixed-price
contracts or on a spot basis.
Coronado Global Resources Inc.
Interest Rate Risk
Interest rate risk is the
risk that a change in interest rates on our borrowing
facilities will have an adverse impact
on
our
financial
performance,
investment
decisions
and
stockholder
return.
Our
objectives
in
managing
our
exposure
to
interest
rates
include
minimizing
interest
costs
in
the
long
term,
providing
a
reliable
estimate
of
interest costs for the
annual work program
and budget and ensuring
that changes in interest
rates will not have
a material impact on our financial performance.
As
of
September
30,
2022,
we
had
$326.3
million
of
fixed
rate
borrowings
and
Notes
and
no
variable-rate
borrowings outstanding.
We currently do not hedge against interest rate
fluctuations.
Foreign Exchange Risk
A significant portion of our
sales are denominated in US$.
Foreign exchange risk is
the risk that our earnings
or
cash flows are adversely impacted by movements in exchange
rates of currencies that are not in US$.
Our main exposure
is to the
A$-US$ exchange rate
through our Australian
Operations, which have
predominantly
A$ denominated costs. Greater than 76.3%
of expenses incurred at our Australian
Operations are denominated
in
A$.
Approximately
23.7%
of
our
Australian
Operations’
purchases
are
made
with
reference
to
US$,
which
provides a natural hedge against
foreign exchange movements on
these purchases (including fuel,
several port
handling charges,
demurrage, purchased
coal and
some insurance
premiums).
Appreciation of
the A$
against
US$ will increase our
Australian Operations’ US$
reported cost base and
reduce US$ reported net
income. For
the portion of US$ required
to purchase A$ to settle our
Australian Operations’ operating costs,
a 10% increase
in the A$ to
US$ exchange rate would increase reported total
costs and expenses by approximately $37.5
million
and $98.5 million for the three and nine months ended
September 30, 2022, respectively.
Under normal market conditions, we generally do not consider it necessary to hedge our
exposure to this foreign
exchange risk.
However,
there
may be
specific commercial
circumstances,
such
as the
hedging
of significant
capital
expenditure,
acquisitions,
disposals
and
other
financial
transactions,
where
we
may
deem
foreign
exchange hedging
as appropriate
and
where a
US$ contract
cannot
be negotiated
directly with
suppliers
and
other third parties.
For our Australian
Operations, we
translate all
monetary assets
and liabilities
at the
period-end exchange
rate,
all
nonmonetary
assets
and
liabilities
at
historical
rates
and
revenue
and
expenses
at
the
average
exchange
rates in effect during
the periods. The net
effect of these
translation adjustments is
shown in the accompanying
consolidated financial statements within components of
net income.
We currently do not hedge our non-US$ exposures
against exchange rate fluctuations.
Credit Risk
Credit risk is the risk of
sustaining a financial loss
as a result of a counterparty
not meeting its obligations
under
a financial instrument or customer contract.
We are exposed
to credit risk
when we have financial
derivatives, cash deposits,
lines of credit, letters
of credit
or bank guarantees
in place with
financial institutions.
To
mitigate against credit risk
from financial counterparties,
we have minimum credit rating requirements with financial
institutions where we transact.
We
are
also
exposed
to
counterparty
credit
risk
arising
from
our
operating
activities,
primarily
from
trade
receivables. Customers who wish to trade
on credit terms are subject to credit
verification procedures, including
an assessment of their independent credit rating, financial position, past experience and industry reputation.
We
monitor the financial performance
of counterparties on a routine
basis to ensure credit
thresholds are achieved.
Where required, we will request additional credit
support, such as letters of credit,
to mitigate against credit risk.
Credit
risk
is
monitored
regularly,
and
performance
reports
are
provided
to
our
management
and
Board
of
Directors.
Coronado Global Resources Inc.
ITEM 4.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We
maintain
disclosure
controls
and
procedures
that
are
designed
to
ensure
that
information
required
to
be
disclosed in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods
specified
in
the
SEC’s
rules
and
forms,
and
that
such
information
is
accumulated
and
communicated
to
our
management, including the
Chief Executive Officer
and the Group
Chief Financial Officer, as appropriate,
to allow
timely
decisions
regarding
required
disclosure
based
solely
on
the
definition
of
“disclosure
controls
and
procedures” in Rule 13a-15(e) promulgated under the
Exchange Act. In designing and evaluating the disclosure
controls
and
procedures,
management
recognized
that
any
controls
and
procedures,
no
matter
how
well
designed and operated, can provide only reasonable
assurance of achieving the desired control
objectives, and
management necessarily was
required to apply
its judgment in
evaluating the cost-benefit
relationship of possible
controls and procedures.
As of the end
of the period
covered by this Quarterly
Report on Form
10-Q, we carried
out an evaluation
under
the supervision and
with the participation
of our
management, including the
Chief Executive Officer
and the
Group
Chief Financial
Officer, of the effectiveness of
the design and
operation of
our disclosure controls
and procedures.
Based on
the foregoing,
the
Chief Executive
Officer
and the
Group Chief
Financial
Officer
concluded
that our
disclosure controls and procedures were effective.
Changes to Internal Control over Financial Reporting
During the
fiscal quarter covered
by this
Quarterly Report on
Form 10-Q,
there were
no changes
in the
Company's
internal
control
over
financial
reporting,
as
such
term
is
defined
in
Rule
13a-15(f)
of
the
Exchange
Act,
that
materially affected,
or are
reasonably
likely to
materially
affect,
the
Company’s
internal controls
over financial
reporting.
Coronado Global Resources Inc.
PART II – OTHER
INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
We are subject to various legal and
regulatory proceedings. For a description of our significant legal
proceedings
refer
to
Note 14. “Contingencies” to
the
unaudited
condensed
consolidated
financial
statements
included
in
Part I,
Item 1. “Financial
Statements”
of
this
Quarterly
Report,
which
information
is
incorporated
by
reference
herein.
ITEM 1A.
RISK FACTORS
Except as set forth below,
there were no material changes
to the risk factors previously
disclosed in Part I, Item
1A, “Risk Factors”, of
our Annual Report on
Form 10-K for the
year ended December 31,
2021, filed with the
SEC
and ASX on
February 22, 2022,
and Part II,
Item 1A. “Risk
Factors” of our
Quarterly Reports
on Form 10-Q
for
the quarterly periods
ended March 31, 2022 and June 30, 2022, filed
with the SEC and ASX on May 9,
2022 and
August 8, 2022:
We
are
subject
to
extensive
forms
of
taxation,
which
imposes
significant
costs
on
us,
and
future
regulations
and
developments
could
increase
those
costs
or
limit
our
ability
to
produce
coal
competitively.
Federal,
state
or
local
governmental
authorities
in
nearly
all
countries
across
the
global
coal
mining
industry
impose various
forms of
taxation
on coal
producers,
including production
taxes,
sales-related
taxes,
royalties,
stamp duty, environmental
taxes and income taxes.
If new legislation or
regulations related to various forms
of coal taxation or
income or other taxes
generally, which
increase our costs or limit our ability to compete
in the areas in which we sell coal, or which
adversely affect our
key customers, are adopted, or if the
basis upon which such duties
or taxes are assessed or levied,
changes or
is different from that provided by us, our business, financial condition or results of
operations could be adversely
affected.
For example, on September
27, 2022, we received from
the QRO an assessment
of the stamp duty payable
on
our acquisition of the Curragh
mine in March 2018. The
QRO assessed the stamp
duty on this acquisition at
an
amount of
$53.5 million
(A$82.2 million)
plus unpaid
tax interest
of $7.9
million (A$12.1
million). We
intend to
lodge an objection to the assessment
within the required timeframe and
before the end of November
2022. The
outcome of this objection is uncertain.
We
have
reviewed
the
assessment
and,
based
on
legal
and
valuation
advice
we
have
sought,
continue
to
maintain our position
and the estimated
accrual of $28.0
million (A$43.0 million)
within “Accrued Expenses
and
Other Current Liabilities”
in our unaudited
Condensed Consolidated
Balance Sheet, as
at September 30,
2022.
We cannot guarantee that the
steps we take to
defend our position in
this matter will be
successful, in which case
the
amount
assessed
by
the
QRO
and
unpaid
tax
interest
on
the
amount
outstanding
will
become
due
and
payable.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS
None.
Coronado Global Resources Inc.
ITEM 3.
DEFAULTS
UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Safety is the cornerstone of the Company’s values and is the number one priority
for all employees at Coronado
Global Resources Inc.
Our U.S. Operations
include multiple mining
complexes across
three states and
are regulated by
both the U.S.
Mine Safety
and Health
Administration, or
MSHA, and
state regulatory
agencies. Under
regulations mandated
by the Federal Mine Safety and Health Act of 1977, or the Mine Act, MSHA inspects our U.S. mines on a regular
basis and issues various citations and orders when it believes
a violation has occurred under the Mine Act.
In accordance
with
Section 1503(a) of
the
Dodd-Frank
Wall
Street
Reform
and
Consumer
Protection
Act
and
Item
104
of
Regulation
S-K
(17
CFR
229.104),
each
operator
of
a
coal
or
other
mine in
the
United
States
is
required to report certain mine safety results in its periodic reports
filed with the SEC under the
Exchange Act.
Information
pertaining
to
mine
safety
matters
is
included
in
Exhibit 95.1
attached
to
this
Quarterly
Report
on
Form 10-Q. The disclosures reflect the United
States mining operations only, as these requirements do not
apply
to our mines operated outside the United States.
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
EXHIBITS
The following documents are filed as exhibits hereto:
Exhibit No.
Description of Document
3.1
3.2
15.1
31.1
31.2
32.1
95.1
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy
Extension Schema Document
101.CAL
Inline XBRL Taxonomy
Extension Calculation Linkbase Document
101.DEF
Inline XBRL Tax
onomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy
Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy
Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101)
___________________________
Coronado Global Resources Inc.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange
Act of 1934, the registrant
has duly caused this
report
to be signed on its behalf by the undersigned, thereunto
duly authorized.
Coronado Global Resources Inc.
By:
/s/ Gerhard Ziems
Gerhard Ziems
Group Chief Financial Officer (as duly authorized officer
and as principal financial officer of the registrant)
Date: November 8, 2022
TABLE OF CONTENTS
Part I, Item 1. Financial Statements Of This Quarterly Report, Which Information Is Incorporated By ReferenceItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 104 Of Regulation S-k (17 Cfr 229. 104), Each Operator Of A Coal Or Other Mine in The United States IsItem 5. Other InformationItem 6. Exhibits