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