UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 10-Q
___________________________________________________
(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20192020
OR
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File NumberNumber: 1-16247
___________________________________________________
Coronado Global Resources Inc.
(Exact name of registrant as specified in its charter)
___________________________________________________
Delaware | 83-1780608 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Level 33, Central Plaza One, 345 Queen Street
100 Bill Baker WayBrisbane, Queensland, Australia 4000
Beckley, West Virginia 25801
(Address of principal executive offices) (Zip Code)
(61) 7 3031 7777
(681) 207-7263
(Registrant’s telephone number, including area code)
N/A
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 | Name of each exchange on which registered | ||
None | None | None |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes o☒ No x☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes x☒ No o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
| Accelerated filer |
|
Non-accelerated filer | ☒ | Smaller reporting company | ☐ |
|
|
|
|
Emerging growth company |
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o☐ Nox☒
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’sregistrant's common stock, par value $0.01 per share, outstanding on July 31, 2019,2020, including shares of common stock underlying CDIs, was 96,651,692.
i
PART I —– FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
(In US$ thousands, except share data)
Assets |
| Note |
| (Unaudited) |
| December 31, |
|
| Note |
| (Unaudited) June 30, 2020 |
| December 31, 2019 | ||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Cash and restricted cash |
|
|
| $ | 46,251 |
| $ | 124,881 |
|
|
|
| $ | 36,324 |
| $ | 26,553 |
Trade receivables |
|
|
| 204,248 |
| 206,127 |
|
| 6 |
|
| 116,110 |
|
| 133,297 | ||
Related party receivables |
| 18 |
| 59,665 |
| 36,716 |
| ||||||||||
Related party trade receivables |
| 6 |
|
| 105,057 |
|
| 86,796 | |||||||||
Income tax receivable |
|
|
| — |
| 12,017 |
|
|
|
|
| 15,431 |
|
| 897 | ||
Inventories |
| 6 |
| 129,424 |
| 95,103 |
|
| 7 |
|
| 138,624 |
|
| 162,170 | ||
Other current assets |
|
|
| 40,722 |
| 40,914 |
|
|
|
|
| 46,831 |
|
| 44,109 | ||
Total current assets |
|
|
| 480,310 |
| 515,758 |
|
|
|
|
| 458,377 |
|
| 453,822 | ||
Non-current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Property, plant and equipment, net |
| 7 |
| 1,603,087 |
| 1,618,558 |
|
| 8 |
|
| 1,532,736 |
|
| 1,632,788 | ||
Right of use asset — operating leases, net |
| 10 |
| 64,343 |
| — |
| ||||||||||
Right of use asset – operating leases, net |
| 11 |
|
| 23,313 |
|
| 62,566 | |||||||||
Goodwill |
| 8 |
| 28,008 |
| 28,008 |
|
| 9 |
|
| 28,008 |
|
| 28,008 | ||
Intangible assets, net |
| 8 |
| 5,221 |
| 5,402 |
|
| 9 |
|
| 4,318 |
|
| 5,079 | ||
Deposits and reclamation bonds |
|
|
| 12,541 |
| 11,635 |
|
|
|
|
| 12,152 |
|
| 12,227 | ||
Deferred income tax assets |
|
|
| 7,779 |
| 11,848 |
|
|
|
|
| 27,586 |
|
| 2,852 | ||
Other non-current assets |
|
|
| 17,194 |
| 18,355 |
|
|
|
|
| 14,819 |
|
| 17,512 | ||
Total assets |
|
|
| $ | 2,218,483 |
| $ | 2,209,564 |
|
|
|
| $ | 2,101,309 |
| $ | 2,214,854 |
Liabilities and Stockholders’ Equity/Members’ Capital |
|
|
|
|
|
|
| ||||||||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
| |||||||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Accounts payable |
|
|
| $ | 41,084 |
| $ | 42,962 |
|
|
|
| $ | 36,652 |
| $ | 64,392 |
Accrued expenses and other current liabilities |
| 9 |
| 252,351 |
| 243,496 |
|
| 10 |
|
| 251,660 |
|
| 238,788 | ||
Income tax payable |
|
|
| 33,024 |
| 9,241 |
|
|
|
|
| 27,328 |
|
| 29,760 | ||
Asset retirement obligations |
|
|
| 7,719 |
| 7,719 |
|
|
|
|
| 9,955 |
|
| 10,064 | ||
Contingent royalty consideration |
| 16 |
| 7,293 |
| 26,832 |
|
| 17 |
|
| — |
|
| 688 | ||
Contract obligations |
| 13 |
| 35,066 |
| 39,116 |
|
| 14 |
|
| 35,225 |
|
| 36,935 | ||
Lease liabilities |
| 10 |
| 28,128 |
| 1,308 |
|
| 11 |
|
| 11,984 |
|
| 29,685 | ||
Other current financial liabilities |
|
|
| 13,126 |
| 7,727 |
|
|
|
|
| 13,268 |
|
| 5,894 | ||
Total current liabilities |
|
|
| 417,791 |
| 378,401 |
|
|
|
|
| 386,072 |
|
| 416,206 | ||
Non-current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Asset retirement obligations |
|
|
| 122,864 |
| 118,072 |
|
|
|
|
| 126,129 |
|
| 121,710 | ||
Contract obligations |
| 13 |
| 224,433 |
| 253,578 |
|
| 14 |
|
| 186,091 |
|
| 204,877 | ||
Deferred consideration liability |
| 14 |
| 164,148 |
| 155,332 |
|
| 15 |
|
| 181,400 |
|
| 174,605 | ||
Interest bearing liabilities |
| 13 |
|
| 441,000 |
|
| 330,000 | |||||||||
Other financial liabilities |
|
|
| 2,697 |
| 4,073 |
|
|
|
|
| 457 |
|
| 1,546 | ||
Lease liabilities |
| 10 |
| 52,902 |
| 2,481 |
|
| 11 |
|
| 23,678 |
|
| 48,165 | ||
Contingent royalty consideration |
| 16 |
| 3,131 |
| 3,371 |
|
| 17 |
|
| — |
|
| 855 | ||
Deferred income tax liabilities |
|
|
| 54,885 |
| 38,838 |
|
|
|
|
| 59,552 |
|
| 47,973 | ||
Other non-current liabilities |
|
|
| 1,680 |
| 1,610 |
|
|
|
|
| 5,003 |
|
| 976 | ||
Total liabilities |
|
|
| 1,044,531 |
| 955,756 |
|
|
|
|
| 1,409,382 |
|
| 1,346,913 | ||
Common stock $0.01 par value; 1,000,000,000 shares authorized, 96,651,692 shares are issued and outstanding as of June 30, 2019 and December 31, 2018 |
|
|
| 967 |
| 967 |
| ||||||||||
Series A Preferred stock $0.01 par value; 100,000,000 shares authorized, 1 Share issued and outstanding as of June 30, 2019 and December 31, 2018 |
|
|
| — |
| — |
| ||||||||||
Common stock $0.01 par value; 1,000,000,000 shares authorized, 96,651,692 shares are issued and outstanding as of June 30, 2020 and December 31, 2019 |
|
|
|
| 967 |
|
| 967 | |||||||||
Series A Preferred stock $0.01 par value; 100,000,000 shares authorized, 1 Share issued and outstanding as of June 30, 2020 and December 31, 2019 |
|
|
|
| — |
|
| — | |||||||||
Additional paid-in capital |
|
|
| 1,108,041 |
| 1,107,948 |
|
|
|
|
| 820,643 |
|
| 820,247 | ||
Accumulated other comprehensive loss |
|
|
| (44,202 | ) | (49,609 | ) |
| 18 |
|
| (74,258) |
|
| (45,206) | ||
Retained earnings |
|
|
| 108,868 |
| 194,220 |
| ||||||||||
(Accumulated losses) retained earnings |
|
|
|
| (55,642) |
|
| 91,712 | |||||||||
Coronado Global Resources Inc. stockholders’ equity |
|
|
|
| 691,710 |
|
| 867,720 | |||||||||
Noncontrolling interest |
|
|
| 278 |
| 282 |
|
|
|
|
| 217 |
|
| 221 | ||
Total stockholders’ equity |
|
|
| 1,173,952 |
| 1,253,808 |
|
|
|
|
| 691,927 |
|
| 867,941 | ||
Total liabilities and stockholders’ equity |
|
|
| $ | 2,218,483 |
| $ | 2,209,564 |
|
|
|
| $ | 2,101,309 |
| $ | 2,214,854 |
See accompanying notes to unaudited condensed consolidated financial statements. | See accompanying notes to unaudited condensed consolidated financial statements. |
Coronado Global Resources Inc. Form 10-Q June 30, 20202
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income
(In US$ thousands, except share data)
|
|
|
| Three Months Ended |
| Six Months Ended |
|
|
|
| Three Months EndedJune 30, |
| Six Months EndedJune 30, | ||||||||||||||||
|
| Note |
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
| Note |
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Coal revenues |
| 4 |
| $ | 495,385 |
| $ | 479,021 |
| $ | 919,329 |
| $ | 571,343 |
|
| 3 |
| $ | 286,206 |
| $ | 495,385 |
| $ | 605,699 |
| $ | 919,329 |
Coal revenues from related parties |
| 4, 18 |
| 135,305 |
| 98,489 |
| 293,158 |
| 213,003 |
|
| 3, 6 |
|
| 9,000 |
|
| 135,305 |
|
| 89,118 |
|
| 293,158 | ||||
Other revenues |
| 4 |
| 11,767 |
| 14,020 |
| 21,848 |
| 15,337 |
|
| 3 |
|
| 9,142 |
|
| 11,767 |
|
| 18,849 |
|
| 21,848 | ||||
Total revenues |
|
|
| 642,457 |
| 591,530 |
| 1,234,335 |
| 799,683 |
|
|
|
|
| 304,348 |
|
| 642,457 |
|
| 713,666 |
|
| 1,234,335 | ||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of coal revenues (exclusive of items shown separately below) |
|
|
| 264,137 |
| 305,309 |
| 533,696 |
| 424,620 |
|
|
|
|
| 224,459 |
|
| 264,137 |
|
| 481,345 |
|
| 533,696 | ||||
Depreciation, depletion and amortization |
|
|
| 45,508 |
| 42,594 |
| 85,279 |
| 64,402 |
|
|
|
|
| 41,547 |
|
| 45,508 |
|
| 86,849 |
|
| 85,279 | ||||
Freight expenses |
|
|
| 52,035 |
| 40,912 |
| 89,362 |
| 45,155 |
|
|
|
|
| 40,504 |
|
| 52,035 |
|
| 82,886 |
|
| 89,362 | ||||
Stanwell rebate |
|
|
| 45,847 |
| 32,812 |
| 94,674 |
| 32,812 |
|
|
|
|
| 24,787 |
|
| 45,847 |
|
| 57,415 |
|
| 94,674 | ||||
Other royalties |
|
|
| 49,073 |
| 67,695 |
| 93,422 |
| 82,987 |
|
|
|
|
| 19,157 |
|
| 49,073 |
|
| 43,455 |
|
| 93,422 | ||||
Selling, general, and administrative expenses |
|
|
| 9,242 |
| 8,513 |
| 18,311 |
| 52,283 |
|
|
|
|
| 7,158 |
|
| 9,242 |
|
| 13,353 |
|
| 18,311 | ||||
Total costs and expenses |
|
|
| 465,842 |
| 497,835 |
| 914,744 |
| 702,259 |
|
|
|
|
| 357,612 |
|
| 465,842 |
|
| 765,303 |
|
| 914,744 | ||||
Operating income |
|
|
| 176,615 |
| 93,695 |
| 319,591 |
| 97,424 |
|
|
|
|
| (53,264) |
|
| 176,615 |
|
| (51,637) |
|
| 319,591 | ||||
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense, net |
|
|
| (9,087 | ) | (18,987 | ) | (17,264 | ) | (25,488 | ) |
|
|
|
| (12,064) |
|
| (9,087) |
|
| (24,318) |
|
| (17,264) | ||||
Loss on debt extinguishment |
|
|
| — |
| — |
| — |
| (3,905 | ) | ||||||||||||||||||
Impairment of assets |
| 4 |
|
| (63,111) |
|
| — |
|
| (63,111) |
|
| — | |||||||||||||||
Other, net |
| 5 |
| (2,989 | ) | (2,391 | ) | 1,042 |
| (26,846 | ) |
| 5 |
|
| (8,537) |
|
| (2,989) |
|
| (4,485) |
|
| 1,042 | ||||
Total other income (expense), net |
|
|
| (12,076 | ) | (21,378 | ) | (16,222 | ) | (56,239 | ) |
|
|
|
| (83,712) |
|
| (12,076) |
|
| (91,914) |
|
| (16,222) | ||||
Income before tax |
|
|
| 164,539 |
| 72,317 |
| 303,369 |
| 41,185 |
| ||||||||||||||||||
Income tax expense |
| 11 |
| (47,033 | ) | (12,995 | ) | (89,043 | ) | (5,534 | ) | ||||||||||||||||||
Net income |
|
|
| 117,506 |
| 59,322 |
| 214,326 |
| 35,651 |
| ||||||||||||||||||
(Loss) income before tax |
|
|
|
| (136,976) |
|
| 164,539 |
|
| (143,551) |
|
| 303,369 | |||||||||||||||
Income tax benefit (expense) |
| 12 |
|
| 22,646 |
|
| (47,033) |
|
| 20,355 |
|
| (89,043) | |||||||||||||||
Net (loss) income |
|
|
|
| (114,330) |
|
| 117,506 |
|
| (123,196) |
|
| 214,326 | |||||||||||||||
Less: Net loss attributable to noncontrolling interest |
|
|
| (4 | ) | (2 | ) | (4 | ) | (4 | ) |
|
|
|
| (2) |
|
| (4) |
|
| (4) |
|
| (4) | ||||
Net income attributable to Coronado Global Resources Inc. |
|
|
| $ | 117,510 |
| 59,324 |
| $ | 214,330 |
| $ | 35,655 |
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
Net (loss) income attributable to Coronado Global Resources Inc. |
|
|
| $ | (114,328) |
| $ | 117,510 |
| $ | (123,192) |
| $ | 214,330 | |||||||||||||||
Other comprehensive income, net of income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign currency translation adjustment |
|
|
| (508 | ) | (18,695 | ) | (1,066 | ) | (18,695 | ) |
| 18 |
|
| 39,161 |
|
| (508) |
|
| (14,406) |
|
| (1,066) | ||||
Net gain on cash flow hedges, net of tax |
|
|
| 894 |
| — |
| 6,473 |
| — |
| ||||||||||||||||||
Total comprehensive income |
|
|
| $ | 117,892 |
| 40,627 |
| 219,733 |
| $ | 16,956 |
| ||||||||||||||||
Net gain (loss) on cash flow hedges, net of tax |
| 18 |
|
| 19,546 |
|
| 894 |
|
| (14,646) |
|
| 6,473 | |||||||||||||||
Total other comprehensive income (loss) |
|
|
|
| 58,707 |
|
| 386 |
|
| (29,052) |
|
| 5,407 | |||||||||||||||
Total comprehensive (loss) income |
|
|
|
| (55,623) |
|
| 117,892 |
|
| (152,248) |
|
| 219,733 | |||||||||||||||
Less: Net loss attributable to noncontrolling interest |
|
|
| (4 | ) | (2 | ) | (4 | ) | (4 | ) |
|
|
|
| (2) |
|
| (4) |
|
| (4) |
|
| (4) | ||||
Total comprehensive income attributable to Coronado Global Resources Inc. |
|
|
| $ | 117,896 |
| $ | 40,629 |
| $ | 219,737 |
| $ | 16,960 |
| ||||||||||||||
Total comprehensive (loss) income attributable to Coronado Global Resources Inc. |
|
|
| $ | (55,621) |
| $ | 117,896 |
| $ | (152,244) |
| $ | 219,737 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share of common stock |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(Loss) earnings per share of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Basic |
| 15 |
| 1.22 |
|
|
| 2.22 |
|
|
|
| 16 |
|
| (1.18) |
|
| 1.22 |
|
| (1.27) |
|
| 2.22 | ||||
Diluted |
| 15 |
| 1.22 |
|
|
| 2.22 |
|
|
|
| 16 |
|
| (1.18) |
|
| 1.22 |
|
| (1.27) |
|
| 2.22 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
See accompanying notes to unaudited condensed consolidated financial statements. | See accompanying notes to unaudited condensed consolidated financial statements. |
Coronado Global Resources Inc. Form 10-Q June 30, 20203
Unaudited Condensed Consolidated Statements of Stockholders’ Equity/Members’ CapitalEquity
(In US$ thousands, except share data)
|
|
| Common stock |
| Preferred stock |
| Additional |
| Accumulated other |
| (Accumulated |
|
|
| Total | ||||
|
|
|
|
|
|
|
|
|
|
| paid in |
| comprehensive |
| losses) Retained |
| Noncontrolling |
| stockholders |
|
|
| Shares |
| Amount |
| Series A |
| Amount |
| capital |
| loss |
| earnings |
| interest |
| equity |
Balance December 31, 2019 |
| $ | 96,651,692 |
| 967 |
| 1 |
| — |
| 820,247 |
| (45,206) |
| 91,712 |
| 221 |
| 867,941 |
Net loss |
|
| — |
| — |
| — |
| — |
| — |
| — |
| (8,863) |
| (2) |
| (8,865) |
Other comprehensive loss (net of $13,781 tax) |
|
| — |
| — |
| — |
| — |
| — |
| (87,759) |
| — |
| — |
| (87,759) |
Total comprehensive loss |
|
| — |
| — |
| — |
| — |
| — |
| (87,759) |
| (8,863) |
| (2) |
| (96,624) |
Share-based compensation for equity classified awards |
|
| — |
| — |
| — |
| — |
| 148 |
| — |
| — |
| — |
| 148 |
Dividends paid |
|
| — |
| — |
| — |
| — |
| — |
| — |
| (24,163) |
| — |
| (24,163) |
Balance March 31, 2020 |
| $ | 96,651,692 |
| 967 |
| 1 |
| — |
| 820,395 |
| (132,965) |
| 58,686 |
| 219 |
| 747,302 |
Net loss |
|
| — |
| — |
| — |
| — |
| — |
| — |
| (114,328) |
| (2) |
| (114,330) |
Other comprehensive income (net of $6,534 tax) |
|
| — |
| — |
| — |
| — |
| — |
| 58,707 |
| — |
| — |
| 58,707 |
Total comprehensive income (loss) |
|
| — |
| — |
| — |
| — |
| — |
| 58,707 |
| (114,328) |
| (2) |
| (55,623) |
Share-based compensation for equity classified awards |
|
| — |
| — |
| — |
| — |
| 248 |
| — |
| — |
| — |
| 248 |
Balance June 30, 2020 |
| $ | 96,651,692 |
| 967 |
| 1 |
| — |
| 820,643 |
| (74,258) |
| (55,642) |
| 217 |
| 691,927 |
|
|
| Common stock |
| Preferred stock |
| Additional |
| Accumulated other |
|
|
|
|
| Total | ||||
|
|
|
|
|
|
|
|
|
|
| paid in |
| comprehensive |
| Retained |
| Noncontrolling |
| stockholders |
|
|
| Shares |
| Amount |
| Series A |
| Amount |
| capital |
| loss |
| earnings |
| interest |
| equity |
Balance December 31, 2018 |
| $ | 96,651,692 |
| 967 |
| 1 |
| — |
| 1,107,948 |
| (49,609) |
| 194,220 |
| 282 |
| 1,253,808 |
Net income |
|
| — |
| — |
| — |
| — |
| — |
| — |
| 96,820 |
| — |
| 96,820 |
Other comprehensive income (net of $2,391 tax) |
|
| — |
| — |
| — |
| — |
| — |
| 5,021 |
| — |
| — |
| 5,021 |
Total comprehensive income |
|
| — |
| — |
| — |
| — |
| — |
| 5,021 |
| 96,820 |
| — |
| 101,841 |
Dividends paid |
|
| — |
| — |
| — |
| — |
| — |
| — |
| (299,682) |
| — |
| (299,682) |
Balance March 31, 2019 |
| $ | 96,651,692 |
| 967 |
| 1 |
| — |
| 1,107,948 |
| (44,588) |
| (8,642) |
| 282 |
| 1,055,967 |
Net income (loss) |
|
| — |
| — |
| — |
| — |
| — |
| — |
| 117,510 |
| (4) |
| 117,506 |
Other comprehensive income (net of $383 tax) |
|
| — |
| — |
| — |
| — |
| — |
| 386 |
| — |
| — |
| 386 |
Total comprehensive income (loss) |
|
| — |
| — |
| — |
| — |
| — |
| 386 |
| 117,510 |
| (4) |
| 117,892 |
Share-based compensation for equity classified awards |
|
| — |
| — |
| — |
| — |
| 93 |
| — |
| — |
| — |
| 93 |
Balance June 30, 2019 |
| $ | 96,651,692 |
| 967 |
| 1 |
| — |
| 1,108,041 |
| (44,202) |
| 108,868 |
| 278 |
| 1,173,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited condensed consolidated financial statements. |
Coronado Global Resources Inc. Form 10-Q June 30, 20204
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Additional |
| Other |
|
|
| Non- |
| Total |
| |||||
|
| Members’ |
| Common Stock |
| Preferred Stock |
| Paid in |
| Comprehensive |
| Retained |
| controlling |
| Stockholders’ |
| |||||
|
| Capital |
| Shares |
| Amount |
| Series A |
| Amount |
| Capital |
| Income / (Loss) |
| Earnings |
| Interest |
| Equity |
| |
Balance December 31, 2018 |
| $ | — |
| 96,651,692 |
| 967 |
| 1 |
| — |
| 1,107,948 |
| (49,609 | ) | 194,220 |
| 282 |
| 1,253,808 |
|
Net income |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 96,820 |
| — |
| 96,820 |
| |
Other comprehensive income (net of $ 2,391 tax) |
| — |
| — |
| — |
| — |
| — |
| — |
| 5,021 |
| — |
| — |
| 5,021 |
| |
Total comprehensive income |
| $ | — |
| — |
| — |
| — |
| — |
| — |
| 5,021 |
| 96,820 |
| — |
| 101,841 |
|
Dividends paid |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| (299,682 | ) | — |
| (299,682 | ) | |
Balance March 31, 2019 |
| $ | — |
| 96,651,692 |
| 967 |
| 1 |
| — |
| 1,107,948 |
| (44,588 | ) | (8,642 | ) | 282 |
| 1,055,967 |
|
Net income |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 117,510 |
| (4 | ) | 117,506 |
| |
Other comprehensive income (net of $ 383 tax) |
| — |
| — |
| — |
| — |
| — |
| — |
| 386 |
| — |
| — |
| 386 |
| |
Total comprehensive income |
| $ | — |
| — |
| — |
| — |
| — |
| — |
| 386 |
| 117,510 |
| (4 | ) | 117,892 |
|
Share-based compensation for equity classified awards |
| — |
| — |
| — |
| — |
| — |
| 93 |
| — |
| — |
| — |
| 93 |
| |
Dividends paid |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |
Balance June 30, 2019 |
| $ | — |
| 96,651,692 |
| 967 |
| 1 |
| — |
| 1,108,041 |
| (44,202 | ) | 108,868 |
| 278 |
| 1,173,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Additional |
| Other |
|
|
| Non- |
| Total |
| |
|
| Members’ |
| Common Stock |
| Preferred Stock |
| Paid in |
| Comprehensive |
| Retained |
| controlling |
| Members’ |
| |||||
|
| Capital |
| Shares |
| Amount |
| Series A |
| Amount |
| Capital |
| Income / (Loss) |
| Earnings |
| Interest |
| Capital |
| |
Balance December 31, 2017 |
| $ | 553,524 |
| — |
| — |
| — |
| — |
| — |
| — |
| 79,539 |
| 237 |
| 633,300 |
|
Net (loss) |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| (23,669 | ) | (2 | ) | (23,671 | ) | |
Other comprehensive income |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |
Total comprehensive income |
| $ | — |
| — |
| — |
| — |
| — |
| — |
| — |
| (23,669 | ) | (2 | ) | (23,671 | ) |
Members’ contributions |
| 181,610 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 62 |
| 181,672 |
| |
Balance March 31, 2018 |
| 735,134 |
| — |
| — |
| — |
| — |
| — |
| — |
| 55,870 |
| 297 |
| 791,301 |
| |
Net income |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 59,324 |
| (2 | ) | 59,322 |
| |
Other comprehensive income |
| — |
| — |
| — |
| — |
| — |
| — |
| (18,695 | ) | — |
| — |
| (18,695 | ) | |
Total comprehensive income |
| $ | — |
| — |
| — |
| — |
| — |
| — |
| (18,695 | ) | 59,324 |
| (2 | ) | 40,627 |
|
Members’ distributions |
| (30,274 | ) | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| (30,274 | ) | |
Balance June 30, 2018 |
| 704,860 |
| — |
| — |
| — |
| — |
| — |
| (18,695 | ) | 115,194 |
| 295 |
| 801,654 |
|
See accompanying notes to unaudited condensed consolidated financial statements
Unaudited Condensed Consolidated Statements of Cash Flows
(In US$ thousands)
|
| Six Months Ended | ||||
|
| June 30, | ||||
|
| 2020 |
| 2019 | ||
Cash flows from operating activities: |
|
|
|
|
|
|
Net (loss) income |
| $ | (123,196) |
| $ | 214,326 |
Adjustments to reconcile net income to cash and restricted cash provided by operating activities: |
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
| 86,849 |
|
| 85,404 |
Impairment of assets |
|
| 63,111 |
|
| — |
Amortization of right of use asset - operating leases |
|
| 9,387 |
|
| 10,394 |
Amortization of deferred financing costs |
|
| 2,751 |
|
| 2,060 |
Non-cash interest expense |
|
| 10,266 |
|
| 9,711 |
Amortization of contract obligations |
|
| (14,794) |
|
| (17,550) |
Loss on disposal of property, plant and equipment |
|
| 208 |
|
| 39 |
Decrease in contingent royalty consideration |
|
| (1,543) |
|
| (7,143) |
Gain on operating lease derecognition |
|
| (1,180) |
|
| — |
Equity-based compensation expense |
|
| 396 |
|
| 93 |
Deferred income taxes |
|
| (6,302) |
|
| 17,026 |
Reclamation of asset retirement obligations |
|
| (1,574) |
|
| (2,552) |
Change in estimate of asset retirement obligation |
|
| — |
|
| (125) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable - including related party receivables |
|
| (6,223) |
|
| (23,105) |
Inventories |
|
| 21,133 |
|
| (34,562) |
Other current assets |
|
| 5,425 |
|
| (2,287) |
Accounts payable |
|
| (27,984) |
|
| (1,832) |
Accrued expenses and other current liabilities |
|
| 3,938 |
|
| 15,585 |
Operating lease liabilities |
|
| (10,374) |
|
| (11,073) |
Change in other liabilities |
|
| (17,930) |
|
| 46,807 |
Net cash (used in) provided by operating activities |
|
| (7,636) |
|
| 301,216 |
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
| (61,927) |
|
| (66,430) |
Purchase of deposits and reclamation bonds |
|
| (51) |
|
| (906) |
Redemption of deposits and reclamation bonds |
|
| 125 |
|
| — |
Net cash used in investing activities |
|
| (61,853) |
|
| (67,336) |
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from interest bearing liabilities and other financial liabilities, net of debt discount |
|
| 145,000 |
|
| 109,008 |
Debt issuance costs and other financing costs |
|
| (2,423) |
|
| — |
Principal payments on interest bearing liabilities and other financial liabilities |
|
| (39,515) |
|
| (108,073) |
Principal payments on finance and capital lease obligations |
|
| (642) |
|
| (686) |
Payment of contingent purchase consideration |
|
| — |
|
| (12,712) |
Dividends paid |
|
| (24,162) |
|
| (299,682) |
Net cash provided by (used in) financing activities |
|
| 78,258 |
|
| (312,145) |
Net decrease in cash and restricted cash |
|
| 8,769 |
|
| (78,265) |
Effect of exchange rate changes on cash and restricted cash |
|
| 1,002 |
|
| (365) |
Cash and restricted cash at beginning of period |
|
| 26,553 |
|
| 124,881 |
Cash and restricted cash at end of period |
| $ | 36,324 |
| $ | 46,251 |
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
Cash payments for interest |
| $ | 10,981 |
| $ | 1,148 |
Cash paid for taxes |
| $ | 2,029 |
| $ | 35,873 |
See accompanying notes to unaudited condensed consolidated financial statements. |
Coronado Global Resources Inc. Form 10-Q June 30, 20205
|
| Six Months Ended |
| ||
|
| 2019 |
| 2018 |
|
Cash Flows From Operating Activities: |
|
|
|
|
|
Net income |
| 214,326 |
| 35,651 |
|
Adjustments to reconcile net income to cash and restricted cash provided by operating activities: |
|
|
|
|
|
Depreciation, depletion and amortization |
| 85,404 |
| 64,354 |
|
Amortization of right of use asset - operating leases |
| 10,394 |
| — |
|
Amortization of deferred financing costs |
| 2,060 |
| 2,406 |
|
Non-cash interest expense |
| 9,711 |
| 1,886 |
|
Amortization of contract obligations |
| (17,550 | ) | (14,390 | ) |
Loss on disposal of property, plant and equipment |
| 39 |
| — |
|
Increase (decrease) in contingent royalty consideration |
| (7,143 | ) | 10,973 |
|
Loss on interest rate swap |
| — |
| 4,871 |
|
Equity-based compensation expense |
| 93 |
| — |
|
Deferred income taxes |
| 17,026 |
| 5,448 |
|
Reclamation of asset retirement obligations |
| (2,552 | ) | (1,415 | ) |
Change in estimate of asset retirement obligation |
| (125 | ) | 48 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Accounts receivable - including related party receivables |
| (23,105 | ) | (32,097 | ) |
Inventories |
| (34,562 | ) | 1,287 |
|
Other current assets |
| (2,287 | ) | (8,154 | ) |
Accounts payable |
| (1,832 | ) | 10,736 |
|
Accrued expenses and other current liabilities |
| 15,585 |
| 60,106 |
|
Operating lease liabilities |
| (11,073 | ) | — |
|
Change in other liabilities |
| 46,807 |
| (98 | ) |
Net cash provided by operating activities |
| 301,216 |
| 141,612 |
|
Cash Flows From Investing Activities: |
|
|
|
|
|
Capital expenditures |
| (66,430 | ) | (46,776 | ) |
Purchase of deposits and reclamation bonds |
| (906 | ) | (523 | ) |
Redemption of deposits and reclamation bonds |
| — |
| 171 |
|
Acquisition of Curragh, net of cash acquired |
| — |
| (537,207 | ) |
Net cash used in investing activities |
| (67,336 | ) | (584,335 | ) |
Cash Flows From Financing Activities: |
|
|
|
|
|
Proceeds from interest bearing liabilities and other financial liabilities, net of debt discount |
| 109,008 |
| 720,083 |
|
Proceeds from interest rate swap |
| — |
| 28,251 |
|
Debt issuance costs and other financing costs |
| — |
| (41,951 | ) |
Principal payments on interest bearing liabilities and other financial liabilities |
| (108,073 | ) | (155,636 | ) |
Principal payments on finance and capital lease obligations |
| (686 | ) | (1,052 | ) |
Payment of contingent purchase consideration |
| (12,712 | ) | — |
|
Dividends paid |
| (299,682 | ) | — |
|
Members’ contributions (distributions), net |
| — |
| 151,336 |
|
NCI member’s contributions |
| — |
| 62 |
|
Net cash provided by (used in) financing activities |
| (312,145 | ) | 701,093 |
|
Net increase (decrease) in cash and restricted cash |
| (78,265 | ) | 258,370 |
|
Effect of exchange rate changes on cash and restricted cash |
| (365 | ) | (2,384 | ) |
Cash and restricted cash at beginning of period |
| 124,881 |
| 28,069 |
|
Cash and restricted cash at end of period |
| 46,251 |
| 284,055 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
Cash payments for interest |
| 1,148 |
| 38,665 |
|
Cash paid for taxes |
| 35,873 |
| 4,417 |
|
See accompanying notes to unaudited condensed consolidated financial statements
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.Description of Business, Basis of Presentation
(a)Description of the Business
Coronado Global Resources Inc. (together with its subsidiaries, the “Company” or “Coronado”) 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 USA.
(b)Basis of Presentation
The interim unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of the 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 registration statementAnnual Report on Form 10, as amended,10-K filed with the SEC and the Australian Securities Exchange, or the ASX, on June 28, 2019.February 24, 2020.
During the year ended December 31, 2018, Coronado Group LLC and Coronado Global Resources Inc. completed a common control reorganization, or the Reorganization Transaction, of their legal entity structure. Prior to the Reorganization Transaction in August 2018, Coronado Group HoldCo LLC, the holding company of our operations in Australia, or the Australian Operations, was a wholly-owned subsidiary of Coronado Group LLC. In connection with the Reorganization Transaction, (i) Coronado Group HoldCo LLC was converted into Coronado Global Resources Inc. in August 2018 and (ii) Coronado Group LLC contributed all of the equity ownership in our operations in the United States, or the U.S. Operations, to Coronado Coal Corporation, a wholly-owned subsidiary of Coronado Global Resources Inc. Immediately following the Reorganization Transaction, Coronado Global Resources Inc. remained a wholly-owned subsidiary of Coronado Group LLC, which is currently owned by The Energy & Minerals Group, or EMG Group, and certain members of our management.
The Reorganization Transaction was treated as a combination of entities under common control in line with Accounting Standards Codification, or ASC, 805, Business Combinations, whereby the receiving entity (the Company) recorded the contributed assets and liabilities at the carrying value of Coronado Group LLC. Prior to the Reorganization Transaction, the consolidated financial statements of the Company reflect the net assets and operations of Coronado Group LLC. The financial statements presented following the Reorganization Transaction are those of the receiving entity (the Company) and are retrospectively adjusted to present that entity as if it always held the net assets or equity interests previously held by the seller, Coronado Group LLC. As such, financial information (including comparatives) of the Company has been presented as a continuation of the pre-existing accounting values of assets and liabilities in Coronado Group LLC’s financial statements.
The interim unaudited condensed consolidated financial statements are presented in U.S. dollars, unless otherwise stated. They include the accounts of Coronado Global Resources Inc. and its affiliates. 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, or Coronado, are used interchangeably to refer to Coronado Global Resources Inc. and its subsidiaries, or to Coronado Group LLC,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 in 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, 20182019 has been derived from the Company’s audited consolidated balance sheet at that date. The Company’s results of operations for the three and six months ended June 30, 20192020 are not necessarily indicative of the results that may be expected for future quarters or for the year ending December 31, 2019.2020.
COVID-19
The COVID-19 global pandemic has continued to result in a challenging working environment which has significantly impacted the demand and price for metallurgical coal. Authorities in many countries around the world have implemented numerous and varying measures to reduce the spread and limit the impact of COVID-19, including travel bans and restrictions, quarantines, curfews, stay-at-home orders, business shutdowns and closures. Many countries have also commenced implementing multi-stage policies with the goal of re-opening markets and boosting economic activity. These measures have impacted and will continue to impact our mining operations, our customers, employees, suppliers and other third parties with whom we do business. The U.S. and Australia, where our mining operations are located, are in varying stages of restrictions and re-opening in response to COVID-19. There is considerable uncertainty regarding how current and future health and safety measures implemented in response to the pandemic will impact our business, including whether they will result in further changes in demand for metallurgical coal, increases in operating costs or impacts to our supply chain, and whether measures will result in port closures or border restrictions, each or all of which can impact our ability to produce and sell our coal.
The safety and wellbeing of our workforce remains our highest priority and we continue to manage the potential threat of COVID-19 at our mines and offices. The Company formed a COVID-19 taskforce spanning its Australian and U.S. operations and proactively enacted stringent preventative measures to ensure the safety and well-being of employees and contractors during the pandemic. These procedures include increased screenings of employees as they arrive at the workplace as well as strict adherence to hygiene and social distancing guidelines while at work.
Coronado Global Resources Inc. Form 10-Q June 30, 20206
Our U.S. Operations were idled in April and May 2020 due to the COVID-19 induced economic downturn and decline in demand from customers in Europe, Brazil and the U.S. While the mines were idled, the Company continued to make shipments to its customers from existing inventories which allowed the Company to meet all customer commitments. On June 1, 2020, the Company resumed operations at the Buchanan and Logan mines. Whilst production at these mines has been reduced in response to lower temporary demand, both mines are operationally well positioned to increase production quickly in the event demand increases rapidly. The Greenbrier mine remains idle and the Company will continue to monitor market developments to evaluate the duration for which the mine will remain idle. Subsequent to June 30, 2020 we have had a small number of our workforce at our U.S Operations who tested positive for the virus. We have taken all necessary steps to isolate the affected workers and protect the remaining workforce. To date these efforts have not adversely affected our production.
The global economic slowdown resulting from the effects of COVID-19 has sharply reduced the demand for steel in all markets except for China, where steel production remained elevated during the second quarter of 2020. In Australia, our sales profile has adjusted accordingly, with an increase in deliveries to the Chinese market in the quarter. Overall, the supply and demand constraints in respect of the global impacts of COVID-19 on our Australian Operations has been limited due to the unique position of the Curragh mine as a strategic supplier of ‘base load’ metallurgical coal for coke blends. While global demand remains uncertain, there are promising signs of recovery in Asia Pacific demand.
In response to the global impacts of COVID-19 on the demand for steel and the resulting impact on the price and demand for metallurgical coal, the Company has taken steps to safeguard its operations, strengthen its balance sheet and increase liquidity by reducing capital expenditures and managing operating costs in a disciplined manner. As of June 30, 2020, the Company reduced its net debt by $31.8 million to $404.9 million since March 31, 2020, and had $109.0million undrawn and available under the Syndicated Facility Agreement, or SFA, subject to a liquidity buffer of $50.0 million, and cash balances (excluding restricted cash) of $36.1 million. See Note 13 “Interest Bearing Liabilities”.
As the COVID-19 pandemic continues to evolve, the Company cannot currently predict the extent of this pandemic, which could have a material adverse impact to its business, results of operations, financial condition and ability to comply with financial covenants under the SFA.
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, 20182019 included in Coronado Global Resources Inc.’s registration statementAnnual Report on Form 10, as amended,10-K filed with the SEC and ASX on June 28, 2019.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)February 24, 2020.
(a)Newly Adopted Accounting Standards
Leases. In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases, by issuing Accounting Standards Update, or ASU, No. 2016-02, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use, or ROU, model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.
On January 1, 2019, the Company adopted ASU No. 2016-02 using the modified retrospective transition approach and elected the package of practical expedients that allows it to forgo reassessment of lease classification for leases that have already commenced. The Company also elected the practical expedients to the new standard without restating comparative prior period financial information, to not recognize ROU assets and liabilities for operating leases with shorter than 12-month terms and to include both lease and non-lease components with lease payments.
In addition to existing finance leases and other financing obligations, the adoption of the new standard resulted in the recognition of ROU assets of $66.8 million and lease liabilities of $81.1 million related to operating leases. On adoption, the lease liability included reclassification of a terminal services contract liability of $14.3 million, which is classified as a lease under the newly adopted standard. There was no material impact to the Consolidated Statements of Operations and Comprehensive Income, the Consolidated Statements of Cash Flows, or the Company’s debt covenant calculations as a result of the adoption of ASU 2016-02.
ASU No. 2016-02 also requires entities to disclose certain qualitative and quantitative information regarding the amount, timing, and uncertainty of cash flows arising from leases. Such disclosures are included in Note 10 “Leases”.
(b)Accounting Standards Not Yet Implemented
Financial Instruments - Credit Losses. Losses. In June 2016, the FASB issued ASU 2016-13 related to the measurement of credit losses on financial instruments. The pronouncement replaces the incurred loss methodology to record credit losses with a methodology that reflects the expected credit losses for financial assets not accounted for at fair value with gains and losses recognized through net income. This standard is effective for fiscal years beginning after December 15, 2019 (January 1, 2020 for the Company) and interim periods therein. The Company expects to adopt ASU 2016-13 as of
On January 1, 2020, the Company adopted ASU 2016-13. The cumulative-effect adjustment upon adoption was not material to the Company’s results of operations and its cash flows. Changes to the Company’s accounting policies as a result of adoption are discussed below.
The Company assesses on a forward-looking basis the expected credit loss associated with its financial assets carried at amortized cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the processrespective financial instrument. The Company recognizes the lifetime expected credit losses for financial assets carried at amortized cost. The expected credit losses on these financial assets are 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 evaluatingboth the impacts of adoption.current as well as forecast conditions at the reporting date.
Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, which amended the fair value measurement guidance by removing and modifying certain disclosure requirements, while also adding new disclosure requirements.
On January 1, 2020, the Company adopted ASU 2018-13. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should bewere applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.presented. All other amendments should bewere applied retrospectively to all periods presented upon their effective date.presented. The amendmentsadoption of ASU 2018-13 did not have a material impact on the Company’s unaudited condensed consolidated financial statements.
Coronado Global Resources Inc. Form 10-Q June 30, 20207
Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. In January 2018, the FASB issued ASU 2017-04, which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit.
On January 1, 2020, the Company adopted ASU 2017-04. Changes to the Company’s accounting policies as a result of adoption are discussed below.
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. Goodwill is not amortized but is reviewed for impairment annually or when circumstances or other events indicate that impairment may have occurred.
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 business unit 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.
(b)Accounting Standards Not Yet Implemented
“Income Taxes - Simplifying the Accounting for Income Taxes” - In December 2019, the FASB issued ASU 2019-12, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for all companies for fiscal years,interim and interimannual periods within those years, beginning after December 15, 2019.2020. The Company plans to adopt all disclosure requirements effective January 1, 2020.is currently evaluating the impact the adoption of ASU 2019-12 will have on its consolidated financial statements.
(c)Reclassification
(c)Reclassification
Certain amounts in the prior period Condensed Consolidated Balance Sheet have been reclassified to conform to the presentation of the current period financial statements. These related to the reclassification of capital lease liabilities included within “other financial liabilities and capital leases” and “other financial liabilities, excluding4 reportable segments into the current instalments” as at December 31, 2018 to “Lease liabilities” current and non-current, respectively.2 reportable segments discussed in Note 3 “Segment information”. These reclassifications had no effect on the previously reported net income.
3.Acquisition of Curragh Complex
On December 22, 2017, a Membership Interest and Asset Purchase Agreement, or the Agreement, was entered by Coronado Australia Holdings Pty Ltd and Coronado Group LLC in order to acquire Wesfarmers Curragh Pty Ltd from Wesfarmers Limited (since renamed Coronado Curragh Pty Ltd), which we refer to as the Curragh acquisition. The Agreement was executed on March 29, 2018.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The aggregate base purchase price for the Membership Interest in Curragh was A$700 million and was subject to adjustments pursuant to the terms of the Agreement. The Company acquired 100% of the Membership Interest. The operating results related to the Curragh acquisition have been included in the consolidated financial statements since March 29, 2018.
The aggregate consideration on the date of the Curragh acquisition totaled $563.8 million.
Contingent consideration recognized on the date of the Curragh acquisition, specifically the Value Share Mechanism, or VSM, of $26.6 million associated with the Curragh acquisition represents the fair value of a two-year, 25% royalty on sales from metallurgical coal mined at Curragh. The royalty only applies to the realized price on metallurgical coal sales above $145 per metric ton. The VSM liability is marked-to-market at each reporting date, with any fluctuations included as an operating expense in the Consolidated Statement of Operations. The payout structure of the royalty can be replicated through a probability weighted discounted cash flow approach using a Monte Carlo simulation over a 24-month period from acquisition date. As such, the Company developed a fair value of the royalty using a Monte Carlo simulation.
In connection with the acquisition, Coronado Australia Holdings Pty Ltd incurred acquisition related costs for the six months ended June 30, 2018 of $53.8 million, $38.5 million of which is recorded in selling, general, and administrative expenses. The remainder, relating to foreign currency swap losses, is recorded in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income under “Other, net”.
The Curragh acquisition has been accounted for using the acquisition method of accounting which requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes total consideration transferred and the allocation of the purchase price to the acquired assets and liabilities:
|
| Amount |
| |
|
| (US$ thousands) |
| |
Fair value of total consideration transferred: |
|
|
| |
Cash consideration |
| $ | 537,207 |
|
Contingent consideration (Value Share Mechanism) |
| 26,552 |
| |
Total consideration transferred |
| 563,759 |
| |
|
|
|
| |
Recognized amounts of identifiable assets acquired, and liabilities assumed: |
|
|
| |
Current assets |
| $ | 240,966 |
|
Property, plant and equipment |
| 851,981 |
| |
Deferred income tax assets |
| 24,432 |
| |
Other long-term assets |
| 1,831 |
| |
Current liabilities |
| (141,611 | ) | |
Contract obligations |
| (306,960 | ) | |
Asset retirement obligations |
| (104,305 | ) | |
Other long-term liabilities |
| (2,575 | ) | |
Total identifiable net assets acquired |
| $ | 563,759 |
|
No goodwill has been recorded in connection with this acquisition as the purchase consideration equaled the fair value of the net assets acquired.
The following pro forma summary reflects consolidated results of operation as if the Curragh acquisition had occurred on January 1, 2018 (unaudited).
| |||
| |||
|
| ||
|
|
The pro forma financial information was prepared based on historical financial information and has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the Curragh acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results.
These pro forma results are based on estimates and assumptions, which the Company believes are reasonable. They are not the results that would have been realized had the acquisition actually occurred on January 1, 2018 and are not necessarily indicative of the Company’s consolidated results of operations in future periods. The pro forma results include adjustments related to purchase accounting, depreciation of property and equipment, and do not include any anticipated synergies or other expected benefits that may be realized from the Curragh acquisition.
The pro forma results for the six months ended June 30, 2018 exclude non-recurring adjustments of $53.8 million of transaction costs.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.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 USA. The Company operates its business along four reportable segments:4 coal mine complexes: Curragh, Buchanan, Logan and Greenbrier. TheseCommencing on January 1, 2020, the Company updated its reportable segments are grouped based on geography. to be the country in which they operate, that is Australia and the United States, in order to align with the manner in which its Chief Operating Decision Maker, or CODM, views the Company’s business for purposes of reviewing performance and allocating resources.
Factors affecting and differentiating the financial performance of each of these four reportable2 reporting segments generally include coal quality, geology, and coal marketing opportunities, mining and transportation methods and regulatory issues. This is the basis on which internal financial and operational reports are currently prepared and provided to the CODM and reflects how the CODM manages performance and determines the allocation of resources within the Company. The Company believes this method of segment reporting reflects both the way its business segments are currently managed and the way the performance of each segment is evaluated. The four segments consist of similar operating activities as each segment produces similar products.Comparative disclosures have been restated to a consistent basis.
The organization of the four reportable segments reflects how Coronado’s chief operating decision maker, or CODM, manages and allocates resources to the various components. 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.
Coronado Global Resources Inc. Form 10-Q June 30, 20208
Adjusted EBITDA is defined as earnings before interest, tax, depreciation, depletion and amortization and other foreign exchange losses and loss on debt extinguishment.losses. Adjusted EBITDA is also adjusted for certain discrete items that management exclude in analyzing each of our 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 consolidated financials.
Reportable segment results as of and for the three and six months ended June 30, 20192020 and 20182019 are presented below.below:
|
| Australia |
| United States |
| Other and Corporate |
| Total |
|
| ($ thousands) | ||||||
Three months ended June 30, 2020 |
|
|
|
|
|
|
|
|
Total revenues |
| 228,410 |
| 75,938 |
| — |
| 304,348 |
Adjusted EBITDA |
| (6,804) |
| 3,490 |
| (7,163) |
| (10,477) |
Net loss |
| (16,933) |
| (74,006) |
| (23,391) |
| (114,330) |
Total assets |
| 1,043,222 |
| 975,045 |
| 83,042 |
| 2,101,309 |
Capital expenditures (1) |
| 13,535 |
| 6,396 |
| 578 |
| 20,509 |
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2019 |
|
|
|
|
|
|
|
|
Total revenues |
| 412,810 |
| 229,647 |
| — |
| 642,457 |
Adjusted EBITDA |
| 151,561 |
| 79,642 |
| (8,912) |
| 222,291 |
Net income (loss) |
| 91,024 |
| 40,609 |
| (14,127) |
| 117,506 |
Total assets |
| 1,182,652 |
| 972,193 |
| 63,638 |
| 2,218,483 |
Capital expenditures (1) |
| 9,341 |
| 27,426 |
| — |
| 36,767 |
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
Total revenues |
| 473,555 |
| 240,111 |
| — |
| 713,666 |
Adjusted EBITDA |
| 6,260 |
| 41,740 |
| (13,056) |
| 34,944 |
Net loss |
| (22,900) |
| (64,877) |
| (35,419) |
| (123,196) |
Total assets |
| 1,043,222 |
| 975,045 |
| 83,042 |
| 2,101,309 |
Capital expenditures (1) |
| 18,804 |
| 41,917 |
| 1,206 |
| 61,927 |
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
Total revenues |
| 794,182 |
| 440,153 |
| — |
| 1,234,335 |
Adjusted EBITDA |
| 271,709 |
| 151,611 |
| (17,965) |
| 405,355 |
Net income (loss) |
| 159,758 |
| 77,409 |
| (22,841) |
| 214,326 |
Total assets |
| 1,182,652 |
| 972,193 |
| 63,638 |
| 2,218,483 |
Capital expenditures (1) |
| 15,431 |
| 50,996 |
| 3 |
| 66,430 |
|
| Curragh (1) |
| Buchanan |
| Logan |
| Greenbrier |
| Other and |
| Total |
|
|
| ($ thousands) |
| ||||||||||
Three months ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| 412,810 |
| 128,713 |
| 81,610 |
| 19,324 |
| — |
| 642,457 |
|
Adjusted EBITDA |
| 151,561 |
| 60,289 |
| 18,126 |
| 1,227 |
| (8,912 | ) | 222,291 |
|
Net income/(loss) |
| 91,024 |
| 34,600 |
| 7,968 |
| (1,959 | ) | (14,127 | ) | 117,506 |
|
Total assets |
| 1,182,652 |
| 511,095 |
| 315,252 |
| 145,846 |
| 63,638 |
| 2,218,483 |
|
Capital expenditures (2) |
| 9,341 |
| 13,476 |
| 12,671 |
| 1,279 |
| — |
| 36,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| 387,379 |
| 126,292 |
| 59,230 |
| 18,294 |
| 335 |
| 591,530 |
|
Adjusted EBITDA |
| 99,979 |
| 35,257 |
| 10,710 |
| (188 | ) | (6,570 | ) | 139,188 |
|
Net income/(loss) |
| 54,217 |
| 24,755 |
| 3,989 |
| 3,845 |
| (27,484 | ) | 59,322 |
|
Total assets |
| 1,287,848 |
| 500,502 |
| 259,963 |
| 145,454 |
| 115,076 |
| 2,308,843 |
|
Capital expenditures (2) |
| 17,838 |
| 7,973 |
| 4,623 |
| 381 |
| 160 |
| 30,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| 794,182 |
| 251,437 |
| 155,919 |
| 32,797 |
| — |
| 1,234,335 |
|
Adjusted EBITDA |
| 271,709 |
| 116,401 |
| 35,291 |
| (81 | ) | (17,965 | ) | 405,355 |
|
Net income/(loss) |
| 159,758 |
| 66,919 |
| 15,523 |
| (5,033 | ) | (22,841 | ) | 214,326 |
|
Total assets |
| 1,182,652 |
| 511,095 |
| 315,252 |
| 145,846 |
| 63,638 |
| 2,218,483 |
|
Capital expenditures (2) |
| 15,431 |
| 28,200 |
| 20,318 |
| 2,478 |
| 3 |
| 66,430 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
| 387,379 |
| 260,501 |
| 112,655 |
| 38,188 |
| 960 |
| 799,683 |
|
Adjusted EBITDA |
| 99,979 |
| 99,701 |
| 15,501 |
| 983 |
| (74,336 | ) | 141,828 |
|
Net income/(loss) |
| 54,217 |
| 76,843 |
| 2,748 |
| (6,176 | ) | (91,981 | ) | 35,651 |
|
Total assets |
| 1,287,848 |
| 500,502 |
| 259,963 |
| 145,454 |
| 115,076 |
| 2,308,843 |
|
Capital expenditures (2) |
| 17,838 |
| 15,628 |
| 13,191 |
| 559 |
| 430 |
| 47,646 |
|
(1) On March 29, 2018, Coronado acquired the Curragh Mining business from Wesfarmers Limited. Curragh is a separate reportable segment due to having separate management, location, assets, and operations. Curragh is located in central Queensland, Australia and the reportable segment produces a wide variety of metallurgical coal.
(2)(1) Capital expenditures includes financing fees incurred through other financial liabilities for the purchase of certain equipment.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The reconciliation of Adjusted EBITDA to net income attributable to the Company for the three and six months ended June 30, 20192020 and 20182019 are as follows:
|
| Three months ended |
| Six Months Ended | ||||||||
|
| June 30, |
| June 30, | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
|
| (US$ thousands) |
| (US$ thousands) | ||||||||
Net (loss) income |
| $ | (114,330) |
| $ | 117,506 |
| $ | (123,196) |
| $ | 214,326 |
Depreciation, depletion and amortization |
|
| 41,547 |
|
| 45,508 |
|
| 86,849 |
|
| 85,279 |
Interest expense (net of income) |
|
| 12,064 |
|
| 9,087 |
|
| 24,318 |
|
| 17,264 |
Other foreign exchange losses (gains) |
|
| 9,777 |
|
| 3,157 |
|
| 4,217 |
|
| (557) |
Income tax (benefit) expense |
|
| (22,646) |
|
| 47,033 |
|
| (20,355) |
|
| 89,043 |
Impairment of assets |
|
| 63,111 |
|
| — |
|
| 63,111 |
|
| — |
Consolidated adjusted EBITDA |
| $ | (10,477) |
| $ | 222,291 |
| $ | 34,944 |
| $ | 405,355 |
Coronado Global Resources Inc. Form 10-Q June 30, 20209
|
| Three months ended |
| Six months ended |
| ||||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| ||
|
| (US$ thousands) |
| (US$ thousands) |
| ||||||
Net income |
| $ | 117,506 |
| 59,322 |
| $ | 214,326 |
| 35,651 |
|
Depreciation, depletion and amortization |
| 45,508 |
| 42,594 |
| 85,279 |
| 64,402 |
| ||
Interest expense (net of income) |
| 9,087 |
| 18,987 |
| 17,264 |
| 25,488 |
| ||
Other foreign exchange (gains) losses |
| 3,157 |
| 5,290 |
| (557 | ) | 6,848 |
| ||
Loss on retirement of debt |
| — |
| — |
| — |
| 3,905 |
| ||
Income tax expense |
| 47,033 |
| 12,995 |
| 89,043 |
| 5,534 |
| ||
Consolidated Adjusted EBITDA |
| $ | 222,291 |
| 139,188 |
| $ | 405,355 |
| 141,828 |
|
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 June 30, 2020 | ||||||
|
| Australia |
| United States |
| Other and Corporate |
| Total |
|
| ($ thousands) | ||||||
Product Groups: |
|
|
|
|
|
|
|
|
Metallurgical coal |
| 194,909 |
| 74,839 |
| — |
| 269,748 |
Thermal coal |
| 25,041 |
| 417 |
| — |
| 25,458 |
Total coal revenue |
| 219,950 |
| 75,256 |
| — |
| 295,206 |
Other(1) |
| 8,460 |
| 682 |
| — |
| 9,142 |
Total |
| 228,410 |
| 75,938 |
| — |
| 304,348 |
|
| Three months ended June 30, 2019 | ||||||
|
| Australia |
| United States |
| Other and Corporate |
| Total |
|
| ($ thousands) | ||||||
Product Groups: |
|
|
|
|
|
|
|
|
Metallurgical coal |
| 377,016 |
| 211,656 |
| — |
| 588,672 |
Thermal coal |
| 26,687 |
| 15,331 |
| — |
| 42,018 |
Total coal revenue |
| 403,703 |
| 226,987 |
| — |
| 630,690 |
Other(1) |
| 9,107 |
| 2,660 |
| — |
| 11,767 |
Total |
| 412,810 |
| 229,647 |
| — |
| 642,457 |
|
| Six months ended June 30, 2020 | ||||||
|
| Australia |
| United States |
| Other and Corporate |
| Total |
|
| ($ thousands) | ||||||
Product Groups |
|
|
|
|
|
|
|
|
Metallurgical coal |
| 407,831 |
| 234,198 |
| — |
| 642,029 |
Thermal coal |
| 50,650 |
| 2,138 |
| — |
| 52,788 |
Total coal revenue |
| 458,481 |
| 236,336 |
| — |
| 694,817 |
Other(1) |
| 15,074 |
| 3,775 |
| — |
| 18,849 |
Total |
| 473,555 |
| 240,111 |
| — |
| 713,666 |
|
| Six months ended June 30, 2019 | ||||||
|
| Australia |
| United States |
| Other and Corporate |
| Total |
|
| ($ thousands) | ||||||
Product Groups |
|
|
|
|
|
|
|
|
Metallurgical coal |
| 727,964 |
| 407,535 |
| — |
| 1,135,499 |
Thermal coal |
| 47,978 |
| 29,010 |
| — |
| 76,988 |
Total coal revenue |
| 775,942 |
| 436,545 |
| — |
| 1,212,487 |
Other(1) |
| 18,240 |
| 3,608 |
| — |
| 21,848 |
Total |
| 794,182 |
| 440,153 |
| — |
| 1,234,335 |
|
| Three months ended June 30, 2019 |
| |||||||||||
|
| Curragh |
| Buchanan |
| Logan |
| Greenbrier |
| Other and |
| Total |
| |
|
| (US $ thousands) |
| |||||||||||
Product Groups |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Metallurgical coal |
| $ | 377,016 |
| 125,837 |
| 68,053 |
| 17,766 |
| — |
| 588,672 |
|
Thermal coal |
| 26,687 |
| 2,827 |
| 12,058 |
| 446 |
| — |
| 42,018 |
| |
Total coal revenue |
| 403,703 |
| 128,664 |
| 80,111 |
| 18,212 |
| — |
| 630,690 |
| |
Other(1) |
| 9,107 |
| 49 |
| 1,499 |
| 1,112 |
| — |
| 11,767 |
| |
Total |
| $ | 412,810 |
| 128,713 |
| 81,610 |
| 19,324 |
| — |
| 642,457 |
|
|
| Three months ended June 30, 2018 |
| |||||||||||
|
| Curragh |
| Buchanan |
| Logan |
| Greenbrier |
| Other and |
| Total |
| |
|
| (US$ thousands) |
| |||||||||||
Product Groups |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Metallurgical coal |
| $ | 349,486 |
| 122,771 |
| 47,443 |
| 17,427 |
| — |
| 537,127 |
|
Thermal coal |
| 25,048 |
| 3,521 |
| 11,787 |
| 27 |
| — |
| 40,383 |
| |
Total coal revenue |
| 374,534 |
| 126,292 |
| 59,230 |
| 17,454 |
| — |
| 577,510 |
| |
Other(1) |
| 12,845 |
| — |
| — |
| 840 |
| 335 |
| 14,020 |
| |
Total |
| $ | 387,379 |
| 126,292 |
| 59,230 |
| 18,294 |
| 335 |
| 591,530 |
|
|
| Six months ended June 30, 2019 |
| |||||||||||
|
| Curragh |
| Buchanan |
| Logan |
| Greenbrier |
| Other and |
| Total |
| |
|
| (US $ thousands) |
| |||||||||||
Product Groups |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Metallurgical coal |
| $ | 727,964 |
| 245,047 |
| 131,421 |
| 31,067 |
| — |
| 1,135,499 |
|
Thermal coal |
| 47,978 |
| 6,306 |
| 22,208 |
| 496 |
| — |
| 76,988 |
| |
Total coal revenue |
| 775,942 |
| 251,353 |
| 153,629 |
| 31,563 |
| — |
| 1,212,487 |
| |
Other(1) |
| 18,240 |
| 84 |
| 2,290 |
| 1,234 |
| — |
| 21,848 |
| |
Total |
| $ | 794,182 |
| 251,437 |
| 155,919 |
| 32,797 |
| — |
| 1,234,335 |
|
|
| Six months ended June 30, 2018 |
| |||||||||||
|
| Curragh |
| Buchanan |
| Logan |
| Greenbrier |
| Other and |
| Total |
| |
|
| (US$ thousands) |
| |||||||||||
Product Groups |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Metallurgical coal |
| $ | 349,486 |
| 253,335 |
| 93,201 |
| 35,982 |
| — |
| 732,004 |
|
Thermal coal |
| 25,048 |
| 7,127 |
| 19,454 |
| 713 |
| — |
| 52,342 |
| |
Total coal revenue |
| 374,534 |
| 260,462 |
| 112,655 |
| 36,695 |
| — |
| 784,346 |
| |
Other(1) |
| 12,845 |
| 39 |
| — |
| 1,493 |
| 960 |
| 15,337 |
| |
Total |
| $ | 387,379 |
| 260,501 |
| 112,655 |
| 38,188 |
| 960 |
| 799,683 |
|
(1) Other revenue for Curragh includes the amortization of the Stanwell non-market coal supply contract obligation liability.
Coronado Global Resources Inc. Form 10-Q June 30, 202010
4. Impairment of assets
5.ExpensesLong-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 pre-tax cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted pre-tax cash flow basis, an impairment is recognized to the extent that the carrying value 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. NaN impairment losses were recognized for property, plant and equipment or amortizing intangible assets for the years ended December 31, 2019 and 2018.
The following costs are reflected in “Impairment of Assets” in the unaudited Consolidated Statement of Operations and Other Comprehensive income for the three and six months ended June 30, 2020:
Other, net
|
|
| Reportable Segment |
(US$ thousands) |
|
| United States |
Property, plant and equipment, net |
| $ | 62,481 |
Right of use asset – operating leases, net |
|
| 10 |
Intangible assets, net |
|
| 620 |
Total |
| $ | 63,111 |
|
| Three months ended |
| Six months ended |
| ||||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| ||
|
| (US$ thousands) |
| (US$ thousands) |
| ||||||
Loss on foreign exchange swap |
| $ | — |
| — |
| $ | — |
| (15,695 | ) |
Other foreign exchange (losses) gains |
| (3,157 | ) | (5,290 | ) | 557 |
| (6,848 | ) | ||
Other (expenses) income |
| 168 |
| 2,899 |
| 485 |
| (4,303 | ) | ||
Total Other, net |
| $ | (2,989 | ) | (2,391 | ) | $ | 1,042 |
| (26,846 | ) |
6.Inventories
(US$ thousands) |
| June 30, 2019 |
| December 31, |
| ||
Raw coal |
| $ | 54,407 |
| $ | 20,106 |
|
Saleable coal |
| 23,051 |
| 26,374 |
| ||
Total coal inventories |
| 77,458 |
| 46,480 |
| ||
Supplies inventory |
| 51,966 |
| 48,623 |
| ||
Total inventories |
| $ | 129,424 |
| $ | 95,103 |
|
7.The Company generally does not view short-term declines in metallurgical coal prices in the markets in which it sells its products as a singular indicator of impairment. However, due to the decline in metallurgical coal prices during the six months ended June 30, 2020, the resulting impact on business conditions from COVID-19 and the idling of the Greenbrier mine for an undetermined period, there were indications that the carrying value of the Greenbrier mining asset, in the U.S., exceeded its fair value. The Company performed an impairment assessment in accordance with the rules of ASC 360 – Property, Plant and Equipment, and determined an impairment charge of $63.1 million reducing the carrying value of Greenbrier’s long-lived assets to approximately $50.0 million as at June 30, 2020. The fair value of the Greenbrier mining asset was derived using Level 3 inputs and was primarily driven by estimates of future cash flows based on a combination of historical results adjusted to reflect the Company’s best estimate of future market and operating conditions, including its current life of mine plan, and reserve multiple valuation. The Company concluded that no indicators of impairment or requisite charges were required at any of the Company’s other mining assets as at June 30, 2020.
(US$ thousands) |
| June 30, 2019 |
| December 31, |
| ||
Land |
| $ | 27,035 |
| $ | 26,845 |
|
Buildings and improvements |
| 83,831 |
| 89,027 |
| ||
Plant, machinery, mining equipment and transportation vehicles |
| 794,619 |
| 765,432 |
| ||
Mineral rights and reserves |
| 464,680 |
| 464,680 |
| ||
Office and computer equipment |
| 3,752 |
| 3,700 |
| ||
Mine development |
| 487,156 |
| 479,152 |
| ||
Asset retirement obligation asset |
| 83,894 |
| 80,993 |
| ||
Construction in process |
| 81,423 |
| 43,691 |
| ||
|
| 2,026,390 |
| 1,953,520 |
| ||
Less accumulated depreciation, depletion and amortization |
| 423,303 |
| 334,962 |
| ||
Net property, plant and equipment |
| $ | 1,603,087 |
| $ | 1,618,558 |
|
5.Expenses
Other, Net
|
| Three months ended |
| Six Months Ended | ||||||||
|
| June 30, |
| June 30, | ||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
|
| (US$ thousands) |
| (US$ thousands) | ||||||||
Other foreign exchange (losses) gains |
|
| (9,777) |
|
| (3,157) |
|
| (4,217) |
|
| 557 |
Other income (expenses) |
|
| 1,240 |
|
| 168 |
|
| (268) |
|
| 485 |
Total Other, net |
| $ | (8,537) |
| $ | (2,989) |
| $ | (4,485) |
| $ | 1,042 |
Coronado Global Resources Inc. Form 10-Q June 30, 202011
6. Trade and related party receivables
The Company extends trade credit to its customers in the ordinary course of business. Trade receivables and related party receivables are recorded initially at fair value and subsequently at amortized cost, less any Expected Credit Losses, or ECL. Trade receivables from provisionally priced sales are carried at fair value to profit or loss.
For trade and related party receivables carried at amortized cost, the Company determines ECL on a forward-looking basis. The amount or 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 at the reporting date, modified for credit enhancements such as letters of credit obtained. To measure ECL, trade and related party receivables have been grouped based on shared credit risk characteristics and the days past due.
The Company considers an event of default has occurred when a financial asset is significantly past due or other factors indicate that the debtor is unlikely to pay amounts owed to the Company. A financial asset is credit impaired when there is evidence that the counterparty is in significant financial difficulty or a breach of contract, such as default or past due event has occurred. 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. The amount of the impairment loss is recognized in the consolidated statement of operations and other comprehensive income within “other, net”. Subsequent recoveries of amounts previously written off are credit against “other, net” in the consolidated statement of operations and other comprehensive income.
(US$ thousands) |
| June 30, 2020 |
| December 31,2019 | ||
Trade receivables - at amortized cost |
| $ | 82,303 |
| $ | 118,572 |
Trade receivables - at fair value |
|
| 33,807 |
|
| 14,725 |
Total trade receivables |
|
| 116,110 |
|
| 133,297 |
Related party receivables - at amortized cost |
|
| 105,057 |
|
| 86,796 |
Total trade and related party receivables |
| $ | 221,167 |
| $ | 220,093 |
NaN provision has been recognized on the ECL on trade and related party receivables as at June 30, 2020. The Company has 0t recognised any bad debt expense from trading counterparties in the three and six months ended June 30, 2020 and 2019.
Related party receivables - Xcoal
During the three and six months ended June 30, 2020, the Company sold coal to Xcoal Energy and Resources, or Xcoal, an entity associated with Non-Executive director, Mr. Ernie Thrasher. Revenues from Xcoal of $9.0 million and $135.3 million, respectively, are recorded as “Coal revenues from related parties” in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income for the three months ended June 30, 2020 and 2019. Revenues from Xcoal of $89.1 million and $293.2 million, respectively, are recorded as coal revenues in the unaudited Condensed Consolidated Statement of Operations and Comprehensive Income for the six months ended June 30, 2020 and 2019. During the three and six months ended June 30, 2020, the Company purchased coal from Xcoal totalling $7.9 million and the corresponding payable was offset against trade receivables from Xcoal. The cost of purchasing coal from Xcoal is recorded within “Cost of coal revenues” in the Unaudited Condensed Consolidated Statement of Operations and Comprehensive Income.
At June 30, 2020, amounts due from Xcoal in respect of coal sales were $105.1 million. At December 31, 2019, amounts due from Xcoal in respect of coal sales were $86.8 million.
Coronado Global Resources Inc. Form 10-Q June 30, 202012
7.Inventories
(US$ thousands) |
| June 30, 2020 |
| December 31,2019 | ||
Raw coal |
| $ | 25,765 |
| $ | 41,127 |
Saleable coal |
|
| 54,713 |
|
| 63,006 |
Total coal inventories |
|
| 80,478 |
|
| 104,133 |
Supplies inventory |
|
| 58,146 |
|
| 58,037 |
Total inventories |
| $ | 138,624 |
| $ | 162,170 |
8.Property, Plant and Equipment
(US$ thousands) |
| June 30, 2020 |
| December 31,2019 | ||
Land |
| $ | 26,747 |
| $ | 27,037 |
Buildings and improvements |
|
| 80,867 |
|
| 80,658 |
Plant, machinery, mining equipment and transportation vehicles |
|
| 938,537 |
|
| 896,392 |
Mineral rights and reserves |
|
| 413,755 |
|
| 464,710 |
Office and computer equipment |
|
| 5,223 |
|
| 3,977 |
Mine development |
|
| 503,430 |
|
| 497,439 |
Asset retirement obligation asset |
|
| 76,737 |
|
| 81,520 |
Construction in process |
|
| 44,100 |
|
| 80,646 |
|
|
| 2,089,396 |
|
| 2,132,379 |
Less accumulated depreciation, depletion and amortization |
|
| 556,660 |
|
| 499,591 |
Net property, plant and equipment |
| $ | 1,532,736 |
| $ | 1,632,788 |
9.Goodwill and Other Intangible Assets
(a)Acquired Intangible Assets
|
| June 30, 2020 | |||||||||
(US$ thousands) |
| Weighted average amortization period (years) |
| Gross carrying amount |
| Accumulated amortization |
| Net carrying amount | |||
Intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
Amortizing intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
Mining permits - Logan |
| 15 |
|
| 1,642 |
|
| 795 |
|
| 847 |
Mining permits - Buchanan |
| 28 |
|
| 4,000 |
|
| 529 |
|
| 3,471 |
Total intangible assets |
|
|
| $ | 5,642 |
| $ | 1,324 |
| $ | 4,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| December 31, 2019 | |||||||||
(US$ thousands) |
| Weighted average amortization period (years) |
| Gross carrying amount |
| Accumulated amortization |
| Net carrying amount | |||
Intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
Amortizing intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
Mining permits - Greenbrier |
| 14 |
| $ | 1,500 |
| $ | 840 |
| $ | 660 |
Mining permits - Logan |
| 15 |
|
| 1,642 |
|
| 756 |
|
| 886 |
Mining permits - Buchanan |
| 28 |
|
| 4,000 |
|
| 467 |
|
| 3,533 |
Total intangible assets |
|
|
| $ | 7,142 |
| $ | 2,063 |
| $ | 5,079 |
|
| June 30, 2019 |
| |||||||
(US$ thousands) |
| Weighted average |
| Gross carrying |
| Accumulated |
| Net carrying |
| |
Intangible assets: |
|
|
|
|
|
|
|
|
| |
Amortizing intangible assets: |
|
|
|
|
|
|
|
|
| |
Mining permits - Greenbrier |
| 14 |
| $ | 1,500 |
| 800 |
| 700 |
|
Mining permits - Logan |
| 15 |
| 1,642 |
| 717 |
| 925 |
| |
Mining permits - Buchanan |
| 28 |
| 4,000 |
| 404 |
| 3,596 |
| |
Total intangible assets |
|
|
| $ | 7,142 |
| 1,921 |
| 5,221 |
|
|
| December 31, 2018 |
| |||||||
(US$ thousands) |
| Weighted average |
| Gross carrying |
| Accumulated |
| Net carrying |
| |
Intangible assets: |
|
|
|
|
|
|
|
|
| |
Amortizing intangible assets: |
|
|
|
|
|
|
|
|
| |
Mining permits - Greenbrier |
| 14 |
| $ | 1,500 |
| 760 |
| 740 |
|
Mining permits - Logan |
| 15 |
| 1,642 |
| 638 |
| 1,004 |
| |
Mining permits - Buchanan |
| 28 |
| 4,000 |
| 342 |
| 3,658 |
| |
Total intangible assets |
|
|
| $ | 7,142 |
| 1,740 |
| 5,402 |
|
Amortization expense is charged using the straight-line method over the useful lives of the respective intangible asset. The aggregate amount of amortization expense for amortizing intangible assets for the three months ended June 30, 20192020 and 20182019 was $0.1 million and $0.1 million, respectively. The aggregate amount of amortization expense for amortizing intangible assets for the six months ended June 30, 20192020 and 20182019 was $0.2 million and $0.2 million, respectively.
Mining permit intangible asset relating to Greenbrier with a carrying value of $0.6 million was fully impaired as at June 30, 2020. Refer to Note 4 “Impairment of assets” for further disclosure.
Coronado Global Resources Inc. Form 10-Q June 30, 202013
(b)Goodwill
(b)Goodwill
In connection with the Buchanan acquisition on March 31, 2016, the Company recorded goodwill in the amount of $28.0 million. The balance of goodwill as at both June 30, 20192020 and December 31, 20182019 was $28.0 million.
9.10.Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
(US$ thousands) |
| June 30, 2020 |
| December 31,2019 | ||
Wages and employee benefits |
| $ | 52,309 |
| $ | 61,008 |
Taxes other than income taxes |
|
| 6,623 |
|
| 3,899 |
Accrued royalties |
|
| 37,841 |
|
| 43,468 |
Accrued freight costs |
|
| 30,248 |
|
| 30,416 |
Accrued mining fees |
|
| 65,162 |
|
| 49,027 |
Cash flow hedge derivative liability |
|
| 16,045 |
|
| — |
Acquisition related accruals |
|
| 29,511 |
|
| 30,190 |
Other liabilities |
|
| 13,921 |
|
| 20,780 |
Total accrued expenses and other current liabilities |
| $ | 251,660 |
| $ | 238,788 |
(US$ thousands) |
| June 30, 2019 |
| December 31, |
| ||
Wages and employee benefits |
| $ | 64,520 |
| $ | 50,819 |
|
Taxes other than income taxes |
| 8,221 |
| 6,512 |
| ||
Accrued royalties |
| 50,648 |
| 49,129 |
| ||
Accrued freight costs |
| 29,118 |
| 26,509 |
| ||
Accrued mining fees |
| 52,187 |
| 45,615 |
| ||
Cash flow hedge derivative liability |
| — |
| 5,311 |
| ||
Acquisition related accruals |
| 30,186 |
| 30,349 |
| ||
Other liabilities |
| 17,471 |
| 29,252 |
| ||
Total accrued expenses and other current liabilities |
| $ | 252,351 |
| $ | 243,496 |
|
Included within acquisition related accruals is an amount outstanding for stamp duty payable on the Curragh acquisition of $30.2 million.$29.5 million (A$43.0 million). This amount was outstanding as at June 30, 20192020 and December 31, 20182019 pending financial assessment to be made by the Office of State Revenue in Queensland, Australia.
11.Leases
10.Leases
On January 1, 2019, the Company adopted ASC 842, Leases. Changes to the Company’s accounting policy as a result of adoption are discussed below.
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.
(a)Finance Leases
ROUOn March 31, 2020, the Company amended one of its mining service contracts for mining equipment assets relatedused to finance leases are presented in property, “Property, plant and equipment, net” onprovide mining services. On execution of the unaudited Condensed Consolidated Balance Sheet. Lease liabilities related to finance leases are presented in “Lease Liabilities” (current) and “Lease Liabilities” (non-current) on the unaudited Condensed Consolidated Balance Sheet.
Finance lease ROUamendment, right of use assets of $25.9 million 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.
(b)Operating Leases
ROU$27.0 million were derecognized. These mining equipment assets related to operating leases are presented as “Right of use asset — operating leases, net”, on the unaudited Condensed 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 the unaudited Condensed Consolidated Balance Sheet.
Operating lease ROUwere previously deemed leased 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. As at June 30, 2019 the unaudited Condensed Consolidated Balance Sheet included $41.5 million of operating lease liabilities relating to equipment embedded within the mining service contracts.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)contract.
Information related to Company’s right-of use assets and related lease liabilities are as follows:
|
| Three Months Ended |
| Six Months Ended | ||||||||||||||
(US$ thousands) |
| Three month ended |
| Six months ended |
|
| June 30, 2020 |
| June 30, 2019 |
| June 30, 2020 |
| June 30, 2019 | |||||
Operating lease costs |
| $ | 6,378 |
| 12,861 |
|
| $ | 3,071 |
| $ | 6,378 |
| $ | 11,350 |
| $ | 12,861 |
Cash paid for operating lease liabilities |
| 4,049 |
| 11,073 |
|
|
| 2,862 |
|
| 4,049 |
|
| 10,374 |
|
| 11,073 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Finance lease costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Amortization of right of use assets |
| 628 |
| 1,221 |
|
|
| 627 |
|
| 628 |
|
| 999 |
|
| 1,221 | |
Interest on lease liabilities |
| 52 |
| 108 |
|
|
| 32 |
|
| 52 |
|
| 69 |
|
| 108 | |
Total finance lease costs |
| $ | 680 |
| 1,329 |
|
| $ | 659 |
| $ | 680 |
| $ | 1,068 |
| $ | 1,329 |
(US$ thousands) |
| June 30, |
| December 31, 2018 |
| |
Operating leases: |
|
|
|
|
| |
Operating lease right-of-use assets |
| $ | 64,343 |
| — |
|
|
|
|
|
|
| |
Finance leases: |
|
|
|
|
| |
Property and equipment |
| 7,881 |
| 7,074 |
| |
Accumulated depreciation |
| (4,135 | ) | (2,914 | ) | |
Property and equipment, net |
| 3,746 |
| 4,160 |
| |
|
|
|
|
|
| |
Current operating lease obligations |
| 26,863 |
| — |
| |
Operating lease liabilities, less current portion |
| 51,064 |
| — |
| |
Total operating lease liabilities |
| 77,927 |
| — |
| |
|
|
|
|
|
| |
Current finance lease obligations |
| 1,265 |
| 1,308 |
| |
Finance lease liabilities, less current portion |
| 1,838 |
| 2,481 |
| |
Total Finance lease liabilities |
| 3,103 |
| 3,789 |
| |
|
|
|
|
|
| |
Total Lease liability |
| $ | 81,030 |
| 3,789 |
|
Coronado Global Resources Inc. Form 10-Q June 30, 202014
| |||
| |||
|
| ||
|
| ||
| |||
|
|
| |
|
|
|
|
|
|
|
|
|
|
(US$ thousands) |
| June 30, 2020 |
| December 31,2019 | ||
Operating leases: |
|
|
|
|
|
|
Operating lease right-of-use assets |
| $ | 23,313 |
| $ | 62,566 |
|
|
|
|
|
|
|
Finance leases: |
|
|
|
|
|
|
Property and equipment |
|
| 7,881 |
|
| 7,881 |
Accumulated depreciation |
|
| (6,143) |
|
| (5,144) |
Property and equipment, net |
|
| 1,738 |
|
| 2,737 |
|
|
|
|
|
|
|
Current operating lease obligations |
|
| 10,146 |
|
| 27,204 |
Operating lease liabilities, less current portion |
|
| 23,678 |
|
| 48,165 |
Total operating lease liabilities |
|
| 33,824 |
|
| 75,369 |
|
|
|
|
|
|
|
Current finance lease obligations |
|
| 1,838 |
|
| 2,481 |
|
|
|
|
|
|
|
Total Lease liability |
| $ | 35,662 |
| $ | 77,850 |
|
|
| June 30, 2020 |
|
| December 31, 2019 |
Weighted Average Remaining Lease Term (Years) |
|
|
|
|
|
|
Weighted average remaining lease term – finance leases |
|
| 0.18 |
|
| 0.67 |
Weighted average remaining lease term – operating leases |
|
| 3.62 |
|
| 2.89 |
|
|
|
|
|
|
|
Weighted Average Discount Rate |
|
|
|
|
|
|
Weighted discount rate – finance lease |
|
| 6.25% |
|
| 6.25% |
Weighted discount rate – operating lease |
|
| 7.94% |
|
| 8.00% |
The Company’s operating leases have remaining lease terms of 1 year to 56 years, some of which include options to extend the terms deemed reasonable to exercise. Maturities of lease liabilities as at June 30, 2020, are as follows:
(US$ thousands) |
| Operating Lease |
| Finance Lease | ||
Year ending December 31, |
|
|
|
|
|
|
2020 |
| $ | 7,532 |
| $ | 1,857 |
2021 |
|
| 9,085 |
|
| — |
2022 |
|
| 8,911 |
|
| — |
2023 |
|
| 9,196 |
|
| — |
2024 |
|
| 2,897 |
|
| — |
Thereafter |
|
| 1,594 |
|
| — |
Total lease payments |
|
| 39,215 |
|
| 1,857 |
Less imputed interest |
|
| (5,391) |
|
| (19) |
Total lease liability |
| $ | 33,824 |
| $ | 1,838 |
(US$ thousands) |
| Operating lease |
| Finance lease |
| |
Year ending December 31, |
|
|
|
|
| |
2019 |
| $ | 16,013 |
| 712 |
|
2020 |
| 30,436 |
| 2,568 |
| |
2021 |
| 22,362 |
| — |
| |
2022 |
| 8,434 |
| — |
| |
2023 |
| 8,427 |
| — |
| |
Thereafter |
| 2,103 |
| — |
| |
Total lease payments |
| 87,775 |
| 3,280 |
| |
Less imputed interest |
| (9,848 | ) | (177 | ) | |
Total lease liability |
| $ | 77,927 |
| 3,103 |
|
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11.12.Income Taxes
The Company is a corporation for U.S. federal and state income tax purposes. The Company’s accounting predecessor, Coronado Group LLC, was and is treated as a flow-through entity for U.S. federal income tax purposes and as such, has generally not been subject to U.S. federal income tax at the entity level. Accordingly, unless otherwise specified, the historical results of operations and other financial information set forth in the Company’s registration statement on Form 10, as amended, filed with the SEC and ASX on June 28, 2019, for periods prior to the incorporation of the Company and the Reorganization Transaction do not include any provision for U.S. income taxes.
For the three and six months ended June 30, 20192020 and 2018,2019, 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 effect 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 20192020 estimated annual effective tax rate, including discrete items, is 29.4%14.2%. The Company had an income tax expensebenefit of $47.0 million and $89.0 million for the three and six months ended June 30, 2019 respectively.
Income tax expense of $13.0 million for the three months ended June 30, 2018 and $5.5$20.4 million for the six months ended June 30, 2018 related solely to the Company’s Australian Operations and was calculated based on effective tax rate for the period, before any2020, comprising a discrete items, of 13%.
The Company’s U.S. entities had no income tax expense of $1.0 million and income tax benefit of $21.4 million based on a loss before tax of $143.6 million.
Income tax expense of $89.0 million for the three and six months ended June 30, 2018 because prior2019 was calculated based on an estimated annual effective tax rate of 29.4% for the period.
Coronado Global Resources Inc. Form 10-Q June 30, 202015
The Company utilizes the “more likely than not” standard in recognizing a tax benefit in its financial statements. For the six months ended June 30, 2020 and the year ended December 31, 2019, the Company had $14.2 million of unrecognized tax benefits. If accrual for interest or penalties is required, it is the Company’s policy to September 19, 2018 they were treatedinclude these as partnerships for U.S.a component of income tax purposes.expense.
The Company is subject to taxation in the United States and its various states, as well as Australia and its various localities. In the United States and Australia, the first tax return was lodged for the year ended December 31, 2018.
12.On March 27, 2020, the United States Congress enacted the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, to provide certain relief as a result of the COVID-19 outbreak. The CARES Act (PL 116-136), allows for a five-year carryback for losses arising in tax years beginning in 2018, 2019 and 2020.
As there was U.S. taxable income in tax years 2018 and 2019, there is an opportunity to carryback the 2020 losses in order to receive a refund of taxes assessed in these tax years of approximately $16.7 million. By virtue of carrying back net operating losses, there will be no longer an opportunity to utilize foreign tax credits in these tax years.
13.Interest Bearing Liabilities
The Company has a Multicurrency Revolving Syndicated Facility Agreement, orCompany’s SFA, dated September 15, 2018, comprisingcomprises of Facility A ($350 million loan facility) and, Facility B (A$370130 million bank guarantee facility) and Facility C ($200 million loan facility). The SFA provides thathas a termination date of February 15, 2023.
The SFA is a revolving credit facility under which the Company may borrow funds from Facility A and/or Facility C for a period of one, two, three or six months, each referred to as a Term. The interest rate is set at the commencement of each Term. At the end of each Term, the Company may elect to repay the loan or extend any loan amount outstanding for a further period of one, two, three or six months.months. The Term of the loan cannot extend beyond the termination date of the SFA.
Due to the global impacts of COVID-19 on the demand and pricing for metallurgical coal and the resulting uncertainties associated with the pandemic, on May 25, 2020, the Company entered into an agreement with its lenders in the SFA beingto waive compliance with certain financial covenants for the period from May 25, 2020 to February 15, 2022.28, 2021, or the waiver period. A breach of these financial covenants at the end of, or after, the waiver period will constitute an event of default under the SFA and all amounts outstanding at that point may become due and payable. The terms of the SFA will revert to the originally agreed terms at the end of the waiver period.
As at June 30, 2020 the Company met its financial covenants and other undertakings under the SFA. The Company is pursuing a number of strategic initiatives to strengthen its liquidity and is actively engaged with its Lenders in relation to the extension of the waiver, referred to above, beyond February 28, 2021. These steps are expected to ensure the continuing availability of the SFA beyond February 28, 2021.
During the period January 1, 2019 tosix months ended June 30, 20192020, the Company borrowed $104.0a total amount of $145.0 million under the SFA to fund the dividend payment made on March 29, 2019 of $299.7 million, and for other working capital and corporate purposes. The funds borrowedRepayments of $34.0 million were fully repaid bymade during the six months ended June 30, 2019. There were no interest-bearing2020.
The total interest bearing liabilities outstanding under the SFA was $441.0 million and $ 330.0 million as at June 30, 20192020 and at December 31, 2018.2019, respectively.
13.14.Contract Obligations
The following is a summary of the contract obligations as of June 30, 2020: | |||||||||
|
|
|
|
|
|
|
|
|
|
(US$ thousands) |
| Current |
| Non-current |
| Total | |||
Coal leases contract liability |
| $ | 843 |
| $ | 21,021 |
| $ | 21,864 |
Stanwell below market coal supply agreement |
|
| 34,382 |
|
| 165,070 |
|
| 199,452 |
|
| $ | 35,225 |
| $ | 186,091 |
| $ | 221,316 |
|
|
|
|
|
|
|
|
|
|
The following is a summary of the contract obligations as of December 31, 2019: | |||||||||
|
|
|
|
|
|
|
|
|
|
(US$ thousands) |
| Current |
| Non-current |
| Total | |||
Coal leases contract liability |
|
| 843 |
|
| 21,312 |
|
| 22,155 |
Stanwell below market coal supply agreement |
|
| 36,092 |
|
| 183,565 |
|
| 219,657 |
|
| $ | 36,935 |
| $ | 204,877 |
| $ | 241,812 |
|
|
|
|
|
|
|
|
|
|
The following is a summary of the contract obligations as ofCoronado Global Resources Inc. Form 10-Q June 30, 2019:202016
(US$ thousands) |
| Short-term |
| Long-term |
| Total |
| |
Coal leases contract liability |
| $ | 843 |
| 21,774 |
| 22,617 |
|
Stanwell below market coal supply agreement |
| 34,223 |
| 202,659 |
| 236,882 |
| |
|
| $ | 35,066 |
| 224,433 |
| 259,499 |
|
The following is a summary of the contract obligations as of December 31, 2018:
(US$ thousands) |
| Short-term |
| Long-term |
| Total |
| |
Terminal services contract liability |
| $ | 2,717 |
| 11,549 |
| 14,266 |
|
Coal leases contract liability |
| 844 |
| 22,354 |
| 23,198 |
| |
Stanwell below market coal supply agreement |
| 35,555 |
| 219,675 |
| 255,230 |
| |
|
| $ | 39,116 |
| 253,578 |
| 292,694 |
|
On adoption of ASC 842 — Leases the Terminal services contract liability was eliminated against the Terminal services Right of Use Asset on the unaudited Condensed Consolidated Balance Sheet.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14.15.Deferred Consideration Liability
On August 14, 2018 the Company completed the purchase of the Stanwell Reserved Area, or the SRA, adjacent to the current Curragh mining tenements. This area was acquired on a deferred consideration basis and on acquisition the Company recognized a “Right-to-mine-asset” and a corresponding deferred consideration liability of $155.2 million, calculated using a pre-tax discount rate of 13% representing fair value of the arrangements andat the date of acquisition. The deferred consideration liability will reflect passage of time changes by way of an annual accretion at the pre-tax discount rate of 13% while the liability will decrease as domestic coal is supplied to Stanwell from the SRA. The accretion of deferred consideration is recognized in “Interest expense, net” in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.
(US$ thousands) |
| June 30, 2020 |
| December 31,2019 | ||
Stanwell Reserved Area deferred consideration |
| $ | 181,400 |
| $ | 174,605 |
|
| $ | 181,400 |
| $ | 174,605 |
(US$ thousands) |
| June 30, 2019 |
| December 31, |
| |
Stanwell Reserved Area deferred consideration |
| $ | 164,148 |
| 155,332 |
|
|
| $ | 164,148 |
| 155,332 |
|
15.16.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. There were no traded shares of common stock outstanding prior to October 23, 2018, therefore no earnings per share information has been presented for any period prior to that date.
Basic and diluted earnings per share was calculated as follows (in thousands, except per share data): | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Six Months Ended | ||||||||
(US$ thousands, except per share data) |
| June 30, 2020 |
| June 30, 2019 |
| June 30, 2020 |
| June 30, 2019 | ||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
| $ | (114,330) |
| $ | 117,506 |
| $ | (123,196) |
| $ | 214,326 |
Less: Net loss attributable to Non-controlling interest |
|
| (2) |
|
| (4) |
|
| (4) |
|
| (4) |
Net (loss) income attributable to Company stockholders |
| $ | (114,328) |
| $ | 117,510 |
| $ | (123,192) |
| $ | 214,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding |
|
| 96,652 |
|
| 96,652 |
|
| 96,652 |
|
| 96,652 |
Effects of dilutive shares |
|
| — |
|
| 3 |
|
| - |
|
| 4 |
Weighted average diluted shares of common stock outstanding |
|
| 96,652 |
|
| 96,655 |
|
| 96,652 |
|
| 96,656 |
Earnings Per Share (US$): |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| (1.18) |
|
| 1.22 |
|
| (1.27) |
|
| 2.22 |
Dilutive |
|
| (1.18) |
|
| 1.22 |
|
| (1.27) |
|
| 2.22 |
Basic and diluted earnings per share was calculated as follows (in thousands, except per share data):
(US$ thousands, except per share data) |
| Three months |
| Six months |
| ||
Numerator: |
|
|
|
|
| ||
Net Income |
| $ | 117,506 |
| $ | 214,326 |
|
Less: Net income attributable to Non-controlling interest |
| (4 | ) | (4 | ) | ||
Net Income attributable to Company stockholders |
| $ | 117,510 |
| $ | 214,330 |
|
Denominator: |
|
|
|
|
| ||
Weighted-average shares of common stock outstanding |
| 96,652 |
| 96,652 |
| ||
Effects of dilutive shares |
| 3 |
| 4 |
| ||
Weighted average diluted shares of common stock outstanding |
| 96,655 |
| 96,656 |
| ||
Earnings Per Share (US$): |
|
|
|
|
| ||
Basic |
| $ | 1.22 |
| $ | 2.22 |
|
Dilutive |
| $ | 1.22 |
| $ | 2.22 |
|
16.17.Derivatives and Fair Value Measurement
(a)Derivatives
(a)Derivatives
The Company may use derivative financial instruments to manage its riskfinancial risks in the normal course of operations, including foreign currency risks, commodity price risk related to forecast purchase of raw materials (such as gas or diesel) and interest rate risk. Derivatives are exclusively used for cashflow hedges purposes and hedging for speculative purposes isare strictly prohibited under the Treasury Risk Management Policy approved by ourthe Board of Directors.
The financing counterparties to the derivative contracts potentially expose the Company to credit-related risk. Credit risk is the risk that a third party might fail to fulfill its performance obligations under the terms of the financial instrument. The Company mitigates credit risk by entering into derivative contracts with high credit quality counterparties, limiting the amount of exposure to each counterparty and frequently monitoring their financial condition.
Forward fuel contracts
In 2018,2019, the Company entered into forward derivative contracts with an aggregate notional amount of $44.6 million to hedge its exposure to diesel fuel prices for diesel fuel that is used, or expects to use, at its operations in the operations at Curragh. The aggregated notional amount of these derivative contracts at June 30, 2019 was $24.0 million.Australia, or Australian Operations, during 2020. During the three monthssix month period ended June 30, 20192020, the Company entered into additional derivative contracts with a notional amount of $59.1 million, to hedge its exposurein relation to diesel fuel prices in relationthat it expects to Curragh consumption of diesel fuel in 2020. The aggregate notional amount for all outstanding derivative contracts was $83.1 millionconsume at its
Coronado Global Resources Inc. Form 10-Q June 30, 2019. The forward diesel fuel contracts were designated as cash flow hedges.202017
Australian Operations during 2021. The aggregate notional amount for all outstanding forward diesel fuel derivative contracts designated as cash flow hedges were $82.2million at June 30, 2020.
Unrealized losses, net of tax, recognized in “Accumulated other comprehensive income/(loss)” as at June 30, 2020, are expected to be recognized into “Cost of coal revenues” in the Unaudited Condensed Statements of Operations and Comprehensive Income, $16.0million within the next 12 months and $4.1 million within 6 months thereafter, when the hedged transaction impacts income. Refer to Note 18 “Other comprehensive loss” for further disclosure.
Forward foreign currency contracts
The Australian Operations utilize the cash it generates from its US$ denominated coal sales revenue to fund its operating costs, which are predominantly in A$. The Company enters into forward foreign currency contracts to hedge its foreign exchange exposure on a portion of the US$ denominated coal sales revenue at Curragh, whose functional currency is A$.
The aggregated notional amount of the outstanding forward foreign currency derivative contracts designated as cash flow hedges were $57.5million as at June 30, 2020. The unrealized loss of $0.1 million, net of tax, recognized in “Accumulated other comprehensive income/(loss)” at June 30, 2020, is expected to be recognized into “Coal revenues” in the Unaudited Condensed Statements of Operations and Comprehensive Income within the next 6 months, when the hedged transaction impacts income. Refer to Note 18 “Other comprehensive loss” for further disclosure.
During the six month period ended June 30, 2020, the Company entered into additional forward foreign currency derivative contracts to manage its exposure to US$ at the Australian Operations. The aggregate notional amount for the outstanding forward foreign currency derivative contracts was $55.1 million at June 30, 2020. The unrealized gain of $1.4 million, net of tax, was recognized in “Other, net” in the Unaudited Condensed Statements of Operations and Comprehensive Income.
The fair value of foreign currency and diesel fuel derivatives reflected in the accompanying unaudited Condensed Consolidated Balance Sheet are set forth in the table below:
|
|
|
| June 30, 2020 |
| December 31, 2019 | ||||
(US$ thousands) |
| Classification |
| Derivative asset |
| Derivative liability |
| Derivative asset |
| Derivative liability |
Forward fuel contracts |
| Other current assets |
| — |
| — |
| 3,180 |
| — |
|
| Other current liabilities |
| — |
| 15,991 |
| — |
| — |
|
| Other non-current liabilities |
| — |
| 4,106 |
| — |
| — |
|
|
|
|
|
|
|
|
|
|
|
Forward foreign currency contracts |
| Other current assets |
| 1,510 |
| — |
| 953 |
| — |
|
| Other current liabilities |
| — |
| 54 |
| — |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,510 |
| 20,151 |
| 4,133 |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2019 |
| December 31, 2018 |
| ||||
(US$ thousands) |
| Classification |
| Derivative |
| Derivative |
| Derivative |
| Derivative |
|
|
| Other current liabilities |
| — |
| — |
| — |
| 5,402 |
|
Forward fuel contracts |
| Other current asset |
| 2,317 |
| — |
| — |
| — |
|
|
| Other non-current assets |
| 1,308 |
| — |
| — |
| — |
|
|
|
|
| 3,625 |
| — |
| — |
| 5,402 |
|
The forward fuel contracts were designated as cash flow hedges. The following table presents our details of theseforeign currency and diesel fuel outstanding hedge contracts:
|
| June 30, 2020 |
| December 31, 2019 | ||||||||
(in thousands) |
| Notional amount (thousands) |
| Unit of measure |
| Varying maturity dates |
| Notional amount (thousands) |
| Unit of measure |
| Varying maturity dates |
Forward fuel contracts |
| 199,636 |
| Liters |
| July 2020 - December 2021 |
| 121,957 |
| Liters |
| January 2020 – December 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward foreign currency contracts |
| 112,632 |
| US$ |
| July 2020 - December 2020 |
| 24,300 |
| US$ |
| January 2020 – March 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| June 30, 2019 |
| December 31, 2018 |
| ||||||||
(in thousands) |
| Notional |
| Unit of |
| Varying |
| Notional |
| Unit of |
| Varying |
|
Designated forward fuel contracts |
| 176,342 |
| Liters |
| July 2019 — December 2020 |
| 93,420 |
| Liters |
| January 2019 — December 2019 |
|
Other derivatives
During the six months ended June 30, 2018 the Company entered into a foreign exchange swap contract to hedge against the exposure fluctuations in the Australian Dollar against the U.S. Dollar on the purchase price of Curragh between the Agreement date and the completion date. The Company elected not to formally designate the swaps as cash flow hedges. As such, the Company accounted for the foreign exchange swaps as an economic hedge and recorded at fair value at the end of each reporting period. Pursuant with ASC 815, the foreign exchange swaps were initially recorded at fair value and all subsequent changes were recorded to “Other, net” (see Note 5 — “Other, net”) within the unaudited Condensed Consolidated Statements of Operations. As of June 30, 2019, the Company did not have any foreign exchange swaps outstanding.
(b)Fair Value of Financial Instruments
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.
Coronado Global Resources Inc. Form 10-Q June 30, 202018
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 Inputs: Other than quoted prices that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
Financial Instruments Measured on a Recurring Basis
As of June 30, 2019,2020, the Company has the following liabilities that are required to be measured at fair value on a recurring basis:
·Forward commodity contracts: valued based on a valuation that is corroborated by the use of market-based pricing (Level 2)
Foreign currency forward contracts: valued based on a valuation that is corroborated by the use of market-based pricing (Level 2)
·Contingent royalty: fair value is determined using the Black-Scholes option pricing formula (Level 3)
The following tables set forth the hierarchy of the Company’s net financial liabilities positions for which fair value is measured on a recurring basis as of June 30, 2020: | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets/(Liabilities) | ||||||||||
(US$ thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Forward commodity contracts |
| $ | — |
| $ | (20,097) |
| $ | — |
| $ | (20,097) |
Forward foreign currency contracts |
|
| — |
|
| 1,456 |
|
| — |
|
| 1,456 |
|
| $ | — |
| $ | (18,641) |
| $ | — |
| $ | (18,641) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s net financial liability positions for which fair value is measured on a recurring basis as of December 31, 2019 was as follows: | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets/(Liabilities) | ||||||||||
(US$ thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Forward commodity contracts |
| $ | — |
| $ | 3,180 |
| $ | — |
| $ | 3,180 |
Forward foreign currency contracts |
|
| — |
|
| 953 |
|
| — |
|
| 953 |
Contingent royalty |
|
| — |
|
| — |
|
| (1,543) |
|
| (1,543) |
|
| $ | — |
| $ | 4,133 |
| $ | (1,543) |
| $ | 2,590 |
Coronado Global Resources Inc. Form 10-Q June 30, 202019
· VSM: fair value is determined using the projected cash flow analysis (Level 3)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Contingent Royalty Consideration | |||||||||
Key assumptions in the valuation include the gross sales price forecast, export volume forecast, volatility, the risk-free rate, and credit-spread of the Company. | |||||||||
Quantitative Information about Level 3 Fair Value Measurements | |||||||||
(US$ thousands) | Fair value at June 30, 2020 | Valuation technique | Unobservable input | Range (Weighted Avg.) | |||||
Contingent Royalty Liability | $ | — | Projected cash flows | Gross sales price forecast per ton | $67.1 to $105.2 ($81.7) | ||||
Export volume forecast (000’s) | 1,816 tons over 9 months | ||||||||
Given the remaining period of the Contingent Royalty obligation is short-term, the valuation technique has been changed from Black-Scholes Option model to projected cash flows. | |||||||||
As a result of the decline in market coal price and the increase of the agreed floor price as the agreement reaches maturity, the Company's projected cash flows resulted in 0 Contingent royalty liability as at June 30, 2020. |
The following tables set forth the hierarchyValue Share Mechanism
As part of the Company’s net financial liabilities positions for which fair value is measuredacquisition of Curragh on March 29, 2018, the Company agreed to pay a recurring basis as25% royalty to the seller on sales from metallurgical coal mined at Curragh over a two-year period in the form of a Value Share Mechanism, or VSM. The VSM expired in March 2020. There were 0 VSM payments during the six months period ended June 30, 2019:2020.
(US$ thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| |
Forward commodity contracts |
| $ | — |
| 3,625 |
| — |
| 3,625 |
|
Contingent royalty |
| — |
| — |
| 10,073 |
| 10,073 |
| |
VSM |
| — |
| — |
| 351 |
| 351 |
| |
|
| $ | — |
| 3,625 |
| 10,424 |
| 14,049 |
|
The Company’s net financial liability positions for which fair value is measured on a recurring basis as of December 31, 2018 was as follows:
(US$ thousands) |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| |
Forward commodity contracts |
| $ | — |
| 5,402 |
| — |
| 5,402 |
|
Contingent royalty |
| — |
| — |
| 17,216 |
| 17,216 |
| |
VSM |
| — |
| — |
| 12,987 |
| 12,987 |
| |
|
| $ | — |
| 5,402 |
| 30,203 |
| 35,605 |
|
Contingent Royalty Consideration
Key assumptions in the valuation include the gross sales price forecast, export volume forecast, volatility, the risk-free rate, and credit-spread of the Company.
|
| Quantitative Information about Level 3 Fair Value Measurements |
| |||||||
(US$ thousands) |
| Fair value at |
| Valuation |
| Unobservable input |
| Range (Weighted |
| |
Contingent Royalty Liability(1) |
| $ | 10,073 |
| Black-Scholes Options model |
| Gross sales price forecast per ton |
| $104.0 to $111.9 ($109.8) |
|
|
|
|
|
|
| Export volume forecast (000’s) |
| 5,221 tons over 21 months |
| |
|
|
|
|
|
| Volatility |
| 15.6% |
| |
|
|
|
|
|
| Risk-free rate |
| 2.11% to 2.37% (2.29)% |
| |
|
|
|
|
|
| Company credit spread |
| 0.072 |
| |
(1) $6.9 million of this amount is classified as a current liability with the remaining $3.1 million classified as a non-current liability.
Value Share Mechanism
Key assumptions in the valuation sales price forecast, expected volume forecast, tax rate and Foreign Exchange, or FX, rate.
|
| Quantitative Information about Level 3 Fair Value Measurements |
| |||||||
(US$ thousands) |
| Fair value at |
| Valuation |
| Unobservable input |
| Range (Weighted |
| |
Value Share Mechanism (VSM) |
| $ | 351 |
| Projected cash flows |
| Gross sales price forecast per ton |
| $131.3 to $146.8 $(137.8) |
|
|
|
|
|
|
| Tax rate |
| 30.00% |
| |
|
|
|
|
|
| FX rate |
| 0.7020 |
| |
Given the remaining period of the VSM obligation is short-term, the valuation technique has been changed from Monte Carlo simulation to a projected cash flow analysis.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following is a summary of all the activity related to the contingent royalty liability and value share mechanism:
|
| Six months ended June 30, 2019 activity |
| |||||||||
(US$ thousands) |
| Account |
| Contingent |
| VSM |
| Incurred |
| Total |
| |
Beginning balance at January 1, 2019: |
|
|
| $ | 17,216 |
| 12,987 |
| 8,295 |
| 38,498 |
|
Statement of Operation activity: |
|
|
|
|
|
|
|
|
|
|
| |
Contingent liability/VSM expense incurred |
| Other royalties |
|
|
|
|
| 15,105 |
| 15,105 |
| |
Decrease in VSM Liability value |
| Other royalties |
|
|
| (12,636 | ) |
|
| (12,636 | ) | |
Decrease in Contingent Royalty Liability value |
| Other royalties |
| (7,143 | ) |
|
|
|
| (7,143 | ) | |
Total Statement of Operations activity: |
|
|
| $ | (7,143 | ) | (12,636 | ) | 15,105 |
| (4,674 | ) |
Cash paid to CONSOL/Wesfarmers |
|
|
|
|
|
|
| (18,384 | ) | (18,384 | ) | |
Balance sheet: |
|
|
|
|
|
|
|
|
|
|
| |
Royalties payable to CONSOL/Wesfarmers |
| Accrued expenses and other liabilities |
|
|
|
|
| 5,016 |
| 5,016 |
| |
VSM Liability |
| Contingent royalty consideration—current |
|
|
| 351 |
|
|
| 351 |
| |
Contingent Royalty Liability |
| Contingent royalty consideration |
| 10,073 |
|
|
|
|
| 10,073 |
| |
Total liabilities |
|
|
| $ | 10,073 |
| 351 |
| 5,016 |
| 15,440 |
|
There are no other fair value measurements of assets and liabilities that are measured at fair value on a nonrecurring basis as of June 30, 2019 and December 31, 2018.
Other Financial Instruments
The following methods and assumptions are used to estimate the fair value of other financial instruments as of June 30, 20192020 and December 31, 2018:2019:
·Cash and restricted cash, accounts receivable, accounts payable, accrued expenses, lease liabilities 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.
·Deposits and reclamation bonds, lease liabilities, interest bearing liabilities and other financial liabilities: The fair values approximate the carrying values reported in the unaudited Condensed Consolidated Balance Sheets.
18.Other Comprehensive Income
17.CommitmentsAccumulated other comprehensive loss consisted of the following at June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
| Net unrealized gain (loss) |
|
| ||
(US$ thousands) |
| Foreign currency translation adjustments |
| Cash flow fuel hedges |
| Cash flow foreign currency hedges |
| Total |
Balance at December 31, 2019 |
| (48,265) |
| 2,378 |
| 681 |
| (45,206) |
Net current-period other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Loss in other comprehensive income (loss) before reclassifications |
| (14,406) |
| (30,796) |
| (4,355) |
| (49,557) |
Loss reclassified from accumulated other comprehensive income (loss) |
| — |
| 9,809 |
| 3,449 |
| 13,258 |
Tax effects |
| — |
| 6,983 |
| 264 |
| 7,247 |
Total net current-period other comprehensive loss |
| (14,406) |
| (14,004) |
| (642) |
| (29,052) |
Balance at June 30, 2020 |
| (62,671) |
| (11,626) |
| 39 |
| (74,258) |
Coronado Global Resources Inc. Form 10-Q June 30, 202020
19.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:
(US$ thousands) |
|
|
| Amount |
Year ending December 31, |
|
|
|
|
2020 |
|
|
| 3,450 |
2021 |
|
|
| 5,373 |
2022 |
|
|
| 5,208 |
2023 |
|
|
| 5,133 |
2024 |
|
|
| 5,010 |
Thereafter |
|
|
| 25,465 |
Total |
|
|
| 49,639 |
|
|
|
|
|
Mineral leases are not in scope of ASC 842 and continue to be accounted for under the guidance in ASC 932, Extractive Activities – Mining. | ||||
|
|
|
|
|
(US$ thousands) |
| Amount |
|
Year ending December 31, |
|
|
|
2019 |
| 2,624 |
|
2020 |
| 5,313 |
|
2021 |
| 5,175 |
|
2022 |
| 5,010 |
|
2023 |
| 4,935 |
|
Thereafter |
| 25,884 |
|
Total |
| 48,941 |
|
Mineral leases are not in scope of ASC 842 and continue to be accounted for under the guidance in ASC 932, Extractive Activities — Mining.
(b)Other commitments
As of June 30, 2019,2020, purchase commitments for capital expenditures were $23.8$25.9 million, all of which is obligated within the next 12 months.
The Company has entered into fixed price contracts to purchase fuel for the U.S. Operations. As of June 30, 2019, the commitment for fuel purchases were $5.6 million, all of which is obligated within the six months to December 31, 2019.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 11 years. In the U.S., the Company typically negotiates its rail and coal terminal access on an annual basis. As of June 30, 2019,2020, these Australian and U.S. commitments under take-or-pay arrangements totaled $1.04$1.5 billion, of which approximately $90.3$101.2 million is obligated within the next year.
20.Contingencies
18.Related-Party Transactions
X-Coal
During the three and six months ended June 30, 2019 the Company sold coal to Xcoal Energy and Resources, or Xcoal, an entity associated with Non-Executive director, Mr. Ernie Thrasher. Revenues from Xcoal of $135.3 million and $98.5 million, respectively, are recorded as coal revenues on the unaudited Condensed Consolidated Statement of Operations for the three months ended June 30, 2019 and 2018. Revenues from Xcoal of $293.2 million and $213.0 million, respectively, are recorded as coal revenues on the unaudited Condensed Consolidated Statement of Operations for the six months ended June 30, 2019 and 2018. At June 30, 2019 amounts due from Xcoal in respect of coal sales were $59.7 million. As of December 31, 2018, amounts due from Xcoal in respect of coal sales were $36.0 million. These balances are included in related party receivables.
19.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.
Facility B of the SFA provides A$370130 million for issuing multicurrency bank guarantees in Australian dollars.guarantees. At June 30, 20192020, Facility B of the SFA had been utilized to issue A$ 268.568.9 million of bank guarantees on behalf of the Company. In
For the U.S. Operations in order to satisfy an obligation to provide a U.S. dollar bank guarantee to a third party, on June 12, 2019,the required financial assurance, the Company entered into a Bank Guarantee Facility Agreement with Westpac Banking Corporation with a limitgenerally uses surety bonds for post-mining reclamation and workers’ compensation obligations. The Company can also use bank letters of $28.6 million. Atcredit to collateralize certain obligations. As of June 30, 2019, this facility was fully utilized2020, the Company had outstanding surety bonds of $40.0 million, to issue a bank guarantee to a third party for $28.6 million.secure various obligations and commitments.
Curragh is a co-defendantco-appellant to proceedings in the Queensland Supreme Court brought by Aurizon. Aurizon’s claim relates to costs relating to the co-defendants’ use of the Wiggins Island Coal Export Terminal Pty Ltd, or WICET, rail links, in particular, whether the “First Milestone Target Date”, which triggers certain “WIRP Fee” payments under the Wiggins Island Rail Project Deed, or WIRP Deed, has been achieved. On June 27, 2019,The trial for this matter concluded in September 2018 and judgement was delivered by the Supreme Court in July 2019. Ultimately, Aurizon was successful in that trial and a determination was made that a WIRP Fee premium is payable by the defendants under the WIRP Deed. The defendants appealed the decision in the Queensland Supreme Court delivered judgements in favor of Aurizon against Coronado Curragh Pty LtdAppeal and the other co-defendants. The Company intendsappeal hearing was held in March 2020. Judgement has been reserved by the Court of Appeal and is not expected to continue to strongly contest the matter. The Company, together with the other co-defendants, lodged a notice of appeal of the Queensland Supreme Court judgement on July 25, 2019. It is currently expected that, were Aurizon successful in the ultimate result of the litigation and expert determinations, Coronado Curragh Pty Ltd would be required to pay approximately A$2.3 million per annum for the term of the WIRP Deed (which is 233 months).delivered before August 2020. Resolution of this dispute would also result in the Company’s below rail access to WICET (of 1.5 MMtpa) becoming a firm contractual capacity entitlement (and the subject of a 20 year take-or-pay access agreement) instead of an ad hoc entitlement only. The Company’s unaudited Condensed Consolidated Balance Sheet includes an estimated loss contingency associated with these proceedings of approximately $4.2 million and $3.5$5.3 million as at June 30, 2019 and December 31, 2018, respectively.2020.
Should the defendant’s appeal process be unsuccessful, the amount of the WIRP Fee may materially differ from our current estimation.
Coronado Global Resources Inc. Form 10-Q June 30, 202021
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.
The liabilities recorded in relation to the above litigationslitigation do not include estimated future costs associated with legal representation, which, in accordance with the Company’s policy, are expensed as incurred. 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.
Coronado Global Resources Inc. Form 10-Q June 30, 202022
20.Subsequent Events
On August 5, 2019, the Board of Directors declared a fully franked interim dividend of $0.112 per Chess Depository Instrument, or CDI. The dividend will have a record date of August 26, 2019, payable on September 20, 2019. Holders of CDIs trading on the ASX who elect to receive the dividend in Australian currency will be paid based on the exchange rate on the record date. The ex-dividend date will be August 23, 2019.
On August 5, 2019, the Board of directors declared a return of capital of $0.298 per CDI. The return of capital will have a record date of August 26, 2019, payable on September 20, 2019. Holders of CDIs trading on the ASX who elect to receive the return of capital in Australian currency will be paid based on the exchange rate on the record date.
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 InformationStatements
We have reviewed the accompanying condensed consolidated balance sheet of Coronado Global Resources Inc. and subsidiaries (the Company) as of June 30, 2019,2020, the related condensed consolidated statements of operationsoperation and comprehensive income, stockholders’ equity and cash flows for the three-month and six-month periods ended June 30, 2019 and 2018, the related condensed consolidated statements of changes in stockholders’ equity/members’ capital and cash flows for the six-month periods ended June 30, 2019 and 2018,2020 and the related notes (collectively referred to as the “condensed consolidated interim financial information)statements”). Based on our reviews,review, we are not aware of any material modifications that should be made to the condensed consolidated interim financial informationstatements for itthem to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standardsThe condensed consolidated financial information of the Public Company Accounting Oversight Board (United States) (PCAOB),for the three-month and six-month periods ended June 30, 2019, were reviewed by other auditors whose report dated August 5, 2019 stated that based on their review they were not aware of any material modifications that should be made to those statements for them to be in conformity with U.S. generally accepted accounting principles. The consolidated balance sheet of the Company as of December 31, 2018, and2019, the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity/members’ capital,stockholders' equity and cash flows for the year then ended, and the related notes (not presented herein); and in our were audited by other auditors whose report dated February 18, 2019, we24, 2020 expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This consolidated interimThese financial information isstatements are the responsibility of the Company’sCompany'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 Securities and Exchange CommissionSEC and the PCAOB.
We conducted our reviewsreview in accordance with the standards of the PCAOB. A review of consolidated interim financial informationstatements 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/ KPMG LLPErnst & Young
Richmond, Virginia
Brisbane, Australia
August 5, 201910, 2020.
Coronado Global Resources Inc. Form 10-Q June 30, 202023
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 the three-year periodyear ended December 31, 20182019 included in Coronado Global Resources Inc.’s registration statementAnnual Report on Form 10, as amended,10-K for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission, or SEC, and the Australian Securities Exchange, or the ASX, on June 28, 2019.February 24, 2020.
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, or the Securities Act, 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 effect of COVID-19 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,” “likely,” “intends,” “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 or an investment in our securities include, but are not limited to:
uncertainty and weaknesses in global economic conditions, including the extent, duration and impact on prices caused by reduced demand. The COVID-19 pandemic led to reduced market demand and risks related to government actions with respect to trade agreements, treaties or policies;
·severe financial hardship, bankruptcy, temporary or permanent shut downs or operational challenges, due to the ongoing COVID-19 pandemic 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;
our ability to generate sufficient cash to service our indebtedness and other obligations;
our indebtedness and ability to comply with the covenants under the agreements governing such indebtedness;
the prices we receive for our coal;
·the demand for steel products, which impacts the demand for our metallurgical, or Met, coals;
·risks inherent to mining;
·the loss of, or significant reduction in, purchases by our largest customers;
·our ability to collect payments from our customers depending on their creditworthiness, contractual performance or otherwise;
Coronado Global Resources Inc. Form 10-Q June 30, 202024
risks unique to international mining and trading operations, including tariffs and other barriers to trade;
·our ability to continue acquiring and developing coal reserves that are economically recoverable;
·uncertainties in estimating our economically recoverable coal reserves;
·transportation for our coal becoming unavailable or uneconomic for our customers;
·the risk that we may be required to pay for unused capacity pursuant to the terms of our take-or-pay arrangements with rail and port operators;
·our ability to retain key personnel and attract qualified personnel;
·any failure to maintain satisfactory labor relations;
·our ability to obtain, renew or maintain permits and consents necessary for our operations;
·potential costs or liability under applicable environmental laws and regulations, including with respect to any exposure to hazardous substances caused by our operations, as well as any environmental contamination our properties may have or our operations may cause;
·extensive regulation of our mining operations and future regulations and developments;
·our ability to provide appropriate financial assurances for our obligations under applicable laws and regulations;
·assumptions underlying our asset retirement obligations for reclamation and mine closures;
·concerns about the environmental impacts of coal combustion, including perceived impacts on global climate issues, which could result in increased regulation of coal combustion in many jurisdictions and divestment efforts affecting the investment community;
·the extensive forms of taxation that our mining operations are subject to, and future tax regulations and developments;
· risks unique to international mining and trading operations;
·any cyber-attacks or other security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us, our customers or other third parties;
·a decrease in the availability or increase in costs of key supplies, capital equipment or commodities, such as diesel fuel, steel, explosives and tires;
· unfavorable economic and financial market conditions;
·the risk that we may not recover our investments in our mining, exploration and other assets, which may require us to recognize impairment charges related to those assets;
·risks related to divestitures and acquisitions;
· our indebtedness and ability to comply with the covenants under the agreements governing such indebtedness;
· our ability to generate sufficient cash to service all of our indebtedness or other obligations;
·the risk that diversity in interpretation and application of accounting principles in the mining industry may impact our reported financial results; and
·other risks and uncertainties detailed in this report, including, but not limited to, those discussed in “Risk Factors,” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q.
We make many of our forward-looking statements based on our operating budgets and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.
See Part I, Item 1A. “Risk Factors” of our registration statementAnnual Report on Form 10, as amended,10-K for the year ended December 31, 2019, filed with the SEC and ASX on June 28, 2019,February 24, 2020 and Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the three months ended March 31, 2020, filed with the SEC and ASX on May 8, 2020, 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. Furthermore, the forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date
Coronado Global Resources Inc. Form 10-Q June 30, 202025
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
Overview
We are a global producer, marketer and exporter of a full range of Met coals.coal products. We own a portfolio of operating mines and development projects in Queensland, Australia and in Virginia, West Virginia and Pennsylvania in the United States.
Our operations in Australia, or our Australian Operations, comprise the 100%-owned Curragh producing mine complex. Our operations in the United States, or the U.S. Operations, comprise threetwo 100%-owned producing mine complexes (Buchanan Logan and Greenbrier)Logan), one 100%-owned temporarily idled mine complex (Greenbrier), two development properties (Pangburn-Shaner-Fallowfield and Russell County) and one idle property (Amonate). In addition to Met coal, our Australian Operations sell thermal coal, which is used to generate electricity, to Stanwell Corporation Limited, or Stanwell. Our U.S. Operations primarily focuses 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.
Our business profile primarily focuses on the production of Met coal for the North American and seaborne export markets. For the six months ended June 30, 2019,2020, we produced 8.0 MMt and sold 10.48.3 MMt of coal. Met coal and thermal coal sales represented approximately 80.0%79.0% and 20.0%21.0%, respectively, of our total volume of coal sold for the six months ended June 30, 2018.2020.
Our results for the six months ended June 30, 2020, were adversely impacted by (1) a fatal injury to an employee of one of our contractors at our Australian Operations which resulted in temporary suspension of mining activities during January and February that resulted in lower production and lower sales volumes, (2) wet weather conditions in Australia which disrupted certain mining and logistics activities, (3) a delay in resolution of the United States and China trade dispute, which limited export sales to China, (4) the impact of COVID-19 on global Met coal demand resulting in the temporary idling of the U.S. Operations in April and May 2020 and implementation of preventative measures at all our operations to protect our employees from the pandemic. These impacted operating efficiencies and resulted in lower production and lower realized prices. The Buchanan and Logan mines resumed operations on June 1, 2020, while the Greenbrier mine remains temporarily idled until market conditions improve. Despite these adverse conditions, our results benefited from lower gross cost and capital expenditure across our business. A weaker Australian dollar, the currency in which most costs are denominated for our Australian Operations, had a positive impact on performance.
From our Australian Operations, production and sales volumes were lower for the six months ended June 30, 2020 compared to the same period in 2019. Coal sales volumes decreased 0.8 MMt, or 12.6%. Lower sales volumes combined with lower average realized prices per Mt resulted in a reduction in coal revenues by 40.4% compared to the prior comparative period. Despite Operating costs for the six months ended June 30, 2020 being $55.6 million, or 10.6% favorable compared to the corresponding period in 2019, Mining cost and Operating costs per ton increased as a result of lower production and sales volumes during period.
From our U.S. Operations, production and sales volumes were lower for the six months ended June 30, 2020 compared to the same period in 2019 primarily due to the impacts of COVID-19 and subsequent idling of operations in April and May. Coal sales volumes decreased 1.2 MMt, or 31.0%. Lower sales volumes combined with lower average realized prices per Mt resulted in a reduction in coal revenues by 45.4% compared to the prior comparative period. To mitigate the revenue decline, Operating costs for the six months ended June 30, 2020 were $90.5 million, or 31.3% favorable compared to the corresponding period in 2019. These effective cost controls realized a reduction in Mining cost and Operating costs per ton compared to the prior corresponding period.
During the period ended June 30, 2020, we recognized an impairment charge of $63.1 million related to the Greenbrier mine.
COVID-19
The COVID-19 global pandemic has continued to result in a challenging working environment which has significantly impacted the demand and price for metallurgical coal. Authorities in many countries around the world have implemented numerous and varying measures to reduce the spread and limit the impact of COVID-19, including travel bans and restrictions, quarantines, curfews, stay-at-home orders, business shutdowns and closures. Many countries have also commenced implementing multi-stage policies with the goal of re-opening markets and boosting economic activity. These measures have impacted and will continue to impact our mining operations, our customers, employees, suppliers and other third parties with whom we do business. The U.S. and Australia, where our mining operations are located, are in varying stages of restrictions and re-opening in response to COVID-19. There is considerable uncertainty regarding how current and future health and safety measures implemented in response to the pandemic will impact our business, including whether they will result in further changes in demand for metallurgical coal, increase in operating costs, impacts to our supply chain and whether measures will result in port closures or border restrictions, each or all of which can impact our ability to produce and sell our coal.
Coronado Global Resources Inc. Form 10-Q June 30, 202026
The safety and wellbeing of our workforce remains our highest priority and we continue to manage the potential threat of COVID-19 at our mines and offices. The Company formed a COVID-19 taskforce spanning its Australian and U.S. operations and proactively enacted stringent preventative measures to ensure the safety and well-being of employees and contractors during the pandemic. These procedures include increased screenings of employees as they arrive at the workplace as well as strict adherence to hygiene and social distancing guidelines while at work.
Our U.S. Operations were idled in April and May 2020 due to the COVID-19 induced economic downturn and decline in demand from customers in Europe, Brazil and the U.S. While the mines were idled, the Company continued to make shipments to its customers from existing inventories which allowed the Company to meet all customer commitments. On June 1, 2020, the Company resumed operations at the Buchanan and Logan mines. Whilst production at these mines has been reduced in response to lower temporary demand, both mines are operationally well positioned to increase production quickly in the event demand increases rapidly. The Greenbrier mine remains idle and the Company will continue to monitor market developments to evaluate the duration for which the mine will remain idle. Subsequent to June 30, 2020 we have had a small number of our workforce at our U.S Operations who tested positive for the virus. We have taken all necessary steps to isolate the affected workers and protect the remaining workforce. To date these efforts have not adversely affected our production.
The global economic slowdown resulting from the effects of COVID-19 has sharply reduced the demand for steel in all markets except for China, where steel production remained elevated during the second half of 2020. In Australia, our sales profile has adjusted accordingly with an increase portion of deliveries to the Chinese market in the quarter. The impact on our Australian Operations has been limited due to the Curragh mine’s unique position as a strategic supplier of ‘base load’ metallurgical coal for coke blends. While global demand remains uncertain, there are promising signs of recovery in Asia Pacific demand.
In response to the global impacts of COVID-19 on the demand for steel and the resulting impact on the price and demand for metallurgical coal, the Company has taken steps to safeguard its operations, strengthen its balance sheet and increase liquidity by reducing capital expenditures and managing operating costs in a disciplined manner.
Due to the impact of COVID-19, we expect our results of operations for fiscal year 2020 to be significantly below our historical performance.
Syndicated Facility Agreement covenant waivers
On May 25, 2020 the Company concluded an agreement with lenders under the SFA to waive compliance with certain financial covenants for the period from May 25, 2020 to February 28, 2021. The waiver provides additional flexibility to work through this period of significant uncertainty, lower demand and pricing for metallurgical coal that has been brought about by the global COVID-19 pandemic. During the waiver period the Company will have additional reporting undertakings and additional restrictions on certain terms and conditions, including in relation to divestments and new indebtedness. During the waiver period we are required to provide additional financial information to the lenders each month and have agreed to limit financial indebtedness and asset sales that is not pre-approved by lenders. See “Liquidity and Capital Resources-Liquidity-Secured Credit Facilities” below for more details.
Segment Reporting
In accordance with Accounting Standards Codification, or ASC, 280, Segment Reporting, we have adopted the following reporting segments: Curragh; Buchanan; Logan;Australia and Greenbrier.the United States. In addition, “Corporate“Other and other”Corporate” is not a reporting segment but is disclosed for the purposes of reconciliation to our consolidated financial statements.
Factors Affecting Comparability of our Financial Statements
Due to several factors, our historical results of operations are not comparable from period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief description of the key factors impacting the comparability of our results of operations.
Curragh Acquisition
On March 29, 2018, we acquired Curragh from Wesfarmers Ltd, or Wesfarmers, for aggregate consideration, on the date of the transaction, of $563.8 million. We refer to this transaction as the Curragh acquisition. The operating results of Curragh have been included in our consolidated financial statements since March 29, 2018.
Corporate Reorganization Transaction
During the year ended December 31, 2018, Coronado Group LLC and Coronado Global Resources Inc. completed a common control reorganization of their legal entity structure, which we refer to as the Reorganization Transaction. Prior to the Reorganization Transaction in August 2018, Coronado Group HoldCo LLC, the holding company of our Australian Operations, was a wholly-owned subsidiary of Coronado Group LLC.
The Company is a corporation for U.S. federal and state income tax purposes. The Company’s accounting predecessor, Coronado Group LLC, was and is treated as a flow-through entity for U.S. federal income tax purposes and as such, has generally not been subject to U.S. federal income tax at the entity level.
The Reorganization Transaction was treated as a combination of entities under common control in line with ASC 805, Business Combinations, whereby the receiving entity (the Company) recorded the contributed assets and liabilities at the carrying value of Coronado Group LLC. Prior to the Reorganization Transaction, the consolidated financial statements of the Company reflect the net assets and operations of Coronado Group LLC. The financial statements presented following the Reorganization Transaction are those of the receiving entity (the Company) and are retrospectively adjusted to present that entity as if it always held the net assets or equity interests previously held by the seller, Coronado Group LLC. As such, financial information (including comparatives) of the Company has been presented as a continuation of the pre-existing accounting values of assets and liabilities in Coronado Group LLC’s financial statements.
Australian IPO
On October 23, 2018, we completed an initial public offering on the ASX, pursuant to which the Company issued and sold the equivalent of 16,651,692 shares of common stock in the form of CHESS Depositary Interests, or CDIs, and the EMG Group sold the equivalent of 2,691,896.4 shares of common stock in the form of CDIs.
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, or on a quarterly basis.basis or annual fixed price contracts.
Coronado Global Resources Inc. Form 10-Q June 30, 202027
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) total sales volumes and average realized price per Mt sold, which we define as total coal revenues divided by total sales volume; (iii) Met sales volumes and average realized metMet price per Mt sold, which we define as metMet coal revenues divided by metMet sales volume; (iv) average segment mining costs per Mt sold, which we define as cost of coal revenuesmining costs divided by sales volumes;volumes for the respective segment; and (v) average segment operating costs per Mt sold, which we define as segment operating costs divided by sales volumes.volumes for the respective segment.
Coal revenues are shown on our statement of operations and comprehensive income exclusive of other revenues. Operating expenses are inclusive of cost of coal revenues, freight expense, Stanwell rebate and other royalties and exclude depreciation, depletion and amortization, and selling, general, and administrative expenses. Cost of coal revenues 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. Cost of coal revenues excludes these cost components as our chief operating decision maker, or CODM, does not view these costs as directly attributable to the production of coal. We believe our presentation of cost of coal revenues is useful to investors in providing an accurate view of the costs directly attributable to the production of coal in our mining costs segment. Additionally,Generally, export sale contracts for our international sales contracts, we typicallyAustralian 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 of operations includes references to and analysis of Adjusted EBITDA and mining costs, which is aare financial measuremeasures not recognized in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. Non-GAAP financial measures, including Adjusted EBITDA, are used by investors to measure our operating performance and lenders to measure our ability to incur and service debt.performance.
Adjusted EBITDA, a non-GAAP measure, is defined as earnings before interest, tax, depreciation, depletion and amortization and other foreign exchange losses and loss on debt extinguishment.losses. Adjusted EBITDA is also adjusted for certain discrete 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-titledsimilarly titled measures presented by other companies. A reconciliation of Adjusted EBITDA to its most directly comparable measure under U.S. GAAP is included below. In addition, we present Adjusted EBITDA on a supplemental pro forma basis.
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 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 June 30, 20192020 Compared to Three Months Ended June 30, 20182019
Summary
Summary
OurThe financial and operational highlights for the three months ended June 30, 2019:2020:
· Tonnage soldSales volume totaled 5.43.8 MMt for the three months ended June 30, 2019, or 0.22020, 1.5 MMt higherlower than the three months ended June 30, 2018. Significant improvements2019. Sales volumes were lower largely due to rail availability at Curraghthe idling of our U.S Operations during April and May in response to the second quarter of 2019 provided the opportunity to recover delayed sales from the first quarter of 2019.COVID-19 market conditions.
·Net income increaseddecreased by $58.2 million, from $59.3$231.8 million for the three months ended June 30, 2018, to net income of2020, from $117.5 million for the three months ended June 30, 2019, reflecting increases in operating incomegenerating a net loss of $114.3 million for the quarter. The decrease was primarily due to lower coal sales revenues and lower other expenses, partlythe impact of the non-cash impairment charge at Greenbrier, partially offset by lower operating costs and an income tax expense.benefit.
· Coal markets remained positiveLower coal market prices during the three months ended June 30, 2019 as2020 resulted in lower average realized Met coal revenues averaged $5.8pricing of $91.6 per ton higherMt sold, 33.5% lower compared to the three months ended June 30, 2018.2019.
·Adjusted EBITDA for the three months ended June 30, 2019 totaled $222.32020, is a loss of $10.5 million, an increasea decrease of $83.1$232.8 million, from Adjusted EBITDA of $139.2$222.3 million for the three months ended June 30, 2018, driven by very strong revenues and lower operating costs.2019.
As at June 30, 2020 the company had $441.0 million of external borrowings outstanding.
Coronado Global Resources Inc. Form 10-Q June 30, 202028
As of June 30, 2019, we2020, Coronado had cash on hand of $46.0$36.1 million (excluding restricted cash) and $350.0 million of availability under the Multicurrency Revolving Syndicated Facility Agreement, dated September 15, 2018, which we refer to as the SFA..
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| For Three Months Ended June 30, |
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| For Three months ended June 30, | ||||||||||||
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| ($ in thousands) |
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| ($ in thousands) | ||||||||||||
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| 2019 |
| 2018 |
| Change |
| % |
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| 2020 |
| 2019 |
| Change |
| % |
Revenues: |
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Coal revenues |
| 630,690 |
| 577,510 |
| 53,180 |
| 9.2 | % |
| 295,206 |
| 630,690 |
| (335,484) |
| (53.2%) |
Other revenues |
| 11,767 |
| 14,020 |
| (2,253 | ) | (16.1 | )% |
| 9,142 |
| 11,767 |
| (2,625) |
| (22.3%) |
Total revenues |
| 642,457 |
| 591,530 |
| 50,927 |
| 8.6 | % |
| 304,348 |
| 642,457 |
| (338,109) |
| (52.6%) |
Costs and expenses: |
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Cost of coal revenues (exclusive of items shown separately below) |
| 264,137 |
| 305,309 |
| (41,172 | ) | (13.5 | )% |
| 224,459 |
| 264,137 |
| (39,678) |
| (15.0%) |
Depreciation, depletion and amortization |
| 45,508 |
| 42,594 |
| 2,914 |
| 6.8 | % |
| 41,547 |
| 45,508 |
| (3,961) |
| (8.7%) |
Freight expenses |
| 52,035 |
| 40,912 |
| 11,123 |
| 27.2 | % |
| 40,504 |
| 52,035 |
| (11,531) |
| (22.2%) |
Stanwell rebate |
| 45,847 |
| 32,812 |
| 13,035 |
| 39.7 | % |
| 24,787 |
| 45,847 |
| (21,060) |
| (45.9%) |
Other royalties |
| 49,073 |
| 67,695 |
| (18,622 | ) | (27.5 | )% |
| 19,157 |
| 49,073 |
| (29,916) |
| (61.0%) |
Selling, general, and administrative expenses |
| 9,242 |
| 8,513 |
| 729 |
| 8.6 | % |
| 7,158 |
| 9,242 |
| (2,084) |
| (22.5%) |
Total costs and expenses |
| 465,842 |
| 497,835 |
| (31,993 | ) | (6.4 | )% |
| 357,612 |
| 465,842 |
| (108,230) |
| (23.2%) |
Operating income |
| 176,615 |
| 93,695 |
| 82,920 |
| 88.5 | % | ||||||||
Operating (loss) income |
| (53,264) |
| 176,615 |
| (229,879) |
| (130.2%) | |||||||||
Other income (expenses): |
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Interest expense, net |
| (9,087 | ) | (18,987 | ) | 9,900 |
| (52.1 | )% |
| (12,064) |
| (9,087) |
| (2,977) |
| 32.8% |
Loss on debt extinguishment |
| — |
| — |
| — |
| — |
| ||||||||
Impairment of assets |
| (63,111) |
| — |
| (63,111) |
| 100.0% | |||||||||
Other, net |
| (2,989 | ) | (2,391 | ) | (598 | ) | 25.0 | % |
| (8,537) |
| (2,989) |
| (5,548) |
| 185.6% |
Total other expenses, net |
| (12,076 | ) | (21,378 | ) | 9,302 |
| (43.5 | )% | ||||||||
Net income before tax |
| 164,539 |
| 72,317 |
| 92,222 |
| 127.5 | % | ||||||||
Income tax expense |
| (47,033 | ) | (12,995 | ) | (34,038 | ) | 261.9 | % | ||||||||
Net income |
| 117,506 |
| 59,322 |
| 58,184 |
| 98.1 | % | ||||||||
Total other income (expense), net |
| (83,712) |
| (12,076) |
| (71,636) |
| 593.2% | |||||||||
Net (loss) income before tax |
| (136,976) |
| 164,539 |
| (301,515) |
| (183.2%) | |||||||||
Income tax benefit (expense) |
| 22,646 |
| (47,033) |
| 69,679 |
| (148.1%) | |||||||||
Net (loss) income |
| (114,330) |
| 117,506 |
| (231,836) |
| (197.3%) | |||||||||
Less: Net loss attributable to noncontrolling interest |
| (4 | ) | (2 | ) | (2 | ) | 100.0 | % |
| (2) |
| (4) |
| 2 |
| (50.0%) |
Net income attributable to Coronado Global Resources Inc. |
| 117,510 |
| 59,324 |
| 58,186 |
| 98.1 | % | ||||||||
Net (loss) income attributable to Coronado Global Resources, Inc. |
| (114,328) |
| 117,510 |
| (231,838) |
| (197.3%) |
Coal Revenues
Coal revenues were $630.7$295.2 million for the three months ended June 30, 2019, an increase of $53.2 million, as compared to $577.5 million for the three months ended June 30, 2018. The increase in coal revenues was attributable to higher Met coal sales volumes and higher average realized Met coal price per ton sold during the 2019 period. Improvements in rail conditions at Curragh underpinned the increase in sales volumes whereas higher average realized Met coal pricing was primarily driven by committed (fixed and index priced) high volatile coal sales from the Logan segment, as well as an improved higher yielding Met coal sales mix.
Other Revenues
Other revenues were $11.8 million for the three months ended June 30, 2019,2020, a decrease of $2.3$335.5 million, as compared to $14.0$630.7 million for the three months ended June 30, 2018. The decrease is predominantly related to Curragh, which recorded $12.6 million in other revenues relating to the amortization of the Stanwell non-market coal supply agreement, or CSA, liability for the three months ended June 30, 2018 compared to $8.5 million recognized for the three months ended June 30, 2019. This decrease was partially offsetdriven by an increaselower coal sales volumes and a lower average realized Met coal price for the three months to June 30, 2020, compared to the same period in freight revenues with respect2019. Coal sales volumes were down 1.5 MMt, due to certain arrangements with customers at Logansofter market conditions resulting from the impact of the COVID-19 pandemic, and Greenbrier.import restrictions into China, which resulted in the suspension of sales from our U.S. Operations to China during the June 30, 2020 quarter. Lower sales volumes were exacerbated by lower average realized Met coal pricing of $91.6 per Mt sold, a reduction of $46.2 per Mt sold, compared to $137.8 per Mt sold as of June 30, 2019 due to difficult coal market conditions, affected by weak customer demand and pandemic restrictions.
Cost of Coal Revenues (Exclusive of Items Shown Separately Below)
Cost of coal revenues are comprisedcomprise of 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 $224.5 million for the Company werethree months ended June 30, 2020, a decrease of $39.7 million, or 15.0%, as compared to $264.1 million for the three months ended June 30, 2019, a2019. The cost of coal revenues for our U.S. Operations decreased $68.9 million due to idling of the U.S. Operations in April and May 2020 in response to COVID-19 pandemic. This decrease was partially offset by an increase in cost of $41.2 million, as compared to $305.3coal revenues for our Australian Operations driven by operational issues impacting productivity which also resulted in lower production volumes.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization was $41.6 million for the three months ended June 30, 2018. The primary reasons for this2020, a decrease are: (1) the three monthsof $3.9 million, as compared to June 30, 2018 included the unwind of a $21.4 million fair value adjustment recognized to coal inventories on the acquisition of Curragh; and (2) favorable average foreign exchange rate on translation of the Curragh operations for the three months ended June 30, 2019 of A$/US$: 0.71 versus 0.76 for the three months ended June 30, 2018. This was partially offset by higher production costs of $3.4 million at our U.S. Operations, primarily due to adverse geological mining conditions at certain mine complexes.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization was $45.5 million for the three months ended June 30, 2019, an increase2019. The decrease was largely driven by favorable average foreign exchange rate on the translation of $2.9 million, asthe Australian operations of A$/US$: 0.66 compared to $42.60.70 for the three months ended June 30, 2020 compared to the same period in 2019.
Coronado Global Resources Inc. Form 10-Q June 30, 202029
Freight Expenses
Freight expenses primarily relate to the Australian operations and relate to costs associated with take-or-pay commitments for rail and port providers and demurrage costs. Freight expenses totaled $40.5 million for the three months ended June 30, 2018. The increase was largely associated with our operating segments in the United States (Buchanan, Logan and Greenbrier) for which depreciation expense increased by $2.12020, a decrease of $11.5 million, predominantly dueas compared to the expiration of a credit that was previously recognized on amortization of sales contracts.
Freight Expenses
The amount of freight expenses was $52.0 million for the three months ended June 30, 2019, an increase2019. Curragh’s freight costs contributed $9.8 million to this decrease driven by lower production and sales volumes which in turn incurred lower railings and port charges. The remaining decrease related to our U.S. Operations where sales volumes were significantly lower due to idling of $11.1 million, as compared to $40.9the mines during April and May.
Stanwell Rebate
The Stanwell rebate was $24.8 million for the three months ended June 30, 2018. Curragh’s freight costs contributed $4.42020, a decrease of $21.1 million, as compared to this increase driven by higher sales volumes which in turn incurred higher railings and port charges. The remaining $6.7 million increase relates mainly to new sales contracts entered into at Logan and Greenbrier which include the rendering of rail and port services to certain customers.
Stanwell Rebate
The Stanwell rebate was $45.8 million for the three months ended June 30, 2019, an increase2019. The decrease was largely driven by lower realized coal pricing during 2020, lower sales volumes in the second quarter of $13.02020 and a favorable average foreign exchange rate on translation of A$/US$: 0.66 compared to 0.70 for the three months ended June 30, 2020 compared to the same period in 2019.
Other Royalties
Other royalties were $19.2 million in the three months ended June 30, 2020, a decrease of $29.9 million, as compared to $32.8$49.1 million in the three months ended June 30, 2019. Lower royalties were a product of lower average realized export pricing, a favorable average foreign exchange rate for the quarter used to translate the Australian Operations and the benefit of a mark to market write down of the Contingent Royalty Consideration obligation (payable to CONSOL) during the three months ended June 30, 2020 of $0.5 million compared to $0.7 million write up for the same period in 2019.
Interest Expense, net
Interest expense, net of $12.1 million for the three months ended June 30, 2018. The increase is driven primarily from higher export sales volumes in the three months ended June 30, 2019 versus the three months ended June 30, 2018.
Other Royalties
Other royalties were $49.0 million in the three months ended June 30, 2019, a decrease of $18.62020, increased $3.0 million, as compared to $67.7 million in the three months ended June 30, 2018. The variance was primarily driven by a significant mark-to-market write up in the Contingent Royalty Consideration (payable to CONSOL) during the 2018 in respect of the Buchanan mine for $19.4 million due to higher forecast Met pricing at the end of June 30, 2018.
Interest Expense
Interest expense, net of interest income, was $9.1 million for the three months ended June 30, 2019, a decrease of $9.9 million, as compared to2019. The higher interest expense in 2020 was due to increase draw down of $19.0debt in the last 12 months with $441.0 million interest-bearing liabilities outstanding as at June 30, 2020. During the three months ended June 30, 2019 an average of $25.0 million of the debt was drawn down. However, such amount was fully repaid, and no balance remained outstanding as at June 30, 2019.
Income tax benefit (expense)
Income tax benefit of $22.6 million for the three months ended June 30, 2018. This decrease in interest2020, increased by $69.7 million, as compared to a tax expense was primarily attributable to the repayment of the $700$47.0 million term loan on October 24, 2018. The interest expense for the three months ended June 30, 2019 includes the discount rate unwind2019. An income tax benefit is realized at June 30, 2020 on account of the Stanwell Reserved Area, orcompany incurring a net loss for the SRA, deferred consideration liability of $4.9 million and interest and finance charges on the SFA of $3.3 million.period.
Six Months Ended June 30, 20192020 Compared to Six Months Ended June 30, 20182019
Summary
Summary
OurThe financial and operational highlights for the six months ended June 30, 2019:2020:
· Tonnage soldSales volume totaled 10.48.3 MMt for the six months ended June 30, 2019,2020, or 5.12.0 MMt higherlower than the six months ended June 30, 2018, predominantly due2019. Sales volumes were impacted by the idling of the U.S Operations for two months in response to the acquisition ofdemand contractions brought on by COVID-19 and the fatality in January 2020 at our Australian Operations impacting production mainly in the first quarter, and other wet weather and sequencing issues at the Curragh on March 29, 2018.mine.
·Net income increaseddecreased by $178.7$337.5 million, from $35.7 million for the six months ended June 30, 2018, to $214.3 million for the six months ended June 30, 2019, reflecting increases in operating income, predominantlyto a net loss $123.2 million for the six months ended June 30, 2020. The decrease was primarily due to lower coal sales revenues and the acquisitionimpact of Curragh on March 29, 2018, lower interest expense, no loss on debt extinguishment, and lower other expenses, partlythe non-cash impairment charge at Greenbrier, partially offset by higherlower operating costs and an income tax expense.benefit.
· Coal markets strengthenedLower coal market prices during the six months ended June 30, 2019 as revenues averaged $116.72020, resulted in lower average realized Met coal pricing of $97.3 per Mt sold, 6.7% higher29.2% lower compared $109.4 per ton sold forto the six months ended June 30, 2018.2019.
·Adjusted EBITDA for the six months ended June 30, 20192020, totaled $405.4$34.9 million, an increasea decrease of $263.5$370.5 million, from Adjusted EBITDA of $141.8$405.4 million for the six months ended June 30, 2018.2019
· Net cash of $301.2 million byCash used in operating activities was $7.6 million for the six months ended June 30, 2019 was partly offset by capital expenditures2020, a decrease of $66.4 million.$308.8 million compared to cash generated of $301.2 million for the six months ended June 30, 2019.
·During the six months ended June 30, 2019, we2020, the Company paid a dividend of $299.7dividends $24.2 million, which was funded by available cash and external borrowings. The monies borrowed were fully repaid byAs at June 30, 2019.2020 the company had $441.0 million of external borrowings outstanding.
Coronado Global Resources Inc. Form 10-Q June 30, 202030
·As of June 30, 2019, we2020, the Company had available cash on hand of $46.0$36.1 million (excluding restricted cash) and $350.0 million of additional liquidity available under the Syndicated Facility Agreement..
|
| For Six Months Ended June 30, |
|
| For Six months ended June 30, | ||||||||||||
|
| ($ in thousands) |
|
| ($ in thousands) | ||||||||||||
|
| 2019 |
| 2018 |
| Change |
| % |
|
| 2020 |
| 2019 |
| Change |
| % |
Revenues: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coal revenues |
| 1,212,487 |
| 784,346 |
| 428,141 |
| 54.6 | % |
| 694,817 |
| 1,212,487 |
| (517,670) |
| (42.7%) |
Other revenues |
| 21,848 |
| 15,337 |
| 6,511 |
| 42.5 | % |
| 18,849 |
| 21,848 |
| (2,999) |
| (13.7%) |
Total revenues |
| 1,234,335 |
| 799,683 |
| 434,652 |
| 54.4 | % |
| 713,666 |
| 1,234,335 |
| (520,669) |
| (42.2%) |
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of coal revenues (exclusive of items shown separately below) |
| 533,696 |
| 424,620 |
| 109,076 |
| 25.7 | % |
| 481,345 |
| 533,696 |
| (52,351) |
| (9.8%) |
Depreciation, depletion and amortization |
| 85,279 |
| 64,402 |
| 20,877 |
| 32.4 | % |
| 86,849 |
| 85,279 |
| 1,570 |
| 1.8% |
Freight expenses |
| 89,362 |
| 45,155 |
| 44,207 |
| 97.9 | % |
| 82,886 |
| 89,362 |
| (6,476) |
| (7.2%) |
Stanwell rebate |
| 94,674 |
| 32,812 |
| 61,862 |
| 188.5 | % |
| 57,415 |
| 94,674 |
| (37,259) |
| (39.4%) |
Other royalties |
| 93,422 |
| 82,987 |
| 10,435 |
| 12.6 | % |
| 43,455 |
| 93,422 |
| (49,967) |
| (53.5%) |
Selling, general, and administrative expenses |
| 18,311 |
| 52,283 |
| (33,972 | ) | (65.0 | )% |
| 13,353 |
| 18,311 |
| (4,958) |
| (27.1%) |
Total costs and expenses |
| 914,744 |
| 702,259 |
| 212,485 |
| 30.3 | % |
| 765,303 |
| 914,744 |
| (149,441) |
| (16.3%) |
Operating income |
| 319,591 |
| 97,424 |
| 222,167 |
| 228.0 | % | ||||||||
Operating (loss) income |
| (51,637) |
| 319,591 |
| (371,228) |
| (116.2%) | |||||||||
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
| (17,264 | ) | (25,488 | ) | 8,224 |
| (32.3 | )% |
| (24,318) |
| (17,264) |
| (7,054) |
| 40.9% |
Loss on debt extinguishment |
| — |
| (3,905 | ) | 3,905 |
| (100.0 | )% | ||||||||
Impairment of assets |
| (63,111) |
| — |
| (63,111) |
| 100.0% | |||||||||
Other, net |
| 1,042 |
| (26,846 | ) | 27,888 |
| (103.9 | )% |
| (4,485) |
| 1,042 |
| (5,527) |
| (530.4%) |
Total other expenses, net |
| (16,222 | ) | (56,239 | ) | 40,017 |
| (71.2 | )% | ||||||||
Net income (loss) before tax |
| 303,369 |
| 41,185 |
| 262,184 |
| 636.6 | % | ||||||||
Income tax (expense) benefit |
| (89,043 | ) | (5,534 | ) | (83,509 | ) | 1,509.0 | % | ||||||||
Net income (loss) |
| 214,326 |
| 35,651 |
| 178,675 |
| 501.2 | % | ||||||||
Total other income (expense), net |
| (91,914) |
| (16,222) |
| (75,692) |
| 466.6% | |||||||||
Net (loss) income before tax |
| (143,551) |
| 303,369 |
| (446,920) |
| (147.3%) | |||||||||
Income tax benefit (expense) |
| 20,355 |
| (89,043) |
| 109,398 |
| (122.9%) | |||||||||
Net (loss) income |
| (123,196) |
| 214,326 |
| (337,522) |
| (157.5%) | |||||||||
Less: Net loss attributable to noncontrolling interest |
| (4 | ) | (4 | ) | — |
| — |
|
| (4) |
| (4) |
| — |
| - |
Net income (loss) attributable to Coronado Global Resources Inc. |
| 214,330 |
| 35,655 |
| 178,675 |
| 501.2 | % | ||||||||
Net (loss) income attributable to Coronado Global Resources, Inc. |
| (123,192) |
| 214,330 |
| (337,522) |
| (157.5%) |
Coal Revenues
Coal revenues were $694.8 million for the six months ended June 30, 2020, a decrease of $517.7 million, compared to $1,212.5 million for the six months ended June 30, 2019, an increase of $428.1 million, as compared to $784.3 million for the six months ended June 30, 2018. The addition of Curragh contributed $402.0 million in additional2019. This decrease was driven by lower coal revenues for the six months ended June 30, 2019 that were not included within coal revenues for the six months ended June 30, 2018 given Curragh was acquired on March 29, 2018. Coal revenues for our operating segments in the United States (Buchanan, Logansales volumes and Greenbrier) of $436.5 million for the six months ended June 30, 2019 were $26.7 million higher than $409.8 million for the six months ended June 30, 2018 mainly as a result higherlower average realized Met coal pricing.
Other Revenues
Other revenuesprice. Coal sales volumes were $21.8 million fordown 2.0 MMt, due to lower production stemming from the six months endedtemporary suspension of mining activities at the Curragh mine following the safety incident in January 2020, the impact of the COVID-19 pandemic which resulted in the temporary idling of the U.S. Operations in April 2020 and May 2020, and the impact of import restrictions into China, which resulted in the suspension of sales from our U.S. Operations to China during the June 30, 2020 quarter. Lower sales volumes were exacerbated by lower average realized Met coal pricing of $97.3 per Mt sold, a reduction of $40.2 per Mt sold, compared to $137.5 per Mt sold as of June 30, 2019 an increase of $6.5 million, as compareddue to $15.3 million for the six months ended June 30, 2018. The increase is predominantly related to the amortization of the Stanwell non-market CSA liability for the six months ended June 30, 2019 of $17.1 million compared to $12.6 million for the period since the acquisition of Curragh on March 29, 2018 included in the six months ended June 30, 2018. Other revenues for our operating segments in the United States (Buchanan, Logansofter market conditions and Greenbrier) increased $1.1 million on higher freight revenue.falling index prices.
Cost of Coal Revenues (Exclusive of Items Shown Separately Below)
Cost of coal revenues are comprisedcomprise of costs related to produced tons sold, along with changes in both the volumes and carrying values of coal inventory. Cost of coal revenues include items such as direct operating costs, which includes employee-related costs, materials and supplies, contractor services, coal handling and preparation costs and production taxes. Total cost of coal revenues were $481.3 million for the Company weresix months ended June 30, 2020, a decrease of $52.4 million, or 9.8%, as compared to $533.7 million for the six months ended June 30, 2019,2019. The cost of coal revenues for our U.S. Operations decreased $83.7 million due to idling of the U.S. Operations in April and May 2020 in response to the COVID-19 pandemic and associated cost control measures implemented during the period. The decrease was partially offset by an increase in cost of $109.1coal revenues for our Australian Operations of $29.2 million as compared to $424.6 million for the six months ended June 30, 2018. $94.5 million of the increase was attributable to a full six-month contribution in the 2019 period from Curragh compared to a partial period from acquisition on March 29, 2018 to June 30, 2018. The remaining $14.6 million increase was primarily driven by higher production costs at the Buchanan and Logan operating segments in the U.S., resulting from adverse mining conditions. In addition, Logan began production at three new coal mines in the first half of 2019.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization was $85.3 million for the six months ended June 30, 2019, an increase of $20.9 million, as compared to $64.4 million for the six months ended June 30, 2018. The increase was primarily a result of the addition of Curragh, which contributed $37.9 million in depreciation, depletion and amortization for the six months ended June 30, 2019 compared to $21.9 from the date of acquisition, March 29, 2018, to June 30, 2018.
Freight Expenses
The amount of freightFreight expenses wastotaled $89.4 million for the six months ended June 30, 2019, an increase2020, a decrease of $44.2$6.5 million, as compared to $45.2$82.9 million for the six months ended June 30, 2018.2019. The increase isdecrease was primarily due to $79.2 milliondriven by lower sales volume of Curragh related freight expenses8.0 MMt for the six months endedto June 30, 20192020, a reduction of 2.4 MMt, compared to $38.2sales volumes of 10.4 MMt for the six months to June 30, 2019. The decrease was partially offset by higher demurrage costs in the Australian Operations as a result of longer vessel wait times at port due to the disruptions in production in the beginning of 2020 period.
Coronado Global Resources Inc. Form 10-Q June 30, 202031
Stanwell Rebate
The Stanwell rebate was $57.4 million for the six months ended June 30, 2018 which included Curragh only for2020, a partial period from acquisition datedecrease of March 29, 2018 to June 30, 3018. The freight expense for our operating segments in the United States (Buchanan, Logan and Greenbrier), which predominantly sells its coal on an F.O.R basis, were $11.2 million for the six months ended June 30, 2019, an increase of $4.4$37.3 million, as compared to $6.8 million for the six months ended June 30, 2018. The increase is primarily driven by new rail and port arrangements with certain customers that did not exist in 2018 period.
Stanwell Rebate
The Stanwell rebate was $94.7 million for the six months ended June 30, 2019, an increase of $61.92019. The decrease was largely driven by lower realized coal pricing and lower sales volumes in 2020.
Other Royalties
Other royalties were $43.5 million as compared to $32.8 million forin the six months ended June 30, 2018. Curragh contribution2020, a decrease of $50.0 million, as compared to the Company’s result during the six months ended June 30, 2018 was only for part of the period since March 29, 2018, being the date of acquisition.
Other Royalties
Other royalties were $93.4 million in the six months ended June 30, 2019, an increase2019. Lower royalties were a product of $10.4 million, as compared to $83.0 million inlower average realized export pricing and lower volumes for the six monthssix-month ended June 30, 2018. Curragh contributed approximately $79.1 million in other royalty expense for the six months ended June 30, 20192020 compared to $38.2the same period in 2019.
Selling, General, and Administrative Expenses
Selling, general and administrative costs were $13.4 million for the six months ended June 30, 2019 which only included Curragh for part of the period from March 29, 2018, the date of acquisition. This increase was in part offset by2020, a decrease of $5.0 million, as compared to $18.3 million for the six months to June 30, 2019. The decrease is primarily driven by improved efficiencies and cost saving initiatives to reduce corporate spend in other royalties attributable2020 compared to our U.S. Operations which decreased $28.4 million. The CONSOL Energy contingent royalty increased $16.4the 2019 comparative period.
Interest Expense, net
Interest expense, net of $24.3 million for the six months ended June 30, 2018 compared to a2020, increased $7.1 million decrease for the six months ended June 30, 2019. This $23.5 million benefit is primarily due to average realized pricing for export sales forecast in the mark-to-market adjustment for June 30, 2018 being significantly higher than the December 31, 2017 forecast in the mark-to-market calculation. The benefit also reflects one less year remaining in the contingent royalty period.
Selling, General, and Administrative Expenses
Selling, general and administrative cost was $18.3 million for the six months ended June 30, 2019, a decrease of $34.0 million, as compared to $52.3 million for the six months ended June 30, 2018. The decrease was due to specific one-off, non-recurring costs incurred in relation to the Curragh acquisition during March 2018 relating to stamp duty of $33.0 million and various professional service and legal fees of $4.7 million.
Interest Expense
Interest expense, net of interest income, was $17.3 million for the six months ended June 30, 2019, a decrease of $8.2 million, as compared to2019. The higher interest expense in 2020 was due to increase draw down of $25.5debt in the last 12 months with $441.0 million of interest-bearing liabilities outstanding as at June 30, 2020. During the six months ended June 30, 2019 the Company had an average drawn debt of $109.0 million which was fully repaid and no balance remained outstanding as at June 30, 2019.
Income tax expense
Income tax benefit of $20.4 million for the six months ended June 30, 2018. Included within interest expense for the six months ended June 30, 2019 is $9.72020, increased by $109.4 million, relating to the accretion of the deferred consideration liability recognized on the purchase of the SRA on August 14, 2018, and $4.7 million finance charges related to commitment and financial guarantee fees incurred in relation to the Syndicated Facility Agreement. This was partially offset by a decrease in interest expenseas compared to the six months ended June 30, 2018, during which the Company incurred interest on a term loan established for the Curragh acquisition. This loan was repaid in full on October 24, 2018.
Loss on Debt Extinguishment
For the six months ended June 30, 2018, the Company recognized a loss on debt extinguishmenttax expense of $3.9 million relating to the extinguishment of a term loan that occurred in conjunction with the Curragh acquisition on March 29, 2018. There was no debt extinguishment cost for the six months ended June 30, 2019.
Other, Net
Other, net income was $1.0$89.0 million for the six months ended June 30, 2019, a decrease2019. The Company had an income tax benefit of $27.9 million, as compared to other, net expense $26.8$20.4 million for the six months ended June 30, 2018. This favorable variance is primarily comprised2020, comprising a discrete income tax expense of non-recurring costs incurred for the six months ended June 30, 2018 relating to the $15.7$1.0 million and an income tax benefit of $21.4 million based on a loss on the settlementbefore tax of a foreign exchange swaps recognized at the time of the Curragh acquisition and a fair value adjustment of $4.9 million on interest rate swaps that were in place during the six months ended June 30, 2018. The remaining difference mainly relates to foreign exchange gains or losses recognized in the translation of monetary items that were denominated in a currency different to the functional currency of operations of the Company.$143.5 million.
Supplemental Segment Financial Data
Three Months Ended June 30, 20192020 Compared to Three Months Ended June 30, 20182019
Australia
|
| For Three Months Ended June 30, | ||||||
|
| ($ in thousands) | ||||||
|
| 2020 |
| 2019 |
| Change |
| % |
Sales volume (MMt) |
| 3.0 |
| 3.3 |
| (0.3) |
| (9.7)% |
Total revenues ($) |
| 228,410 |
| 412,810 |
| (184,400) |
| (44.7)% |
Coal revenues ($) |
| 219,950 |
| 403,703 |
| (183,753) |
| (45.5)% |
Average realized price per Mt sold ($/Mt) |
| 73.2 |
| 121.3 |
| (48.1) |
| (39.7)% |
Met sales volume (MMt) |
| 2.1 |
| 2.5 |
| (0.4) |
| (14.9)% |
Met coal revenues ($) |
| 194,909 |
| 377,016 |
| (182,107) |
| (48.3)% |
Average realized Met price per Mt sold ($/Mt) |
| 91.9 |
| 151.4 |
| (59.5) |
| (39.3)% |
Mining costs ($) |
| 160,697 |
| 133,104 |
| 27,593 |
| 20.7% |
Mining cost per Mt sold ($/Mt) |
| 53.6 |
| 40.0 |
| 13.6 |
| 34.0% |
Operating costs ($) |
| 236,418 |
| 260,796 |
| (24,378) |
| (9.3)% |
Operating costs per Mt sold ($/Mt) |
| 78.6 |
| 78.3 |
| 0.3 |
| 0.4% |
Segment Adjusted EBITDA ($) |
| (6,804) |
| 151,561 |
| (158,365) |
| (104.5)% |
Curragh
|
| For Three Months Ended June 30, |
| ||||||
|
| ($ in thousands) |
| ||||||
|
| 2019 |
| 2018 |
| Change |
| % |
|
Sales Volume (MMt) |
| 3.3 |
| 3.1 |
| 0.2 |
| 6.5 | % |
Total revenues ($) |
| 412,810 |
| 386,756 |
| 26,054 |
| 6.7 | % |
Coal revenues ($) |
| 403,703 |
| 374,534 |
| 29,169 |
| 7.8 | % |
Average realized price per Mt sold ($/Mt) |
| 121.3 |
| 121.0 |
| 0.3 |
| 0.2 | % |
Met Sales Volume (MMt) |
| 2.5 |
| 2.2 |
| 0.3 |
| 13.6 | % |
Met coal Revenues ($) |
| 377,016 |
| 348,871 |
| 28,145 |
| 8.1 | % |
Average realized met price per Mt sold ($/Mt) |
| 151.4 |
| 158.3 |
| (6.9 | ) | (4.4 | )% |
Mining costs ($) |
| 133,104 |
| 177,665 |
| (44,561 | ) | (25.1 | )% |
Mining cost per Mt sold ($/Mt) |
| 40.0 |
| 57.5 |
| (17.5 | ) | (30.4 | )% |
Operating costs ($) |
| 260,796 |
| 287,012 |
| (26,216 | ) | (9.1 | )% |
Operating costs per Mt sold ($/Mt) |
| 78.3 |
| 92.9 |
| (14.6 | ) | (15.7 | )% |
Segment Adjusted EBITDA ($) |
| 151,561 |
| 99,979 |
| 51,582 |
| 51.6 | % |
Coal revenues for CurraghAustralian Operations for the three months ended June 30, 20192020, were $403.7$220.0 million, an increasea decrease of $29.2$183.8 million or 7.8%45.5%, compared to $374.5$403.7 million for the three months ended June 30, 2018.2019. This increasedecrease was largely driven largely by an increase inlower average realized Met coal pricing as a result of difficult coal market conditions stemming from the export metCOVID-19 pandemic. The average realized Met price for the current quarter was $91.9 per Mt sold, which is $59.5 per Mt lower compared to the same quarter last year. Subdued pricing was exacerbated by lower Met coal sales volumes of 0.3Mt, partially offset2.1Mt for the three months ended June 30, 2020, 0.4Mt lower than the 2.5Mt sold during the three months ended June 30, 2019. Sales volumes during the quarter were a result of lower production caused by a decrease in average realized met price per Mt soldwet weather and operational issues at the Curragh mine impacting productivity.
Coronado Global Resources Inc. Form 10-Q June 30, 202032
Operating costs decreased by $26.2$24.4 million, or 9.1%9.3%, for the three months ended June 30, 20192020, compared to the three months ended June 30, 2018. This2019, slightly mitigating the impacts from lower revenue. The decrease was driven primarily by mining costs which decreased by $44.6 million as a result of: (1)lower royalties and Stanwell rebate (due to lower realized coal pricing), lower freight expenses (due to lower sales volume) and the three months to June 30, 2018 included the unwindbenefit of a $21.4 million fair value adjustment recognized to coal inventories on acquisition of Curragh, which was incurred as coal was sold during the period; and (2) favorable average foreign exchange rate on translation of the Curragh operationsA$ denominated Australian Operations for the three months ended June 30, 20192020 of A$/US$: 0.71 versus 0.760.66 compared to 0.70 for the three months ended June 30, 2018. Lower2019. The decrease was partially offset by higher mining costs and higher sales volumes caused the mining cost per Mt soldassociated with mine sequencing impacts.
Adjusted EBITDA decreased by $158.4 million, or 104.5%, to a loss of $6.8 million for the three months ended June 30, 2019 to decrease by $17.5 per Mt sold. The decrease in mining costs were partially offset by higher freight costs of $5.5 million, driven by higher railings to port and higher export sales volumes, and higher Stanwell rebates which increased by $13.0 million due mainly to higher sales volumes.
Adjusted EBITDA increased by $51.6 million, or 51.6%,2020 as compared to $151.6 million for the three months ended June 30, 2019, as compared to $100.0 million for the six months ended June 30, 2018, due to lower coal revenues partly mitigated by lower operating costs and higher coal revenues.
Buchanancosts.
United States
|
| For Three Months Ended June 30, |
|
| For Three Months Ended June 30, | ||||||||||||
|
| ($ in thousands) |
|
| ($ in thousands) | ||||||||||||
|
| 2019 |
| 2018 |
| Change |
| % |
|
| 2020 |
| 2019 |
| Change |
| % |
Sales Volume (MMt) |
| 1.2 |
| 1.2 |
| — |
| — |
| ||||||||
Sales volume (MMt) |
| 0.8 |
| 2.0 |
| (1.2) |
| (59.1)% | |||||||||
Total revenues ($) |
| 128,713 |
| 126,292 |
| 2,421 |
| 1.9 | % |
| 75,938 |
| 229,647 |
| (153,709) |
| (66.9)% |
Coal revenues ($) |
| 128,664 |
| 126,292 |
| 2,372 |
| 1.9 | % |
| 75,256 |
| 226,987 |
| (151,731) |
| (66.8)% |
Average realized price per Mt sold ($/Mt) |
| 103.0 |
| 104.9 |
| (1.9 | ) | (1.8 | )% |
| 90.2 |
| 111.1 |
| (20.9) |
| (18.8)% |
Met Sales Volume (MMt) |
| 1.2 |
| 1.1 |
| 0.1 |
| 9.1 | % | ||||||||
Met coal Revenues ($) |
| 125,837 |
| 122,771 |
| 3,066 |
| 2.5 | % | ||||||||
Average realized met price per Mt sold ($/Mt) |
| 104.8 |
| 107.3 |
| (2.5 | ) | (2.3 | )% | ||||||||
Met sales volume (MMt) |
| 0.8 |
| 1.8 |
| (1.0) |
| (53.7)% | |||||||||
Met coal revenues ($) |
| 74,839 |
| 211,656 |
| (136,817) |
| (64.6)% | |||||||||
Average realized Met price per Mt sold ($/Mt) |
| 90.8 |
| 118.9 |
| (28.1) |
| (23.6)% | |||||||||
Mining costs ($) |
| 64,605 |
| 66,469 |
| (1,864 | ) | (2.8 | )% |
| 56,921 |
| 131,033 |
| (74,112) |
| (56.6)% |
Mining cost per Mt sold ($/Mt) |
| 51.7 |
| 55.2 |
| (3.5 | ) | (6.3 | )% |
| 73.5 |
| 64.1 |
| 9.4 |
| 14.6% |
Operating costs ($) |
| 68,472 |
| 91,049 |
| (22,577 | ) | (24.8 | )% |
| 72,489 |
| 150,296 |
| (77,807) |
| (51.8)% |
Operating costs per Mt sold ($/Mt) |
| 54.8 |
| 75.7 |
| (20.9 | ) | (27.6 | )% |
| 86.8 |
| 73.6 |
| 13.2 |
| 18.1% |
Segment Adjusted EBITDA ($) |
| 60,289 |
| 35,257 |
| 25,032 |
| 71.0 | % |
| 3,490 |
| 79,642 |
| (76,152) |
| (95.6)% |
Coal revenue increasedrevenues decreased by $2.4$151.7 million, or 1.9%66.8%, to $128.7$75.3 million for the three months ended June 30, 20192020 as compared to $126.3$227.0 million for the three months ended June 30, 2018.2019. This increasedecrease was driven by higherlower average realized Met coal pricing of $90.8 per Mt sold for the three months ended June 30, 2020, which was a result of softer market conditions and a decline in the benchmark coking coal market, and by lower sales volumes of 0.10.8 MMt or 9.1%. This was partially offset byas compared to 2.0 MMt for June 30, 2019 quarter. Lower sales volumes were a lower average realized price dueresult of softer market conditions resulting from the impact of the COVID-19 pandemic and import restrictions into China, which resulted in the suspension of sales to import tariffs on U.S. coal imposed by China duringfor the quarter.
Operating costs decreased by $22.6$77.8 million, or 24.8%51.8%, for the three months ended June 30, 20192020 compared to the three months ended June 30, 2018. This decrease was primarily driven by the CONSOL Energy contingent royalty of $19.4 million related to the mark-to-market adjustment and one less year remaining in the contingent payment period. Prior year reflects a significant adjustment for higher forecast export pricing related to the mark-to-market calculation. In addition, royalty expense was lower by $1.4 million related to a higher percentage of owned production (no royalty) mined in the second quarter 2019 compared to second quarter 2018. Additionally, mining costs decreased by $1.9 million. The decrease in operating costs resulted in a corresponding decrease of operating cost per ton of $20.9/t for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, as there was no significant change to sales volumes when comparing the two periods.
For the three months ended June 30, 2019 adjusted EBITDA improved $25.0 million, or 71%, compared to the comparative quarter. The improvement was primarily generated by the favorable mark-to-market adjustments related to the CONSOL Energy contingent royalty and lower royalties related to mining a higher percentage of owned coal versus leased coal. In addition, higher Met sales and lower mine costs contributed to the improved performance. This was partially offset by lower average realized pricing related to import tariffs on U.S. coal imposed by China.
Logan
|
| For Three Months Ended June 30, |
| ||||||
|
| ($ in thousands) |
| ||||||
|
| 2019 |
| 2018 |
| Change |
| % |
|
Sales Volume (MMt) |
| 0.7 |
| 0.7 |
| — |
| — |
|
Total revenues ($) |
| 81,610 |
| 59,230 |
| 22,380 |
| 37.8 | % |
Coal revenues ($) |
| 80,111 |
| 59,230 |
| 20,881 |
| 35.3 | % |
Average realized price per Mt sold ($/Mt) |
| 119.7 |
| 84.6 |
| 35.1 |
| 41.5 | % |
Met Sales Volume (MMt) |
| 0.5 |
| 0.4 |
| 0.1 |
| 25.0 | % |
Met coal Revenues ($) |
| 68,053 |
| 47,443 |
| 20,610 |
| 43.4 | % |
Average realized met price per Mt sold ($/Mt) |
| 146.1 |
| 106.8 |
| 39.3 |
| 36.8 | % |
Mining costs ($) |
| 53,714 |
| 44,840 |
| 8,874 |
| 19.8 | % |
Mining cost per Mt sold ($/Mt) |
| 80.3 |
| 64.1 |
| 16.2 |
| 25.3 | % |
Operating costs ($) |
| 63,689 |
| 50,185 |
| 13,504 |
| 26.9 | % |
Operating costs per Mt sold ($/Mt) |
| 95.2 |
| 71.7 |
| 23.5 |
| 32.8 | % |
Segment Adjusted EBITDA ($) |
| 18,126 |
| 10,710 |
| 7,416 |
| 69.2 | % |
Coal revenues increased by $20.9 million, or 35.3%, to $80.1$150.3 million for the three months ended June 30, 20192019. The decrease was due to lower mining costs of $74.1 million, or 56.6% as the U.S. Operations were idled in April and May of 2020 in response to the COVID-19 pandemic. The increase in mining cost per Mt sold was primarily driven by lower sales volumes of 1.2 MMt driving up mining costs by $9.4 per Mt sold compared to $59.2 million forthe same period in 2019.
For the three months ended June 30, 2018. This improvement was driven2020 Adjusted EBITDA decreased by increased Met coal sales volume and a higher average realized price for high volatile coal, due$76.2 million, or 95.6%, compared to committed sales contracts and to improved sales mix.
Total operating costs increased $13.5 million, to $63.7 million for the three months ended June 30, 2019 compared toquarter. This decrease was primarily driven by softer market conditions resulting in a lower average realized Met coal price per Mt sold and lower sales volumes. This resulted in a decrease in Total revenues of $153.7 million which was partially offset by a decrease in operating costs of $50.2 million for the three months ended June 30, 2018. The increase was primarily due to higher cost production at existing operations, driven by mining conditions, and production set-up costs related to three additional mines coming online in 2019. Additionally, freight expense increased due to new sales contracts, which includes the cost of rail and port services to certain customers. The increase in operating costs resulted in a corresponding increase of operating cost per ton of $19.3/t for the three months ended June 30, 2019 compared to the three months ended June 30, 2018, as there was no significant change to sales volumes when comparing the two periods.$77.8 million.
Adjusted EBITDA for the three months ended June 30, 2019 increased $7.4 million, or 69.2%, to $18.1 million, compared to $10.7 million for the three months ended June 30, 2018. Improved performance relates to increased demand and higher prices for high volatile coal on committed contracts. Partially offsetting this is higher cost production and a change in the production mix, with the addition of the three new operations.
Greenbrier
|
| For Three Months Ended June 30, |
| ||||||
|
| ($ in thousands) |
| ||||||
|
| 2019 |
| 2018 |
| Change |
| % |
|
Sales Volume (MMt) |
| 0.1 |
| 0.2 |
| (0.1 | ) | (50.0 | )% |
Total revenues ($) |
| 19,324 |
| 18,292 |
| 1,032 |
| 5.6 | % |
Coal revenues ($) |
| 18,212 |
| 17,454 |
| 758 |
| 4.3 | % |
Average realized price per Mt sold ($/Mt) |
| 145.6 |
| 99.9 |
| 45.7 |
| 45.7 | % |
Met Sales Volume (MMt) |
| 0.1 |
| 0.2 |
| (0.1 | ) | (50.0 | )% |
Met coal Revenues ($) |
| 17,766 |
| 17,427 |
| 339 |
| 1.9 | % |
Average realized met price per Mt sold ($/Mt) |
| 155.7 |
| 100.0 |
| 55.7 |
| 55.7 | % |
Mining costs ($) |
| 12,714 |
| 16,335 |
| (3,621 | ) | (22.2 | )% |
Mining cost per Mt sold ($/Mt) |
| 101.6 |
| 93.5 |
| 8.1 |
| 8.7 | % |
Operating costs ($) |
| 18,135 |
| 18,482 |
| (347 | ) | (1.9 | )% |
Operating costs per Mt sold ($/Mt) |
| 145.0 |
| 105.8 |
| 39.2 |
| 37.1 | % |
Segment Adjusted EBITDA ($) |
| 1,227 |
| (188 | ) | 1,415 |
| (752.7 | )% |
Coal revenues increased by $0.8 million, or 4.3%, to $18.2 million for the three months ended June 30, 2019 as compared to $17.5 million for the three months ended June 30, 2018. This increase was driven by higher average realized pricing, partly offset by lower sales volumes. The lower sales volume is primarily related to the exhaustion of the Pollock Knob reserve, lack of purchased coal available for blending, and lower production volume due to adverse geological mining conditions and equipment downtime.
Total operating costs at Greenbrier for the three months ended June 30, 2019, were relatively in line with total operating costs for the three months ended June 30, 2018. However, operating costs per ton increased $39.2 per ton due to lower sales volumes and additional freight expenses driven by new rail and port arrangements with certain customers that did not exist in the comparative period.
Adjusted EBITDA improved $1.4 million, resulting in $1.2 million of EBITDA for the three months ended June 30, 2019, compared to EBITDA of ($0.2) million for the three months ended June 30, 2018. Improved performance was primarily related to increased demand for mid vol coal and higher average realized pricing.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:
|
| For Three Months Ended June 30, | ||||||
|
| ($ in thousands) | ||||||
|
| 2020 |
| 2019 |
| Change |
| % |
Selling, general, and administrative expenses |
| 7,159 |
| 9,242 |
| (2,083) |
| (22.5)% |
Other, net |
| 4 |
| (330) |
| 334 |
| 101.2% |
Total Corporate and Other Adjusted EBITDA |
| 7,163 |
| 8,912 |
| (1,749) |
| (19.6)% |
Adjusted EBITDA loss ofCorporate and other costs decreased $1.8 million to $7.2 million for the three months ended June 30, 2020, as compared to $8.9 million for the three months ended June 30, 2019 increased $2.3 million2019. The decrease is primarily driven by improved efficiencies and cost saving initiatives to reduce corporate spend in 2020 compared to $6.6 million for the three months ended2019 comparative period.
Coronado Global Resources Inc. Form 10-Q June 30, 2018. The 2018 period included fair value mark-to-market gains with respect to interest rate swaps202033
Mining and operating costs for the Three Months Ended June 30, 2020 compared to Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
A reconciliation of segment costs and expenses, segment operating costs, and segment mining costs is shown below:
|
| For Three Months Ended June 30, 2020 | ||||||
|
| ($ in thousands) | ||||||
|
| Australia |
| United States |
| Other / Corporate |
| Total Consolidated |
Total costs and expenses |
| 256,730 |
| 93,528 |
| 7,354 |
| 357,612 |
Less: Selling, general and administrative expense |
| — |
| — |
| (7,158) |
| (7,158) |
Less: Depreciation, depletion and amortization |
| (20,312) |
| (21,039) |
| (196) |
| (41,547) |
Total operating costs |
| 236,418 |
| 72,489 |
| — |
| 308,907 |
Less: Other royalties |
| (17,547) |
| (1,610) |
| — |
| (19,157) |
Less: Stanwell rebate |
| (24,787) |
| — |
| — |
| (24,787) |
Less: Freight expenses |
| (32,882) |
| (7,622) |
| — |
| (40,504) |
Less: Other non-mining costs |
| (505) |
| (6,336) |
| — |
| (6,841) |
Total mining costs |
| 160,697 |
| 56,921 |
| — |
| 217,618 |
Sales Volume excluding non-produced coal (MMt) |
| 3.0 |
| 0.8 |
| — |
| 3.8 |
Mining cost per Mt sold ($) |
| 53.6 |
| 73.5 |
| — |
| 57.7 |
|
|
|
|
|
|
|
|
|
|
| For Three Months Ended June 30, 2019 | ||||||
|
| ($ in thousands) | ||||||
|
| Australia |
| United States |
| Other / Corporate |
| Total Consolidated |
Total costs and expenses |
| 283,948 |
| 172,844 |
| 9,050 |
| 465,842 |
Less: Selling, general and administrative expense |
| (282) |
| — |
| (8,960) |
| (9,242) |
Less: Depreciation, depletion and amortization |
| (22,870) |
| (22,548) |
| (90) |
| (45,508) |
Total operating costs |
| 260,796 |
| 150,296 |
| — |
| 411,092 |
Less: Other royalties |
| (39,209) |
| (9,864) |
| — |
| (49,073) |
Less: Stanwell rebate |
| (45,847) |
| — |
| — |
| (45,847) |
Less: Freight expenses |
| (42,636) |
| (9,399) |
| — |
| (52,035) |
Total mining costs |
| 133,104 |
| 131,033 |
| — |
| 264,137 |
Sales Volume excluding non-produced coal (MMt) |
| 3.3 |
| 2.0 |
| — |
| 5.4 |
Mining cost per Mt sold ($) |
| 40.0 |
| 64.1 |
| — |
| 49.2 |
|
| For Three Months Ended June 30, 2019 |
| ||||||||||
|
| ($ in thousands) |
| ||||||||||
|
| Curragh |
| Buchanan |
| Logan |
| Greenbrier |
| Other / |
| Total |
|
Total costs and expenses |
| 283,948 |
| 80,212 |
| 70,626 |
| 22,006 |
| 9,050 |
| 465,842 |
|
Less: Selling, general and administrative expense |
| (282 | ) | — |
| — |
| — |
| (8,960 | ) | (9,242 | ) |
Less: Depreciation, depletion and amortization |
| (22,870 | ) | (11,740 | ) | (6,937 | ) | (3,871 | ) | (90 | ) | (45,508 | ) |
Total operating costs |
| 260,796 |
| 68,472 |
| 63,689 |
| 18,135 |
| — |
| 411,092 |
|
Less: Other royalties |
| (39,209 | ) | (3,506 | ) | (5,302 | ) | (1,056 | ) | — |
| (49,073 | ) |
Less: Stanwell rebate |
| (45,847 | ) | — |
| — |
| — |
| — |
| (45,847 | ) |
Less: Freight expenses |
| (42,636 | ) | (361 | ) | (4,673 | ) | (4,365 | ) | — |
| (52,035 | ) |
Total mining costs |
| 133,104 |
| 64,605 |
| 53,714 |
| 12,714 |
| — |
| 264,137 |
|
Average realized Met coal revenue for the Three Months Ended June 30, 2020 compared to Three Months Ended June 30, 2019
|
| For Three Months Ended June 30, 2018 |
| ||||||||||
|
| ($ in thousands) |
| ||||||||||
|
| Curragh |
| Buchanan |
| Logan |
| Greenbrier |
| Other / |
| Total |
|
Total costs and expenses |
| 309,469 |
| 101,559 |
| 56,874 |
| 21,859 |
| 8,074 |
| 497,835 |
|
Less: Selling, general and administrative expense |
| (439 | ) | — |
| — |
| — |
| (8,074 | ) | (8,513 | ) |
Less: Depreciation, depletion and amortization |
| (22,018 | ) | (10,510 | ) | (6,689 | ) | (3,377 | ) | — |
| (42,594 | ) |
Total operating costs |
| 287,012 |
| 91,049 |
| 50,185 |
| 18,482 |
| — |
| 446,728 |
|
Less: Other royalties |
| (38,241 | ) | (24,279 | ) | (3,869 | ) | (1,306 | ) | — |
| (67,695 | ) |
Less: Stanwell rebate |
| (32,812 | ) | — |
| — |
| — |
| — |
| (32,812 | ) |
Less: Freight expenses |
| (38,294 | ) | (301 | ) | (1,476 | ) | (841 | ) | — |
| (40,912 | ) |
Total mining costs |
| 177,665 |
| 66,469 |
| 44,840 |
| 16,335 |
| — |
| 305,309 |
|
A reconciliation of the Company’s average realized Met coal revenue is shown below:
|
| For Three Months Ended June 30, | ||||||
|
| ($ in thousands) | ||||||
|
| 2020 |
| 2019 |
| Change |
| % |
Met sales volume (MMt) |
| 2.9 |
| 4.3 |
| (1.4) |
| (32.6)% |
Met coal revenues ($) |
| 269,748 |
| 588,672 |
| (318,924) |
| (54.2)% |
Average realized Met price per Mt sold ($/Mt) |
| 91.6 |
| 137.8 |
| (46.2) |
| (33.5)% |
Coronado Global Resources Inc. Form 10-Q June 30, 202034
Six Months Ended June 30, 20192020 Compared to Six Months Ended June 30, 20182019
Australia
|
| For Six Months Ended June 30, | ||||||
|
| ($ in thousands) | ||||||
|
| 2020 |
| 2019 |
| Change |
| % |
Sales volume (MMt) |
| 5.6 |
| 6.4 |
| (0.8) |
| (12.6)% |
Total revenues ($) |
| 473,555 |
| 794,182 |
| (320,627) |
| (40.4)% |
Coal revenues ($) |
| 458,481 |
| 775,942 |
| (317,461) |
| (40.9)% |
Average realized price per Mt sold ($/Mt) |
| 82.1 |
| 121.5 |
| (39.4) |
| (32.4)% |
Met sales volume (MMt) |
| 3.9 |
| 4.8 |
| (0.9) |
| (18.6)% |
Met coal revenues ($) |
| 407,831 |
| 727,964 |
| (320,133) |
| (44.0)% |
Average realized Met price per Mt sold ($/Mt) |
| 104.8 |
| 152.3 |
| (47.5) |
| (31.2)% |
Mining costs ($) |
| 298,841 |
| 272,201 |
| 26,640 |
| 9.8% |
Mining cost per Mt sold ($/Mt) |
| 53.9 |
| 42.6 |
| 11.3 |
| 26.5% |
Operating costs ($) |
| 466,606 |
| 522,169 |
| (55,563) |
| (10.6)% |
Operating costs per Mt sold ($/Mt) |
| 83.6 |
| 81.8 |
| 1.8 |
| 2.2% |
Segment Adjusted EBITDA ($) |
| 6,260 |
| 271,709 |
| (265,449) |
| (97.7)% |
Curragh
The unaudited pro forma supplemental financial data of CurraghCoal revenues for Australian Operations for the six months ended June 30, 2018, presented in the table below, has been derived from the unaudited consolidated pro forma statements2020, were $458.5 million, a decrease of operations included in this Form 10-Q and gives effect to each of the Curragh acquisition as if it had occurred on January 1, 2018. The commentary below compares Curragh’s result for the six months ended June 30, 2019 to the pro forma results for the six months ended June 30, 2018 to provide more meaningful analysis of the segment performance.
|
| For Six Months Ended June 30, |
| ||||||
|
| ($ in thousands) |
| ||||||
|
| 2019 |
| Pro |
| Change |
| % |
|
Sales Volume (MMt) |
| 6.4 |
| 5.8 |
| 0.6 |
| 10.3 | % |
Total revenues ($) |
| 794,182 |
| 703,879 |
| 90,303 |
| 12.8 | % |
Coal revenues ($) |
| 775,942 |
| 688,028 |
| 87,914 |
| 12.8 | % |
Average realized price per Mt sold ($/Mt) |
| 121.5 |
| 118.8 |
| 2.7 |
| 2.3 | % |
Met Sales Volume (MMt) |
| 4.8 |
| 4.1 |
| 0.7 |
| 17.1 | % |
Met coal Revenues ($) |
| 727,964 |
| 638,811 |
| 89,153 |
| 14.0 | % |
Average realized met price per Mt sold ($/Mt) |
| 152.3 |
| 154.7 |
| (2.4 | ) | (1.5 | )% |
Mining costs ($) |
| 272,201 |
| 323,171 |
| (50,970 | ) | (15.8 | )% |
Mining cost per Mt sold ($/Mt) |
| 42.6 |
| 55.8 |
| (13.2 | ) | (23.6 | )% |
Operating costs ($) |
| 522,169 |
| 541,710 |
| (19,541 | ) | (3.6 | )% |
Operating costs per Mt sold ($/Mt) |
| 81.8 |
| 93.6 |
| (11.8 | ) | (12.6 | )% |
Segment Adjusted EBITDA ($) |
| 271,709 |
| 164,764 |
| 106,945 |
| 64.9 | % |
A reconciliation of unaudited pro forma financial data is shown below:
|
| Historical Curragh |
| Post-Acquisition |
| For six months |
|
($ in thousands) |
| January 1, 2018 - |
| March 30, 2018 - |
| Total Pro forma |
|
Sales Volume (MMt) |
| 2.7 |
| 3.1 |
| 5.8 |
|
Total revenues ($) |
| 316,500 |
| 387,379 |
| 703,879 |
|
Coal revenues ($) |
| 313,494 |
| 374,534 |
| 688,028 |
|
Average realized price per Mt sold ($/Mt) |
| 114.3 |
| 121.2 |
| 118.8 |
|
Met Sales Volume (MMt) |
| 1.9 |
| 2.2 |
| 4.1 |
|
Met coal Revenues ($) |
| 289,325 |
| 349,486 |
| 638,811 |
|
Average realized met price per Mt sold ($/Mt) |
| 150.6 |
| 158.3 |
| 154.7 |
|
Mining costs ($) |
| 145,506 |
| 177,699 |
| 323,205 |
|
Mining cost per Mt sold ($/Mt) |
| 53.1 |
| 57.5 |
| 55.8 |
|
Operating costs ($) |
| 254,698 |
| 286,913 |
| 541,611 |
|
Operating costs per Mt sold ($/Mt) |
| 94.3 |
| 92.9 |
| 93.6 |
|
Segment Adjusted EBITDA ($) |
| 64,785 |
| 99,979 |
| 164,764 |
|
($ in thousands) |
| Historical Curragh |
| Post-Acquisition |
| For six months |
|
Curragh Segment Pro forma |
| January 1, 2018 - |
| March 30, 2018 - |
| Total Pro forma |
|
Net Income (loss) |
| (308,947 | ) | 54,217 |
| (254,730 | ) |
Add: Income tax expense (benefit) |
| 17,772 |
| 23,867 |
| 41,639 |
|
Add: Interest expense (net of income) |
| 341,703 |
| (124 | ) | 341,579 |
|
Add: Depreciation, depletion and amortization |
| 14,257 |
| 22,019 |
| 36,276 |
|
Adjusted EBITDA |
| 64,785 |
| 99,979 |
| 164,764 |
|
Pro forma coal revenues increased by $87.9$317.5 million or 12.8%40.9%, compared to $775.9 million for the six months ended June 30, 2019 as2019. This decrease was largely driven by a decrease in average realized Met coal price by $47.5 per Mt sold and a decrease in sales volumes of 0.8Mt due to reduced production stemming from the temporary suspension of operations at the Curragh Mine following January’s safety incident, adverse weather impacts, poor rail performance and scheduling issues with the provider and the impact of COVID-19 pandemic affecting customer demand.
Operating costs decreased by $55.6 million, or 10.6%, for the six months ended June 30, 2020, compared to $688.0the six months ended June 30, 2019, partly mitigating the impacts from lower revenue. The decrease was driven by lower royalties and Stanwell rebate (mainly due to lower realized coal pricing) lower freight expenses resulting from a decrease in sales volumes and the benefit of a favorable average foreign exchange rate on translation of the A$ denominated Australian Operations for the six months ended June 30, 2020 of A$/US$: 0.66 compared to 0.71 for the six months ended June 30, 2020. Mining cost per Mt sold of $53.9 per ton was 26.5% higher compared to the six months ended June 30, 2019, impacted by lower sales volumes due to lower production as a result of suspended operations following the safety incident in January 2020 at Curragh, the lag effects of that incident, wet weather and operational issues impacting mine productivity.
Adjusted EBITDA decreased by $265.4 million, or 97.7%, to $6.3 million for the six months ended June 30, 2018. This increase was driven by higher Met coal sales volumes which increased 0.7 MMt or 17.1%, to 4.8MMt for the six months ended June 30, 20192020 as compared to 4.1 MMt for the six months ended June 30, 2018.
Pro forma operating costs decreased by $19.5 million, or 3.6%, to $522.2$271.7 million for the six months ended June 30, 2019, compareddue to $541.7 million in the six months ended June 30, 2018 primarily driven by a decrease in mining costs per
Mt sold of $42.6 per ton as compared to $55.8 per ton for the six months ended June 30, 2018. Pro forma mining cost per Mt sold was higher for the six months ended June 30, 2018 due to: (1) the unwind of a $21.4 million fair value adjustment recognized to coal inventories on acquisition of Curragh that was unwound during the three months ended June 30, 2018 as the coal was sold and (2) unplanned outages at the wash plant. The decrease in pro forma operating costs were partially offset by higher Stanwell rebates which increased by $9.0 million due mainly to higher sales volumes.
Adjusted EBITDA for the six months ended June 30, 2019 was $271.7 million, an improvement of $106.9 million (or 64.9%) over the pro forma Adjusted EBITDA for the six months ended June 30, 2018. Lower operating costs and higherlower coal revenues were two key factors that contributed to the higher Adjusted EBITDA.partly mitigated by lower operating costs.
United States
|
| For Six Months Ended June 30, | ||||||
|
| ($ in thousands) | ||||||
|
| 2020 |
| 2019 |
| Change |
| % |
Sales volume (MMt) |
| 2.8 |
| 4.0 |
| (1.2) |
| (31.0)% |
Total revenues ($) |
| 240,111 |
| 440,153 |
| (200,042) |
| (45.4)% |
Coal revenues ($) |
| 236,336 |
| 436,545 |
| (200,209) |
| (45.9)% |
Average realized price per Mt sold ($/Mt) |
| 85.6 |
| 109.2 |
| (23.6) |
| (21.6)% |
Met sales volume (MMt) |
| 2.7 |
| 3.5 |
| (0.8) |
| (22.3)% |
Met coal revenues ($) |
| 234,198 |
| 407,535 |
| (173,337) |
| (42.5)% |
Average realized Met price per Mt sold ($/Mt) |
| 86.6 |
| 117.0 |
| (30.4) |
| (26.0)% |
Mining costs ($) |
| 173,546 |
| 261,495 |
| (87,949) |
| (33.6)% |
Mining cost per Mt sold ($/Mt) |
| 64.3 |
| 65.4 |
| (1.1) |
| (1.7)% |
Operating costs ($) |
| 198,495 |
| 288,985 |
| (90,490) |
| (31.3)% |
Operating costs per Mt sold ($/Mt) |
| 71.9 |
| 72.3 |
| (0.4) |
| (0.5)% |
Segment Adjusted EBITDA ($) |
| 41,740 |
| 151,611 |
| (109,871) |
| (72.5)% |
Buchanan
|
| For Six Months Ended June 30, |
| ||||||
|
| ($ in thousands) |
| ||||||
|
| 2019 |
| 2018 |
| Change |
| % |
|
Sales Volume (MMt) |
| 2.4 |
| 2.4 |
| — |
| — |
|
Total revenues ($) |
| 251,437 |
| 260,501 |
| (9,064 | ) | (3.5 | )% |
Coal revenues ($) |
| 251,353 |
| 260,462 |
| (9,109 | ) | (3.5 | )% |
Average realized price per Mt sold ($/Mt) |
| 103.9 |
| 109.3 |
| (5.4 | ) | (5.0 | )% |
Met Sales Volume (MMt) |
| 2.3 |
| 2.3 |
| — |
| — |
|
Met coal Revenues ($) |
| 245,047 |
| 253,335 |
| (8,288 | ) | (3.3 | )% |
Average realized met price per Mt sold ($/Mt) |
| 106.0 |
| 111.8 |
| (5.8 | ) | (5.2 | )% |
Mining costs ($) |
| 130,286 |
| 123,877 |
| 6,409 |
| 5.2 | % |
Mining cost per Mt sold ($/Mt) |
| 53.8 |
| 52.0 |
| 1.8 |
| 3.5 | % |
Operating costs ($) |
| 135,095 |
| 160,814 |
| (25,719 | ) | (16.0 | )% |
Operating costs per Mt sold ($/Mt) |
| 55.8 |
| 67.5 |
| (11.7 | ) | (17.3 | )% |
Segment Adjusted EBITDA ($) |
| 116,401 |
| 99,701 |
| 16,700 |
| 16.8 | % |
Coal revenues decreased by $9.1$200.2 million, or 3.5%45.9%, to $251.4$236.3 million for the six months ended June 30, 20192020 as compared to $260.5$436.5 million for the six months ended June 30, 2018.2019. This decrease was driven by lower average realized price dueMet coal pricing of $86.6 per Mt sold for the six months ended June 30, 2020, compared to $117.0 per Mt sold for the same period in
Coronado Global Resources Inc. Form 10-Q June 30, 202035
2019, which was a result of softer market conditions and a decline in the benchmark coking coal market, and by lower sales volumes of 2.8 MMt as compared to 4.0 MMt in 2019. Lower sales volumes were a result of softer market conditions and import tariffs on U.S. coal imposedrestrictions into China, which resulted in the suspension of sales into China in the second quarter of 2020.
Operating costs decreased by China and changes$90.5 million, or 31.3%, for the six months ended June 30, 2020 compared to the sales mix, partially offset by stronger pricing on domestic Met sales.
Total operating costs improved $25.7 million to $135.1of $289.0 million for the six months ended June 30, 2019,2019. The decrease was due to lower mining costs of $173.5 million, a reduction of 33.6% compared to operating coststhe same period in 2019, as the U.S. Operations were idled in April and May of $160.8 million2020 in response to the COVID-19 pandemic combined with stringent cost control measures implemented in the first quarter of 2020. The cost control measures resulted in slightly lower mining cost of $64.3 per Mt sold for the six months ended June 30, 2018. The improvement was primarily related2020, compared to the mark-to-market adjustment for the CONSOL Energy contingent royalty and mining a greater percentage of owned coal versus leased coal. This improvement was partially offset by increased mining costs of $6.4 million due to adverse mining conditions. The overall improvement in operating costs resulted in a corresponding improvement in operating costs$65.4 per ton of $11.7/tMt sold for the six months ended June 30, 2019, compared to the six months ended June 30, 2018, as there was no significant change to30,2019 despite a decline in sales volumes when comparing the two periods.of 1.2 MMt.
Adjusted EBITDA for the six months ended June 30, 2019 was $116.4 million, an improvement of $16.7 million (or 16.8%) over the six months ended June 20, 2018. Lower royalties related to the CONSOL Energy contingent royalty and mining a greater percentage of owned coal versus lease coal were partially offset by higher mine costs resulting from adverse mining conditions.
Logan
|
| For Six Months Ended June 30, |
| ||||||
|
| ($ in thousands) |
| ||||||
|
| 2019 |
| 2018 |
| Change |
| % |
|
Sales Volume (MMt) |
| 1.3 |
| 1.3 |
| — |
| — |
|
Total revenues ($) |
| 155,919 |
| 112,655 |
| 41,264 |
| 36.6 | % |
Coal revenues ($) |
| 153,629 |
| 112,655 |
| 40,974 |
| 36.4 | % |
Average realized price per Mt sold ($/Mt) |
| 114.4 |
| 84.8 |
| 29.6 |
| 34.9 | % |
Met Sales Volume (MMt) |
| 0.9 |
| 0.9 |
| — |
| — |
|
Met coal Revenues ($) |
| 131,421 |
| 93,201 |
| 38,220 |
| 41.0 | % |
Average realized met price per Mt sold ($/Mt) |
| 139.0 |
| 103.4 |
| 35.6 |
| 34.5 | % |
Mining costs ($) |
| 104,765 |
| 89,175 |
| 15,590 |
| 17.5 | % |
Mining cost per Mt sold ($/Mt) |
| 78.0 |
| 67.1 |
| 10.9 |
| 16.2 | % |
Operating costs ($) |
| 120,925 |
| 99,444 |
| 21,481 |
| 21.6 | % |
Operating costs per Mt sold ($/Mt) |
| 90.0 |
| 74.8 |
| 15.2 |
| 20.3 | % |
Segment Adjusted EBITDA ($) |
| 35,291 |
| 15,501 |
| 19,790 |
| 127.7 | % |
Coal revenue increased by $41.0 million, or 36.4%, to $153.6 million for the six months ended June 30, 2019 as compared to $112.7 million for the six months ended June 30, 2018. This increase was driven by a higher average realized price for high volatile coal due to higher committed contract prices, as well as improvements to the sales mix.
For the six months ended June 30, 2019 total operating costs at Logan increased $21.52020 Adjusted EBITDA decreased by $109.9 million, or 21.6%72.5%, to $120.9 million compared to $99.4 million for the six months ended June 30, 2018. Mining costs increased $15.6 million,comparative half year. This decrease was primarily due to higher cost production at existing operations, driven by miningsofter market conditions resulting in a lower average realized Met coal price per Mt sold and production costs related to three additional mines coming onlinelower sales volumes. This resulted in 2019. Freight expense increased $2.9a decrease in coal revenues of $200.2 million drivenwhich was partially offset by new rail and port arrangements with certain customers that did not exist in the comparative period. Other royalties increased $3.0 million due to higher revenues. The increasea decrease in operating costs resulted in a corresponding increase of operating cost per ton of $15.2/t for the six months ended June 30, 2019, compared to the six months ended June 30, 2018, as there was no significant change to sales volumes when comparing the two periods.$90.5 million.
Adjusted EBITDA improved by $19.8 million to $35.3 million for the six months ended June 30, 2019, compared to $15.5 million for the six months ended June 30, 2018, a 127.7% increase, as the $41.0 million increase in coal revenues more than offset the $21.5 million of increased operating costs.
Greenbrier
|
| For Six Months Ended June 30, |
| ||||||
|
| ($ in thousands) |
| ||||||
|
| 2019 |
| 2018 |
| Change |
| % |
|
Sales Volume (MMt) |
| 0.2 |
| 0.4 |
| (0.2 | ) | (50.0 | )% |
Total revenues ($) |
| 32,797 |
| 38,188 |
| (5,391 | ) | (14.1 | )% |
Coal revenues ($) |
| 31,563 |
| 36,695 |
| (5,132 | ) | (14.0 | )% |
Average realized price per Mt sold ($/Mt) |
| 133.6 |
| 101.4 |
| 32.2 |
| 31.8 | % |
Met Sales Volume (MMt) |
| 0.2 |
| 0.3 |
| (0.1 | ) | (33.3 | )% |
Met coal Revenues ($) |
| 31,067 |
| 35,982 |
| (4,915 | ) | (13.7 | )% |
Average realized met price per Mt sold ($/Mt) |
| 138.3 |
| 104.1 |
| 34.2 |
| 32.9 | % |
Mining costs ($) |
| 26,445 |
| 33,905 |
| (7,460 | ) | (22.0 | )% |
Mining cost per Mt sold ($/Mt) |
| 111.9 |
| 93.7 |
| 18.2 |
| 19.4 | % |
Operating costs ($) |
| 32,965 |
| 38,305 |
| (5,340 | ) | (13.9 | )% |
Operating costs per Mt sold ($/Mt) |
| 139.5 |
| 105.9 |
| 33.6 |
| 31.7 | % |
Segment Adjusted EBITDA ($) |
| (81 | ) | 983 |
| (1,064 | ) | (108.2 | )% |
Coal revenue decreased by $5.1 million, or 14.0%, to $31.6 million for the six months ended June 30, 2019, as compared to $36.7 million for the six months ended June 30, 2018. This decrease was driven by lower sales volumes, partially offset by higher average realized price. The lower sales volume is primarily related to the exhaustion of the Pollock Knob reserve, lack of purchased coal available for blending, and lower production volume due to adverse geological mining conditions and equipment downtime.
For the six months ended June 30, 2019, total operating costs improved by $5.3 million to $33.0 million, compared to costs of $38.3 million for the six months ended June 30, 2018. The improvement was primarily due to lower sales volumes, partially offset by an increase in freight expense driven by new rail and port arrangements with certain customers that did not exist in the comparative period. Operating cost per ton increased by $31.7 to $139.5, of which approximately $18/t was due the increased freight expenses. Additionally, lower production volumes related to the exhaustion of the Pollock Knob reserve and to adverse geological mining conditions and equipment downtime, impacted average cost per ton.
Adjusted EBITDA declined $1.1 million on lower sales volume to ($0.1) million for the six months ended June 30, 2019, compared to adjusted EBITDA of $1.0 million for the six months ended June 30, 2018.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components of Corporate and Other Adjusted EBITDA:
|
| For Six Months Ended June 30, | ||||||
|
| ($ in thousands) | ||||||
|
| 2020 |
| 2019 |
| Change |
| % |
Selling, general, and administrative expenses |
| 13,353 |
| 17,979 |
| (4,626) |
| (25.7)% |
Other, net |
| (297) |
| (14) |
| (283) |
| 2,021.4% |
Total Corporate and Other Adjusted EBITDA |
| 13,056 |
| 17,965 |
| (4,909) |
| (27.3)% |
|
| For Six Months Ended June 30, |
| ||||||
|
| ($ in thousands) |
| ||||||
|
| 2019 |
| 2018 |
| $ |
| % |
|
Salaries |
| 6,344 |
| 4,695 |
| 1,649 |
| 35.1 | % |
Professional and consultancy fees |
| 7,362 |
| 10,182 |
| (2,820 | ) | (27.7 | )% |
Office and operational fees |
| 1,045 |
| 1,191 |
| (146 | ) | (12.3 | )% |
Dues, registration fees and licenses |
| 107 |
| 33,103 |
| (32,996 | ) | (99.7 | )% |
Loss on foreign exchange swap |
| — |
| 15,695 |
| (15,695 | ) | (100.0 | )% |
Other |
| 3,107 |
| 9,470 |
| (6,363 | ) | (67.2 | )% |
Total Corporate and Other Adjusted EBITDA |
| 17,965 |
| 74,336 |
| (56,371 | ) | (75.8 | )% |
Adjusted EBITDA loss of $74.3Corporate and other costs decreased $4.9 million to $13.1 million for the six months ended June 30, 2018 includes one-time costs2020, as compared to $18.0 million for the six months ended June 30, 2019. The decrease is primarily driven by improved efficiencies and cost saving initiatives to reduce corporate spend in relation to professional and consultancy fees and stamp duty of $33.0 million and a loss on foreign exchange of $15.7 million incurred in relation2020 compared to the Curragh acquisition, the Reorganization Transaction and the Australian IPO.2019 comparative period.
Coronado Global Resources Inc. Form 10-Q June 30, 202036
Mining and operating costs for the Six Months Ended June 30, 2020 compared to Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
A reconciliation of segment costs and expenses, segment operating costs, and segment mining costs is shown below:
|
| For Six Months Ended June 30, 2020 | ||||||
|
| ($ in thousands) | ||||||
|
| Australia |
| United States |
| Other / Corporate |
| Total Consolidated |
Total costs and expenses |
| 506,686 |
| 244,891 |
| 13,726 |
| 765,303 |
Less: Selling, general and administrative expense |
| — |
| — |
| (13,353) |
| (13,353) |
Less: Depreciation, depletion and amortization |
| (40,080) |
| (46,396) |
| (373) |
| (86,849) |
Total operating costs |
| 466,606 |
| 198,495 |
| — |
| 665,101 |
Less: Other royalties |
| (37,508) |
| (5,947) |
| — |
| (43,455) |
Less: Stanwell rebate |
| (57,415) |
| — |
| — |
| (57,415) |
Less: Freight expenses |
| (70,220) |
| (12,666) |
| — |
| (82,886) |
Less: Other non-mining costs |
| (2,622) |
| (6,336) |
| — |
| (8,958) |
Total mining costs |
| 298,841 |
| 173,546 |
| — |
| 472,387 |
Sales Volume excluding non-produced coal (MMt) |
| 5.5 |
| 2.7 |
| — |
| 8.2 |
Mining cost per Mt sold ($) |
| 53.9 |
| 64.3 |
| — |
| 57.3 |
|
|
|
|
|
|
|
|
|
|
| For Six Months Ended June 30, 2019 | ||||||
|
| ($ in thousands) | ||||||
|
| Australia |
| United States |
| Other / Corporate |
| Total Consolidated |
Total costs and expenses |
| 564,658 |
| 331,930 |
| 18,156 |
| 914,744 |
Less: Selling, general and administrative expense |
| (332) |
| — |
| (17,979) |
| (18,311) |
Less: Depreciation, depletion and amortization |
| (42,157) |
| (42,945) |
| (177) |
| (85,279) |
Total operating costs |
| 522,169 |
| 288,985 |
| — |
| 811,154 |
Less: Other royalties |
| (77,100) |
| (16,322) |
| — |
| (93,422) |
Less: Stanwell rebate |
| (94,674) |
| — |
| — |
| (94,674) |
Less: Freight expenses |
| (78,194) |
| (11,168) |
| — |
| (89,362) |
Less: Other non-mining costs |
| — |
| — |
| — |
| — |
Total mining costs |
| 272,201 |
| 261,495 |
| — |
| 533,696 |
Sales Volume excluding non-produced coal (MMt) |
| 6.4 |
| 4.0 |
| — |
| 10.4 |
Mining cost per Mt sold ($) |
| 42.6 |
| 65.4 |
| — |
| 51.4 |
Average realized Met price for the Six Months Ended June 30, 2020 compared to Six Months Ended June 30, 2019
|
| For Six Months Ended June 30, 2019 |
| ||||||||||
|
| ($ in thousands) |
| ||||||||||
|
| Curragh |
| Buchanan |
| Logan |
| Greenbrier |
| Other / |
| Total |
|
Total costs and expenses |
| 564,658 |
| 157,770 |
| 134,457 |
| 39,703 |
| 18,156 |
| 914,744 |
|
Less: Selling, general and administrative expense |
| (332 | ) | — |
| — |
| — |
| (17,979 | ) | (18,311 | ) |
Less: Depreciation, depletion and amortization |
| (42,157 | ) | (22,675 | ) | (13,532 | ) | (6,738 | ) | (177 | ) | (85,279 | ) |
Total operating costs |
| 522,169 |
| 135,095 |
| 120,925 |
| 32,965 |
| — |
| 811,154 |
|
Less: Other royalties |
| (77,100 | ) | (4,284 | ) | (9,996 | ) | (2,042 | ) | — |
| (93,422 | ) |
Less: Stanwell rebate |
| (94,674 | ) | — |
| — |
| — |
| — |
| (94,674 | ) |
Less: Freight expenses |
| (78,194 | ) | (526 | ) | (6,164 | ) | (4,478 | ) | — |
| (89,362 | ) |
Total mining costs |
| 272,201 |
| 130,285 |
| 104,765 |
| 26,445 |
| — |
| 533,696 |
|
A reconciliation of the Company’s average realized Met coal revenue is shown below:
|
| For Six Months Ended June 30, 2018 |
| ||||||||||
|
| ($ in thousands) |
| ||||||||||
|
| Curragh |
| Buchanan |
| Logan |
| Greenbrier |
| Other / |
| Total |
|
Total costs and expenses |
| 309,469 |
| 183,678 |
| 112,148 |
| 45,120 |
| 51,844 |
| 702,259 |
|
Less: Selling, general and administrative expense |
| (439 | ) | — |
| — |
| — |
| (51,844 | ) | (52,283 | ) |
Less: Depreciation, depletion and amortization |
| (22,019 | ) | (22,864 | ) | (12,704 | ) | (6,815 | ) | — |
| (64,402 | ) |
Total operating costs |
| 287,011 |
| 160,814 |
| 99,444 |
| 38,305 |
| — |
| 585,574 |
|
Less: Other royalties |
| (38,242 | ) | (35,132 | ) | (7,000 | ) | (2,613 | ) | — |
| (82,987 | ) |
Less: Stanwell rebate |
| (32,812 | ) | — |
| — |
| — |
| — |
| (32,812 | ) |
Less: Freight expenses |
| (38,294 | ) | (1,805 | ) | (3,269 | ) | (1,787 | ) | — |
| (45,155 | ) |
Total mining costs |
| 177,663 |
| 123,877 |
| 89,175 |
| 33,905 |
| — |
| 424,620 |
|
|
| For Six Months Ended June 30, | ||||||
|
| ($ in thousands) | ||||||
|
| 2020 |
| 2019 |
| Change |
| % |
Met sales volume (MMt) |
| 6.6 |
| 8.3 |
| (1.7) |
| (20.5)% |
Met coal revenues ($) |
| 642,029 |
| 1,135,499 |
| (493,470) |
| (43.5)% |
Average realized Met price per Mt sold ($/Mt) |
| 97.3 |
| 137.5 |
| (40.2) |
| (29.2)% |
Coronado Global Resources Inc. Form 10-Q June 30, 202037
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
|
| For Three Months Ended |
| For Six Months Ended | ||||
|
| June 30, |
| June 30, | ||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 |
|
| (US $ thousands) | ||||||
Reconciliation to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
Net (loss) income |
| (114,330) |
| 117,506 |
| (123,196) |
| 214,326 |
Add: Depreciation, depletion and amortization |
| 41,547 |
| 45,508 |
| 86,849 |
| 85,279 |
Add: Interest expense (net of income) |
| 12,064 |
| 9,087 |
| 24,318 |
| 17,264 |
Add: Other foreign exchange losses (gains) |
| 9,777 |
| 3,157 |
| 4,217 |
| (557) |
Add: Income tax (benefit) expense |
| (22,646) |
| 47,033 |
| (20,355) |
| 89,043 |
Add: Impairment of assets |
| 63,111 |
| — |
| 63,111 |
| — |
Adjusted EBITDA |
| (10,477) |
| 222,291 |
| 34,944 |
| 405,355 |
|
| For Three Months |
| For Six Months |
| ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
|
|
| ($ in thousands) |
| ||||||
Reconciliation to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
Net Income |
| 117,506 |
| 59,322 |
| 214,326 |
| 35,651 |
|
Add: Depreciation, depletion and amortization |
| 45,508 |
| 42,594 |
| 85,279 |
| 64,402 |
|
Add: Interest expense (net of income) |
| 9,087 |
| 18,987 |
| 17,264 |
| 25,488 |
|
Add: Other foreign exchange losses (gains) |
| 3,157 |
| 5,290 |
| (557 | ) | 6,848 |
|
Add: Loss on retirement of debt |
| — |
| — |
| — |
| 3,905 |
|
Add: Income tax expense |
| 47,033 |
| 12,995 |
| 89,043 |
| 5,534 |
|
Adjusted EBITDA |
| 222,291 |
| 139,188 |
| 405,355 |
| 141,828 |
|
Liquidity and Capital Resources
Overview
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 flow from operations and borrowings under the SFA.
Our main uses of cash have historically been, and are expected to continue to be, the funding of our operations, working capital and capital expenditure and debt service obligations and payment of dividends.obligations. Based on our outlook for the next 12 months, which is subject to continued changing demand from our customers, and volatility in coal prices and the uncertainty of impacts from the COVID-19 pandemic on the global economy, we expect to generatebelieve 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 and service our debt obligations and fund our dividends.obligations.
Our ability to generate sufficient cash depends on our future performance which may be subject to a number of factors beyond our control, including general economic, financial and competitive conditions and other risks described in this document and in Part I, Item 1A. “Risk Factors” of our registration statementAnnual Report on Form 10, as amended,10-K for the year ended December 31, 2019, filed with the SEC and ASX on June 28, 2019. Over time,February 24, 2020 and Part II, Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the three months ended March 31, 2020, filed with the SEC and ASX on May 8, 2020. Given the current market outlook, we expect to implement additional strategic and financial initiatives to ensure there is sufficient available liquidity to meet our obligations. The business retains operating and cost flexibility, and such strategic initiatives may seek additionalinclude further right-sizing of production at the U.S. Operations for market conditions, deferring development capex, reducing stay-in-business capex and curtailing non-essential operating costs. In addition, the Company may pursue other initiatives to improve cash flow, such as the potential for non-core asset sales or other funding from a range of sources to diversify our funding sources.measures.
Liquidity as of June 30, 20192020 and December 31, 20182019 was as follows:
|
| June 30, 2020 |
| December 31, 2019 |
|
| ($ in thousands) | ||
Cash, excluding restricted cash |
| 36,072 |
| 26,302 |
Availability under Revolving Syndicate Facility Agreement (1) |
| 109,000 |
| 220,000 |
Total |
| 145,072 |
| 246,302 |
(1) The availability to fully draw down under the SFA is subject to a liquidity buffer of $50 million, requiring lenders consent, during the existing covenant waiver period to February 28, 2021.
|
| June 30, 2019 |
| December 31, 2018 |
| ||
|
| ($ in thousands) |
| ||||
Cash, excluding restricted cash |
| $ | 46,001 |
| $ | 124,656 |
|
Availability under Revolving Syndicate Facility Agreement |
| 350,000 |
| 350,000 |
| ||
Total |
| $ | 396,001 |
| $ | 474,656 |
|
Coronado Global Resources Inc. Form 10-Q June 30, 202038
Total Indebtedness
Our total indebtedness as of June 30, 20192020 and December 31, 20182019 consisted of the following:
|
| June 30, 2020 |
| December 31, 2019 |
|
| ($ in thousands) | ||
Current instalments of other financial liabilities and finance lease obligations |
| 15,106 |
| 8,375 |
Interest bearing liabilities, excluding current instalments |
| 441,000 |
| 330,000 |
Other financial liabilities, excluding current instalments |
| 457 |
| 1,546 |
Total |
| 456,563 |
| 339,921 |
|
| June 30, 2019 |
| December 31, 2018 |
| ||
|
| ($ in thousands) |
| ||||
Finance/capital lease liabilities |
| $ | 3,103 |
| $ | 3,789 |
|
Other financial liabilities |
| 15,823 |
| 11,800 |
| ||
Total |
| $ | 18,926 |
| $ | 15,589 |
|
Liquidity
As of June 30, 2020, available liquidity was $145.1 million comprising cash and cash equivalents (excluding restricted cash) of $36.1 million and $109.0 million of available borrowing facilities under the SFA, $50 million of which is subject to a liquidity buffer agreed with the Lenders. As of December 31, 2019, available liquidity was $396.0$246.3 million comprising cash and cash equivalents of $46.0$26.3 million and $350.0$220.0 million of available borrowing facilities. As
In light of December 31, 2018,the COVID-19 pandemic, the Company has taken steps to strengthen its financial position, and maintain financial flexibility, including reviewing operating and corporate expenditure, reducing capital expenditure and ensuring there is sufficient available liquidity was $474.7 million comprising cashunder the SFA. As stated above, we are actively pursuing a number of strategic initiatives to increase liquidity, including extending the duration of covenant waivers, to manage operations through this period of uncertainty and cash equivalents of $124.7 million and $350.0 million of available borrowing facilities.volatility.
Cash
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.accounts or used to repay interest bearing liabilities.
Secured Credit Facilities
To assist in managing the potential volatility in economic and operational changes, which may influence the generation of free cash flow, the Company entered into a Syndicated Facility Agreement on September 15, 2018 providing twothe SFA, which provides three borrowing facilities:
·•Facility A—$350A — $350 million multi-currencymulticurrency revolving loan facility available for general working capital and corporate purposes; and
·•Facility B—B — A$370130 million multicurrency bank guarantee facility.facility; and
•Facility C — $200 million multicurrency revolving loan facility available for general working capital and corporate purposes.
The right to draw upon these facilities is conditional upon a number of provisions being satisfied at the time that each drawdown request is issued. These conditions include, among other things, that:
·•no Event of Default is continuing or would result from the proposed loan;
·•the representations, as defined in the Syndicated Facility Agreement,SFA, that are made are true in all material respects and not misleading; and
·•the amount of the proposed loan will not cause the committed facility limit to be exceeded.
At June 30, 2019,2020, Facility A was fully utilized and Facility C had no borrowings outstanding,$91.0 million drawn, with $350$109.0 million undrawn.
On May 25, 2020, the Company executed a Syndicated Facility Agreement Waiver Letter, or Waiver Letter, which, among other matters, waives compliance with certain finance covenants for the period from May 25, 2020 to February 28, 2021. The Waiver Letter provides the Company with additional flexibility to work through the current period of availability undrawn.lower demand and pricing for metallurgical coal as a result of COVID-19.
During the waiver period the Company has agreed to additional reporting requirements and other restrictions, including on new indebtedness and asset sales. The Company has also agreed to a new review event during the waiver period that arises if a utilization notice is provided which would cause the available balance under the Facility A and Facility C, in aggregate, to be less than US$50 million. If such a utilization notice is provided, we will be required to negotiate with the Lenders on the terms on which they may consent to a drawdown of the $50 million liquidity buffer. During this period, the Company
Coronado Global Resources Inc. Form 10-Q June 30, 202039
will be under a review event such that if agreement cannot be reached on the terms under which the liquidity buffer may be drawn, the Lenders may cancel the whole or any part of the Facilities and require repayment.
See Part II, Item 1A. “Risk Factors” – “Our financial performance could be adversely affected by a prolonged deterioration in prices.” for additional information.
Bank Guarantees
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. Facility B is available for this purpose and as of June 30, 2019,2020, we had issued multicurrency Bank Guarantees totaling A$268.568.9 million to satisfy these requirements, leaving A$101.561.1 million available under Facility B.
In addition to the above, to satisfy an obligation to provide a U.S. dollar bank guarantee to a third party, on June 12, 2019 the Company entered into a Bank Guarantee Facility Agreement with Westpac Banking Corporation with a limit of $28.6 million. At June 30, 2019 this facility was fully utilized.
Secured Credit Facilities Terms
Interest Rate
Borrowings under our Syndicated Facility AgreementSFA bear interest at a floating rate which is either (i) LIBOR plus an applicable margin for US$ loans and (ii) Bank Bill Swap Bid Rate, or BBSY, bid plus an applicable margin for the A$ loan. The applicable margin for Facility A and C depends on the Net Debt to EBITDA ratio (as defined in the Syndicated Facility Agreement)SFA).
Financial Covenants
Under the SFA we are required to comply with financial covenants, namely leverage ratio, interest coverage ratio, tangible net worth.
EachAs discussed above under “Liquidity - Secured Credit Facilities”, on May 25, 2020, the Company executed a Waiver Letter, which waives compliance with certain financial covenant is calculatedcovenants for the period from May 25, 2020 to February 28, 2021. The Waiver Letter provides the Company with referenceadditional flexibility to the definitions contained in the SFA.work through this period of lower demand and pricing for metallurgical coal as a result of COVID-19. As of June 30, 2019, which was the last applicable compliance date under the SFA,2020, we were in compliance with all applicablethe SFA’s financial covenants under the SFA.
Dividend
We paid an aggregate dividend of $299.7 million on March 29, 2019 in A$and did not need to holders of CDIsrely on the ASX aswaiver from lenders. See Part II, Item 1A. “Risk Factors” – “Our financial performance could be adversely affected by a prolonged deterioration in prices.” for additional information.
Dividend
During the six months to June 30, 2020 we paid $24.2 million of March 5, 2019, baseddividends to stockholders and CDI holders on the exchange rate on March 5, 2019.ASX.
Capital Requirements
Our main uses of cash have historically been and are expected to continue to be the funding of our operations, working capital and capital expenditure and the payment of interest and dividends.
Historical Cash Flows
The following table summarizes our cash flows for the six months ended June 30, 20192020 and 2018,2019, as reported in the accompanying consolidated financial statements:
Cash Flow
|
| For Six months ended June 30, | ||
|
| 2020 |
| 2019 |
|
| ($ in thousands) | ||
Net cash (used in) provided by operating activities |
| (7,636) |
| 301,216 |
Net cash (used in) investing activities |
| (61,853) |
| (67,336) |
Net cash provided by (used in) financing activities |
| 78,258 |
| (312,145) |
Net change in cash and cash equivalents |
| 8,769 |
| (78,265) |
Effect of exchange rate changes on cash and restricted cash |
| 1,002 |
| (365) |
Cash and restricted cash at beginning of period |
| 26,553 |
| 124,881 |
Cash and restricted cash at end of period |
| 36,324 |
| 46,251 |
Coronado Global Resources Inc. Form 10-Q June 30, 202040
|
| Six Months Ended June 30, |
| ||
|
| 2019 |
| 2018 |
|
|
| ($ in thousands) |
| ||
Net cash provided by operating activities |
| 301,216 |
| 141,612 |
|
Net cash (used in) investing activities |
| (67,336 | ) | (584,335 | ) |
Net cash (used in) provided by financing activities |
| (312,145 | ) | 701,093 |
|
Net change in cash and cash equivalents |
| (78,265 | ) | 258,370 |
|
Effect of exchange rate changes on cash and restricted cash |
| (365 | ) | (2,384 | ) |
Cash and restricted cash at beginning of period |
| 124,881 |
| 28,069 |
|
Cash and restricted cash at end of period |
| 46,251 |
| 284,055 |
|
Operating activities
Net cash used in operating activities was $7.6 million for the six months ended June 30, 2020, and cash provided by operating activities was $301.2 million and $141.6for the six months ended June 30, 2019. The decrease in cash from operating activities was primarily due to the decline in revenues in the period partially offset by lower operating costs.
Investing activities
Net cash used in investing activities was $61.9 million for the six months ended June 30, 2019 and 2018, respectively. The increase in cash provided by operating activities during the six months ended June 30, 2019 was primarily due2020, compared to the additional cash contributed by Curragh since it was acquired on March 29, 2018, and an improvement in operating performance of the U.S. Operations.
Investing activities
Net cash used in investing activities was $67.3$67.4 million for the six months ended June 30, 2019, compared to $584.3 million for the six months ended June 30, 2018.2019. Capital expenditure for the six months ended June 30, 20192020 was $66.4$61.9 million, of which $15.4$18.8 million related to Curragh and the remainderAustralian Operations, $41.9 million related to the U.S. Operations. CapitalOperations and the remaining $1.2 million for other and corporate. Included in the capital expenditure for ourthe U.S. Operations was $51.0 millionan acquisition of new reserves of $6.0 million.
As a result of weak market conditions and $46.8the uncertainty surrounding the length and severity of the COVID-19 pandemic, we are focused on reducing our expected cost and capital expenditures for the remainder of fiscal year 2020.
Financing activities
Net cash provided by financing activities was $78.3 million for the six months ended June 30, 2019 and 2018, respectively. Included in the cash flows in the six months ended June 30, 2018 was the cash consideration of $537.2 million used by Coronado to purchase Curragh.
Financing activities
Net cash used in financing activities was $312.1 million for the six months ended June 30, 2019,2020, compared to $701.1$312.1 million of net cash provided byused in financing activities during the six months ended June 30, 2018. 2019. Included in the net cash provided in financing activities for the six months ended June 30, 2020, were proceeds from borrowings of $145.0 million, repayment of borrowings of $34.0 million, and $24.2 million for dividends paid to the shareholders of the Company.
Uses of cash from financing activities during the six months ended June 30, 2019 included $299.7 million for dividends paid to the shareholders of the Company and payments of contingent royalty consideration under the Value Share Mechanism of $12.7 million. Included in the net cash provided in financing activities for the six months ended June 30, 2018 was proceeds from borrowings of $700.0 and $151.3 contributed by members of Coronado Group LLC (former parent of the Company), which were utilized for the purchase of Curragh and the repayment of a term loan on March 29, 2018.
Contractual Obligations
There were no material changes to our contractual obligations from the information previously provided in Item 27. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our registration statementAnnual Report on Form 10, as amended,10-K for the year ended December 31, 2019, filed with the SEC and ASX on June 28, 2019, for the year ended December 31, 2018.February 24, 2020.
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 committeeAudit Committee of our Board of Directors.
Our critical accounting policies are discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” inof our registration statementAnnual Report on Form 10, as amended,10-K for the year ended December 31, 2019, filed with the SEC and ASX on June 28, 2019.February 24, 2020.
Newly Adopted Accounting Standards and Accounting Standards Not Yet Implemented
Unaudited Pro Forma Combined Financial Information
The followingSee Note 2. (a) “Newly Adopted Accounting Standards” and Note 2. (b) “Accounting Standards Not Yet Implemented” to our unaudited condensed consolidated pro forma statements of operations present the combination of the historical financial statements of Coronado and Curragh, adjusted to give effect to the acquisition of Wesfarmers Curragh Pty Ltd by Coronado, which we refer to as the Curragh acquisition.
The unaudited consolidated pro forma statement of operations for the six months ended June 30, 2018 combine the historical consolidated statement of operations of Coronado and the historical combined statement of operations for Curragh, giving effect to the acquisition of Wesfarmers Curragh Pty Ltd by Coronado as if they had been consummated on January 1, 2018. This will facilitate a pro forma comparison between the six months ended June 30, 2019 and June 30, 2018 in Management’s Discussion and Analysis of Financial Condition and Results of Operations. We believe a discussion of these two periods is more meaningful as it is on a comparable basis.
The unaudited consolidated pro forma statements of operations donewly adopted accounting standards and accounting standards not reflect the costs of any integration activities or benefits. The unaudited pro forma adjustments are based upon current available information and assumptions that yet implemented.
Coronado believes to be reasonable. The pro forma adjustments and related assumptions are described in the accompanying notes presented on the following pages.
The unaudited consolidated pro forma statements of operations are for informational purposes only and are not intended to represent or to be indicative of the actual results of operations or financial position that the combined business of Coronado and Curragh would have reported had the transactions been completed as of the dates set forth in the unaudited consolidated pro forma statements of operations and should not be taken as being indicative of Coronado’s future consolidated results of operation. The actual results may differ significantly from those reflected in the unaudited consolidated pro forma statements of operations for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the unaudited consolidated pro forma statements of operations and actual amounts. As a result, the pro forma consolidated information does not purport to be indicative of what the results of operations would have been had the transaction been completed on the applicable dates of the unaudited consolidated pro forma statements of operations.
Unaudited Consolidated pro forma statement of operations
For the six months-endedGlobal Resources Inc. Form 10-Q June 30, 2018202041
(U.S. dollars and AUD in thousands)
|
|
|
| Historical 1 January 2018 to 29 March 2018 |
|
|
|
|
|
|
| ||||||||||
|
| Historical |
|
|
| Note 2(a) |
| Note 2(b) |
|
|
| Note 2(c) |
| Pro Forma adjustments |
|
|
| ||||
|
| Coronado |
| Curragh |
| Reclassification |
| IFRS to US |
| Curragh in |
| Curragh in |
| Pro forma |
| Note 2 |
| Consolidated |
| ||
|
| USD |
| AUD |
| AUD |
| AUD |
| AUD |
| USD |
| USD |
|
|
| USD |
| ||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Coal revenues |
| 561,363 |
| 406,696 |
| — |
| — |
| 406,696 |
| 313,494 |
| — |
|
|
| 874,857 |
| ||
Coal revenues from related parties |
| 222,983 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 222,983 |
| ||
Other Revenues |
| 15,337 |
| — |
| — |
| — |
| — |
| — |
| 3,006 |
| (d | ) | 18,343 |
| ||
Total Revenues |
| 799,683 |
| 406,696 |
| — |
| — |
| 406,696 |
| 313,494 |
| 3,006 |
|
|
| 1,116,183 |
| ||
Cost and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Cost of coal revenues (exclusive of items shown separately below) |
| 424,620 |
| 204,132 |
| (15,367 | ) | — |
| 188,765 |
| 145,506 |
| — |
|
|
| 570,126 |
| ||
Depreciation, depletion and amortization |
| 64,402 |
| — |
| 16,971 |
| 1,525 |
| 18,496 |
| 14,257 |
| 7,977 |
| (e | ) | 86,636 |
| ||
Freight expense |
| 45,155 |
| — |
| 47,769 |
| — |
| 47,769 |
| 36,822 |
| — |
|
|
| 81,977 |
| ||
Stanwell rebate |
| 32,812 |
| — |
| 55,949 |
| — |
| 55,949 |
| 43,127 |
| — |
|
|
| 75,939 |
| ||
Other royalty expenses |
| 82,987 |
| 93,886 |
| (55,949 | ) | — |
| 37,937 |
| 29,243 |
| — |
|
|
| 112,230 |
| ||
Impairment |
| — |
| (263,097 | ) | — |
| 263,097 |
| — |
| — |
| — |
|
|
| — |
| ||
Selling, general, and administrative expenses |
| 52,283 |
| 50,098 |
| (47,769 | ) | — |
| 2,329 |
| 1,795 |
| (38,101 | ) | (f | ) | 15,977 |
| ||
Total costs and expenses |
| 702,259 |
| 85,019 |
| 1,604 |
| 264,622 |
| 351,245 |
| 270,750 |
| (30,124 | ) |
|
| 942,885 |
| ||
Operating income |
| 97,424 |
| 321,677 |
| (1,604 | ) | (264,622 | ) | 55,451 |
| 42,744 |
| 33,130 |
|
|
| 173,298 |
| ||
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Interest income |
| 585 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 585 |
| ||
Interest expense |
| (26,073 | ) | (444,895 | ) | 1,604 |
| — |
| (443,291 | ) | (341,703 | ) | 336,058 |
| (g | ) | (31,718 | ) | ||
Loss on debt extinguishment |
| (3,905 | ) | — |
| — |
| — |
| — |
| — |
| 3,905 |
| (h | ) | — |
| ||
Other, net |
| (26,846 | ) | 10,098 |
| — |
| — |
| 10,098 |
| 7,784 |
| 15,695 |
| (i | ) | (3,367 | ) | ||
Total other income (loss), net |
| (56,239 | ) | (434,797 | ) | 1,604 |
| — |
| (433,193 | ) | (333,919 | ) | 355,658 |
|
|
| (34,500 | ) | ||
Income before tax |
| 41,185 |
| (113,120 | ) | — |
| (264,622 | ) | (377,742 | ) | (291,175 | ) | 388,788 |
|
|
| 138,798 |
| ||
Income tax expense |
| (5,534 | ) | (102,443 | ) | — |
| 79,387 |
| (23,056 | ) | (17,772 | ) | (4,314 | ) | (j | ) | (27,620 | ) | ||
Net income |
| 35,651 |
| (215,563 | ) | — |
| (185,235 | ) | (400,798 | ) | (308,947 | ) | 384,474 |
|
|
| 111,178 |
| ||
Less: Net loss attributable to noncontrolling interest |
| (4 | ) | — |
| — |
| — |
| — |
| — |
| — |
|
|
| (4 | ) | ||
Net income (loss) attributable to Coronado Global Resources Inc. |
| 35,655 |
| (215,563 | ) | — |
| (185,235 | ) | (400,798 | ) | (308,947 | ) | 384,474 |
|
|
| 111,182 |
| ||
Earnings per share of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Basic |
| 0.37 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| $ | 1.15 |
| |
Diluted |
| 0.37 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| $ | 1.15 |
| |
Average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Basic |
| $ | 96,651,692 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 96,651,692 |
| |
Diluted |
| $ | 96,656,067 |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| 96,656,067 |
|
See accompanying notes to the unaudited pro forma consolidated statement of operations.
Note 1. Basis of Preparation
The accompanying unaudited consolidated pro forma statement of operations was prepared in accordance with Article 11 of Regulation S-X and presents the pro forma combined results of operations of Coronado based upon the historical financial statements of each of Coronado and Curragh, after giving effect to the Curragh acquisition and change in tax status, and are intended to reflect the impact of the Curragh acquisition and change in tax status on Coronado’s statement of operations. The accompanying unaudited consolidated pro forma statement of operations has been prepared using, and should be read in conjunction with the consolidated financial statements of Coronado for the three and six months ended June 30, 2019. Assumptions and estimates underlying the pro forma adjustments are described in these notes.
The accompanying unaudited consolidated pro forma statement of operations is presented for illustrative purposes only and does not purport to be indicative of the actual results that would have been achieved by Coronado if the Curragh acquisition had been consummated as of the beginning of the periods presented or that will be achieved in the future. The unaudited consolidated pro forma statement of operations does not reflect the costs of any integration activities or benefits that may result from realization of synergies expected to result from the Curragh acquisition. In addition, throughout the period presented in the unaudited consolidated pro forma statement of operations until the date of acquisition on March 29, 2018, the operations of Curragh were conducted and accounted for as part of the former shareholder. Curragh’s unaudited combined financial information has been derived from the former shareholder’s historical accounting records and reflect certain allocations of direct costs and expenses. All of the allocations and estimates in such financial information are based on assumptions that the management of the former shareholder believes are reasonable. In the opinion of management, the unaudited consolidated pro forma statement of operations includes all normal and recurring adjustments that are considered necessary for the fair presentation of the results for the period presented. Curragh’s financial information does not necessarily represent the financial position of Curragh had it been operated as a stand-alone company during the period.
The unaudited consolidated pro forma statement of operations combines the historical consolidated statement of operations of Coronado for the three and six months ended June 30, 2018 and the unaudited combined financial information of Wesfarmer’s Curragh Pty Ltd for the three months ended March 29, 2018, giving effect to the Curragh acquisition as if both had been consummated on January 1, 2018.
Note 2. Income Statement Adjustments
The unaudited consolidated pro forma statement of operations reflects the following adjustments ($ in thousands):
(A) Reclassifications
These adjustments represent reclassifications to conform the accounting presentation of Curragh’s financial statements to Coronado’s financial statements.
(B) International Financial Reporting Standards, or IFRS, to U.S. GAAP adjustments (in AUD)
Impairment was adjusted as follows:
| |||
|
| ||
|
|
(1) Represents the removal of the IFRS, impairment reversal consistent with pushing back the U.S. GAAP acquisition fair values to January 1, 2018 and the prohibition under U.S. GAAP of the reversal of impairment expense.
Depreciation, depletion and amortization was adjusted as follows:
| |||
|
| ||
|
|
(1) Under U.S. GAAP, a company-specific risk adjusted discount rate is used which is higher than the discount rate required by IFRS. The higher discount rate under U.S. GAAP reduces the asset retirement obligation, or ARO, booked initially and results in a higher accretion expense each period as the discounted ARO balance increases.
See Note J for discussion of the calculation of the income tax expense.
(C) USD translation rate
In order to translate the Curragh AUD results into USD, an exchange rate of .7708 was utilized. This represents the average exchange rate for the period from January 1, 2018 to June 30, 2018.
(D) Other revenues
Other revenues were adjusted as follows:
| |||
|
| ||
|
|
(1) Relates to the amortization of the Stanwell below market coal supply agreement, or CSA. The Stanwell below market CSA represents the fair value attributable to the Australian coal supply obligation arising from the Coronado Curragh business combination.
(E) Depreciation, depletion and amortization
Depreciation, depletion and amortization were adjusted as follows:
| |||
|
| ||
|
|
(1) Represents the adjustment to Curragh’s historical depreciation and amortization as a result of preliminary fair value adjustments to the acquired depreciable assets, mineral reserves and amortizable intangible assets.
(F) Selling, general and administrative
Selling, general and administrative expenses were adjusted as follows:
| |||
|
|
| |
|
|
|
(1) Relates to advisory and legal fees incurred in the year ended June 30, 2018, which are directly attributable to the Curragh acquisition, but which are not expected to have a continuing impact on results following the consummation of the Curragh acquisition.
(G) Interest expense
Interest expense was adjusted as follows:
| |||
|
| ||
|
| ||
|
|
| |
|
|
| |
|
|
(1) Represents the removal of the historical interest charge in relation to an intercompany loan Curragh had with its previous shareholder, which was assigned to Coronado upon acquisitions and is therefore eliminated in consolidation.
(2) Represents the reversal of interest expense related to the Bank of America Term Loan on Coronado’s Statement of Operations. This loan was extinguished on March 29, 2018 in conjunction with the acquisition of Curragh. In order to represent the financing in-place as if the acquisition occurred on January 1, 2018, the effects of this note have been removed.
(3) Represents additional interest expense related to the DB Term Loan. This $700 million loan, established on March 29, 2018, was used to partially finance the acquisition of Curragh and the additional interest charge reflects this loan as if it were in existence on January 1, 2018. The assumed interest rate for the three months to March 29, 2018 was 8.802%, representing LIBOR plus a 6.5% spread. This is the actual interest rate of the loan at origination. Due to the proximity of the assumed origination (January 1, 2018) and the actual origination (March 29, 2018) as well as the fact the loan was extinguished on October 24, 2018, the interest rate at March 29, 2018 was determined to be representative and more meaningful for the pro forma adjustment than utilizing the current rate.
(4) For each one-eighth of 1% change in estimated interest rate associated with the $700 million DB Term Loan, interest expense would increase or decrease by $0.4 million for the six months ended June 30, 2018.
(5) Represents the additional amortization of debt issuance costs and the debt discount associated with the DB Term Loan.
(H) Loss on debt extinguishment
Loss on debt extinguishment was adjusted as follows:
| |||
|
| ||
|
|
(1) Represents the reversal of the debt extinguishment expense related to the Bank of America Term Loan on Coronado’s Statement of Operations. This loan was extinguished on March 29, 2018 in conjunction with the acquisition of Curragh. In order to represent the financing in-place as if the acquisition occurred on January 1, 2018, the effects of this note have been removed.
(I) Other, net
Other, net was adjusted as follows:
| |||
|
| ||
|
|
(1) Relates to the loss on Foreign Exchange, or FX, swap incurred in the six months ended June 30, 2018, which is directly attributable to the Curragh acquisition as it locked in the USD exchange rate in advance of the purchase of Curragh. This loss on FX swap is not expected to have a continuing impact on results following the consummation of the Curragh acquisition.
(J) Income tax provisions
For purposes of the unaudited pro forma condensed combined financial statements, an Australian statutory tax rate of approximately 30% has been used for pro forma adjustments related to Curragh. A U.S. blended statutory tax rate (Federal and State) of approximately 27% has been used for pro forma adjustments related to the U.S. LLC’s. This does not reflect Coronado’s effective tax rate, which will include other tax items such as state and foreign taxes as well as other tax charges and benefits, and does not take into account any historical or possible future tax events that may impact Coronado following the consummation of the Curragh acquisition.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKQuantitative and Qualitative Disclosures About Market Risk
Our activities expose us to a variety of financial risks, including market risk such as commodity price risk, interest rate risk, foreign currency risk, liquidity risk and credit risk. OurThe 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 are exclusively used for economic hedging purposes and hedging for speculative purposes is strictly prohibited by the Treasury Risk managementManagement 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 rate, 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.
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 registration statementAnnual Report on Form 10, as amended,10-K filed with the SEC and ASX on June 28, 2019.February 24, 2020.
Sales commitments in the Metmetallurgical coal market are typically not long-term in nature, and we are therefore subject to fluctuations in market pricing. For example, a 10% decreaseCertain coal sales in our Australian Operations are provisionally priced initially. Provisionally priced sales are those for which price finalization, referenced to the hard coking coal, or HCC, benchmarkrelevant index, is outstanding at the reporting date. The final sales price would have decreased reported revenues foris determined within 7 to 90 days after delivery to the three months endedcustomer. At June 30, 20192020, there were $33.8 million of outstanding provisionally priced sales. If prices were to decrease 10%, provisionally priced sales would decrease by $3.4 million. See item 1A. “Risk Factors—Our profitability depends upon the prices we receive for our coal. Prices for coal are volatile and six months ended June, 2019 by approximately $363.3 millioncan fluctuate widely based upon a number of factors beyond our control” in our Annual Report on Form 10-K filed with the SEC and $698.4 million respectively.ASX on February 24, 2020.
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.
In 2018, we entered into fixed price contracts with ourThe fuel suppliers to purchase 19.1 million liters of fuelrequired for our U.S. Operations with a total commitment of $11.3 million for 2019. The remaining commitment as of June 30, 2019 was $5.6 million with respect to 9.5 million liters. Any additional fuel requiredin fiscal year 2020 will be purchased under fixed-price contracts or on a spot basis.
In the same period, For our Australian Operations, we have entered into forward derivative contracts to purchase 93.4 million liters of diesel fuel in 2019 with respect to the fuel requirements for the Curragh operations in Australia. During the three month period ended June 30, 2019 we have entered into additional forward derivative contracts to purchase 126 million liters of diesel fuel with respect to the expected 2020our fuel requirements for Curragh.at Curragh in 2020 and 2021 of which 199.6 million liters were outstanding as of June 30, 2020. The fair value of the forward derivative contractcontracts as of June 30, 20192020 was an asseta liability of $3.6 million with respect to outstanding 173.3 million liters.$20.1 million.
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 financial performance, investment decisions and stockholder returns. 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 June 30, 2019,2020, we had $17.1$15.6 million of fixed-rate borrowings and $441.0 million of variable-rate borrowings outstanding. As discussed in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results Ofof Operations—Liquidity and Capital Resources—Liquidity,” as of June 30, 2019, we had undrawn2020, the drawn debt facility of $350$441.0 million withincurred a variable interest rate of LIBOR or BBSY bid plus a margin. We intend to draw these funds for working capital requirements and general corporate purposes. A significantAs of June 30, 2020, a 10% increase in the market interest rate following a drawdown could result in a materialon our variable-rate borrowings of $441.0 million would increase in theour annual interest expense dependent on the amount drawn.by $0.2 million. We currently do not hedge against interest rate fluctuations.
Coronado Global Resources Inc. Form 10-Q June 30, 202042
Foreign Exchange Risk
A significant portion of our sales are denominated in US$. 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 90% of expenses incurred at Curragh are denominated in A$. Approximately 10% of Curragh’s purchases are made with reference to US$, which provides a natural hedge against foreign exchange movements on these purchases (including fuel, the Wiggins Island Coal Export Terminal Pty Ltd, or WICET, Terminal Handling Charge,some port handling charges, demurrage, purchased coal and some insurance premiums). Appreciation
The Company entered into forward exchange contracts to manage its foreign currency exposure of the Curragh operations by selling US$ generated from export coal sales revenue at Curragh and purchasing A$ against US$ will increaserequired to settle Curragh’s US$ reported cost base and reduce US$ reported net income. Assuming we had no foreign currency hedging instruments in place, a 5% increase inA$ operating costs. The fair value of the A$ to US$ exchange rate would increase reported expenses by approximately $7.9 million and $16.0 million for the three months endedforward derivative contracts as of June 30, 2019 and the six months ended June 30, 2019, respectively.2020 was an asset of $1.5 million.
Under normal market conditions, we generally do not consider it necessary to hedge our exposure to this foreign exchange risk. However, there may be specific commercial circumstances, such as the hedging of significant capital expenditure, acquisitions, disposals and other financial transactions, where we may deem foreign exchange hedging as appropriate and where a US$ contract cannot be negotiated directly with suppliers and other third parties.
During 2018, we entered into a foreign exchange swap to hedge the exposure to fluctuations in the A$-US$ in connection with the acquisition of Curragh. At June 30, 2019, we did not have any foreign exchange contracts outstanding.
For our Australian Operations, we translate all monetary assets and liabilities at the period-end exchange rate, all non-monetary 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 againstFor the unhedged portion of US$ required to purchase A$ to settle Curragh’s operating costs, a 10% increase in the A$ to US$ exchange rate fluctuations.would increase reported total costs and expenses by approximately $19.6 million and $37.1 million for the three and six months ended June 30, 2020.
Liquidity Risk
Liquidity risk is the risk that we will not have sufficient liquid funds to meet our financial commitments as and when they fall due. Liquidity risk is managed centrally through short-term cash forecasting and longer-term strategic planning. Our objective is to ensure that we have sufficient liquid assets and funding to meet both our anticipated and unexpected financial obligations.
Access to capital is also an important feature of liquidity risk management. We manage this risk through proactive management of our funding profile by ensuring that we have access to diverse sources of funds and that we do not have material refinancing risk in any single reporting period.
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.
Coronado Global Resources Inc. Form 10-Q June 30, 202043
ITEMitem 4.CONTROLS AND PROCEDURES Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act isare recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Group Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report, and concluded that such disclosure controls and procedures were effective to provide reasonable assurance that the desired control objectives were achieved.
Internal Control over Financial Reporting
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes-Oxley Act of 2002, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. We will not be required to submit a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm until our second annual report on Form 10-K, due to awhich will be for fiscal year 2020, in accordance with the transition period established by the rules of the SEC for newly registered companies.
During the preparation of our financial statements for the year ended December 31, 2018, we and our auditors identified a material weakness in our internal control over financial reporting related to the recognition and presentation of the impact of the Reorganization Transaction, which occurred just prior to the Australian IPO. The presentation was corrected prior to the issuance of the financial statements and did not result in any material misstatement of our financial statements or disclosures.
In the period since December 31, 2018, management has remediated the identified material weakness. The remediation efforts implemented specifically focused on the identified item and have also aided in enhancing our overall financial control environment. Remediation efforts applied during the period included (a) the immediate posting of the identified one-off item to ensure no material misstatement in our financial statements; (b) the continued recognition of this position since December 31, 2018 in our financial statements for the period ending June 30, 2019; (c) the Company has employed additional qualified resources to prepare, review and provide guidance on technical matters of this nature; and (d) the Company continues to utilize the expertise of certain third party technical advisors to assist in the review of complex transactions.
Our Chief Executive Officer and Group Chief Financial Officer have concluded that the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, present fairly, in all material respects, the financial position of the Company at June 30, 20192020, and the consolidated results of operations and cash flows for the six months period ended June 30, 20192020, in conformity with U.S. generally accepted accounting principles.principles.
Changes to Internal Control over Financial Reporting
As previously reported, we expect to continue to make changes in our internal control over financial reporting in connection with our compliance efforts with respect to the Sarbanes-Oxley Act of 2002. As such, we will continue to assess the adequacy of our internal control over financial reporting, remediate any control weaknesses that may be identified, validate through testing that controls are functioning as designed and implement a continuous reporting and improvement process for internal control over financial reporting.
Coronado Global Resources Inc. Form 10-Q June 30, 202044
item 1. lEGAL PROCEEDINGS
We are involved insubject to various legal proceedings from time to time in the normal courseand regulatory proceedings. For a description of business including proceedings related to employment matters. These liabilities do not include costs associated with legal representation, which are expensed as they are incurred. In management’s opinion, except for what is described below, we are not currently involved in anyour significant legal proceedings which, individually or in the aggregate and if determined adversely, could have a material effect on our financial condition, results of operations and/or liquidity or that would otherwise be requiredrefer to be disclosed herein.
Curragh is a co-defendant to proceedings in the Queensland Supreme Court brought by Aurizon. Aurizon’s claim relates to costs relatingNote 20. “Contingencies” to the co-defendants’ use of the WICET rail links,unaudited condensed consolidated financial statements included in particular, whether the “First Milestone Target Date”, which triggers certain “WIRP Fee” payments under the Wiggins Island Rail Project Deed, or WIRP Deed, has been achieved. On June 27, 2019, the Queensland Supreme Court delivered judgements in favor of Aurizon against Coronado Curragh Pty Ltd and the other co-defendants. The Company intends to continue to strongly contest the matter. The Company, together with the other co-defendants, lodged a notice of appeal of the Queensland Supreme Court judgement on July 25, 2019. It is currently expected that, were Aurizon successful in the ultimate result of the litigation and expert determinations, Coronado Curragh Pty Ltd would be required to pay approximately A$2.3 million per annum for the term of the WIRP Deed (which is 233 months). ResolutionPart I, Item 1. “Financial Statements” of this dispute would also result in the Company’s below rail access to WICET (of 1.5 MMtpa) becoming a firm contractual capacity entitlement (and the subject of a 20 year take-or-pay access agreement) instead of an ad hoc entitlement only. The Company’s unaudited Condensed Consolidated Balance Sheet includes an estimated loss contingency associated with these proceedings.
In February 2019, the Queensland Competition Authority, or QCA, issued its final decision in respect of Access Undertaking 5, or UT5. The final decision, consistent with the draft decision issued in December 2017, reduces the rate of return that can be chargedQuarterly Report, which information is incorporated by Aurizon on its network routes. The Queensland coal producers experienced material rail haulage underperformance because soon after the draft UT5 decision was handed down by the QCA, the rail track network was severely restricted due to Aurizon’s modification of its maintenance practices in order to lower costs. It is possible that Aurizon will modify its maintenance practices in the future to lower costs should similar decisions be issued by the QCA, resulting in constrained access to the rail network, making it more difficult for customers (including us) to arrange for the transportation of coal in excess of their contracted capacity entitlement and having the potential to increase demurrage costs.reference herein.
In a constrained rail capacity and high demand environment, there is a risk that we and other users of the network will not be allocated additional access to rail above annual contracted entitlements. Should this occur, the potential impact on us is higher in the short term as our contracted access entitlement for 1.5 MMt per annum of below rail capacity to WICET is currently treated as an ad hoc entitlement. This means that, in the event of a scheduling contest with a contracted user (which could arise because of changes by Aurizon to maintenance practices or because of increased usage of the line by other customers), a path we request may not be able to be scheduled. This capacity is now expected to become the subject of a long-term access agreement as the judgment from the litigation concluded in September 2018 has been handed down and the dispute between Wiggins Island Rail Project customers and Aurizon regarding the “First Milestone Target Date” under the WIRP Deed has been finally resolved.
In June 2018, two holders of preference equity issued by WICET Holdings commenced legal proceedings in the Supreme Court of New South Wales against WICET Pty Ltd and WICET Holdings alleging unpaid dividends in respect of the shares held by them. Although we are not exposed directly to this litigation, an adverse finding may detrimentally impact the financial position of WICET Holdings and WICET Pty Ltd and could result in the senior lenders or a receiver appointed by them taking steps to seek to recover against the shippers (including us) whether through increased terminal handling charges or otherwise.
Our registration statementExcept 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, as amended,10-K for the year ended December 31, 2019, filed with the SEC and ASX on June 28, 2019, which we refer to as our Form 10, includes a detailed discussion of certain material risk factors we face. The information presented below restates the risk factor set forth under the heading “Risks related to our investment in WICET may adversely affect our financial conditionFebruary 24, 2020 and results of operations” inPart II, Item 1A1A. “Risk Factors” of our Form 10. You should consider this risk factor together with the other risk factors and other matters described in our registration statement and in this Quarterly Report on Form 10-Q.10-Q for the three months ended March 31, 2020, filed with the SEC and ASX on May 8, 2020:
Our financial performance could be adversely affected by a prolonged deterioration in prices.
Risks relatedAs at June 30, 2020, we had $441.0 million of borrowings outstanding under the SFA. The degree to which liquidity is sufficient to meet the ongoing needs of the business may be impacted by a number of factors and could have the following consequence if sufficient liquidity is not available, including, but not limited to:
making it more difficult for us to pay interest and satisfy our investmentdebt obligations;
making any refinancing more difficult if the capital and lending markets are constrained;
making it more difficult to obtain surety bonds, letters of credit, bank guarantees or other financing, particularly during periods in WICET may adversely affectwhich credit markets are weak;
limiting our financial conditionflexibility in planning for, or reacting to, changes in our business and results of operations .in the coal industry; and
causing a decline in our credit ratings.
We have a minority interest in WICET Holdings Pty Ltd, whose wholly owned subsidiary, WICET Pty Ltd, owns WICET. Other coal producers who export coal through WICET also hold shares in WICET Holdings Pty Ltd. In addition,On May 25, 2020, we and the other coal producers (or shippers) have evergreen, ten year take-or-pay agreements with WICET Pty Ltd and pay a terminal handling charge to export coal through WICET, which is calculated by reference to WICET’s annual operating costs, as well as finance costs associated with WICET Pty Ltd’s external debt facilities, refinanced and extended in late 2018.
Under our take-or-payconcluded an agreement with WICET Pty Ltd, orlenders under the WICET Take-or-Pay Agreement, weSFA to waive compliance with certain financial covenants for the period from March 25, 2020 to February 28, 2021. The waiver provides us with additional flexibility to work through the current period of lower demand and pricing for metallurgical coal that has been brought about by the global COVID-19 pandemic. We are obligatedcontinuing to pay for that capacity via terminal handling charges, whether utilized or not. The terminal handling charge payable by usactively engage with our Lenders in relation to the extension of the waiver beyond February 28, 2021. There can be adjusted by WICET Pty Ltdno assurance that waivers will be extended beyond February 28, 2021 or that the Company will be in compliance with its financial covenants after February 28, 2021 if our share of WICET Pty Ltd’s operatingthe current market conditions persist.
During the waiver period, the Company has agreed to additional reporting requirements and finance cost increases, due to increased operating costs or because another shipper defaultsother restrictions, inlcuding on new indebtedness and asset sales. The Company has its capacity reduced to nil. The terminal handling charge calculation is subjectalso agreed to a finance cap setnew review event during the waiver period that arises if a utilization notice is provided which would cause the available balance under Facility A and Facility C, in aggregate, to be less than US$50 million. If such a utilization notice is provided, the Company will be required to negotiate with the Lenders on the terms of the WICET Take-or-Pay Agreement and this cap has already been reached and is in force. Since WICET began shipping export tonnages in April 2015, four WICET Holdings Pty Ltd shipper-shareholders have entered administration, resulting in defaults under their take-or-pay agreements and a decrease in the aggregate contracted tonnage at WICET from 27 MMtpaon which they would be prepared to 15.5 MMtpa.
Given the operation of the finance cap (agreed as part of WICET’s refinance) there is a limitcontinue to the recovery by WICET of its financing costs from shippers (subject to certain review event triggers). Accordingly, prior defaults referred to above have resulted in only minor increases to the terminal handling charges payable by the remaining shipper shareholders (including us). These increases have related to higher $/ton operating costs resulting from a lower contract base. Ifprovide all or any of the four-remaining shipper shareholders liquidates and/Facilities, and if agreement cannot be reached, the Lenders may cancel the whole or defaults under its take-or-pay agreement, a reviewany part of the finance cap would be triggeredFacilities and the terminal handling charges for the remaining shipper shareholders, including us, willrequire repayment.
Any downgrade in our credit ratings could result in, among other matters, an increase as each remaining shipper effectively would be proportionately liable to pay the defaulting shipper’s share of WICET’s operating and financing costs going forward.
In addition, if we default under our take-or-pay agreement with WICET Pty Ltd, we might be liable for a significant termination payment. The termination payment is approximately equal to our proportion of WICET Pty Ltd’s total external debt (which is based on the proportion that our contracted tonnage bears to the total contracted tonnage at WICET when the payment obligation is triggered). We have provided security to WICET Pty Ltd in the formcost of, a bank guarantee, the amount of which is required to cover our estimated liabilities as a shipper under the WICET Take-or-Pay Agreement for the following 12 month period.
Any attempt by the senior lenders for WICET Pty Ltd’s external debt, or a receiver appointed by them,limit on our access to, take steps to seek to recover against the shipper-shareholders (whether through increased terminal handling charges or otherwise) could materially and adversely impactvarious forms of credit used in operating our business and resultsthe requirement by suppliers for us to provide financial assurance by way of operations. If an insolvency or other event ultimately resulted in a permanent cessationletters of operations at WICET, we may also be required to procure additional port capacity, as well as be liable for a termination payment under our take-or-pay agreement.credit.
Coronado Global Resources Inc. Form 10-Q June 30, 202045
ITEMitem 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
None.
ITEMitem 3. DEFAULTS UPON SENIOR SECURITIES
None.
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.
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.
Coronado Global Resources Inc. Form 10-Q June 30, 202046
The following documents are filed as exhibits hereto:
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15.1 | Acknowledgment of Independent Registered Public Accounting Firm | |
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32.1 | ||
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101.SCH | ||
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| Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | ||
| Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | ||
| Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | ||
| Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | ||
| Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
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Coronado Global Resources Inc. Form 10-Q June 30, 202047
SIGNATURE
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. (Registrant) | ||
By: | /s/ Ayten Saridas | |
Ayten Saridas | ||
Group Chief Financial Officer (as duly authorized officer and as principal financial officer of the registrant) |
Date: August 5, 201910, 2020