Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

(a) Newly Adopted Accounting Standards

During the period there have been no new Accounting Standards Updates issued by the Financial Accounting

Standards Board that had a material impact on the Company’s Consolidated Financial Statements

.

(b) Accounting Standards Not Yet Implemented

To date, there have been no recent accounting pronouncements not yet effective that have significance, or potential

significance, to the Company’s Consolidated Financial Statements.

(c) Use of Estimates

The preparation of Consolidated Financial Statements in conformity with U.S. GAAP requires management to

make certain judgements, estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the

reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially

from those estimates. Significant items subject to such estimates and assumptions include asset retirement

obligations; useful lives for depreciation, depletion and amortization; deferred income tax assets and liabilities;

values of coal properties; fair value of assets held for sale, workers’ compensation liability and other

contingencies.

(d) Foreign Currency

Financial Statements of foreign operations

The reporting currency of the Company is the U.S. Dollar, or US$.

Functional currency is determined by the primary economic environment in which an entity operates. The

functional currency of the Company and its subsidiaries is the US$, with the exception of two foreign operating

subsidiaries, Curragh and its immediate parent CAH, whose functional currency is the Australian dollar, or A$,

since Curragh’s predominant sources of operating expenses are denominated in that currency.

Assets and liabilities are translated at the year-end exchange rate and items in the statement of operations are

translated at average rates with gains and losses from translation recorded in other comprehensive losses.

Foreign Currency Transactions

Monetary assets and liabilities are remeasured at year-end exchange rates while non-monetary items are

remeasured at historical rates. 

Gains and losses from foreign currency remeasurement related to Curragh’s U.S. dollar receivables are included

in coal revenues. All other gains and losses from foreign currency remeasurement and foreign currency forward

contracts are included in “Other, net”, with exception of foreign currency gains or losses on long-term

intercompany loan balances which are classified within “Accumulated other comprehensive losses”. The total

aggregate impact of foreign currency transaction gains or losses on the Consolidated Statements of Operations

and Comprehensive Income was a net gain of $

47.6

 million and $

1.7

 million and a net loss of $

3.2

 million for the

years ended December 31, 2022, 2021 and 2020, respectively. The total impact of foreign currency transactions

related to U.S. dollar coal sales in Australia (included in the total above) was a net gain of $

15.0

 million and $

8.7

million and a net loss of $

4.0

 million for the years ended December 31, 2022, 2021 and 2020, respectively.

(e) Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash at bank and short-term highly liquid investments with an original maturity

date of three months or less. At December 31, 2022 and 2021, the Company had

no

 cash equivalents.

“Cash and Restricted Cash”, as disclosed in the accompanying Consolidated Balance Sheets includes $

0.3

million of restricted cash at December 31, 2022 and $

0.3

 million at 2021.

(f) Trade Accounts Receivables

The Company extends trade credit to its customers in the ordinary course of business. Trade receivables are

recorded initially at fair value and subsequently at amortized cost, less any Expected Credit Losses, or ECL. 

For trade receivables carried at amortized cost, the Company determines ECL on a forward-looking basis. The

amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the

respective financial instrument. The Company recognizes the lifetime ECL. The ECL is estimated based on the

Company’s historic credit loss experience, adjusted for factors that are specific to the financial asset, general

economic conditions, financial asset type, term and an assessment of both the current as well as forecast

conditions, including expected timing of collection, at the reporting date, modified for credit enhancements such

as letters of credit obtained. To measure ECL, trade receivables have been grouped based on shared credit risk

characteristics and the days past due. 

The amount of credit loss is recognized in the Consolidated Statements of Operations and Other Comprehensive

Income within “Provision for discounting and credit losses”. The Company writes off a financial asset when there

is information indicating there is no realistic prospect of recovery of the asset from the counterparty. Subsequent

recoveries of amounts previously written off are credited against “Provision for discounting and credit losses” in

the Consolidated Statements of Operations and Other Comprehensive Income.

Factoring

The Company has agreements with financial institutions to sell selected trade receivables on a recurring, non-

recourse basis. Under these agreements, trade receivables sold do not allow for recourse for any credit risk

related to the Company’s customers if such receivables are not collected by the third-party financial institutions. 

The Company derecognizes the trade receivables sold under the factoring arrangement and the difference

between proceeds received and carrying amount of the trade receivables sold is recognized within “Interest, net”

in its Consolidated Statements of Operations and Comprehensive Income.

(g) Inventories

Coal is recorded as inventory at the point in time the coal is extracted from the mine. Raw coal represents coal

stockpiles that may be sold in current condition or may be further processed prior to shipment to a customer.

Saleable coal represents coal stockpiles which require no further processing prior to shipment to a customer.

Coal inventories are stated at the lower of average cost and net realizable value. The cost of coal inventories is

determined based on an average cost of production, which includes all costs incurred to extract, transport and

process the coal. Net realizable value considers the estimated sales price of the particular coal product, less

applicable selling costs, and, in the case of raw coal, estimated remaining processing costs.

Supplies inventory is comprised of replacement parts for operational equipment and other miscellaneous

materials and supplies required for mining which are stated at cost on the date of purchase. Supplies inventory

is valued at the lower of average cost or net realizable value, less a reserve for obsolete or surplus items. This

reserve incorporates several factors, such as anticipated usage, inventory turnover and inventory levels. It is not

customary to sell these inventories; the Company plans to use them in mining operations as needed.

(h) Assets held for sale

Assets held for sale are measured at the lower of their carrying amount or fair value less costs to sell. The

Company classifies assets and liabilities as held for sale (disposal group) when management, having the authority

to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year and the

disposal group is available for sale in its present condition. The Company also considers whether an active

program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price

that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate

that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. An impairment

test is performed when a disposal group is classified as held for sale and an impairment charge is recorded when

the carrying amount of the disposal group exceeds its estimated fair value, less cost to sell. Depreciation and

amortization for assets classified as held for sale are ceased.

(i) Property, Plant and Equipment, Impairment of Long-Lived Assets and Goodwill

Property, Plant, and Equipment

Costs for mine development incurred to expand capacity of operating mines or to develop new mines and certain

mining equipment are capitalized and charged to operations on the hours of usage or units of production method

over the estimated proven and probable reserve tons directly benefiting from the capital expenditures. Mine

development costs include costs incurred for site preparation and development of the mines during the

development stage. Mineral rights and reserves acquired are measured at cost and are depleted on a units of

production method over the estimated proven and probable reserve tons of the relevant mineral property.

Capitalized costs related to internal-use software are amortized on a straight-line basis over the estimated useful

lives of the assets.

Property, plant, and equipment are recorded at cost and include expenditures for improvements when they

substantially increase the productive lives of existing assets. Depreciation is calculated using the straight-line

method over the estimated useful lives of the depreciable assets of

3

 to

10

 years for machinery, mining equipment

and transportation vehicles,

5

 to

10

 years for office equipment, and

10

 to

20

 years for plant, buildings and

improvements.

Maintenance and repair costs are expensed to operations as incurred. When equipment is retired or disposed,

the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss

on disposal is recognized in operations.

Impairment of long-lived assets

Long-lived assets, such as property, plant, and equipment, and purchased intangible assets subject to

amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the

carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group

be tested for possible impairment, the Company first compares undiscounted cash flows expected to be

generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or

asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent

that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques

including discounted cash flow models, quoted market values and third-party independent appraisals, as

considered necessary. Refer to Note 5 “Impairment of Assets” for further disclosure .

Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business

combination that are not individually identified and separately recognized. In connection with the Buchanan

acquisition on March 31, 2016, the Company recorded goodwill in the amount of $

28.0

 million. Goodwill is not

amortized but is reviewed for impairment annually or when circumstances or other events indicate that impairment

may have occurred. The Company follows the guidance in Accounting Standards Update 2017-04 “

Intangibles –

Goodwill and Other: Simplifying the Test for Goodwill Impairment

” (ASU 2017-04). The Company makes a

qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying

amount. Circumstances that are considered as part of the qualitative assessment and could trigger a quantitative

impairment test include but are not limited to: a significant adverse change in the business climate; a significant

adverse legal judgment; adverse cash flow trends; an adverse action or assessment by a government agency;

unanticipated competition; and a significant restructuring charge within a reporting unit. If a quantitative

assessment is determined to be necessary, the Company compares the fair value of a reporting unit with its

carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the Company

recognizes an impairment charge for the amount by which the carrying amount exceeds its fair value to the extent

of the amount of goodwill allocated to that reporting unit.

The Company defines reporting units at the mining asset level. For purposes of testing goodwill for impairment,

goodwill has been allocated to the reporting units to the extent it relates to each reporting unit.

(j) Asset Retirement Obligations

The Company’s asset retirement obligation, or ARO, liabilities primarily consist of estimates of surface land

reclamation and support facilities at both surface and underground mines in accordance with applicable

reclamation laws and regulations in the U.S. and Australia as defined by each mining permit.

The Company estimates its ARO liabilities for final reclamation and mine closure based upon detailed engineering

calculations of the amount and timing of the future cash spending for a third party to perform the required work.

Spending estimates are escalated for inflation and then discounted at the credit-adjusted, risk-free rate. The

Company records an ARO asset associated with the discounted liability for final reclamation and mine closure.

The obligation and corresponding asset are recognized in the period in which the liability is incurred. The ARO

asset is amortized on the units-of-production method over its expected life of the related asset and the ARO

liability is accreted to the projected spending date. As changes in estimates occur (such as mine plan revisions,

changes in estimated costs or changes in timing of the performance of reclamation activities), the revisions to

the obligation and asset are recognized at the appropriate credit-adjusted, risk-free rate. The Company also

recognizes an obligation for contemporaneous reclamation liabilities incurred as a result of surface mining.

Contemporaneous reclamation consists primarily of grading, topsoil replacement and re-vegetation of backfilled

pit areas. To settle the liability, the obligation is paid, and to the extent there is a difference between the liability

and the amount of cash paid, a gain or loss upon settlement is recorded. The Company annually reviews its

estimated future cash flows for its asset retirement obligations.

(k) Borrowing costs

Borrowing costs are recognized as an expense when they are incurred, except for interest charges attributable

to major projects with substantial development and construction phases which are capitalized as part of the cost

of the asset. There was

no

 interest capitalized during the years ended December 31, 2022 and 2021.

(l) Leases

From time to time, the Company enters into mining services contracts which may include embedded leases of

mining equipment and other contractual agreements to lease mining equipment and facilities. Based upon the

Company’s assessment of the terms of a specific lease agreement, the Company classifies a lease as either

finance or operating.

Finance leases

Right of Use, or ROU, assets related to finance leases are presented in Property, plant and equipment, net on

the Consolidated Balance Sheet. Lease liabilities related to finance leases are presented in “Lease Liabilities”

(current) and “Lease Liabilities” (non-current) on the Consolidated Balance Sheets.

Finance lease ROU assets and lease liabilities are recognized at the commencement date based on the present

value of the future lease payments over the lease term. The discount rate used to determine the present value

of the lease payments is the rate implicit in the lease unless that rate cannot be readily determined, in which

case, the Company utilizes its incremental borrowing rate in determining the present value of the future lease

payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow

on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic

environment.

Operating leases

ROU assets related to operating leases are presented as Right of Use assets – operating leases, net on the

Consolidated Balance Sheet. Lease liabilities related to operating leases that are subject to the ASC 842

measurement requirements such as operating leases with lease terms greater than twelve months are presented

in “Lease Liabilities” (current) and “Lease Liabilities” (non-current) on Consolidated Balance Sheets. 

Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present

value of the future lease payments over the lease term. The discount rate used to determine the present value

of the lease payments is the rate implicit in the lease unless that rate cannot be readily determined, in which

case, the Company utilizes its incremental borrowing rate in determining the present value of the future lease

payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow

on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic

environment. Operating lease ROU assets may also include any cumulative prepaid or accrued rent when the

lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may also include

options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

The ROU asset includes any lease payments made and lease incentives received prior to the commencement

date. The Company has lease arrangements with lease and non-lease components which are accounted for

separately. Non-lease components of the lease payments are expensed as incurred and are not included in

determining the present value.

(m) Royalties

Lease rights to coal lands are often acquired in exchange for royalty payments. Royalties are payable monthly

as a percentage of the gross realization from the sale of the coal mined using surface mining methods and as a

percentage of the gross realization for coal produced using underground mining methods. Advance mining

royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable

against future production. The Company had advance mining royalties of $

6.8

 million and $

5.5

 million

respectively, included in “Other current assets” as of December 31, 2022 and 2021.

(n) Stanwell Rebate

The Stanwell rebate relates to a contractual arrangement entered into by Curragh with Stanwell Corporation

Limited, a State of Queensland owned electricity generator, which requires payment of a rebate for export coal

sold from some of Curragh’s mining tenements. The rebate obligation is accounted for as an executory contract

and the expense is recognized as incurred.

(o) Revenue Recognition

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the

parties are identified, payment terms are identified, the contract has commercial substance and collectability of

consideration is probable. Once a contract is identified, the Company evaluates whether the combined or single

contract should be accounted for as more than one performance obligation.

The Company recognizes revenue when control is transferred to the customer. For the Company’s contracts, in

order to determine the point in time when control transfers to customers, the Company uses standard shipping

terms to determine the timing of transfer of legal title and the significant risks and rewards of ownership. The

Company also considers other indicators including timing of when the Company has a present right to payment

and when physical possession of products is transferred to customers. The amount of revenue recognized

includes any adjustments for variable consideration, which is included in the transaction price and allocated to

each performance obligation based on the relative standalone selling price. The variable consideration is

estimated through the course of the contract using management’s best estimates.

The majority of the Company’s revenue is derived from short term contracts where the time between confirmation

of sales orders and collection of cash is not more than a few months.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific

revenue-producing transaction that are collected by the Company from a customer are excluded from revenue.

Performance obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A

contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when,

or as, the performance obligation is satisfied.

The Company’s contracts have multiple performance obligations as the promise to transfer the individual unit of

coal is separately identifiable from other units of coal promised in the contracts and, therefore, distinct.

Performance obligations, as described above, primarily relate to the Company’s promise to deliver a designated

quantity and type of coal within the quality specifications stated in the contract.

For contracts with multiple performance obligations, we allocate the contract’s transaction price to each

performance obligation on a relative standalone selling price basis. The standalone selling price is determined at

each contract inception using an adjusted market assessment approach. This approach focuses on the amount

that the Company believes the market is willing to pay for a good or service, considering market conditions, such

as benchmark pricing, competitor pricing, market awareness of the product and current market trends that affect

the pricing.

Warranties provided to customers are assurance-type of warranties on the fitness of purpose and merchantability

of the Company’s goods. The Company does not provide service-type of warranties to customers.

Revenue is recognized at a point in time and therefore there are

no

 unsatisfied and/or partially satisfied

performance obligations at December 31, 2022 and 2021.

Shipping and Handling

The Company accounts for shipping and handling activities on Free on Rail sales after the customer obtains

control of the good as an activity to fulfil the promise to transfer the good. In this instance, shipping and handling

costs paid to third party carriers and invoiced to coal customers are recorded as freight expense and other

revenues, respectively.

(p) Commodity Price Risk

The Company has commodity price risk arising from fluctuations in domestic and global coal prices. 

The Company’s principal philosophy is not to hedge against movements in coal prices unless there are

exceptional circumstances. Any potential hedging of coal prices would be through fixed price contracts. 

The Company is also exposed to commodity price risk related to diesel fuel purchases. The Company may

periodically enter into arrangements that protect against the volatility in fuel prices as follows:

• enter into fixed price contracts to purchase fuel for the U.S. Operations .

• enter into derivative financial instruments to hedge exposures to fuel price fluctuations. 

There are

no

 derivative contracts outstanding at December 31, 2022 and 2021.

(q) Income Taxes

The Company uses the asset and liability approach to account for income taxes as required by ASC 740, Income

Taxes, which requires the recognition of deferred income tax assets and liabilities for the expected future tax

consequences attributable to differences between the financial statement carrying amounts of existing assets

and liabilities and their respective tax bases.

Valuation allowances are provided when necessary to reduce deferred income tax assets to the amount expected

to be realized, on a more likely than not basis.

The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on income

tax returns it files if such tax position is more likely than not to be sustained on examination by the taxing

authorities, based on the technical merits of the position. These tax benefits are measured based on the largest

benefit that has a greater than 50% likelihood of being realized upon ultimate resolution.

The Company’s foreign structure consists of Australian entities which are treated as corporations subject to tax

under Australian taxing authorities. The Curragh entities are treated as a branch for U.S. tax purposes and all

income flows through the ultimate parent (the Company).

(r) Fair Value Measurements

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 principal or most relevant market. When

considering market participant assumptions in fair value measurements, the Company distinguishes between

observable and unobservable inputs, which are categori zed in one of 3 levels of inputs.

Refer to Note 25 “Fair Value Measurement” for detailed information related to the Company’s fair value policies

and disclosures.

(s) Derivative accounting

The Company recognizes at fair value all contracts meeting the definition of a derivative as assets or liabilities in

the Consolidated Balance Sheet.

With respect to derivatives used in hedging activities, the Company assesses, both at inception and at least

quarterly thereafter, whether such derivatives are highly effective at offsetting the changes in the anticipated

exposure of the hedged item. The change in the fair value of derivatives designated as a cash flow hedge and

deemed highly effective is recorded in “Accumulated other comprehensive losses” until the hedged transaction

impacts reported earnings, at which time any gain or loss is reclassified to earnings. If the hedge ceases to qualify

for hedge accounting, the Company prospectively recognizes changes in the fair value of the instrument in

earnings in the period of the change. The potential for hedge ineffectiveness is present in the design of certain

of the Company’s cash flow hedge relationships.

The Company’s asset and liability derivative positions are offset on a counterparty-by-counterparty basis if the

contractual agreement provides for the net settlement of contracts with the counterparty in the event of default or

termination of any one contract.

There are

no

 derivative contracts outstanding at December 31, 2022 and 2021.

(t) Stock-based Compensation

The Company has a stock-based compensation plan which allows for the grant of certain equity-based incentives

including stock options, performance stock units, or PSU, and restricted stock units, or RSU, to employees and

executive directors, valued in whole or in part with reference to the Company’s CDIs or equivalent common

shares (on a

10.1

 CDI to common share ratio).

The grant-date fair value of stock option award is estimated on the date of grant using Black-Scholes-Merton

option-pricing model. For certain options and PSUs, the Company includes a relative Total Stockholder Return,

or TSR, modifier to determine the number of shares earned at the end of the performance period. The fair value

of awards that include the TSR modifier is determined using a Monte Carlo valuation model.

The expense for these equity-based incentives is based on their fair value at date of grant and is amortized over

the required service period, generally the vesting period. The Company accounts for forfeitures as and when they

occur.

Refer to Note 23 “Stock-Based Compensation”

for detailed information related to the Company’s stock-based

compensation plans.

(

u) Earnings per Share

Basic earnings per share is computed by dividing net income attributable to stockholders of the Company by the

weighted-average number of shares of common stock outstanding during the reporting period.

Diluted net income per share is computed using the weighted-average number of shares of common stock and

dilutive potential shares of common stock outstanding during the period. Dilutive potential shares of common

stock primarily consist of employee stock options and restricted stock.

(v) Deferred Financing Costs

The Company capitalizes costs incurred in connection with new borrowings, the establishment or enhancement

of credit facilities and the issuance of debt securities. These costs are amortized as an adjustment to interest

expense over the life of the borrowing or term of the credit facility using the effective interest method. Debt

issuance costs related to a recognized liability are presented in the balance sheet as a direct reduction from the

carrying amount of that liability whereas debt issuance costs related to a credit facility are shown as an asset. 

For information on the unamortized balance of deferred financing fees related to outstanding debt, see Note 17

“Interest Bearing Liabilities”.