EDGAR 10-K Filing

Company CIK: 1770561
Filing Year: 2023
Filename: 1770561_10-K_2023_0001562762-23-000044.json

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ITEM 1. BUSINESS
Item 1.
“Business-Regulatory Matters-Australia” and “Business-Regulatory
Matters-United States.”
Demand for our Met coal is significantly dependent on
the steel industry.
The majority of
the coal that
we produce
is Met coal
that is
sold, directly
or indirectly,
to steel
producers and
is
used in blast furnaces for steel production. Met coal,
specifically high-quality HCC and low-volatile PCI,
which is
produced at most of our
assets, has specific physical
and chemical properties, which are
necessary for efficient
blast furnace operation.
Therefore, demand for
our Met coal is
correlated to demands
of the steel industry.
The
steel industry’s
demand for
Met coal
is influenced
by a
number of
factors, including:
the cyclical
nature of
that
industry’s business; general economic
and regulatory conditions and demand
for steel; and the availability,
cost
and preference for substitutes for steel, such as aluminum, composites and plastics,
all of which may impact the
demand
for steel
products.
Similarly,
if
new
steelmaking
technologies
or practices
are developed
that
can
be
substituted
for
Met
coal
in
the
integrated
steel
mill
process,
then
demand
for
Met
coal
would
be
expected
to
decrease.
Although
conventional
blast
furnace
technology
has
been
the
most
economic
large-scale
steel
production
technology for a number of years, there can
be no assurance that over the longer term,
competitive technologies
not reliant on
Met coal would
not emerge,
which could
reduce the
demand and
price premiums
for Met coal.
A
significant reduction in
the demand for
steel products would
reduce the demand
for Met coal, which
could have
a material adverse effect on our financial condition
and results of operations.
Additionally, tariffs imposed by the United States on the import of certain steel products may impact foreign steel
producers
to
the
extent
their
production
is
imported
into the
United
States.
Future
tariffs
could
further
reduce
imports
of
steel
and
increase
U.S.
Met
coal
demand.
This
additional
U.S.
Met
coal
demand
could
be
met
by
reducing exports of Met coal and redirecting that volume
to domestic consumption.
The tariffs
established by
the United
States have
prompted retaliatory
tariffs from
key trading
partners, notably
Europe and China. Any further retaliatory tariffs by these or other countries to these tariffs may limit international
trade and adversely impact
global economic conditions. We cannot ascertain
the impact, if any, that similar tariffs
may have
on demand
for our
Met coal.
See “-We
may face
restricted
access
to international
markets in
the
future.”
We are
subject to
extensive health
and safety
laws and
regulations that
could have
a material
adverse
effect on our reputation and financial condition
and results of operations.
We are subject to extensive laws and regulations governing health and safety at coal
mines in the United States
and Australia. As a
result of increased stakeholder focus on
health and safety issues (such
as black lung disease
or
coal
workers’
pneumoconiosis),
there
is
a
risk
of
legislation
and
regulatory
change
that
may
increase
our
exposure to claims arising
out of current or
former activities or result in
increased compliance costs (e.g., through
requiring improved
monitoring standards
or contribution
to an
industry-pooled fund).
Regulatory agencies
also
have the authority, following
significant health and safety incidents, such as fatalities, to order mining operations
to be temporarily suspended or
the facility be permanently closed.
For example, on January 12, 2020,
operations
at our
Curragh mine were
temporarily suspended after
a contractor was
fatally injured during
a tire
change activity
in
the
main
workshop
on
site
and
on
November
21,
2021,
operations
at
our
Curragh
mine
were
temporarily
suspended after an employee
was fatally injured while working
in the dragline operations.
If further serious safety
incidents were to
occur at any
of our mining
facilities in the
future, it is
possible that a
regulator might impose
a
range
of
conditions
on
re-opening
of
a
facility,
including
requiring
capital
expenditures,
which
could
have
an
adverse effect on our reputation, financial condition
and results of operations.
For
additional
information
about
the
various
regulations
affecting
us,
see
Item 1.
“Business-Regulatory
Matters-Australia” and “Business-Regulatory Matters
-United States.”
Coronado Global Resources Inc. Form 10-K December 31,
Failure to comply with applicable anti-corruption and trade laws, regulations and policies could result in
fines and criminal
penalties, causing
a material adverse
effect on our
business, operating and
financial
prospects or performance.
Any
fraud,
bribery,
misrepresentation,
money
laundering,
violations
of
applicable
trade
sanctions,
anti-competitive
behavior
or
other
misconduct
by
our
employees,
contractors,
customers,
service
providers,
business
partners
and
other
third parties
could
result
in violations
of relevant
laws
and regulations
by us
and
subject us or relevant
individuals to corresponding regulatory
sanctions or other claims,
and could also result
in
an event of default under our financing arrangements. These unlawful activities
and other misconduct may have
occurred in
the past
and may
occur in
the future
and may
result in
civil and
criminal liability
under increasingly
stringent laws relating
to fraud, bribery,
sanctions, competition and
misconduct or cause
serious reputational or
financial
harm
to
us.
In
addition,
failure
to
comply
with
environmental,
health
or
safety
laws
and
regulations,
privacy laws and regulations,
U.S. trade sanctions,
the U.S. Foreign Corrupt
Practices Act and other
applicable
laws or regulations could result in litigation, the assessment of damages, the imposition of penalties, suspension
of production
or distribution,
costly changes
to equipment
or processes
due to
required corrective
action, or
a
cessation or interruption of operations.
We
have
policies
and
procedures
to
identify,
manage
and
mitigate
legal
risks
and
address
regulatory
requirements
and
other
compliance
obligations.
However,
there
can
be
no
assurance
that
such
policies,
procedures and established internal controls
will adequately protect us against
fraudulent or corrupt activity and
such activity could have an adverse effect on our reputation,
financial condition and results of operations.
In
times
of
drought
and/or
shortage
of
available
water,
our
operations
and
production,
particularly
at
Curragh, could be negatively impacted if
the regulators impose restrictions on our
water offtake licenses
that are required for water used in the CPPs.
In Queensland, all entitlements to the use, control and
flow of water are vested in the state and regulated by
the
Water Act
2000 (Qld).
Allocations under
the Water
Act 2000 (Qld)
can be managed
by a water
supply scheme
operator, such as SunWater Ltd. We have purchased the required water allocations for Curragh and
entered into
a suite of
related channel and pipeline
infrastructure agreements and river supply
agreements with SunWater
Ltd
to regulate the supply of water pursuant to these allocations.
The amount
of water
that is
available to
be taken
under a
water entitlement
will vary
from year
to year
and is
determined by
water sharing rules
of the
relevant catchment area.
These rules
will, for
example, state
a procedure
for water supply scheme holders to calculate
the water available to an allocation holder,
based on available and
predicted supply.
In situations
of severely
constrained supply
(such as during
a drought),
supply contracts
with
the scheme operator generally provide for a
reduced apportionment, with certain uses (e.g., domestic use) being
given higher
priority.
It is
possible that
during times
of drought
our water
offtake entitlements
in Australia
could
be reduced. If our water
offtake entitlement was reduced, the operations would have to
recycle more of the water
collected in
on-site dams
and former
mining pits,
from rainfall
and dewatering
activities, for
use in
the Curragh
CPP.
This may
impact our
ability to
maintain current
production levels
without incurring
additional costs,
which
could adversely impact our operations and production.
Decreases in demand for
coal-fired electricity and changes
in thermal coal consumption
patterns of the
United States and Australian electric power generators could
adversely affect our business.
In
addition
to
Met
coal,
our
Australian
Operations
and
U.S.
Operations
produce
some
thermal
coal.
Sales
of
thermal coal represented 34.7%
of tons sold and 5.3%
of the total revenues of our Australian
Operations for the
year ended December 31, 2022.
The majority of the thermal coal
produced by our Australian Operations
is sold
on a long-term supply
arrangement to Stanwell.
Sales of thermal coal
by our Australian Operations
to domestic
and export buyers are exposed to fluctuations in the global demand for thermal coal or electricity.
However, coal
sold to Stanwell is not directly exposed
to fluctuations in the global demand for
electricity or thermal coal. Under
the Stanwell supply contract,
Stanwell can set volumes, and
pricing is set at
significantly below-market rates. Our
cost of supplying coal to Stanwell has been and may continue to be greater than the price paid by Stanwell. See
“-Risks
related
to
the
Supply
Deed
with
Stanwell
may
adversely
affect
our
financial
condition
and
results
of
operations.”
Coronado Global Resources Inc. Form 10-K December 31,
For the
year ended
December 31,
2022, sales
of thermal
coal represented
4.3% of
tons sold
and 3.7%
of the
total
revenues
our
U.S.
Operations
for
the
year
ended
December
31,
2022.
As
such,
any
changes
in
coal
consumption by electric power generators in the United
States could impact our business over the long term.
While
power
generation
from
thermal
coal
remains
a
cost-effective
form
of
energy,
the
increasing
focus
on
renewable
energy
generation,
competition
from
alternative
fuel
sources,
such
as
natural
gas,
environmental
regulations and
the consequential
decline in
electricity generation
from fossil
fuels, is
expected to
result in
the
further decline
of coal-fired
electricity generation
due to
retirement of
coal-fired
capacity in
favor of
alternative
energy. The
low price of natural gas has resulted
in some U.S. electric power generators
increasing natural gas
consumption while decreasing coal consumption.
Further reductions in
the demand for
coal-fired electricity generation and
the growth of
alternative energy options,
such
as
renewables,
and
alternate
power
generation
technologies,
as
well
as
any
reduction
in
demand
for
electricity could materially reduce the demand for thermal coal, which may have a material adverse effect on our
financial condition and results of operations.
Economic, Competitive and Industry Risks
Our
business
may
be
adversely
affected
by
the
impact
on
the
global
economy
due
to,
among
other
events,
the
ongoing
military
conflict
between
Russia
and
Ukraine
or
other
significant
geopolitical
tensions.
Global
markets
are
experiencing
volatility
and
disruption
following
the
geopolitical
tensions
and
the
military
invasion of Ukraine
by Russia. This
military conflict
has led to,
and may lead
to additional,
sanctions and
other
penalties being
levied by
the United
States, the
European Union
and other
countries against
Russia, Belarus,
the Crimea Region
of Ukraine and
the two separatist
republics in the
Donetsk and Luhansk
regions of Ukraine,
including expansive bans on imports and exports of
products to and from Russia.
We are unable
to predict
the extent and
duration of the
ongoing military conflict,
which could lead
to further market
disruptions, including
significant volatility
in commodity
prices, including
the coal we
sell and
fuel we purchase,
instability in the
financial markets, higher inflation,
supply chain interruptions, political and
social instability as well
as an
increase in
cyberattacks and
espionage. Further, sanctions, and
any other
measures, as
well as
the existing
and potential
further responses from
Russia or
other countries
to such
sanctions, could adversely
affect the global
economy and financial markets, which
could in turn have
an adverse impact on
our financial condition and
results
of operations or heighten other risks described in this
Item 1A, “Risk Factors”.
Our
business,
financial
condition
and
results
of
operations
may
be
adversely
impacted
by
global
pandemics, including the COVID-19 pandemic, or other
widespread public health concerns.
Global pandemics, including the COVID-19
pandemic, or other widespread public
health concerns could have an
adverse effect on our business, financial condition
and results of operations.
International, federal, state and local public health and governmental authorities’ mandates in response to global
pandemics could require forced
shutdowns of our mines
and other facilities
in Australia and the
U.S. for extended
periods, restrict movement and the implementation of social distancing
protocols and restrict travelling overseas
or
across
borders
(including
interstate),
affecting
a
number
of
our
normal
business
practices
and
operations.
These
restrictions
could
cause
disruptions
to
mining
operations,
manufacturing
operations
and
supply
chains
around the world.
The
extent and duration
of the impact
that global pandemics, including
the COVID-19 pandemic,
and other public
health concerns could have in our business and results of operations will depend on numerous factors out of our
control that we may
not be able to
accurately predict and
could also heighten
other risks described
in this “Item
1A. Risk Factors” section, which could have a material adverse impact in our business and results of operations.
Our
profitability
depends
upon
the
prices we
receive
for our
coal.
Prices
for
coal are
volatile
and
can
fluctuate widely based upon a number of factors beyond
our control.
We generate
revenue from
the sale
of coal
and our
financial
results
are materially
impacted by
the prices
we
receive.
Prices
and
quantities
under
Met
coal
sales
contracts
in
North
America
are
generally
based
on
expectations
of
the
next
year’s
coal
prices
at
the
time
the
contract
is
entered
into,
renewed,
extended
or
re-opened. Pricing in the global seaborne market is typically set
on a rolling quarterly average benchmark price.
Coronado Global Resources Inc. Form 10-K December 31,
Sales by our
U.S. Operations to the
export market are
typically priced with reference
to a benchmark
index. Sales
by our Australian Operations have typically been contracted on an annual basis and are priced with reference
to
benchmark indices or bilaterally
negotiated term prices
and spot indices. As
a result, a significant
portion of our
revenue is
exposed to
movements in
coal prices
and any
weakening in
Met or
thermal coal
prices would
have
an adverse impact on our financial condition and results
of operations.
The expectation of future prices for coal depends upon many factors beyond our
control, including the following:
•
the current market price of coal;
•
overall domestic and global economic conditions,
including inflationary conditions and the supply
of and
demand for domestic and foreign coal, coke and steel;
•
the consumption pattern of industrial consumers, electricity generators
and residential users;
•
weather
conditions
in
our
markets
that
affect
the
ability
to
produce
Met
coal
or
affect
the
demand
for
thermal coal;
•
competition from other coal suppliers;
•
technological advances affecting the steel production
process and/or energy consumption;
•
the costs, availability and capacity of transportation infrastructure;
and
•
the impact
of domestic
and foreign
governmental policy,
laws and
regulations, including
the imposition
of tariffs, environmental
and climate change
regulations and
other regulations
affecting the
coal mining
industry,
including regulations and measures introduced in response
to the COVID-19 pandemic.
Met
coal
has
been
a
volatile
commodity
over
the
past
ten
years.
Recently,
in
the
second
quarter
of
2022,
seaborne prices reached record
levels with both the Australian
and U.S. Met coal
price indices exceeding $600
per Mt, largely as result of
supply concerns in key Met coal
markets and continued trade flow
disruptions due to
sanctions imposed
on Russia’s
coal imports
following Russian
invasion of
Ukraine. The
demand and
supply in
the Met
coal industry
changes from
time to
time. There
are no
assurances that
oversupply will
not occur,
that
demand will
not decrease
or that
overcapacity will
not occur,
which could
cause declines
in the
prices of
coal,
which could have a material adverse effect on
our financial condition and results of operations.
In addition, coal prices are highly
dependent on the outlook for coal consumption in
large Asian economies, such
as China, India, South Korea and Japan,
as well as any changes in government
policy regarding coal or energy
in those
countries.
Seaborne
Met coal
import
demand
can also
be significantly
impacted by
the
availability
of
local coal production, particularly in the leading Met coal import countries of China and India, among others, and
the
competitiveness
of
seaborne
Met
coal
supply,
including
from
the
leading
Met
coal
exporting
countries
of
Australia, the United States, Russia, Canada and Mongolia,
among others.
We face increasing competition, which could adversely
affect profitability.
Competition
in
the
coal
industry
is
based
on
many
factors,
including,
among
others,
world
supply,
price,
production
capacity,
coal
quality
and
characteristics,
transportation
capability
and
costs,
blending
capability,
brand name
and diversified
operations. We
are subject
to competition
from Met
coal producers
from Australia,
the United States, Russia, Canada, Mongolia and other Met coal producing countries.
Should those competitors
obtain a
competitive advantage in comparison
to us (whether
by way of
an increase in
production capacity, higher
realized
prices,
lower
operating
costs,
export/import
tariffs,
being
comparatively
less
impacted
as
a
result
of
global pandemics or otherwise),
such competitive advantage
may have an adverse
impact on our ability
to sell,
or the
prices at
which we
are able
to sell
coal
products.
In addition,
some of
our competitors
may have
more
production capacity as well as greater financial, marketing, distribution and other resources than we do and may
be subject to less stringent environmental and other regulations
than we are.
Coronado Global Resources Inc. Form 10-K December 31,
The consolidation
of the global
Met coal industry
in recent years
has contributed
to increased competition,
and
our competitive
position may
be adversely
impacted by
further consolidation
among
market participants
or by
further
competitors
entering
into
and
exiting
bankruptcy
proceedings
under
a
lower
cost
structure.
Similarly,
potential
changes
to
international
trade
agreements,
trade
concessions
or
other
political
and
economic
arrangements may benefit
coal producers operating
in countries
other than the
United States and
Australia. Other
coal producers may also develop or acquire new projects to increase their coal production, which may adversely
impact our competitiveness. Some
of our global competitors
have significantly greater financial
resources, such
that increases in their coal production may affect domestic and foreign Met coal supply into the seaborne market
and associated prices and impact our ability to retain or
attract Met coal customers. In addition, our ability to ship
our Met coal to non-U.S.
and non-Australian customers
depends on port and transportation
capacity.
Increased
competition
within
the
Met
coal
industry
for
international
sales
could
result
in
us
not
being
able
to
obtain
throughput capacity at port facilities, as well as transport capacity, and could cause the rates for such services to
increase to a point where it is not economically feasible to export
our Met coal.
Increased competition, or a
failure to compete effectively,
in the markets in
which we participate
may result in a
loss of market share and could adversely affect our financial
condition and results of operations.
We may face restricted access to international markets
in the future.
Access to
international markets
may be
subject to
ongoing interruptions
and trade
barriers due
to policies
and
tariffs of individual
countries, and the
actions of certain
interest groups to
restrict the
import or export
of certain
commodities. For
example, the
current imposition
of tariffs
and import
quota restrictions
by China
on U.S.
and
Australian coal
imports respectively,
including the
ongoing suspension
of imports
of Australian
coal into
China,
may in
the future have
a negative impact
on our profitability. The timing
of any change
to these measures
remains
uncertain, and there can be no guarantee that other tariffs, import quota restrictions, bans or other trade barriers
will not be imposed (whether as a result of geopolitical tensions or for other
reasons), either by China or in other
markets for our products. We
may or may not be able to
access alternate markets for our
coal should additional
interruptions
and
trade
barriers
occur
in
the
future.
An
inability
for
Met
coal
suppliers
to
access
international
markets, including China, would likely
result in an oversupply of Met coal
and may result in a decrease in
prices
or the curtailment of production, which could
have a material adverse effect on our financial condition and
results
of operations.
If transportation
for our
coal becomes
unavailable or
uneconomic for
our customers,
our ability
to sell
coal could suffer.
Our mining operations produce coal, which is transported to customers by a combination of road, rail, barge and
ship. The
delivery of
coal produced
by our
mining operations
is subject
to potential
disruption and
competition
from other network users,
which may affect our
ability to deliver coal
to our customers and
may have an impact
on productivity and profitability.
Such disruptions to transportation services may include,
among others:
•
disruptions due to weather-related problems;
•
key equipment or infrastructure failures;
•
industrial action;
•
rail or port capacity congestion or constraints;
•
commercial disputes;
•
failure to
obtain consents
from third
parties for
access to
rail or
land, or
access being
removed
or not
granted by regulatory authorities;
•
changes in applicable regulations;
•
failure or delay in the construction of new rail or port capacity;
and
•
terrorist attacks, natural disasters, the
impact from global pandemics, including
the COVID-19 pandemic,
or other events.
Coronado Global Resources Inc. Form 10-K December 31,
Any
such
disruptions,
or
any
deterioration
in
the
reliability
of
services
provided
by
our
transportation
service
providers, could
impair our
ability to
supply coal
to our
customers, result
in decreased
shipments and
revenue
and adversely affect our results of operations.
Typically,
we sell coal at the mine
gate and/or loaded into vessels at
the port. While ordinarily our coal
customers
arrange
and
pay
for
transportation
of
coal
from
the
mine
or
port
to
the
point
of
use,
we
have
entered
into
arrangements
with
third
parties
to
gain
access
to
transportation
infrastructure
and
services
where
required,
including road transport organizations, rail carriers and port owners. Where coal is exported or sold other than at
the mine gate, the costs associated with these arrangements represent a significant portion of both the total cost
of supplying
coal to
customers and
of our
production costs.
As a
result, the
cost of
transportation is
not only
a
key factor in our cost base, but also in the purchasing decision of customers. Transportation
costs may increase
and
we
may
not
be
able
to
pass
on
the
full
extent
of
cost
increases
to
our
customers.
For
example,
where
transportation
costs
are
connected
to
market
demand,
costs
may
increase
if
usage
by
us
and
other
market
participants increases. Significant
increases in transport
costs due to factors
such as fluctuations in
the price of
diesel fuel, electricity and demurrage or environmental requirements could make our coal less competitive when
compared to coal produced from other regions and countries. As the transportation capacity secured
by our port
and rail agreements is based
on assumed production volumes, we may
also have excess transportation capacity
(which, in the
case of take-or-pay
agreements, we may
have to pay
for even if
unused) if our
actual production
volumes are lower
than our estimated production
volumes. Conversely, we may not have sufficient transportation
capacity if our actual production volumes
exceed our estimated production volumes, if
we are unable to transport
the
full
capacity
due
to
contractual
limitations
or
if
any
deterioration
in
our
relationship
with
brokers
and
intermediaries results
in a
reduction in
the proportion
of coal
purchased FOR
from our
U.S. Operations
(and a
corresponding increase in the proportion of coal purchased FOB).
Take-or-pay arrangements within the
coal industry could unfavorably affect our profitability.
Our
Australian
Operations
generally
contract
port
and
rail
capacity
via
long-term
take-or-pay
contracts
for
transport, currently with
Aurizon Operations
Limited and Pacific
National Pty Ltd,
to and export
from the Port
of
Gladstone via two main port terminals, RGTCT and WICET.
At our U.S. Operations, we also have a take-or-pay
agreement in
connection
with the
Kinder Morgan
Pier IX
Terminal
in Hampton
Roads, Virginia.
We may
enter
into other take-or-pay arrangements in the future.
Where we have entered into take-or-pay contracts, we will generally be required to pay for our
contracted port or
rail capacity, even
if it
is not
utilized by
us or
other shippers. Although
the majority
of our
take-or-pay arrangements
provide security over minimum port and
rail infrastructure availability,
unused port or rail capacity can
arise as a
result
of
varying
unforeseen
circumstances,
including
insufficient
production
from
a
given
mine,
a
mismatch
between the timing of
required port and rail
capacity for a mine,
or an inability to
transfer the used capacity
due
to contractual limitations, such as
required consent of the provider of
the port or rail services,
or because the coal
must emanate from specified
source mines or
be loaded onto trains
at specified load
points. Paying for
unused
transport
capacity
could
materially
and
adversely
affect
our
cost
structures
and
financial
performance.
See
Item 7. “Management’s Discussion and
Analysis of Financial
Condition and Results of
Operations” for a
summary
of our expected future obligations under take-or-pay arrangements
as of December 31, 2022.
A decrease in
the availability
or increase
in costs of
key supplies, capital
equipment, commodities
and
purchased components,
such as
diesel fuel,
steel, explosives
and tires
could materially
and adversely
affect our financial condition and results of operations.
Our mining operations require a reliable
supply of large quantities of fuel,
explosives, tires, steel-related products
(including
roof
control
materials),
lubricants
and
electricity.
The
prices
we
pay
for
commodities
are
strongly
impacted by the global
market. In situations where
we have chosen to
concentrate a large portion
of purchases
with one supplier, it has been to take
advantage of cost savings from larger volumes of
purchases and to support
security of supply.
If the cost
of any of
these key supplies
or commodities increased
significantly,
or if a
source
for these supplies or mining equipment was unavailable to meet our replacement demands, including as a result
of the COVID-19 pandemic or
otherwise, our profitability could be reduced or
we could experience a delay or
halt
in our production.
Coronado Global Resources Inc. Form 10-K December 31,
Prices
for equipment,
materials,
supplies
and employee
labor
contractor
services
increased during
2022,
and
could
continue
to
increase
in
and
beyond.
Long-term
inflationary
pressures
may
result
in
such
prices
continuing to
increase
more quickly
than expected.
Inflation increases
costs for
materials, labor
and services,
and we
may be
unable to
secure these
resources on
economically acceptable
terms or
offset such
costs with
increased revenues, operating efficiencies,
or cost savings, which may adversely
impact our financial condition,
results of operations, liquidity,
and cash flows.
Our coal production and production costs can be materially and adversely impacted by unexpected shortages or
increases in the costs of consumables, spare parts,
plant and equipment. For example, operation
of the thermal
dryer located at
the CPP at
Buchanan is dependent
upon the delivery
of natural gas
and there is
currently only
one
natural
gas
supplier
in
the
area,
an
affiliate
of
CONSOL
Energy.
Although
we
have
entered
into
a
gas
purchase agreement with CONSOL Energy,
this agreement can be terminated by CONSOL
Energy on 30 days’
notice and any delay
or inability to negotiate
a replacement agreement
would impact our costs
of production as
we would need to change our processing method at Buchanan.
Defects in
title or
loss of
any leasehold
interests in
our properties
could limit
our ability
to mine
these
properties or result in significant unanticipated costs.
In Queensland,
where all
of our
Australian Operations
are carried
out, exploring
or mining
for coal
is unlawful
without a tenement granted by the Queensland
government. The grant and renewal of tenements
are subject to
a regulatory regime and each
tenement is subject to certain
conditions. There is no
certainty that an application
for the grant of a
new tenement or renewal
of one of the
existing Tenements
at Curragh will be
granted at all or
on
satisfactory
terms
or
within
expected
timeframes.
Further,
the
conditions
attached
to
the
Tenements
may
change at the time they are renewed. There is
a risk that we may lose title to
any of our granted Tenements if we
fail to comply with
the Tenement
conditions and other
applicable legislative requirements
(including payment of
State
royalties)
or
if
the
land
that
is
subject
to
the
title
is
required
for
public
purposes.
The
Tenements
have
expiration dates ranging from
May 31, 2023 to July
31, 2044 and, where renewal
is required, there is a
risk that
the Queensland government may change the terms and conditions
of such Tenement
upon renewal.
In
the
United
States,
title
to
a
leased
property
and
mineral
rights
is
generally
secured
prior
to
permitting
and
developing a property. In some cases,
we rely on title information or representations and warranties provided by
our lessors, grantors
or other third
parties. Our right
to mine some
of our reserves
may be adversely
affected if
defects in
title or
boundaries
exist or
if a
lease expires.
Any challenge
to our
title or
leasehold interests
could
delay the exploration and development of the property and could ultimately result in the loss of some
or all of our
interest in the property and, accordingly, require us to reduce our estimated coal
reserves. In addition, if we mine
on property that we do not
own or lease, we could incur
civil damages or liability for
such mining and be subject
to conversion, negligence,
trespass, regulatory sanction
and penalties. Some
leases have minimum
production
requirements or require us
to commence mining operations in
a specified term to
retain the lease. Failure
to meet
those requirements
could result
in losses of
prepaid royalties
and, in some
rare cases,
could result
in a loss
of
the lease itself.
In
the
United
States,
we
predominantly
access
our
mining
properties
through
leases
with
a
range
of
private
landholders.
If
a
default
under
a
lease
for
properties
on
which
we
have
mining
operations
resulted
in
the
termination of the
applicable lease,
we may have
to suspend
mining or significantly
alter the sequence
of such
mining operations, which may adversely affect our
future coal production and future revenues.
To
obtain
leases
or
mining
contracts
to
conduct
our
U.S.
Operations
on
properties
where
defects
exist
or
to
negotiate extensions or amendments
to existing leases, we
may in the future have
to incur unanticipated costs.
In addition, we may
not be able
to successfully negotiate new
leases or mining
contracts for properties containing
additional
reserves
or
maintain
our
leasehold
interests
in
properties
where
we
have
not
commenced
mining
operations during the term of the lease.
A defect in our title or the loss of any lease or Tenement
upon expiration of its term, upon a default or otherwise,
could adversely affect our ability to mine the
associated reserves or process the coal we mine.
Coronado Global Resources Inc. Form 10-K December 31,
We may
be unable
to obtain,
renew or
maintain permits necessary
for our
operations, which
would reduce
coal production, cash flows and profitability.
Our performance
and
operations
depend
on, among
other things,
being able
to
obtain on
a timely
basis,
and
maintain,
all
necessary
regulatory
approvals,
including
any
approvals
arising
under
applicable
mining
laws,
environmental regulations and
other laws, for our
current operations, expansion
and growth projects. Examples
of regulatory
approvals that
we must
obtain and
maintain include
mine development
approvals, environmental
permits and, in
Australia, tenure and approvals
relating to native
title and indigenous cultural
heritage. In addition,
our operations depend
on our ability
to obtain and
maintain consents from private
land owners and
good relations
with local communities.
The requirement
to obtain
and maintain
approvals and
address potential
and actual
issues for
former,
existing
and future
mining
projects
is common
to all
companies
in the
coal sector.
However,
there is
no assurance
or
guarantee that we
will obtain,
secure, or be
able to maintain
any or all
of the required
consents, approvals
and
rights necessary to maintain our current
production profile from our existing
operations or to develop our
growth
projects
in a
manner
which
will result
in
profitable
mining
operations
and/or
achieve
our long-term
production
targets. The permitting rules, and
the interpretations of these rules,
are complex, change frequently and
are often
subject to the interpretation of the regulators that
enforce them, all of which may make compliance more
difficult
or impractical,
and may
possibly preclude
the continuance
of ongoing
operations or
the development
of future
mining operations. Certain
laws, such as
the SMCRA, require
that certain environmental
standards be met
before
a
permit
is
issued.
The
public,
including
non-governmental
organizations,
anti-mining
groups
and
individuals,
have certain
statutory
rights
to comment
upon and
submit
objections
to requested
permits and
environmental
impact statements.
These comments
are prepared
in connection
with applicable
regulatory processes,
and the
public may otherwise engage
in the permitting
process, including bringing
lawsuits to challenge the
issuance of
permits, the
validity or
adequacy of environmental
impact statements or
performance of mining
activities. In
states
where we operate, applicable
laws and regulations
also provide that
a mining permit
or modification can,
under
certain
circumstances,
be
delayed,
refused
or
revoked
if
we
or
any
entity
that
owns
or
controls
or
is
under
common
ownership
or
control
with
us
have
unabated
permit
violations
or
have
been
the
subject
of
permit
or
reclamation bond revocation or suspension. Thus, past or ongoing violations of federal and state
mining laws by
us or such entity could provide a basis
to revoke existing permits and to deny
the issuance of additional permits
or modification
or amendment
of existing
permits. In
recent years,
the
permitting
required for
coal mining
has
been the subject of increasingly stringent regulatory and
administrative requirements and extensive activism and
litigation
by
environmental
groups.
If
this
trend
continues,
it
could
materially
and
adversely
affect
our
mining
operations, development
and expansion
and cost
structures, the
transport of
coal and
our customers’
ability to
use coal produced
by our mines,
which, in turn,
could have
a material
adverse effect
on our financial
condition
and results of operation.
In particular,
certain of
our activities
require a
dredge and
fill permit
from the
USACE under
Section 404 of
the
CWA. In
recent years, the
Section 404 permitting
process has
been subject to
increasingly stringent
regulatory
and administrative
requirements
and a
series of
court challenges,
which have
resulted in
increased costs
and
delays in the permitting process. In addition, in 2015, the EPA and the USACE issued the CWR, under the CWA
that would
further expand
the circumstances
when a
Section 404 permit
is needed.
The CWR
is the
subject of
extensive ongoing litigation and
administrative proceedings, as
a result of which the
CWR has been enjoined
in
certain
states
(including
West
Virginia)
and
reinstated
in
others
(including
Virginia
and
Pennsylvania),
and
its
current and future impact on our operations are the subject of significant uncertainty. On April 21, 2020, the EPA
and the
USACE
published
the NWPR,
replacing
the
CWR. The
NWPR
revises
the definition
of
waters
of
the
United States
and replaces
the CWR.
The NWPR
shrinks the
agencies’ jurisdiction,
particularly as
it relates
to
tributaries and adjacent waters, such
as wetlands, that were previously
covered by the definition under
the CWR.
The NWPR
went into
effect
on June
22, 2020.
States and
environmental
groups have
filed challenges
to the
NWPR in various federal
district courts.
We cannot at this time
predict how this rule
will be enforced in
the future.
Additionally, we may rely on nationwide permits
under the CWA Section 404 program for
some of our operations.
These nationwide
permits
are issued
every
five years,
and the
nationwide
permit
program
was
recently
reissued in
January
2017.
If we
are unable
to use
the nationwide
permits
and require
an individual
permit
for
certain work, that could delay operations.
Coronado Global Resources Inc. Form 10-K December 31,
If we
are unable
to obtain
and maintain
the approvals,
consents and
rights required
for our
current and
future
operations, or
if we
obtain
approvals subject
to conditions
or limitations,
the
economic
viability of
the relevant
projects may be
adversely affected,
which may in
turn result in
the value of
the relevant assets
being impaired,
which could have a material adverse effect on
our financial condition and results of operations.
A
shortage
of
skilled
labor
in
the
mining
industry
could
pose
a
risk
to
achieving
improved
labor
productivity.
Efficient coal mining using modern techniques and equipment requires skilled laborers, preferably with at least a
year of experience and proficiency in multiple
mining tasks. Any reduced availability or future
shortage of skilled
labor
in
the
Australian
and
U.S.
mining
industries
(including,
but
not
limited
to,
ongoing
labor
shortage
at
the
Logan operations which has impacted production at our U.S. Operations and as
a result of the impact of COVID-
19 pandemic)
could result
in our
having
insufficient
personnel
to operate
our business,
or expand
production,
particularly in the event there
is an increase in the
demand for our coal, which
could adversely affect our financial
condition and results of operations.
The existence (or claimed existence) of native
title on land within our Australian tenements
may impose
restrictions on the construction of our expansion activities
and our continued operations.
In Australia,
mineral exploration
and mining
tenure
(and
many other
forms
of tenure
or interests
in
land)
may
cover land that is subject to
a claim for native title or
land where native title has already been
determined to exist.
Native title is the communal, group or individual rights and interests of Aboriginal or Torres Strait Islander people
in relation to their traditional land or waters. The existence
of native title in Australia is recognized and protected
in
accordance
with
the
Native
Title
Act
(Cth),
or
the
Native
Title
Act,
and
legislation
in
each
State
and
Territory.
The common
law of Australia
recognizes a
form of
native title that,
in circumstances
where it has
not
been extinguished, reflects the entitlement of
the appropriate traditional owners to their
lands, in accordance with
their traditional law and custom.
If native title
is either determined
to exist or
there are
registered, but
undetermined, native
title claims
over any
part of the tenements
and native title
has not otherwise
been extinguished with
respect to that
part, we may
be
required to negotiate with, and pay compensation to, the native title holders for impairment, loss
or diminution or
other effect of the proposed activities
on their native title rights and
interests. Compensation obligations may also
arise pursuant
to agreements
with native
title claimants
or native
title holders
in relation
to any
tenements
we
acquire.
The
existence
of
native
title
or
a
registered
native
title
claim
may
preclude
or
delay
the
granting
of
exploration and mining tenements pending resolution of the statutory procedures
imposed by the Native Title Act
and considerable expenses may be incurred in negotiating
and resolving native title issues.
The risk of
unforeseen native
title claims also
could affect
existing operations
as well as
development projects.
Although native title will not prevent the exercise of any validly granted rights and interests under our tenements,
the Native Title
Act and applicable
State and Commonwealth
legislation, together
with the recognition
of native
title at common
law,
may impact
the continued
operations under
our tenements,
development projects
and the
construction of our expansion activities and/or give rise to
liability for compensation.
The Aboriginal Cultural
Heritage Act 2003
(Qld) and the
Torres
Strait Islander
Cultural Heritage
Act 2003 (Qld)
provide
a
framework
for
the
protection
of
Aboriginal
and
Torres
Strait
Islander
cultural
heritage.
The
main
mechanism through
which
each act
operates is
a list
of places
and artifacts
of heritage
significance. The
acts
also create
offenses
such
as breach
of the
cultural
heritage duty
of care.
This duty
of care
requires a
person
carrying
out
an
activity
to
take
all reasonable
and
practicable
measures
to
ensure
the
activity
does
not
harm
Aboriginal cultural heritage.
In addition, it may also be necessary for
us to enter into separate arrangements with the
traditional owners of the
sites.
This
could
be
costly
for
us
and
potentially
cause
delays
in
our
continued
operational
and
expansion
activities.
Although
the
failure
to
resolve
any
issues
associated
with
sites
of
indigenous
heritage
significance
could
adversely impact our expansion activities and our continuing operations, there are no
such current or anticipated
issues.
Coronado Global Resources Inc. Form 10-K December 31,
Operational and Technology
Risks
Risks inherent to mining operations could impact the amount of coal produced,
cause delay or suspend
coal deliveries, or increase the cost of operating our
business.
Our
mining
operations,
including
exploration,
development,
preparation,
product
handling
and
accessing
transport infrastructure,
may be affected
by various operational
difficulties that
could impact the
amount of coal
produced at our coal mines, cause
delay or suspend coal deliveries, or increase
the cost of mining for a varying
length of time.
Our financial performance
is dependent
on our ability
to sustain or
increase coal production
and
maintain or increase operating margins. Our coal production and production costs are,
in many respects, subject
to conditions and events beyond our control, which could disrupt our operations and
have a significant impact on
our financial results. Adverse operating conditions and
events that we may have experienced in the past or
may
experience in the future include:
•
a failure to achieve the Met coal qualities or quantities
anticipated from exploration activities;
•
variations in
mining and
geological
conditions from
those anticipated,
such as
variations in
coal seam
thickness and quality,
and geotechnical conclusions;
•
operational and technical
difficulties encountered in mining,
including equipment failure,
delays in moving
longwall equipment, drag-lines and other equipment and maintenance
or technical issues;
•
adverse weather conditions
or natural or
man-made disasters, including
hurricanes, cyclones, tornadoes,
floods, droughts, bush
fires, seismic activities,
ground failures, rock
bursts, structural cave-ins
or slides
and other
catastrophic events
(such as
the COVID-19
pandemic that
has caused
significant disruption
across nearly
all industries
and markets,
including global
supply chain
shortages, the
impact of
which,
continues to be uncertain);
•
insufficient or unreliable infrastructure, such as power,
water and transport;
•
industrial and
environmental accidents,
such as
releases of
mine-affected water
and diesel
spills (both
of which have affected our Australian Operations
in the past);
•
industrial disputes and labor shortages;
•
mine safety accidents, including fatalities, fires and explosions
from methane and other sources;
•
competition
and
conflicts
with
other
natural
resource
extraction
and
production
activities
within
overlapping operating areas, such as natural gas extraction
or oil and gas development;
•
unexpected shortages, or increases in the costs, of consumables,
spare parts, plant and equipment;
•
cyber-attacks
that
disrupt
our
operations
or
result
in
the
dissemination
of
proprietary
or
confidential
information about us to our customers or other third
parties; and
•
security breaches or terrorist acts.
If any
of the
foregoing conditions
or events
occurs and
is not
mitigated or
excusable as
a force
majeure event
under
our
coal
sales
contracts,
any
resulting
failure
on
our
part
to
deliver
coal
to
the
purchaser
under
such
contracts
could
result
in
economic
penalties,
demurrage
costs,
suspension
or
cancellation
of
shipments
or
ultimately termination
of such
contracts, which
could
have a
material adverse
effect
on our
financial condition
and results of operations.
Coronado Global Resources Inc. Form 10-K December 31,
Our U.S.
Operations are
concentrated in
a small
number of
mines in
the CAPP
and our
Australian Operations
include one
mine in
the Bowen
Basin of
Australia. As
a result,
the effects
of any
of these
conditions or
events
may be exacerbated and may have a disproportionate
impact on our results of operations and assets. Any such
operational
conditions
or
events
could
also
result
in
disruption
to
key
infrastructure
(including
infrastructure
located at or serving our mining activities, as well as the infrastructure that
supports freight and logistics). These
conditions and events could
also result in the
partial or complete closure
of particular railways, ports or
significant
inland waterways
or sea
passages, potentially
resulting in
higher costs,
congestion, delays
or cancellations
on
some
transport
routes.
Any
of
these
conditions
or
events
could
adversely
impact
our
business
and
results
of
operations.
Our long-term
success depends
upon our
ability to
continue discovering,
or acquiring
and developing
assets containing, coal reserves that are economically
recoverable.
Our recoverable reserves decline
as we produce coal.
Our long-term outlook depends
on our ability to maintain
a commercially viable portfolio of coal reserves that are economically recoverable. Failure to acquire or discover
new coal reserves or
develop new assets could
negatively affect our financial condition and
results of operations.
Exploration activity may occur adjacent to established
assets and in new regions. These activities
may increase
land tenure,
infrastructure
and related
political risks.
Failure to
discover or
acquire new
coal reserves,
replace
coal reserves or develop new assets or operations in sufficient quantities to maintain or grow the
current level of
reserves could negatively affect our financial condition
and results of operations.
Potential changes to our portfolio of assets through acquisitions and divestments may have an adverse effect on
future results
of operations
and financial
condition. From
time to
time, we
may add
assets to,
or divest
assets
from, our portfolio. There are a number of risks associated with historical
and future acquisitions or divestments,
including, among others:
•
adverse market
reaction to
such acquisitions
and divestments
or the
timing or
terms on
which acquisitions
and divestments are made;
•
imposition of adverse regulatory conditions and obligations;
•
political and country risk;
•
commercial objectives not being achieved as expected;
•
unforeseen liabilities arising from changes to the portfolio;
•
sales revenues and operational performance not meeting
expectations;
•
anticipated synergies or cost savings being delayed or not
being achieved; and
•
inability to retain key staff and transaction-related costs
being more than anticipated.
These factors could materially and adversely affect
our financial condition and results of operations.
We rely
on estimates
of our
recoverable resources
and reserves,
which are
complex due
to geological
characteristics of the properties and the number of
assumptions made.
We rely on estimates of our recoverable resources and reserves.
In this Annual Report on Form 10-K, we report
our estimated resources
and reserves in
accordance with
subpart 1300
of Regulation S-K
under the Exchange
Act. See Item
2. “Properties.”
Subpart 1300 of
Regulation S-K requires
us to disclose
our mineral resources,
in
addition to
our mineral reserves.
In addition,
as an
ASX-listed company, our ASX disclosures
follow the Australian
Code
for
Reporting
of
Exploration
Results,
Mineral
Resources
and
Ore
Reserves
2012,
or
the
JORC
Code.
Accordingly,
our estimates
of resources
and reserves
in this
Annual Report
on Form
10-K and
in other
reports
that
we
are
required
to
file
with
the
SEC
may
be
different
than
our
estimates
of
resources
and
reserves
as
reported in our ASX disclosures.
Coronado Global Resources Inc. Form 10-K December 31,
Coal
is
economically
recoverable
when
the
price
at
which
it
can
be
sold
exceeds
the
costs
and
expenses
of
mining
and
selling
the
coal.
The
costs
and
expenses
of
mining
and
selling
the
coal
are
determined
on
a
mine-by-mine basis, and as a result, the price at which our coal is economically recoverable varies based on the
mine. We
base our resource
and reserve
information on geologic
data, coal ownership
information and current
and
proposed
mine
plans,
and
mining
cost
assumptions
may
be
affected
by
changes
in
mine
planning
or
scheduling over
time. There
are numerous
uncertainties
inherent in
estimating
quantities
and qualities
of coal
and
costs
to
mine
recoverable
reserves,
including
many
factors
beyond
our
control.
There
are
inherent
uncertainties and risks associated with such estimates, including:
•
geologic and mining conditions,
which may not be
fully identified by available
exploration data and may
differ from our experience and assumptions in areas
we currently mine;
•
current
and
future
market
prices
for
coal,
contractual
arrangements,
operating
costs
and
capital
expenditures;
•
severance and
excise
taxes,
unexpected
governmental
taxes, royalties
,
stamp
duty and
development
and reclamation costs;
•
future mining technology improvements;
•
the effects of regulation by governmental agencies;
•
the ability to obtain, maintain and renew all required permits;
•
employee health and safety; and
•
historical production from the area compared with production from
other producing areas.
Except
for
that
portion
of
mineral
resources
classified
as
mineral
reserves,
mineral
resources
do
not
have
demonstrated economic value. Even
if a mineral
resource exists, there can
be no assurance that
any part of
such
mineral resource will ever be converted to mineral reserves.
In addition, estimates of coal resources and reserves are revised based on actual production experience, and/or
new exploration
information and therefore
the estimates
of coal resources
and reserves
are subject to
change.
Should we
encounter geological
conditions or
qualities different
from those
predicted by
past drilling,
sampling
and similar examinations, estimates
of coal resources and reserves
may have to be adjusted
and mining plans,
coal processing and infrastructure may have to be
altered in a way that might adversely affect our
operations. As
a result, our estimates may not accurately reflect our actual future coal
resources and reserves.
As
a
result,
the
quantity
and
quality
of
the
coal
that
we
recover
may
be
less
than
the
resource
and
reserve
estimates included in
this Annual Report
on Form 10-K.
If our actual coal
resources and reserves
are less than
current estimates,
or the
rate at
which they
are recovered
is less
than estimated
or results
in higher
than estimated
cost, our financial condition and results of operations may
be materially adversely affected.
Our
profitability
could
be
affected
adversely
by
the
failure
of
suppliers
and/or
outside
contractors
to
perform.
We use
contractors and
other third
parties for
exploration, mining
and other
services generally,
and are
reliant
on several
third parties
for the
success of
our current
operations and
the development
of our
growth projects.
While
this
is normal
for
the
mining
industry,
problems
caused
by third
parties
may arise,
which
may
have
an
impact on our performance and operations. In particular, the majority of workers at our
Australian Operations are
employed by contractors, including Thiess Pty Ltd, Golding
Contractors Pty Ltd, and Wolff Mining
Pty Ltd.
Coronado Global Resources Inc. Form 10-K December 31,
Operations
at
our
mines
may
be
interrupted
for
an
extended
period
in
the
event
that
we
lose
any
of
our
key
contractors (because their
contract is terminated or
expires) and are required
to replace them. There
can be no
assurance that skilled third parties or
contractors will continue to be
available at reasonable rates.
As we do not
have the
same control
over contractors
as we
do over
employees, we
are also
exposed to
risks related
to the
quality or
continuation of
the services
of, and
the equipment
and supplies
used by,
our contractors,
as well
as
risks related
to the
compliance of our
contractors with environmental
and health and
safety legislation and
internal
policies, standards and
processes. Any failure
by our key
contractors to comply
with their obligations
under our
operating agreements with
them (whether as a
result of financial, safety
or operational difficulties
or otherwise),
any
termination
or
breach
of
our
operating
agreements
by
our
contractors,
any
protracted
dispute
with
a
contractor,
any inability
to perform
due to
global pandemics
or other
health concerns,
including the
COVID-19
pandemic,
any material labor dispute between our contractors and their employees or any major labor action by
those employees
against
our
contractors,
could
have
a material
adverse
effect
on
our financial
condition
and
results of operations.
Further, in
periods of high
commodity prices, demand
for contractors may
exceed supply resulting
in increased
costs or lack
of availability
of key contractors.
Disruptions of
operations or
increased costs also
can occur as
a
result of disputes with contractors or a shortage
of contractors with particular capabilities. To
the extent that any
of the foregoing risks were to materialize, our operating
results and cash flows could be adversely affected.
Our inability to replace or
repair damaged or destroyed
equipment or facilities in
a timely manner could
materially and adversely affect our financial condition
and results of operations.
We depend on several
major pieces of mining
equipment and facilities to
produce and transport coal,
including,
but
not
limited
to,
longwall
mining
systems,
continuous
miners,
draglines,
dozers,
excavators,
shovels,
haul
trucks, conveyors,
CPPs and
rail loading
and blending
facilities. Obtaining
and repairing
these major
pieces of
equipment often involves long lead
times. If any of these
pieces of equipment and facilities suffers major
damage
or is destroyed by fire,
abnormal wear and tear,
flooding, incorrect operation or
otherwise, we may be unable
to
replace or repair them in a timely manner or at a reasonable cost, which would impact our ability
to produce and
transport
coal
and
could
materially
and
adversely
affect
our financial
condition
and
results
of
operations.
Our
ability to replace or
repair damaged or destroyed
equipment or facilities
may also be dependent
on suppliers or
manufacturers remaining operational and having the relevant equipment, work force or services available for us.
Suppliers
and
manufacturers
may be
unable
to
provide
such
equipment,
work
force
or service
for
a
range
of
reasons,
including
but
not
limited
to
their
business
suffering
adverse
effects
as
a
result
of
global
pandemics,
including the COVID-19 pandemic.
Additionally, regulatory agencies sometimes make changes with regard to requirements for pieces of
equipment.
Such changes can impose costs on us and can cause delays if manufacturers and suppliers are unable to make
the required changes in compliance with mandated deadlines.
Our
ability to
operate effectively
could
be impaired
if we
lose key
personnel
or fail
to
attract qualified
personnel.
The loss of key personnel and the failure to recruit sufficiently qualified staff
could affect our future performance.
We have entered into employment
contracts with a number of
key personnel in Australia
and the United States,
including
our
Managing
Director
and
Chief
Executive
Officer,
Garold
Spindler,
our
Chief
Operating
Officer,
Australia, Douglas
Thompson,
our Group
Chief Financial
Officer,
Gerhard
Ziems,
and Chief
Operating
Officer
U.S., Jeffrey Bitzer. On January 17, 2023,
Coronado announced that Mr. Spindler will retire from
his role as Chief
Executive Officer
and transition
to the
position of
Executive Chair
of the
Board of
Directors, and
the Company
also announced that Mr.
Thompson will be appointed as Chief
Executive Officer of the Company.
Mr. Spindler’s
and Mr.
Thompson’s new
positions will be
effective immediately
following the Company’s
2023 Annual General
Meeting of Stockholders.
Coronado Global Resources Inc. Form 10-K December 31,
Mr. Spindler’s, Mr.
Thompson’s,
Mr. Ziems’ and
Mr. Bitzer’s expertise and
experience in the mining industry
are
important to the
continued development
and operation
of our mining
interests. However,
there is
no assurance
that such personnel
will remain with
us for the
term of their
employment contracts or beyond.
In the United
States,
we have not
entered into
employment contracts
with any
of our key
personnel (other
than Mr.
Spindler and
his
direct reports), meaning that we do
not have the benefit of notice
provisions or non-compete restraints with these
employees. There
may be
a limited
number of
persons with
the requisite
experience and
skills to
serve in
our
senior management positions. We may not be
able to locate or employ
qualified executives on acceptable terms.
In addition, as our business develops and
expands, we believe that our future
success will depend greatly on our
continued ability
to attract and
retain highly
skilled personnel
with coal
industry experience
in Australia
and the
United States. We may not be able to continue to employ key
personnel or attract and retain qualified personnel
in the future.
The loss of
such key
personnel or
the failure to
recruit sufficiently
qualified employees
may affect
our business and future performance.
We may not have adequate insurance coverage
for some business risks.
We have insurance coverage for certain
operating risks that provide limited coverage
for some potential liabilities
associated with our
business. As
a result of
market conditions, premiums
and deductibles for
certain insurance
policies
can
increase
substantially,
and
in
some
instances,
certain
insurance
may
become
unavailable
or
available only for reduced amounts of coverage. As a result, we may not be able
to renew our existing insurance
policies or
procure
other
desirable
insurance
on commercially
reasonable
terms,
if at
all. In
addition,
we
may
become subject
to liability
(including in
relation to
pollution, occupational
illnesses
or other
hazards),
or suffer
loss resulting from
business interruption, for
which we are
not insured (or
are not sufficiently
insured) or cannot
insure, including liabilities in respect of past activities.
Should we suffer a major
uninsured loss, future financial
performance could be materially
adversely affected. In
addition, insurance may not
continue to be available
at economically acceptable
premiums or coverage may
be
reduced. As
a result,
the insurance
coverage
may not
cover the
full scope
and extent
of claims
against us
or
losses we
may incur.
The occurrence
of a
significant
adverse event
not fully
or partially
covered by
insurance
could have a material adverse effect on our financial
condition and results of operations.
Cybersecurity
attacks,
natural
disasters,
terrorist
attacks
and
other
similar
crises
or
disruptions
may
negatively affect our business, financial condition
and results of operations.
Our
business
may
be
impacted
by
disruptions
such
as
cybersecurity
attacks
or
failures,
threats
to
physical
security,
and
extreme
weather
conditions
or other
natural disasters.
Strategic
targets,
such
as energy-related
assets, may be
at greater risk
of future terrorist
or cybersecurity attacks
than other targets
in the United
States
or
Australia.
These
disruptions
or
any
significant
increases
in
energy
prices
that
follow
could
result
in
government-imposed price
controls. Our
insurance may
not protect
us against
such occurrences.
It is
possible
that any of these
occurrences, or a
combination of them,
could have a material
adverse effect on
our business,
financial condition and results of operations.
In addition, a disruption in,
or failure of, our information
technology systems could adversely affect
our business
operations
and
financial
performance.
We
rely
on
the
accuracy,
capacity
and
security
of
our
information
technology,
or IT,
systems for the operations
of many of our
business processes and to
comply with regulatory,
legal and tax
requirements. While
we maintain
some of
our critical IT
systems, we
are also dependent
on third
parties
to
provide
important
IT
services
relating
to,
among
other
things,
human
resources,
electronic
communications
and
certain
finance
functions.
Despite
the
security
measures
that
we
have
implemented,
including those
related to cybersecurity, our systems
could be breached
or damaged by
computer viruses, natural
or man-made
incidents or
disasters or
unauthorized physical
or electronic
access. Though
we have
controls in
place, we cannot provide assurance that a cyber-attack
will not occur.
Furthermore, we may
have little or
no oversight with
respect to security
measures employed by
third-party service
providers, which may ultimately prove to be ineffective at countering threats. Failures of our IT systems, whether
caused
maliciously
or inadvertently,
may
result
in
the
disruption
of
our
business
processes,
the
unauthorized
release
of
sensitive,
confidential
or
otherwise
protected
information
or
the
corruption
of
data,
which
could
adversely affect our
business operations and
financial performance. We may
be required to
incur significant costs
to protect against and remediate the damage caused by
such disruptions or system failures in the future.
Coronado Global Resources Inc. Form 10-K December 31,
Mining in the
CAPP is more
complex and involves
more regulatory constraints than
mining in other areas
of the U.S., which could affect our mining operations
and cost structures in these areas.
Mining in the CAPP is more
complex and involves more
regulatory constraints than mining
in other areas of the
United
States,
which
could
affect
our
mining
operations
and
cost
structures
in
these
areas.
The
geological
characteristics of coal reserves in the CAPP,
such as depth of overburden and coal seam thickness, make them
complex
and
costly
to
mine.
As
mines
become
depleted,
replacement
reserves
may
not
be
available
or,
if
available, may not
be able
to be
mined at
costs comparable to
those of
the depleting mines.
In addition, compared
to mines
in the
other areas
of the
United States,
permitting,
licensing and
other
environmental
and regulatory
requirements are more costly and time
consuming to satisfy.
These factors could materially adversely
affect the
mining operations
and cost
structures of,
and our
customers’ ability
to use
coal produced
by, our mining properties
in the CAPP.
Financial and Strategic Risks
The loss
of, or
significant reduction
in, purchases
by our
largest customers
could adversely
affect our
revenues.
For the
year ended
December 31,
2022, our
top ten
customers comprised
73.1%
of our
total revenue
and our
top five customers comprised
52.6%
of our total revenue. For the year ended December 31, 2022,
sales to Tata
Steel and Xcoal represented
19.4%
and 11.7%,
respectively,
of our total revenue.
The majority of our sales
are
made on
a spot
basis or
under contracts
with terms
of typically
one year. The
failure to
obtain additional
customers
or
the
loss
of
all
or
a
portion
of
the
revenues
attributable
to
any
customer
as
a
result
of
competition,
creditworthiness,
inability
to
negotiate
extensions,
replacement
of
contracts
or
the
impact
of
the
global
pandemics,
including
the
COVID-19
pandemic,
or
otherwise,
may
adversely
affect
our
business,
financial
condition and results of operations.
If a substantial number
of our customers fail
to perform under our
contracts with them, our revenues
and
operating profits could suffer.
A significant portion of the sales of our Met coal is to
customers with whom we have had long-term relationships.
The success of our business depends on our
ability to retain our current customers, renew our existing customer
contracts
and
solicit
new
customers.
Our
ability
to
do
so
generally
depends
on
a
variety
of
factors,
including
having our mines
operational, having the type
and quantity of
coal available, the quality
and price of
our products,
our ability to market these products effectively, our ability to deliver on a timely basis and the level of competition
that we face.
In addition, our
sales contracts
generally contain
provisions that
allow customers
to suspend or
terminate if
we
commit a material breach of the terms of the contract, a change in law
restricts or prohibits a party from carrying
out its
material obligations
under the
contract or
a material
adverse change
occurs in
our financial
standing or
creditworthiness. If customers suspend
or terminate existing contracts,
or otherwise refuse to accept
shipments
of our Met
coal for which
they have an
existing contractual
obligation, our revenues
will decrease, and
we may
have to reduce production at our mines until our customers’
contractual obligations are honored.
If our customers do not
honor contract commitments,
or if they terminate agreements
or exercise force majeure
provisions
allowing
for
the
temporary
suspension
of
performance
during
specified
events
beyond
the
parties’
control, including the COVID-19 pandemic and we are unable to replace the contract, our financial condition and
results of operations could be materially and adversely affected.
Coronado Global Resources Inc. Form 10-K December 31,
If our ability
to collect
payments from
customers is
impaired, our
revenues and
operating profits
could
suffer.
Our
ability
to
receive
payment
for
coal
sold
and
delivered
will
depend
on
the
continued
creditworthiness
and
contractual performance of our customers and counterparties. For certain customers, we require the provision of
a letter of credit as
security for payment. The inability of key customers
to procure letters of credit (due
to general
economic conditions or the
specific circumstances of the
customer) may restrict our
ability to contract with such
customers or result in fewer sales contracts being executed, which could materially adversely affect our financial
condition and results of operations. For certain of our large customers
in Australia who have not provided letters
of
credit
or
other
form
of
security,
we
maintain
an
insurance
policy
to
cover
for
any
failure
in
payment.
This
insurance coverage, however,
may not cover the full scope
and extent of losses we
may incur as the result
of a
payment default or otherwise.
If a customer
does not
pay amounts
due in
a timely
manner,
we may
decide to sell
the customer’s coal
on the
spot market, which may be
at prices lower than the contracted
price, or we may be unable
to sell the coal at all.
If our customers’ or counterparties’ creditworthiness deteriorates,
our business could be adversely affected.
Changes in credit
ratings issued by
nationally recognized statistical
rating organizations could
adversely
affect our cost of financing and the market price
of our securities.
Credit rating agencies
could downgrade our ratings
due to factors specific
to our business,
a prolonged cyclical
downturn in the
mining industry or
macroeconomic trends
(such as global
or regional recessions)
and trends in
credit and
capital markets
more generally.
Any decline
in our credit
ratings would
likely result
in an
increase to
our cost of financing, limit our access to the capital markets, significantly harm our financial condition and results
of operations,
hinder
our ability
to refinance
existing
indebtedness
on
acceptable
terms
and
have an
adverse
effect on the market price of our securities.
Our existing and future indebtedness may limit cash flow available to invest in the ongoing needs of our
businesses, which could
prevent us
from fulfilling our
obligations under our
senior secured notes,
senior
secured asset-based revolving
credit agreement in
an initial
aggregate principal amount
of $100.0
million,
or the ABL Facility,
and other debt, and we may be forced to take other actions to satisfy our obligations
under our debt, which may not be successful.
As
of
December
31,
2022,
we
had
$242.3
million
aggregate
principal
amount
of
our
senior
secured
notes
outstanding. As of December 31, 2022,
no amounts were outstanding, and
no outstanding letters of credit issued
under the ABL Facility.
As of December 31, 2022, the available borrowing capacity under this facility was $100.0
million.
We dedicate a
portion of our
cash flow from
operations to the
payment of debt
service, reducing the
availability
of our cash flow
to fund capital expenditures,
acquisitions or strategic
development initiatives and
other general
corporate purposes. Our ability to make scheduled payments on or to refinance our debt obligations depends on
our ability to
generate cash in
the future and our
financial condition and operating
performance, which are subject
to prevailing economic and competitive
conditions and to certain
financial, business and other factors
beyond our
control. There can be no assurance that we
will maintain a level of cash flows from
operating activities sufficient
to permit us to pay the principal, premium, if any,
and interest on our debt. In addition, any failure to comply
with
covenants in the
instruments governing
our debt could
result in an
event of default
that, if not
cured or
waived,
would have a material adverse effect on us.
Our
level
of
indebtedness
could
have
further
consequences,
including,
but
not
limited
to,
increasing
our
vulnerability to adverse
economic or industry
conditions, placing us
at a competitive
disadvantage compared
to
other businesses in
the industries in
which we
operate that are
not as leveraged
and that may
be better positioned
to withstand
economic downturns,
limiting our
flexibility to
plan for,
or react
to, changes
in our
businesses and
the industries in which we operate, and requiring us to refinance all or a portion of our existing debt. We may not
be
able
to
refinance
on
commercially
reasonable
terms
or
at
all,
and
any
refinancing
of
our
debt
could
be
at
higher interest rates
and may require
us to comply
with more onerous
covenants, making it more
difficult to obtain
surety bonds, letters of credit or
other financial assurances that may be
demanded by our vendors or regulatory
agencies, particularly during periods in which credit markets
are weak.
Coronado Global Resources Inc. Form 10-K December 31,
If
we
are
unable
to
service
our
debt
obligations,
we
could
face
substantial
liquidity
problems
and
we
may
be
forced to
reduce or delay
investments and capital
expenditures, or to
sell assets, seek
additional capital, including
additional secured or unsecured debt, or restructure or refinance our debt, and we may be unable to continue as
a going concern.
We may be
unable to consummate
any proposed asset
sales or recover
the carrying value
of
these assets,
and
any proceeds
may
not
be adequate
to
meet
any
debt
service
obligations
then
due.
Any
of
these
examples
potentially
could
have
a
material
adverse
impact
on
our
results
of
operations,
profitability,
stockholders’ equity and capital structure.
We
adjust
our
capital
structure
from
time
to
time
and
may
need
to
increase
our
debt
leverage,
which
would make us more sensitive to the effects of
economic downturns.
It is
possible that we
may need
to raise additional
debt or
equity funds
in the
future. Our ABL
Facility and operating
cash flows may not be adequate to fund our ongoing capital requirements, for any future acquisitions or projects
or to
refinance our
debt. There
is no
guarantee that
we will
be able
to refinance
our existing
debt, or
if we
do,
there is no guarantee that such new funding will be on
terms acceptable to us.
Global credit markets have been severely constrained in the
past, such as during a global financial crisis and the
European sovereign
debt crisis,
and during
the
COVID-19
pandemic,
and
the ability
to obtain
new funding
or
refinance in
the future
may be
significantly reduced.
If we
are unable
to obtain
sufficient funding,
either due
to
banking and
capital market
conditions, generally,
or due
to factors
specific to
our
business, we
may not
have
sufficient cash to meet our
ongoing capital requirements, which
in turn could materially and
adversely affect our
financial
condition.
Failure
to
obtain
sufficient
financing
could
cause
delays
or
abandonment
of
business
development plans and have a material adverse effect
on our business, operations and financial condition.
In
recent
years,
certain
financial
institutions,
investment
managers
and
insurance
companies
globally
have
responded to pressure
to take actions
to limit or
divest investments in, financing
made available to,
and insurance
coverage
provided
for,
the
development
of
new
coal-fired
power
plants
and
coal
miners
that
derive
revenues
from thermal
coal sales.
For
example, in
2017, some
financial institutions
publicly announced
that they
would
stop funding new thermal coal projects or would
otherwise reduce their overall lending to coal
producers. These
or similar
policies
may adversely
impact
the coal
industry
generally,
our ability
to
access
capital and
financial
markets in the future, our costs of capital and the future
global demand for coal.
Our business may require substantial ongoing capital
expenditures, and we may not have access to
the
capital required to reach full productive capacity at our
mines.
Maintaining
and
expanding
mines
and
related
infrastructure
is
capital
intensive.
Specifically,
the
exploration,
permitting
and
development
of
Met
coal
reserves,
mining
costs,
the
maintenance
of
machinery,
facilities
and
equipment
and
compliance
with
applicable
laws
and
regulations
require
ongoing
capital
expenditures.
Any
decision to increase
production at our existing
mines or to
develop the high-quality Met
coal recoverable reserves
at our
development properties in
the future
could also affect
our capital
needs or
cause future
capital expenditures
to be higher than in the past and/or higher than our estimates. We cannot assure that we will be able to maintain
our production
levels or
generate sufficient cash
flow, or that
we will
have access
to sufficient financing
to continue
our
production,
exploration,
permitting
and
development
activities
at
or
above
our
present
levels
and
on
our
present levels or levels achieved prior to the COVID-19 pandemic and on our current or projected timelines, and
we may be required to
defer all or a portion
of our capital expenditures.
Our results of operations,
business and
financial condition may be materially adversely affected
if we cannot make such capital expenditures.
To
fund our
capital expenditures,
we will
be required
to use
cash from
our operations,
incur debt
or raise
new
equity.
Our ability
to obtain
bank financing
or our
ability to
access the
capital markets
for future
equity or
debt
offerings, on the other hand, may
be limited by our financial
condition at the time of any
such financing or offering
and the
covenants in
our existing
debt agreements,
as well
as by
general economic
conditions, contingencies
and uncertainties that
are beyond
our control. If
cash flow generated
by our operations
or available borrowings
under our
bank financing
arrangements are
insufficient to
meet our
capital requirements
and we
are unable
to
access
the
capital
markets
on
acceptable
terms
or
at
all,
we
could
be
forced
to
curtail
the
expansion
of
our
existing mines and the development of
our properties which, in turn, could
lead to a decline in
our production and
could materially and adversely affect our business,
financial condition and results of operations.
Coronado Global Resources Inc. Form 10-K December 31,
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.
Our balance sheet includes a number of assets that are subject to impairment risk, particularly long-lived assets,
including
property,
plant
and
equipment,
mining
tenements,
exploration
and
evaluation
assets
and
intangible
assets (including goodwill).
The values of
these assets
are generally derived
from the fundamental
valuation of
the underlying mining operations and, as
such, are subject to many of
the same risks to which our
operations are
exposed, including
decreases in
coal prices,
foreign currency
exchange risks,
operational and
geological risks,
changes in coal production and changes in estimates of proven and
probable coal reserves. Adverse changes in
these and
other risk
factors could
lead to
a reduction
in the
valuation of
certain
of our
assets and
result in
an
impairment charge being recognized.
Risks
related
to
our
investment
in
WICET
may
adversely
affect
our
financial
condition
and
results
of
operations.
We have
a minority
interest in
WICET Holdings
Pty Ltd,
whose wholly
owned subsidiary,
Wiggins Island
Coal
Export Terminal
Pty Ltd, or WICET Pty Ltd, owns WICET. Other coal producers who export coal through WICET
also hold
shares
in
WICET
Holdings
Pty Ltd.
In addition,
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.
Under our take-or-pay agreement with WICET
Pty Ltd, or the WICET Take
-or-Pay Agreement, Curragh’s export
capacity is 1.5 MMtpa and we
are obligated to pay the
terminal handling charge for this capacity, whether utilized
or not. The terminal handling
charge calculation is based on
total operating and finance costs
of WICET Pty Ltd
being charged to contracted shippers in proportion to each shipper’s contracted capacity. Under the terms of the
WICET
Take
-or-Pay
Agreement
the
terminal
handling
charge
payable
by
us
can
be
adjusted
(increased
or
decreased) by WICET Pty Ltd if WICET Pty
Ltd’s operating and finance costs change,
or if a contracted shipper
defaults on its take-or-pay agreement obligations and has its contracted capacity reduced to
nil. Under the terms
of the WICET Take
-or-Pay Agreement there is a limit of how much WICET Pty Ltd can charge us for recovery of
its finance costs, referred to as a finance cap.
Since WICET began operating in April 2015, four WICET Holdings
Pty Ltd shipper-shareholders
have defaulted on their
obligations under their respective
take-or-pay agreements
and
subsequently
had
those
agreements
terminated.
The
result
of
these
terminations
is
a
decrease
in
the
aggregate contracted tonnage at WICET from 27 MMtpa to
15.5 MMtpa.
Given the
operation
of the
finance cap
(which
has been
reached,
subject
to further
adjustment
for Consumer
Price Index,
or CPI) there
is a
limit to the
recovery by
WICET of its
financing costs
from shippers. 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 A$/ton (or
US$/ton)
charge for
operating
costs
resulting
from
a
lower
contract
base.
If
any of
the
remaining
shipper
shareholders
becomes
insolvent
and/or
defaults
under
its
take-or-pay
agreement,
the
terminal
handling
charges
for
the
remaining shipper shareholders, including us, may increase proportionately to pay the defaulting shipper’s share
of WICET’s
operating
and
financing costs
going forward
(noting that
the
finance cap
applies
in respect
of the
financing costs component of the terminal handling charges).
In addition, if we default under the WICET Take
-or-Pay Agreement and that default is not remedied, then we will
be obligated
to pay
a termination
payment. The
termination payment
is equal
to the
lesser of
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) and
ten years equivalent
terminal
handling
charges
at
the
prevailing
rate
at
the
time
that
the
termination
payment
falls
due.
We
have
provided
security to WICET
Pty Ltd in
the form 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 twelve-month
period.
In the event of WICET Pty Ltd defaulting on its external debt obligations, external lenders to WICET Pty Ltd may
enforce
their
rights
to
the
security
over
the
assets
of
WICET
and
appoint
a
receiver
to
take
steps
to
recover
outstanding debt. The
external lenders
do not have
direct recourse to
the shippers
to recover outstanding
debt
and shipper take-or-pay agreements would remain on foot and access to the port would continue to be available
to us.
In the
event of
a permanent
cessation of
operations
at WICET,
we may
be required
to procure
additional
port
capacity elsewhere, as well as be liable for a termination payment
under the WICET Take
-or-Pay Agreement.
Coronado Global Resources Inc. Form 10-K December 31,
Risks related to
the Supply Deed
with Stanwell may
adversely affect
our financial condition
and results
of operations.
Curragh has a CSA,
as amended from
time to time,
with Stanwell to
supply thermal coal
to the Stanwell
Power
Station. The
CSA restricted
Curragh from
mining the
SRA which
was reserved
for the
benefit of
Stanwell and
could not be
mined without
Stanwell’s consent.
Under the
CSA, in addition
to supplying thermal
coal at
a price
below the cost
to Curragh
of mining and
processing the
coal, Curragh
pays certain
rebates to
Stanwell on
Met
coal exported
from certain
parts of
Curragh, which
represents
the deferred
purchase
cost of
the right
to mine
some areas at Curragh. Our cost of
supplying coal to Stanwell has been
and may continue to be greater than
the
price paid by Stanwell.
On August 14, 2018, Curragh entered into the Supply
Deed with Stanwell. The Supply Deed grants Curragh
the
right
to
mine
the
coal
reserves
in
the
SRA.
In
exchange
for
these
rights,
Curragh
has
agreed
to
certain
amendments to
the CSA
and to
enter into
the NCSA,
which will
commence on
or around
the expiration
of the
CSA (currently
expected to
expire in
2027).
On July
12, 2019,
Curragh
entered into
the NCSA
with Stanwell.
Curragh agreed that
the total value
of the discount
received by Stanwell
on coal supplied
to it under
the NCSA
should (by the expiry date
of the NCSA) be equal
to the net present value
of A$210 million as at
the date of the
Supply Deed.
No export rebates
are payable during
the term of
the NCSA. The
amortized cost of
the deferred
consideration was $243.2 million (A$359.0 million) as of December
31, 2022.
We could
be adversely
affected if we
fail to
appropriately provide financial
assurances for
our obligations.
Australian laws and
U.S. federal and
state laws require
us to provide
financial assurances related
to requirements
to reclaim lands used
for mining, to pay
federal and state workers’
compensation, to provide financial assurances
for coal
lease obligations
and to
satisfy other
miscellaneous obligations.
The primary
methods we
use to
meet
those obligations in
the United States
are to provide
a third-party surety
bond or provide
a letter of credit.
As of
December 31, 2022,
we provided $34.9
million of third-party
surety bonds in
connection with our
U.S. Operations.
There are no cash collateral requirements to support any
of the outstanding bonds.
Our financial
assurance obligations
may increase
due to
a number
of factors,
including the
size of
our mining
footprint and
new government
regulations,
and
we may
experience
difficulty
procuring
or renewing
our surety
bonds. In addition, our bond issuers may demand higher fees or additional collateral, including letters of
credit or
other terms less favorable to us upon those renewals. Because we are required by federal and state law to have
these
bonds
or
other
acceptable
security
in
place
before
mining
can
commence
or
continue,
any
failure
to
maintain surety bonds, letters
of credit or other guarantees or
security arrangements would adversely
affect our
ability to mine coal. That failure
could result from a variety
of factors, including lack of
availability of surety bond
or letters of credit,
higher expense or
unfavorable market terms,
the exercise by
third-party surety bond
issuers
of their right
to refuse
to renew
the surety
and the
requirement to
provide collateral
for future
third-party surety
bond
issuers
under
the
terms
of
financing
arrangements.
If
we
fail
to
maintain
adequate
bonding,
our
mining
permits could be
invalidated, which would
prevent mining operations from
continuing, and future
operating results
could be materially adversely affected.
In
Australia,
the
Financial
Provisioning
Act
amended
the
financial
assurance
provisions
of
the
EP
Act,
and
impacted the way that our Australian Operations
provide for and manage associated costs
of providing financial
assurances related to mine rehabilitation obligations.
The Financial Provisioning Act:
•
amended
the
financial
assurance
arrangements
for
resource
activities
under
the
EP
Act
with
a
new
financial provisioning
scheme, and
changed
how the
ERC for
an environmental
authority is
calculated;
and
•
amended
the
EP
Act
to
introduce
new
requirements
for
the
progressive
rehabilitation
and
closure
of
mined land.
Coronado Global Resources Inc. Form 10-K December 31,
Since April 1, 2019, any financial assurance currently
held for environmental approvals already held
in Australia
are
treated
as
surety
under
the
Financial
Provisioning
Act.
There
was
a
transition
period
of
three
years
that
commenced
in
early
during
which
all
miners
in
Queensland
were
assessed
and
received
an
initial
risk
allocation
decision
based
on
a
formulaic
calculation
of
their
ERC.
Our
ERC
is
the
cost
estimated
by
the
government department
of rehabilitating
the land
on which
our operation
is carried
out. This
allocation put
our
resource activity
at Curragh
into a
risk category
under the
Financial
Provisioning Act
based on
the regulator’s
assessment of both
the amount of
our ERC and
our financial capacity
to carry out
and discharge the
rehabilitation
liability and obligation
at the time
our mining
operations cease.
This risk assessment
is reviewed annually,
and
assessment fees are payable each time there is an allocation
decision for our operations in Queensland.
The financial provisioning
scheme is managed
by the Scheme
Manager and financial
assurance is provided
by
paying
a
contribution
to
the
Scheme
and/or
the
giving
of
surety
to
the
Scheme
Manager.
Our
contribution
is
calculated
as
the
prescribed
percentage
(dependent
on
risk
allocation
decision)
of
Curragh’s
ERC.
The
prescribed percentages
for each
category are:
(1) Very
low: 0.5%;
(2) Low: 1.0%;
and (3) Moderate:
2.75%. In
the event Curragh’s ERC is allocated a
high risk allocation, we are required to
negotiate the percentage of surety
to be provided with the Scheme Manager. The Scheme Manager is a statutory officer and manages the Scheme
contributions and the sureties on behalf of the Queensland
State Government.
In
October
2022,
the
Scheme
Manager
completed
the
assessment
of
the
Annual
Review
Allocation
for
environmental authority
number EPML00643713
and issued
an Annual
Review Allocation
of “Moderate”.
The
moderate rating results in Curragh being
obliged to make a financial contribution
to the Scheme of 2.75% of the
ERC.
In January
2023, the
Scheme
Manager
completed
an assessment
of the
Annual
Review
Allocation
for
Environmental Authority
Number EPVX00635313
and issued
an Annual
Review Allocation
of “High”
in respect
of MDL162
requiring
Curragh
to
maintain
its
historical
financial
assurance
in
respect
of
100%
of
the
ERC
for
Environmental Authority Number EPVX00635313.
There can be no assurance that our risk category allocation
will not change in future years.
Our financial assurance obligations may increase due to
a number of factors, including but not limited to:
•
any change that increases ERC or area of disturbance;
•
any major Environmental Authority amendment;
•
compliance with existing Environmental Authority obligations; and
•
major changes to financial soundness of the EA Holder.
For more information on the Financial Provisioning Act, see
Item 1. “Business-Regulatory Matters-Australia-
Environmental Protection Act 1994 (Qld).”
Mine closures entail substantial costs. If we prematurely close one or more of our mines, our operations
and financial performance would likely be affected
adversely.
Federal and state
regulatory agencies
have the
authority following
significant health
and safety
incidents, such
as
fatalities,
to
order
mining
operations
to
be
temporarily
suspended
or
a
facility
be
permanently
closed.
For
example, on
January 12,
2020, operations
at our
Curragh mine
were temporarily
suspended after
a contractor
was
fatally
injured
during
a
tire
change
activity
in
the
main
workshop
on
site
and
on
November
21,
2021,
operations at our Curragh mine were temporarily suspended after an employee was fatally injured while working
in the dragline
operations. We could also
be required to
close or discontinue
operations at particular
mines before
the end
of their
mine life
due to
environmental,
geological,
geotechnical,
commercial,
leasing or
other issues.
Such
closure
or
discontinuance
of
operations
could
result
in
significant
closure
and
rehabilitation
expenses,
employee redundancy
costs, contractor
demobilization costs
and other
costs or
loss of
revenues. If
and when
incurred, these closure and
rehabilitation costs could exceed
our current estimates. If
one or more of our
mines
is closed earlier
than anticipated, we
would be required
to fund the
reclamation and closure costs
on an
expedited
basis and potentially
lose revenues and,
for some
of our operations,
pay for take-or-pay
arrangements that
we
no longer use, which would
have an adverse impact on
our operating and financial performance.
Many of these
costs could also
be incurred
if a mine
was unexpectedly
placed on care
and maintenance
before the end
of its
planned mine life
such as our
mines in the
U.S. Operations, which
were temporarily idled
in 2020 as a
result of
the COVID-19 pandemic.
Coronado Global Resources Inc. Form 10-K December 31,
If the
assumptions underlying
our provision
for reclamation
and mine
closure obligations
prove to
be
inaccurate, we could be required to expend greater
amounts than anticipated.
The
Environmental
Protection
Act 1994
(Qld)
and
the
SMCRA
establish
operational,
reclamation
and
closure
standards
for
all
aspects
of
surface
mining
as
well
as
deep
mining.
We
accrue
for
the
costs
of
current
mine
disturbance
and
final
mine
closure,
including
the
cost
of
treating
mine
water
discharge
where
necessary.
Estimates of
our total
reclamation and
mine-closing
liabilities totaled
$138.5
million as
of December
31, 2022,
based upon
permit requirements
and the
historical
experience at
our operations,
and depend
on a
number
of
variables involving assumptions and estimation and therefore may be subject to change, including the estimated
future
asset
retirement
costs
and the
timing
of
such
costs,
estimated
proven
reserves,
assumptions
involving
third-party contractors, inflation rates
and discount rates.
If these accruals
are insufficient or our
liability in a
future
year is
greater than
currently anticipated,
our future
operating results
and financial
position could
be adversely
affected. See
Item 7. “Management’s Discussion
and Analysis
of Financial
Condition and
Results of
Operations-
Critical Accounting Policies and Estimates.”
We are subject to foreign exchange risks involving
certain operations in multiple countries.
Loss sustained from adverse movements
in currency exchange rates
can impact our financial performance
and
financial position and the level of additional funding required to support
our businesses. Our financial results are
reported
in
US$
and
certain
parts
of
our
liabilities,
earnings
and
cash
flows
are
influenced
by
movements
in
exchange rates, especially movements in A$
to US$ exchange rate. For
example, costs relating to our
Australian
Operations
are
generally
denominated
in
A$.
In
addition,
foreign
currency
exposures
arise
in
relation
to
coal
supply
contracts,
procurement
of
plant
and
equipment
and
debt,
which
may
be
priced
in
A$
or
other
foreign
currencies other than US$.
The impact of currency exchange rate movements will vary depending on factors such as the nature, magnitude
and duration
of the movements,
the extent
to which
currency risk
is hedged under
forward exchange
contracts
or other hedging instruments and the terms of these contracts. We may enter into forward exchange
contracts to
hedge a portion of our
foreign currency exposure of
our Australian Operations from
time to time. The unhedged
portion of our non-US$
exposures against exchange rate fluctuations will
be at the risk
of any adverse movement
in exchange rates, which may affect our operating results,
cash flows and financial condition.
Interest rates could change substantially and have an adverse
effect on our profitability.
We are exposed to interest rate risk
in relation to variable-rate bank balances
and variable-rate borrowings. Our
interest rate risk primarily arises from fluctuations in LIBOR and the Australian Bank Bill Swap Yield, or BBSY,
in
relation to US$-
and A$-denominated borrowings,
respectively.
Our lending rates
may increase in
the future as
a result of factors beyond our control and may
result in an adverse effect on our financial condition and results of
operations.
In addition,
national and
international regulators
and law
enforcement agencies
have conducted
investigations
into a number of rates or indices, which
are deemed to be “reference rates.”
Actions by such regulators and law
enforcement agencies may result
in changes to the
manner in which certain
reference rates are determined,
their
discontinuance,
or
the
establishment
of
alternative
reference
rates.
For
example,
after
2021,
the
United
Kingdom’s Financial
Conduct Authority,
which regulates
LIBOR, no
longer compelled banks
to submit rates
for
the
calculation
of
non-U.S.-dollar
LIBOR.
U.S-dollar
LIBOR
must
be
replaced
before
June
30,
2023.
The
Alternative Reference Rates
Committee has proposed
SOFR as its
recommended alternative
to LIBOR. At
this
time, it
is not
possible to
predict the
effect that
these developments,
any discontinuance,
modification or
other
reforms to
LIBOR or any
other reference rate,
or the
establishment of alternative
reference rates, including
SOFR,
may
have
on
LIBOR
or
other
benchmarks,
including
LIBOR-based
borrowings
under
our
variable-rate
bank
balances and variable-rate borrowings.
Furthermore, the use of
alternative reference rates or
other reforms could
cause the
market value
of, the
applicable interest
rate on
and the
amount
of interest
paid on
our benchmark-
based borrowings
to be
materially
different
than
expected and
could
materially
adversely
impact
our ability
to
refinance such borrowings or raise future indebtedness
on a cost effective basis.
Coronado Global Resources Inc. Form 10-K December 31,
We may
be unsuccessful
in integrating
the operations
of acquisitions
with our
existing operations
and
in realizing all or any part of the anticipated benefits of
any such acquisitions.
From time to time, we
may evaluate and acquire assets and businesses that
we believe complement our existing
assets and business. Acquisitions may
require substantial capital or
the incurrence of substantial indebtedness.
Our capitalization
and results
of operations
may change
significantly as
a result
of future
acquisitions. Acquisitions
and business expansions involve numerous risks, including the
following:
•
difficulties in the integration of the assets and operations
of the acquired businesses;
•
inefficiencies
and
difficulties
that
arise
because
of
unfamiliarity
with
new
assets
and
the
businesses
associated with them and new geographic areas;
•
the diversion of management’s attention from other
operations; and
•
timing, and whether the acquisition
or business expansion is occurring
during adverse economic, social
and regulatory periods.
Further,
unexpected
costs
and
challenges
may
arise
whenever
businesses
with
different
operations
or
management
are
combined,
and
we
may
experience
unanticipated
delays
in
realizing
the
benefits
of
an
acquisition. Entry into certain lines of
business may subject us to new
laws and regulations with which we
are not
familiar and may lead
to increased litigation and
regulatory risk. Also, following
an acquisition, we may
discover
previously
unknown liabilities
associated with
the acquired
business
or assets
for which
we have
no recourse
under applicable indemnification provisions. If a new business generates insufficient revenue or if we are unable
to efficiently manage our expanded operations,
our results of operations may be adversely affected.
Coronado
Global
Resources Inc.
is
a
holding
company
with
no
operations
of
its
own
and,
as
such,
it
depends
on
its
subsidiaries
for
cash
to
fund
its
operations
and
expenses,
including
future
dividend
payments, if any.
As a
holding company,
our
principal
source
of cash
flow
is
distributions
from
our
subsidiaries.
Therefore,
our
ability to fund and conduct our business, service our debt,
and pay dividends, if any,
in the future will depend on
the
ability
of
our
subsidiaries
to
generate
sufficient
cash
flow
to
make
upstream
cash
distributions
to
us.
Our
subsidiaries are separate legal
entities, and although they
are wholly-owned and controlled
by us, they have
no
obligation to make any funds available to us, whether
in the form of loans, dividends, or otherwise. The
ability of
our
subsidiaries
to
distribute
cash
to
us
will
also
be
subject
to,
among
other
things,
restrictions
that
may
be
contained in our subsidiary agreements (as entered into from time to time), availability
of sufficient funds in such
subsidiaries and applicable laws and regulatory restrictions. Claims of any creditors of our subsidiaries generally
will have
priority as
to the
assets of
such subsidiaries
over our
claims and
claims of
our creditors
and stockholders.
To
the extent the ability
of our subsidiaries
to distribute dividends or
other payments to us
is limited in any
way,
our ability to fund and conduct our business, service our
debt, and pay dividends, if any,
could be harmed.
Legal, Compliance and Sustainability Risks
We could be negatively affected if
we fail to maintain satisfactory labor relations.
Relations with
our employees
and, where
applicable, organized
labor are
important to
our success.
Enterprise
bargaining and other disputes between us and our employees or disputes affecting our contractors may result in
strikes or uncompetitive work practices.
As of
December 31,
2022, we
had 1,735
employees.
In addition,
as of
December 31,
2022, there
were 2,326
contractors
supplementing
the
permanent
workforce,
primarily
at
Curragh.
As
of
December
31,
2022,
approximately
11.5%
of our
total employees,
all at
our
Australian Operations,
were represented
by organized
labor unions and covered
by the EA. In
May 2019, the Australian
Fair Work Commission
approved the Curragh
Mine Enterprise
Agreement 2019.
This EA
has a
nominal expiration
date of
May 26,
2022 and
but remains
in
place by
operation of
the Fair
Work Act
2009 (Cth)
until replaced
or terminated
by the
Fair Work
Commission.
We have
been negotiating
with employee
bargaining representatives
for a
replacement EA
since March
2022.
Those negotiations continue
in good faith
with the intent
of reaching an
agreement as
soon as practicable.
Our
U.S. Operations employ a 100% non-union labor force
.
Coronado Global Resources Inc. Form 10-K December 31,
Future industrial
action by
our employees
or mining
contractors’ employees or
involving trade unions
could disrupt
operations and negatively impact mine productivity,
production and profitability.
Our operations
may impact
the environment
or cause
exposure to
hazardous substances,
which could
result in material liabilities to us.
We are
subject to
extensive environmental
laws and
regulations,
and our
operations may
substantially
impact
the
environment
or
cause
exposure
to
hazardous
materials
to
our
contractors,
our
employees
or
local
communities. We use hazardous materials
and generate hazardous or other regulated
waste, which we store in
our storage or disposal
facilities. We may become subject to
statutory or common law claims
(including damages
claims) as
a result
of
our
use of
hazardous
materials
and generation
of hazardous
waste.
A number
of laws,
including, in
the United
States, the
CERCLA or
Superfund, and
the RCRA,
and in
Australia, the
Environmental
Protection Act 1994 (Qld),
impose liability relating to
contamination by hazardous
substances. Furthermore, the
use of
hazardous materials
and generation
of hazardous
and other
waste may
subject us
to investigation
and
require the clean-up of soil, surface water,
groundwater and other media.
Mining
operation
process,
including
blasting
and
processing
ore
bodies,
can
also
generate
environmental
impacts. These
impacts include,
but are
not limited
to, leakages
of polluting
substances,
explosions,
flooding,
fires, accidental mine water discharges,
and excessive dust and noise. Such
risks could result in damage to
the
applicable mine site, personal
injury to our employees
and contractors, environmental
damage, decreased coal
production and
possible legal
liability under
environmental regulations.
Employee or
strict liability
claims under
common law
or environmental
regulations in
relation to
these matters
may arise,
for example, out
of current
or
former activities
at sites
that we
own, lease
or operate
and at
properties to
which hazardous
substances have
been sent for treatment,
storage, disposal or other
handling. Our liability
for such claims may
be strict, joint and
several with other miners or parties or with our
contractors, such that we may be held
responsible for more than
our
share
of
the
contamination
or
other
damages,
or
even
for
the
entire
amount
of
damages
assessed.
Additionally,
any violations of
environmental laws by
us could lead
to, among other
things, the imposition
on us
of substantial fines,
penalties, other civil and
criminal sanctions, the curtailment
or cessation of
operations, orders
to
pay
compensation,
orders
to
remedy
the
effects
of
violations
and
take
preventative
steps
against
possible
future violations,
increased compliance costs,
or costs
for environmental remediation,
rehabilitation or
rectification
works.
We maintain extensive
Met coal refuse
areas and slurry impoundments
at our mining
properties. At Curragh, coal
slurry
is
disposed
of
by
pumping
into
an
impoundment
area
where
particles
are
allowed
to
settle.
We
have
procedures
in
place
that
the
Curragh
slurry
impoundments
remain
below
the
surrounding
topography
so
that
there is
minimal likelihood
of failure
and/or spills.
At our
U.S. Operations,
refuse areas
and impoundments
are
frequently inspected and subject
to extensive governmental regulation.
Slurry impoundments have
been known
to
fail,
releasing
large
volumes
of
coal
slurry
into
the
surrounding
environment.
Structural
failure
of
an
impoundment can result in extensive damage to the environment
and natural resources, such as bodies of water
that the coal slurry reaches, as well as create liability for
related personal injuries, property damages and injuries
to natural resources
and plant and
wildlife. Of the
five refuse areas
among our U.S.
mining properties, only
two
impound slurry; the other facilities are combined refuse
and do not impound slurry.
Two of our impoundments
in
the U.S. overlie
mined out
areas, which
can pose
a heightened
risk of
failure and
the assessment
of damages
arising out of such failure.
If one of our impoundments
were to fail, we could
be subject to substantial
claims for
the resulting environmental contamination and associated
liability, as well as
for related fines and penalties.
Changes in
and compliance
with government
policy, regulation
or legislation
may adversely
affect our
financial condition and results of operations.
The coal mining industry
is subject to regulation
by federal, state and
local authorities in each
relevant jurisdiction
with respect
to
a range
of industry
specific and
general
matters.
Any future
legislation
and
regulatory
change
imposing more constraints or
more stringent requirements may
affect the coal mining
industry and may adversely
affect our financial condition and results of operations. Examples of such changes are, future laws or regulations
that may limit
the emission
of GHGs, attach
a cost to
GHG emissions,
or limit the
use of thermal
coal in power
generation, more stringent workplace health and safety laws, more rigorous environmental laws, and changes to
existing taxation and royalty legislation.
Coronado Global Resources Inc. Form 10-K December 31,
Compliance
with
applicable
federal,
state
and
local
laws
and
regulations
may
become
more
costly
and
time-consuming
and
may
delay
commencement
or
interrupt
continuation
of
exploration
or
production
at
our
operations. We have
incurred, and may
in the future
incur, significant expenditures to comply
with such regulation
and legislation. These laws are constantly evolving and may become increasingly
stringent. The ultimate impact
of complying with existing laws
and regulations is not always
clearly known or determinable due
in part to the
fact
that
certain
implementation
of
the
regulations
for
these
laws
have
not
yet
been
promulgated
and
in
certain
instances
are
undergoing
revision.
These
laws
and
regulations,
particularly
new
legislative
or
administrative
proposals
(or
judicial
interpretations
of
existing
laws
and
regulations),
could
result
in
substantially
increased
capital,
operating
and
compliance
costs
and
could
have
a
material
adverse
effect
on
our
operations
and
our
customers’ ability to use our products. Due in part to the extensive and comprehensive
regulatory requirements,
along with
changing interpretations
of these
requirements, violations
of applicable
federal, state
and local
laws
and regulations occur from time to time in the
coal industry and minor violations have
occurred at our Australian
Operations and our U.S. Operations in the past.
Moreover, changes in the law
may impose additional standards and a heightened degree
of responsibility for us
and our stockholders, directors and employees; may
require unprecedented compliance efforts; could
divert our
management’s
attention;
and
may
require
significant
expenditures.
For
example,
we
may
also
be
subject
to
unforeseen
environmental
liabilities
resulting
from
coal-related
activities,
which
may
be
costly
to
remedy
or
adversely impact
our operations.
In particular,
the acceptable
level of
pollution and
the potential
abandonment
costs and obligations for which we
may become liable as a result
of our activities may be difficult
to assess under
the current legal
framework. To the extent that
required expenditures, as
with all
costs, are not
ultimately reflected
in the
prices of
coal, our
operating results
will be
detrimentally
impacted. The
costs
and operating
restrictions
necessary for compliance
with safety
and environmental laws
and regulations,
which is a
major cost
consideration
for
our
Australian
Operations
and
U.S.
Operations,
may
have
an
adverse
effect
on
our
competitive
position
relative to foreign producers and operators in
other countries which may not be
required to incur equivalent costs
in their operations.
We are
also affected
by various
other international,
federal, state,
local and
tribal or
indigenous environmental
laws
and
regulations
that
impact
our
customers.
To
the
extent
that
such
environmental
laws
and
regulations
reduce
customer
demand
for
or
increase
the
price
of
coal,
we
will
be
detrimentally
impacted.
For
additional
information
about
the
various
regulations
affecting
us,
see
Item 1.
“Business-Regulatory
Matters-Australia”
and “Business-Regulatory Matters-United States.”
We
are
subject
to
extensive
forms
of
taxation,
which
imposes
significant
costs
on
us,
and
future
regulations
and
developments
could
increase
those
costs
or
limit
our
ability
to
produce
coal
competitively.
Federal,
state
or
local
governmental
authorities
in
nearly
all
countries
across
the
global
coal
mining
industry
impose various
forms of
taxation
on coal
producers,
including production
taxes,
sales-related taxes,
royalties,
stamp duty, environmental
taxes and income taxes.
For
example,
on
September
27,
2022,
we
received
from
the
Queensland
Revenue
Office,
or
QRO,
an
assessment of the
stamp duty payable
on our acquisition
of the Curragh
mine in March
2018. The QRO
assessed
the stamp duty on this
acquisition at an amount
of $55.4 million (A$82.2
million) plus unpaid tax
interest of $8.2
million
(A$12.1
million).
On
November
23,
2022,
the
Company
filed
an
objection
to
the
assessment
and
is
currently awaiting the outcome of this objection. The outcome
of this objection is uncertain.
We have reviewed the assessment received and based on legal and valuation advice the Company continues to
maintain its position regarding the estimated accrual
of $29.0 million (A$43.0 million) stamp duty payable
on the
Curragh acquisition. During the
period we made a
partial payment reducing the
estimated accrual to $11.7 million
(A$17.3
million)
as
at
December
31,
2022,
which
is
included
within
“Accrued
Expenses
and
Other
Current
Liabilities” in its Consolidated Balance sheet.
We cannot
guarantee that
the steps
we take
to defend
our position
on this
matter will
be successful,
in which
case the amount assessed by
the QRO and unpaid tax interest
on the amount outstanding may become
due and
payable.
Coronado Global Resources Inc. Form 10-K December 31,
Additionally, in 2022, the Queensland
State Government in
Australia amended the
Mineral Resources Regulation
2013 (Qld) introducing additional
higher tiers to the
coal royalty rates effective
from July 1, 2022,
increasing the
royalty payable by our Australian Operations.
The new
tiers applicable
in calculating
the royalty
payable for
our Australian
Operations from
July 1,
2022, are
as set out below:
•
7% for average coal price per Mt sold up to and including
A$ 100 per Mt;
•
12.5% for average coal price per Mt sold from A$100 to
A$150 per Mt;
•
15% for average coal price per Mt sold from A$150 to
A$175 per Mt;
•
20% for average coal price per Mt sold from A$175 to
A$225 per Mt;
•
30% for average coal price per Mt sold from A$225 to
A$300 per Mt; and
•
40% for average coal price per Mt sold above A$300 per
Mt.
If new legislation or
regulations related to various forms
of coal taxation or
income or other taxes
generally, which
increase our costs or limit our ability to compete
in the areas in which we sell coal, or which
adversely affect our
key customers, are adopted, or if the
basis upon which such duties
or taxes are assessed or levied,
changes or
is different from that provided by us, our business, financial condition or results of
operations could be adversely
affected.
We may be subject
to litigation, the disposition
of which could negatively
affect our profitability and cash
flow
in
a
particular
period,
or
have
a
material
adverse
effect
on
our
business,
financial
condition
and
results of operations.
Our profitability or cash flow in
a particular period could be affected by
an adverse ruling in any litigation that
may
be filed against us in the future. In addition, such litigation could have
a material adverse effect on our business,
financial condition and results of operations. See Item
3. “Legal Proceedings.”
We have no
registered trademarks for
our Company
name used by
us in the
United States or
any other
countries, and failure to obtain those registrations
could adversely affect our business.
Although
we
have
filed
a
trademark
application
for
use
of
the
stylized
mark
“CORONADO
STEEL
STARTS
HERE” in the United States and Australia, our applications are still pending
and the corresponding mark has not
been registered
in
the
United
States
or
Australia.
We
have
not
filed
for
this
or
other
trademarks
in
any
other
country. During trademark registration proceedings, we may receive rejections. If so, we will have an opportunity
to respond,
but we
may be
unable to
overcome such
rejections. In
addition, Intellectual
Property Australia
and
the United
States Patent
and Trademark Office
and comparable agencies
in many
foreign jurisdictions
may permit
third parties to oppose pending trademark
applications and to seek to
cancel registered trademarks. If opposition
or
cancellation
proceedings
are
filed
against
our
trademark
application,
our
trademark
may
not
survive
such
proceedings,
and/or
we
may
be
required
to
expend
significant
additional
resources
in
an
effort
to
defend
ourselves in the proceedings or identify a suitable substitute
mark for future use.
Risks Specific to Our Common Stock
Our certificate of incorporation and bylaws include
provisions that may discourage a change in control.
Provisions contained in our amended and restated certificate of incorporation, or certificate of incorporation, and
amended and
restated bylaws, or
bylaws, and
Delaware law
could make
it more
difficult for a
third-party to acquire
us,
even
if
doing
so
might
be
beneficial
to
our
stockholders.
Provisions
of
our
bylaws
and
certificate
of
incorporation impose various procedural and other
requirements that could make it
more difficult for stockholders
to effect certain corporate actions.
Coronado Global Resources Inc. Form 10-K December 31,
We have elected not to be governed by Section 203 of the General Corporation Law of
the State of Delaware,
or
the DGCL (or any successor provision thereto),
until immediately following the time at
which the EMG Group no
longer beneficially
owns in
the aggregate
shares of
our common
stock representing
at least
10% of
our voting
stock, in which case we
shall thereafter be governed by
Section 203 if and
for so long as Section
203 by its terms
would apply
to us.
Section 203
provides that
an interested
stockholder,
along with
its affiliates
and associates
(i.e., a stockholder that has
purchased greater than 15%,
but less than 85%, of
a company’s outstanding voting
stock (with
some exclusions)),
may not
engage in
a business
combination
transaction
with the
company for
a
period of three years after buying more than 15% of a company’s outstanding voting stock unless certain criteria
are met or certain other corporate actions are taken by the company.
These provisions could limit the price
that certain investors might be willing
to pay in the future for
shares of our
common stock and may have the effect of delaying
or preventing a change in control.
Our
certificate
of
incorporation
limits
the
personal
liability
of
our
directors
for
certain
breaches
of
fiduciary duty.
Our
certificate
of
incorporation
and
bylaws
include
provisions
limiting
the
personal
liability
of
our
directors
for
breaches
of
fiduciary
duty
under
the
DGCL.
Specifically,
our
certificate
of
incorporation
contains
provisions
limiting
a
director’s
personal
liability
to
us
and
our
stockholders
to
the
fullest
extent
permitted
by
the
DGCL.
Furthermore, our
certificate of
incorporation provides
that no director
shall be
liable to
us and
our stockholders
for
monetary
damages
resulting
from
a
breach
of
fiduciary
duty
as
a
director,
except
to
the
extent
that
such
exemption from liability or limitation thereof is
not permitted under the DGCL. The principal
effect of this limitation
on liability
is that
a stockholder
will be
unable to
prosecute an
action for
monetary damages
against a
director
unless the
stockholder can
demonstrate a
basis for
liability that
cannot be
eliminated under
the DGCL.
These
provisions, however, should
not limit or eliminate our right or any stockholder’s right to seek non-monetary relief,
such as an injunction or rescission,
in the event of a
breach of a director’s fiduciary duty. These provisions do not
alter a director’s liability under
U.S. federal securities laws.
The inclusion of these
provisions in our certificate
of
incorporation may discourage or deter stockholders or management from bringing
a lawsuit against directors for
a breach of
their fiduciary
duties, even
though such an
action, if successful,
might otherwise have
benefited us
and our stockholders.
Coronado
Group
LLC
and
the
EMG
Group
have
substantial
control
over
us
and
are
able
to
influence
corporate matters.
Coronado Group
LLC and
the EMG
Group have
significant
influence over
us, including
control over
decisions
that
require
the
approval
of
stockholders,
which
could
limit
the
ability
of
other
stockholders
to
influence
the
outcome of stockholders votes.
As of
December 31,
2022, the
EMG Group
indirectly held
50.4%
of our
outstanding shares
of common
stock.
Therefore, the EMG
Group has
effective control
over the outcome
of votes on
all matters requiring
approval by
stockholders. There is a risk that the interests of the EMG Group could conflict with or differ from our interests or
the interests of
other stockholders.
In addition, pursuant
to the terms
of the Stockholder’s
Agreement, dated
as
of September
24, 2018,
between us
and Coronado
Group LLC,
or the
Stockholder’s Agreement,
so long
as it
beneficially owns in the aggregate at least 25% of the outstanding shares of our common stock, the EMG Group
will have
the ability
to exercise
substantial control
over certain
of our
transactions,
including change
of control
transactions,
such
as
mergers
and
capital
and
debt
raising
transactions.
See Item
5.
“Market
for
Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” for a description of the
Stockholder’s Agreement.
Further, pursuant to
the terms of the Series A
Share, Coronado Group and the
EMG Group or its successors
or
permitted
assigns,
as
the
beneficial
owner
of
the
Series A
Share,
at
its
option,
will
have
the
ability
to
elect
a
specified number of directors, or the Series A Directors, based on
the EMG Group’s aggregate level of beneficial
ownership of shares
of our common
stock. For more
details on the
ability of Coronado
Group and the
EMG Group
to elect Series A Directors, as
well as the rights of
stockholders to participate in the removal
of any such Series
A
Directors,
see
Item 5.
“Market
for
Registrant’s
Common
Equity,
Related
Stockholder
Matters
and
Issuer
Purchases of Equity Securities.”
Coronado Global Resources Inc. Form 10-K December 31,
Moreover, the
EMG Group’s beneficial
ownership of shares of
our common stock may
also adversely affect
the
price of our
common stock
to the extent
equity investors
perceive disadvantages
in owning common
stock of a
company with a controlling stockholder.
In addition, the EMG Group
is in the business of making
investments in
companies and may, from time to time, acquire interests in businesses that
directly or indirectly compete with us,
as well as businesses of our existing or potential significant
customers. The EMG Group may acquire or seek
to
acquire assets that
we seek to
acquire and, as
a result, those
acquisition opportunities
may not be
available to
us or
may be
more expensive
for us
to pursue,
and as
a result,
the interests
of the
EMG Group
may not
align
with the interests of our other stockholders.
The EMG Group has the
right, subject to certain conditions, to
require us to cooperate in
a sale of shares
of our common stock held by it (including in the form
of CDIs) under the Securities Act.
Pursuant to the Registration
Rights and Sell-Down Agreement,
dated as of September 24,
2018, between us and
Coronado
Group LLC,
or
the
Registration
Rights
and
Sell-Down
Agreement,
Coronado
Group LLC
(or
its
successors
or
permitted
assigns
or
transferees)
has
the
right,
subject
to
certain
conditions,
to
require
us
to
cooperate in a
sell-down of
shares of
our common
stock or
CDIs held by
it. By virtue
of its majority
ownership,
exercising its registration rights and selling a large number of shares or CDIs, Coronado Group LLC could cause
undue volatility in the
prevailing market price of
our common stock. See
Item 5. “Market for Registrant’s Common
Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.”
Our non-employee directors and their respective
affiliates, including the EMG Group, may
be able to take
advantage of a corporate opportunity that would otherwise
be available to us.
The corporate opportunity
and related
party transactions provisions
in our
certificate of incorporation
could enable
any
of
our
non-employee
directors
or
their
respective
affiliates,
including
the
EMG
Group,
to
benefit
from
corporate opportunities
that might
otherwise be
available to
us. Subject
to the
limitations of
applicable law,
our
certificate of incorporation, among other things, will:
•
permit
us
to
enter
into
transactions
with
entities
in
which
one
or
more
non-employee
directors
are
financially or otherwise interested;
•
permit any non-employee director or
his or her affiliates to
conduct a business that competes
with us and
to make investments in any kind of property in which we
may make investments; and
•
provide that if
any non-employee director
becomes aware of
a potential business
opportunity, transaction
or
other
matter
(other
than
one
expressly
offered
to
that
non-employee
director
solely
in
his
or
her
capacity
as
our
director),
that
non-employee
director
will
have
no
duty
to
communicate
or
offer
that
opportunity to
us, and
will be
permitted to
communicate
or offer
that opportunity
to his
or her
affiliates
and pursue or acquire such opportunity for himself
or herself, and that non-executive director
will not be
deemed
to
have
acted
in
a
manner
inconsistent
with
his
or
her
fiduciary
or
other
duties
to
us
or
our
stockholders regarding the opportunity or acted in bad faith or in a manner inconsistent with
our and our
stockholders’ best interests.
These provisions enable a
corporate opportunity that
would otherwise be available
to us to be taken
by or used
for the
benefit of
the
non-employee
directors
or their
respective
affiliates,
which
include the
EMG Group
as a
result of the rights granted to it under the Stockholder’s Agreement.
General Risk Factors
Any
failure
to
maintain
effective
internal
control
over
financial
reporting
may
adversely
affect
our
financial condition and results of operations.
Our
management
is
responsible
for
establishing
and
maintaining
adequate
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
generally accepted accounting principles in the United
States, or U.S. GAAP.
Coronado Global Resources Inc. Form 10-K December 31,
During the course of the preparation of our financial statements,
we evaluate and correct any deficiencies in
our
internal controls over
financial reporting. If we
fail to maintain an
effective system of disclosure
or internal controls
over financial
reporting, including
satisfaction of
the requirements
of Section
404 of
the Sarbanes-Oxley
Act of
2002, we may not be able to report
accurately or timely on our financial results or adequately identify and reduce
fraud. Therefore, the financial condition of our business could be adversely
affected, current and potential future
stockholders could lose confidence in us and/or
our reported financial results, which may cause
a negative effect
on the trading price of our
CDIs, and we could be exposed
to litigation or regulatory proceedings,
which may be
costly or divert management attention.
The requirements of
being a public company
in the United
States and Australia may
strain our resources,
divert
management’s
attention,
and
affect
our
ability
to
attract
and
retain
executive
management
and
qualified board members.
Our CDIs are
currently listed on
the ASX and
we are registered
as a foreign
company in
Australia. As such
we
need to ensure continuous compliance with relevant Australian laws
and
regulations, including the listing rules of
the ASX, as amended from time to time, or the ASX Listing
Rules,
and certain provisions of the Corporations Act
2001 (Cth), or the Corporations Act.
As a U.S.
public company, we are subject
to the reporting
requirements of the
Exchange Act, the
Sarbanes-Oxley
Act
of
2002,
the
Dodd-Frank
Wall
Street
Reform
and
Consumer
Protection
Act
of
and
other
applicable
securities laws, rules and regulations. Compliance with these laws,
rules, and regulations may increase our legal
and
financial
compliance
costs,
make
some
activities
more
difficult,
time-consuming,
or
costly,
and
increase
demand on
our systems
and resources.
The Exchange
Act requires,
among other
things,
that
we file
annual,
quarterly, and
current reports with respect
to our business and
results of operations. In
the absence of a waiver
from the ASX
Listing Rules, these
SEC periodic reports
will be in addition
to our periodic
filings required by
the
ASX Listing
Rules.
The
Sarbanes-Oxley
Act of
2002 requires,
among
other things,
that we
maintain
effective
disclosure
controls
and
procedures
and
internal
control
over
financial
reporting.
In
order
to
maintain
and,
if
required, improve our disclosure
controls and procedures and
internal control over financial
reporting to meet this
standard, significant resources and management oversight will be required. As a result, management’s attention
may be diverted from other
business concerns and our
costs and expenses will increase,
which could harm our
business
and results
of
operations,
all of
which
could
be magnified
during the
COVID-19
pandemic.
We
may
need
to
hire
more
employees
in
the
future
or
engage
outside
consultants,
which
will
increase
our
costs
and
expenses.
In addition, changing laws,
regulations, and standards relating to
corporate governance and public disclosure
are
creating
uncertainty
for
public
companies,
increasing
legal
and
financial
compliance
costs
and
making
some
activities more time consuming.
These laws, regulations
and standards are subject
to varying interpretations, in
many cases due to their
lack of specificity and,
as a result, their
application in practice may
evolve over time as
new
guidance
is
provided
by
regulatory
and
governing
bodies.
This
could
result
in
continuing
uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance
practices.
We
intend
to
invest
resources
to
comply
with
evolving
laws,
regulations
and
standards,
and
this
investment may result in increased
general and administrative expenses
and a diversion of management’s
time
and
attention
from
sales-generating
activities
to
compliance
activities.
If
our
efforts
to
comply
with
new
laws,
regulations and standards differ from the activities intended by
regulatory or governing bodies due to ambiguities
related
to
their
application
and
practice,
regulatory
authorities
may
initiate
legal,
administrative
or
other
proceedings against us and our business may be harmed.
A state
court located within
the State
of Delaware (or, if
no state court
located within the
State of
Delaware
has jurisdiction, the
federal district court
for the District
of Delaware) will
be, to the
extent permitted by
law,
the
sole
and
exclusive
forum
for
substantially
all
state
law
based
disputes
between
us
and
stockholders.
Our bylaws provide
that, unless we
consent in writing
to the selection
of an alternative
forum, a state
or federal
court within the State of Delaware will be the sole and
exclusive forum for:
•
any derivative action or proceeding brought on our behalf;
•
any action or proceeding asserting a claim of breach of
a fiduciary duty owed by any director or
officer or
other employee or
agent of the
Company to the
Company or the
Company’s stockholders or debtholders;
Coronado Global Resources Inc. Form 10-K December 31,
•
any
action
or
proceeding
asserting
a
claim
against
the
Company
or
any
director
or
officer
or
other
employee or
agent of
the Company
arising pursuant
to any
provision of
the DGCL
or our
certificate of
incorporation or bylaws; or
•
any action
asserting
a claim
against
the
Company
or
any
director
or
officer
or
other
employee
of
the
Company
governed
by
the
internal
affairs
doctrine
or
other
“internal
corporate
claims”
as
defined
in
Section 115 of the DGCL.
The choice of
forum provision may limit
a stockholder’s ability
to bring a claim
against us or our
directors, officers,
employees or
agents in
a forum
that it
finds favorable,
which may
discourage stockholders
from bringing
such
claims
at
all.
Alternatively,
if a
court
were
to
find
the
choice
of forum
provision
contained
in
our
bylaws
to
be
inapplicable or unenforceable
in an action,
we may incur
additional costs associated
with resolving such
action
in
another
forum,
which
could
materially
adversely
affect
our
business,
financial
condition
and
results
of
operations. However, the choice of forum provision does
not apply to any actions
arising under the Securities Act
or the Exchange Act.
The issuance of additional
common stock or securities
convertible into our
common stock could
result
in dilution of the ownership interest in us held by existing
stockholders.
We may
issue more
CDIs in
the future
in order
to fund
future investments, acquisitions,
capital raising
transactions
or
to
reduce
our
debt.
While
we
will
be
subject
to
the
constraints
of
the
ASX
Listing
Rules
regarding
the
percentage of our
capital that we
are able to
issue within a
12-month period
(subject to applicable
exceptions),
any such equity raisings may dilute the ownership of existing
common stockholders.
We are subject to general
market risks that are
inherent to companies with publicly-traded securities
and
the price of our securities may be volatile.
We are subject to
the general market risks that
are inherent in all
securities traded on a
securities exchange. This
may result
in fluctuations
in the
trading price
of our
securities that are
not explained
by our
fundamental operations
and activities. There is
no guarantee that the
price of our securities
will increase in the
future, even if our
earnings
increase.
Our securities may trade at, above or below the price paid by an investor for those securities due to a number of
factors, including, among others:
•
general market conditions, including investor sentiment;
•
movements in interest and exchange rates;
•
fluctuations in the local and global market for listed stocks;
•
actual or anticipated
fluctuations in
our interim and
annual results and
those of other
public companies
in our industry;
•
industry cycles and trends;
•
mergers and strategic alliances in the coal industry;
•
changes in government regulation;
•
potential or actual military conflicts or acts of terrorism;
•
changes in accounting principles;
•
announcements concerning us or our competitors;
•
changes in government policy,
legislation or regulation;
•
inclusion of our securities in or removal from particular market
indices (including S&P/ASX indices); and
•
the nature of the markets in which we operate.
Coronado Global Resources Inc. Form 10-K December 31,
Other factors
that may
negatively affect
investor sentiment
and influence
us, specifically,
or the
stock market,
more generally, include acts
of terrorism, an outbreak of international hostilities, fires, floods, earthquakes,
labor
strikes, civil wars,
natural disasters, outbreaks of
disease, including the COVID-19
pandemic, or other man-made
or natural events.
Stock markets have
experienced extreme price
and volume fluctuations
in the past
that are
often disproportionate
or
unrelated
to
the
operating
performance
of
companies.
There
can
be
no
guarantee
that
trading
prices
and
volumes of any securities
will be sustained. These
factors may materially affect the
market price of our
securities,
regardless of our
operational performance. This
may then significantly
impact our ability
to raise new
equity which
may be required to fund our operations if our financial
performance deteriorates due to other factors.
The payment of
dividends and repurchases
of our stock
are dependent on
a number
of factors, and
future
payments and repurchases cannot be assured.
The
payment
of
dividends
in
respect
of
our
common
stock
is
impacted
by
several
factors,
including
our
profitability,
retained earnings,
capital requirements
and free
cash flow,
as well
as applicable
covenants under
the indenture
governing our
senior secured
notes and
covenants under
the ABL
Facility.
Any future
dividends
will be determined by
our Board of Directors having
regard to these factors,
among others. There is
no guarantee
that any dividend
will be paid,
or repurchases will
be made, by
us, or if
paid, paid at
previous levels. From
time
to time, our Board of Directors may also cancel previously
announced dividends.
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 1B. UNRESOLVED
STAFF COMMENTS
None.
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 2.
PROPERTIES
Summary Overview of Mining Operations
Coronado owns and controls a portfolio of operating mines and development projects in Queensland, Australia, and Virginia,
West
Virginia
and
Pennsylvania
in
the
United
States.
Our
Australian
Operations
consist
of
the
100%-owned
Curragh
producing
mine
complex.
With
respect
to
our
U.S.
Operations,
Coronado
owns
a
100%
interest
in
two
producing
mine
complexes (Buchanan and Logan) and
a 100% interest in one
temporarily idled, production-stage mine complex
(Greenbrier)
and two
development properties
(Mon Valley
Minerals (formerly
called Pangburn-Shaner-Fallowfield)
and Russell
County).
Figures 1 and 2 below show the locations of our mining properties in Australia and the United States, respectively.
Figure 1: Australian Operations:
Coronado Global Resources Inc. Form 10-K December 31,
14.7
10.5
25.2
13.6
12.8
26.4
12.4
25.3
Australia
United States
Group
ROM production (Mt)
FY20
FY21
FY22
12.0
5.1
17.0
11.1
6.3
17.4
9.8
6.2
16.0
Australia
United States
Group
Saleable production (Mt)
FY20
FY21
FY22
Figure 2: U.S. Operations:
The below charts show run-of-mine, or ROM, production and saleable production for our Australian Operations and our U.S.
Operations for the years ended December 31, 2022, 2021 and 2020.
See the descriptions
of our material
mining properties under
“-Curragh,” “-Buchanan,” “-Logan”
and “-Mon Valley” below
for more information. Table
1 below contains a
summary of the key
information relative to the
various Coronado properties.
Tables
2 and 3 provide a summary of our coal resources and reserves, respectively, as of December 31, 2022.
Coronado Global Resources Inc. Form 10-K December 31,
Table 1.
Summary Coronado Properties
Property
(Property
Stage)
Mineral Rights
(1)
Permit
Status
(2)
Mine Type(s)
Coal Type
Coal Seams of
Economic
Interest
(Formation)
Processing
Plants/
Facilities
Curragh
(Production)
25,586 hectares
leased; 6,381
hectares owned
Permitted
Surface
HCC, SCC,
PCI, Thermal
Various (Rangal
Coal Measures)
CPP1 - 1100 raw
Mt per hour;
CPP2 - 1200 raw
Mt per hour; Rail
Loadout
Buchanan
(Production)
25,852 hectares
leased
(3)
; 7,725
hectares owned
1 Permit
Underground
Low-Vol
Pocahontas #3
(Pocahontas
Formation)
CPP - 1270 raw
Mt per hour; Rail
Loadout
Logan
(Production)
13,183 hectares
leased
(3)
; 69
hectares owned
24 Permits
Surface &
Underground
HVA, HVB,
Thermal
Various
(Kanawha
Formation)
CPP - 1088 raw
Mt per hour; Rail
Loadout
Mon Valley
(Development)
1,339 hectares
leased
(3)
; 40,276
hectares owned
Not
Permitted
Underground
(4)
High-Vol
Upper Freeport
(Freeport
Formation)
Future
Greenbrier
(Production -
Idled)
18,907 hectares
leased
(3)
22 Permits
Surface &
Underground
Mid-Vol, PCI,
Thermal
Pocahontas #6,
#7, #8
(Pocahontas
Formation);
Various (New
River Formation)
CPP - 544 raw Mt
per hour; Rail
Loadout
Russell County
(Development)
7,111
hectares
leased
(3)
; 378
hectares owned
Not
Permitted
Underground
(4)
High-Vol
Lower Castle
(Norton
Formation);
Upper Horsepen
(Middle Lee
Formation)
Future
(1)
We are
not aware of
any significant encumbrances or
defects in title
with respect to
any of our
mining properties.
Certain credit
facilities of the Company are secured by a lien on
substantially all of the Company’s assets, including
mining properties.
(2)
We believe we
have secured
all applicable
environmental licenses
and permits
under applicable
law and
have all
necessary permits
and licenses regarding cultural heritage, native
title and various other social issues to support
current mining operations.
(3)
Subject to the exercise of our renewal rights thereunder, most of the leases at our U.S. mining properties expire upon exhaustion
of the relevant reserves.
(4)
Proposed mine type.
Coronado Global Resources Inc. Form 10-K December 31,
Table 2.
Summary Coal Resources Exclusive of Reserves at End of the Fiscal Year Ended December 31, 2022.
(1)
Coal Resources (In Situ, MMt)
(2)
Quality (Air-Dried Basis)
Measured
Indicated
Measured
+
Indicated
Inferred
Ash
Sulfur
Volatile
Matter
Australia
Curragh
19.5%
0.5%
18.4%
Total
Australia
United States
Buchanan
-
25.0%
0.7%
16.0%
Logan
24.0%
1.0%
28.0%
Mon Valley
-
-
-
-
-
-
-
Greenbrier
-
31.0%
1.1%
20.0%
Russell County
-
29.0%
0.7%
23.0%
Total
United States
Total
(1)
For more
information regarding price
assumptions used
in the
calculation of
coal resources
as of
December 31,
2022, see
the
individual property disclosures below.
(2)
Australian resources are estimated inclusive of 5.3%
in-situ moisture.
United States resources are estimated on a
dry basis.
(3)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
Table 3.
Summary Coal Reserves (Marketable Sales Basis) at End of the Fiscal Year Ended December 31, 2022.
(1)
Demonstrated Coal Reserves (Wet
Tons,
Washed or Direct Shipped, MMt)
(2)
Quality (Air-Dried Basis)
Proven
Probable
Total
Ash
Sulfur
Volatile
Matter
Australia
Curragh
10.7%
0.4%
19.0%
Total
Australia
United States
Buchanan
6.0%
0.7%
19.0%
Logan
8.0%
0.9%
36.0%
Mon Valley
8.0%
1.2%
35.0%
Greenbrier
8.0%
1.0%
26.0%
Russell County
8.0%
0.9%
31.0%
Total
United States
Total
(1)
For more
information regarding
price assumptions
used in
the calculation
of coal
reserves as
of December
31, 2022,
see the
individual property disclosures below.
(2)
For more information regarding moisture assumptions used in the calculation of coal
reserves as of December 31, 2022, see the
individual property disclosures below.
(3)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
Curragh
Curragh is a
production-stage mining
property that consists
of two active,
open-pit, surface mines
(Curragh North and
Curragh
Main).
Coal mine development at the Curragh property is presently accomplished by surface mining methods and has been
so historically
since the mine’s
inception.
Curragh coals are
widely known
for their low
ash, low to
mid volatile matter,
low
sulfur and low
phosphorous content. Curragh Met
coal products are
also known for their
consistent delivered quality,
which
supports a consistent offtake across a diversified market base.
A map of Curragh is shown in Figure 3.
Coronado Global Resources Inc. Form 10-K December 31,
Figure 3.
Coronado Curragh Mine Complex Property Location Map.
The
Curragh
mine
complex
is
located
within
the
Bowen
Basin
coalfields,
approximately
kilometers
by
road
west
of
Rockhampton,
Queensland,
Australia,
and
approximately
14 kilometers
north
of
the
town
of
Blackwater,
Queensland,
Australia. The coordinates of CPP1, which is located within Curragh Main, are 688,561 meters
East, 7,400,933 meters North
in
the
AMG66
grid
system.
Curragh
owns
and
operates
the
necessary
CPPs
and
load-out
system
for
dispatches
via
Blackwater
rail
line
to
the
Port
of
Gladstone
or
the
Stanwell
Power
Station.
See
Item
1.
“Business-Transportation-
Australian Operations” for
additional information regarding the
rail and port services
available to Curragh. Curragh
also has
maintenance
facilities
for
the
fleet
of
mining
equipment,
as
well
as
office
buildings
for
the
mine
staff
and
personnel.
Established
sealed
roads
connect
the
mine
to
the
town
of
Emerald,
Queensland,
Australia,
to
the
west
and
the
Port
of
Gladstone to the east.
Third-party rail providers operate
the Blackwater rail line
and transport Curragh export
coal, for sale
to international customers, to the RG Tanna
Coal Terminal
or Wiggins Island Coal Export Terminal
at the Port of Gladstone.
Curragh domestic coal is loaded onto train wagons for transportation to the Stanwell Power Station for power generation.
Curragh has ready access to water,
electricity and personnel to support its operations.
SunWater Ltd. supplies water to
the
mine complex from the Fairbairn Dam via the Bedford Weir.
The mine complex also recycles water from on-site dams-i.e.,
old open-cut pits that capture rainfall and water from
dewatering activities.
Curragh has a dedicated 66-kilovolt, or kV, power
supply to support the
mining operations with a
capacity of up to
57-megawatt, or MW, sourced from the
main grid power.
The
substation is
located on
the southwest
corner of
ML1878 with
both 66kv and
22kv distribution
networks to
supply the
draglines,
shovel and CPP.
Coronado Global Resources Inc. Form 10-K December 31,
The Mineral
Resources Act
(Qld), or
MRA, and
the Mineral
and Energy
Resources (Common
Provisions) Act
(Qld), or MERCPA, together,
provide for the assessment, development and utilization of mineral resources in Queensland to
the maximum extent
practicable, consistent with sound
economic and land use
management. The MRA vests
ownership of
minerals, with
limited exceptions, in
the “Crown,”
which in
relation to Curragh,
is the
Queensland Government.
A royalty is
payable to the Queensland Government for the right to extract minerals. The MRA also creates different tenures for different
mining activities, such
as prospecting, exploring
and mining. A
ML is the
most important tenure, as
it permits the
extraction
of minerals in conjunction with other required authorities. The MRA imposes general conditions on an ML.
We control the
coal mining rights at
Curragh under 14 coal
and infrastructure MLs
and three MDLs granted
pursuant to the
MRA.
We
refer
to
the
MLs
and
MDLs
at
Curragh,
collectively,
as
the
Tenements.
Renewal of
certain
Tenements
will be
required
during the
mine
life of
Curragh and
the Queensland
government can
vary
the terms
and conditions
on
renewal.
There are a number
of existing mining and
petroleum tenements which overlap
with the Tenements. The priority, consent and
coordination requirements under the MRA, MERCPA and the Petroleum and Gas (Production and
Safety) Act 2004 (Qld) (as
relevant) may apply
with respect to
those overlaps.
Extensive statutory protocols
govern the relationships
between co-existing
mining and
exploration rights and
these protocols
are largely focused
on encouraging the
overlapping tenement
holders to
negotiate and formulate arrangements that enable the
co-existence of their respective interests. To date, we have negotiated
arrangements
in place
with all
of
our
overlapping
tenement holders
and full
access
to
all of
our
Tenements.
See
Item 1.
“Business-Regulatory Matters-Australia-Tenements”
for additional information regarding Curragh mining tenements.
Property control and mining rights at Curragh are entirely expressed in the MLs and MDLs mentioned in Item 1. “Business-
Regulatory
Matters-Australia-Tenements.”
An
overlapping
petroleum
tenure
exists
over
the
southern
extents
of
the
Tenements.
Under the Mineral
and Energy Resources (Common
Provisions) Act 2014
(Qld), this requires annual
information
exchanges, including
the provision and
maintenance of joint
information management
plans with the
overlapping tenement
holder.
Curragh is compliant with the legislation and there are no current restrictions to coal mining.
As conditions to certain
of the Tenements,
Curragh is subject to
royalties payable to the
Queensland government on a
new
regulated tiered structure
introduced 1st July
2022. This tiered
royalty payment regime is
dependent on the
received AUD/t
revenue received from the coal sales, and varies from 7% for up to A$100/t sales, up to 40% payable for
sales over A$300/t.
These royalties are
in addition to
the Stanwell rebate,
as described in
Item 1. “Business-Customers-Stanwell.” Additionally,
if MDL
162 advances
from development
to production,
we would
be required
to pay
under
a private
royalty deed
a base
royalty of A$0.50 per Mt of coal and a royalty of A$0.70 for every Mt of SCC produced above 2.5 MMt per year.
A joint
venture
between
Arco Australia
Ltd., Australian
Consolidated Industries
Ltd.,
R.W.
Miller
& Co.
and Mitsui
& Co.
(Australia) first began development on certain of the Tenements in 1983.
Later, Arco Australia Ltd. bought out the other joint
venturers and, in 2000, sold the Property to Wesfarmers Ltd. In 2014,
Wesfarmers acquired MDL 162 from Peabody Budjero
Pty
Ltd.
Coronado
acquired
all
the
Tenements
from
Wesfarmers
Ltd.
in
March
2018.
Production
history
has
been
approximately 12.0 MMt in 2020, 11.1 MMt in 2021 and 9.8 MMt in 2022.
Beginning in the 1960’s, various tenement holders began
prospecting and exploratory drilling at Curragh. We currently have
an
active,
ongoing exploration
program
at
Curragh that
allows us
to update
and
refine the
geological
model ahead
of pit
development.
Coal
mine
development
at
the
Curragh
property
is
presently
accomplished
by
surface
mining
methods
and
has been
so
historically since
the mine’s inception.
The mine
characteristics and output
levels allow
it to
be ranked
as a
large coal
operation
when compared to domestic producers in Australia and worldwide.
Curragh operates four large electric draglines, one large
electric shovel
and a fleet
of smaller contractor
excavators.
Contractors are employed
for the
pre strip, post
strip and coal
mining activities. Contract highwall mining operations has commenced at Curragh North during the 2022 calendar year.
Curragh
has
two
coal
preparation
plants
CPP1
and
CPP2.
CPP1
is
the
oldest
of
the
two
processing
plants
and
has
a
documented nameplate
capacity of
tph (as
received).
CPP2 has
a documented
nameplate capacity
of 1200
tph (as
received) with a capability of up to 1350 tph when processing selected
feed types.
Curragh has a loadout facility for loading
coal onto railcars, which is connected to the main Blackwater rail link.
Generally, the mining equipment and
facilities at Curragh
are in good
operating condition. We
focus on the
long-term potential
of
the
mine
complex
and
regularly
monitor
developments
in
the
mining
industry
for
technology
improvements
and
new
equipment
that
could
help
us
increase
efficiency
and
lower
our
costs.
Curragh’s
oldest
mining
equipment,
including
two
draglines, began operations in 1983. All of the
draglines have additional boom (stress) monitoring systems, which
allow us to
increase their
total suspended
load capacities,
and still
achieve over
90% mechanical
availability.
Prior to
our taking
over
mining operations, Wesfarmers Ltd. made improvements to the processing facilities at Curragh, including the commissioning
of the
second CPP
in 2012
and replacing
the raw
coal crushing
system at
Curragh Main
with an
updated circuit
in 2016.
Wesfarmers
Ltd. also
started a
corrosion and
structural
repair program
over ten
years ago
that we
have
continued since
acquiring the
mine complex.
This program
helps us
ensure that
the assets
are available
well into
the future.
From time
to
time,
we
also
update
and
improve
other
equipment
and
facilities
to
maintain
their
usefulness
and
optimize
our
competitiveness. As of
December 31, 2022,
the book value of
Curragh and its
associated plant and equipment
was $761.8
million.
We are not
aware of
any significant encumbrances
or defects
in title with
respect to
the Property.
We believe we
have secured
all applicable environmental
licenses and permits
under both
Queensland and Australian
Commonwealth legislation and
have
all
permits
and
licenses
regarding
cultural
heritage,
native
title
and
various
other
social
issues.
See
Item
1.
“Business-
Regulatory Matters-Australia” for a discussion of the permitting conditions applicable to Curragh.
Coronado Global Resources Inc. Form 10-K December 31,
Summaries
of Curragh’s
coal resources
and reserves
as of
December 31,
and 2021
are shown
in Tables
4 and
5,
respectively.
Table 4.
Curragh - Summary
of Coal Resources
Exclusive of Reserves
at the End
of the Fiscal
Year Ended December
31, 2022 and 2021.
(1)
Coal Resources
(Wet Tons, In Situ, MMt)
(2)(3)(4)
Quality (Air-Dried Basis)
Measured
Indicated
Measured
+
Indicated
Inferred
Ash
Sulfur
Volatile
Matter
December 31, 2022
19.5%
0.50%
18.4%
December 31, 2021
19.5%
0.50%
18.4%
(1)
Curragh splits the resource into
areas that are above and
below a 15:1 open cut
stripping ratio and considers
the lower ratio areas
as
suitable for
open cut
mining at
the
higher ratio
areas as
suitable for
underground mining.
The
average sales
price for
the
underground resources was estimated to be $147 per Mt (FOB).
Pricing for resources is described in Section 11.5 of the Curragh
TRS.
(2)
There are
resources suitable
for open
cut mining
outside of
reserves. Pricing
for resources
is described
in Section
11.5
of the
Curragh TRS.
Based on assumed long-term average sales price of $143 per Mt (FOB) representing the long-term average price
forecast for Curragh based on independent price
forecasts.
(3)
Table 1-1 of the Curragh TRS provides a summary of Curragh resource tons inclusive of
reserve tons as of December 31, 2021.
(4)
Reported on a 5.3% in-situ moisture basis.
(5)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
Table
5.
Curragh
-
Summary
of
Coal
Reserves
(Marketable
Sales
Basis)
at
the
End
of
the
Fiscal
Year
Ended
December 31, 2022 and 2021.
(1)
Demonstrated Coal Reserves (Wet
Tons, Washed
or Direct Shipped, MMt)
(2)
Quality (Air-Dried Basis)
Proven
Probable
Total
Ash
Sulfur
Volatile
Matter
December 31, 2022
10.7%
0.4%
19.0%
December 31, 2021
10.7%
0.4%
19.0%
(1)
Based on pricing data as provided by
Coronado described in Section 16 of the
Curragh TRS. The pricing data assumes average
realized price of $141 per Mt sold over the LOM.
(2)
Reported on an 11.0% moisture basis.
(3)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
From December 31, 2021 to
December 31, 2022, total reserves decreased
by approximately 5%, from approximately 215.0
MMt to approximately 205.0 MMt. The decrease in total reserves is attributable to mining depletion.
Barry Lay,
BSc Geology (Hons); MAusIMM of
Resology Pty Ltd, and
Paul Wood, B. Eng.;
MAusIMM(CP), who is employed
full-time as
the Senior Life
of Mine Planner
of our
subsidiary,
Coronado Curragh, whom
we refer
to as the
Australian QPs,
prepared the estimates
of coal
resources and reserves
summarized in Tables 4 and
5.
A copy of
the Australian
QPs’ technical
report summary,
or
TRS, with
respect
to Curragh,
dated
February 21,
2022, or
the Curragh
TRS, is
filed
as Exhibit
96.1
hereto. Neither Mr. Barry Lay nor Resology Pty Ltd is affiliated with Coronado.
The
Australian
QPs prepared
the
estimates
of
coal
resources
and
reserves
using
drilling
data
available
from
exploration
activities at Curragh conducted by numerous entities over time.
Most of this information was obtained prior to
our acquisition
of the Property,
using varying drilling
and core-logging techniques,
survey methods and
testing procedures.
As a result,
in
verifying
the
data,
the
Australian
QPs
made
certain
assumptions
about
the
adequacy
of
the
processes
performed
and
comparability of the data based on their professional experience and familiarity with Curragh.
Per Section
12.1 of the
Curragh TRS, coal
reserves were classified
as proven
or probable considering
“modifying factors,”
including mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors.
Section 22.2 of
the Curragh
TRS includes
a risk
assessment of
the key
modifying factors
that could
potentially impact
the operations
and
therefore the estimate of coal reserves and resources.
Coronado Global Resources Inc. Form 10-K December 31,
As
summarized
in
Section
7.1
of
the
Curragh
TRS,
the
concentration
of
exploration
drill
holes
varies
slightly
across
the
Property.
The location of
the drilling is
shown on the
maps included in
Section 7.
Points of observation
include exploration
drill holes and mine measurements, which
have been fully vetted and processed
into a geologic model. The geologic model
is based on seam depositional
modelling, the interrelationship of overlying
and underlying strata on seam
mineability, seam
thickness trends,
the impact
of seam
structure (i.e.,
faulting), intra-seam
characteristics, etc.
Section 11.6
of the
Curragh
TRS summarizes the drill hole spacings and accuracy associated with each resource category.
Coal quality is instrumental in
determining the viability of a
coal deposit. As per Table
11-1 of
the Curragh TRS, coal quality
conforms to international standards. These quality attributes aided in converting in-place tons to demonstrated coal reserves
(recoverable washed tons). Pricing data as provided by Coronado
is described in Table 16-1 of the Curragh TRS.
These are
weighted-average values across the LOM schedule.
Regarding
production
rates
as
described
in
Section 13
of
the
Curragh
TRS,
the
mine
plan
and
productivity
expectations
consider
historical
performance
and
efforts
have
been
made
to
adjust
the
plan
to
reflect
current
technology
and
future
conditions.
Mine
development and
operation
have
not been
optimized within
the Curragh
TRS.
Additional mine-specific
factors can be found in Section 13 of the Curragh TRS.
Buchanan
Buchanan is
a production-stage
mining property,
consisting of
one active
underground mine
and supporting
infrastructure
that produces
Low-Vol
Met coal
using the
longwall mining
method.
The mine
complex is
located in
Buchanan County
in
southwest Virginia.
A map of Buchanan is shown in Figure 4.
Figure 4.
Coronado Buchanan Mine Complex Property Location Map.
The
Buchanan
mine
complex
is
located
approximately 6.4
kilometers
southeast
of
Oakwood,
Virginia,
and
kilometers
southeast
of
Grundy,
Virginia.
The
coordinates
of
the
Buchanan
CPP
are
latitude
37°
09'
40"
and
longitude
81°
59'
13"
(Easting
984,100’,
Northing 320,100’
-
in the
VA
State Plane
South
NAD 27
grid system).
The
nearest major
population
centers
are
Roanoke,
Virginia,
and
Lexington,
Kentucky,
which
are
about
kilometers
northeast
and
kilometers
northwest of
the property,
respectively.
From U.S.
Route 460,
which runs
through Oakwood,
a well-developed
network of
improved and
unimproved roads
provides access
to the
property.
The surface
facilities at
Buchanan are
located along
a
Norfolk Southern
rail line,
which serves
as the
primary means
of transport
for produced
coal.
Norfolk Southern
transports
coal from
the Buchanan
mine complex
either to
domestic customers
or to
Lamberts Point
Coal Terminal
Pier 6
in Norfolk,
Virginia, for overseas shipment.
Buchanan has ready access
to water,
electricity and personnel to
support its operations.
The mine complex
sources water
from streams
that flow
over Company-owned
property.
The mine
also utilizes
ground water
from an
old abandoned
mine.
Electricity
is
sourced
from
American
Electric
Power.
Personnel
have
historically
been
sourced
from
the
surrounding
communities in
Buchanan, Tazewell,
McDowell and
Pike Counties and
have proven
to be adequate
in numbers to
operate
the mine complex.
As mining is common in the surrounding areas,
the workforce is generally familiar with mining
practices,
and many are experienced miners.
The property mineral rights
are composed of approximately 33,577
total hectares, of which 25,852
are leased or subleased
from private landholders under
approximately 150 individual coal
lease tracts, and
7,725 hectares are owned
by Coronado.
Subject to
Coronado’s exercising
its renewal
rights thereunder,
all the
leases expire
upon exhaustion
of the
relevant coal
reserves, which is expected to occur in 2044.
Coronado Global Resources Inc. Form 10-K December 31,
Under the
terms of the
relevant leases, we
are required
to pay
royalties ranging
from 4% to
6% of
the selling
price of coal
mined from the
corresponding leasehold and,
for the majority,
an annual minimum
royalty, irrespective
of production.
Coal
produced
at
Buchanan,
however,
is
not
subject
to
“wheelage
fees”
(i.e.,
fees
payable
on
coal
mined
and
removed
from
properties other than the particular leasehold and hauled across the leasehold premises).
The
property
was
formerly
controlled
by
Consolidation
Coal
Company,
or
CONSOL.
Mine
development
was
started
by
CONSOL in 1983 and
longwall production began in
1987.
Coronado acquired the Buchanan Mine
from CONSOL in March
2016.
Production history has been approximately 3.4 MMt in 2020, 4.4 MMt in 2021 and 3.9 MMt in 2022.
Our right to
commercially mine and
recover coal reserves
at Buchanan overlaps
with the right
of an affiliate
of CNX Resources
Corporation, which we refer to as the Gas Party, to commercially recover and develop coal gas interests from the mine area.
The
Gas
Party
and
we
have
entered
into
certain
agreements
to
regulate
the
interaction
between,
and
coordinate,
our
respective operations.
In general,
the combination
of these
overlapping interests
allows for
mutual benefits
to the
parties,
namely,
the degassing of our
coal mining operations
in the mine,
which helps assure the
safety of mine personnel,
and the
Gas Party’s
commercial capture and
sale of the
coal gas.
In addition, the
Gas Party’s drilling
activities have contributed
to
exploration efforts with respect to coal
deposits at Buchanan.
As the only natural gas supplier
in the area, we purchase our
requirements of natural gas for the operation of our thermal dryer at Buchanan from the Gas Party.
Before Coronado
took over
mining operations
at Buchanan,
CONSOL Energy
had conducted
extensive exploration
of the
property.
We have
continued exploration
at the
property through
a program
of core
drilling to
confirm reserves,
establish
additional resources and assess the geotechnical viability of mining.
Buchanan produces
primarily a
Low-Vol
HCC, but
it also
produces a
premium Low-Vol
PCI product.
The Buchanan
mine
extracts coal from the Pocahontas #3 seam of the Pennsylvanian-age Pocahontas Formation, which is the principal minable
coal seam of that formation.
The seam is situated
below drainage throughout the
Property and is accessed
by vertical shafts.
The seam thickness averages 1.58 meters within the mining area.
The Buchanan mine extracts coal using a single longwall system supported by six continuous miner sections, which develop
main
entries
and
gate
roads
in
preparation
for
the
longwall.
Each
continuous
miner
section
is
equipped
with
one
or
two
continuous miners, two
roof bolters and two
or three coal
haulage units.
After extraction, a
series of conveyor
belts deliver
raw coal
to an
underground storage
bunker.
The Buchanan
mine complex
uses a
skip hoist
system to
lift raw
coal to
the
surface.
Buchanan has
a CPP
that processes
raw coal
at a
rate of
approximately 1,270
raw tph,
as well
as the
other necessary
support infrastructure, including loadout and portal facilities.
Generally,
the mining
equipment
and
facilities
at
Buchanan
are
in
good
operating
condition.
We
focus
on
the
long-term
potential of the
mine complex and
regularly monitor developments
in the mining
industry for technology
improvements and
new equipment that could
help us increase efficiency
and lower our costs.
Since acquiring the Buchanan
operations, we have
implemented improvements at
the CPP,
which have resulted
in increased capacity.
From time to
time, we also
update and
improve other equipment
and facilities to
maintain their usefulness
and optimize our
competitiveness. For example,
we rebuild
our longwall shear, drives
and cycling shields
after every panel.
We have also
entered into life
cycle management agreements
for
our
continuous
miner
equipment,
installed
programmable
logic
controller,
or
PLC,
controls
on
the
skip
hoist
system,
upgraded our
belt drives
for increased
horsepower, deployed
state-of-the-art Fletcher
roof bolters
on our continuous
miner
sections
and
switched
to
PLC
control
systems
and
variable
frequency
drive,
or
VFD,
starters
on
our
belt
drives.
As
of
December 31, 2022, the book value of Buchanan and its associated plant and equipment was $387.6 million.
We are not aware of any significant
encumbrances or defects in title
with respect to the Property.
Additionally, we believe we
have obtained
all requisite
mining and
discharge permits
to conduct
our operations
at Buchanan
and expect
to be
able to
obtain all
required permits
in the
future. The
Buchanan mine
complex holds
one state
permit, with
the associated
NPDES
permit.
Buchanan is subject to a federal black lung excise tax of $1.21 per ton for underground mining and a federal reclamation tax
of $0.13
per ton for
underground mining.
However, the
federal black lung
excise tax
applies only with
respect to coal
sold
domestically.
Additionally, Buchanan is subject to a Virginia reclamation tax of $0.05 per ton (which amount is contributed to
a state-funded bond pool) and a Virginia severance tax of 2% for all coal sold. See Item 1. “Business-Regulatory Matters-
United States” for a discussion of the permitting conditions applicable to Buchanan.
Coronado Global Resources Inc. Form 10-K December 31,
Summaries of
Buchanan’s coal
resources and
reserves as
of December
31, 2022
and 2021
are shown in
Tables
6 and
7,
respectively.
Table
6.
Buchanan
-
Summary
of
Coal
Resources
Exclusive
of
Reserves
at
the
End
of
the
Fiscal
Year
Ended
December 31, 2022 and 2021.
(1)
Coal Resources (Dry Tons, In Situ, MMt)
(2)(3)
Quality (Air-Dried Basis)
Measured
Indicated
Measured
+
Indicated
Inferred
Ash
Sulfur
Volatile
Matter
December 31, 2022
-
25.0%
0.7%
16.0%
December 31, 2021
-
25.0%
0.7%
16.0%
(1)
Pricing for resources is described in
Section 11.3.1 of the Buchanan TRS.
Based on assumed long-term average price
of $94 per
Mt (FOB loadout) for
Buchanan resources as
of December 31, 2021
and $110 per Mt (FOB loadout)for
resources at December 31,
2022,
representing the long-term average price forecast
for Buchanan based on independent price forecasts.
(2)
Exclusive of reserve
tons.
Table
1-1 of the
Buchanan TRS provides
a summary of
Buchanan resource tons
inclusive of reserve
tons as of December 31, 2022.
(3)
Reported on a dry basis.
Surface moisture and inherent moisture are excluded.
(4)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
Table
7.
Buchanan
-
Summary
of
Coal
Reserves
(Marketable
Sales
Basis)
at
the
End
of
the
Fiscal
Year
Ended
December 31, 2022 and 2021.
(1)
Demonstrated Coal Reserves (Wet
Tons, Washed
or Direct Shipped, MMt)
(2)
Quality (Air-Dried Basis)
Proven
Probable
Total
Ash
Sulfur
Volatile
Matter
December 31, 2022
6.0%
0.7%
19.0%
December 31, 2021
6.0%
0.7%
19.0%
(1)
Pricing data as provided
by Coronado is described
in Section 16.2 of
the Buchanan TRS.
For Buchanan reserves as
of December
31, 2021, the pricing data assumes a weighted average domestic and
international FOB-mine price of approximately $197 per Mt
for calendar
year 2022;
the weighted
average price
decreases to
approximately $118
to
$126
per Mt
through year
2026 and
averages approximately $152 per Mt over
the LOM.
For Buchanan reserves as of December
31, 2022, the pricing
data assumes
a weighted average
domestic and international
FOB-mine price of
approximately $179 per
Mt for calendar
year 2023; the weighted
average price decreases to approximately $132 to $143 per Mt through year 2027 and averages approximately $153 per Mt over
the LOM.
(2)
Reported on a 6.0% moisture basis.
(3)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
From December
31, 2021
to December
31, 2022,
total reserves decreased
by approximately
5%, from approximately
98.0
MMt to approximately 93.0 MMt.
This net reduction of 5.0 MMt of total reserves was attributable
to a combination of updates
to the mine plan along with one year of mining depletion. A TRS with respect to Buchanan, updating the TRS with respect to
Buchanan
filed
with
Coronado’s
Annual
Report
on
Form
10-K
for
the
year
ended
December
31,
2021,
was
prepared
in
February
due
to
material
differences
in
the
key
financial
modifying
factors,
including coal
sales
price
assumptions,
operating costs and capital costs from
December 31, 2021 to December 31,
2022. Coal sales price assumptions underlying
the reserve
estimates are
discussed in
Sections 12
and 16
of the
Buchanan TRS,
while operating
costs and
capital costs
assumptions underlying the reserve
estimates are discussed in
Sections 18 and 19
of the Buchanan TRS.
The differences
in the
key financial
modifying factors
did not
have a
material impact
on the
reserve estimates
from December
31, 2021
to
December
31,
2022.
From
December
31,
to
December
31,
2022,
measured
and
indicated
resources
increased
significantly,
by approximately 167%,
due to
evaluation of
additional gas
well data in
the North where
none had
previously
been analyzed.
Updated financial
inputs, including
coal sales
price assumptions
and operating
and capital
costs used
in
estimating the resources exclusive of reserves, as discussed in
Section 11.3.1 of the Buchanan TRS, did not have a material
impact on
the measured
and indicated
resource estimates
as of
December 31,
2022, as
compared to
the measured
and
indicated resource estimates as of
December 31, 2021. Net increase resulted
in an additional 25 MMt of
in-place resources
in the North.
Marshall Miller & Associates, Inc., a third-party firm comprising mining experts,
whom we refer to as the U.S. QPs, prepared
the estimates of
coal resources and
reserves as of December
31, 2022 summarized
in Tables
6 and 7.
A copy of the
U.S.
QPs’ TRS
with respect to
Buchanan, dated
as of
February 15, 2023,
or the
Buchanan TRS,
is filed
as Exhibit 96.2
hereto.
The U.S. QPs are not affiliated with Coronado.
Coronado Global Resources Inc. Form 10-K December 31,
The
U.S.
QPs
prepared
the
estimates
of
coal
resources
and
reserves
using
core
drilling
data
available
from
exploration
activities at
Buchanan conducted
by numerous
entities over
time.
Most of
this information
was obtained
prior to
our acquisition
of the
property,
using varying drilling
and core-logging
techniques, survey methods
and testing procedures.
As a result,
in
verifying the data,
the U.S. QPs
made certain assumptions
about the adequacy
of the processes
performed and comparability
of the data based on their professional experience and familiarity with Buchanan.
Per Section 12.1 of the Buchanan TRS, coal reserves were classified as proven or probable considering “modifying factors,”
including mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors.
Section 22.2 of
the Buchanan TRS includes
a risk assessment of the
key modifying factors that could
potentially impact the operations
and
therefore the estimate of coal reserves and resources.
As summarized
in Section
7.1 in
the Buchanan
TRS, the
U.S. QPs
utilized 4,589
available core,
rotary,
channel samples,
mine
measurements
and
coalbed
methane
wells
on
and
around
the
Buchanan
property.
Points
of
observation
include
exploration drill
holes, degas
holes, and
mine measurements,
which have
been fully
vetted and
processed into
a geologic
model.
The geologic model is based on seam depositional modeling, the interrelationship of
overlying and underlying strata
on seam mineability, seam thickness trends, the impact of seam structure (i.e., faulting), intra-seam characteristics, etc.
The
U.S. QPs completed a geostatistical analysis on drill holes within the reserve boundaries to determine the applicability of the
common United States classification system for
measured and indicated coal resources.
Historically,
the United States has
assumed that coal within 0.4
kilometers of a point of
observation represents a measured resource,
whereas coal between 0.4
kilometers and
1.2 kilometers
from a
point of
observation is
classified as
indicated.
Inferred resources
are commonly
assumed
to be located between 1.2
kilometers and 4.8 kilometers from
a point of observation. The
U.S. QPs performed a geostatistical
analysis of the Buchanan data set using
the Drill Hole Spacing Analysis, or DHSA,
method. DHSA prescribes that measured,
indicated
and
inferred
drill
hole
spacings
be
determined
at
the
10%,
20%,
and
50%
levels
of
relative
error,
respectively.
Comparing the results of
the DHSA to
the historical standards,
it is evident that
the historical standards
are more conservative
than
even
the
most
conservative
DHSA
model
with
regards to
determining
measured
resources.
The
Exponential
model
included in the DHSA
recommends using a radius
of 0.67 kilometers
for measured resources
compared to the historical
value
of
0.4
kilometers.
With
respect
to
indicated
resources
the
DHSA
falls
in
line
closely
with
the
historical
standards.
The
Exponential and Spherical models of the DHSA recommend using a radius of 1.08 kilometers from a point of observation for
indicated resources, while
the Gaussian model included
in the DHSA
recommends a radius
of 1.10 kilometers
from a point
of observation for indicated resources. These values line up closely with the historical radius of 1.2 kilometers. These results
have led
the U.S.
QPs to
report the
data following
the historical
classification standards,
rather than
use the
results of
the
DHSA.
Coal quality is instrumental
in determining the viability
of a coal deposit.
Per Section 8.2 of
the Buchanan TRS,
coal quality
conforms to the American Society
for Testing and Materials, or ASTM, standards. These quality
attributes aided in converting
dry, in-place tons to demonstrated coal reserves (recoverable washed tons).
The reserve and resource criteria are
presented
in
Table
11-1
of
the
Buchanan
TRS,
including
assumptions
related
to
seam
density,
minimum
cut-off
thickness,
and
recoveries.
Regarding production rates as described in
Section 13.2 of the Buchanan TRS,
the mine plan and productivity expectations
reflect historical performance and
efforts have been
made to adjust the
plan to reflect
future conditions.
Mine development
and operation have not been optimized within the Buchanan TRS.
Logan
Coronado’s Logan property is
currently in the production stage.
Logan consists of four
active underground mines (North
Fork
Winifrede,
Lower War
Eagle, Eagle
No. 1
and Muddy
Bridge) and
supporting infrastructure
that produce
High-Volatile
Met
coal using
the room
and pillar
mining method
and one
active surface
mine (Toney
Fork) and
supporting infrastructure
that
produce both Met and thermal coal using the contour and highwall mining methods. The
Logan complex life plan includes 12
proposed mines,
consisting of
nine underground
mines and
three surface
mines. The
property is
located in
Boone, Logan
and Wyoming Counties in southern West Virginia.
The surface facilities are located in Logan County,
West Virginia.
A map
of Logan is shown in Figure 5.
Coronado Global Resources Inc. Form 10-K December 31,
Figure 5.
Coronado Logan Mine Complex Property Location Map.
The Logan mine complex
encompasses the towns of
Lorado and Pardee in
Logan County,
West Virginia, and
Cyclone and
Lacoma in Wyoming County, West
Virginia. The coordinates of the Saunders CPP are latitude 37° 47' 58" and longitude 81°
40'
01"
(Easting
1,806,880’,
Northing
291,517’
-
in
the
WV
State
Plane
South
NAD
grid
system).
The
nearest
major
population centers are
Huntington, West Virginia,
and Charleston, West
Virginia, which are
about 145 kilometers northwest
and 129
kilometers northeast
of the
property,
respectively.
From U.S.
Route 119,
which runs
through Mingo,
Logan and
Boone Counties to the north, a
well-developed network of improved and unimproved
roads provides access to the property,
including
Route
and
Route
10,
which
run
east-west
across
the
property
in
Logan
County
and
Wyoming
County,
respectively.
The Logan surface facilities
are located approximately 21
kilometers northeast of Man,
West Virginia, along a
CSX Corporation, or CSX, rail line,
which serves as the primary means
of transport for produced coal.
CSX transports coal
from Logan
either to
domestic customers
or to
the Kinder
Morgan Pier
IX and
Dominion Terminals
in Norfolk,
Virginia, for
overseas shipment.
Logan has
ready access to
water, electricity
and personnel to
support its operations.
Buffalo Creek
Public Service
District
supplies water
and American
Electric Power
supplies electricity
to the
mine complex.
Mine personnel
generally live
in the
surrounding communities of Logan, Boone, Wyoming and Mingo Counties in West Virginia.
The property mineral
rights are
composed of 13,183
total hectares, 13,114 of
which are leased
from private landholders
under
approximately 15
individual leases,
and 69
hectares are
owned by
Coronado.
Subject to
Coronado exercising
its renewal
rights thereunder, a majority of the leases, covering a majority of the Logan reserves, expire upon exhaustion of the relevant
coal
reserves,
which
is
expected
to
occur
in
2056.
One
lease expires
in
2032;
however,
Coronado
is
projected
to
have
previously exhausted the reserves covered thereby.
Under the
terms of
the leases,
we are
required to
pay royalties
ranging from
3.0% to
9.0% of
revenue from
sales of
coal
produced depending on mining
method. Certain of the
leases also provide for
“wheelage fees” ranging from
0.25% to 1.0%
of revenue from sales of coal mined
and removed from properties other than
the particular leasehold and hauled across the
leasehold premises.
The mining
of Logan
was commenced
in 1945
by Lorado
Mining Company,
or Lorado.
Lorado was
sold to
Buffalo Mining
Company in
1964 and
then to Pittston
Coal Company
in 1971.
Pittston operated
the property
until the
early 1990’s.
After
being idle for a period, the property was then sold to
Addington Resources in 2004.
Imagin Natural Resources acquired the
property in 2007 and sold
it to Cliffs Natural Resources Inc.
(now known as Cleveland-Cliffs Inc.) in 2011,
which in turn sold
the property to Coronado in 2014. Production history
has been approximately 1.6 MMt in 2020, 1.9
MMt in 2021 and 2.1 MMt
in 2022.
Before
Coronado
acquired
Logan,
previous
owners
had
conducted
extensive
exploration
on
the
property.
Coronado
has
continued exploration
at the
property through
a program
of core
drilling to
confirm reserves,
establish additional
resources
and assess the geotechnical viability of mining.
Logan
produces
primarily
High-Vol
Met
coal
(HVA
HCC
and
HVB
HCC),
mined
from
various
seams
of
the
Kanawha
Formation, most of which are situated below
drainage; however, several Met coal seams are situated above drainage.
Logan
also produces thermal coal from upper portions of the Kanawha Formation.
Coronado Global Resources Inc. Form 10-K December 31,
Most of Logan’s Met coal production is
attributable to its four active underground mines, Winifrede, Lower War
Eagle, Eagle
No. 1 and Muddy Bridge, each of which uses the room and
pillar mining method.
The North Fork Winifrede mine utilizes one
continuous miner
section to
extract coal
from the
Upper Winifrede
seam, which
is situated
above drainage
throughout the
property and accessed by drift entry.
The Lower War Eagle mine utilizes two continuous miner
super sections to extract coal
from the Lower War Eagle
seam, which is situated
below drainage throughout the
property and accessed
by slope. The Eagle
No. 1 mine utilizes
three continuous miner super
sections to extract coal
from the No. 2 Gas
seam, which is situated
above
drainage throughout the
property and accessed
by drift entry.
The Muddy Bridge
mine utilizes two
continuous miner super
sections to extract coal from the No. 2
Gas seam, which is situated above drainage
throughout the property and accessed by
drift entry.
A majority of the
sections of the active
underground mines at
Logan are configured as
full super sections, with
two continuous
miners
per
section.
Each
section
also
has
two
or
four
roof bolters,
three
or
six
shuttle
cars
and
two
scoops.
From
the
continuous miner at the production face, the shuttle cars haul extracted coal to
a feeder breaker, which transfers raw coal to
a conveyor belt for transport to a
surface stockpile holding area. A shared overland conveyor
carries raw coal from the Lower
War Eagle mine
to a CPP.
Trucks haul raw coal
from the Eagle No. 1 and
North Fork Winifrede mines to the
CPP and from
the Muddy Bridge mine to
the Logan overland conveyor.
The CPP has a feed
rate capacity of 1,088 raw
tph.
The CPP site
includes raw coal storage, clean coal storage, a loadout connected to a CSX rail line and refuse disposal area.
The Toney
Fork surface mine extracts Met and thermal coal using the area mining method. The current LOM plan for Toney
Fork also contemplates utilizing
contour and highwall mining
methods at various times
during the life of
the mine. The mine
uses a spread of front-end loaders, large tractors/dozers and rock trucks to remove overburden and
expose the coal. We will
deploy
highwall
mining
when
overburden
volumes
exceed
economical
stripping
ratios
associated
with
area
and
contour
mining. Trucks
haul raw
coal from
Toney
Fork to
the CPP
site for
cleaning or
to the
loading site
to be
shipped directly
to
customers.
Our current plans at Logan contemplate 12 proposed mines, consisting of nine underground mines and three surface mines,
including the five mines
currently in operation.
The proposed underground mines
would extract coal using
the room and pillar
mining method, and the proposed surface mines would
extract coal using area, contour or highwall
mining methods, or some
combination thereof.
Generally, the mining equipment and facilities at Logan are in good operating condition.
We focus on the long-term potential
of
the
mine
complex
and
regularly
monitor
developments
in
the
mining
industry
for
technology
improvements
and
new
equipment that could
help us increase
efficiency and lower
our costs. Logan’s
oldest mining equipment
and facilities, including
the CPP and
loadout facility,
began operations in
2008, when the Powellton
No. 1 mine started
production. Since acquiring
the Logan operations, we
have implemented improvements at
the CPP, which have resulted in increased
capacity. From time
to
time,
we
also
update
and
improve
other
equipment
and
facilities
to
maintain
their
usefulness
and
optimize
our
competitiveness. As
of December
31, 2022,
the book
value of
Logan and
its associated
plant and
equipment was
$232.1
million.
We are not aware of any significant encumbrances or
defects in title with respect to the property.
Additionally, we believe we
have obtained all requisite mining and discharge permits to conduct our operations at Logan and expect
to be able to obtain
or renew all required permits in the future. The Logan mine complex holds 24 state permits with associated NPDES permits.
Logan is subject to a federal black lung excise tax of $1.21 per ton for underground mining
and $0.28 per ton for surface and
highwall mining;
however,
this tax
applies only
with respect
to
coal sold
domestically.
Logan is
also subject
to a
federal
reclamation fee
of $0.13
per ton
for underground
mining and
$0.31 per
ton for
surface and
highwall mining.
Additionally,
Logan is subject to
a West Virginia
reclamation tax of $0.308 per
ton and a West
Virginia severance tax of
1.0% to 5.0% of
revenues for all coal produced.
See Item 1. “Business-Regulatory Matters-United States”
for a discussion of the
permitting
conditions applicable to Logan.
Summaries
of
Logan’s
coal
resources
and
reserves
as
of
December
31,
and
are
shown
in
Tables
and
9,
respectively.
Table 8.
Logan - Summary of Coal Resources Exclusive of Reserves at the End of the
Fiscal Year Ended December
31, 2022 and 2021.
(1)
Coal Resources (Dry Tons, In Situ, MMt)
(2)(3)
Quality (Air-Dried Basis)
Measured
Indicated
Measured
+
Indicated
Inferred
Ash
Sulfur
Volatile
Matter
December 31, 2022
24.0%
1.0%
28.0%
December 31, 2021
24.0%
1.0%
28.0%
Coronado Global Resources Inc. Form 10-K December 31,
(1)
Pricing for resources is described in Section 11.3.1 of the Logan TRS.
For Logan resources as of December 31, 2021, based on
assumed long-term average price of $130 per
ton (FOB loadout) for underground-mineable
resources, representing the long-term
average price
forecast for
HVB provided
by Coronado;
surface resources
were assessed
at a
sales price
of $52
per Mt
(FOB
loadout) based on estimated historical
pricing for Coronado’s surface operations.
For Logan resources as of December
31, 2022,
based on assumed long-term average price of $154 per Mt (FOB loadout) for underground-mineable resources, representing the
long-term average price forecast for HVB provided by Coronado; surface resources were assessed at a sales price of $83 per Mt
(FOB loadout) based on estimated historical pricing
for Coronado’s surface operations.
(2)
Exclusive of reserve tons.
Table 1-1 of the Logan TRS provides a summary of Logan
resource tons inclusive of reserve tons
as of
December 31, 2022.
(3)
Reported on a dry basis.
Surface moisture and inherent moisture are excluded.
(4)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
Table 9.
Logan - Summary of
Coal Reserves (Marketable Sales
Basis) at the End
of the Fiscal Year Ended December
31, 2022 and 2021.
(1)
Demonstrated Coal Reserves (Wet
Tons,
Washed or Direct Shipped, MMt)
(2)
Quality (Air-Dried Basis)
Proven
Probable
Total
Ash
Sulfur
Volatile
Matter
December 31, 2022
8.0%
0.9%
36.0%
December 31, 2021
8.0%
0.9%
35.0%
(1)
Pricing data as
provided by Coronado is
described in Section
16.2 of the
Logan TRS.
For Logan reserves
as of December
31,
2021, the
pricing data
assumes respective
HVA,
HVB, specialty
markets and
thermal FOB-mine
prices of
approximately $224,
$123, and $51 per Mt for calendar year 2022; HVA, HVB, and thermal prices decrease to approximately $145, $115, and $51 per
Mt, respectively, through year 2026,
and then increase
to $227, $189, and
$51 per Mt,
respectively, through year 2050 (after
which
sales prices were held constant). For
Logan reserves as of December 31,
2022, the pricing data assumes
respective HVA, HVB
and thermal FOB-mine
prices of approximately
$192, $170, and
$227 per Mt
for calendar
year 2023; HVA, HVB,
and thermal prices
decrease to approximately
$151, $132, and
$83 per Mt,
respectively, through
year 2027, and
then increase to
$271, $237, and
$150 per Mt, respectively, through year 2056.
(2)
Reported on a 4.5% - 6.0% moisture basis.
(3)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
From December 31, 2021 to December 31, 2022, total reserves decreased by approximately 3.9%, from approximately 73.5
MMt to 70.6
MMt.
This net reduction
of 2.9 MMt
of total reserves
was attributable to
a combination of
updates to the
mine
plans along
with one year
of mining
depletion. A
TRS with
respect to
Logan, updating
the TRS
with respect
to Logan
filed
with Coronado’s Annual
Report on Form
10-K for the
year ended December
31, 2021, was
prepared in February
2023 due
to
material
differences
in
the
key
financial
modifying
factors
including
coal
sales
price
assumptions,
operating
costs
and
capital costs from
December 31, 2021,
to December 31,
2022. Coal sales
price assumptions underlying
the reserve estimates
are discussed in Sections
12 and 16 of the
Logan TRS, while operating
costs and capital costs
assumptions underlying the
reserve estimates
are discussed
in Sections
18 and
19 of
the Logan
TRS.
The differences
in the
key financial
modifying
factors
did
not
have
a
material
impact
on
the
reserve
estimates
as
of
December
31,
2022,
as
compared
to
the
reserve
estimates as of
December 31, 2021.
From December 31,
2021, to December
31, 2022, measured
and indicated resources
decreased by approximately 0.7%,
from approximately 82.8 MMt
to 82.2 MMt. This
net reduction of 0.6
MMt of measured
and
mineral resources
was attributable
to one
year of
mining depletion
along with
changes to the
mine plan.
Updated financial
inputs, including coal sales price assumptions and
operating and capital costs used in estimating
the resources exclusive of
reserves, as discussed
in Section 11.3.1
of the Logan
TRS, did not
have a material
impact on the
measured and indicated
resource
estimates
as
of
December
31,
2022,
as
compared
to
the
measured
and
indicated
resource
estimates
as
of
December 31, 2021.
Marshall Miller & Associates, Inc., a third-party firm comprising mining experts,
whom we refer to as the U.S. QPs, prepared
the estimates of
coal resources
and reserves as of
December 31, 2022 summarized
in Tables
8 and 9.
A copy of the
U.S.
QPs’ TRS with respect to Logan, dated as
of February 15, 2023, or the Logan TRS,
is filed as Exhibit 96.3 hereto. The
U.S.
QPs are not affiliated with Coronado.
The
U.S.
QPs
prepared
the
estimates
of
coal
resources
and
reserves
using
core
drilling
data
available
from
exploration
activities at Logan conducted
by numerous entities over
time.
Most of this information
was obtained prior to
our acquisition
of the
property,
using varying drilling
and core-logging
techniques, survey methods
and testing procedures.
As a result,
in
verifying the data,
the U.S. QPs
made certain assumptions
about the adequacy
of the processes
performed and comparability
of
the
data
based
on
their
professional
experience
and
familiarity
with
Logan.
Per
Section
12.1
of
the
Logan
TRS,
coal
reserves were
classified as
proven or
probable considering
“modifying factors,”
including mining,
metallurgical, economic,
marketing, legal, environmental, social
and governmental factors.
Section 22.2 of the
Logan TRS includes a
risk assessment
of
the
key
modifying
factors
that
could
potentially
impact the
operations
and
therefore
the
estimate
of
coal
reserves
and
resources.
Coronado Global Resources Inc. Form 10-K December 31,
As summarized in
Section 7.1 in the
Logan TRS, the U.S.
QPs utilized 1,131 available
core, rotary,
and gas well drilling
on
and around the Logan property.
Points of observation include exploration drill holes,
degas holes, and mine measurements,
which
have
been
fully
vetted
and
processed
into
a
geologic
model.
The
geologic
model
is
based
on
seam
depositional
modeling, the interrelationship
of overlying and underlying
strata on seam mineability,
seam thickness trends,
the impact of
seam structure (i.e., faulting), intra-seam characteristics, etc.
The U.S. QPs completed a geostatistical analysis on
drill holes
within the reserve boundaries to determine the applicability of the common United States classification system for measured
and
indicated
coal
resources.
Historically,
the
United
States
has
assumed
that
coal
within
0.4
kilometers
of
a
point
of
observation
represents
a
measured
resource
whereas
coal
between
0.4
kilometers
and
1.2
kilometers
from
a
point
of
observation is classified as indicated.
Inferred resources are commonly assumed to be located
between 1.2 kilometers and
4.8 kilometers from a point of observation. The U.S. QPs performed a geostatistical analysis of the Logan data set using the
DHSA method. DHSA prescribes measured, indicated, and
inferred drill hole spacings be determined at
the 10%, 20%, and
50% levels of relative error, respectively.
Comparing the results of the DHSA to the historical standards, it is evident that the
historical
standards
are
more
conservative
than
even
the
most
conservative
DHSA
model
with
regards
to
determining
measured
resources. The
Exponential and
Spherical models
recommend using
a
radius of
0.87 kilometers
for measured
resources
compared
to
the
historical
value
of
0.4
kilometers.
With
respect
to
indicated
resources
the
Spherical
and
Exponential models recommend using a radius
1.53 kilometers.
The historical radius of 1.2
kilometers is therefore also more
conservative than the DHSA results for
indicated resources.
These results have led the U.S.
QPs to report the data following
the historical classification standards, rather than use the results of the DHSA.
Coal
quality
is
instrumental
in
determining
the
viability
of
a
coal
deposit.
Per
Section
8.2 of
the
Logan
TRS,
coal
quality
conforms
to
the
ASTM
standards.
These
quality
attributes
aided
in
converting
dry,
in-place
tons
to
demonstrated
coal
reserves
(recoverable
washed
tons).
The
reserve
and
resource
criteria
are
presented
in
Table
11-1
of
the
Logan
TRS,
including
assumptions
related
to
seam
density,
minimum
cutoff
thickness,
and
recoveries.
Pricing
data
as
provided
by
Coronado is described in Section 16.2 of the Logan TRS.
Regarding production
rates as
described in
Section 13.2
of the
Logan TRS,
the projected
underground mines
are set
up
similarly to the four
active underground operations as
of December 31, 2022.
Each mine is scheduled
to operate one to
three
production sections.
A majority of the sections are configured as full super sections with two continuous miners
per section.
Three
surface resource
areas were
modeled.
Mining
operations are
projected to
utilize area,
as well
as contour,
mining
methods.
The three areas
planned for highwall
mining are assumed
to be mined
by a contractor;
therefore, the contractor
costs
included
in
the
financial
model
assume
that
the
contractor
is
responsible
for
staffing
those
operations
along
with
providing necessary equipment
capital. Spoil for
final highwall reclamation is
expected to come
from strategic placement of
spoil on pre-existing benches by haul trucks such that they are within the push distance of the reclamation dozer.
Additional
information regarding mine-specific production factors can be found in Section 13.4 of the Logan TRS.
Mon Valley
The
Mon
Valley
mine
complex
comprises
three
development-stage
mining
properties,
namely,
Pangburn,
Shaner
and
Fallowfield, each consisting of a proposed underground
mine that would produce High-Vol Met coal using the room and pillar
mining method.
The preliminary design for the properties also includes plans for surface facilities and a preparation plant
for
each mine.
The properties reside
in Allegheny, Washington and Westmoreland Counties in
southwestern Pennsylvania.
The
proposed
facilities
include
a
barge
loading
dock
and
CSX
rail
loadout
on
the
Monongahela
River
in
Allegheny
County,
Pennsylvania, which would ship
clean coal from all three
mines to end customers.
A map of Mon Valley
is shown in Figure
6.
Figure 6.
Coronado Mon Valley Mine Complex Property Location Map.
Coronado Global Resources Inc. Form 10-K December 31,
Mon
Valley
is
located
approximately
22.5
kilometers
southeast
of
Pittsburgh,
Pennsylvania,
near
the
communities
of
Bentleyville,
Lockview,
Monongahela,
Elizabeth,
Sutersville
and
Irwin,
Pennsylvania.
The
coordinates
of
the
proposed
infrastructure are latitude 40°
15' 24" and longitude
79° 53' 50"
(Easting 1,398,821’, Northing 343,480’
- in the
PA State Plane
South NAD 27
grid system). From
U.S. Interstate
70 and Pennsylvania
Route 51, which
traverse the
Fallowfield and Pangburn
areas, respectively, a well-developed network of improved and
unimproved roads allows general access
to the property.
The
Monongahela and
Youghiogheny
Rivers also
run through
the property.
The primary
means of
transport for
produced coal
would be by barge on the Monongahela River/Ohio River
system.
Additionally, a CSX rail line located along the banks of the
Monongahela River would provide another option for the shipment of coal.
Mon Valley has sources of water, power,
and supplies readily available for use.
Personnel in the area have historically been
sourced from the
surrounding communities in
Allegheny,
Washington, and
Westmoreland Counties, and
have proven to
be
adequate in numbers to
operate the mines.
As mining is
common in the surrounding
areas, the workforce
is generally familiar
with mining practices, and many are
experienced miners.
Water is expected to be sourced locally from
a nearby public water
sources
or
rivers.
Electricity
is
anticipated
to
be
sourced
from
West
Penn
Power.
The
service
industry
in
the
areas
surrounding the proposed mine complex has historically provided supplies, equipment repairs and fabrication, etc.
The property mineral rights are composed of 41,615
total hectares, of which 1,339 are leased from
private landholders under
two leases, and
40,276 hectares are
owned by Coronado.
Subject to
Coronado’s exercising its
renewal rights thereunder,
both of the leases expire upon exhaustion of the relevant coal reserves, which is expected to occur in 2100.
A predecessor of CONSOL
Energy previously controlled the
properties.
We acquired the properties
from CONSOL Energy
in March 2016 in connection with the acquisition of the Buchanan property.
Before we acquired Mon
Valley,
CONSOL Energy had conducted
extensive exploration of Mon
Valley.
We have continued
an exploration program focused on defining reserves and assessing the geotechnical viability of mining.
Mon Valley
is capable
of producing
primarily a
High-Vol
Met coal
from the
Upper Freeport
seam of
the Pennsylvania-age
Allegheny Formation.
The seam
is situated
below drainage
throughout the
properties and
would be
accessed with
slopes
and shafts.
The seam thickness in the projected mining areas averages 1.95 meters.
Under our current
mine development plans,
production would begin
at the Pangburn
mine in 2032,
followed by the
Shaner
mine in 2038
and, finally,
the Fallowfield mine
in 2057.
The proposed Mon
Valley
underground mines would
use the room
and pillar
mining method
with limited
pillaring as
to cause
no subsidence.
Each mine
would have
three continuous
miner
sections, with two continuous miners, two roof bolters,
four shuttle cars and two scoops per section.
The shuttle cars would
haul extracted coal
from the production
face to a
feeder breaker-conveyor system,
which would carry
raw coal to
a surface
stockpile and CPP.
The CPPs and surface facilities would have large raw
and clean coal storage areas to facilitate efficient
loading of clean coal into
barges or rail cars for
transport.
We have not yet
completed detailed designs of the
infrastructure
or surface facilities for the proposed Shaner and Fallowfield mines.
As of December 31, 2022, the book value of Mon Valley was $17.4 million.
We
are not
aware
of
any significant
encumbrances or
defects
in
title
with
respect to
the properties.
However,
we will
be
required
to obtain
alternate zoning
approval
from the
local township.
Further,
we will
be required
to submit
formal permit
applications to state or federal regulatory agencies.
Although we have commenced the work to
obtain the necessary permits
and
zoning
variances,
we
are
aware
that
the
period
of
time
necessary
to
obtain
final
authorizations,
for
purposes
of
commencing the development, construction and ultimate production at the proposed mine site, may be significant, and there
can be
no assurance
that we
can obtain
the necessary
zoning and
permits. See
Item 1.
“Business-Regulatory Matters-
United States” for a discussion of the permitting conditions applicable to Mon Valley.
Coal
mined
from
the
Mon
Valley
mine
complex
would
be
subject
to
a
federal
black
lung
excise
tax
of
$1.21
per
ton
for
underground mining and a federal reclamation tax of $0.13 per ton for underground mining.
However, the federal black lung
excise tax will only apply with respect to coal sold domestically.
Mon Valley contains no resources exclusive of reserve tons as of December 31, 2022 and 2021. Table 1-1 of the Mon Valley
TRS provides a summary of Mon Valley resource tons inclusive of reserve tons as of December 31, 2022.
A summary of Mon Valley’s coal reserves as of December 31, 2022 and 2021 is shown in Table
10.
Table
10.
Mon Valley
- Summary
of Coal
Reserves (Marketable
Sales Basis)
at the
End of
the Fiscal
Year
Ended
December 31, 2022 and 2021.
(1)
Demonstrated Coal Reserves (Wet
Tons, Washed
or Direct Shipped, MMt)
(2)
Quality (Air-Dried Basis)
Proven
Probable
Total
Ash
Sulfur
Volatile
Matter
December 31, 2022
8.0%
1.2%
35.0%
December 31, 2021
8.0%
1.2%
35.0%
Coronado Global Resources Inc. Form 10-K December 31,
(1)
Pricing data
as provided
by Coronado
is described
in Section
16.2 of
the Mon
Valley TRS.
For Mon
Valley reserves as
of December
31,
2021,
the
pricing
data
assumes
HVB
domestic
and
export
FOB-mine
prices
of
approximately
$137
and
$120
per
Mt,
respectively,
for
calendar
year
2027;
HVB
domestic
and
export
prices
increase
to
approximately
$221
and
$193
per
Mt,
respectively, through year 2050, and
then increased by 1% annual inflation thereafter.
For Mon Valley reserves as
of December
31,
2022,
the
pricing
data
assumes
HVB
domestic
and
export
FOB-mine
prices
of
approximately
$130
and
$114
per
Mt,
respectively,
for
calendar
year
2028;
HVB
domestic
and
export
prices
increase
to
approximately
$204
and
$178
per
Mt,
respectively, through year 2050, and then increased by 2% annual inflation
thereafter.
(2)
Reported on a 6.0% moisture basis.
(3)
Some numerical figures in the
above table have been subject
to rounding adjustments. Accordingly,
numerical figures shown as
totals may not equal the sum of the figures that
precede them.
Total
reserves did not change from December 31, 2021, to December 31, 2022. A TRS with respect to Mon Valley,
updating
the TRS
with respect
to Mon
Valley
filed with
Coronado’s Annual
Report on
Form 10-K
for the
year ended
December 31,
2021, was prepared
in February 2023
due to material
differences in
the key financial
modifying factors including
coal sales
price
assumptions,
operating
costs
and
capital
costs
from
December
31,
2021,
to
December
31,
2022.
Coal
sales
price
assumptions
are
discussed
in
Sections
and
of
the
Mon
Valley
TRS,
while
operating
costs
and
capital
costs
are
discussed in Sections 18 and 19 of the Mon Valley TRS.
Marshall
Miller
& Associates,
Inc.,
a
third-party
firm comprising
mining,
whom we
refer to
as
the U.S.
QPs, prepared
the
estimates of coal reserves summarized in Tables 10.
A copy of the U.S. QPs’ TRS
with respect to Mon Valley (Pennsylvania
Upper Freeport
Holdings), dated as
of February 15,
2023, or the
Mon Valley
TRS, is filed
as Exhibit
96.4 hereto. The
U.S.
QPs are not affiliated with Coronado.
The
U.S.
QPs
prepared
the
estimates
of
coal
resources
and
reserves
using
core
drilling
data
available
from
exploration
activities
at
Mon
Valley
conducted
by
numerous
entities
over
time.
Most
of
this
information
was
obtained
prior
to
our
acquisition of the Property, using varying drilling and core-logging techniques, survey methods and testing procedures.
As a
result, in
verifying the
data, the
U.S. QPs
made certain
assumptions about
the adequacy
of the
processes performed
and
comparability of the data based on their professional experience and familiarity with Mon Valley.
Per Section 12.1 of the Mon
Valley TRS, coal reserves were classified as proven or
probable considering “modifying factors,”
including mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors.
Section 22.2 of
the Mon Valley TRS includes a risk assessment of the key modifying factors that could potentially
impact the operations and
therefore the estimate of coal reserves and resources.
As summarized in Section
7.1 in the
Mon Valley TRS, the U.S.
QPs utilized approximately
750 available core and
rotary holes
on
and
around
the
Mon
Valley
properties.
Points
of
observation
include
exploration
drill
holes,
degas
holes,
and
mine
measurements, which have
been fully vetted
and processed into
a geologic model.
The geologic model
is based on
seam
depositional modeling,
the interrelationship
of overlying
and underlying
strata on
seam mineability,
seam thickness
trends,
the impact of seam structure (i.e. faulting), intra-seam characteristics, etc.
The U.S. QPs completed a geostatistical analysis
on drill holes within the
reserve boundaries to determine the applicability of
the common United States classification system
for measured and indicated coal
resources.
Historically, the United
States has assumed that coal
within 0.4 kilometers of a
point of observation represents a measured resource whereas coal between 0.4 kilometer and 1.2 kilometers from a point of
observation is classified as indicated.
Inferred resources are commonly assumed to be located
between 1.2 kilometers and
4.8 kilometers
from a
point of
observation. The
U.S. QPs
performed a
geostatistical analysis
of the
Pennsylvania data
set
using the
DHSA method.
DHSA prescribes
measured, indicated,
and inferred
drill hole
spacings be
determined at
the 10-
percent, 20-percent, and 50-percent levels of relative error, respectively.
Comparing the results of the DHSA to the historical
standards, it is evident
that the historical standards
are more conservative than
even the most
conservative DHSA model with
regards
to
determining
measured
resources.
The
Gaussian
and
Spherical
models
recommend
using
a
radius
of
0.72
kilometers for
measured resources
compared to the
historical value of
0.4 kilometers.
With respect
to indicated
resources
the
DHSA
falls
in
line
closely
with
the
historical
standards.
The
Exponential
model
recommends
using
a
radius
1.43
kilometers, while
the Spherical
and Gaussian
models recommend
a radius
of 1.42
kilometers, respectively.
These values
line up closely
with the historical
radius of 1.2
kilometers.
These results have
led the U.S.
QPs to report
the data following
the historical classification standards, rather than use the results of the DHSA.
Coal quality is instrumental in determining the viability of
a coal deposit. Per Section 8.2 of the Mon
Valley TRS, coal quality
conforms to the
ASTM standards.
These quality
attributes aided
in converting dry, in-place
tons to
demonstrated coal reserves
(recoverable washed tons). The reserve
and resource criteria are presented
in Table
11-1 of the
Mon Valley
TRS, including
assumptions related
to seam
density,
minimum cutoff
thickness, and
recoveries. Pricing
data as
provided by
Coronado is
described in Section 16.2 of the Mon Valley TRS.
Regarding production
rates as
described in
Section 13.2
of the
Mon Valley
TRS, the
Mon Valley
mine complex
is not
yet
active, with
three distinct
mines and
CPPs planned.
The mine
plan and
productivity expectations
reflect historical
performance
from other
similar mines
with similar
conditions and
efforts have
been made
to adjust
the plan
to reflect
future conditions.
Mine development and
operation have not been
optimized within the Mon
Valley
TRS.
Additional mine-specific factors can
be found in Section 13.4 of the Mon Valley TRS.
Coronado Global Resources Inc. Form 10-K December 31,
Greenbrier (Non-Material Property)
The Greenbrier property has been idled
since April 1, 2020. During the
fourth quarter of 2020, the
Company committed to a
plan
to
sell
Greenbrier
on
the basis
that
it
does
not
form
part
of
the
Company’s
core
business
strategy.
The
Greenbrier
property is not
considered material to
Coronado’s business or
financial conditions. Resources
exclusive of reserves
are based
on assumed long-term average price of $154
per Mt (FOB loadout) for all resources,
representing the Company’s long-term
average
price
forecast
for
Greenbrier.
The
pricing
data
assumes
respective
Mid-Vol/Low-Vol
and
thermal/PCI
FOB-mine
prices of
approximately $152 and
$80 per Mt
for calendar year
2028.
Mid-Vol/Low-Vol
and thermal/PCI prices
increase to
approximately $206 and
$109 per Mt,
respectively, through
year 2043.
The Greenbrier operations
are projected to
be fully
depleted in
2043. Marketable
reserve tons
are reported
on a
moist basis,
including a
combination of
surface and
inherent
moisture.
The combination of surface and inherent moisture is modeled at 6.0%.
Russell County (Non-Material Property)
The Russell County property is not considered material
to Coronado’s business or financial conditions. In addition, pursuant
to the current mine plan,
the property will only
start generating cash flows when
it commences production in 2040.
Resources
exclusive
of
reserves
are
based
on
assumed
long-term
average
price
of
$143
per
Mt
(FOB
loadout),
representing
the
Company’s
long-term average
price
forecast for
Russell County.
The pricing
data assumes
HVA
FOB-mine prices
with a
weighted LOM
average of
approximately $228
per Mt.
Marketable reserve
tons are
reported on
a moist
basis, including
a
combination of surface and inherent moisture.
The combination of surface and inherent moisture is modeled at 6.0%.
Internal Controls
Our
staff
of
geologists
and
engineers
worked
with
the
qualified
persons
throughout
the
mineral
resource
and
reserve
estimation process and
provided data from
our own exploration
and operating activities
at the properties.
We have
internal
control procedures, including
quality assurance/quality
control procedures and
internal verification of
input data and
geological
modelling, subject to multi-level review,
to help ensure the validity of the data.
These procedures include, but are not limited
to:
•
Oversight and approval of each annual statement by responsible senior officers;
•
Independent, external review of new and materially changed estimates at regular intervals;
•
Annual reconciliation with internal planning
by our staff of geologists and
engineers to validate coal reserve
and coal
resource estimates for operating mines, including the following procedures:
•
Assessments
of
drilling,
sampling
and
quality
assurance/quality
control
data,
resource
modelling,
resource estimation, classification, and reporting;
•
Assessment
and
benchmarking
of
production
assumptions,
mining
rate
and
production
schedules
against historical production data;
•
Assessments of capital and operating costs against other comparable projects for reasonableness;
•
Continual identification and evaluation
of material technical
issues likely to impact
the five-year plan and
the future performance of producing properties;
•
An examination of historical information and results in respect of the technical aspects of
the properties by our staff
of geologists and engineers, including a review of the following key elements:
•
Geology mapping, reports and models, including geotechnical and hydrology aspects;
•
Coal resource and coal reserve estimates;
•
Mining operations and proposed growth options;
•
Coal preparation facilities;
•
Coal handling and transport;
•
Environmental matters and approvals;
•
Land management, including leases and other pertinent agreements;
•
Veracity of existing information supporting five-year plans and business plans;
•
Identification of key project drivers; and
Coronado Global Resources Inc. Form 10-K December 31,
•
Risks and opportunities.
The pricing information used
for preliminary resource valuation
and to estimate our
proven and probable coal
reserves was
based on
prices under
our existing
contracts and
price forecasts.
Below is
a description
of some
of the
factors that
could
affect price forecasts
for Met
and thermal
coal products
on a
mine-by-mine and
product-by-product basis.
Differences between
the assumptions and analyses included
in the price forecasts
and realized factors could cause
actual pricing to differ from
the
forecasts.
Metallurgical.
Several
factors
can
influence
Met
coal
supply
and
demand
and
pricing.
Demand
is
impacted
by
economic
conditions and demand for steel
and is also impacted by competing
technologies used to make steel, some
of which do not
use coal as a
manufacturing input. Competition
from other types
of coal is
also a key price
consideration and can be
impacted
by coal quality and characteristics, delivered
energy cost (including transportation costs), customer service
and support and
reliability of supply.
Seaborne Met
coal import
demand can
be significantly
impacted by
the availability
of local
coal production,
particularly in
leading Met coal
import countries such
as China and
India, among others,
as well as
country-specific policies
restricting or
promoting
domestic supply.
The competitiveness
of seaborne
Met coal
supply
from
leading Met
coal
exporting countries,
such as Australia, the United States, Russia, Canada and Mongolia, among others, is also an important price consideration.
In
addition
to
the
factors
noted
above,
the
prices
which
may
be
obtained
at
each
individual
mine
or
future
mine
can
be
impacted by factors such as (i) the
mine’s location, which impacts the total delivered
energy costs to its customers, (ii)
quality
characteristics, particularly
if they
are unique
relative to
competing mines,
(iii) assumed
transportation costs
and (iv)
other
mine costs that are contractually passed on to customers in certain commercial relationships.
Thermal.
Several factors
can influence
thermal coal
supply and
demand and
pricing. Demand
is sensitive
to total
electric
power generation volumes, which are determined in part by the impact of weather on heating and cooling demand, inter-fuel
competition in the electric power generation mix, changes in capacity (additions and retirements), inter-basin or inter-country
coal
competition,
coal
stockpiles
and
policy
and
regulations.
Supply
considerations
impacting
pricing
include
reserve
positions, mining methods, strip ratios, production costs
and capacity and the cost of new
supply (new mine developments or
extensions at existing mines).
The cost information that the QPs used for preliminary resource valuation and to estimate our proven and probable reserves
were
generally
internal
projected
future
costs
based
on
historical
costs
and
expected
future
trends.
The
estimated
costs
normally include
mining, processing,
transportation, royalty,
tax and
other mining-related
costs. Our
estimated mining
and
processing costs reflect projected changes in prices of
consumable commodities (mainly diesel fuel, natural gas, explosives
and steel), labor costs, geological
and mining conditions, targeted
product qualities and other
mining-related costs. Estimates
for other sales-related
costs (mainly transportation,
royalty and tax)
are based on
contractual prices
or fixed rates.
Specific
factors that may impact the cost at our various operations include:
•
Geological settings.
The geological
characteristics of
each mine
are among
the most
important factors
that determine
the mining cost. Our geology department conducts
the exploration program and provides geological models for
the
life-of-mine process. Coal seam depth, thickness, dipping angle, partings and quality constrain the available mining
methods and
size of
operations. Shallow
coal is
typically mined
by surface
mining methods
by which
the primary
cost is overburden removal.
Deep coal is typically mined
by underground mining methods where
the primary costs
include coal extraction, conveyance and roof control.
•
Scale of operations
and the equipment
sizes.
For surface mines,
our dragline systems
generally have a
lower unit
cost
than
truck-and-shovel
systems
for
overburden
removal.
The
longwall
operations
generally
are
more
cost
effective than bord-and-pillar operations for underground mines.
•
Commodity
prices.
For surface
mines, the
costs of
diesel fuel
and explosives
are major
components
of the
total
mining cost.
For underground
mines, the
steel used
for roof
bolts represents
a significant
cost. Commodity
price
forecasts are used to project those costs in the financial models we use to establish our reserves.
•
Target
product
quality.
By
targeting
a
premium
quality,
product,
our
mining
and
processing
processes
may
experience more coal
losses. By lowering product
quality,
the coal losses
can be minimized
and therefore a
lower
cost per
Mt can
be achieved.
In our
mine plans,
the product
qualities are
estimated to
correspond to
existing contracts
and forecasted market demands.
•
Transportation
costs.
We
have
entered
into
arrangements
with
third
parties
to
gain
access
to
transportation
infrastructure and
services where required,
including rail carriers
and port owners.
Where coal is
exported or sold
other than at the mine gate,
the costs associated with these
arrangements represent a significant portion of
both the
total cost
of supplying
coal to
customers and
of our
production costs.
As a
result, the
cost of
transportation is
not
only a key factor in our cost base but also in the purchasing decision of customers.
Our transportation costs vary by
region. See Item 1. “Business-Transportation”
for more information regarding transportation arrangements for
our
operations.
Coronado Global Resources Inc. Form 10-K December 31,
•
Royalty costs.
As conditions to certain of the Tenements, Curragh is subject to royalties payable to the Queensland
government
as
described
in
Item
1.
“Business-Regulatory
Matters-Australia-Mineral
Resources
Act
(Qld)”).
These
royalties
are
in
addition
to
the
Stanwell
rebate,
as
described
in
Item
1.
“Business-Customers-
Australia
Sales
and
Marketing-Stanwell.”
Royalty
costs
at
our
U.S.
Operations
are
based
upon
contractual
agreements for the coal leased from private owners and vary
from property to property and by the type of
mine (i.e.,
surface or underground). The
royalty rates under leases
at our U.S. Operations
range between 3% -
9% of revenues
from coal
sales. Under
some of
the leases,
we are
required to
pay minimum
royalties, regardless
of
production,
and/or
“wheelage
fees”
(i.e., fees
payable
on
coal
mined
and
removed
from
properties
other
than
the
particular
leasehold and hauled across the leasehold premises).
•
Black lung, severance and reclamation taxes.
Our U.S. Operations are subject to a federal black lung excise tax on
coal sold domestically.
•
Exchange rates.
Costs related
to our
Australian Operations
are predominantly
denominated in
A$, while
the coal
that our Australian Operations export is sold in
US$. As a result, A$-US$ exchange rates
impact the U.S. dollar cost
of our Australian Operations’ production.
For
further
discussion
of
comprehensive
risk
inherent
in
the
estimation,
see

---

ITEM 1A. RISK FACTORS
Item
1A.
“Risk
Factors-Operational
and
Technology
Risks-We rely on
estimates of our
recoverable resources and
reserves, which are
complex due to
geological
characteristics of the properties and the number of assumptions made.”
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 3.
LEGAL PROCEEDINGS.
We are
involved in
various
legal proceedings
occurring
in the
ordinary course
of business.
It is
the opinion
of
management, after consultation
with legal counsel,
that these matters
will not materially
affect our consolidated
financial position, results of operations or cash flows.
The Company is subject to a wide
variety of laws and regulations within the legal jurisdiction in
which it operates.
See “Part I, Item 1. Business-Regulatory Matters”
for additional information. The Company believes that
it is in
substantial compliance with federal, state and local laws
and regulations.
Coronado Global Resources Inc. Form 10-K December 31,
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 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 Annual
Report on Form
10-K. The disclosures reflect the
United States mining operations only, as these requirements do
not apply to our
mines operated outside the United States.
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY,
RELATED
STOCKHOLDER MATTERS
AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our CDIs, each
representing one-tenth
of one share
of our common
stock, have
been listed on
the ASX under
the
trading
symbol
“CRN”
since
October 23,
2018.
Prior
to
such
time,
there
was
no
public
market
for
our
securities. There is no principal market in the United States
for our CDIs or shares of our common stock.
Holders
As of December 31, 2022, we had 167,645,373
shares of our common stock issued
and outstanding with 7,513
holders of record.
The holders included CHESS
Depositary Nominees Pty Limited,
which held 90,337,270 shares
of our common stock in the form of
CDIs on behalf of the CDI holders; there were 7,512 registered owners
of our
CDIs on December 31, 2022.
Series A Preferred Share
On September
20, 2018,
we issued
the Series
A Preferred
Share to
Coronado
Group LLC,
at par
value.
The
offer, sale, and issuance of the Series A Share were deemed to be exempt from registration under
the Securities
Act in reliance on Section
4(a)(2) of the Securities Act as
transactions by an issuer not involving
a public offering.
The recipient of the Series A Share acquired the Series A Share for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate
legends were affixed to the Series A Share.
Dividends
The
payment
of
dividends
is
at
the
discretion
of
the
Board
of
Directors.
The
decision
as
to
whether
or
not
a
dividend will be
paid will
be subject to
a number of
considerations including
the general
business environment,
operating
results,
cash
flows,
future
capital
requirements,
regulatory
and
contractual
restrictions,
as
well
as
applicable
covenants
under
the
indenture
governing
our
senior
secured
notes
and
covenants
under
the
ABL
Facility and any other factors the Board of Directors may
consider relevant.
Our objective in setting our dividend policy is to deliver
stockholder returns while maintaining flexibility to pursue
our strategic
initiatives within
a prudent
capital structure.
Our dividend
policy is
to distribute
between 60%
and
100%
of
available
free
cash.
Available
free
cash
is
defined
as
net
cash
from
operating
activities
less
capital
expenditure, acquisition expenditure,
amounts reserved for
capital expenditure and
acquisition expenditure and
amounts required for
debt servicing. In
circumstances where there is
surplus available free cash,
at the discretion
of
our
Board
of
Directors
and
in
light
of
business
and
market
conditions,
we
may
consider
the
potential
for
additional
stockholder
returns
through
special
dividends
and
share
buy-backs
as
part
of
its
broader
capital
management strategy.
Summary Description of the Company’s
Non-Stockholder Approved Equity Compensation
Plans
The Company does not have any non-stockholder approved
equity compensation plans.
Recent Sales of Unregistered Securities
Other than as previously
disclosed in a Quarterly
Report on Form 10-Q
or in a Current
Report on Form 8-K,
we
did not issue
any shares of
our common stock
in a transaction
that was
not registered under
the Securities Act
during the year ended December 31, 2022.
Purchases of Equity Securities by the Issuer and
Affiliated Purchases
We had no repurchases of equity securities for the
three months ended December 31, 2022.
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 6.
[Reserved]
Coronado Global Resources Inc. Form 10-K December
31, 2022
ITEM 7.
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 Consolidated Financial Statements and the related notes to those
statements included elsewhere in this Annual Report on Form
10-K.
Overview
For the year ended December 31,
2022, we produced 16.0
MMt and sold 16.4 MMt of
coal. Met coal and thermal
coal sales
represented
77.2%
and 22.8%,
respectively,
of our
total volume
of coal
sold and
95.3% and
4.7%,
respectively, of total
coal revenues.
During the year
ended December 31,
2022, seaborne index
prices reached record
highs globally,
driven by the
continued impact
of the
Russian invasion
of Ukraine,
which removed
Russian Met
coal from
key markets,
Met
coal crossover trades
into thermal market
due to
elevated demand for
thermal coal and
supply constraints caused
by wet weather and logistical issues.
Coronado has
continued to
take advantage
of its
unique geographical
diversification as
a Met
coal supplier
of
scale to meet the requirements of steel customers across the globe. Our U.S. Operations have taken advantage
of current unique market fundamentals created
by the trade restrictions on Russian coal
by switching coal sales
from
China
to
Europe
providing
higher
returns
for
our
products.
In
addition
to
geographical
diversification,
Coronado is well
positioned to take
advantage of price
arbitrage between the
Thermal and Met
coal markets to
maximize price realizations.
Our results
of operations
for the
year ended
December 31,
2022 benefited
from higher
averaged realized
Met
price per Mt sold,
partially offset by (1) significant unprecedented
wet weather events impacting production at
our
Australian
Operations,
(2)
inflationary
pressure,
including
the
higher
cost
of
fuel
and
labor
costs,
(3)
adverse
geological
conditions
and
weather
events
at
our
U.S.
Operations
resulting
in
lower
production
and
higher
equipment
maintenance
costs,
(4)
additional
fleets
mobilized
at
our
Australian
Operations
to
improve
coal
recovery and (5) higher sales related costs (Stanwell rebate,
royalties and freight costs).
Coal revenues of $3.5
billion
for the year ended December 31, 2022, increased by 67.3% compared to the same
period in 2021, was largely driven by higher
market price of coal resulting in increased
average realized Met coal
pricing of $265.8 per Mt sold,
$127.8 per Mt sold higher than 2021. Sales
volumes were lower for the year ended
December
31,
2022,
compared
to
primarily
due
to
lower
production
caused
by
significant
wet
weather
events at our Australian Operations and adverse geological
conditions at our U.S. Operations.
Operating costs for the year
ended December 31, 2022,
were $680.5 million, or
41.6%, higher compared to
the
corresponding
period
in
driven
by
inflationary
pressures
on
labor
and
supply
costs,
adverse
geological
conditions
in
certain
mines
of
our
U.S.
Operations,
additional
contractor
fleets
deployed
at
our
Australian
Operations to accelerate
overburden removal and
increase coal availability, higher maintenance
costs and higher
sales related costs, resulting in mining costs of $88.4 per Mt sold for the year ended December 31, 2022, 34.5%
higher than 2021.
Dividends
During the year ended December 31, 2022, Coronado
paid total dividends of $700.2 million to stockholders
and
CDI holders on
the ASX, net
of $1.4 million
foreign exchange gain on
payment of dividends
to certain CDI
holders
that elected to be paid in Australian dollars.
Liquidity
As
of
December
31,
2022,
the
Company’s
net
cash
position
was
$92.1
million,
consisting
of
cash
(excluding
restricted cash) of $334.4 million and $242.3 million aggregate principal amount of Notes outstanding. Coronado
had available
liquidity of
$434.4 million
as of
December 31,
2022, comprising
cash (excluding
restricted cash)
and undrawn available borrowings $100.0 million under our ABL facility.
Notes redemption
During the year ended December 31, 2022, we redeemed $72.7 million
of the Notes,
$37.7 million of which were
in relation to offers made in connection with dividends
paid during the period.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Safety
For
our
Australian
Operations,
the
twelve-month
rolling
average
Total
Reportable
Injury
Frequency
Rate
at
December 31, 2022
was 3.92 compared
to 3.07
at the end
of December
31, 2021. At
our U.S. Operations,
the
twelve-month rolling average Total
Reportable Incident Rate, at December 31, 2022 was 2.42 compared to 2.51
at the
end of
December 31, 2021.
Reportable rates for
our Australian Operations
and U.S.
Operations were below
the relevant industry benchmarks.
The safety of our workforce is
our number one priority and we
remain focused on the safety and
wellbeing of all
employees and contracting parties.
Segment Reporting
In accordance with
Accounting Standards Codification,
or ASC, 280,
Segment Reporting, we
have adopted the
following reporting
segments: Australia and
the United
States. In
addition, “Other and
Corporate” is
not a
reporting
segment but is disclosed for the purposes of reconciliation
to our Consolidated Financial Statements.
Results of Operations
How We Evaluate Our Operations
We
evaluate
our
operations
based
on
the
volume
of
coal
we
can
safely
produce
and
sell
in
compliance
with
regulatory
standards,
and
the
prices
we
receive
for
our
coal.
Our
sales
volume
and
sales
prices
are
largely
dependent upon
the terms
of our
coal sales
contracts, for
which prices
generally are
set based
on daily
index
averages, on a quarterly basis or on annual fixed price
contracts.
Our management
uses a
variety of
financial and
operating metrics
to analyze
our performance.
These metrics
are significant factors
in assessing our
operating results
and profitability.
These financial
and operating metrics
include: (i) safety and environmental metrics; (ii) Adjusted EBITDA; (iii) total sales volumes and average realized
price
per
Mt
sold,
which
we
define
as
total
coal
revenues
divided
by
total
sales
volume;
(iv)
Met
coal
sales
volumes and average realized Met price per
Mt sold, which we define as Met coal
revenues divided by Met coal
sales volume; (v)
average segment mining
costs per Mt sold,
which we define
as mining costs
divided by sales
volumes (excluding
non-produced coal)
for the
respective segment;
and (vi)
average segment
operating costs
per Mt sold, which we define as segment operating costs
divided by sales volumes for the respective segment.
Coal revenues are shown on our Consolidated Statements of Operations
and Comprehensive Income exclusive
of other
revenues. Generally,
export sale
contracts for
our Australian
Operations require
us to
bear the
cost of
freight
from
our
mines
to
the
applicable
outbound
shipping
port,
while
freight
costs
from
the
port
to
the
end
destination are
typically borne by
the customer. Sales to
the export market
from our U.S.
Operations are generally
recognized when the 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 the
cost of coal revenues to allow for consistency and comparability
in evaluating our operating performance.
Non-GAAP Financial Measures; Other Measures
The following discussion of
our results includes
references to and analysis
of Adjusted EBITDA and
mining costs,
which
are
financial
measures
not
recognized
in
accordance
with
U.S.
GAAP.
Non-GAAP
financial
measures,
including Adjusted EBITDA, are used by investors to
measure our operating performance.
Adjusted EBITDA, a non-GAAP measure, is defined as earnings before interest, tax, depreciation, depletion and
amortization
and
other
foreign
exchange
losses.
Adjusted
EBITDA
is
also
adjusted
for
certain
discrete
non-
recurring items that we exclude in
analyzing each of our segments’
operating performance. Adjusted EBITDA
is
not intended to
serve as an
alternative to U.S. GAAP
measures of performance
and may not
be comparable to
similarly titled measures presented by
other companies. A reconciliation
of Adjusted EBITDA to its
most directly
comparable measure under U.S. GAAP is included below.
Segment
Adjusted
EBITDA
is
defined
as
Adjusted
EBITDA
by
operating
and
reporting
segment,
adjusted
for
certain
transactions,
eliminations
or
adjustments
that
our
CODM
does
not
consider
for
making
decisions
to
allocate resources among segments or assessing segment performance.
Segment Adjusted EBITDA is used as
a
supplemental
financial
measure
by
management
and
by
external
users
of
our
Consolidated
Financial
Statements such
as investors,
industry analysts
and lenders
to assess
the operating
performance of
the business.
Mining costs,
a non-GAAP
measure, are
based on
the 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 the mine.
Mining costs exclude these cost
Coronado Global Resources Inc. Form 10-K December
31, 2022
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 Consolidated
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.
Year Ended December 31,
2022 Compared to Year
Ended December 31, 2021
Summary
The financial and operational highlights for the year ended December
31, 2022:
•
Net income
increased by
$582.3 million,
from a
net income
of $189.4
million for
the year
ended December
31, 2021,
to a
net income
of $771.7
million for
the year
ended December
31, 2022.
The increase
was
driven by higher revenues, partially offset by higher
operating costs and higher income tax expense.
•
Supply concerns
in key
Met coal markets
driven by wet
weather,
logistic issues,
the ongoing
impact of
the Russia and Ukraine
war on global coal
supply chain and Met
coal crossover trades into
the thermal
market caused considerable
volatility in coal pricing,
resulting in average
realized Met price
per Mt sold
of $265.8 for the year ended December
31, 2022, 92.6% higher
compared to $138.0 per Mt sold for
the
year ended December 31, 2021.
•
Total sales volume was 16.4 MMt for the
year ended December 31, 2022,
or 1.5 MMt lower
than the year
ended December
31, 2021.
The lower
sales volumes
were primarily
driven by
significant wet
weather
events
at
our
Australian
Operations
and
adverse
geological
and
weather
events
at
one
of
our
mine
complexes at our U.S. Operations.
•
Adjusted EBITDA for the year
ended December 31, 2022, totaled
$1,215.6 million, an increase of
$729.5
million, from Adjusted EBITDA of $486.1 million for
the year ended December 31, 2021, driven by
higher
coal revenues partially offset by higher operating
costs.
•
Cash
provided
by
operating
activities
was
$926.6 million
for
the
year
ended
December
31,
2022,
an
increase of $484.6 million
compared to $442.0 million for the year ended
December 31, 2021.
•
As of December
31, 2022 the
Company had total
available liquidity of
$434.4 million, consisting
of $334.4
million of cash (excluding restricted cash) and $100.0 million
of availability under the ABL Facility.
Coronado Global Resources Inc. Form 10-K December
31, 2022
For Year Ended December 31,
(US$ in thousands)
Change
%
Revenues:
Coal revenues
3,527,626
2,108,331
1,419,295
67.3%
Other revenues
43,916
40,140
3,776
9.4%
Total
revenues
3,571,542
2,148,471
1,423,071
66.2%
Costs and expenses:
Cost of coal revenues (exclusive of items shown
separately below)
1,515,585
1,195,250
320,335
26.8%
Depreciation, depletion and amortization
167,046
177,875
(10,829)
(6.1%)
Freight expenses
249,081
241,862
7,219
3.0%
Stanwell rebate
165,995
55,403
110,592
199.6%
Other royalties
385,065
142,751
242,314
169.7%
Selling, general, and administrative expenses
42,499
30,666
11,833
38.6%
Restructuring costs
-
2,300
(2,300)
(100.0%)
Total
costs and expenses
2,525,271
1,846,107
679,164
36.8%
Other income (expenses):
Interest expense, net
(67,632)
(68,062)
(0.6%)
Loss on debt extinguishment
(5,336)
(8,477)
3,141
(37.1%)
(Increase) decrease in provision for discounting and
credit losses
(3,821)
8,042
(11,863)
(147.5%)
Gain on disposal of asset
-
14,845
(14,845)
(100.0%)
Other, net
33,795
(6,187)
39,982
(646.2%)
Total
other expense, net
(42,994)
(59,839)
16,845
(28.2%)
Income before tax
1,003,277
242,525
760,752
313.7%
Income tax expense
(231,574)
(53,102)
(178,472)
336.1%
Net income
771,703
189,423
582,280
307.4%
Less: Net loss attributable to noncontrolling interest
-
(2)
(100.0%)
Net income attributable to Coronado Global
Resources Inc.
771,703
189,425
582,278
307.4%
Coal revenues
Coal revenues
were $3,527.6
million
for the
year
ended December
31, 2022,
an
increase of
$1,419.3
million,
compared
to
$2,108.3 million
for
the
year
ended
December
31,
2021.
This
increase
was
driven
by
favorable
market conditions and higher coal
price indices, which resulted in
a higher average realized Met
price per Mt sold
for the year ended December
31, 2022 of $265.8, compared
to $138.0 per Mt sold
for the same period in
2021.
This increase was
partially offset by 1.8
MMt lower Met
coal sales volume
compared to the
year ended December
31,2021, primarily a result of above average rainfall impacting
production at our Australian Operations.
Cost of coal revenues (exclusive of Items shown
separately below)
Cost of
coal revenues is
comprised 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
include employee-related costs, materials and supplies, contractor services, coal handling and preparation costs
and production taxes.
Total
cost of coal revenues
was $1,515.6 million for
the year ended December
31, 2022, an
increase of $320.3
million, or
26.8%, compared
to $1,195.3
million for
the year
ended December
31, 2021.
Cost of
coal revenues
for our U.S.
Operations increased $171.3 million during the
year ended December 31, 2022,
driven by the impact
of
inflation
on
labor
and
supply
costs,
adverse
geological
conditions
in
certain
mines
of
our
U.S.
Operations
resulting
in
unplanned
maintenance
costs,
and
increased
purchased
coal
transactions
to
meet
certain
sales
commitments.
Cost
of
coal
revenues
for
our
Australian
Operations
for
the
year
ended
December
31,
increased $149.1 million, largely due to additional fleets mobilized
to accelerate overburden removal, inflationary
pressure on fuel pricing and labor costs and increased purchased coal transactions to meet sales commitments.
Higher costs
were partially
offset by
a favorable
average foreign
exchange rate
on translation
of the Australian
Operations for
the year
ended December
31, 2022,
of A$/US$:
0.70 compared
to 0.75
for the
same period
in
2021.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Depreciation, depletion and amortization
Depreciation, depletion and amortization were $167.0 million for
the year ended December 31, 2022,
a decrease
of
$10.8 million,
compared
to
$177.9
million
for
the
year
ended
December
31,
2021.
The
decrease
was
associated with a
favorable average foreign
exchange rate on
translation of the
Australian Operations,
partially
offset by depreciation on equipment brought into
service during the year ended December 31, 2022.
Freight expenses
Freight expenses of $249.1 million for the year
ended December 31, 2022, increased by
$7.2 million, compared
to $241.9
million for
the year
ended December
31, 2021.
Our U.S.
Operations contributed
$15.9 million
to the
increase, due to certain contracts for which we arrange and pay for transportation to port that did not exist to the
same extent in 2022
combined with higher rail freight
rates due the impact of
inflationary pressures in the market,
partially offset by the
benefits of lower
average foreign exchange
rate on translation
of freight cost
from Australian
Operations.
Stanwell rebate
The Stanwell
rebate was
$166.0 million
for the
year ended
December 31,
2022, an
increase of
$110.6 million,
compared to
$55.4 million
for the
year
ended December
31, 2021.
The increase
was largely
driven by
higher
realized
export
reference
coal
pricing
for
the
prior
twelve-month
period
used
to
calculate
the
rebate,
partially
offset by the favorable average foreign exchange
rate on translation of the Australian Operations.
Other royalties
Other
royalties
were
$385.1 million
for
the
year
ended
December
31,
2022,
an
increase
of
$242.3 million,
as
compared to
$142.8 million
for the
year ended
December 31,
2021.
Higher royalties
were a
product of
higher
average
realized
export
pricing
and
the
adverse
impact
of
the
new
Queensland
Government
royalty
regime
applicable from July 1, 2022 to our Australian Operations.
Other, net
Other,
net
was
a
gain
of
$33.8
million
in
the
year
ended
December
31,
2022,
an
increase
of
$40.0
million
compared to
a net
loss of
$6.2 million
for the
year ended
December 31,
2021. The
increase largely
relates to
foreign exchange gains
recognized in the
translation of short-term
inter-entity balances in
certain entities within
the
Group
that
are
denominated
in
currencies
other
than
their
respective
functional
currencies
due
to
the
favorable average foreign exchange rate on translation.
Income tax expense
Income tax
expense of
$231.6 million
for the
year ended
December 31,
2022, increased
by $178.5
million, as
compared to $53.1 million for the year ended December
31, 2021.
The income tax expense
for the year ended
December 31, 2022 resulted in
an annual effective tax rate
of 23.8%,
an increase from 21.9% for the year ended December
31, 2021.
Year Ended December 31,
2021 Compared to Year
Ended December 31, 2020
The Company’s comparison of 2021 results to
2020 results is included in the
Company’s
Annual Report on Form
10-K for the fiscal year ended December 31, 2021
, under Part II Item
7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations”.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Supplemental Segment Financial Data
Year Ended December 31,
2022 Compared to Year
Ended December 31, 2021
Australian Operations
For Year Ended December 31,
(US$ in thousands)
Change
%
Sales Volume (MMt)
10.0
11.3
(1.3)
(12.1)%
Total
revenues ($)
2,116,555
1,315,851
800,704
60.9%
Coal revenues ($)
2,078,518
1,279,736
798,782
62.4%
Average realized price per Mt sold ($/Mt)
208.9
113.1
95.8
84.7%
Met sales volume (MMt)
6.5
8.2
(1.7)
(20.7)%
Met coal revenues ($)
1,968,173
1,171,869
796,304
68.0%
Average realized Met price per Mt sold ($/Mt)
303.1
143.1
160.0
111.8%
Mining costs ($)
864,616
736,782
127,834
17.4%
Mining costs per Mt sold ($/Mt)
89.5
67.6
21.9
32.4%
Operating costs ($)
1,575,786
1,111,248
464,538
41.8%
Operating costs per Mt sold ($/Mt)
158.3
98.2
60.1
61.2%
Segment Adjusted EBITDA ($)
541,208
204,992
336,216
164.0%
Coal
revenues
for
Australian
Operations
for
the
year
ended
December
31,
2022,
were
$2,078.5 million,
an
increase of $798.8 million, or 62.4%, compared
to $1,279.7 million for the year
ended December 31, 2021. This
increase
was
driven
by
higher
average
realized
Met
price
of
$303.1
per
Mt,
an
increase
of
$160.0
per
Mt,
compared to $143.1 per Mt sold during the same period in 2021. The higher realized price during the period was
primarily driven by disruption in supply dynamics caused by the conflict between
Russia and Ukraine, as well as
supply constraints from key Met
coal markets due to unseasonal
wet weather and logistical issues. Sales
volume
of 10.0 MMt was 1.3 MMt lower compared to 11.3
MMt for the year ended December 31, 2021, mainly driven by
significant unprecedented wet
weather events experienced
at the Curragh
mine during 2022
which significantly
reduced mining activities and coal availability.
Operating costs increased by $464.5 million, or 41.8%, for the year ended December 31, 2022, compared to the
year
ended
December
31,
2021.
The
increase
was
driven
by
a
higher
mining
costs,
higher
Stanwell
rebate
(mainly due
to higher
realized coal
pricing) and
greater royalties,
due to higher
coal revenues
and the
adverse
impact of the amended royalty.
Mining costs were $127.8 million, or 17.4%, higher for the year ended December
31, 2022 compared to the same
period in 2021, primarily due
to inflationary pressures and additional
contractor
fleets mobilized
during the
first half
of 2022
at our
Australian Operations,
partially offset
by favorable
average
foreign exchange on
translation of our
Australian Operations. Increased
costs combined with
lower sales
volumes
resulted in higher Mining
and Operating costs per Mt
sold of $89.5 and
$158.3, respectively, an increase of $21.9
and $60.1, respectively,
compared to the same period in 2021.
For the year
ended December 31,
2022, Segment
Adjusted EBITDA was
$541.2 million, an
increase of $336.2
million compared
to Segment
Adjusted EBITDA
of $205.0
million for
the year
ended December
31, 2021.
This
increase was primarily driven by higher coal revenues
partially offset by higher operating costs.
Coronado Global Resources Inc. Form 10-K December
31, 2022
United States
For Year Ended December 31,
(US$ in thousands)
Change
%
Sales Volume (MMt)
6.4
6.4
-
(0.1)%
Total
revenues ($)
1,454,987
832,620
622,367
74.7%
Coal revenues ($)
1,449,108
828,595
620,513
74.9%
Average realized price per Mt sold ($/Mt)
225.2
128.6
96.6
75.1%
Met sales volume (MMt)
6.2
6.3
(0.1)
(1.7)%
Met coal revenues ($)
1,394,880
822,000
572,880
69.7%
Average realized Met price per Mt sold ($/Mt)
226.5
131.2
95.3
72.6%
Mining costs ($)
531,812
392,362
139,450
35.5%
Mining costs per Mt sold ($/Mt)
86.5
62.3
24.2
38.9%
Operating costs ($)
739,940
524,018
215,922
41.2%
Operating costs per Mt sold ($/Mt)
115.0
81.3
33.7
41.5%
Segment Adjusted EBITDA ($)
716,661
312,048
404,613
129.7%
Coal revenues increased by $620.5 million, or
74.9%, to $1,449,1 million for the
year ended December 31, 2022,
as compared
to
$828.6 million
for the
year
ended December
31, 2021.
This increase
was
mainly driven
by
a
higher average
realized
Met price
per Mt
sold for
the
year ended
December 31
,
2022 of
$226.5 compared
to
$131.2 per Mt sold for
the same period in 2021.
Higher average realized Met price benefited
from strong demand
and supply shortage
in the global
seaborne export markets
and high demand
of U.S.-sourced coal
into Europe
due to trade restrictions on Russian coal.
Operating costs
increased by $215.9 million, or 41.2%, to $739.9 million for the year ended December 31, 2022,
compared to
operating costs
of $524.0
million for
the year
ended December
31, 2021
driven by
higher mining
costs, royalties, freight expenses
and increase in purchase
d
coal to meet sales
commitments.
Higher operating
costs were largely driven
by increase in mining
costs of $139.5 million,
or 35.5%. compared to
the same period
in 2021, as
a result
of adverse
geological conditions
causing higher
maintenance costs,
higher subcontractor’s
costs
due to labor shortages and overall inflationary pressures
on labor, materials and supplies.
Segment Adjusted EBITDA of $716.7 million for
the year ended December 31, 2022 increased by
$404.6 million,
or
129.7%, compared to
$312.0 million for
the year ended
December 31,
2021. This increase
was primarily driven
by a higher average realized Met price per Mt sold, partially offset
by higher operating costs.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components
of Corporate and Other Adjusted EBITDA:
For Year Ended December 31,
(US$ in thousands)
Change
%
Selling, general, and administrative expenses
42,499
30,666
11,833
38.6%
Other, net
(254)
(495)
(205.4)%
Total
Corporate and Other Adjusted EBITDA
42,245
30,907
11,338
36.7%
Corporate
and
other
costs
increased
$11.3
million
to
$42.2
million
for
the
year
ended
December
31,
2022,
compared
to
$30.9
million
for
the
year
ended
December
31,
2021.
The
increase
in
selling,
general,
and
administrative
expenses
was
largely
driven
by
inflationary
pressures
on
corporate
and
labor
costs,
corporate
activities resuming to pre-COVID-19 pandemic levels and timing
or certain corporate costs.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Mining and operating costs for the Year Ended December 31, 2022 compared to Year
December 31, 2021
A reconciliation of
segment costs and
expenses, segment operating
costs, and segment
mining costs is
shown
below:
For Year Ended December 31, 2022
(US$ in thousands)
Australia
United States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
1,658,105
823,529
43,637
2,525,271
Less: Selling, general and administrative expense
(24)
-
(42,475)
(42,499)
Less: Depreciation, depletion and amortization
(82,295)
(83,589)
(1,162)
(167,046)
Total operating costs
1,575,786
739,940
-
2,315,726
Less: Other royalties
(330,503)
(54,562)
-
(385,065)
Less: Stanwell rebate
(165,995)
-
-
(165,995)
Less: Freight expenses
(153,068)
(96,013)
-
(249,081)
Less: Other non-mining costs
(61,604)
(57,553)
-
(119,157)
Total mining costs
864,616
531,812
-
1,396,428
Sales Volume excluding non-produced
coal (MMt)
9.7
6.1
-
15.8
Mining cost per Mt sold ($/Mt)
89.5
86.5
-
88.4
For Year Ended December 31, 2021
(US$ in thousands)
Australia
United States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
1,202,807
611,611
31,689
1,846,107
Less: Selling, general and administrative expense
-
-
(30,666)
(30,666)
Less: Restructuring costs
(2,300)
-
-
(2,300)
Less: Depreciation, depletion and amortization
(89,259)
(87,593)
(1,023)
(177,875)
Total operating costs
1,111,248
524,018
-
1,635,266
Less: Other royalties
(117,001)
(25,750)
-
(142,751)
Less: Stanwell rebate
(55,403)
-
-
(55,403)
Less: Freight expenses
(161,703)
(80,159)
-
(241,862)
Less: Other non-mining costs
(40,359)
(25,747)
-
(66,106)
Total mining costs
736,782
392,362
-
1,129,144
Sales Volume excluding non-produced
coal (MMt)
10.9
6.3
-
17.2
Mining cost per Mt sold ($/Mt)
67.6
62.3
-
65.7
Average realized Met price for the Year
Ended December 31, 2022 compared to Year
December 31, 2021
A reconciliation of the Company’s average realized
Met coal revenue is shown below:
For Year Ended December 31,
(US$ in thousands)
Change
%
Met sales volume (MMt)
12.7
14.5
(1.8)
(12.4)%
Met coal revenues ($)
3,363,053
1,993,869
1,369,184
68.7%
Average realized met price per Mt sold ($/Mt)
265.8
138.0
127.8
92.6%
Coronado Global Resources Inc. Form 10-K December
31, 2022
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
For year ended December 31,
(US$ in thousands)
Reconciliation to Adjusted EBITDA:
Net income (loss)
771,703
189,423
(226,537)
Add: Depreciation, depletion and amortization
167,046
177,875
191,189
Add: Interest expense, net
67,632
68,062
50,585
Add: Other foreign exchange (gains) losses
(32,259)
7,049
1,175
Add: Loss on debt extinguishment
5,336
8,477
-
Add: Income tax expense (benefit)
231,574
53,102
(60,016)
Add: Impairment of assets
-
-
78,111
Add: Restructuring costs
-
2,300
-
Add: Losses on idled assets held for sale
2,732
9,994
Add: Gain on disposal of asset held for sale
-
(14,845)
-
Add: Increase (decrease) in provision for discounting
and credit losses
3,821
(8,042)
9,298
Adjusted EBITDA
1,215,624
486,133
53,799
Liquidity and Capital Resources
Overview
Our objective is to maintain a prudent capital structure and to ensure that sufficient liquid assets and funding are
available to meet both anticipated and
unanticipated financial obligations, including unforeseen events that could
have an
adverse impact
on revenues
or costs.
Our principal
sources of
funds are
cash and
cash equivalents,
cash flow from operations and availability under the ABL
Facility.
Our main uses of cash have historically been, and are expected to continue to be, the funding of our operations,
working capital,
capital
expenditure,
debt
service
obligations,
business
or assets
acquisitions
and
payment
of
dividends. Based on our outlook for the next
twelve months and beyond,
which is subject to continually changing
demand from our customers, volatility in
coal prices, ongoing interruptions and uncertainties surrounding China’s
import restrictions,
such as
trade barriers
imposed by
China on
Australian sourced
coal and
the uncertainty
of
impacts from the Russia and Ukraine war
on the global supply chain, we believe
expected cash generated from
operations together with available borrowing facilities
and other strategic and financial
initiatives, will be sufficient
to meet
the needs
of our
existing operations,
capital expenditure,
service our
debt obligations
and, if
declared,
payment of dividends.
Our ability to generate
sufficient cash depends
on our future performance
which may be subject
to a number of
factors
beyond
our
control,
including
general
economic,
financial
and
competitive
conditions
and
other
risks
described in Part I, Item 1A. “Risk Factors” of this Annual
Report on Form 10-K.
Liquidity as of December 31, 2022 and December 31,
2021 was as follows:
December 31,
(US$ in thousands)
Cash, excluding restricted cash
334,378
437,679
Availability under ABL Facility
(1)
100,000
100,000
Total
434,378
537,679
(1)
The ABL Facility contains a
springing fixed charge coverage
ratio of not less than 1.00
to 1.00, which ratio is tested
if availability under the
ABL Facility is less than $17.5 million for five consecutive
business days or less than $15.0 million on
any business day.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Our total indebtedness as of December 31, 2022 and
December 31, 2021 consisted of the following:
(US$ in thousands)
Interest bearing liabilities, excluding current installments
242,326
315,000
Current installments of other financial liabilities and finance
lease obligations
4,585
8,634
Other financial liabilities and finance lease obligations, excluding current
installments
8,336
14,031
Total
255,247
337,665
Liquidity
As
of
December
31,
2022,
available
liquidity
was
$434.4
million,
comprising
of
cash
and
cash
equivalents
(excluding restricted cash) of $334.4 million and $100.0
million of available borrowings under our ABL Facility.
Coronado continues to actively
review plans for reducing
operating, corporate and capital
expenditures to ensure
sufficient available liquidity during periods of uncertainty
and volatility.
Cash
Cash is held in a
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
is invested
in short-
term interest-bearing deposit accounts or used to repay
interest bearing liabilities.
Senior Secured Notes
As of December 31, 2022, the outstanding principal amount of our 10.750%
Senior Secured Notes due 2026, or
the Notes,
was $242.3
million. Interest on
the Notes is
payable semi-annually in
arrears on
May 15 and
November
15 of each year. The Notes
mature on May 15, 2026 and are senior secured obligations
of the Company.
The Notes are guaranteed
on a senior secured
basis by the Company
and its wholly-owned
subsidiaries (other
than
the
Issuer)
(subject
to
certain
exceptions
and
permitted
liens)
and
secured
by
(i)
a
first-priority
lien
on
substantially all of the Company’s assets and the assets of the other
Guarantors (other than accounts receivable
and other rights to payment,
inventory,
intercompany indebtedness, certain
general intangibles and commercial
tort claims, commodities accounts, deposit accounts, securities accounts and other related assets and proceeds
and
products
of
each
of
the
foregoing,
or,
collectively,
the
ABL
Collateral),
or
the
Notes
Collateral,
and
(ii)
a
second-priority lien on the ABL Collateral, which is
junior to a first-priority lien, for the
benefit of the lenders under
the ABL Facility.
The terms
of the
Notes are
governed
by the
indenture.
The indenture
contains
customary
covenants
for high
yield bonds, including,
but not limited
to, limitations on
investments, liens, indebtedness,
asset sales, transactions
with affiliates and restricted payments, including payment
of dividends on capital stock.
The Company may
redeem some or
all of the
Notes at the
redemption prices and
on the terms
specified in the
Indenture. In addition, the Company may,
from time to time, seek to retire or purchase outstanding
debt through
open-market purchases,
privately negotiated
transactions or
otherwise. Such
repurchases, if
any,
will be
upon
such terms and at such prices as the Company may determine, and will depend on prevailing market conditions,
liquidity requirements, contractual restrictions and other
factors.
As of December 31, 2022, we were in compliance with all applicable
covenants under the Indenture.
Partial Redemption of Notes
On November
23, 2022,
the Company
exercised its
optional redemption
rights and
redeemed $35.0
million, or
10.0%, of the
original aggregate principal amount
of its Notes
at a redemption
price equal to
103% of the
principal
amount of the Notes, plus accrued and unpaid interest on
the Notes to, but not including, the date
of redemption.
For
the
year
ended
December
31,
2022,
in
connection
with
the
dividends
paid
in
the
period,
we
offered
to
purchase the
Notes pursuant
to the
terms of
the Indenture.
In connection
with the
above offers,
we purchased
an
aggregate
principal
amount,
for
accepted
offers,
of
$37.7
million
at
a
price
equal
to
104%
of
the
principal
amount of the Notes, plus accrued and unpaid interest on
the Notes to, but not including, the date
of redemption.
Coronado Global Resources Inc. Form 10-K December
31, 2022
ABL Facility
The ABL
Facility,
dated May
12, 2021,
is for
an aggregate
multi-currency
lender commitment
of up
to $100.0
million, including a $30.0 million
sublimit for the issuance
of letters of credit and
$5.0 million for swingline
loans,
at any time outstanding, subject to borrowing base availability.
The ABL Facility matures on May 12, 2024.
Borrowings under the ABL Facility bear interest at a rate
equal to a BBSY rate plus an applicable margin.
As
at
December
31,
2022,
no
amounts
were
drawn
and
no
letters
of
credit
were
outstanding
under
the
ABL
Facility.
As of December 31, 2022, we were in compliance with all applicable
covenants under the ABL Facility.
Bank Guarantees and Surety Bonds
We
are
required
to
provide
financial
assurances
and
securities
to
satisfy
contractual
and
other
requirements
generated in the
normal course of
business. Some of
these assurances are provided
to comply with
state or other
government agencies’ statutes and regulations.
For the U.S. Operations, in
order to provide the required
financial assurance, we generally use
surety bonds for
post-mining reclamation.
We can
also use
bank letters
of credit
to collateralize
certain other
obligations. As
of
December 31, 2022, we
had outstanding surety bonds of
$34.9 million and letters of
credit of $16.8 million issued
from our available bank guarantees, to meet contractual obligations under workers compensation insurance and
to secure
various
obligations
and commitments.
Future
regulatory
changes relating
to these
obligations
could
result in increased obligations, additional costs or additional
collateral requirements.
For
the
Australian
Operations,
we
had
bank
guarantees
outstanding
of
$27.3
million
at
December
31,
2022,
primarily in respect of certain rail and port arrangements
of the Company.
As of
December 31,
2022, we
had outstanding
bank guarantees
of $44.1
million to
secure various
obligations
and
commitments.
The
Company
provided
cash,
in
the
form
of
deposits,
as
collateral
against
these
bank
guarantees.
Dividend
During the year ended December 31, 2022, we paid $700.2
million in dividends to stockholders or CDI holders
on the ASX,
net of $1.4 million foreign exchange gain on payment
of dividends to certain CDI holders that
elected to be paid in Australian dollars.
On February 21,
2023, our Board
of Directors declared
a bi-annual fully
franked fixed ordinary
dividend of $8.4
million, or 0.5 cents per CDI. The Company
is not required to make an offer
to purchase Notes in relation to this
dividend due to the available unaccepted portion of the
offer to purchase Notes made in connection with
special
dividends declared on October 30, 2022. The dividend will have a record date of March 15, 2023, Australia time,
and be payable on April 5, 2023, Australia time. The
ordinary dividend will be funded from available cash.
Capital Requirements
Our main uses of cash have historically been the funding
of our operations, working capital, capital expenditure,
the payment of
interest and dividends.
We intend
to use cash
to fund debt
service payments
on our Notes,
the
ABL Facility and our
other indebtedness, to fund operating
activities, working capital, capital expenditures, partial
redemption of the Notes, business or assets acquisitions
and, if declared, payment of dividends.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Historical Cash Flows
The
following
table
summarizes
our
cash
flows
for
the
year
ended
December
31,
2022,
and
as
reported in the accompanying Consolidated Financial Statements:
Cash Flow
For Year Ended December 31,
(US$ in thousands)
Net cash provided by (used in) operating activities
926,643
442,014
(3,000)
Net cash used in investing activities
(208,343)
(134,332)
(114,128)
Net cash (used in) provided by financing activities
(784,251)
80,836
137,526
Net change in cash and cash equivalents
(65,951)
388,518
20,398
Effect of exchange rate changes on cash and restricted
cash
(37,351)
3,677
(1,215)
Cash and restricted cash at beginning of period
437,931
45,736
26,553
Cash and restricted cash at end of period
334,629
437,931
45,736
Operating activities
Net cash provided
by operating activities
was $926.6 million
for the year ended
December 31, 2022,
compared
to a
cash provided
by in
operating activities
of $442.0 million for
the year
ended December
31, 2021.
The increase
was primarily driven by higher coal revenues due to an increase in the
average realized Met coal pricing partially
offset by higher operating
costs and unfavorable working capital
movement due to higher trade
receivables and
inventories at December 31, 2022.
Net cash provided
by operating activities
was $442.0 million
for the year ended
December 31, 2021,
compared
to a cash used in
operating activities of $3.0 million for the year
ended December 31, 2020. The increase in cash
provided by
operating
activities
was driven
by favorable
movement
in working
capital and
an increase
in coal
revenues during the year partially offset by higher
operating costs.
Investing activities
Net cash
used in
investing activities
was
$208.3 million
for the
year
ended December
31, 2022,
compared
to
$134.3 million
for the
year ended
December 31,
2021. Cash
spent on
capital expenditures
for the
year ended
December 31,
was $199.7
million, of
which $79.
million is
related to
the Australian
Operations,
$119.7
million is related
to the U.S.
Operations and the
remaining $0.6 million
for other and corporate.
During the year
ended December
31, 2022,
a net
of $6.5
million of
additional deposits
were provided
as collateral
for our
U.S.
workers
compensation
obligations
and
$2.4
million
of
the
additional
security
deposit
were
provided
by
our
Australian Operations to satisfy contractual requirements in
the normal course of business.
Net cash
used in
investing
activities was
$134.3 million
for the
year
ended December
31, 2021,
compared
to
$114.1
million for
the year
ended December
31, 2020.
Cash spent
on capital
expenditures for
the year
ended
December 31, 2021 was
$89.7 million, of
which $37.9 million is
related to the Australian
Operations, $50.1 million
related to
the
U.S.
Operations
and the
remaining
$1.6
million for
other
and corporate.
During
the
year
ended
December 31, 2021, a net of $73.7 million of additional deposits were provided as collateral for bank guarantees
and our
U.S. workers
compensation obligations.
Partially offsetting
the cash
used, was
net proceeds
of $27.5
million generated during the year ended December 31, 2021
from the sale of Amonate.
Financing activities
Net cash
used in
financing
activities was
$784.3 million
for the
year ended
December
31, 2022,
compared
to
cash provided by financing activities of
$80.8 million for the year ended December
31, 2021. The net cash used
in financing activities for
the year ended December
31, 2022, included dividend
payments of $700.2
million, net
of a
$1.4 million
foreign exchange
gain on
settlement
of dividends
for shareholders
who elected
to be
paid
in
Australian dollars
,
$72.7 million
of Notes
redeemed
and
$2.6 million
of premium
paid on
redemption,
and the
remainder related to repayment of other financial liabilities.
Net cash provided by financing activities was $80.8
million for the year ended December 31, 2021, compared
to
$137.5 million
for the year
ended December
31, 2021.
Included in the
net cash
provided by
financing activities
for
the
year
ended
December
31,
2021,
were
net
proceeds
from
borrowings
of
$396.3
million,
repayment
of
borrowings of $413.2 million and net proceeds from the stock
issuance of $97.7 million.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Contractual Obligations
The following is a summary of our contractual obligations
at December 31, 2022:
Payments Due By Year
Less than
-
-
More than
(US$ in thousands)
Total
1 Year
Years
Years
5 Years
Long
-
term debt obligations
(1)
12,964
4,543
8,421
-
-
Senior secured notes
(2)
242,326
-
-
242,326
-
Mineral lease commitments
(3)
52,742
5,493
10,623
10,228
26,398
Operating and finance lease commitments
27,099
9,102
11,644
6,353
-
Unconditional purchase obligations
(4)
28,601
28,601
-
-
-
Take
-
or
-
pay contracts
(5)
932,701
96,734
203,116
206,564
426,287
Total
contractual cash obligations
1,296,433
144,473
233,804
465,471
452,685
(1)
Represents financial obligation relating to amounts outstanding
from financing equipment purchases,
insurance premiums and financial liabilities for a sale and lease
back type arrangement.
(2)
Represents financial obligation outstanding under the
Senior Secured Notes. Refer to 17 “Interest
Bearing Liabilities”
in the accompanying audited Consolidated Financial Statements
for additional
discussion.
(3)
Represents future minimum royalties and payments under mineral
leases. Refer to 27 “Commitments”
in the accompanying audited Consolidated Financial Statements
for additional discussion.
(4)
Represents firm purchase commitments for capital expenditures
(based on order to suppliers for capital
purchases) for 2023.
(5)
Represents various short-
and long-term take-or-pay arrangements in Australia associated
with rail and
port commitments for the delivery of coal.
This
table
does
not
include
our
estimated
Asset
Retirement
Obligations,
or
ARO.
As
discussed
in
“-Critical
Accounting
Policies
and
Estimates-Carrying
Value
of
Asset
Retirement
Obligations”
below,
the
current
and
non-current
carrying
amount
of
our
ARO
involves
several
estimates,
including
the
amount
and
timing
of
the
payments required to satisfy
these obligations. The timing
of payments is based on numerous
factors, including
projected
mine
closure
dates.
Based
on
our
assumptions,
the
carrying
amount
of
our
ARO
as
determined
in
accordance with U.S. GAAP was $138.5 million as of
December 31, 2022.
Critical Accounting Policies and Estimates
The preparation
of
our Consolidated
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
Consolidated
Financial
Statements
and
the
reported
amounts
of
revenue
and
expenses
during
the
reporting
period.
Listed
below
are
the
accounting
estimates
that
we
believe
are
critical
to
our
Consolidated
Financial
Statements due to the degree of
uncertainty regarding the estimates or assumptions involved and
the magnitude
of the asset, liability, revenue or expense being reported. All of these accounting
estimates and assumptions, as
well
as
the
resulting
impact
to
our
Consolidated
Financial
Statements,
have
been
discussed
with
the
Audit,
Governance and Risk Committee, or Audit Committee,
of our Board of Directors.
See Note 2.
“Summary of Significant
Accounting Policies”
to the accompanying
audited Consolidated Financial
Statements for a summary of our significant accounting
policies.
Fair Value of Non-Financial Assets
Our
non-financial
assets
valuations
are
primarily
comprised
of
our
determination
of
the
estimated
fair
value
allocation of net tangible
and intangible assets, our
annual assessment of
the recoverability of
our goodwill and
our evaluation of the recoverability of our other long-lived
assets upon certain triggering events.
Long-Lived Assets
We review
the carrying
value of
intangible
assets with
definite lives
and
other long-lived
assets to
be used
in
operations annually
or whenever
events or
changes in
circumstances
indicate that
the carrying
amount of
the
assets or asset groups might not be recoverable.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Factors that would necessitate
an impairment assessment
include a significant adverse
change in the extent
or
manner in which an asset is
used, a significant adverse change in
legal factors or the business climate
that could
affect
the
value
of
the
asset
group
or
a significant
decline
in
the
observable
market
value
of
an
asset
group,
among others. If such facts
indicate a potential impairment,
the recoverability of the asset
group is assessed by
determining whether the carrying value
of the asset group exceeds
the sum of the projected
undiscounted cash
flows expected to
result from
the use and
eventual disposition
of the asset
group over the
remaining economic
life of the asset
group. If the projected undiscounted cash
flows are less than
the carrying amount, an impairment
is recorded
for the
excess of
the carrying
amount over
the estimated
fair value,
which is
generally determined
using discounted future cash
flows. Any such write
down is included in
impairment expense in our
consolidated
statement of operations.
A high degree of
judgment is required
to estimate the
fair value of
our intangible and
long-lived assets, and
the
conclusions that
we reach
could vary
significantly based
on these
judgments.
We make
various
assumptions,
including assumptions regarding
future cash flows
in our
assessments of
fair value. The
assumptions about future
cash
flows
and
growth
rates
are
based
on
the
current
and
long-term
business
plans
related
to
the
long-lived
assets. Discount
rate assumptions
are based
on an
assessment of
the risk
inherent in
the future
cash flows
of
the long-lived assets.
At
December
31,
2022,
we
determined,
based
on
our
qualitative
assessment,
that
no
impairment
indicators
existed.
Goodwill Impairment
We had
a balance
of goodwill
of $28.0 million
recorded at
December 31,
2022, which
was generated
upon the
acquisition of Buchanan
in 2016. We
perform our annual assessment
of the recoverability of
our goodwill in
the
fourth quarter of each year. We utilize a qualitative assessment for determining whether the quantitative goodwill
impairment analysis is
necessary.
The accounting guidance
permits entities to
first assess qualitative
factors to
determine whether it is more
likely than not that the
fair value of a reporting
unit is less than its carrying
amount
as
a
basis
for
determining
whether
it
is
necessary
to
perform
the
quantitative
goodwill
impairment
test.
In
evaluating goodwill on
a qualitative basis,
we review the
business performance
of the Buchanan
mine complex
(the only reporting
unit with
a goodwill balance)
and evaluate
other relevant
factors as
identified in the
relevant
accounting
guidance
to
determine
whether
it
is
more
likely
than
not
that
an
indicator
of
impairment
exists
at
Buchanan. We consider whether there are any negative macroeconomic conditions, industry specific conditions,
market
changes,
increased
competition,
increased
costs
in
doing
business,
management
challenges,
legal
environments and how these factors might
impact company specific performance in future periods.
As part of the
analysis, we
also consider
fair value
determinations for
certain reporting
units that
have been
made at
various
points throughout
the current
and prior
year for
other purposes
to ensure
there is
no contrary
evidence to
our
analysis. At
December 31,
2022, we
did not
perform a
quantitative impairment
assessment as
we determined,
based on our qualitative assessment, that no impairment
indicators existed.
Assets held for sale
As of December 31, 2022, the assets
and liabilities held for sale represent the fair value
of the Greenbrier mining
asset, which may be realized through a potential sale within the
next 12 months.
The fair value of the Greenbrier mining asset was primarily driven by indicative offers and Level 3 inputs such as
estimates
of
future
cash
flows
which
aligns
to
the
Company’s
best
estimate
of
future
market
and
operating
conditions, including
its current
life of
mine plan.
The life
of mine
plan includes
assumptions in
relation to
coal
price forecasts, projected mine production volumes, operating costs,
capital costs and discount rate.
Carrying Value of Asset Retirement
Obligations
The Company is required to maintain a liability
(and associated asset) for the expected value of future
retirement
obligations on their mines, in line with ASC 410, Asset
Retirement and Environmental Obligations.
Reclamation
of
areas
disturbed
by
mining
operations
must
be
performed
by
us
in
accordance
with
approved
reclamation plans and in compliance with state and federal laws in the states of West Virginia and Virginia
in the
U.S., and Queensland in Australia. For areas disturbed, a significant amount of the reclamation will take place in
the future, when
operations cease. There
were no assets
that were
legally restricted for
purposes of settling
asset
retirement obligations
as of
December 31,
2022. In
addition, state
agencies monitor
compliance with
the mine
plans, including reclamation.
Coronado Global Resources Inc. Form 10-K December
31, 2022
We
record
the
fair
value
of
additions
to
our
asset
retirement
obligations
using
the
present
value
of
projected
future
cash
flows
discounted
using
a
credit-adjusted
risk-free
rate,
with
an
equivalent
amount
recorded
as
a
long-lived asset. An accretion
cost is recorded each
period and the capitalized cost
is depreciated over the
useful
life of the
related asset. As reclamation
work is performed or
liabilities are otherwise settled, the
recorded amount
of the liability is reduced.
A review
of restoration
and
decommissioning
provisions
is carried
out annually
on a
mine-by-mine
basis,
and
adjustments are made to reflect any changes in estimates, if necessary. On an interim basis, we may update the
liability based on significant changes to the life of mine or significant increases in disturbances during the period.
Expected Credit Losses
For trade and related party
receivables carried at amortized
cost, we determine expected
credit losses, or ECL,
on a forward-looking basis. The amount of ECL is updated at each reporting date to reflect changes in credit risk
since the
initial recognition of
the respective
financial instrument. We
recognize the lifetime
ECL. ECL is
estimated
based on our
historic credit loss
experience, adjusted for
factors that are
specific to the
financial asset, general
economic
conditions,
financial
asset
type,
term
and
an
assessment
of
both
the
current
as
well
as
forecast
conditions, including
the expected
timing of
collection, 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.
We consider
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 us.
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.
We write
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 “Decrease (increase) in provision
for discounting
and
credit
losses”.
Subsequent
recoveries
of
amounts
previously
written
off
are credit
against
“Decrease (increase) provision for discounting and
credit losses” in the
consolidated statement of operations and
other comprehensive income.
Recoverable Coal Reserves
There are numerous uncertainties inherent
in estimating quantities and values of
economically recoverable coal
reserves,
including
many
factors
beyond
our
control.
As
a
result,
estimates
of
economically
recoverable
coal
reserves
are
by
their
nature
uncertain.
Information
about
our
reserves
consists
of
estimates
based
on
engineering,
economic
and
geological
data
assembled
and
analyzed
by
our
staff
and
third-party
qualified
persons. Our
reserves are
periodically reviewed
by an
independent third
party consultant.
Some of
the factors
and assumptions which impact economically recoverable reserve
estimates include:
•
geological settings;
•
historical production from the area compared with production from
other producing areas;
•
the assumed effects of regulations and taxes by governmental
agencies
;
•
assumptions governing future prices; and
•
future operating costs.
Each of these factors may in fact vary considerably from the
assumptions used in estimating reserves. For these
reasons,
estimates
of
the
economically
recoverable
quantities
of
coal
attributable
to
a
particular
group
of
properties, and classifications
of these reserves
based on the
risk of recovery
and estimates of
future net cash
flows,
may
vary
substantially.
Actual
production,
revenues
and
expenditures
with
respect
to
our
reserves
will
likely
vary
from
estimates,
and
these
variances
may
be
material.
See
Item 1A.
“Risk
Factors-We
rely
on
estimates of our
recoverable reserves,
which is complex
due to geological
characteristics of the
properties and
the number of assumptions made”
and Item 2. “Properties” for discussions
of the uncertainties in estimating
our
proven and probable coal reserves.
Taxes
We are required to
estimate the amount of
tax payable or
refundable for the
current year and the
deferred income
tax liabilities and assets
for the future tax consequences
of events that have
been reflected in our
Consolidated
Coronado Global Resources Inc. Form 10-K December
31, 2022
Financial Statements
or tax
returns for
each taxing
jurisdiction in
which we
operate. This
process requires
our
management to
make judgments
regarding the
timing and
probability of
the ultimate
tax impact
of the
various
agreements
and
transactions
that
we
enter
into.
Based
on
these
judgments
we
may
record
tax
reserves
or
adjustments
to
valuation
allowances
on
deferred
tax
assets
to
reflect
the
expected
realizability
of
future
tax
benefits. Actual income
taxes could vary
from these estimates
due to
future changes in
income tax
law, significant
changes
in
the
jurisdictions
in
which
we
operate,
our
inability
to
generate
sufficient
future
taxable
income
or
unpredicted results from the final
determination of each year’s
liability by taxing authorities. These
changes could
have a significant impact on our financial position.
Newly Adopted Accounting Standards and Accounting
Standards Not Yet Implemented
See Note 2. “Summary
of Significant Accounting
Policies” to the
accompanying audited
Consolidated Financial
Statements
for
a
discussion
of
newly
adopted
accounting
standards
and
accounting
standards
not
yet
implemented.
Coronado Global Resources Inc. Form 10-K December
31, 2022
ITEM 7A.
QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Our activities
expose us
to
a variety
of financial
risks, such
as commodity
price risk,
interest rate
risk, foreign
currency risk, liquidity risk and credit
risk. The overall risk management objective is
to minimize potential adverse
effects on our financial performance from those risks
which are not coal price related.
We manage
financial risk
through policies
and procedures
approved by
our Board
of Directors.
These specify
the responsibility
of the
Board
of Directors
and
management
with regard
to the
management
of financial
risk.
Financial risks are
managed centrally by
our finance
team under the
direction of the
Group Chief
Financial Officer.
The finance team manages risk exposures primarily through delegated authority limits approved by the Board of
Directors. The finance team regularly monitors our
exposure to these financial risks and reports
to management
and
the
Board
of
Directors
on
a
regular
basis.
Policies
are
reviewed
at
least
annually
and
amended
where
appropriate.
We may use
derivative financial instruments such
as forward fixed
price commodity contracts, interest
rate swaps
and
foreign
exchange
rate
contracts
to
hedge
certain
risk
exposures.
Derivatives
for
speculative
purposes
is
strictly prohibited by the Treasury Risk Management Policy approved by our Board of
Directors. We use different
methods
to
measure
the
extent
to
which
we
are
exposed
to
various
financial
risks.
These
methods
include
sensitivity analysis in
the case of
interest 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.
The
expectation
of
future
prices
for
coal
depends
upon
many
factors
beyond
our
control.
Met
coal
has
been
volatile commodity
over the
past ten
years. Recently,
in the
second quarter
of 2022,
seaborne prices
reached
record levels with both the Australian and U.S. Met coal price indices exceeding $600 per Mt, largely as result of
supply concerns
in key
Met coal
markets and
continued trade
flow disruptions
caused by
geopolitical tensions
following Russian
invasion
of Ukraine.
The demand
and supply
in the
Met coal
industry changes
from time
to
time. There are no assurances that oversupply will not occur, that demand will not decrease or that overcapacity
will not
occur,
which could
cause declines
in the
prices of
coal, which
could have
a material
adverse effect
on
our financial condition and results of operations
Additionally,
access to
international markets
may be
subject to
ongoing interruptions
and trade
barriers due
to
policies and tariffs of individual countries. For example, the imposition of restrictions
by China on Australian coal
into the
Country,
may in
the future
have a
negative impact
on our
profitability.
We may
or may
not be
able to
access alternate
markets for
our coal
should additional
interruptions and
trade barriers
occur in
the future.
An
inability
for
Met
coal
suppliers
to
access
international
markets,
including
China,
would
likely
result
in
an
oversupply of Met coal and may result in a decrease in
prices and or the curtailment of production.
We manage
our commodity
price risk
for our non-trading,
thermal coal
sales through
the use
of long-term
coal
supply agreements in our
U.S. Operations. In Australia, thermal
coal is sold
to Stanwell on a
supply contract. See
Part I, Item 1A. “Risk Factors-Risks related to the Supply Deed with Stanwell may
adversely affect our financial
condition and results of operations.”
Sales commitments in the
Met coal market are typically
not long-term in nature,
and we are therefore subject
to
fluctuations
in
market
pricing.
Certain
coal
sales
in
our
Australian
Operations
are
provisionally
priced
initially.
Provisionally priced sales
are those for
which price
finalization, referenced
to the relevant
index, is outstanding
at the reporting date. The final sales price is
determined within 7 to 90 days after delivery
to the customer.
As of
December 31, 2022,
we had $13.7
million of outstanding
provisionally priced receivables
subject to changes
in
the relevant price index. If prices decreased 10%, these provisionally priced receivables would decrease by $1.4
million.
See Part
I, Item
1A.
“Risk
Factors-Our
profitability depends
upon the
prices
we receive
for our
coal.
Prices for coal are volatile and can fluctuate widely based upon
a number of factors beyond our control.”
Coronado Global Resources Inc. Form 10-K December
31, 2022
Diesel Fuel
We may
be exposed
to price
risk in
relation to
other commodities
from time
to time
arising from
raw materials
used in our operations (such as gas or
diesel). These commodities may be hedged through financial instruments
if the
exposure is
considered material
and where
the exposure
cannot be
mitigated through
fixed price
supply
agreements.
The fuel required for our operations in fiscal year 2023 will be purchased under fixed-price contracts or on
a spot
basis.
Interest Rate Risk
Interest rate risk is the risk that a change in interest rates
on our borrowing facilities will have an adverse impact
on financial performance, investment decisions
and stockholder return. Our
objectives in managing our exposure
to interest rates include
minimizing interest costs
in the long term,
providing a reliable estimate
of interest costs
for
the
annual
work
program
and
budget
and
ensuring
that
changes
in
interest
rates
will
not
have
a
material
impact on our financial performance.
As
of
December
31,
2022,
we
had
$255.2 million
of
fixed-rate
borrowings
and
Notes
and
there
were
no variable-rate borrowings outstanding.
We currently do not hedge against interest rate
fluctuations.
Foreign Exchange Risk
A significant portion of our
sales are denominated in US$.
Foreign exchange risk is
the risk that our earnings
or
cash flows are adversely impacted by movements in exchange
rates of currencies that are not in US$.
Our main exposure
is to the
A$-US$ exchange rate
through our Australian
Operations, which have
predominantly
A$
denominated
costs.
In
2022,
greater
than
60%
of
expenses
incurred
at
our
Australian
Operations
were
denominated in
A$. Approximately
40% of
our Australian
Operations’
purchases were
made with
reference
to
US$, which provides
a natural hedge
against foreign exchange
movements on these
purchases (including fuel,
several port handling charges,
demurrage, purchased coal
and some insurance
premiums). Appreciation of
the
A$ against
US$ will
increase our
Australian Operations’
US$ reported
cost base
and reduce
US$ reported
net
income. For
the portion
of US$
required to
purchase A$
to settle
our Australian
Operations’ operating
costs, a
10%
increase
in
the
A$
to
US$
exchange
rate
would
have
increased
reported
total
costs
and
expenses
by
approximately $99.0 million for the year ended December
31, 2022.
Under normal market conditions, we generally do not consider it necessary to hedge our
exposure to this foreign
exchange risk.
However,
there
may be
specific commercial
circumstances,
such
as the
hedging
of significant
capital
expenditure,
acquisitions,
disposals
and
other
financial
transactions,
where
we
may
deem
foreign
exchange hedging
as appropriate
and
where a
US$ contract
cannot
be negotiated
directly with
suppliers
and
other third parties.
For our Australian
Operations, we
translate all
monetary assets
and liabilities
at the period-end
exchange rate,
all 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
against exchange rate fluctuations.
Credit Risk
Credit risk is the risk of
sustaining a financial loss
as a result of a counterparty
not meeting its obligations under
a financial instrument or customer contract.
We are exposed
to credit risk
when we have financial
derivatives, cash deposits,
lines of credit, letters
of credit
or bank guarantees
in place with
financial institutions. To mitigate against credit risk
from financial counterparties,
we have minimum credit rating requirements with financial
institutions where we transact.
Coronado Global Resources Inc. Form 10-K December
31, 2022
We
are
also
exposed
to
counterparty
credit
risk
arising
from
our
operating
activities,
primarily
from
trade
receivables. Customers who wish to trade on
credit terms are subject to credit
verification procedures, including
an assessment of their independent credit rating, financial position, past experience and industry reputation.
We
monitor the financial performance
of counterparties on a routine
basis to ensure credit
thresholds are achieved.
Where required, we will request additional credit
support, such as letters of credit,
to mitigate against credit risk.
Credit
risk
is
monitored
regularly,
and
performance
reports
are
provided
to
our
management
and
Board
of
Directors.
As of
December
31,
2022,
we had
financial
assets
of
$838.8
million,
comprising
of cash
and
restricted
cash,
trade receivables and
restricted deposits,
which are exposed
to counterparty
credit risk. These
financial assets
have been assessed under ASC 326, Financial Instruments - Credit Losses, and
a provision for discounting and
credit
losses
of
$5.1
million
was
recorded
as
of
December
31,
2022.
See
item
8.
Financial
Statements
and
Supplementary Data-Note 9. Provision for Discounting and
Credit Losses.
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY
DATA
Page
Number
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
(PCAOB ID: 0
)
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Balance Sheets
(In US$ thousands, except share data)
Assets
Note
December 31,
December 31,
Current assets:
Cash and restricted cash
$
334,629
$
437,931
Trade receivables, net
409,979
271,923
Inventories
158,018
118,922
Other current assets
60,188
47,647
Assets held for sale
26,214
27,023
Total
current assets
989,028
903,446
Non-current assets:
Property, plant and
equipment, net
1,389,548
1,397,363
Right of use asset - operating leases, net
17,385
13,656
Goodwill
28,008
28,008
Intangible assets, net
3,311
3,514
Restricted deposits
89,062
80,981
Deferred income tax assets
-
14,716
Other non-current assets
33,585
19,728
Total
assets
$
2,549,927
$
2,461,412
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
61,780
$
97,514
Accrued expenses and other current liabilities
343,691
270,942
Income tax payable
119,981
25,612
Asset retirement obligations
10,646
9,414
Contract obligations
40,343
39,961
Lease liabilities
7,720
8,452
Other current financial liabilities
4,458
8,508
Liabilities held for sale
12,241
12,113
Total
current liabilities
600,860
472,516
Non-current liabilities:
Asset retirement obligations
127,844
110,863
Contract obligations
94,525
141,188
Deferred consideration liability
243,191
230,492
Interest bearing liabilities
232,953
300,169
Other financial liabilities
8,268
13,822
Lease liabilities
15,573
12,894
Deferred income tax liabilities
95,671
75,750
Other non-current liabilities
27,952
26,216
Total
liabilities
$
1,446,837
$
1,383,910
Common stock $
0.01
par value;
1,000,000,000
shares authorized,
167,645,373
shares issued and outstanding as of December 31, 2022 and
December 31, 2021
1,677
1,677
Series A Preferred stock $
0.01
par value;
100,000,000
shares authorized,
Share issued and outstanding as of December 31, 2022 and
December 31,
-
-
Additional paid-in capital
1,092,282
1,089,547
Accumulated other comprehensive losses
(91,423)
(44,228)
Retained earnings
100,554
30,506
Total
stockholders’ equity
1,103,090
1,077,502
Total
liabilities and stockholders’ equity
$
2,549,927
$
2,461,412
See accompanying notes to consolidated financial
statements.
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Statements of Operations and Comprehensive
Income
(In US$ thousands, except share data)
Year ended December 31,
Note
Revenues:
Coal revenues
$
3,527,626
$
2,010,996
$
1,289,010
Coal revenues from related parties
-
97,335
134,589
Other revenues
43,916
40,140
38,663
Total
revenues
3,571,542
2,148,471
1,462,262
Costs and expenses:
Cost of coal revenues (exclusive of items shown
separately below)
1,515,585
1,195,250
1,014,879
Depreciation, depletion and amortization
167,046
177,875
191,189
Freight expenses
249,081
241,862
185,863
Stanwell rebate
165,995
55,403
103,039
Other royalties
385,065
142,751
84,891
Selling, general, and administrative expenses
42,499
30,666
30,352
Restructuring costs
-
2,300
-
Total
costs and expenses
2,525,271
1,846,107
1,610,213
Other income (expenses):
Interest expense, net
(67,632)
(68,062)
(50,585)
Loss on debt extinguishment
(5,336)
(8,477)
-
Impairment of assets
-
-
(78,111)
(Increase) decrease in provision for discounting and
credit losses
(3,821)
8,042
(9,298)
Gain on disposal of asset held for sale
-
14,845
-
Other, net
33,795
(6,187)
(608)
Total
other expense, net
(42,994)
(59,839)
(138,602)
Income (loss) before tax
1,003,277
242,525
(286,553)
Income tax (expense) benefit
(231,574)
(53,102)
60,016
Net income (loss)
771,703
189,423
(226,537)
Less: Net loss attributable to noncontrolling
interest
-
(2)
(69)
Net income (loss) attributable to Coronado Global
Resources Inc.
$
771,703
$
189,425
$
(226,468)
Other comprehensive income, net of income taxes:
Foreign currency translation adjustment
(47,195)
(17,451)
21,488
Net gain (loss) on cash flow hedges, net of tax
-
2,029
(5,088)
Total
other comprehensive (loss) income
(47,195)
(15,422)
16,400
Total
comprehensive income (loss)
724,508
174,001
(210,137)
Less: Net loss attributable to noncontrolling
interest
-
(2)
(69)
Total
comprehensive income (loss) attributable to
Coronado Global Resources Inc.
$
724,508
$
174,003
$
(210,068)
Earnings (loss) per share of common stock
Basic
4.60
1.21
(2.04)
Diluted
4.60
1.21
(2.04)
See accompanying notes to consolidated financial
statements.
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Statements of Stockholders’ Equity
(In US$ thousands, except share data)
Common stock
Preferred stock
Additional
paid in
capital
Accumulated
other
comprehensive
losses
Retained
earnings
(Accumulated
losses)
Noncontrolling
interest
Total
stockholders'
equity
Shares
Amount
Series A
Amount
Balance December 31, 2019
96,651,692
$
$
-
$
820,247
$
(45,206)
$
91,712
$
$
867,941
Net loss
-
-
-
-
-
-
(226,468)
(69)
(226,537)
Other comprehensive income (net of
$
2,108
deferred income tax)
-
-
-
-
-
16,400
-
-
16,400
Total comprehensive income (loss)
-
-
-
-
-
16,400
(226,468)
(69)
(210,137)
Issuance of common stock, net
41,736,198
-
-
171,168
-
-
-
171,585
Stock-based compensation for equity
classified awards
-
-
-
-
1,637
-
-
-
1,637
Dividends
-
-
-
-
-
-
(24,163)
-
(24,163)
Balance December 31, 2020
138,387,890
$
1,384
$
-
$
993,052
$
(28,806)
$
(158,919)
$
$
806,863
Net income (loss)
-
-
-
-
-
-
189,425
(2)
189,423
Other comprehensive income (net of
$
deferred income tax)
-
-
-
-
-
(15,422)
-
-
(15,422)
Total comprehensive (loss) income
-
-
-
-
-
(15,422)
189,425
(2)
174,001
Issuance of common stock, net
29,257,483
-
-
97,448
-
-
-
97,741
Stock-based compensation for equity
classified awards
-
-
-
-
(250)
-
-
-
(250)
Acquisition of non-controlling interest
-
-
-
-
(703)
-
-
(150)
(853)
Balance December 31, 2021
167,645,373
$
1,677
$
-
$
1,089,547
$
(44,228)
$
30,506
$
-
$
1,077,502
Net income
-
-
-
-
-
-
771,703
-
771,703
Other comprehensive loss
-
-
-
-
-
(47,195)
-
-
(47,195)
Total comprehensive (loss) income
-
-
-
-
-
(47,195)
771,703
-
724,508
Stock-based compensation for equity
classified awards
-
-
-
-
2,735
-
-
-
2,735
Dividends
-
-
-
-
-
-
(701,655)
-
(701,655)
Balance December 31, 2022
167,645,373
$
1,677
$
-
$
1,092,282
$
(91,423)
$
100,554
$
-
$
1,103,090
See accompanying notes to consolidated financial
statements
Coronado Global Resources Inc. Form 10-K December
31, 2022
Consolidated Statements of Cash Flows
(In US$ thousands)
Year Ended December 31,
Cash flows from operating activities:
Net income (loss)
$
771,703
$
189,423
$
(226,537)
Adjustments to reconcile net income to cash and
restricted cash provided by
operating activities:
Depreciation, depletion and amortization
165,503
175,814
197,162
Impairment of Assets
-
-
78,111
Amortization of right of use asset - operating leases
6,704
8,899
13,285
Amortization of deferred financing costs
1,933
3,133
5,546
Non-cash interest expense
31,362
29,120
22,410
Amortization of contract obligations
(36,519)
(33,967)
(33,172)
Loss on disposal of property, plant and equipment
Decrease in contingent royalty consideration
-
-
(1,543)
Gain on operating lease derecognition
-
-
(1,184)
Equity-based compensation expense (gain)
2,735
(250)
1,637
Loss on debt extinguishment
5,336
8,477
-
Deferred income taxes
40,423
24,417
(11,247)
Reclamation of asset retirement obligations
(4,543)
(4,273)
(2,859)
Change in estimate of asset retirement obligation
1,543
2,061
(5,973)
Gain on disposal of asset held for sale
-
(14,845)
-
Increase (decrease) in provision for discounting and
credit losses
3,821
(8,042)
9,298
Changes in operating assets and liabilities:
Accounts receivable - including related party receivables,
net
(156,818)
(33,545)
(38,025)
Inventories
(41,243)
(9,637)
53,652
Other current assets
(12,365)
24,573
(1,921)
Accounts payable
(27,664)
24,166
6,833
Accrued expenses and other current liabilities
84,041
64,285
(27,829)
Operating lease liabilities
(8,244)
(10,986)
(15,329)
Income tax payable
96,326
-
-
Change in other liabilities
1,754
2,776
(25,446)
Net cash provided by (used in) operating activities
926,643
442,014
(3,000)
Cash flows from investing activities:
Capital expenditures
(199,716)
(89,661)
(117,856)
Proceeds from the disposal of property, plant, and equipment
1,594
-
Proceeds from disposal of assets held for sale
-
27,451
-
Purchase of restricted deposits
(9,761)
(103,997)
(2,302)
Redemption of restricted deposits
30,281
6,030
Net cash used in investing activities
(208,343)
(134,332)
(114,128)
Cash flows from financing activities:
Proceeds from interest bearing liabilities and other
financial liabilities
-
411,524
216,953
Debt issuance costs and other financing costs
-
(15,263)
(2,955)
Principal payments on interest bearing liabilities
and other financial liabilities
(81,310)
(412,046)
(221,414)
Call premiums paid on early redemption of debt
(2,557)
(1,050)
-
Principal payments on finance lease obligations
(140)
(70)
(2,481)
Dividends paid
(700,244)
-
(24,162)
Proceeds from stock issuance, net
-
97,741
171,585
Net cash (used in) provided by financing activities
(784,251)
80,836
137,526
Net (decrease) increase in cash and restricted
cash
(65,951)
388,518
20,398
Effect of exchange rate changes on cash and restricted
cash
(37,351)
3,677
(1,215)
Cash and restricted cash at beginning of period
437,931
45,736
26,553
Cash and restricted cash at end of period
$
334,629
$
437,931
$
45,736
Supplemental disclosure of cash flow information:
Cash payments for interest
$
36,728
$
33,462
$
23,538
Cash paid (refund) for taxes
$
90,888
$
(16,582)
$
1,955
See accompanying notes to consolidated financial
statements
Coronado Global Resources Inc. Form 10-K December
31, 2022
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1.
Description of Business, Basis of Presentation
(a)
Nature of operations
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
United States, or
U.S. For details
of the
Company’s
capital structure, refer to Note 7 “Capital Structure” for
further information.
(b)
Basis of Presentation
The
Consolidated
Financial
Statements
have
been
prepared
in
accordance
with
requirements
of
the
U.S.
Generally Accepted
Accounting
Principles,
or U.S.
GAAP and
are presented
in U.S.
dollars,
unless otherwise
stated.
The Consolidated Financial Statements include the accounts of the Company and its
affiliates. The Company, or
Coronado, are used interchangeably to refer to Coronado Global Resources Inc. or Coronado Global Resources
Inc. and
its subsidiaries,
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 on consolidation.
(c)
Certain Significant Risks and Uncertainties
External
factors,
including
general
economic
conditions,
international
events
and
circumstances,
competitor
actions, governmental actions
and regulations are beyond
the Company’s control
and can cause fluctuations
in
demand for coal and
volatility in the price
of commodities. This
in turn may adversely
impact on the
Company’s
future operating results, purchase or investment opportunities
in the coal mining industry.
Concentration of customers
The Company
has a
formal written
credit policy
that establishes
procedures to
determine creditworthiness
and
credit
limits
for
trade
customers
and
counterparties
in
the
over-the-counter
coal
market.
Generally,
credit
is
extended based on
an evaluation of
the customer’s financial
condition. Collateral is not
generally required, unless
credit cannot be established.
Payments from customers are generally due between
30 to 60 days after
invoicing. Invoicing usually occurs after
shipment
or
delivery
of
goods.
The
timing
between
the
recognition
of
revenue
and
receipt
of
payment
is
not
significant.
The Company had certain customers
whose accounts receivable balances individually represented
% or more
of
the
Company’s
total
accounts
receivable,
or
whose
revenue
individually
represented
%
or
more
of
the
Company’s total revenue.
The
following
table
summarizes
any
customer
whose
revenue
individually
represented
%
or
more
of
the
Company’s total revenue in the years ended December
31, 2022, 2021 and 2020.
Year Ended December 31,
Xcoal
12%
11%
9%
Tata
Steel
19%
17%
17%
For the
year ended
December 31,
2022, $
1,848.8
million, or
52.6
% of
total revenues,
were attributable
to five
customers. In
comparison,
for the
year ended
December 31,
2021, $
971.6
million, or
46.3
% of
total revenues
were attributable to five customers and
for the year ended December 31,
2020, $
671.9
million, or
47.1
% of total
revenues were attributable
to five customers.
As of December
31, 2022, the
Company had
four customers that
accounted
for $
212.5
million,
or
51.6
%, of
accounts
receivable.
As of
December
31, 2021,
the
Company
had
four customers that accounted for $
149.2
million, or
54.7
%, of accounts receivable.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
The
following
table
presents
revenues
as
a
percent
of
total
revenue
from
external
customers
by
geographic
region:
Year Ended December 31,
North America
12%
7%
13%
Australia
4%
6%
6%
Asia
46%
48%
50%
Europe
11%
12%
13%
South America
8%
6%
4%
Brokered sales
19%
21%
14%
Total
100%
100%
100%
The Company uses shipping destination as the basis for attributing revenue to individual countries. Because title
may transfer on brokered
transactions at a point
that does not reflect
the end usage point,
they are reflected
as
exports, and attributed to an end delivery point if that knowledge
is known to the Company.
Concentration of labor
Out of the Company’s total employees,
11.5
% are subject to the Curragh
Mine Operations Enterprise Bargaining
Agreement 2019.
This agreement
covers work
carried out
by permanent,
full-time, temporary,
and casual
coal
mining employees
engaged by
Curragh to
fulfil production,
maintenance
and processing
activities. Other
than
the Curragh
Mine Operations
Enterprise
Bargaining Agreement
2019, there
are no
other collective
bargaining
agreements or union contracts covering employees of the Company
.
Transportation
The Company depends
upon port and
rail transportation
systems to deliver
coal to
its customers.
Disruption of
these
transportation
services
due
to
weather-related
problems,
mechanical
difficulties,
strikes,
lockouts,
bottlenecks, and other
events could temporarily
impair the Company’s
ability to supply
coal to its
customers. In
the past, disruptions in these services have resulted in
delayed shipments and production interruptions.
2.
Summary of Significant Accounting Policies
(a)
Newly Adopted Accounting Standards
During
the
period
there
have
been
no
new
Accounting
Standards
Updates
issued
by
the
Financial
Accounting
Standards Board that had a material impact on the Company’s Consolidated Financial Statements
.
(b)
Accounting Standards Not Yet
Implemented
To
date, there have
been no
recent accounting
pronouncements not
yet effective
that have significance,
or potential
significance, to the Company’s Consolidated Financial Statements.
(c) Use of Estimates
The preparation
of Consolidated
Financial
Statements
in conformity
with U.S. GAAP
requires
management
to
make certain
judgements, estimates
and assumptions
that affect
the reported
amounts of
assets and
liabilities
and disclosure of
contingent assets
and liabilities at
the date of
the Consolidated
Financial Statements
and the
reported amounts
of revenues
and expenses
during the
reporting periods.
Actual results
could differ
materially
from
those
estimates.
Significant
items
subject
to
such
estimates
and
assumptions
include
asset
retirement
obligations; useful
lives for
depreciation, depletion
and amortization;
deferred income
tax assets
and liabilities;
values
of
coal
properties;
fair
value
of
assets
held
for
sale,
workers’
compensation
liability
and
other
contingencies.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(d)
Foreign Currency
Financial Statements of foreign operations
The reporting currency of the Company is the U.S. Dollar,
or US$.
Functional
currency
is
determined
by
the
primary
economic
environment
in
which
an
entity
operates.
The
functional currency of
the Company
and its subsidiaries
is the US$,
with the exception
of two foreign
operating
subsidiaries, Curragh
and its
immediate parent
CAH, whose
functional currency
is the
Australian dollar,
or A$,
since Curragh’s predominant sources of operating
expenses are denominated in that currency.
Assets and liabilities
are translated at
the year-end exchange
rate and items
in the statement
of operations are
translated at average rates with gains and losses from
translation recorded in other comprehensive losses.
Foreign Currency Transactions
Monetary
assets
and
liabilities
are
remeasured
at
year-end
exchange
rates
while
non-monetary
items
are
remeasured at historical rates.
Gains and losses from foreign
currency remeasurement related to Curragh’s U.S. dollar receivables are
included
in coal revenues. All other gains and losses
from foreign currency remeasurement
and foreign currency forward
contracts
are
included
in
“Other,
net”,
with
exception
of
foreign
currency
gains
or
losses
on
long-term
intercompany
loan
balances
which
are classified
within
“Accumulated
other
comprehensive
losses”.
The
total
aggregate impact of foreign currency
transaction gains or losses on the
Consolidated Statements of Operations
and Comprehensive Income was a net gain of $
47.6
million and $
1.7
million and a net loss of $
3.2
million for the
years ended December 31, 2022, 2021 and 2020, respectively. The total impact of foreign currency transactions
related to U.S. dollar coal sales in Australia (included in the total above) was a net gain of $
15.0
million and $
8.7
million and a net loss of $
4.0
million for the years ended December 31, 2022, 2021
and 2020, respectively.
(e)
Cash and Cash Equivalents and Restricted Cash
Cash and cash
equivalents include cash
at bank and
short-term highly liquid investments
with an original
maturity
date of three months or less. At December 31, 2022 and 2021,
the Company had
no
cash equivalents.
“Cash
and
Restricted
Cash”,
as
disclosed
in
the
accompanying
Consolidated
Balance
Sheets
includes
$
0.3
million of restricted cash at December 31, 2022 and
$
0.3
million at 2021.
(f)
Trade Accounts Receivables
The Company
extends trade
credit to
its customers
in the
ordinary course
of business.
Trade
receivables are
recorded initially at fair value and subsequently at amortized
cost, less any Expected Credit Losses, or ECL.
For trade receivables
carried at amortized
cost, the Company
determines ECL on
a forward-looking
basis. The
amount of
ECL is
updated at
each reporting
date to reflect
changes in
credit risk
since initial recognition
of the
respective financial instrument.
The Company recognizes
the lifetime ECL. The
ECL is estimated
based on the
Company’s
historic credit
loss
experience,
adjusted for
factors that
are specific
to the
financial
asset, general
economic
conditions,
financial
asset
type,
term
and
an
assessment
of
both
the
current
as
well
as
forecast
conditions, including expected timing
of collection, at the
reporting date, modified for
credit enhancements such
as letters of credit obtained. To
measure ECL, trade receivables have been grouped based on shared credit risk
characteristics and the days past due.
The amount of credit
loss is recognized in
the Consolidated Statements
of Operations and Other Comprehensive
Income within “Provision for discounting and credit losses”. The Company writes off a financial asset when there
is information indicating there is no realistic prospect of recovery of the asset from the counterparty. Subsequent
recoveries of amounts
previously written off
are credited against “Provision
for discounting and
credit losses” in
the Consolidated Statements
of Operations and Other Comprehensive Income.
Factoring
The Company
has agreements
with financial
institutions to
sell selected
trade receivables
on a
recurring, non-
recourse
basis.
Under
these
agreements,
trade
receivables
sold
do
not
allow
for
recourse
for
any
credit
risk
related to the Company’s customers if such receivables
are not collected by the third-party financial institutions.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
The
Company
derecognizes
the
trade
receivables
sold
under
the
factoring
arrangement
and
the
difference
between proceeds received and carrying amount of the trade receivables sold is
recognized within “Interest, net”
in its Consolidated Statements of Operations and Comprehensive
Income.
(g)
Inventories
Coal is recorded
as inventory at the
point in time
the coal is
extracted from the
mine. Raw coal
represents coal
stockpiles that
may be
sold in
current condition
or may
be further
processed prior
to shipment
to a
customer.
Saleable coal represents coal stockpiles which require
no further processing prior to shipment to a customer.
Coal inventories are stated
at the lower of average
cost and net realizable
value. The cost of coal
inventories is
determined based
on an
average cost
of production,
which includes
all costs
incurred to
extract, transport
and
process
the coal.
Net
realizable
value
considers
the
estimated
sales
price
of
the
particular
coal
product,
less
applicable selling costs, and, in the case of raw coal, estimated
remaining processing costs.
Supplies
inventory
is
comprised
of
replacement
parts
for
operational
equipment
and
other
miscellaneous
materials and supplies
required for mining
which are stated
at cost on the
date of purchase.
Supplies inventory
is valued at
the lower of
average cost or
net realizable
value, less a
reserve for obsolete
or surplus items.
This
reserve incorporates several factors, such as anticipated usage, inventory turnover and inventory levels. It is not
customary to sell these inventories; the Company plans
to use them in mining operations as needed.
(h)
Assets held for sale
Assets
held
for
sale
are
measured
at
the
lower
of
their
carrying
amount
or
fair
value
less
costs
to
sell.
The
Company classifies
assets and
liabilities as
held for
sale (disposal
group) when
management, having
the authority
to approve the action,
commits to a plan
to sell the disposal
group, the sale is
probable within one year
and the
disposal
group
is
available
for
sale
in
its
present
condition.
The
Company
also
considers
whether
an
active
program to locate a buyer
has been initiated, whether the
disposal group is marketed actively
for sale at a price
that is reasonable in relation
to its current fair value,
and whether actions required
to complete the plan indicate
that it is
unlikely that significant
changes to the
plan will be
made or that
the plan will
be withdrawn. An
impairment
test is performed when
a disposal group is
classified as held for sale
and an impairment charge is
recorded when
the carrying
amount of
the disposal
group exceeds
its estimated
fair value,
less cost
to sell.
Depreciation
and
amortization for assets classified as held for sale are ceased.
(i)
Property, Plant and
Equipment, Impairment of Long-Lived Assets and Goodwill
Property, Plant, and
Equipment
Costs for mine development incurred to
expand capacity of operating mines or to
develop new mines and certain
mining equipment are capitalized and charged to operations on the
hours of usage or units of production method
over
the
estimated
proven
and
probable
reserve
tons
directly
benefiting
from
the
capital
expenditures.
Mine
development
costs
include
costs
incurred
for
site
preparation
and
development
of
the
mines
during
the
development stage.
Mineral rights
and reserves
acquired are
measured at
cost and
are depleted
on a
units of
production
method
over
the
estimated
proven
and
probable
reserve
tons
of
the
relevant
mineral
property.
Capitalized costs related to internal-use software are amortized on
a straight-line basis over the estimated useful
lives of the assets.
Property,
plant,
and
equipment
are
recorded
at
cost
and
include
expenditures
for
improvements
when
they
substantially
increase
the
productive
lives
of existing
assets.
Depreciation
is calculated
using
the
straight-line
method over
the estimated
useful lives
of the
depreciable assets of
to
years for machinery, mining
equipment
and
transportation
vehicles,
to
years
for
office
equipment,
and
to
years
for
plant,
buildings
and
improvements.
Maintenance and
repair costs
are expensed to
operations as
incurred. When
equipment is
retired or
disposed,
the related cost
and accumulated
depreciation are
removed from
the respective
accounts and any
gain or loss
on disposal is recognized in operations.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Impairment of long-lived assets
Long-lived
assets,
such
as
property,
plant,
and
equipment,
and
purchased
intangible
assets
subject
to
amortization,
are
reviewed
for
impairment
whenever
events
or
changes
in
circumstances
indicate
that
the
carrying amount of an
asset may not be
recoverable. If circumstances
require a long-lived asset
or asset group
be
tested
for
possible
impairment,
the
Company
first
compares
undiscounted
cash
flows
expected
to
be
generated by
that asset
or asset
group to
its carrying
amount. If
the carrying
amount of
the long-lived
asset or
asset group
is not
recoverable on
an undiscounted
cash flow
basis, an
impairment is
recognized to
the extent
that the
carrying amount
exceeds its
fair value.
Fair value
is determined
through
various valuation
techniques
including
discounted
cash
flow
models,
quoted
market
values
and
third-party
independent
appraisals,
as
considered necessary.
Refer to Note 5 “Impairment of Assets” for further disclosure
.
Goodwill
Goodwill is an asset
representing the future economic
benefits arising from other
assets acquired in a
business
combination
that
are
not
individually
identified
and
separately
recognized.
In
connection
with
the
Buchanan
acquisition on
March 31, 2016,
the Company
recorded goodwill
in the
amount of
$
28.0
million. Goodwill
is not
amortized but
is reviewed
for impairment
annually or
when circumstances or
other events
indicate that
impairment
may have occurred. The Company follows the guidance in Accounting Standards Update 2017-04 “
Intangibles -
Goodwill
and
Other:
Simplifying
the
Test
for
Goodwill
Impairment
”
(ASU 2017-04).
The
Company
makes
a
qualitative assessment of whether it
is more likely than
not that a
reporting unit’s fair value is
less than its carrying
amount. Circumstances that are considered as
part of the qualitative
assessment and could trigger a
quantitative
impairment test include but are
not limited to: a significant
adverse change in the business
climate; a significant
adverse legal judgment;
adverse cash flow
trends; an
adverse action
or assessment
by a government
agency;
unanticipated
competition;
and
a
significant
restructuring
charge
within
a
reporting
unit.
If
a
quantitative
assessment
is
determined
to
be
necessary,
the
Company
compares
the
fair
value
of
a
reporting
unit
with
its
carrying amount, including goodwill.
If the carrying amount
of a reporting unit
exceeds its fair value,
the Company
recognizes an impairment
charge for the
amount by which
the carrying amount
exceeds its fair
value to the
extent
of the amount of goodwill allocated to that reporting unit.
The Company defines reporting
units at the mining
asset level. For purposes
of testing goodwill for
impairment,
goodwill has been allocated to the reporting units to the
extent it relates to each reporting unit.
(j)
Asset Retirement Obligations
The
Company’s
asset
retirement
obligation,
or
ARO,
liabilities
primarily
consist
of
estimates
of
surface
land
reclamation
and
support
facilities
at
both
surface
and
underground
mines
in
accordance
with
applicable
reclamation laws and regulations in the U.S. and Australia
as defined by each mining permit.
The Company
estimates its ARO
liabilities for
final reclamation
and mine
closure based upon
detailed engineering
calculations of the amount
and timing of the future
cash spending for a
third party to perform
the required work.
Spending
estimates
are
escalated
for
inflation
and
then
discounted
at
the
credit-adjusted,
risk-free
rate.
The
Company records
an ARO asset
associated with
the discounted
liability for final
reclamation and
mine closure.
The obligation
and corresponding
asset are recognized
in the period
in which the
liability is incurred.
The ARO
asset
is
amortized
on
the
units-of-production
method
over
its
expected
life
of
the
related
asset
and
the
ARO
liability is accreted to the projected
spending date. As changes
in estimates occur (such as
mine plan revisions,
changes in
estimated costs
or changes
in timing
of the
performance of
reclamation activities),
the revisions
to
the
obligation
and
asset
are
recognized
at
the
appropriate
credit-adjusted,
risk-free
rate.
The
Company
also
recognizes
an
obligation
for
contemporaneous
reclamation
liabilities
incurred
as
a
result
of
surface
mining.
Contemporaneous reclamation consists primarily
of grading, topsoil replacement
and re-vegetation of backfilled
pit areas. To
settle the liability,
the obligation is paid,
and to the extent
there is a difference
between the liability
and
the
amount
of cash
paid,
a
gain
or
loss
upon
settlement
is
recorded.
The
Company
annually
reviews
its
estimated future cash flows for its asset retirement obligations.
(k)
Borrowing costs
Borrowing costs are
recognized as an
expense when they
are incurred, except
for interest charges
attributable
to major projects with substantial development and construction phases which are capitalized
as part of the cost
of the asset. There was
no
interest capitalized during the years ended December 31, 2022
and 2021.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(l)
Leases
From time
to time,
the Company
enters into
mining services
contracts which
may include
embedded leases
of
mining equipment
and other
contractual agreements
to lease
mining equipment
and facilities.
Based upon
the
Company’s
assessment
of the
terms
of a
specific
lease agreement,
the Company
classifies a
lease
as either
finance or operating.
Finance leases
Right of Use,
or ROU,
assets related
to finance
leases are
presented in
Property,
plant and
equipment, net
on
the Consolidated
Balance Sheet.
Lease liabilities
related to
finance leases
are presented
in “Lease
Liabilities”
(current) and “Lease Liabilities” (non-current) on the Consolidated
Balance Sheets.
Finance lease ROU assets and lease liabilities are recognized at the commencement date based on the present
value of the
future lease payments
over the lease
term. The
discount rate used
to determine
the present
value
of the
lease
payments
is the
rate
implicit in
the
lease unless
that
rate cannot
be readily
determined,
in which
case, the
Company utilizes
its incremental
borrowing
rate in
determining the
present value
of the
future lease
payments. The incremental borrowing
rate is the rate
of interest that the
Company would have to
pay to borrow
on
a
collateralized
basis
over
a
similar
term
an
amount
equal
to
the
lease
payments
in
a
similar
economic
environment.
Operating leases
ROU
assets
related to
operating
leases
are presented
as Right
of Use
assets
- operating
leases,
net
on the
Consolidated
Balance
Sheet.
Lease
liabilities
related
to
operating
leases
that
are
subject
to
the
ASC
measurement requirements such as operating
leases with lease terms
greater than twelve months are
presented
in “Lease Liabilities” (current) and “Lease Liabilities” (non-current)
on Consolidated Balance Sheets.
Operating lease
ROU assets and
lease liabilities
are recognized at
the commencement date
based on
the present
value of the
future lease payments
over the lease
term. The
discount rate used
to determine
the present
value
of the
lease
payments
is the
rate
implicit in
the
lease unless
that
rate cannot
be readily
determined,
in which
case, the
Company utilizes
its incremental
borrowing
rate in
determining
the present
value of
the future
lease
payments. The incremental borrowing
rate is the rate
of interest that the
Company would have to
pay to borrow
on
a
collateralized
basis
over
a
similar
term
an
amount
equal
to
the
lease
payments
in
a
similar
economic
environment. Operating
lease ROU
assets may
also include
any cumulative
prepaid or
accrued rent
when the
lease payments
are uneven
throughout the
lease term.
The ROU
assets and
lease liabilities
may also
include
options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
The ROU
asset includes
any lease
payments made
and lease
incentives received
prior to
the commencement
date.
The
Company
has
lease
arrangements
with
lease
and
non-lease
components
which
are
accounted
for
separately.
Non-lease
components
of
the
lease
payments
are
expensed
as
incurred
and
are
not
included
in
determining the present value.
(m) Royalties
Lease rights
to coal
lands are
often acquired
in exchange
for royalty
payments. Royalties
are payable
monthly
as a percentage of the gross
realization from the sale of the coal
mined using surface mining methods
and as a
percentage
of
the
gross
realization
for
coal
produced
using
underground
mining
methods.
Advance
mining
royalties are advance
payments made to
lessors under terms
of mineral lease
agreements that are
recoupable
against
future
production.
The
Company
had
advance
mining
royalties
of
$
6.8
million
and
$
5.5
million
respectively, included
in “Other current assets” as of December 31, 2022
and 2021.
(n)
Stanwell Rebate
The
Stanwell
rebate
relates
to
a
contractual
arrangement
entered
into
by
Curragh
with
Stanwell
Corporation
Limited, a State
of Queensland
owned electricity
generator, which
requires payment
of a rebate
for export coal
sold from some of Curragh’s
mining tenements. The rebate obligation is
accounted for as an executory
contract
and the expense is recognized as incurred.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(o)
Revenue Recognition
The Company accounts for
a contract when it
has approval and commitment
from both parties, the
rights of the
parties are identified,
payment terms
are identified,
the contract has
commercial substance
and collectability
of
consideration is probable. Once a contract
is identified, the Company evaluates
whether the combined or single
contract should be accounted for as more than one performance
obligation.
The Company recognizes revenue when
control is transferred to the customer.
For the Company’s contracts,
in
order to determine
the point
in time when
control transfers
to customers, the
Company uses
standard shipping
terms to
determine
the timing
of transfer
of
legal title
and the
significant
risks
and rewards
of ownership.
The
Company also considers other
indicators including timing
of when the Company
has a present right
to payment
and
when
physical
possession
of
products
is
transferred
to
customers.
The
amount
of
revenue
recognized
includes any
adjustments for
variable consideration,
which is
included in
the transaction
price and
allocated to
each
performance
obligation
based
on
the
relative
standalone
selling
price.
The
variable
consideration
is
estimated through the course of the contract using management’s
best estimates.
The majority of
the Company’s revenue is derived
from short term
contracts where the time
between confirmation
of sales orders and collection of cash is not more than
a few months.
Taxes
assessed
by
a
governmental
authority
that
are
both
imposed
on
and
concurrent
with
a
specific
revenue-producing transaction that are collected by the
Company from a customer are excluded from revenue.
Performance obligations
A
performance
obligation
is
a
promise
in
a
contract
to
transfer
a
distinct
good
or
service
to
the
customer.
A
contract’s transaction price is allocated
to each distinct performance obligation
and recognized as revenue
when,
or as, the performance obligation is satisfied.
The Company’s contracts have
multiple performance obligations as the
promise to transfer the individual
unit of
coal
is
separately
identifiable
from
other
units
of
coal
promised
in
the
contracts
and,
therefore,
distinct.
Performance obligations, as described above, primarily relate to the Company’s
promise to deliver a designated
quantity and type of coal within the quality specifications
stated in the contract.
For
contracts
with
multiple
performance
obligations,
we
allocate
the
contract’s
transaction
price
to
each
performance obligation on a relative standalone selling price basis. The
standalone selling price is determined at
each contract inception using
an adjusted market assessment
approach. This approach focuses
on the amount
that the Company believes the market is willing to pay
for a good or service, considering market conditions, such
as benchmark pricing, competitor pricing, market awareness of the product and current market trends that affect
the pricing.
Warranties provided to customers are
assurance-type of warranties on
the fitness of
purpose and merchantability
of the Company’s goods. The Company does not
provide service-type of warranties to customers.
Revenue
is
recognized
at
a
point
in
time
and
therefore
there
are
no
unsatisfied
and/or
partially
satisfied
performance obligations at December 31, 2022 and 2021.
Shipping and Handling
The Company
accounts
for
shipping
and
handling
activities
on
Free
on
Rail
sales
after
the
customer
obtains
control of the good as an activity to fulfil the promise to transfer the good. In this instance, shipping and handling
costs
paid
to
third
party
carriers
and
invoiced
to
coal
customers
are
recorded
as
freight
expense
and
other
revenues, respectively.
(p)
Commodity Price Risk
The Company has commodity price risk arising from fluctuations
in domestic and global coal prices.
The
Company’s
principal
philosophy
is
not
to
hedge
against
movements
in
coal
prices
unless
there
are
exceptional circumstances.
Any potential hedging of coal prices would be through fixed
price contracts.
The
Company
is
also
exposed
to
commodity
price
risk
related
to
diesel
fuel
purchases.
The
Company
may
periodically enter into arrangements that protect against
the volatility in fuel prices as follows:
•
enter into fixed price contracts to purchase fuel for the U.S. Operations
.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
•
enter into derivative financial instruments to hedge exposures to fuel
price fluctuations.
There are
no
derivative contracts outstanding at December 31, 2022
and 2021.
(q)
Income Taxes
The Company uses the asset
and liability approach to account
for income taxes as required by
ASC 740, Income
Taxes,
which requires
the
recognition
of deferred
income
tax assets
and
liabilities
for the
expected
future
tax
consequences
attributable
to differences
between
the
financial
statement
carrying
amounts
of
existing
assets
and liabilities and their respective tax bases.
Valuation allowances are provided
when necessary to
reduce deferred income
tax assets to
the amount expected
to be realized, on a more likely than not basis.
The Company recognizes the
benefit of an uncertain
tax position that it has
taken or expects
to take on income
tax
returns
it
files
if
such
tax
position
is
more
likely
than
not
to
be
sustained
on
examination
by
the
taxing
authorities, based on the technical merits
of the position. These tax benefits
are measured based on the largest
benefit that has a greater than 50% likelihood of being realized
upon ultimate resolution.
The Company’s foreign
structure consists of
Australian entities which
are treated as
corporations subject to
tax
under Australian
taxing authorities.
The Curragh
entities are
treated as
a branch
for U.S.
tax purposes
and all
income flows through the ultimate parent (the Company).
(r)
Fair Value Measurements
The Company utilizes valuation
techniques that maximize
the use of observable inputs
and minimize the use of
unobservable
inputs
to
the
extent
possible.
The
Company
determines
fair
value
based
on
assumptions
that
market
participants
would
use
in
pricing
an
asset
or
liability
in
the
principal
or
most
relevant
market.
When
considering
market
participant
assumptions
in
fair
value
measurements,
the
Company
distinguishes
between
observable and unobservable inputs, which are categori
zed in one of 3 levels of inputs.
Refer to Note 25 “Fair
Value
Measurement” for detailed
information related to the
Company’s fair value
policies
and disclosures.
(s)
Derivative accounting
The Company recognizes at fair value all contracts meeting the definition of a derivative as assets or liabilities in
the Consolidated Balance Sheet.
With
respect
to
derivatives
used
in
hedging
activities,
the
Company
assesses,
both
at
inception
and
at
least
quarterly
thereafter,
whether
such
derivatives
are
highly
effective
at
offsetting
the
changes
in
the
anticipated
exposure of the
hedged item.
The change
in the fair
value of derivatives
designated as a
cash flow
hedge and
deemed highly effective
is recorded
in “Accumulated
other comprehensive
losses” until
the hedged
transaction
impacts reported earnings,
at which
time any gain
or loss is
reclassified to earnings.
If the
hedge ceases to
qualify
for
hedge
accounting,
the
Company
prospectively
recognizes
changes
in
the
fair
value
of
the
instrument
in
earnings in the
period of the
change. The
potential for
hedge ineffectiveness
is present in
the design
of certain
of the Company’s cash flow hedge relationships.
The Company’s
asset and
liability derivative
positions are
offset on
a counterparty-by-counterparty
basis if
the
contractual agreement provides for the net settlement of contracts with the
counterparty in the event of default or
termination of any one contract.
There are
no
derivative contracts outstanding at December 31, 2022
and 2021.
(t)
Stock-based Compensation
The Company has
a stock-based compensation plan
which allows for
the grant of
certain equity-based incentives
including stock options,
performance stock units,
or PSU, and
restricted stock units,
or RSU, to
employees and
executive
directors,
valued
in
whole
or
in
part
with
reference
to
the
Company’s
CDIs
or
equivalent
common
shares (on a
10.1
CDI to common share ratio).
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
The grant-date
fair value
of stock
option
award is
estimated on
the
date
of grant
using
Black-Scholes-Merton
option-pricing model. For
certain options and
PSUs, the Company includes
a relative Total
Stockholder Return,
or TSR, modifier to determine the number of shares
earned at the end of the performance period.
The fair value
of awards that include the TSR modifier is determined
using a Monte Carlo valuation model.
The expense for these equity-based incentives is based on their fair value at date of grant and is amortized over
the required service
period, generally the vesting
period. The Company accounts
for forfeitures as
and when they
occur.
Refer to
Note
23 “Stock-Based
Compensation”
for detailed
information
related
to the
Company’s
stock-based
compensation plans.
(
u)
Earnings per Share
Basic earnings per share is computed by dividing net income attributable to stockholders of the Company by the
weighted-average number of shares of common stock
outstanding during the reporting period.
Diluted net income
per share is computed
using the weighted-average
number of shares
of common stock
and
dilutive
potential
shares
of
common
stock
outstanding
during
the
period.
Dilutive
potential
shares
of
common
stock primarily consist of employee stock options and
restricted stock.
(v)
Deferred Financing Costs
The Company capitalizes costs
incurred in connection with new
borrowings, the establishment or
enhancement
of credit
facilities
and the
issuance
of debt
securities.
These costs
are amortized
as an
adjustment to
interest
expense
over
the
life
of
the
borrowing
or
term
of
the
credit
facility
using
the
effective
interest
method.
Debt
issuance costs related to a recognized
liability are presented in the balance
sheet as a direct reduction from
the
carrying amount of that liability whereas debt issuance costs
related to a credit facility are shown as an asset.
For information on the
unamortized balance of
deferred financing fees
related to outstanding
debt, see Note
“Interest Bearing Liabilities”.
3.
Segment Information
The Company has
a portfolio of operating
mines and development
projects in Queensland,
Australia and in the
states of
Pennsylvania,
Virginia
and West
Virginia
in the
U.S. The
Australian Operations
comprise the
100%-
owned
Curragh
producing
mine
complex.
The
U.S.
Operations
comprise
two
100%-owned
producing
mine
complexes (Buchanan and Logan),
one
100%-owned idled mine complex which is held for sale (Greenbrier) and
two
development properties (Mon Valley
and Russell County).
The
Company
operates
its
business
along
two
reportable
segments:
Australia
and
United
States.
The
organization of the
two
reportable segments reflects how Coronado’s chief
operating decision maker, or
CODM,
manages and allocates resources to the various components
of the Company’s business.
The CODM
uses Adjusted
EBITDA as
the primary
metric to
measure each
segment’s
operating performance.
Adjusted EBITDA is not a measure of financial performance in accordance with U.S. GAAP.
Investors should be
aware that
the Company’s
presentation of
Adjusted EBITDA
may not
be comparable
to similarly
titled financial
measures used by other companies.
Adjusted EBITDA is
defined as earnings
before interest, taxes,
depreciation, depletion and
amortization and other
foreign exchange losses. Adjusted EBITDA is
also adjusted for certain discrete items that
management exclude
in analyzing each
of the
Company’s segments’ operating performance.
“Other and corporate”
relates to additional
financial information for the corporate function such
as financial reporting and 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 Financial Statements.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Reportable segment results for the years ended December 31,
2022, 2021 and 2020 are presented below:
(US$ thousands)
Australia
United
States
Other and
Corporate
Total
Year ended December 31,
Total
revenues
$
2,116,555
$
1,454,987
$
-
$
3,571,542
Adjusted EBITDA
541,208
716,661
(42,245)
1,215,624
Net income (loss)
328,632
486,817
(43,746)
771,703
Total
assets
1,353,424
1,013,359
183,144
2,549,927
Capital expenditures
89,001
95,769
185,357
Year ended December 31,
Total
revenues
$
1,315,851
$
832,620
$
-
$
2,148,471
Adjusted EBITDA
204,992
312,048
(30,907)
486,133
Net income (loss)
64,278
220,975
(95,830)
189,423
Total
assets
1,357,132
822,222
282,058
2,461,412
Capital expenditures
38,733
50,787
1,616
91,136
Year ended December 31,
Total
revenues
$
976,369
$
485,893
$
-
$
1,462,262
Adjusted EBITDA
(8,586)
92,801
(30,416)
53,799
Net loss
(66,645)
(77,853)
(82,039)
(226,537)
Total
assets
1,307,745
908,361
(67,630)
2,148,476
Capital expenditures
47,456
74,881
1,519
123,856
The reconciliation of Adjusted EBITDA to net income attributable to the Company for
the years ended December
31, 2022, 2021 and 2020 are as follows:
Year Ended December 31,
(US$ thousands)
Net income (loss)
$
771,703
$
189,423
$
(226,537)
Depreciation, depletion and amortization
167,046
177,875
191,189
Interest expense, net
67,632
68,062
50,585
Other foreign exchange (gains) losses
(1)
(32,259)
7,049
1,175
Loss on debt extinguishment
5,336
8,477
-
Income tax expense (benefit)
231,574
53,102
(60,016)
Impairment of assets
-
-
78,111
Restructuring costs
-
2,300
-
Losses on idled assets held for sale
(2)
2,732
9,994
Gain on disposal of assets held for sale
-
(14,845)
-
Increase (decrease) in provision for discounting
and credit losses
3,821
(8,042)
9,298
Consolidated adjusted EBITDA
$
1,215,624
$
486,133
$
53,799
(1)
Refer to Note 6 “Other, net” for further discussion.
(2)
These losses relate to idled non-core assets that the Company has classified as held
for sale with the view that these will be
sold within the next
twelve months or were sold in prior periods.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
The
reconciliations
of
capital
expenditures
per
the
Company’s
segment
information
to
capital
expenditures
disclosed on
the Consolidated
Statements of
Cash Flows
for the
years ended
December
31, 2022,
2021 and
2020 are as follows:
Year Ended December 31,
(US$ thousands)
Capital expenditures per Consolidated Statement of Cash
flows
$
199,716
$
89,661
$
117,856
Payment for capital acquired in prior period
(7,475)
(6,000)
-
Accruals for capital expenditures
11,243
7,475
6,000
Advance payment to acquire long lead capital items
(18,127)
-
-
Capital expenditures per segment detail
$
185,357
$
91,136
$
123,856
Disaggregation of Revenue
The Company disaggregates the revenue
from contracts with customers by
major product group for each of
the
Company’s
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.
Year ended December 31, 2022
(US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
1,968,173
$
1,394,880
$
3,363,053
Thermal coal
110,345
54,228
164,573
Total
coal revenue
2,078,518
1,449,108
3,527,626
Other
(1)
38,037
5,879
43,916
Total
$
2,116,555
$
1,454,987
$
3,571,542
Year ended December 31, 2021
(US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
1,171,869
$
822,000
$
1,993,869
Thermal coal
107,867
6,595
114,462
Total
coal revenue
1,279,736
828,595
2,108,331
Other
(1)
36,115
4,025
40,140
Total
$
1,315,851
$
832,620
$
2,148,471
Year ended December 31, 2020
(US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
836,545
$
476,222
$
1,312,767
Thermal coal
105,681
5,151
110,832
Total
coal revenue
942,226
481,373
1,423,599
Other
(1)
34,143
4,520
38,663
Total
$
976,369
$
485,893
$
1,462,262
(1)
Included in
Other is
the amortization
of Stanwell
non-market coal
supply agreement
liability recognized
on acquisition
of Curragh.
See further
discussion in Note 19 “Contract Obligations”.
Further explanation to tables above:
The following is a description of the principal activities
by reportable segments.
•
The Company primarily offers two types of products to its
customers: metallurgical coal and thermal coal
of
varying
qualities.
The
Company’s
metallurgical
coal
is
classified
as
hard
coking
coal,
further
distinguished by its volatility (defined as high, mid, or low),
and pulverized coal injection.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
•
The Australian Operations reportable segment
includes the Curragh mine. The
Australian Operations is
a separate
reportable segment
due to
having separate
management, location,
assets, and
operations.
Curragh
mine,
included
in
the
Australian
Operations,
is
located
in
central
Queensland,
Australia
and
produces a wide variety of metallurgical coal.
•
The United States reportable segment includes the Buchanan, Logan and Greenbrier coal
mine facilities
in Virginia and West Virginia,
United States. It produces high, mid and low volatility
hard coking coal.
4. Assets Held for Sale
During the fourth quarter of 2020, the Company committed to a plan to sell the Greenbrier asset and determined
that all of
the criteria to
classify assets and liabilities
as held for
sale were met.
The asset is part
of the Company’s
U.S. segment,
located
in the
State
of
West
Virginia,
and
does
not form
part
of
the Company’s
core
business
strategy. The Greenbrier
mining asset has been idle since April 1, 2020.
The following table provides the major classes of assets and liabilities classified as held for sale as of December
31, 2022 and December 31, 2021:
December 31
(US$ thousands)
Inventories, net
-
1,795
Other current assets
2,326
1,706
Property, plant and
equipment, net
23,447
23,447
Other noncurrent assets
Total
assets held for sale
$
26,214
$
27,023
Accounts payable
Accrued expenses and other current liabilities
1,344
Current asset retirement obligations
5,137
5,140
Noncurrent asset retirement obligations
5,978
5,203
Total
liabilities held for sale
$
12,241
$
12,113
As of December 31, 2022, the assets
and liabilities held for sale represent the fair value
of the Greenbrier mining
asset, which will likely be realized through a sale within
the next 12 months.
The fair
value of
the Greenbrier
mining asset
was
primarily
determined
by reference
to non-binding
indicative
offers and Level 3 inputs such
as estimates of future cash flows which
aligns to the Company’s
best estimate of
future
market
and
operating
conditions,
including
its
current
life
of
mine
plan.
The
life
of
mine
plan
includes
assumptions in relation to coal price
forecasts, projected mine production volumes, operating costs, capital costs
and discount rate.
Sale of the Amonate Mining Asset
On
December 2, 2021
,
the
Company
sold
Amonate,
including
related
assets
and
liabilities,
to
Ramaco
Resources, Inc., a Delaware corporation,
for a purchase price of $
30.0
million and realized a pre-tax
net gain of
$
14.8
million after transaction costs of $
2.6
million, included within “Gain on disposal of
asset held for sale” in the
Company’s
Consolidated
Statement
of Operations
and
Comprehensive
Income for
the year
ended December
31, 2021.
5. Impairment of Assets
The Company concluded
that no impairment
charges were
required at any
of the Company’s
mining assets
for
the years ended December 31, 2022 and 2021.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
During the year ended
December 31, 2020, the
Company performed an
impairment assessment in
accordance
with ASC 360 - Property, Plant and Equipment, and determined that the
sum of the estimated undiscounted pre-
tax future
cash flows
of Greenbrier
long-lived assets
exceeded its
carrying amount.
As a
result, an
impairment
charge of $
78.1
million was recorded,
reducing the
carrying amount
of Greenbrier’s
long-lived assets
to its
fair
value at that time, which did not include any associated ARO
liabilities.
6.
Other, net
Other, net consists of the following:
Year Ended December 31,
(US$ thousands)
Other foreign exchange gains (losses)
(1)
$
32,259
$
(7,049)
$
(1,175)
Other income
1,536
Total
Other, net
$
33,795
$
(6,187)
$
(608)
(1)
Other foreign
exchange gains
(losses) primarily
relates to
gains and
losses recognized
on the
translation of
short-term
inter-entity
balances
between
certain
entities
within
the
Group
that
are
denominated
in
currencies
other than their respective functional currencies.
7.
Capital Structure
(a)
Stockholders’ Equity
Authorized capital stock
The Company’s Articles of Incorporation, as amended, authorize the Company to issue
1,100,000,000
shares of
$
0.01
par value
capital stock
consisting of
1,000,000,000
shares of
common stock
and
100,000,000
shares of
preferred stock.
Common Stock / CDIs
The
common
stock
is
publicly
traded
on
the
ASX
under
the
ticker
“CRN,”
in
the
form
of
CHESS
Depositary
Interests (“CDIs). CDIs are units
of beneficial ownership in shares
of common stock held by
CHESS Depositary
Nominees Pty Limited (“CDN”), a wholly-owned subsidiary
of ASX Limited, the company that operates the ASX.
As each CDI represents one tenth of a share,
holders of CDIs will be entitled to
one
vote for every
CDIs they
hold. CDI
holders
are to
receive
entitlements
which attach
to underlying
shares
such as
participation
in rights
issues, bonus issues, capital reductions and liquidation preferences.
The CDIs entitle
holders to dividends,
if any, and other rights
economically equivalent to
shares of common
stock,
including the right
to attend stockholders’
meetings. CDN, as
the stockholder of
record, will vote
the underlying
shares in accordance with the directions of the CDI holders.
The following table summarizes Common Stock activity
during the periods presented below:
Year Ended December 31,
Shares outstanding at the beginning of the year
167,645,373
138,387,890
96,651,692
Shares issued during the year
-
29,257,483
41,736,198
Shares outstanding at the end of the year
167,645,373
167,645,373
138,387,890
Coronado Group LLC
As
of
December
31,
2022,
Coronado
Group
LLC,
the
Company’s
controlling
stockholder,
beneficially
owns
845,061,399
CDIs (representing a beneficial interest
in
84,506,140
shares of common stock) representing
50.4
%
of
the
total
1,676,453,730
CDIs
(representing
a
beneficial
interest
in
167,645,373
shares
of
common
stock)
outstanding.
The
remaining
831,392,331
CDIs
(representing
a
beneficial
interest
in
83,139,233
shares
of
common stock) are owned by investors in the form of CDIs
publicly traded on the ASX.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Refer to Note 23 “Stock-Based Compensation” for
options to purchase common stock issued
and outstanding as
of December 31, 2022 and 2021.
Preferred Stock
Coronado Group
LLC holds
one share
of preferred
stock
Series A.
The holder
of Series
A Preferred
Stock
is
permitted
to
nominate
and
elect
members
of
the
Company’s
Board
of
Directors
in
relation
to
the
level
of
the
holder’s
aggregate
beneficial
ownership
of
shares
of
the
Company’s
common
stock.
The
Series
A
Preferred
Share
is
not
entitled
to
dividends
and
is
non
transferable.
The
Series
A
Preferred
Share
has
a
liquidation
preference of $
1.00
.
(b)
Dividends
The dividend
policy
and
the
payment
of future
cash
dividends
are subject
to
the
discretion
of the
Company’s
Board of Directors.
During the year ended December 31, 2022, the Company declared:
•
Dividends of $
150.9
million, or $
0.09
per CDI ($
0.90
per share of common stock), on February 24, 2022;
•
Dividends of $
200.1
million, or $
0.119
per CDI ($
1.19
per share of common stock), on May 9, 2022;
•
Dividends of $
125.7
million, or $
0.075
per CDI ($
0.75
per share of
common stock),
on August 8,
2022;
and
•
Dividends of $
225.0
million, or $
0.134
per CDI ($
1.34
per share of common stock), on
October 30, 2022.
The
Company
paid
a
total
of
$
700.2
million
to
stockholders
and
CDI
holders
on
the
ASX,
net
of
$
1.4
million
foreign exchange gain
on payment of
dividends to certain
CDI holders that
elected to be
paid in Australian
dollars,
in relation to the above declared dividends.
During the year ended December 31, 2021, the Company did
not declare or pay dividends.
During the year
ended December 31,
2020, the Company
declared a dividend
to stockholders and
CDI holders
on the
ASX of
$
24.2
million, or
$
0.025
per CDI
($
0.25
per share
of common
stock). The
dividend was
paid on
March 31, 2020.
(c)
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. During periods in which the Company incurs
a net loss, diluted weighted average shares outstanding
are equal to basic weighted average shares outstanding
because the effect of all equity awards is anti-dilutive.
Basic and diluted earnings per share was calculated as
follows (in thousands, except per share data):
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Year Ended December 31,
(US$ thousands, except per share data)
Numerator:
Net income (loss)
$
771,703
$
189,423
$
(226,537)
Less:
Net (loss) attributable to Non-controlling interest
-
(2)
(69)
Net income (loss) attributable to Company stockholders
$
771,703
$
189,425
$
(226,468)
Denominator (in thousands):
Weighted-average shares of common stock outstanding
167,645
156,710
111,073
Effects of dilutive shares
-
Weighted average diluted shares of common stock
outstanding
167,846
156,842
111,073
Earnings (Loss) Per Share (US$):
Basic
4.60
1.21
(2.04)
Dilutive
4.60
1.21
(2.04)
8. Trade Receivables, net
The Company
extends trade
credit to
its customers
in the
ordinary course
of business.
Trade
receivables are
recorded initially at fair value and subsequently at amortized
cost, less any ECL.
December 31,
(US$ thousands)
Trade
receivables - at amortized cost
$
414,490
$
272,657
Provision for discounting and credit losses (Note 9)
(4,511)
(734)
Trade receivables, net
$
409,979
$
271,923
Xcoal
At December
31, 2022,
amounts
outstanding from
Xcoal in
respect
of coal
sales
were $
69.8
million,
of which
$
34.9
million were past due, and is included within “Trade
receivables, net” on the Consolidated Balance
Sheet.
Subsequent to December
31, 2022, the Company has collected
the Xcoal past due balance in
full. The carrying
amount
of
trade
receivables
from
Xcoal,
net
of
provision
for
discounting
and
credit
losses
of
$
2.9
million,
recognized due to the uncertainty surrounding expected timing
of collection, was $
65.7
million.
At December
31,
2021, amounts
outstanding
from
Xcoal in
respect
of coal
sales
were $
35.2
million,
of which
$
17.9
million
was
past due
and was
included
in “Trade
receivables,
net” on
the
Consolidated
Balance Sheet.
Subsequent to December 31,
2021, the Company collected
Xcoal’s past due balance in
full. The carrying amount
of
trade
receivables
from
Xcoal,
net
of
provision
for
discounting
and
credit
losses
of
$
0.4
million,
was
$
34.8
million.
9. Provision for Discounting and Credit Losses
The following
table provides
the reconciliation
of the
allowance for
credit losses
that is
deducted from
financial
assets to present the net amount expected to be collected:
(US$ thousands)
Trade and
related party
trade
receivables
Other
Assets
Total
As at January 1, 2021
$
9,298
$
-
$
9,298
Change in estimates during the current period
Unwind of provision for discounting and credit losses
(9,000)
-
(9,000)
As at December 31, 2021
1,256
Change in estimates during the current period
3,777
3,821
As at December 31, 2022
$
4,511
$
$
5,077
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
10. Inventories
December 31,
(US$ thousands)
Raw coal
$
50,604
$
17,334
Saleable coal
45,913
42,006
Total
coal inventories
96,517
59,340
Supplies inventory
61,501
59,582
To
tal inventories
$
158,018
$
118,922
Coal inventories measured at its net realizable value were
$
5.0
million and $
2.2
million at December 31, 2022
and 2021, respectively,
and relates to coal designated for deliveries under the Stanwell
non-market coal supply
agreement. See further discussion in Note 19 “Contract
Obligations”.
11.
Property, Plant and
Equipment
The following
table indicates
the carrying
amount of
each of
the major
classes of
the Company’s
consolidated
depreciable assets:
December 31,
(US$ thousands)
Land
$
27,711
$
27,853
Buildings and improvements
91,336
88,079
Plant, machinery, mining
equipment and transportation vehicles
1,012,844
963,272
Mineral rights and reserves
373,309
374,326
Office and computer equipment
9,488
8,718
Mine development
565,106
566,201
Asset retirement obligation asset
87,877
75,215
Construction in process
82,713
42,055
To
tal cost of property,
plant and equipment
2,250,384
2,145,719
Less accumulated depreciation, depletion and amortization
860,836
748,356
Property, plant and
equipment, net
$
1,389,548
$
1,397,363
The amount of depreciation and amortization expense
for property, plant
and equipment for the years ended
December 31, 2022, 2021 and 2020 was $
155.8
million, $
166.2
million and $
187.7
million, respectively.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
12.
Goodwill and Other Intangible Assets
(a)
Acquired Intangible Assets
December 31, 2022
(US$ thousands)
Weighted
average
amortization
period (years)
Gross
carrying
amount
Accumulated
amortization
Net carrying
amount
Intangible assets:
Amortizing intangible assets:
Mining permits - Logan
$
1,642
$
$
Mining permits - Buchanan
3,501
2,659
Total
intangible assets
$
5,143
$
1,832
$
3,311
December 31, 2021
(US$ thousands)
Weighted
average
amortization
period (years)
Gross
carrying
amount
Accumulated
amortization
Net carrying
amount
Intangible assets:
Amortizing intangible assets:
Mining permits - Logan
$
1,642
$
$
Mining permits - Buchanan
3,501
2,784
Total
intangible assets
$
5,143
$
1,629
$
3,514
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
years
ended
December
31,
2022,
and
2020,
were
$
0.2
million,
$
0.2
million
and
$
0.2
million,
respectively.
Estimated
amortization expense for each of the next five years is
$
0.2
million.
(b)
Goodwill
In connection with the
Buchanan acquisition on
March 31, 2016, the Company
recorded goodwill in the
amount
of $
28.0
million. The
Company performed
a qualitative
assessment to
determine if
impairment was
required at
December 31, 2022
or 2021.
Based upon
the Company’s
qualitative assessment,
it is more
likely than
not that
the fair
value
of the
reporting
unit is
greater
than
the
carrying
amount at
December 31,
2022 and
2021. As
a
result,
no
impairment
was
recorded,
and
the
balance
of
goodwill
at
both
December 31,
and
was
$
28.0
million. The Company has not noted any indicators
of impairment since the acquisition date.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
13.
Other Assets
December 31,
(US$ thousands)
Other current assets:
Prepayments
$
26,831
$
24,226
Long service leave receivable
7,884
9,136
Tax
credits receivable
4,183
4,440
Other
21,290
9,845
Total
other current assets
$
60,188
$
47,647
Other non-current assets:
Favorable mineral leases
$
3,448
$
3,645
Deferred debt issue costs
2,463
4,310
Long service leave receivable
Tax
credits receivable
7,269
11,223
Deposits to acquire long lead capital items
18,126
-
Other
1,694
-
Total
other non-current assets
$
33,585
$
19,728
The Company
has other assets
which includes prepayments,
favorable mineral leases,
deferred debt issue
costs,
long service leave receivable,
equipment deposits and coalfield employment enhancement tax credit receivable.
The favorable mineral leases are amortized based on the coal tonnage removed from the lease property relative
to the total estimated reserves on that property.
Long service leave for
eligible coal mine workers
at the Company’s
Australian Operations is
paid when leave is
taken, with a subsequent
reimbursement received from
the Coal Mining Industry
(Long Service Leave Funding)
Corporation
in
Queensland,
Australia.
The
reimbursement
entitlement
is
recognized
as
a
receivable
and
is
measured as
the present
value of
expected future
reimbursements to
be received
for the
corresponding leave
liability recognized.
The deferred
issue costs
as of
December
31,
2022 and
2021,
were
incurred to
establish
the ABL
Facility (as
described in Note 17
“Interest Bearing Liabilities”) and
amortized over the life
of the facility
on a straight-line
basis
and
included
in
“Interest
expense,
net”
in
the
Company’s
Consolidated
Statements
of
Operations
and
Comprehensive Income.
The tax credits receivable relates
to the Virginia coalfield employment enhancement tax
credit for coal sales from
the Company’s mining properties in the State of West Virginia in the U.S. during the 2018 to 2021 income years.
Where the credits exceed the Company’s state tax liability for the tax year,
the excess is redeemable by the Tax
Commissioner on behalf of the Commonwealth of Virginia for
% of the face value within 90
days after filing the
return. The
tax credits
allowed can
be claimed
in the
third taxable
year following
the taxable
year in
which the
credit was earned and allowed.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
14.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the
following:
December 31,
(US$ thousands)
Wages
and employee benefits
$
38,687
$
41,187
Taxes
other than income taxes
5,988
6,246
Accrued royalties
117,131
70,237
Accrued freight costs
44,496
27,754
Accrued mining fees
103,492
65,835
Acquisition related accruals
11,669
31,201
Other liabilities
22,228
28,482
Total
accrued expenses and other current liabilities
$
343,691
$
270,942
Acquisition
related
accruals
is
an
accrual
for
the
remaining
estimated
stamp
duty
payable
on
the
Curragh
acquisition of $
11.7
million (A$
17.3
million). Refer to Note 28 “Contingencies” for further
details.
15. Leases
Information related to Company’s right-of use
assets and related lease liabilities are as follows:
Year ended December 31,
(US$ thousands)
Operating lease costs
$
8,088
$
10,863
Cash paid for operating lease liabilities
8,244
10,986
Finance lease costs:
Amortization of right of use assets
Interest on lease liabilities
Total
finance lease costs
$
$
December 31,
(US$ thousands)
Operating leases:
Right of use asset - operating leases, net
$
17,385
$
13,656
Finance leases:
Property and equipment
Accumulated depreciation
(186)
(67)
Property and equipment, net
Current operating lease obligations
7,593
8,326
Non-current operating lease obligations
15,505
12,685
Total
Operating lease liabilities
23,098
21,011
Current finance lease obligations
Non-current finance lease obligations
Total
Finance lease liabilities
Current lease obligations
7,720
8,452
Non-current lease obligations
15,573
12,894
Total
lease obligations
$
23,293
$
21,346
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
December 31,
Weighted Average Remaining
Lease Term (Years)
Weighted average remaining lease term - finance
leases
1.52
2.54
Weighted average remaining lease term - operating
leases
4.11
2.59
Weighted Average Discount
Rate
Weighted discount rate - finance lease
7.60%
7.60%
Weighted discount rate - operating lease
8.94%
7.95%
The Company’s leases have remaining lease terms of
1 year
to
5 years
, some of which include
options to extend
the terms deemed reasonable to exercise. Maturities of lease
liabilities are as follows:
(US$ thousands)
Operating
Lease
Finance
Lease
Year ending
December 31,
$
8,964
$
6,112
5,325
5,214
-
Thereafter
1,139
-
Total
lease payments
26,754
Less imputed interest
(3,656)
(150)
Total
lease liability
$
23,098
$
16.
Asset Retirement Obligations
Reclamation of
areas disturbed
by mining
operations
must be
performed
by the
Company in
accordance
with
approved
reclamation
plans
and
in
compliance
with
state
and
federal
laws
in
the
states
of
West
Virginia
and
Virginia
in
the
United
States
and
Queensland
in
Australia.
For
areas
disturbed,
a
significant
amount
of
the
reclamation will take place in
the future when operations cease. There
were
no
assets that were legally restricted
for
purposes
of
settling
asset
retirement
obligations
as
of
December
31,
and
2021.
In
addition,
state
agencies monitor compliance with the mine plans, including reclamation.
The Company records the fair value
of its asset retirement obligations using the present
value of projected future
cash flows, with
an equivalent amount
recorded in the
related long lived
asset or a
change to the
Consolidated
Statements of Operations
if the related
permit is closed.
An accretion cost,
representing the
increase over time
in the present value of
the liability, is recorded each period and the capitalized cost is
depreciated over the useful
life of the related asset. As reclamation work is performed or liabilities
otherwise settled, the recorded amount of
the liability is reduced.
Changes in
the asset
retirement obligations
for the
years ended
December 31,
2022 and
December 31,
were as follows:
(US$ thousands)
December 31,
December 31,
Total
asset retirement obligations at beginning of the year
$
120,277
$
122,144
ARO liability additions
1,835
1,642
Accretion
9,066
9,353
Reclamation performed in the year
(3,270)
(3,322)
Gain on settlement of ARO
(53)
(601)
Change in estimate recorded to net income
(2)
1,195
Change in estimate recorded to assets
15,381
(5,444)
Foreign currency translation adjustment
(4,744)
(4,690)
Total
Asset retirement obligations at end of the year
138,490
120,277
Less current portion
(10,646)
(9,414)
Asset retirement obligation, excluding current portion
$
127,844
$
110,863
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
17.Interest Bearing Liabilities
The following is a summary of interest-bearing liabilities
at December 31, 2022:
(US$ thousands)
December 31,
December 31,
Weighted Average
Interest Rate at
December 31, 2022
Final
Maturity
10.75
% Senior Secured Notes
$
242,326
$
315,000
12.14
%
(2)
ABL Facility
-
-
Discount and debt issuance costs
(1)
(9,373)
(14,831)
Total
interest bearing liabilities
$
232,953
$
300,169
(1)
Deferred debt issuance
costs incurred on
the establishment of the
ABL Facility has been
included within "Other non-current
assets" on the
Consolidated Balance Sheets.
(2)
Represents the effective interest rate.
Senior Secured Notes
On May 12, 2021,
the Company entered
into an indenture, or
the Indenture, among
Coronado Finance Pty Ltd,
an Australian proprietary company,
as the issuer or the Australian Borrower, the Company,
as parent guarantor,
the other
guarantors
party
thereto
and
Wilmington
Trust,
National
Association,
as trustee,
and
as priority
lien
collateral trustee, relating to the issuance of
10.750
% Senior Secured Notes due 2026, or the Notes.
Interest on
the Notes
is payable
semi-annually in
arrears on
May 15
and November
15 of
each year
to record
holders of the Notes on the immediately preceding May
1 and November 1, as applicable. The Notes mature
on
May 15, 2026
and are senior secured obligations of the Company.
The Notes are guaranteed
on a senior secured
basis by the Company
and its wholly-owned
subsidiaries (other
than
the
Issuer)
(subject
to
certain
exceptions
and
permitted
liens)
and
secured
by
(i)
a
first-priority
lien
on
substantially all of the Company’s assets and the assets of the other
Guarantors (other than accounts receivable
and other rights to payment,
inventory,
intercompany indebtedness, certain
general intangibles and commercial
tort claims, commodities accounts, deposit accounts, securities accounts and other related assets and proceeds
and
products
of
each
of
the
foregoing,
or,
collectively,
the
ABL
Collateral),
or
the
Notes
Collateral,
and
(ii)
a
second-priority lien on the ABL Collateral, which is
junior to a first-priority lien, for the
benefit of the lenders under
the Company’s
senior secured
asset-based revolving
credit agreement
in an
initial aggregate
principal amount
of $
100.0
million, or the ABL Facility.
The terms
of the
Notes are
governed
by the
Indenture.
The Indenture
contains
customary covenants
for high
yield bonds, including,
but not limited
to, limitations on
investments, liens, indebtedness,
asset sales, transactions
with affiliates and
restricted payments, including
payment of dividends
on capital
stock. As of
December 31, 2022,
the Company was in compliance with all applicable covenants
under the Indenture.
The Company may
redeem some or
all of the
Notes at the
redemption prices and
on the terms
specified in the
Indenture.
Partial Redemption of Notes
On November
23, 2022,
the Company
exercised its
optional redemption
rights and
redeemed $
35.0
million, or
10.0
%, of the
original aggregate principal amount
of its Notes
at a redemption
price equal to
% of the
principal
amount of the Notes, plus accrued and unpaid interest on
the Notes to, but not including, the date
of redemption.
The redemption
allocation was
determined by
lot, in
compliance with
the requirements
of the
Depository Trust
Company as provided in the Indenture governing the
Notes.
During the
year ended
December 31,
2022, in
connection
with the
dividends paid
in the
period, the
Company
offered to
purchase the
Notes pursuant
to the
terms of
the Indenture.
In connection
with the
above offers,
the
Company purchased an
aggregate principal amount, for
accepted offers, of
$
37.7
million at a
price equal to
%
of the principal amount of the
Notes, plus accrued and unpaid interest on
the Notes to, but not including, the
date
of redemption.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
In connection to the above redemptions,
the Company recorded a “Loss
on debt extinguishment” of $
5.3
million
in the
Consolidated Statement
of Operations
and Comprehensive
Income, which
represents the
premium paid
and a portion of unamortized debt issuance costs and
discount on issuance.
ABL Facility
On
May
12,
2021,
the
Company,
Coronado
Coal
Corporation,
a
Delaware
corporation
and
wholly-owned
subsidiary of the
Company,
or the U.S.
Borrower,
the
Australian Borrower and
the guarantors
entered into the
ABL
Facility
agreement
with
Citibank,
N.A.,
as
administrative
agent
and
a
lender,
and
various
other
financial
institutions, with an aggregate multi-currency lender
commitment of up to
$
100.0
million, including a $
30.0
million
sublimit for the issuance of
letters of credit and $
5.0
million for swingline loans,
at any time outstanding, subject
to borrowing base availability.
The ABL Facility matures on
May 12, 2024
.
Revolving loan
(and letter
of credit)
availability under
the ABL
Facility is
subject to
a borrowing
base, which
at
any time is equal to the sum of certain
eligible accounts receivable, certain eligible
inventory and certain eligible
supplies
inventories
and,
in
each
case,
subject
to
specified
advance
rates.
The
borrowing
base
is
subject
to
certain reserves, which may be established
by the agent in its
reasonable credit discretion, that could reasonably
be expected to have an adverse effect on the value
of the collateral included in the borrowing base.
Borrowings
under
the
ABL
Facility
bear
interest
at
a
rate equal
to
a
BBSY
rate
plus an
applicable
margin.
In
addition to paying
interest on the
outstanding borrowings
under the ABL
Facility,
the Company is
also required
to pay a fee in respect of unutilized commitments, on amounts available to be drawn under outstanding letters of
credit and certain
administrative fees.
The
obligations
of
the
borrowers
under
the
ABL
Facility
are
guaranteed
by
(a)
a
first
priority-lien
in
the
ABL
Collateral, (b)
a second
priority-lien
in
the Notes
Collateral
and (c)
solely in
the
case
of the
obligations
of the
Australian Borrower,
a featherweight
floating security
interest over
certain accounts
released from
the security
by the Australian Borrower in favor of Stanwell.
The ABL Facility contains customary covenants for
asset-based credit agreements of this type, including, among
others: (i) the requirement to deliver
financial statements, other reports and
notices; (ii) covenants related to the
payment of dividends on, or purchase or redemption
of, capital stock; (iii) covenants related to
the incurrence or
prepayment of
certain debt;
(iv) covenants
related to
the incurrence
of liens
or encumbrances;
(v) compliance
with
laws;
(vi)
restrictions
on
certain
mergers,
consolidations
and
asset
dispositions;
and
(vii)
restrictions
on
certain transactions with affiliates. Subject to customary grace periods and notice requirements, the
ABL Facility
also
contains
customary
events
of
default.
Additionally,
the
ABL
Facility
contains
a
springing
fixed
charge
coverage ratio of not less than
1.00
to 1.00, which ratio is tested if availability under
the ABL Facility is less than
a certain amount.
As of December
31, 2022, the
Company is
not subject to
this covenant.
As at December
31,
2022, the Company met its undertakings under the ABL
Facility.
As
at
December
31,
2022,
no
amounts
were
drawn
and
no
letters
of
credit
were
outstanding
under
the
ABL
Facility.
The carrying value of
debt issuance costs,
recorded as “Other
non-current assets” in
the Consolidated Balance
Sheets, were $
2.5
million and $
4.3
million at December 31, 2022 and December 31, 2021, respectively. Refer to
Note 13 “Other Assets”.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
18.
Other Financial Liabilities
The following is a summary of other financial liabilities:
(US$ thousands)
December 31,
December 31,
Collateralized financial liabilities payable to third-party financing
companies
(1)
$
12,726
$
17,794
Unsecured notes payable to insurance premium finance company,
payable in
aggregate monthly instalments ranging from $
to $
with a fixed rate
ranging up to
2.25
% per annum
-
4,536
Total
Other financial
liabilities
12,726
22,330
Less: current portion
4,458
8,508
Other non-current financial liabilities
$
8,268
$
13,822
(1)
On January
6, 2021,
the Company
entered into
an agreement
with a
third-party financier
to sell
and leaseback
items of
property, plant and
equipment
owned by
Curragh, a
wholly-owned subsidiary of
the Company.
The transaction
did not
satisfy the
sale criteria
under ASC
606 -
Revenues from
Contracts with
Customers. As
a
result, the
transaction was
deemed a
financing arrangement
and the
Company has
continued to
recognize the
underlying property,
plant and equipment
on its Consolidated
Balance Sheet. The
proceeds received from the
transaction of $
23.5
million (A$
30.2
million) were recognized as “Other financial
liabilities” on the Consolidated Balance Sheet. The
term of the financing arrangement
ranges up to
five
years
with an implied interest rate
of up to
8.1
% per annum. The carrying
amount of this financial liability, net of issuance
costs, was $
12.7
million and
$
17.8
million as at December 30, 2022 and 2021,
$
4.5
million and $
4.0
million of which were classified as a current liability, respectively.
19.
Contract Obligations
In
connection
with
the
acquisition
of
the
Logan
assets,
the
Company
assumed
certain
non-market
contracts
related to various
coal leases.
The non-market
coal leases
require royalty
payments based on
a percentage
of
the
realization
from
the
sale
of
the
respective
coal
under
lease.
On
acquisition,
the
Company
recorded
$
27.3
million related to the non-market
portion of the coal leases
and is amortizing it ratably
over the respective
estimated coal reserves as they are mined and sold.
In
connection
with
the
acquisition
of
Curragh,
the
Company
assumed
the
Stanwell
non-market
coal
supply
agreement
(CSA)
with
a
fixed
pricing
component
that
was
effectively
below
the
market
price
at
the
date
of
acquisition. As a
result, on acquisition,
the Company recorded
a liability
of $
307.0
million (A$
400.0
million) related
to the
unfavorable pricing
of the
Stanwell CSA
and is
amortizing it
ratably based
on the
tons sold
through the
contract.
The
amortization
of this
liability
for the
year
ended December
31,
2022,
and
were
$
36.2
million,
$
33.7
million
and
$
32.6
million,
respectively,
and
recorded
as
“Other
revenues”
in
the
Consolidated
Statements of Operations and Comprehensive Income.
The following is a summary of the contract obligations
as of December 31, 2022:
(US$ thousands)
Short-term
Long-term
Total
Coal leases contract liability
$
$
19,720
$
20,563
Stanwell below market coal supply agreement
39,500
74,805
114,305
$
40,343
$
94,525
$
134,868
The following is a summary of the contract obligations
as of December 31, 2021:
(US$ thousands)
Short-term
Long-term
Total
Coal leases contract liability
$
$
20,081
$
20,924
Stanwell below market coal supply agreement
39,118
121,107
160,225
$
39,961
$
141,188
$
181,149
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
20.
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
“Mineral
rights
and
reserves”
asset
and
a
corresponding
deferred
consideration liability of $
155.2
million (A$
210.0
million), calculated using the contractual pre-tax discount rate of
% representing
fair value
of the
arrangements
at the
date of
acquisition. The
deferred consideration
liability
will reflect passage of
time changes by way
of an annual accretion
at the contractual pre-tax discount
rate of
%
and will
be settled
as a
discount to
the price
of thermal
coal supplied
to Stanwell
over the
term of
a new
coal
supply agreement which
is expected to
commence in 2027.
The accretion of
deferred consideration is recognized
in “Interest expense, net” in the Consolidated Statements of Operations and Comprehensive Income. The Right-
to-mine-asset will be amortized over the coal reserves
mined from the SRA.
December 31,
(US$ thousands)
Stanwell Reserved Area deferred consideration
$
243,191
$
230,492
$
243,191
$
230,492
21.
Workers’ Compensation and Pneumoconiosis (“Black
Lung”) Obligations
In
the
United
States,
coal
mine
operations
may
lead
to
traumatic
workers
compensation
claims,
as
well
as
workers’ compensation occupational disease claims for
black lung disease. Injured workers generally file claims
for traumatic injury under
the governing state
workers compensation legislation.
Workers may file
claims due to
black
lung
under
the
governing
state
workers
compensation
legislation
or
under
a
series
of
federal
laws
that
include the Federal Coal Mine Health and Safety Act of 1969, as amended, the Black Lung Benefits Act of 1973,
and
the
Black
Lung
Benefits
Reform
Act
of
1977.
The
Company
provides
for
both
traumatic
workers
compensation claims and occupational disease claims through
an insurance policy.
The Company obtained workers
compensation insurance for work
related injuries, including black
lung, through
a
third-party
commercial
insurance
company
for
the
years
ended
December
31,
2022,
and
2020.
The
insurance policy
covers claims
that exceed
$
0.5
million per
occurrence for
all years,
or aggregate
claims in
excess
of $
22.7
million, $
22.0
million and $
15.0
million for policy years ending May 2023, May 2022 and May 2021. Per
the contractual agreements, the Company
was required to provide a collateral
deposit of $
53.1
million for policy
years 2017 through
2023, ending May 31,
2023, which is
accomplished through providing
a combination of
letters
of credit and cash collateral
in an escrow account.
As of December 31,
2022, the Company has
provided $
16.8
million of letters
of credit, $
27.1
million of cash
collateral and surety
bonds of $
6.0
million totaling $
49.9
million.
The remaining collateral is required to be provided by
March 31, 2023.
For the
years ended
December 31, 2022,
2021 and
2020, the
audited Consolidated
Statements of
Operations
and
Comprehensive
Income
included
Company
incurred
claims,
premium
expenses
and
administrative
fees
related
to
worker’s
compensation
benefits
of
$
12.2
million,
$
12.2
million
and
$
9.5
million,
respectively.
As
of
December 31, 2022 and 2021, the estimated workers’ compensation
liability was $
30.1
million and $
29.7
million,
respectively, representing claims incurred but not paid based on
the estimate of the
outstanding claims under the
coverage
limits
and
the
actuarially
determined
retained
liability
under
the
aggregate
claim
amount.
As
of
December
31,
and
2021,
$
27.1
million
and
$
25.3
million,
respectively,
are
recorded
within
“Other
non-
current liabilities” in the Consolidated Balance Sheets.
The current portion of the Company’s estimated
workers’
compensation liabilities are
recorded within “Accrued
expenses and other
current liabilities” in the
Consolidated
Balance Sheets.
22.
Employee Benefit Plans
The
Company
has
a
401(k)-defined
contribution
plan
in
which
all
U.S.
full
time
employees
are
eligible
to
participate
upon
their
date
of
hire.
Employees
generally
may
contribute
up
to
%
of
their
qualifying
compensation
subject
to
statutory
limitations.
The
Company
matches
up
to
%
up
to
the
first
%
of
the
participant’s annual compensation
for all employees except
for those employed at Buchanan.
For employees at
Buchanan,
the
Company
matches
up
to
%
of
the
first
%
of
the
participant’s
annual
compensation.
The
Company’s contributions immediately
vest. Total Company contributions
for the
years ended
December 31,
2022,
2021 and 2020 amounted to $
3.9
million, $
3.3
million and $
2.7
million, respectively.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
In the United States, the Company is self-insured for
employee health care claims up to the lesser of $
0.2
million
per
covered
person
or
an
aggregate
amount
depending
on
the
various
coverages
provided
to
employees
throughout the plan year
for all employees. The Company
has purchased coverage from a
commercial insurance
carrier to provide for any claims
in excess of these amounts. At December
31, 2022 and 2021, the Company had
provided
accruals
of
$
1.9
million
and
$
1.7
million,
respectively,
for
claims
incurred
but
not
paid
based
on
management’s estimate
of the Company’s
self-insured liability.
For the years
ended December
31, 2022, 2021
and 2020, the Company incurred claims,
premium expenses and administrative
fees related to this plan totaling
$
29.8
million, $
25.8
million and $
23.9
million respectively.
23.
Stock-Based Compensation
Total
stock-based
compensation
expense
was
$
2.7
million,
$
0.5
million
and
$
1.6
million
for
the
years
ended
December 31,
2022,
and
respectively,
and
was
included
as
a
component
of
selling,
general,
and
administrative expenses in the Company’s Consolidated Statements of Operations and Comprehensive Income.
The stock-based compensation expense includes
compensation expense recognized in full
at the grant date for
employees that meet certain retirement eligibility criteria
per the 2018 Plan (as defined below).
As
of
December 31,
the
Company
had
$
4.1
million
of
total
unrecognized
compensation
cost
related
to
nonvested stock-based
compensation awards
granted under
the plans.
This cost
is expected to
be recognized
over
3.25
years
with
a
weighted-average
period
of
2.38
years
as
stock-based
compensation
expense.
This
expected cost does not include the impact of any future stock-based
compensation awards.
a) 2018 Equity Incentive Plan
In
connection
with
the
completion
of
the
Company’s
initial
public
offering
of
common
stock,
the
Company
implemented
the
Coronado
Global
Resources Inc.
Equity
Incentive
Plan,
or
the
Plan,
which
is
designed
to
align
compensation
for
certain
key
executives
with
the
performance
of
the
Company.
Since
its
approval, there have been no updates to the 2018 Plan
or issuance of a new plan.
The 2018
Plan provides
for the
grant of
awards
including stock
options,
or Options;
stock appreciation
rights;
restricted stock
units, or
RSUs; and
restricted stock,
valued in
whole or
in part
with reference
to shares
of the
Company’s CDIs or common stock, as well as performance-based awards, including performance stock units,
or
PSUs, denominated in CDIs or shares
of common stock. Each award
is entitled to receive one
CDI with
ten
CDIs
representing one share of common stock.
The Company
measures the cost
of all stock-based
compensation, including
stock options,
at fair value
on the
grant date
and recognizes
such costs
within “Selling,
general and
administrative expense”
in the
Consolidated
Statements of
Operations and Comprehensive
Income. The
Company recognizes compensation
expense related
to Options, PSUs and RSUs
that cliff vest using
the straight-line method during
the requisite service period.
For
stock-based
awards
where
vesting
is
dependent
upon
achieving
certain
operating
performance
goals,
the
Company
estimates
the
likelihood
of
achieving
the
performance
goals
during
the
performance
period.
The
Company accounts
for forfeitures as and when they occur.
All awards require the grantee
to be employed by the
Company at the vesting date except
for grantees who meet
certain retirement criteria under the 2018 Plan.
The following awards were granted under the 2018 Plan:
Grant year
Vesting date
(1)
Performance period
Stock Options
PSUs
RSUs
01/01/2023
not applicable
-
-
393,793
01/07/2023
not applicable
-
-
255,284
01/01/2024
not applicable
-
-
151,747
01/07/2024
not applicable
-
-
343,210
31/03/2026
01/01/2022 - 31/12/2024
-
7,471,100
-
31/03/2025
01/01/2021 - 31/12/2023
-
5,998,212
-
31/03/2024
01/01/2020 - 31/12/2022
-
3,203,988
-
31/03/2023
01/01/2019 - 31/12/2021
1,336,454
1,001,914
-
30/12/2019
not applicable
-
-
54,687
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(1)
The awards shall vest on the one-year anniversary
of each testing date and no later than the disclosed date.
The Options
and PSUs granted
that will
vest are
subject to the
achievement of goals
over the
performance period.
These goals are relative total shareowner return, or TSR, and scorecard performance metrics, or the Scorecard.
TSR is determined based on the Company’s percentile ranking of TSR over the performance period relative to a
predefined comparator group of companies.
Performance metrics applicable to the Options and
PSUs granted as summarized below:
Grant year
Relative TSR
Scorecard
TSR
Safety
TSR
Cashflow
Production
Production
2022, 2021 and
33.0%
22.0%
22.0%
22.0%
-
-
25.0%
25.0%
-
-
25.0%
25.0%
Awards subject to
TSR vest based
on service
and market conditions.
The fair
value of
relative TSR was
estimated
on the grant date using a Monte Carlo simulation model.
Awards subject to Scorecard vest based on service and performance conditions. The fair value of the Scorecard
was estimated
on the
grant
date fair
value of
the Company’s
Common Stock
adjusted for
dividends foregone
during the performance period.
RSUs are only subject to service conditions.
Stock Option Awards
The Company’s 2018 stock option awards were granted
on the date of the IPO with an exercise price of $
2.84
per CDI (A$
4.00
per CDI) which was equal to the Company’s IPO
Price.
The Company’s Stock Option activity is summarized
below:
Stock Option Plan Activity
Opening at the beginning of the year
1,015,006
1,083,101
1,292,476
Granted
-
-
-
Forfeited
(833,319)
(68,095)
(209,375)
Outstanding at the end of the year
181,687
1,015,006
1,083,101
Exercisable at the end of the year
-
-
-
Weighted-average remaining contractual term (in
years)
0.25
1.25
2.25
The weighted
average
grant
date
fair
value
of all
Option
Awards
granted
was
$
0.27
.
On August
5,
2019, the
Board of Directors declared and approved return of
capital of $
0.298
(A$
0.440
) per CDI. In accordance with ASX
listing rule clause 7.22.3 the exercise price of option
awards granted under 2018 plan were reduced by the same
amount
as
the
return
of
capital
to
$
2.41
(A$
3.56
).
No
stock
option
awards
vested
during
the
year
ended
December 31, 2022.
The assumptions used to determine the Options fair value
on grant date were as follows:
2018 Grant
Expected term of the stock options (in years) (i)
7.22
Dividend yield (ii)
10%
Expected volatility (iii)
35%
Risk-free interest rate (iv)
2.46%
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(i)
Expected
term
represents
the
period
that
the
Company’s
stock-based
awards
are
expected
to
be
outstanding and is determined using
the simplified method, which
equates to a weighted average
of the
vesting period
and total
contractual
term
of the
award.
All awards
cliff vest
at the
end
of the
requisite
service period.
(ii)
Dividend yield is the expected average yield of dividends
expected over the vesting period.
(iii)
Expected volatility
was estimated
using comparable
public company’s
volatility for
similar terms
as the
Company
does
not
have
a
long
enough
operating
period
as
a
public
company
to
estimate
its
own
volatility.
Over
time as
the
Company
develops
its own
volatility
history
it will
begin
to
incorporate
that
history into its expected volatility estimates.
(iv)
Risk-free interest
rate is based
on an interpolated
Australian Government
Bond Rate
at the time
of the
grant for periods corresponding with the expected term
of the option.
The applicable
assumptions in
determining the
fair value
of market
and performance
conditions of
the Options
awards were the same.
Performance Stock Unit Awards
Activity of the Company’s
PSUs that are ultimately
payable in the Company’s
CDIs or the equivalent
number of
shares of common stock granted under the 2018 Plan
is summarized below:
Performance Stock Units Plan Activity
Nonvested at the beginning of the year
8,501,869
4,002,783
988,721
Granted
7,471,100
5,998,212
3,203,988
Forfeited
(1,114,048)
(1,499,126)
(189,926)
Nonvested at the end of the year
14,858,921
8,501,869
4,002,783
Weighted-average grant date fair value (per CDI)
$
0.53
$
0.43
$
0.79
Weighted-average remaining term (in years)
2.54
2.79
3.01
The weighted
average grant
date fair
value of
all PSU
Awards granted
in 2022
was $
0.67
(A$
0.89
).
No
PSUs
vested during the year ended December 31, 2022.
The assumptions used to determine the PSUs fair value on
each grant date were as follow:
2022 Grant
2021 Grant
2020 Grant
2018 Grant
Time to maturity (in years) (i)
3.99
3.85
3.49
4.52
Dividend yield (ii)
16.3%
3.0%
1.6%
10.0%
Expected volatility (iii)
60.0%
60.0%
60.0%
35.0%
Risk-free interest rate (iv)
2.66%
0.35%
0.18%
2.23%
(i)
Time to maturity represents the period
that the Company’s stock-based
awards will vest. All awards cliff
vest at the end of the requisite service period.
(ii)
Dividend yield is the expected average yield of dividends
expected over the vesting period.
(iii)
For the
2018 grant,
the expected
volatility was
estimated using
comparable public
company’s
volatility
for similar terms as the Company does not have a long enough operating period
as a public company to
estimate
its
own
volatility.
For
the
2020,
and
grants,
the
volatility
was
estimated
using
comparable public company’s volatility and the Company’s
own volatility for similar terms.
(iv)
Risk-free interest
rate is based
on an interpolated
Australian Government
Bond Rate
at the time
of the
grant for periods corresponding with the expected term
of the PSUs.
The above
inputs were
consistent to
determine the
fair value
of the
market and
performance conditions
of the
PSUs awards.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Restricted Stock Units
During the year ended
December 31, 2022,
the Company issued
RSUs to certain
employees. These RSUs
are
only subject
to service
conditions and
vest at
various intervals
during the
service
period. The
fair value
of the
award
was
determined
using
the
market
price
of
the
Company’s
Common
Stock
at
the
date
of
grant
and
compensation expense is recorded over the requisite
service period.
Activity of the Company’s
RSUs that are ultimately
payable in the Company’s
CDIs or the equivalent
number of
shares of common stock granted under the 2018 Plan
is summarized below:
Restricted Stock Units Plan Activity
Nonvested at the beginning of the year
-
Granted
1,144,034
Forfeited
-
Vested
-
Nonvested at the end of the year
1,144,034
Weighted-average grant date fair value (per CDI)
$
1.22
Weighted-average remaining term (in years)
0.70
24.
Income Taxes
At December
31, 2021,
a company,
which is
not part
of the
Australian tax
consolidated group,
had tax
losses
carried forward of $
5.9
million (tax effected) for which an equal valuation
allowance has been recognized.
The tax losses of $
27.0
million (tax effected) at December 31, 2021, carried forward at the Australian Operations
were fully utilized in 2022.
The U.S. House
of Representatives
approved a
$740 billion budget
reconciliation package
that includes
a new
minimum tax on certain large corporations, an excise tax on stock buybacks, a significant increase in funding for
the Internal Revenue Service, incentives to promote climate change mitigation and clean energy,
and provisions
to promote health
care affordability.
The Inflation Reduction
Act includes a
book-minimum tax
(AMT) similar
to
that originally proposed in the House-approved
Build Back Better legislation that would
impose a
% minimum
tax on “adjusted
financial statement income”
of applicable corporations over
the “corporate AMT
foreign tax credit
for the taxable
year.”
Under the bill,
an applicable corporation’s
minimum tax would
be equal to
the amount by
which
the
tentative
minimum
tax
exceeds
the
sum
of
the
corporation’s
regular
tax
for
the
year
and
the
corporation’s base
erosion and
anti-abuse tax
liability under
section 59A.
This provision
would be
effective
for
taxable years beginning after December 31, 2022 and
it is not expected to apply to the Company.
Income (loss) from
continuing operations before
income taxes for
the periods presented
below consisted of
the
following:
December 31,
(US$ thousands)
U.S.
$
609,617
$
226,463
$
(116,354)
Non-U.S.
393,660
16,062
(170,199)
Total
$
1,003,277
$
242,525
$
(286,553)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Total
income tax expense (benefit) for the periods presented
below consisted of the following:
December 31,
(US$ thousands)
Current:
U.S. federal
$
90,933
$
30,075
$
(28,959)
Non-U.S.
75,270
(4,443)
(18,967)
State
25,347
3,480
(1,034)
Total
current
191,550
29,112
(48,960)
Deferred:
U.S. federal
13,486
18,353
Non-U.S.
35,425
6,658
(18,757)
State
4,193
3,846
(10,652)
Total
deferred
40,024
23,990
(11,056)
Total
income tax expense (benefit)
$
231,574
$
53,102
$
(60,016)
The following is a reconciliation of the expected statutory federal income tax expense (benefit) to the Company’s
income tax expense (benefit) for the periods presented
below:
December 31,
(US$ thousands)
Current:
Expected income tax expense (benefit) at U.S. federal statutory
rate
$
210,690
$
50,931
$
(60,176)
Percentage depletion
(41,047)
-
-
Permanent differences
(2,262)
(3,144)
Prior period tax return adjustments and amendments
(4,259)
-
Foreign tax deductions method change and prior year
amendments
-
-
28,952
Australian branch impact on U.S. taxes
42,049
(1,699)
(21,398)
State income taxes, net of federal benefit
21,548
7,833
(4,250)
Total
income tax expense (benefit)
$
231,574
$
53,102
$
(60,016)
Effective tax rate
23.1%
21.9%
20.9%
Deferred income taxes
reflect the net
tax effects of
temporary differences between the
carrying amounts of
assets
and liabilities
for financial
reporting purposes
and the
amount used
for income
tax purposes
using the
enacted
tax rates and laws currently
in effect. Significant components
of the Company’s deferred
income tax assets and
liabilities as of December 31, 2022 and 2021 were as follows:
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
December 31,
(US$ thousands)
Deferred income tax assets:
Accruals and provisions
$
36,409
$
29,091
Contract obligations
119,505
137,290
Asset retirement obligation
49,078
40,033
Goodwill
6,590
7,057
Tax
losses
6,886
35,078
U.S. asset on foreign deferred taxes
14,408
-
Other
31,747
22,676
Gross deferred income tax assets
264,623
271,225
Valuation allowance
(1)
(34,667)
(25,590)
Total
deferred income tax assets, net of valuation allowance
229,956
245,635
Deferred income tax liabilities:
Property, plant, equipment
and mine development, principally due to
differences in depreciation, depletion and asset
impairments
(300,968)
(272,219)
Warehouse stock
(13,980)
(14,903)
U.S. liability on foreign deferred taxes
-
(10,301)
Other
(10,679)
(9,246)
Total
deferred income tax liabilities
(325,627)
(306,669)
Net deferred income tax liability
$
(95,671)
$
(61,034)
(1)
As of December 31,
2022, the Company recorded
a valuation allowance against
a deferred tax asset
of an equal amount
which relates
predominantly to foreign tax credits, tax losses, land and
goodwill in Australia which is in the Other category in
the table. Due to the capital
character of these items and the
lack of expected capital gains,
the Australian group is not expected
to realize the benefit of this
deferred tax
asset.
Unrecognized Tax
Benefits
The
Company
provides
for
uncertain
tax
positions,
and
the
related
interest
and
penalties,
based
upon
management’s assessment of whether a tax benefit is
more likely than not to be sustained upon examination by
tax authorities.
To
the extent
that the
anticipated
tax outcome
of these
uncertain
tax positions
changes,
such
changes in estimate will impact the income tax
provision in the period in which such determination is made.
The
Company recognizes accrued interest and penalties related to uncertain tax
positions as a component of income
tax expense.
The Company
did not
identify any
new uncertain
tax positions
during the
year ended
December 31,
2021 and
2022, and as
a result the
Company does
no
t have any
recorded uncertain tax positions
as of December
31, 2022.
The Company
recorded
no
amounts related
to interest
and penalties
on uncertain
tax positions
for 2022, 2021
and 2020 and these years remain open to examination
by U.S. and Australian tax authorities.
25.
Fair Value Measurement
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.
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
Inputs:
Unadjusted
quoted
prices
in
active
markets
for
identical
assets
or
liabilities
accessible
to
the
reporting entity at the measurement date.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
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
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 December
31, 2022
and 2021,
there were
no
financial instruments
required to
be measured
at fair
value
on a recurring basis.
Other Financial Instruments
The following methods and assumptions are used to estimate the
fair value of other financial instruments as of
December 31, 2022 and 2021:
•
Cash and
restricted cash, accounts
receivable, accounts payable,
accrued expenses, lease
liabilities and
other
current
financial
liabilities:
The
carrying
amounts
reported
in
the
Consolidated
Balance
Sheets
approximate fair value due to the short maturity of these
instruments.
•
Restricted deposits,
lease liabilities,
interest bearing
liabilities and
other financial
liabilities: The
fair values
approximate the carrying amounts
reported in the Consolidated Balance Sheets.
•
Interest bearing liabilities: The
Company’s outstanding interest-bearing liabilities are carried at
amortized
cost.
As
of
December
31,
2022,
there
were
no
borrowings
outstanding
under
the
ABL
Facility.
The
estimated fair value
of the Notes
as of December
31, 2022 is
approximately $
249.7
million based upon
quoted market prices in a market that is not considered active
(Level 2).
Other than
the estimated
fair values
of the
Greenbrier
mining asset
held for
sale
described
in Note
4 “Assets
Held for Sale” and Note 5 “Impairment of Assets”, which are level
3 fair value measurements, there are no other
fair value
measurements of
assets and
liabilities that
are measured
at fair
value on
a nonrecurring
basis as
of
December 31, 2022 and 2021.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
26.
Accumulated Other Comprehensive Losses
The Company’s Accumulated
Other Comprehensive Losses
consists of foreign currency
translation adjustment
from subsidiaries not using the U.S. dollar as their functional currency.
Net
gain
(loss)
(US$ thousands)
Foreign
currency
translation
adjustments
Cash flow
fuel hedges
Total
Balance at December 31, 2020
$
(26,777)
$
(2,029)
$
(28,806)
Net current-period other comprehensive income (loss):
Gain in other comprehensive income before reclassifications
6,991
9,922
16,913
Loss on long-term intra-entity foreign currency transactions
(24,442)
-
(24,442)
Gain reclassified from accumulated other comprehensive
loss
-
(7,023)
(7,023)
Tax
effects
-
(870)
(870)
Total
net current-period other comprehensive income (loss)
(17,451)
2,029
(15,422)
Balance at December 31, 2021
(44,228)
-
(44,228)
Net current-period other comprehensive income (loss):
Loss in other comprehensive income
(19,610)
-
(19,610)
Loss on long-term intra-entity foreign currency transactions
(27,585)
-
(27,585)
Total
net current-period other comprehensive losses
(47,195)
-
(47,195)
Balance at December 31, 2022
$
(91,423)
$
-
$
(91,423)
27.
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,
$
5,493
5,365
5,258
5,127
5,101
Thereafter
26,398
Total
$
52,742
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
December
31,
2022,
purchase
commitments
for
capital
expenditures
were
$
28.6
million,
all
of
which
is
obligated within the next 12 months.
In Australia, the
Company has generally
secured the ability
to transport coal
through rail contracts
and coal export
terminal contracts that are primarily funded
through take-or-pay arrangements with terms ranging up to
13 years
.
In the U.S., the Company typically
negotiates its rail and coal terminal
on an annual basis.
As of December 31,
2022,
these
Australian
and
U.S.
commitments
under
take-or-pay
arrangements
totaled
$
0.93
billion,
of
which
approximately $
96.7
million is obligated
within the next
year,
$
203.1
million within
1-3 years, $
206.6
million 3-5
years and $
426.3
million thereafter.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
28.
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 bank
guarantees, letters of credit and performance
or surety bonds. No liabilities
related to these arrangements are reflected in the Company’s Consolidated Balance Sheets.
Management does
not expect any material losses to result from these guarantees
or off-balance sheet financial instruments.
As required
by certain
agreements,
the Company
had cash
collateral
in the
form of
deposits in
the amount
of
$
89.1
million and $
81.0
million as of December 31,
2022 and 2021, respectively, to provide back-to-back support
for bank guarantees, financial
payments, other performance obligations, various
other operating agreements and
contractual obligations
under workers
compensation insurance.
These deposits
are restricted
and classified
as
long-term assets in the Consolidated Balance Sheets.
In accordance
with the
terms of
the ABL
Facility,
the Company
may be
required
to cash
collateralize
the ABL
Facility to the extent of outstanding letters of credit after the expiration or termination date of such letter of credit.
As of December 31, 2022,
no
such letter of credit was outstanding and as such
no
cash collateral was required.
For the U.S. Operations in order to provide the required financial assurance, the Company generally uses surety
bonds for post-mining reclamation. The Company can also use bank letters of credit to collateralize certain other
obligations. As of December 31, 2022, the Company had outstanding surety bonds of $
34.9
million and letters of
credit of $
16.8
million issued from our available bank guarantees,
to meet contractual obligations under workers
compensation insurance and to secure various
obligations and commitments. Future regulatory changes relating
to these obligations could result in increased obligations,
additional costs or additional collateral requirements.
For the Australian Operations, the Company had bank guarantees outstanding
of $
27.4
million at December 31,
2022, primarily in respect of certain rail and port arrangements
of the Company.
At December 31, 2022, the Company had total outstanding
bank guarantees provided of $
44.2
million to secure
obligations and commitments.
Stamp duty on Curragh acquisition
On September 27, 2022, the Company received from
the Queensland Revenue Office, or QRO,
an assessment
of the stamp duty
payable on its
acquisition of the Curragh
mine in March
2018. The QRO assessed
the stamp
duty
on
this
acquisition
at
an
amount
of
$
55.4
million
(A$
82.2
million)
plus
unpaid
tax
interest
of
$
8.2
million
(A$
12.1
million).
On
November
23,
2022,
the
Company
filed
an
objection
to
the
assessment
and
is
currently
awaiting the outcome of this objection. The outcome of
this objection is uncertain.
The Company
has reviewed
the assessment
received and
based on
legal and
valuation advice
it has
sought,
continues to maintain its position and the estimated accrual of $
29.0
million (A$
43.0
million) stamp duty payable
on the Curragh acquisition. During
the period the Company made a partial
payment of stamp duty,
reducing the
remaining estimated accrual
for stamp duty
to $
11.7
million (A$
17.3
million) as at December
31, 2022, which
is
included within “Accrued Expenses and Other Current Liabilities”
in its Consolidated Balance sheet.
From time to time, the
Company becomes a
party to other legal
proceedings in the
ordinary course of business
in Australia, the U.S. and other countries where the Company does business.
Based on current information, the
Company believes that such other pending
or threatened proceedings are likely to
be resolved without a material
adverse
effect
on
its
financial
condition,
results
of
operations
or
cash
flows.
In
management’s
opinion,
the
Company is not currently
involved in any legal
proceedings, which individually
or in the aggregate
could have a
material effect on the financial condition, results of
operations and/or liquidity of the Company.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
29. Related
-
Party Transactions
Xcoal
On
May
27,
2021,
Xcoal
ceased
to
be
a
related
party
after
Xcoal’s
founder,
chief
executive
officer
and
chief
marketing officer,
Mr. Ernie Thrasher,
retired as a non-executive director of the Company.
“Coal
revenues
from
related
parties”
of
$
97.3
million
in
the
Consolidated
Statement
of
Operations
and
Comprehensive Income for the period up to May 27, 2021, represent
revenues from Xcoal while it was a related
party.
Revenues
from
coal
sales
to
Xcoal
after
May
27,
are
included
within
“Coal
revenues”
in
the
Consolidated Statement of Operations and Comprehensive Income.
Revenues from Xcoal of $
134.6
million for the year ended December
31, 2020, are recorded as “Coal
revenues
from related parities” in the Consolidated Statement of Operations
and Comprehensive Income.
The Energy & Mineral Group
On
May
12,
2021,
affiliates
of
The
Energy
&
Minerals
Group,
or
EMG,
which
is
the
Company’s
controlling
stockholder
through
its
ownership
of
Coronado
Group
LLC,
participated
in
the
Notes Offering
and
purchased
$
65.0
million aggregate principal amount of Notes at the closing of the Notes Offering. Following
the redemption
of
Notes
in
November
and
November
2022,
as
described
in
Note
“Interest
Bearing
Liabilities”,
the
principal amount of Notes
held by EMG reduced
to $
52.0
million and remained
unchanged as at December
31,
2022.
At
December
31,
2022,
interest
payable
to
affiliates
of
EMG
on
the
Notes
was
$
0.7
million
and
was
recorded
within
“Accrued
expenses
and
other
current
liabilities”
in
the
Consolidated
Balance
Sheet.
Interest
expense to affiliates
of EMG was
$
7.1
million for the
year ended December
31, 2022, and recorded
in “Interest
expense, net” in the Consolidated Statement of Operations
and Comprehensive Income.
Coronado Group LLC
Under
the
Coronado
Group LLC
agreement
(as
amended,
effective
October 23,
2018),
2,900
management
incentive units were designated and authorized for issuance
to certain members of management to motivate and
retain senior management.
The plan is designated
to allow key members
of management to share
in the profits
of the Company
after certain
returns are
achieved by
the equity
investors. The
incentive units
constitute “profit
interests” for the benefit of senior management in consideration
of services rendered and to be rendered.
Coronado Coal LLC and Coronado II
LLC merged to form Coronado Group
LLC in July 2015. Coronado IV
LLC
was
merged
into
Coronado
Group LLC,
the
Company’s
controlling
stockholder,
on
June 30,
2016.
Under
the
updated formation
agreement dated
June 30, 2016,
the
2,500
designated and authorized
units under the
initial
formation of
Coronado Group LLC
were replaced
by these
new units.
At December
31, 2022
and 2021,
2,900
management incentive units were outstanding.
The incentive units are comprised of three
tiers, which entitle the holders to receive
distributions from Coronado
Group LLC subordinate
to the
distributions to
be received
by Members.
As of
December 31, 2022
and 2021,
a
portion of the authorized
units have been allocated
to various members of the
Company’s management including
Mr. Garold Spindler,
CEO, who is also member of Coronado Group LLC.
Stockholder’s Agreement and Registration Rights
and Sell-Down Agreement
As
of
December
31,
2022,
Coronado
Group LLC
has
beneficial
ownership
in
the
aggregate
of
50.4
%
of
the
Company’s
Shares.
On
September 24,
2018,
Coronado
Group LLC
and
the
Company
entered
into
a
Stockholder’s Agreement
and a
Registration Rights
and Sell-Down
Agreement
which governs
the relationship
between Coronado
Group LLC
and the
Company
while the
EMG Group
beneficially
owns in
the aggregate
at
least
%
of
our
outstanding
shares
of
common
stock
(including
shares
of
common
stock
underlying
CDIs),
including certain governance matters relating to the Company. Under this Agreement, Coronado Group LLC has
the ability to
require the Company
to register its
shares under the
U.S. Securities Exchange
Act of 1934
and to
provide assistance to Coronado Group LLC in selling
some or all of its shares (including in the form of CDIs).
The Stockholder’s Agreement provides for the following:
•
Consent rights: Coronado
Group LLC (or its
successors or permitted
assigns) will have
certain consent
rights, whereby pre-agreed actions
require approval by Coronado
Group LLC prior to these
actions being
undertaken;
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
•
Provision
of
information
to
Coronado
Group LLC:
There
will
be
ongoing
information
sharing
arrangements
relating
to
the
provision
of
financial
and
other
information
by
the
Company
and
its
subsidiaries to Coronado Group LLC group entities and cooperation and assistance between the parties
in connection with any financing (or refinancing) undertaken
by the Company;
•
Pro rata issuances: While Coronado Group LLC Group entities beneficially own in the
aggregate at least
% of
the outstanding
Shares, unless
Coronado
Group LLC
(or
its successors
or permitted
assigns)
agrees
otherwise,
issuances
of
equity
securities
must
have
been
offered
to
Coronado
Group LLC
in
respect of
its pro
rata shares
and any
equity securities
to be
allocated by
the Company
under a
share
incentive plan will be sourced by purchasing them in the market
rather than by issuing them; and
•
Board rights:
Certain rights
regarding the
board including
the right,
but not
the obligation,
to designate
the Directors
to be
included in the
membership of
any board committee,
except to the
extent that
such
membership would violate applicable securities laws or
stock exchange or stock market rules.
Relationship Deed
On September 24, 2018, the Company and Coronado Group LLC entered into a Relationship Deed under which
the Company provides
a number of indemnities
in favor of Coronado
Group LLC, including in
relation to certain
ASX initial public
offering, or
Australian IPO, -related
matters and also
certain guarantees
that have in
the past
been provided or
arranged by Coronado
Group LLC and
its affiliates
in support of
Company obligations.
Under
the
Relationship
Deed,
Coronado
Group LLC
also
agrees
to
indemnify
the
Company
in
relation
to
certain
Australian IPO-related matters and reimburse certain costs.
30.
Subsequent Events
Ordinary dividends
On
February
21,
2023,
the
Company’s
Board
of
Directors
declared
a
bi-annual
fully
franked
fixed
ordinary
dividend of $
8.4
million, or
0.5
cents per CDI. The
Company is not required
to make an offer
to purchase Notes
in
relation
to
this
dividend
due
to
the
available
unaccepted
portion
of
the
offer
to
purchase
Notes
made
in
connection with special dividends declared on October 30,
2022.
The dividend will
have a record
date of
March 15, 2023
, Australia time,
and be payable
on
April 5, 2023
, Australia
time.
CDIs will
be quoted
“ex” dividend
on March
14, 2023,
Australia time.
The total
ordinary dividend
will be
funded from available cash.
Coronado Global Resources Inc. Form 10-K December
31, 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To
the Shareholders and the Board of Directors of Coronado
Global Resources Inc.
Opinion on the Financial Statements
We
have
audited
the
accompanying
consolidated
balance
sheets
of
Coronado
Global
Resources
Inc.
(the
Company)
as
of
December
31,
and
2021,
the
related
consolidated
statements
of
operations
and
comprehensive
income,
stockholders’
equity
and
cash
flows
for
each
of
the
three
years
in
the
period
ended
December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In
our opinion, the consolidated financial
statements present fairly,
in all material respects, the
financial position of
the Company at December 31, 2022 and
2021, and the results of its
operations and its cash flows for
each of the
three
years
in
the
period
ended
December
31,
2022,
in
conformity
with
U.S.
generally
accepted
accounting
principles.
We
also
have
audited,
in
accordance
with
the
standards
of the
Public
Company
Accounting
Oversight
Board
(United States)
(PCAOB), the
Company's internal control
over financial
reporting as
of December
31, 2022,
based
on
criteria
established
in
Internal
Control-Integrated
Framework
issued
by
the
Committee
of
Sponsoring
Organizations of
the Treadway Commission (2013
framework) and our
report dated
February 21,
2023 expressed
an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the
Company's management. Our responsibility is to express
an opinion
on the
Company’s financial statements
based on
our audits.
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 Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to
obtain reasonable assurance about whether the
financial statements are free of
material
misstatement, whether
due to
error or
fraud. Our
audits included
performing procedures
to assess
the risks
of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to
those risks.
Such procedures
included examining,
on a
test basis,
evidence regarding
the amounts
and disclosures
in the
financial statements.
Our audits
also included
evaluating the
accounting principles
used
and significant
estimates made
by management,
as well
as evaluating
the overall
presentation of
the financial
statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matter
The critical
audit
matter communicated
below is
a matter
arising
from
the current
period audit
of the
financial
statements that was communicated
or required to be communicated
to the audit committee and that:
(1) relates
to accounts
or disclosures that
are material
to the
financial statements and
(2) involved our
especially challenging,
subjective, or
complex judgments.
The communication
of the critical
audit matter
does not alter
in any way
our
opinion on the consolidated financial
statements, taken as a whole,
and we are not, by
communicating the critical
audit matter below,
providing a separate opinion on
the critical audit matter or
on the accounts or disclosures
to
which it relates.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Stamp Duty assessment on the acquisition of the
Curragh mine
Description of the
matter
As described in Note 28 to the consolidated financial statements, the Company received an
assessment from
the Queensland
Revenue Office
(“QRO”) for
the stamp
duty payable
on
the Company’s
2018 acquisition
of the
Curragh mine.
The QRO
assessed the
stamp duty
on this acquisition at an amount
of $55.4 million plus unpaid tax interest
of $8.2 million.
The
Company disputes the QRO’s calculation
of the liability, which the Company estimates to
be
$29.0 million
including unpaid
tax interest.
On November
23, 2022,
the Company
filed an
objection to the assessment and is currently awaiting its
outcome.
Auditing the accrual for the stamp duty obligation involved complex auditor judgment,
given
the
materiality
of
the
assessment
made
by
the
QRO,
the
unique
nature
of
the
property
acquired
and
the
resulting
difficulty
in
assessing
the
Company’s
judgments
around
the
interpretation and application of the law to this matter.
How we
addressed the
matter in our
audit
We
obtained
an
understanding,
evaluated
the
design
and
tested
the
operation
of
management’s controls related to the Company’s process for the recognition, measurement
and
disclosure
of
the
stamp
duty
contingency,
as
a
non-routine
judgmental
accounting
matter including the Company’s interpretation of tax
law.
Our
audit
procedures
included,
among
others,
understanding
external
legal
counsel
opinions obtained by
management to support
their interpretation and
application of the
law
in this matter. We also
discussed external legal counsel’s
opinion with external
legal counsel
directly.
We
involved
our
indirect
tax
professionals
to
help
us
evaluate
the
Company’s
judgments
around the interpretation and application
of the law to this matter and
the relative likelihood
of the multiple alternative potential outcomes. These potential outcomes included the risk of
litigation and estimations of interest and penalties payable.
We also evaluated the disclosures made in the
consolidated financial statements.
/s/
Ernst & Young
We have served as the Company’s auditor
since 2020.
Brisbane, Australia
February 21, 2023
Coronado Global Resources Inc. Form 10-K December
31, 2022
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
Coronado Global Resources Inc. Form 10-K December
31, 2022
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We are
subject to
the periodic
reporting requirements
of the
Exchange Act.
We have
designed our
disclosure
controls and procedures
to provide reasonable
assurance that information we
disclose in reports
we file or
submit
under the Exchange
Act is recorded,
processed, summarized,
and reported within
the time periods
specified in
the
rules
and
forms
of
the
SEC.
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
is
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)
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.
Changes to Internal Control over Financial Reporting
There have been
no changes in
our internal control
over financial reporting
or in
other factors that
occurred during
our
last
fiscal
quarter
that
have
materially
affected,
or
are
reasonably
likely
to
materially
affect,
our
internal
controls over financial reporting.
Management’s Report on Internal Control
Over Financial Reporting
Our management
is responsible
for establishing and
maintaining adequate internal
control over
financial reporting
as
defined
in
Rules
13a-15(f)
under
the
Exchange
Act.
Internal
control
over
financial
reporting
is
a
process
designed to
provide reasonable
assurance regarding
the reliability
of financial
reporting and
the preparation
of
the Company’s
consolidated financial
statements for
external purposes
in accordance
with generally
accepted
accounting principles.
Internal control over financial reporting includes
those policies and procedures that (i) pertain
to the maintenance
of records that,
in reasonable detail,
accurately and fairly
reflect the transactions
and dispositions of
the assets
of the
Company;
(ii) provide
reasonable assurance
that
transactions
are recorded
as necessary
to permit
the
preparation of the
consolidated financial statements in
accordance with generally
accepted accounting principles,
and
that
receipts
and
expenditures
of
the
Company
are
being
made
only
in
accordance
with
appropriate
authorizations of management
and directors of
the Company; and
(iii) provide reasonable
assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s
assets that could
have a material effect on the consolidated financial
statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements. Also,
projections of
any evaluation
of effectiveness
to future
periods are
subject to
the risk
that
controls may
become inadequate
because of
changes in
conditions, or
that the
degree of
compliance with
the
policies or procedures may deteriorate.
Management
conducted
an
assessment
of
the
Company’s
internal
control
over
financial
reporting
as
of
December 31, 2022, using the framework specified in
Internal Control - Integrated Framework (2013)
, published
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission
(COSO).
Based
on
this
assessment, management
concluded that
the Company’s
internal control
over financial
reporting was
effective
as of December 31, 2022.
Our
Independent
Registered
Public
Accounting
Firm,
Ernst
&
Young,
has
audited
our
internal
control
over
financial reporting, as stated in their unqualified opinion
report included herein.
Coronado Global Resources Inc. Form 10-K December
31, 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To
the Shareholders and the Board of Directors of Coronado
Global Resources Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Coronado Global Resources
Inc.’s internal control over financial
reporting as of December 31,
2022,
based
on
criteria
established
in
Internal
Control-Integrated
Framework
issued
by
the
Committee
of
Sponsoring Organizations
of the
Treadway
Commission (2013
framework) (the
COSO criteria).
In our
opinion,
Coronado Global
Resources
Inc. (the
Company)
maintained,
in
all material
respects,
effective
internal control
over financial reporting as of December 31, 2022, based on the
COSO criteria.
We
also
have
audited,
in
accordance
with
the
standards
of the
Public
Company
Accounting
Oversight
Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021,
the
related
consolidated
statements
of
operations
and
comprehensive
income,
stockholders’
equity
and
cash
flows for each
of the three
years in the
period ended
December 31, 2022,
and the related
notes and our
report
dated February 21, 2023 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment
of the effectiveness
of internal control
over financial reporting
included in the
accompanying
Management’s Report
on Internal
Control Over
Financial Reporting.
Our responsibility
is to express
an opinion
on the
Company’s internal
control over
financial reporting
based on
our audit.
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
Commission and the PCAOB.
We conducted our audit
in accordance with the standards
of the PCAOB. Those standards
require that we plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
effective
internal
control
over
financial
reporting was maintained in all material respects.
Our audit included obtaining an understanding
of internal control over financial reporting,
assessing the risk that
a
material
weakness
exists,
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk,
and
performing
such
other
procedures
as
we
considered
necessary
in
the
circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control Over
Financial Reporting
A
company’s
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
for external purposes in
accordance with generally
accepted accounting principles.
A company’s internal
control over financial
reporting
includes those policies
and procedures that (1)
pertain to the maintenance
of records that, in
reasonable detail,
accurately and
fairly reflect
the transactions and
dispositions of the
assets of
the company;
(2) provide reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance with
generally accepted
accounting principles,
and that
receipts and
expenditures of
the company
are being
made only
in accordance
with authorizations
of management
and directors
of the
company; and
(3)
provide
reasonable
assurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use,
or
disposition of the company’s assets that could have
a material effect on the financial statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements. Also,
projections of
any evaluation
of effectiveness
to future
periods are
subject to
the risk
that
controls may
become inadequate
because of
changes in
conditions, or
that the
degree of
compliance with
the
policies or procedures may deteriorate.
/s/ Ernst & Young
Brisbane, Australia
February 21, 2023
Coronado Global Resources Inc. Form 10-K December
31, 2022
ITEM 9B.
OTHER INFORMATION
None.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT
INSPECTIONS
None.
Coronado Global Resources Inc. Form 10-K December
31, 2022
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.
The information required to
be furnished by
this Item will be
set forth in
our definitive proxy statement
for the 2023
Annual Meeting of
Stockholders, or the
Proxy Statement,
under the heading
“Executive Officers
and Corporate
Governance”, and is incorporated herein by reference
and made a part hereof from the Proxy Statement.
ITEM 11.
EXECUTIVE COMPENSATION.
The information required
to be furnished
by this Item
will be set forth
in the Proxy Statement
under the heading
“Executive
Compensation”
and
is
incorporated
herein
by
reference
and
made
a
part
hereof
from
the
Proxy
Statement.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER
MATTERS.
The
information
required
to
be
furnished
by
this
Item
will
be
set
forth
in
the
Proxy
Statement
under
the
heading “Security Ownership
of Certain Beneficial
Owners and Management
and Related Stockholder
Matters”
and is incorporated herein by reference and made a part
hereof from the Proxy Statement.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required
to be furnished
by this Item
will be set forth
in the Proxy Statement
under the heading
“Certain Relationships and
Related Transactions” and is
incorporated herein by
reference and made
a part
hereof
from the Proxy Statement.
ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES.
The information required
to be furnished
by this Item
will be set forth
in the Proxy Statement
under the heading
“Ratification of
Appointment of
Independent
Registered
Public Accounting
Firm” and
is incorporated
herein by
reference and made a part hereof from the Proxy Statement.
Coronado Global Resources Inc. Form 10-K December
31, 2022
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT
SCHEDULES
(a)
The following documents are filed as part of this
Annual Report:
1.
Financial Statements.
See index to
Financial Statements
and Supplementary
Data on page
of this
Annual report on Form 10-K.
2.
Financial Statements Schedules. Schedules are omitted because
they are not required or applicable, or
the required information is included in the Financial Statements
or related notes thereto.
3.
Exhibits. The
exhibits filed
with or
incorporated by
reference as
part of
this Report
are set
forth in
the
Exhibit Index.
(b)
The documents listed in
the Exhibit Index of
this Annual Report on
Form 10-K are incorporated
by reference
or are filed with this Annual Report on Form 10-K, in
each case as indicated therein.
The following documents are filed as exhibits hereto:
Exhibit No.
Description of Document
2.1*
Share Sale Agreement-Cork, dated as of December 22, 2017, by and among Coronado
Australia Holdings Pty Ltd, Coronado Group LLC and Wesfarmers Limited (filed as
Exhibit 2.1 to the Company’s Registration Statement on Form 10 (File No. 000-56044)
filed on June 28, 2019 and incorporated herein by reference)
3.1
Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s
Registration Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and
incorporated herein by reference)
3.2
Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company’s Registration
Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and incorporated
herein by reference)
4.1
Stockholder’s Agreement, dated as of September 24, 2018, by and between the
Company and Coronado Group
(filed
as
Exhibit
4.1
to
the
Company’s
Registration
Statement
on
Form
(File
No.
000-56044)
filed
on
April
29,
and
incorporated
herein by reference)
4.2
Registration Rights and Sell-Down Agreement, dated as of September 24, 2018, by and
between the Company and Coronado Group (filed as Exhibit 4.2 to the Company’s
Registration Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and
incorporated herein by reference)
4.3
Description of the Company’s securities registered under Section 12 of the Securities
Exchange Act of 1934 (filed as Exhibit 4.3 to the Company’s Annual Report on Form 10-
K (File No. 000-56044) filed on February 24, 2020 and incorporated herein by reference)
4.4
Indenture, dated as of May 12, 2021, among Coronado Finance Pty Ltd, as issuer,
Coronado Global Resources Inc., as guarantor, the subsidiaries of Coronado Global
Resources Inc. named therein, as additional guarantors, Wilmington Trust, National
Association, as trustee and notes collateral agent (filed as Exhibit 4.1 to the Company’s
Current Report on Form 8-K (File No. 000-56044) filed on May 14, 2021 and
incorporated herein by reference)
4.5
Form of 10.750% Senior Secured Notes due 2026 (filed as Exhibit 4.2 to the Company’s
Current Report on Form 8-K (File No. 000-56044) filed on May 14, 2021 and
incorporated herein by reference)
10.1
Relationship Deed, dated as of September 24, 2018, by and among the Company,
Coronado Group, certain EMG Group entities and their affiliates (filed as Exhibit 10.1 to
the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April
29, 2019 and incorporated herein by reference)
10.2†‡
Syndicated Facility Agreement, dated as of May 12, 2021, among Coronado Global
Resources Inc., as guarantor, Coronado Coal Corporation, as U.S. borrower, Coronado
Finance Pty Ltd, as Australian borrower, the subsidiaries of Coronado Global Resources
Inc. named therein, as additional guarantors, and Citibank, N.A., as administrative agent
and a lender, and various other financial institutions as lenders (filed as Exhibit 10.1 to
the Company’s Current Report on Form 8-K (File No. 000-56044) filed on May 14, 2021
and incorporated herein by reference)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Exhibit No.
Description of Document
10.3‡
Coronado Global Resources Inc. 2019 Short-Term Incentive Plan (filed as Exhibit 10.3
to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April
29, 2019 and incorporated herein by reference)
10.4‡
Coronado Global Resources Inc. 2018 Equity Incentive Plan (filed as Exhibit 10.4 to the
Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April 29,
2019 and incorporated herein by reference)
10.5>‡
Coronado Global Resources Inc. 2018 Non-Executive Director Plan (filed as Exhibit 10.5
to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April
29, 2019 and incorporated herein by reference)
10.6>‡
Employment Agreement dated as of September 21, 2018, by and between Coronado
Global Resources Inc. and Garold Spindler (filed as Exhibit 10.6 to the Company’s
Registration Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and
incorporated herein by reference)
10.7>‡
Employment Agreement dated as of July 7, 2020, by and between Curragh Queensland
Mining Pty Ltd and Gerhard Ziems (filed as Exhibit 10.1 to the Company’s Current Report
on Form 8-K/A (File No. 000-56044) filed on July 7, 2020 and incorporated herein by
reference)
10.8>‡
Employment Agreement dated as of August 5, 2021, by and between Coronado Global
Resources Inc. and Jeffrey Bitzer (filed as Exhibit 10.1 to the Company’s Current Report
on Form 8-K (File No. 000-56044) filed on August 9, 2021 and incorporated herein by
reference)
10.9>‡
Contract of Employment dated as of August 4, 2021, by and between Curragh
Queensland Mining Pty Ltd and Douglas Thompson (filed as Exhibit 10.2 to the
Company’s Current Report on Form 8-K (File No. 000-56044) filed on August 9, 2021
and incorporated herein by reference)
10.10>‡
Letter Agreement dated as of February 18, 2022, by and between Curragh Queensland
Mining Pty Ltd and Douglas Thompson (filed as Exhibit 10.10 to the Company’s Annual
Report on Form 10-K (File No. 000-56044) filed on February 22, 2022 and incorporated
herein by reference)
10.11>‡
Employment Agreement dated as of July 12, 2021, by and between Coronado Global
Resources Inc. and Christopher P. Meyering (filed as Exhibit 10.11 to the Company’s
Annual Report on Form 10-K (File No. 000-56044) filed on February 22, 2022 and
incorporated herein by reference)
10.12>‡
Employment Agreement dated as of October 18, 2018, by and between Coronado
Curragh Pty Ltd and Emma Pollard (filed as Exhibit 10.11 to the Company’s Registration
Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and incorporated
herein by reference)
10.13>
Form of Stock Option Award Agreement (Long Term Incentive Grant) (filed as Exhibit
10.12 to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed
on April 29, 2019 and incorporated herein by reference)
10.14>
Form of Performance Stock Unit Award Agreement (Long Term Incentive Grant) (filed
as Exhibit 10.13 to the Company’s Registration Statement on Form 10 (File No. 000-
56044) filed on April 29, 2019 and incorporated herein by reference)
10.15>
Form of Non-Executive Director Restricted Stock Unit Award Agreement (filed as Exhibit
10.14 to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed
on April 29, 2019 and incorporated herein by reference)
10.16>
Form of Restricted Stock Unit Award Agreement (Retention Grant) (filed as Exhibit 10.15
to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April
29, 2019 and incorporated herein by reference)
10.17>
Form of Restricted Stock Unit Award Agreement (STIP Deferral Grant) (filed as Exhibit
10.16 to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed
on April 29, 2019 and incorporated herein by reference)
10.18>
Summary of Non-Executive Director Compensation (filed as Exhibit 10.17 to the
Company’s Annual Report on Form 10-K (File No. 000-56044) filed on February 24,
2020 and incorporated herein by reference)
10.19>
Form of Agreement of Indemnity, Insurance and Access (filed as Exhibit 10.18 to the
Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April 29,
2019 and incorporated herein by reference)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Exhibit No.
Description of Document
10.20‡
Amended Coal Supply Agreement, dated as of November 6, 2009, by and between
Stanwell Corporation Limited and Wesfarmers Curragh Pty Ltd (now known as Coronado
Curragh Pty Ltd) (filed as Exhibit 10.20 to the Company’s Registration Statement on
Form 10 (File No. 000-56044) filed on June 14, 2019 and incorporated herein by
reference)
10.21‡
Deed of Amendment to the Amended Coal Supply Agreement, dated as of November
21, 2016, by and between Stanwell Corporation Limited and Wesfarmers Curragh Pty
Ltd (now known as Coronado Curragh Pty Ltd) (filed as Exhibit 10.21 to the Company’s
Registration Statement on Form 10 (File No. 000-56044) filed on June 14, 2019 and
incorporated herein by reference)
10.22‡
Curragh Mine New Coal Supply Deed, dated August 14, 2018, by and between Stanwell
Corporation Limited and Coronado Curragh Pty Ltd (filed as Exhibit 10.22 to the
Company’s Registration Statement on Form 10 (File No. 000-56044) filed on June 14,
2019 and incorporated herein by reference)
10.23
Deed of Amendment, dated September 20, 2018 and effective September 21, 2018,
among Coronado Curragh Pty Ltd, Stanwell Corporation Limited and Coronado Group
LLC (filed as Exhibit 10.23 to the Company’s Registration Statement on Form 10 (File
No. 000-56044) filed on June 14, 2019 and incorporated herein by reference)
10.24
Deed of Amendment, dated March 5, 2019 and effective May 21, 2019, between
Coronado Curragh Pty Ltd and Stanwell Corporation Limited (filed as Exhibit 10.24 to
the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on June
14, 2019 and incorporated herein by reference)
10.25
Deed of Amendment, dated May 9, 2019 and effective May 21, 2019, between Coronado
Curragh Pty Ltd and Stanwell Corporation Limited (filed as Exhibit 10.25 to the
Company’s Registration Statement on Form 10 (File No. 000-56044) filed on June 14,
2019 and incorporated herein by reference)
10.26†‡
New Coal Supply Agreement, dated as of July 12, 2019, by and between Stanwell
Corporation Limited and Coronado Curragh Pty Ltd. (filed as Exhibit 10.2 to the
Company’s Quarterly Report on Form 10-Q (File No. 000-56044) filed on November 7,
2019 and incorporated herein by reference)
21.1
List of Subsidiaries
23.1
Consent of Ernst & Young
23.2
Consent of Barry Lay
23.3
Consent of Paul Wood
23.4
Consent of Marshall Miller & Associates, Inc.
31.1
Certification of the Chief Executive Officer pursuant to SEC Rules 13a-14(a) or 15d-
14(a) adopted pursuant to Section 302 of the Sarbanes -Oxley Act of 2002
31.2
Certification of the Chief Financial Officer pursuant to SEC Rules 13a-14(a) or 15d-14(a)
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
95.1
Mine Safety Disclosures
96.1
Technical Report Summary for Curragh (filed as Exhibit 96.1 to the Company’s Annual
Report on Form 10-K (File No. 000-56044) filed on February 22, 2022 and incorporated
herein by reference)
96.2
Technical Report Summary for Buchanan
96.3
Technical Report Summary for Logan
96.4
Technical Report Summary for Mon Valley
The following materials from the Company’s Annual Report on Form 10-K for the period
ended December
31,
2022,
formatted
in
iXBRL
(Inline
Extensible
Business
Reporting
Language): (i) Consolidated
Balance Sheets, (ii)
Consolidated Statements of
Operations
and Consolidated Statements of
Comprehensive Income, (iii)
Consolidated Statements
of Stockholders’ Equity/Members’ Capital, (iv) Consolidated
Statements of Cash Flows,
(v) related notes to these financial statements and (vi)
document and entity information
Coronado Global Resources Inc. Form 10-K December
31, 2022
Exhibit No.
Description of Document
Cover Page
Interactive Data
File (the cover
page XBRL
tags are embedded
within the
Inline XBRL document)
____________________
*
Portions of this
exhibit have been omitted
pursuant to Item 601(b)(2)(ii)
of Regulation S-K,
which portions
will be furnished to the Securities and Exchange Commission
upon request.
†
Certain schedules and exhibits to this
agreement have been omitted pursuant to Item
601(a)(5) and Item
601(a)(6)
of
Regulation
S-K.
A
copy
of
any
omitted
schedule
and/or
exhibit
will
be
furnished
to
the
Securities and Exchange Commission upon request.
‡
Portions
of
this
exhibit
have
been
omitted
pursuant
to
Item
601(b)(10)(iv)
of
Regulation
S-K,
which
portions will be furnished to the Securities and Exchange Commission
upon request.
>
Management contract, compensatory plan or arrangement
Coronado Global Resources Inc. Form 10-K December
31, 2022
ITEM 16.
FORM 10-K SUMMARY
None.
Coronado Global Resources Inc. Form 10-K December
31, 2022
SIGNATURES
Pursuant to the
requirements of
Section 13
or 15(d) 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/ Garold Spindler
Garold Spindler
Managing Director and Chief Executive Officer (as
duly
authorized officer and as principal executive officer
of
the registrant)
Date: February 21, 2023
Pursuant to the requirements
of the Securities Exchange
Act of 1934, this
report has been
signed below by
the
following persons, on behalf of the registrant and in the
capacities and on the dates indicated.
Name
Title
Date
/s/ Garold Spindler
Managing Director and Chief Executive
Officer (Principal Executive Officer)
February 21, 2023
Garold Spindler
/s/ Gerhard Ziems
Group Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
February 21, 2023
Gerhard Ziems
/s/ William Koeck
Director
February 21, 2023
William Koeck
/s/ Philip Christensen
Director
February 21, 2023
Philip Christensen
/s/ Greg Pritchard
Director
February 21, 2023
Greg Pritchard
/s/ Laura Tyson
Director
February 21, 2023
Laura Tyson
/s/ Sir Michael Davis
Director
February 21, 2023
Sir Michael Davis

---

ITEM 1B. UNRESOLVED STAFF COMMENTS

---

ITEM 2. PROPERTIES

---

ITEM 3. LEGAL PROCEEDINGS
ITEM 3.
LEGAL PROCEEDINGS.
We are
involved in
various
legal proceedings
occurring
in the
ordinary course
of business.
It is
the opinion
of
management, after consultation
with legal counsel,
that these matters
will not materially
affect our consolidated
financial position, results of operations or cash flows.
The Company is subject to a wide
variety of laws and regulations within the legal jurisdiction in
which it operates.
See “Part I, Item 1. Business-Regulatory Matters”
for additional information. The Company believes that
it is in
substantial compliance with federal, state and local laws
and regulations.
Coronado Global Resources Inc. Form 10-K December 31,

---

ITEM 4. MINE SAFETY DISCLOSURE
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 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 Annual
Report on Form
10-K. The disclosures reflect the
United States mining operations only, as these requirements do
not apply to our
mines operated outside the United States.
Coronado Global Resources Inc. Form 10-K December 31,

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY,
RELATED
STOCKHOLDER MATTERS
AND
ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our CDIs, each
representing one-tenth
of one share
of our common
stock, have
been listed on
the ASX under
the
trading
symbol
“CRN”
since
October 23,
2018.
Prior
to
such
time,
there
was
no
public
market
for
our
securities. There is no principal market in the United States
for our CDIs or shares of our common stock.
Holders
As of December 31, 2022, we had 167,645,373
shares of our common stock issued
and outstanding with 7,513
holders of record.
The holders included CHESS
Depositary Nominees Pty Limited,
which held 90,337,270 shares
of our common stock in the form of
CDIs on behalf of the CDI holders; there were 7,512 registered owners
of our
CDIs on December 31, 2022.
Series A Preferred Share
On September
20, 2018,
we issued
the Series
A Preferred
Share to
Coronado
Group LLC,
at par
value.
The
offer, sale, and issuance of the Series A Share were deemed to be exempt from registration under
the Securities
Act in reliance on Section
4(a)(2) of the Securities Act as
transactions by an issuer not involving
a public offering.
The recipient of the Series A Share acquired the Series A Share for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate
legends were affixed to the Series A Share.
Dividends
The
payment
of
dividends
is
at
the
discretion
of
the
Board
of
Directors.
The
decision
as
to
whether
or
not
a
dividend will be
paid will
be subject to
a number of
considerations including
the general
business environment,
operating
results,
cash
flows,
future
capital
requirements,
regulatory
and
contractual
restrictions,
as
well
as
applicable
covenants
under
the
indenture
governing
our
senior
secured
notes
and
covenants
under
the
ABL
Facility and any other factors the Board of Directors may
consider relevant.
Our objective in setting our dividend policy is to deliver
stockholder returns while maintaining flexibility to pursue
our strategic
initiatives within
a prudent
capital structure.
Our dividend
policy is
to distribute
between 60%
and
100%
of
available
free
cash.
Available
free
cash
is
defined
as
net
cash
from
operating
activities
less
capital
expenditure, acquisition expenditure,
amounts reserved for
capital expenditure and
acquisition expenditure and
amounts required for
debt servicing. In
circumstances where there is
surplus available free cash,
at the discretion
of
our
Board
of
Directors
and
in
light
of
business
and
market
conditions,
we
may
consider
the
potential
for
additional
stockholder
returns
through
special
dividends
and
share
buy-backs
as
part
of
its
broader
capital
management strategy.
Summary Description of the Company’s
Non-Stockholder Approved Equity Compensation
Plans
The Company does not have any non-stockholder approved
equity compensation plans.
Recent Sales of Unregistered Securities
Other than as previously
disclosed in a Quarterly
Report on Form 10-Q
or in a Current
Report on Form 8-K,
we
did not issue
any shares of
our common stock
in a transaction
that was
not registered under
the Securities Act
during the year ended December 31, 2022.
Purchases of Equity Securities by the Issuer and
Affiliated Purchases
We had no repurchases of equity securities for the
three months ended December 31, 2022.
Coronado Global Resources Inc. Form 10-K December 31,

---

ITEM 6. SELECTED FINANCIAL DATA
ITEM 6.
[Reserved]
Coronado Global Resources Inc. Form 10-K December
31, 2022

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7.
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 Consolidated Financial Statements and the related notes to those
statements included elsewhere in this Annual Report on Form
10-K.
Overview
For the year ended December 31,
2022, we produced 16.0
MMt and sold 16.4 MMt of
coal. Met coal and thermal
coal sales
represented
77.2%
and 22.8%,
respectively,
of our
total volume
of coal
sold and
95.3% and
4.7%,
respectively, of total
coal revenues.
During the year
ended December 31,
2022, seaborne index
prices reached record
highs globally,
driven by the
continued impact
of the
Russian invasion
of Ukraine,
which removed
Russian Met
coal from
key markets,
Met
coal crossover trades
into thermal market
due to
elevated demand for
thermal coal and
supply constraints caused
by wet weather and logistical issues.
Coronado has
continued to
take advantage
of its
unique geographical
diversification as
a Met
coal supplier
of
scale to meet the requirements of steel customers across the globe. Our U.S. Operations have taken advantage
of current unique market fundamentals created
by the trade restrictions on Russian coal
by switching coal sales
from
China
to
Europe
providing
higher
returns
for
our
products.
In
addition
to
geographical
diversification,
Coronado is well
positioned to take
advantage of price
arbitrage between the
Thermal and Met
coal markets to
maximize price realizations.
Our results
of operations
for the
year ended
December 31,
2022 benefited
from higher
averaged realized
Met
price per Mt sold,
partially offset by (1) significant unprecedented
wet weather events impacting production at
our
Australian
Operations,
(2)
inflationary
pressure,
including
the
higher
cost
of
fuel
and
labor
costs,
(3)
adverse
geological
conditions
and
weather
events
at
our
U.S.
Operations
resulting
in
lower
production
and
higher
equipment
maintenance
costs,
(4)
additional
fleets
mobilized
at
our
Australian
Operations
to
improve
coal
recovery and (5) higher sales related costs (Stanwell rebate,
royalties and freight costs).
Coal revenues of $3.5
billion
for the year ended December 31, 2022, increased by 67.3% compared to the same
period in 2021, was largely driven by higher
market price of coal resulting in increased
average realized Met coal
pricing of $265.8 per Mt sold,
$127.8 per Mt sold higher than 2021. Sales
volumes were lower for the year ended
December
31,
2022,
compared
to
primarily
due
to
lower
production
caused
by
significant
wet
weather
events at our Australian Operations and adverse geological
conditions at our U.S. Operations.
Operating costs for the year
ended December 31, 2022,
were $680.5 million, or
41.6%, higher compared to
the
corresponding
period
in
driven
by
inflationary
pressures
on
labor
and
supply
costs,
adverse
geological
conditions
in
certain
mines
of
our
U.S.
Operations,
additional
contractor
fleets
deployed
at
our
Australian
Operations to accelerate
overburden removal and
increase coal availability, higher maintenance
costs and higher
sales related costs, resulting in mining costs of $88.4 per Mt sold for the year ended December 31, 2022, 34.5%
higher than 2021.
Dividends
During the year ended December 31, 2022, Coronado
paid total dividends of $700.2 million to stockholders
and
CDI holders on
the ASX, net
of $1.4 million
foreign exchange gain on
payment of dividends
to certain CDI
holders
that elected to be paid in Australian dollars.
Liquidity
As
of
December
31,
2022,
the
Company’s
net
cash
position
was
$92.1
million,
consisting
of
cash
(excluding
restricted cash) of $334.4 million and $242.3 million aggregate principal amount of Notes outstanding. Coronado
had available
liquidity of
$434.4 million
as of
December 31,
2022, comprising
cash (excluding
restricted cash)
and undrawn available borrowings $100.0 million under our ABL facility.
Notes redemption
During the year ended December 31, 2022, we redeemed $72.7 million
of the Notes,
$37.7 million of which were
in relation to offers made in connection with dividends
paid during the period.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Safety
For
our
Australian
Operations,
the
twelve-month
rolling
average
Total
Reportable
Injury
Frequency
Rate
at
December 31, 2022
was 3.92 compared
to 3.07
at the end
of December
31, 2021. At
our U.S. Operations,
the
twelve-month rolling average Total
Reportable Incident Rate, at December 31, 2022 was 2.42 compared to 2.51
at the
end of
December 31, 2021.
Reportable rates for
our Australian Operations
and U.S.
Operations were below
the relevant industry benchmarks.
The safety of our workforce is
our number one priority and we
remain focused on the safety and
wellbeing of all
employees and contracting parties.
Segment Reporting
In accordance with
Accounting Standards Codification,
or ASC, 280,
Segment Reporting, we
have adopted the
following reporting
segments: Australia and
the United
States. In
addition, “Other and
Corporate” is
not a
reporting
segment but is disclosed for the purposes of reconciliation
to our Consolidated Financial Statements.
Results of Operations
How We Evaluate Our Operations
We
evaluate
our
operations
based
on
the
volume
of
coal
we
can
safely
produce
and
sell
in
compliance
with
regulatory
standards,
and
the
prices
we
receive
for
our
coal.
Our
sales
volume
and
sales
prices
are
largely
dependent upon
the terms
of our
coal sales
contracts, for
which prices
generally are
set based
on daily
index
averages, on a quarterly basis or on annual fixed price
contracts.
Our management
uses a
variety of
financial and
operating metrics
to analyze
our performance.
These metrics
are significant factors
in assessing our
operating results
and profitability.
These financial
and operating metrics
include: (i) safety and environmental metrics; (ii) Adjusted EBITDA; (iii) total sales volumes and average realized
price
per
Mt
sold,
which
we
define
as
total
coal
revenues
divided
by
total
sales
volume;
(iv)
Met
coal
sales
volumes and average realized Met price per
Mt sold, which we define as Met coal
revenues divided by Met coal
sales volume; (v)
average segment mining
costs per Mt sold,
which we define
as mining costs
divided by sales
volumes (excluding
non-produced coal)
for the
respective segment;
and (vi)
average segment
operating costs
per Mt sold, which we define as segment operating costs
divided by sales volumes for the respective segment.
Coal revenues are shown on our Consolidated Statements of Operations
and Comprehensive Income exclusive
of other
revenues. Generally,
export sale
contracts for
our Australian
Operations require
us to
bear the
cost of
freight
from
our
mines
to
the
applicable
outbound
shipping
port,
while
freight
costs
from
the
port
to
the
end
destination are
typically borne by
the customer. Sales to
the export market
from our U.S.
Operations are generally
recognized when the 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 the
cost of coal revenues to allow for consistency and comparability
in evaluating our operating performance.
Non-GAAP Financial Measures; Other Measures
The following discussion of
our results includes
references to and analysis
of Adjusted EBITDA and
mining costs,
which
are
financial
measures
not
recognized
in
accordance
with
U.S.
GAAP.
Non-GAAP
financial
measures,
including Adjusted EBITDA, are used by investors to
measure our operating performance.
Adjusted EBITDA, a non-GAAP measure, is defined as earnings before interest, tax, depreciation, depletion and
amortization
and
other
foreign
exchange
losses.
Adjusted
EBITDA
is
also
adjusted
for
certain
discrete
non-
recurring items that we exclude in
analyzing each of our segments’
operating performance. Adjusted EBITDA
is
not intended to
serve as an
alternative to U.S. GAAP
measures of performance
and may not
be comparable to
similarly titled measures presented by
other companies. A reconciliation
of Adjusted EBITDA to its
most directly
comparable measure under U.S. GAAP is included below.
Segment
Adjusted
EBITDA
is
defined
as
Adjusted
EBITDA
by
operating
and
reporting
segment,
adjusted
for
certain
transactions,
eliminations
or
adjustments
that
our
CODM
does
not
consider
for
making
decisions
to
allocate resources among segments or assessing segment performance.
Segment Adjusted EBITDA is used as
a
supplemental
financial
measure
by
management
and
by
external
users
of
our
Consolidated
Financial
Statements such
as investors,
industry analysts
and lenders
to assess
the operating
performance of
the business.
Mining costs,
a non-GAAP
measure, are
based on
the 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 the mine.
Mining costs exclude these cost
Coronado Global Resources Inc. Form 10-K December
31, 2022
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 Consolidated
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.
Year Ended December 31,
2022 Compared to Year
Ended December 31, 2021
Summary
The financial and operational highlights for the year ended December
31, 2022:
•
Net income
increased by
$582.3 million,
from a
net income
of $189.4
million for
the year
ended December
31, 2021,
to a
net income
of $771.7
million for
the year
ended December
31, 2022.
The increase
was
driven by higher revenues, partially offset by higher
operating costs and higher income tax expense.
•
Supply concerns
in key
Met coal markets
driven by wet
weather,
logistic issues,
the ongoing
impact of
the Russia and Ukraine
war on global coal
supply chain and Met
coal crossover trades into
the thermal
market caused considerable
volatility in coal pricing,
resulting in average
realized Met price
per Mt sold
of $265.8 for the year ended December
31, 2022, 92.6% higher
compared to $138.0 per Mt sold for
the
year ended December 31, 2021.
•
Total sales volume was 16.4 MMt for the
year ended December 31, 2022,
or 1.5 MMt lower
than the year
ended December
31, 2021.
The lower
sales volumes
were primarily
driven by
significant wet
weather
events
at
our
Australian
Operations
and
adverse
geological
and
weather
events
at
one
of
our
mine
complexes at our U.S. Operations.
•
Adjusted EBITDA for the year
ended December 31, 2022, totaled
$1,215.6 million, an increase of
$729.5
million, from Adjusted EBITDA of $486.1 million for
the year ended December 31, 2021, driven by
higher
coal revenues partially offset by higher operating
costs.
•
Cash
provided
by
operating
activities
was
$926.6 million
for
the
year
ended
December
31,
2022,
an
increase of $484.6 million
compared to $442.0 million for the year ended
December 31, 2021.
•
As of December
31, 2022 the
Company had total
available liquidity of
$434.4 million, consisting
of $334.4
million of cash (excluding restricted cash) and $100.0 million
of availability under the ABL Facility.
Coronado Global Resources Inc. Form 10-K December
31, 2022
For Year Ended December 31,
(US$ in thousands)
Change
%
Revenues:
Coal revenues
3,527,626
2,108,331
1,419,295
67.3%
Other revenues
43,916
40,140
3,776
9.4%
Total
revenues
3,571,542
2,148,471
1,423,071
66.2%
Costs and expenses:
Cost of coal revenues (exclusive of items shown
separately below)
1,515,585
1,195,250
320,335
26.8%
Depreciation, depletion and amortization
167,046
177,875
(10,829)
(6.1%)
Freight expenses
249,081
241,862
7,219
3.0%
Stanwell rebate
165,995
55,403
110,592
199.6%
Other royalties
385,065
142,751
242,314
169.7%
Selling, general, and administrative expenses
42,499
30,666
11,833
38.6%
Restructuring costs
-
2,300
(2,300)
(100.0%)
Total
costs and expenses
2,525,271
1,846,107
679,164
36.8%
Other income (expenses):
Interest expense, net
(67,632)
(68,062)
(0.6%)
Loss on debt extinguishment
(5,336)
(8,477)
3,141
(37.1%)
(Increase) decrease in provision for discounting and
credit losses
(3,821)
8,042
(11,863)
(147.5%)
Gain on disposal of asset
-
14,845
(14,845)
(100.0%)
Other, net
33,795
(6,187)
39,982
(646.2%)
Total
other expense, net
(42,994)
(59,839)
16,845
(28.2%)
Income before tax
1,003,277
242,525
760,752
313.7%
Income tax expense
(231,574)
(53,102)
(178,472)
336.1%
Net income
771,703
189,423
582,280
307.4%
Less: Net loss attributable to noncontrolling interest
-
(2)
(100.0%)
Net income attributable to Coronado Global
Resources Inc.
771,703
189,425
582,278
307.4%
Coal revenues
Coal revenues
were $3,527.6
million
for the
year
ended December
31, 2022,
an
increase of
$1,419.3
million,
compared
to
$2,108.3 million
for
the
year
ended
December
31,
2021.
This
increase
was
driven
by
favorable
market conditions and higher coal
price indices, which resulted in
a higher average realized Met
price per Mt sold
for the year ended December
31, 2022 of $265.8, compared
to $138.0 per Mt sold
for the same period in
2021.
This increase was
partially offset by 1.8
MMt lower Met
coal sales volume
compared to the
year ended December
31,2021, primarily a result of above average rainfall impacting
production at our Australian Operations.
Cost of coal revenues (exclusive of Items shown
separately below)
Cost of
coal revenues is
comprised 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
include employee-related costs, materials and supplies, contractor services, coal handling and preparation costs
and production taxes.
Total
cost of coal revenues
was $1,515.6 million for
the year ended December
31, 2022, an
increase of $320.3
million, or
26.8%, compared
to $1,195.3
million for
the year
ended December
31, 2021.
Cost of
coal revenues
for our U.S.
Operations increased $171.3 million during the
year ended December 31, 2022,
driven by the impact
of
inflation
on
labor
and
supply
costs,
adverse
geological
conditions
in
certain
mines
of
our
U.S.
Operations
resulting
in
unplanned
maintenance
costs,
and
increased
purchased
coal
transactions
to
meet
certain
sales
commitments.
Cost
of
coal
revenues
for
our
Australian
Operations
for
the
year
ended
December
31,
increased $149.1 million, largely due to additional fleets mobilized
to accelerate overburden removal, inflationary
pressure on fuel pricing and labor costs and increased purchased coal transactions to meet sales commitments.
Higher costs
were partially
offset by
a favorable
average foreign
exchange rate
on translation
of the Australian
Operations for
the year
ended December
31, 2022,
of A$/US$:
0.70 compared
to 0.75
for the
same period
in
2021.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Depreciation, depletion and amortization
Depreciation, depletion and amortization were $167.0 million for
the year ended December 31, 2022,
a decrease
of
$10.8 million,
compared
to
$177.9
million
for
the
year
ended
December
31,
2021.
The
decrease
was
associated with a
favorable average foreign
exchange rate on
translation of the
Australian Operations,
partially
offset by depreciation on equipment brought into
service during the year ended December 31, 2022.
Freight expenses
Freight expenses of $249.1 million for the year
ended December 31, 2022, increased by
$7.2 million, compared
to $241.9
million for
the year
ended December
31, 2021.
Our U.S.
Operations contributed
$15.9 million
to the
increase, due to certain contracts for which we arrange and pay for transportation to port that did not exist to the
same extent in 2022
combined with higher rail freight
rates due the impact of
inflationary pressures in the market,
partially offset by the
benefits of lower
average foreign exchange
rate on translation
of freight cost
from Australian
Operations.
Stanwell rebate
The Stanwell
rebate was
$166.0 million
for the
year ended
December 31,
2022, an
increase of
$110.6 million,
compared to
$55.4 million
for the
year
ended December
31, 2021.
The increase
was largely
driven by
higher
realized
export
reference
coal
pricing
for
the
prior
twelve-month
period
used
to
calculate
the
rebate,
partially
offset by the favorable average foreign exchange
rate on translation of the Australian Operations.
Other royalties
Other
royalties
were
$385.1 million
for
the
year
ended
December
31,
2022,
an
increase
of
$242.3 million,
as
compared to
$142.8 million
for the
year ended
December 31,
2021.
Higher royalties
were a
product of
higher
average
realized
export
pricing
and
the
adverse
impact
of
the
new
Queensland
Government
royalty
regime
applicable from July 1, 2022 to our Australian Operations.
Other, net
Other,
net
was
a
gain
of
$33.8
million
in
the
year
ended
December
31,
2022,
an
increase
of
$40.0
million
compared to
a net
loss of
$6.2 million
for the
year ended
December 31,
2021. The
increase largely
relates to
foreign exchange gains
recognized in the
translation of short-term
inter-entity balances in
certain entities within
the
Group
that
are
denominated
in
currencies
other
than
their
respective
functional
currencies
due
to
the
favorable average foreign exchange rate on translation.
Income tax expense
Income tax
expense of
$231.6 million
for the
year ended
December 31,
2022, increased
by $178.5
million, as
compared to $53.1 million for the year ended December
31, 2021.
The income tax expense
for the year ended
December 31, 2022 resulted in
an annual effective tax rate
of 23.8%,
an increase from 21.9% for the year ended December
31, 2021.
Year Ended December 31,
2021 Compared to Year
Ended December 31, 2020
The Company’s comparison of 2021 results to
2020 results is included in the
Company’s
Annual Report on Form
10-K for the fiscal year ended December 31, 2021
, under Part II Item
7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations”.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Supplemental Segment Financial Data
Year Ended December 31,
2022 Compared to Year
Ended December 31, 2021
Australian Operations
For Year Ended December 31,
(US$ in thousands)
Change
%
Sales Volume (MMt)
10.0
11.3
(1.3)
(12.1)%
Total
revenues ($)
2,116,555
1,315,851
800,704
60.9%
Coal revenues ($)
2,078,518
1,279,736
798,782
62.4%
Average realized price per Mt sold ($/Mt)
208.9
113.1
95.8
84.7%
Met sales volume (MMt)
6.5
8.2
(1.7)
(20.7)%
Met coal revenues ($)
1,968,173
1,171,869
796,304
68.0%
Average realized Met price per Mt sold ($/Mt)
303.1
143.1
160.0
111.8%
Mining costs ($)
864,616
736,782
127,834
17.4%
Mining costs per Mt sold ($/Mt)
89.5
67.6
21.9
32.4%
Operating costs ($)
1,575,786
1,111,248
464,538
41.8%
Operating costs per Mt sold ($/Mt)
158.3
98.2
60.1
61.2%
Segment Adjusted EBITDA ($)
541,208
204,992
336,216
164.0%
Coal
revenues
for
Australian
Operations
for
the
year
ended
December
31,
2022,
were
$2,078.5 million,
an
increase of $798.8 million, or 62.4%, compared
to $1,279.7 million for the year
ended December 31, 2021. This
increase
was
driven
by
higher
average
realized
Met
price
of
$303.1
per
Mt,
an
increase
of
$160.0
per
Mt,
compared to $143.1 per Mt sold during the same period in 2021. The higher realized price during the period was
primarily driven by disruption in supply dynamics caused by the conflict between
Russia and Ukraine, as well as
supply constraints from key Met
coal markets due to unseasonal
wet weather and logistical issues. Sales
volume
of 10.0 MMt was 1.3 MMt lower compared to 11.3
MMt for the year ended December 31, 2021, mainly driven by
significant unprecedented wet
weather events experienced
at the Curragh
mine during 2022
which significantly
reduced mining activities and coal availability.
Operating costs increased by $464.5 million, or 41.8%, for the year ended December 31, 2022, compared to the
year
ended
December
31,
2021.
The
increase
was
driven
by
a
higher
mining
costs,
higher
Stanwell
rebate
(mainly due
to higher
realized coal
pricing) and
greater royalties,
due to higher
coal revenues
and the
adverse
impact of the amended royalty.
Mining costs were $127.8 million, or 17.4%, higher for the year ended December
31, 2022 compared to the same
period in 2021, primarily due
to inflationary pressures and additional
contractor
fleets mobilized
during the
first half
of 2022
at our
Australian Operations,
partially offset
by favorable
average
foreign exchange on
translation of our
Australian Operations. Increased
costs combined with
lower sales
volumes
resulted in higher Mining
and Operating costs per Mt
sold of $89.5 and
$158.3, respectively, an increase of $21.9
and $60.1, respectively,
compared to the same period in 2021.
For the year
ended December 31,
2022, Segment
Adjusted EBITDA was
$541.2 million, an
increase of $336.2
million compared
to Segment
Adjusted EBITDA
of $205.0
million for
the year
ended December
31, 2021.
This
increase was primarily driven by higher coal revenues
partially offset by higher operating costs.
Coronado Global Resources Inc. Form 10-K December
31, 2022
United States
For Year Ended December 31,
(US$ in thousands)
Change
%
Sales Volume (MMt)
6.4
6.4
-
(0.1)%
Total
revenues ($)
1,454,987
832,620
622,367
74.7%
Coal revenues ($)
1,449,108
828,595
620,513
74.9%
Average realized price per Mt sold ($/Mt)
225.2
128.6
96.6
75.1%
Met sales volume (MMt)
6.2
6.3
(0.1)
(1.7)%
Met coal revenues ($)
1,394,880
822,000
572,880
69.7%
Average realized Met price per Mt sold ($/Mt)
226.5
131.2
95.3
72.6%
Mining costs ($)
531,812
392,362
139,450
35.5%
Mining costs per Mt sold ($/Mt)
86.5
62.3
24.2
38.9%
Operating costs ($)
739,940
524,018
215,922
41.2%
Operating costs per Mt sold ($/Mt)
115.0
81.3
33.7
41.5%
Segment Adjusted EBITDA ($)
716,661
312,048
404,613
129.7%
Coal revenues increased by $620.5 million, or
74.9%, to $1,449,1 million for the
year ended December 31, 2022,
as compared
to
$828.6 million
for the
year
ended December
31, 2021.
This increase
was
mainly driven
by
a
higher average
realized
Met price
per Mt
sold for
the
year ended
December 31
,
2022 of
$226.5 compared
to
$131.2 per Mt sold for
the same period in 2021.
Higher average realized Met price benefited
from strong demand
and supply shortage
in the global
seaborne export markets
and high demand
of U.S.-sourced coal
into Europe
due to trade restrictions on Russian coal.
Operating costs
increased by $215.9 million, or 41.2%, to $739.9 million for the year ended December 31, 2022,
compared to
operating costs
of $524.0
million for
the year
ended December
31, 2021
driven by
higher mining
costs, royalties, freight expenses
and increase in purchase
d
coal to meet sales
commitments.
Higher operating
costs were largely driven
by increase in mining
costs of $139.5 million,
or 35.5%. compared to
the same period
in 2021, as
a result
of adverse
geological conditions
causing higher
maintenance costs,
higher subcontractor’s
costs
due to labor shortages and overall inflationary pressures
on labor, materials and supplies.
Segment Adjusted EBITDA of $716.7 million for
the year ended December 31, 2022 increased by
$404.6 million,
or
129.7%, compared to
$312.0 million for
the year ended
December 31,
2021. This increase
was primarily driven
by a higher average realized Met price per Mt sold, partially offset
by higher operating costs.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components
of Corporate and Other Adjusted EBITDA:
For Year Ended December 31,
(US$ in thousands)
Change
%
Selling, general, and administrative expenses
42,499
30,666
11,833
38.6%
Other, net
(254)
(495)
(205.4)%
Total
Corporate and Other Adjusted EBITDA
42,245
30,907
11,338
36.7%
Corporate
and
other
costs
increased
$11.3
million
to
$42.2
million
for
the
year
ended
December
31,
2022,
compared
to
$30.9
million
for
the
year
ended
December
31,
2021.
The
increase
in
selling,
general,
and
administrative
expenses
was
largely
driven
by
inflationary
pressures
on
corporate
and
labor
costs,
corporate
activities resuming to pre-COVID-19 pandemic levels and timing
or certain corporate costs.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Mining and operating costs for the Year Ended December 31, 2022 compared to Year
December 31, 2021
A reconciliation of
segment costs and
expenses, segment operating
costs, and segment
mining costs is
shown
below:
For Year Ended December 31, 2022
(US$ in thousands)
Australia
United States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
1,658,105
823,529
43,637
2,525,271
Less: Selling, general and administrative expense
(24)
-
(42,475)
(42,499)
Less: Depreciation, depletion and amortization
(82,295)
(83,589)
(1,162)
(167,046)
Total operating costs
1,575,786
739,940
-
2,315,726
Less: Other royalties
(330,503)
(54,562)
-
(385,065)
Less: Stanwell rebate
(165,995)
-
-
(165,995)
Less: Freight expenses
(153,068)
(96,013)
-
(249,081)
Less: Other non-mining costs
(61,604)
(57,553)
-
(119,157)
Total mining costs
864,616
531,812
-
1,396,428
Sales Volume excluding non-produced
coal (MMt)
9.7
6.1
-
15.8
Mining cost per Mt sold ($/Mt)
89.5
86.5
-
88.4
For Year Ended December 31, 2021
(US$ in thousands)
Australia
United States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
1,202,807
611,611
31,689
1,846,107
Less: Selling, general and administrative expense
-
-
(30,666)
(30,666)
Less: Restructuring costs
(2,300)
-
-
(2,300)
Less: Depreciation, depletion and amortization
(89,259)
(87,593)
(1,023)
(177,875)
Total operating costs
1,111,248
524,018
-
1,635,266
Less: Other royalties
(117,001)
(25,750)
-
(142,751)
Less: Stanwell rebate
(55,403)
-
-
(55,403)
Less: Freight expenses
(161,703)
(80,159)
-
(241,862)
Less: Other non-mining costs
(40,359)
(25,747)
-
(66,106)
Total mining costs
736,782
392,362
-
1,129,144
Sales Volume excluding non-produced
coal (MMt)
10.9
6.3
-
17.2
Mining cost per Mt sold ($/Mt)
67.6
62.3
-
65.7
Average realized Met price for the Year
Ended December 31, 2022 compared to Year
December 31, 2021
A reconciliation of the Company’s average realized
Met coal revenue is shown below:
For Year Ended December 31,
(US$ in thousands)
Change
%
Met sales volume (MMt)
12.7
14.5
(1.8)
(12.4)%
Met coal revenues ($)
3,363,053
1,993,869
1,369,184
68.7%
Average realized met price per Mt sold ($/Mt)
265.8
138.0
127.8
92.6%
Coronado Global Resources Inc. Form 10-K December
31, 2022
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
For year ended December 31,
(US$ in thousands)
Reconciliation to Adjusted EBITDA:
Net income (loss)
771,703
189,423
(226,537)
Add: Depreciation, depletion and amortization
167,046
177,875
191,189
Add: Interest expense, net
67,632
68,062
50,585
Add: Other foreign exchange (gains) losses
(32,259)
7,049
1,175
Add: Loss on debt extinguishment
5,336
8,477
-
Add: Income tax expense (benefit)
231,574
53,102
(60,016)
Add: Impairment of assets
-
-
78,111
Add: Restructuring costs
-
2,300
-
Add: Losses on idled assets held for sale
2,732
9,994
Add: Gain on disposal of asset held for sale
-
(14,845)
-
Add: Increase (decrease) in provision for discounting
and credit losses
3,821
(8,042)
9,298
Adjusted EBITDA
1,215,624
486,133
53,799
Liquidity and Capital Resources
Overview
Our objective is to maintain a prudent capital structure and to ensure that sufficient liquid assets and funding are
available to meet both anticipated and
unanticipated financial obligations, including unforeseen events that could
have an
adverse impact
on revenues
or costs.
Our principal
sources of
funds are
cash and
cash equivalents,
cash flow from operations and availability under the ABL
Facility.
Our main uses of cash have historically been, and are expected to continue to be, the funding of our operations,
working capital,
capital
expenditure,
debt
service
obligations,
business
or assets
acquisitions
and
payment
of
dividends. Based on our outlook for the next
twelve months and beyond,
which is subject to continually changing
demand from our customers, volatility in
coal prices, ongoing interruptions and uncertainties surrounding China’s
import restrictions,
such as
trade barriers
imposed by
China on
Australian sourced
coal and
the uncertainty
of
impacts from the Russia and Ukraine war
on the global supply chain, we believe
expected cash generated from
operations together with available borrowing facilities
and other strategic and financial
initiatives, will be sufficient
to meet
the needs
of our
existing operations,
capital expenditure,
service our
debt obligations
and, if
declared,
payment of dividends.
Our ability to generate
sufficient cash depends
on our future performance
which may be subject
to a number of
factors
beyond
our
control,
including
general
economic,
financial
and
competitive
conditions
and
other
risks
described in Part I, Item 1A. “Risk Factors” of this Annual
Report on Form 10-K.
Liquidity as of December 31, 2022 and December 31,
2021 was as follows:
December 31,
(US$ in thousands)
Cash, excluding restricted cash
334,378
437,679
Availability under ABL Facility
(1)
100,000
100,000
Total
434,378
537,679
(1)
The ABL Facility contains a
springing fixed charge coverage
ratio of not less than 1.00
to 1.00, which ratio is tested
if availability under the
ABL Facility is less than $17.5 million for five consecutive
business days or less than $15.0 million on
any business day.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Our total indebtedness as of December 31, 2022 and
December 31, 2021 consisted of the following:
(US$ in thousands)
Interest bearing liabilities, excluding current installments
242,326
315,000
Current installments of other financial liabilities and finance
lease obligations
4,585
8,634
Other financial liabilities and finance lease obligations, excluding current
installments
8,336
14,031
Total
255,247
337,665
Liquidity
As
of
December
31,
2022,
available
liquidity
was
$434.4
million,
comprising
of
cash
and
cash
equivalents
(excluding restricted cash) of $334.4 million and $100.0
million of available borrowings under our ABL Facility.
Coronado continues to actively
review plans for reducing
operating, corporate and capital
expenditures to ensure
sufficient available liquidity during periods of uncertainty
and volatility.
Cash
Cash is held in a
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
is invested
in short-
term interest-bearing deposit accounts or used to repay
interest bearing liabilities.
Senior Secured Notes
As of December 31, 2022, the outstanding principal amount of our 10.750%
Senior Secured Notes due 2026, or
the Notes,
was $242.3
million. Interest on
the Notes is
payable semi-annually in
arrears on
May 15 and
November
15 of each year. The Notes
mature on May 15, 2026 and are senior secured obligations
of the Company.
The Notes are guaranteed
on a senior secured
basis by the Company
and its wholly-owned
subsidiaries (other
than
the
Issuer)
(subject
to
certain
exceptions
and
permitted
liens)
and
secured
by
(i)
a
first-priority
lien
on
substantially all of the Company’s assets and the assets of the other
Guarantors (other than accounts receivable
and other rights to payment,
inventory,
intercompany indebtedness, certain
general intangibles and commercial
tort claims, commodities accounts, deposit accounts, securities accounts and other related assets and proceeds
and
products
of
each
of
the
foregoing,
or,
collectively,
the
ABL
Collateral),
or
the
Notes
Collateral,
and
(ii)
a
second-priority lien on the ABL Collateral, which is
junior to a first-priority lien, for the
benefit of the lenders under
the ABL Facility.
The terms
of the
Notes are
governed
by the
indenture.
The indenture
contains
customary
covenants
for high
yield bonds, including,
but not limited
to, limitations on
investments, liens, indebtedness,
asset sales, transactions
with affiliates and restricted payments, including payment
of dividends on capital stock.
The Company may
redeem some or
all of the
Notes at the
redemption prices and
on the terms
specified in the
Indenture. In addition, the Company may,
from time to time, seek to retire or purchase outstanding
debt through
open-market purchases,
privately negotiated
transactions or
otherwise. Such
repurchases, if
any,
will be
upon
such terms and at such prices as the Company may determine, and will depend on prevailing market conditions,
liquidity requirements, contractual restrictions and other
factors.
As of December 31, 2022, we were in compliance with all applicable
covenants under the Indenture.
Partial Redemption of Notes
On November
23, 2022,
the Company
exercised its
optional redemption
rights and
redeemed $35.0
million, or
10.0%, of the
original aggregate principal amount
of its Notes
at a redemption
price equal to
103% of the
principal
amount of the Notes, plus accrued and unpaid interest on
the Notes to, but not including, the date
of redemption.
For
the
year
ended
December
31,
2022,
in
connection
with
the
dividends
paid
in
the
period,
we
offered
to
purchase the
Notes pursuant
to the
terms of
the Indenture.
In connection
with the
above offers,
we purchased
an
aggregate
principal
amount,
for
accepted
offers,
of
$37.7
million
at
a
price
equal
to
104%
of
the
principal
amount of the Notes, plus accrued and unpaid interest on
the Notes to, but not including, the date
of redemption.
Coronado Global Resources Inc. Form 10-K December
31, 2022
ABL Facility
The ABL
Facility,
dated May
12, 2021,
is for
an aggregate
multi-currency
lender commitment
of up
to $100.0
million, including a $30.0 million
sublimit for the issuance
of letters of credit and
$5.0 million for swingline
loans,
at any time outstanding, subject to borrowing base availability.
The ABL Facility matures on May 12, 2024.
Borrowings under the ABL Facility bear interest at a rate
equal to a BBSY rate plus an applicable margin.
As
at
December
31,
2022,
no
amounts
were
drawn
and
no
letters
of
credit
were
outstanding
under
the
ABL
Facility.
As of December 31, 2022, we were in compliance with all applicable
covenants under the ABL Facility.
Bank Guarantees and Surety Bonds
We
are
required
to
provide
financial
assurances
and
securities
to
satisfy
contractual
and
other
requirements
generated in the
normal course of
business. Some of
these assurances are provided
to comply with
state or other
government agencies’ statutes and regulations.
For the U.S. Operations, in
order to provide the required
financial assurance, we generally use
surety bonds for
post-mining reclamation.
We can
also use
bank letters
of credit
to collateralize
certain other
obligations. As
of
December 31, 2022, we
had outstanding surety bonds of
$34.9 million and letters of
credit of $16.8 million issued
from our available bank guarantees, to meet contractual obligations under workers compensation insurance and
to secure
various
obligations
and commitments.
Future
regulatory
changes relating
to these
obligations
could
result in increased obligations, additional costs or additional
collateral requirements.
For
the
Australian
Operations,
we
had
bank
guarantees
outstanding
of
$27.3
million
at
December
31,
2022,
primarily in respect of certain rail and port arrangements
of the Company.
As of
December 31,
2022, we
had outstanding
bank guarantees
of $44.1
million to
secure various
obligations
and
commitments.
The
Company
provided
cash,
in
the
form
of
deposits,
as
collateral
against
these
bank
guarantees.
Dividend
During the year ended December 31, 2022, we paid $700.2
million in dividends to stockholders or CDI holders
on the ASX,
net of $1.4 million foreign exchange gain on payment
of dividends to certain CDI holders that
elected to be paid in Australian dollars.
On February 21,
2023, our Board
of Directors declared
a bi-annual fully
franked fixed ordinary
dividend of $8.4
million, or 0.5 cents per CDI. The Company
is not required to make an offer
to purchase Notes in relation to this
dividend due to the available unaccepted portion of the
offer to purchase Notes made in connection with
special
dividends declared on October 30, 2022. The dividend will have a record date of March 15, 2023, Australia time,
and be payable on April 5, 2023, Australia time. The
ordinary dividend will be funded from available cash.
Capital Requirements
Our main uses of cash have historically been the funding
of our operations, working capital, capital expenditure,
the payment of
interest and dividends.
We intend
to use cash
to fund debt
service payments
on our Notes,
the
ABL Facility and our
other indebtedness, to fund operating
activities, working capital, capital expenditures, partial
redemption of the Notes, business or assets acquisitions
and, if declared, payment of dividends.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Historical Cash Flows
The
following
table
summarizes
our
cash
flows
for
the
year
ended
December
31,
2022,
and
as
reported in the accompanying Consolidated Financial Statements:
Cash Flow
For Year Ended December 31,
(US$ in thousands)
Net cash provided by (used in) operating activities
926,643
442,014
(3,000)
Net cash used in investing activities
(208,343)
(134,332)
(114,128)
Net cash (used in) provided by financing activities
(784,251)
80,836
137,526
Net change in cash and cash equivalents
(65,951)
388,518
20,398
Effect of exchange rate changes on cash and restricted
cash
(37,351)
3,677
(1,215)
Cash and restricted cash at beginning of period
437,931
45,736
26,553
Cash and restricted cash at end of period
334,629
437,931
45,736
Operating activities
Net cash provided
by operating activities
was $926.6 million
for the year ended
December 31, 2022,
compared
to a
cash provided
by in
operating activities
of $442.0 million for
the year
ended December
31, 2021.
The increase
was primarily driven by higher coal revenues due to an increase in the
average realized Met coal pricing partially
offset by higher operating
costs and unfavorable working capital
movement due to higher trade
receivables and
inventories at December 31, 2022.
Net cash provided
by operating activities
was $442.0 million
for the year ended
December 31, 2021,
compared
to a cash used in
operating activities of $3.0 million for the year
ended December 31, 2020. The increase in cash
provided by
operating
activities
was driven
by favorable
movement
in working
capital and
an increase
in coal
revenues during the year partially offset by higher
operating costs.
Investing activities
Net cash
used in
investing activities
was
$208.3 million
for the
year
ended December
31, 2022,
compared
to
$134.3 million
for the
year ended
December 31,
2021. Cash
spent on
capital expenditures
for the
year ended
December 31,
was $199.7
million, of
which $79.
million is
related to
the Australian
Operations,
$119.7
million is related
to the U.S.
Operations and the
remaining $0.6 million
for other and corporate.
During the year
ended December
31, 2022,
a net
of $6.5
million of
additional deposits
were provided
as collateral
for our
U.S.
workers
compensation
obligations
and
$2.4
million
of
the
additional
security
deposit
were
provided
by
our
Australian Operations to satisfy contractual requirements in
the normal course of business.
Net cash
used in
investing
activities was
$134.3 million
for the
year
ended December
31, 2021,
compared
to
$114.1
million for
the year
ended December
31, 2020.
Cash spent
on capital
expenditures for
the year
ended
December 31, 2021 was
$89.7 million, of
which $37.9 million is
related to the Australian
Operations, $50.1 million
related to
the
U.S.
Operations
and the
remaining
$1.6
million for
other
and corporate.
During
the
year
ended
December 31, 2021, a net of $73.7 million of additional deposits were provided as collateral for bank guarantees
and our
U.S. workers
compensation obligations.
Partially offsetting
the cash
used, was
net proceeds
of $27.5
million generated during the year ended December 31, 2021
from the sale of Amonate.
Financing activities
Net cash
used in
financing
activities was
$784.3 million
for the
year ended
December
31, 2022,
compared
to
cash provided by financing activities of
$80.8 million for the year ended December
31, 2021. The net cash used
in financing activities for
the year ended December
31, 2022, included dividend
payments of $700.2
million, net
of a
$1.4 million
foreign exchange
gain on
settlement
of dividends
for shareholders
who elected
to be
paid
in
Australian dollars
,
$72.7 million
of Notes
redeemed
and
$2.6 million
of premium
paid on
redemption,
and the
remainder related to repayment of other financial liabilities.
Net cash provided by financing activities was $80.8
million for the year ended December 31, 2021, compared
to
$137.5 million
for the year
ended December
31, 2021.
Included in the
net cash
provided by
financing activities
for
the
year
ended
December
31,
2021,
were
net
proceeds
from
borrowings
of
$396.3
million,
repayment
of
borrowings of $413.2 million and net proceeds from the stock
issuance of $97.7 million.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Contractual Obligations
The following is a summary of our contractual obligations
at December 31, 2022:
Payments Due By Year
Less than
-
-
More than
(US$ in thousands)
Total
1 Year
Years
Years
5 Years
Long
-
term debt obligations
(1)
12,964
4,543
8,421
-
-
Senior secured notes
(2)
242,326
-
-
242,326
-
Mineral lease commitments
(3)
52,742
5,493
10,623
10,228
26,398
Operating and finance lease commitments
27,099
9,102
11,644
6,353
-
Unconditional purchase obligations
(4)
28,601
28,601
-
-
-
Take
-
or
-
pay contracts
(5)
932,701
96,734
203,116
206,564
426,287
Total
contractual cash obligations
1,296,433
144,473
233,804
465,471
452,685
(1)
Represents financial obligation relating to amounts outstanding
from financing equipment purchases,
insurance premiums and financial liabilities for a sale and lease
back type arrangement.
(2)
Represents financial obligation outstanding under the
Senior Secured Notes. Refer to 17 “Interest
Bearing Liabilities”
in the accompanying audited Consolidated Financial Statements
for additional
discussion.
(3)
Represents future minimum royalties and payments under mineral
leases. Refer to 27 “Commitments”
in the accompanying audited Consolidated Financial Statements
for additional discussion.
(4)
Represents firm purchase commitments for capital expenditures
(based on order to suppliers for capital
purchases) for 2023.
(5)
Represents various short-
and long-term take-or-pay arrangements in Australia associated
with rail and
port commitments for the delivery of coal.
This
table
does
not
include
our
estimated
Asset
Retirement
Obligations,
or
ARO.
As
discussed
in
“-Critical
Accounting
Policies
and
Estimates-Carrying
Value
of
Asset
Retirement
Obligations”
below,
the
current
and
non-current
carrying
amount
of
our
ARO
involves
several
estimates,
including
the
amount
and
timing
of
the
payments required to satisfy
these obligations. The timing
of payments is based on numerous
factors, including
projected
mine
closure
dates.
Based
on
our
assumptions,
the
carrying
amount
of
our
ARO
as
determined
in
accordance with U.S. GAAP was $138.5 million as of
December 31, 2022.
Critical Accounting Policies and Estimates
The preparation
of
our Consolidated
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
Consolidated
Financial
Statements
and
the
reported
amounts
of
revenue
and
expenses
during
the
reporting
period.
Listed
below
are
the
accounting
estimates
that
we
believe
are
critical
to
our
Consolidated
Financial
Statements due to the degree of
uncertainty regarding the estimates or assumptions involved and
the magnitude
of the asset, liability, revenue or expense being reported. All of these accounting
estimates and assumptions, as
well
as
the
resulting
impact
to
our
Consolidated
Financial
Statements,
have
been
discussed
with
the
Audit,
Governance and Risk Committee, or Audit Committee,
of our Board of Directors.
See Note 2.
“Summary of Significant
Accounting Policies”
to the accompanying
audited Consolidated Financial
Statements for a summary of our significant accounting
policies.
Fair Value of Non-Financial Assets
Our
non-financial
assets
valuations
are
primarily
comprised
of
our
determination
of
the
estimated
fair
value
allocation of net tangible
and intangible assets, our
annual assessment of
the recoverability of
our goodwill and
our evaluation of the recoverability of our other long-lived
assets upon certain triggering events.
Long-Lived Assets
We review
the carrying
value of
intangible
assets with
definite lives
and
other long-lived
assets to
be used
in
operations annually
or whenever
events or
changes in
circumstances
indicate that
the carrying
amount of
the
assets or asset groups might not be recoverable.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Factors that would necessitate
an impairment assessment
include a significant adverse
change in the extent
or
manner in which an asset is
used, a significant adverse change in
legal factors or the business climate
that could
affect
the
value
of
the
asset
group
or
a significant
decline
in
the
observable
market
value
of
an
asset
group,
among others. If such facts
indicate a potential impairment,
the recoverability of the asset
group is assessed by
determining whether the carrying value
of the asset group exceeds
the sum of the projected
undiscounted cash
flows expected to
result from
the use and
eventual disposition
of the asset
group over the
remaining economic
life of the asset
group. If the projected undiscounted cash
flows are less than
the carrying amount, an impairment
is recorded
for the
excess of
the carrying
amount over
the estimated
fair value,
which is
generally determined
using discounted future cash
flows. Any such write
down is included in
impairment expense in our
consolidated
statement of operations.
A high degree of
judgment is required
to estimate the
fair value of
our intangible and
long-lived assets, and
the
conclusions that
we reach
could vary
significantly based
on these
judgments.
We make
various
assumptions,
including assumptions regarding
future cash flows
in our
assessments of
fair value. The
assumptions about future
cash
flows
and
growth
rates
are
based
on
the
current
and
long-term
business
plans
related
to
the
long-lived
assets. Discount
rate assumptions
are based
on an
assessment of
the risk
inherent in
the future
cash flows
of
the long-lived assets.
At
December
31,
2022,
we
determined,
based
on
our
qualitative
assessment,
that
no
impairment
indicators
existed.
Goodwill Impairment
We had
a balance
of goodwill
of $28.0 million
recorded at
December 31,
2022, which
was generated
upon the
acquisition of Buchanan
in 2016. We
perform our annual assessment
of the recoverability of
our goodwill in
the
fourth quarter of each year. We utilize a qualitative assessment for determining whether the quantitative goodwill
impairment analysis is
necessary.
The accounting guidance
permits entities to
first assess qualitative
factors to
determine whether it is more
likely than not that the
fair value of a reporting
unit is less than its carrying
amount
as
a
basis
for
determining
whether
it
is
necessary
to
perform
the
quantitative
goodwill
impairment
test.
In
evaluating goodwill on
a qualitative basis,
we review the
business performance
of the Buchanan
mine complex
(the only reporting
unit with
a goodwill balance)
and evaluate
other relevant
factors as
identified in the
relevant
accounting
guidance
to
determine
whether
it
is
more
likely
than
not
that
an
indicator
of
impairment
exists
at
Buchanan. We consider whether there are any negative macroeconomic conditions, industry specific conditions,
market
changes,
increased
competition,
increased
costs
in
doing
business,
management
challenges,
legal
environments and how these factors might
impact company specific performance in future periods.
As part of the
analysis, we
also consider
fair value
determinations for
certain reporting
units that
have been
made at
various
points throughout
the current
and prior
year for
other purposes
to ensure
there is
no contrary
evidence to
our
analysis. At
December 31,
2022, we
did not
perform a
quantitative impairment
assessment as
we determined,
based on our qualitative assessment, that no impairment
indicators existed.
Assets held for sale
As of December 31, 2022, the assets
and liabilities held for sale represent the fair value
of the Greenbrier mining
asset, which may be realized through a potential sale within the
next 12 months.
The fair value of the Greenbrier mining asset was primarily driven by indicative offers and Level 3 inputs such as
estimates
of
future
cash
flows
which
aligns
to
the
Company’s
best
estimate
of
future
market
and
operating
conditions, including
its current
life of
mine plan.
The life
of mine
plan includes
assumptions in
relation to
coal
price forecasts, projected mine production volumes, operating costs,
capital costs and discount rate.
Carrying Value of Asset Retirement
Obligations
The Company is required to maintain a liability
(and associated asset) for the expected value of future
retirement
obligations on their mines, in line with ASC 410, Asset
Retirement and Environmental Obligations.
Reclamation
of
areas
disturbed
by
mining
operations
must
be
performed
by
us
in
accordance
with
approved
reclamation plans and in compliance with state and federal laws in the states of West Virginia and Virginia
in the
U.S., and Queensland in Australia. For areas disturbed, a significant amount of the reclamation will take place in
the future, when
operations cease. There
were no assets
that were
legally restricted for
purposes of settling
asset
retirement obligations
as of
December 31,
2022. In
addition, state
agencies monitor
compliance with
the mine
plans, including reclamation.
Coronado Global Resources Inc. Form 10-K December
31, 2022
We
record
the
fair
value
of
additions
to
our
asset
retirement
obligations
using
the
present
value
of
projected
future
cash
flows
discounted
using
a
credit-adjusted
risk-free
rate,
with
an
equivalent
amount
recorded
as
a
long-lived asset. An accretion
cost is recorded each
period and the capitalized cost
is depreciated over the
useful
life of the
related asset. As reclamation
work is performed or
liabilities are otherwise settled, the
recorded amount
of the liability is reduced.
A review
of restoration
and
decommissioning
provisions
is carried
out annually
on a
mine-by-mine
basis,
and
adjustments are made to reflect any changes in estimates, if necessary. On an interim basis, we may update the
liability based on significant changes to the life of mine or significant increases in disturbances during the period.
Expected Credit Losses
For trade and related party
receivables carried at amortized
cost, we determine expected
credit losses, or ECL,
on a forward-looking basis. The amount of ECL is updated at each reporting date to reflect changes in credit risk
since the
initial recognition of
the respective
financial instrument. We
recognize the lifetime
ECL. ECL is
estimated
based on our
historic credit loss
experience, adjusted for
factors that are
specific to the
financial asset, general
economic
conditions,
financial
asset
type,
term
and
an
assessment
of
both
the
current
as
well
as
forecast
conditions, including
the expected
timing of
collection, 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.
We consider
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 us.
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.
We write
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 “Decrease (increase) in provision
for discounting
and
credit
losses”.
Subsequent
recoveries
of
amounts
previously
written
off
are credit
against
“Decrease (increase) provision for discounting and
credit losses” in the
consolidated statement of operations and
other comprehensive income.
Recoverable Coal Reserves
There are numerous uncertainties inherent
in estimating quantities and values of
economically recoverable coal
reserves,
including
many
factors
beyond
our
control.
As
a
result,
estimates
of
economically
recoverable
coal
reserves
are
by
their
nature
uncertain.
Information
about
our
reserves
consists
of
estimates
based
on
engineering,
economic
and
geological
data
assembled
and
analyzed
by
our
staff
and
third-party
qualified
persons. Our
reserves are
periodically reviewed
by an
independent third
party consultant.
Some of
the factors
and assumptions which impact economically recoverable reserve
estimates include:
•
geological settings;
•
historical production from the area compared with production from
other producing areas;
•
the assumed effects of regulations and taxes by governmental
agencies
;
•
assumptions governing future prices; and
•
future operating costs.
Each of these factors may in fact vary considerably from the
assumptions used in estimating reserves. For these
reasons,
estimates
of
the
economically
recoverable
quantities
of
coal
attributable
to
a
particular
group
of
properties, and classifications
of these reserves
based on the
risk of recovery
and estimates of
future net cash
flows,
may
vary
substantially.
Actual
production,
revenues
and
expenditures
with
respect
to
our
reserves
will
likely
vary
from
estimates,
and
these
variances
may
be
material.
See
Item 1A.
“Risk
Factors-We
rely
on
estimates of our
recoverable reserves,
which is complex
due to geological
characteristics of the
properties and
the number of assumptions made”
and Item 2. “Properties” for discussions
of the uncertainties in estimating
our
proven and probable coal reserves.
Taxes
We are required to
estimate the amount of
tax payable or
refundable for the
current year and the
deferred income
tax liabilities and assets
for the future tax consequences
of events that have
been reflected in our
Consolidated
Coronado Global Resources Inc. Form 10-K December
31, 2022
Financial Statements
or tax
returns for
each taxing
jurisdiction in
which we
operate. This
process requires
our
management to
make judgments
regarding the
timing and
probability of
the ultimate
tax impact
of the
various
agreements
and
transactions
that
we
enter
into.
Based
on
these
judgments
we
may
record
tax
reserves
or
adjustments
to
valuation
allowances
on
deferred
tax
assets
to
reflect
the
expected
realizability
of
future
tax
benefits. Actual income
taxes could vary
from these estimates
due to
future changes in
income tax
law, significant
changes
in
the
jurisdictions
in
which
we
operate,
our
inability
to
generate
sufficient
future
taxable
income
or
unpredicted results from the final
determination of each year’s
liability by taxing authorities. These
changes could
have a significant impact on our financial position.
Newly Adopted Accounting Standards and Accounting
Standards Not Yet Implemented
See Note 2. “Summary
of Significant Accounting
Policies” to the
accompanying audited
Consolidated Financial
Statements
for
a
discussion
of
newly
adopted
accounting
standards
and
accounting
standards
not
yet
implemented.
Coronado Global Resources Inc. Form 10-K December
31, 2022

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A.
QUANTITATIVE
AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Our activities
expose us
to
a variety
of financial
risks, such
as commodity
price risk,
interest rate
risk, foreign
currency risk, liquidity risk and credit
risk. The overall risk management objective is
to minimize potential adverse
effects on our financial performance from those risks
which are not coal price related.
We manage
financial risk
through policies
and procedures
approved by
our Board
of Directors.
These specify
the responsibility
of the
Board
of Directors
and
management
with regard
to the
management
of financial
risk.
Financial risks are
managed centrally by
our finance
team under the
direction of the
Group Chief
Financial Officer.
The finance team manages risk exposures primarily through delegated authority limits approved by the Board of
Directors. The finance team regularly monitors our
exposure to these financial risks and reports
to management
and
the
Board
of
Directors
on
a
regular
basis.
Policies
are
reviewed
at
least
annually
and
amended
where
appropriate.
We may use
derivative financial instruments such
as forward fixed
price commodity contracts, interest
rate swaps
and
foreign
exchange
rate
contracts
to
hedge
certain
risk
exposures.
Derivatives
for
speculative
purposes
is
strictly prohibited by the Treasury Risk Management Policy approved by our Board of
Directors. We use different
methods
to
measure
the
extent
to
which
we
are
exposed
to
various
financial
risks.
These
methods
include
sensitivity analysis in
the case of
interest 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.
The
expectation
of
future
prices
for
coal
depends
upon
many
factors
beyond
our
control.
Met
coal
has
been
volatile commodity
over the
past ten
years. Recently,
in the
second quarter
of 2022,
seaborne prices
reached
record levels with both the Australian and U.S. Met coal price indices exceeding $600 per Mt, largely as result of
supply concerns
in key
Met coal
markets and
continued trade
flow disruptions
caused by
geopolitical tensions
following Russian
invasion
of Ukraine.
The demand
and supply
in the
Met coal
industry changes
from time
to
time. There are no assurances that oversupply will not occur, that demand will not decrease or that overcapacity
will not
occur,
which could
cause declines
in the
prices of
coal, which
could have
a material
adverse effect
on
our financial condition and results of operations
Additionally,
access to
international markets
may be
subject to
ongoing interruptions
and trade
barriers due
to
policies and tariffs of individual countries. For example, the imposition of restrictions
by China on Australian coal
into the
Country,
may in
the future
have a
negative impact
on our
profitability.
We may
or may
not be
able to
access alternate
markets for
our coal
should additional
interruptions and
trade barriers
occur in
the future.
An
inability
for
Met
coal
suppliers
to
access
international
markets,
including
China,
would
likely
result
in
an
oversupply of Met coal and may result in a decrease in
prices and or the curtailment of production.
We manage
our commodity
price risk
for our non-trading,
thermal coal
sales through
the use
of long-term
coal
supply agreements in our
U.S. Operations. In Australia, thermal
coal is sold
to Stanwell on a
supply contract. See
Part I, Item 1A. “Risk Factors-Risks related to the Supply Deed with Stanwell may
adversely affect our financial
condition and results of operations.”
Sales commitments in the
Met coal market are typically
not long-term in nature,
and we are therefore subject
to
fluctuations
in
market
pricing.
Certain
coal
sales
in
our
Australian
Operations
are
provisionally
priced
initially.
Provisionally priced sales
are those for
which price
finalization, referenced
to the relevant
index, is outstanding
at the reporting date. The final sales price is
determined within 7 to 90 days after delivery
to the customer.
As of
December 31, 2022,
we had $13.7
million of outstanding
provisionally priced receivables
subject to changes
in
the relevant price index. If prices decreased 10%, these provisionally priced receivables would decrease by $1.4
million.
See Part
I, Item
1A.
“Risk
Factors-Our
profitability depends
upon the
prices
we receive
for our
coal.
Prices for coal are volatile and can fluctuate widely based upon
a number of factors beyond our control.”
Coronado Global Resources Inc. Form 10-K December
31, 2022
Diesel Fuel
We may
be exposed
to price
risk in
relation to
other commodities
from time
to time
arising from
raw materials
used in our operations (such as gas or
diesel). These commodities may be hedged through financial instruments
if the
exposure is
considered material
and where
the exposure
cannot be
mitigated through
fixed price
supply
agreements.
The fuel required for our operations in fiscal year 2023 will be purchased under fixed-price contracts or on
a spot
basis.
Interest Rate Risk
Interest rate risk is the risk that a change in interest rates
on our borrowing facilities will have an adverse impact
on financial performance, investment decisions
and stockholder return. Our
objectives in managing our exposure
to interest rates include
minimizing interest costs
in the long term,
providing a reliable estimate
of interest costs
for
the
annual
work
program
and
budget
and
ensuring
that
changes
in
interest
rates
will
not
have
a
material
impact on our financial performance.
As
of
December
31,
2022,
we
had
$255.2 million
of
fixed-rate
borrowings
and
Notes
and
there
were
no variable-rate borrowings outstanding.
We currently do not hedge against interest rate
fluctuations.
Foreign Exchange Risk
A significant portion of our
sales are denominated in US$.
Foreign exchange risk is
the risk that our earnings
or
cash flows are adversely impacted by movements in exchange
rates of currencies that are not in US$.
Our main exposure
is to the
A$-US$ exchange rate
through our Australian
Operations, which have
predominantly
A$
denominated
costs.
In
2022,
greater
than
60%
of
expenses
incurred
at
our
Australian
Operations
were
denominated in
A$. Approximately
40% of
our Australian
Operations’
purchases were
made with
reference
to
US$, which provides
a natural hedge
against foreign exchange
movements on these
purchases (including fuel,
several port handling charges,
demurrage, purchased coal
and some insurance
premiums). Appreciation of
the
A$ against
US$ will
increase our
Australian Operations’
US$ reported
cost base
and reduce
US$ reported
net
income. For
the portion
of US$
required to
purchase A$
to settle
our Australian
Operations’ operating
costs, a
10%
increase
in
the
A$
to
US$
exchange
rate
would
have
increased
reported
total
costs
and
expenses
by
approximately $99.0 million for the year ended December
31, 2022.
Under normal market conditions, we generally do not consider it necessary to hedge our
exposure to this foreign
exchange risk.
However,
there
may be
specific commercial
circumstances,
such
as the
hedging
of significant
capital
expenditure,
acquisitions,
disposals
and
other
financial
transactions,
where
we
may
deem
foreign
exchange hedging
as appropriate
and
where a
US$ contract
cannot
be negotiated
directly with
suppliers
and
other third parties.
For our Australian
Operations, we
translate all
monetary assets
and liabilities
at the period-end
exchange rate,
all 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
against exchange rate fluctuations.
Credit Risk
Credit risk is the risk of
sustaining a financial loss
as a result of a counterparty
not meeting its obligations under
a financial instrument or customer contract.
We are exposed
to credit risk
when we have financial
derivatives, cash deposits,
lines of credit, letters
of credit
or bank guarantees
in place with
financial institutions. To mitigate against credit risk
from financial counterparties,
we have minimum credit rating requirements with financial
institutions where we transact.
Coronado Global Resources Inc. Form 10-K December
31, 2022
We
are
also
exposed
to
counterparty
credit
risk
arising
from
our
operating
activities,
primarily
from
trade
receivables. Customers who wish to trade on
credit terms are subject to credit
verification procedures, including
an assessment of their independent credit rating, financial position, past experience and industry reputation.
We
monitor the financial performance
of counterparties on a routine
basis to ensure credit
thresholds are achieved.
Where required, we will request additional credit
support, such as letters of credit,
to mitigate against credit risk.
Credit
risk
is
monitored
regularly,
and
performance
reports
are
provided
to
our
management
and
Board
of
Directors.
As of
December
31,
2022,
we had
financial
assets
of
$838.8
million,
comprising
of cash
and
restricted
cash,
trade receivables and
restricted deposits,
which are exposed
to counterparty
credit risk. These
financial assets
have been assessed under ASC 326, Financial Instruments - Credit Losses, and
a provision for discounting and
credit
losses
of
$5.1
million
was
recorded
as
of
December
31,
2022.
See
item
8.
Financial
Statements
and
Supplementary Data-Note 9. Provision for Discounting and
Credit Losses.
Coronado Global Resources Inc. Form 10-K December 31,

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY
DATA
Page
Number
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
(PCAOB ID: 0
)
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Balance Sheets
(In US$ thousands, except share data)
Assets
Note
December 31,
December 31,
Current assets:
Cash and restricted cash
$
334,629
$
437,931
Trade receivables, net
409,979
271,923
Inventories
158,018
118,922
Other current assets
60,188
47,647
Assets held for sale
26,214
27,023
Total
current assets
989,028
903,446
Non-current assets:
Property, plant and
equipment, net
1,389,548
1,397,363
Right of use asset - operating leases, net
17,385
13,656
Goodwill
28,008
28,008
Intangible assets, net
3,311
3,514
Restricted deposits
89,062
80,981
Deferred income tax assets
-
14,716
Other non-current assets
33,585
19,728
Total
assets
$
2,549,927
$
2,461,412
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
61,780
$
97,514
Accrued expenses and other current liabilities
343,691
270,942
Income tax payable
119,981
25,612
Asset retirement obligations
10,646
9,414
Contract obligations
40,343
39,961
Lease liabilities
7,720
8,452
Other current financial liabilities
4,458
8,508
Liabilities held for sale
12,241
12,113
Total
current liabilities
600,860
472,516
Non-current liabilities:
Asset retirement obligations
127,844
110,863
Contract obligations
94,525
141,188
Deferred consideration liability
243,191
230,492
Interest bearing liabilities
232,953
300,169
Other financial liabilities
8,268
13,822
Lease liabilities
15,573
12,894
Deferred income tax liabilities
95,671
75,750
Other non-current liabilities
27,952
26,216
Total
liabilities
$
1,446,837
$
1,383,910
Common stock $
0.01
par value;
1,000,000,000
shares authorized,
167,645,373
shares issued and outstanding as of December 31, 2022 and
December 31, 2021
1,677
1,677
Series A Preferred stock $
0.01
par value;
100,000,000
shares authorized,
Share issued and outstanding as of December 31, 2022 and
December 31,
-
-
Additional paid-in capital
1,092,282
1,089,547
Accumulated other comprehensive losses
(91,423)
(44,228)
Retained earnings
100,554
30,506
Total
stockholders’ equity
1,103,090
1,077,502
Total
liabilities and stockholders’ equity
$
2,549,927
$
2,461,412
See accompanying notes to consolidated financial
statements.
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Statements of Operations and Comprehensive
Income
(In US$ thousands, except share data)
Year ended December 31,
Note
Revenues:
Coal revenues
$
3,527,626
$
2,010,996
$
1,289,010
Coal revenues from related parties
-
97,335
134,589
Other revenues
43,916
40,140
38,663
Total
revenues
3,571,542
2,148,471
1,462,262
Costs and expenses:
Cost of coal revenues (exclusive of items shown
separately below)
1,515,585
1,195,250
1,014,879
Depreciation, depletion and amortization
167,046
177,875
191,189
Freight expenses
249,081
241,862
185,863
Stanwell rebate
165,995
55,403
103,039
Other royalties
385,065
142,751
84,891
Selling, general, and administrative expenses
42,499
30,666
30,352
Restructuring costs
-
2,300
-
Total
costs and expenses
2,525,271
1,846,107
1,610,213
Other income (expenses):
Interest expense, net
(67,632)
(68,062)
(50,585)
Loss on debt extinguishment
(5,336)
(8,477)
-
Impairment of assets
-
-
(78,111)
(Increase) decrease in provision for discounting and
credit losses
(3,821)
8,042
(9,298)
Gain on disposal of asset held for sale
-
14,845
-
Other, net
33,795
(6,187)
(608)
Total
other expense, net
(42,994)
(59,839)
(138,602)
Income (loss) before tax
1,003,277
242,525
(286,553)
Income tax (expense) benefit
(231,574)
(53,102)
60,016
Net income (loss)
771,703
189,423
(226,537)
Less: Net loss attributable to noncontrolling
interest
-
(2)
(69)
Net income (loss) attributable to Coronado Global
Resources Inc.
$
771,703
$
189,425
$
(226,468)
Other comprehensive income, net of income taxes:
Foreign currency translation adjustment
(47,195)
(17,451)
21,488
Net gain (loss) on cash flow hedges, net of tax
-
2,029
(5,088)
Total
other comprehensive (loss) income
(47,195)
(15,422)
16,400
Total
comprehensive income (loss)
724,508
174,001
(210,137)
Less: Net loss attributable to noncontrolling
interest
-
(2)
(69)
Total
comprehensive income (loss) attributable to
Coronado Global Resources Inc.
$
724,508
$
174,003
$
(210,068)
Earnings (loss) per share of common stock
Basic
4.60
1.21
(2.04)
Diluted
4.60
1.21
(2.04)
See accompanying notes to consolidated financial
statements.
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Statements of Stockholders’ Equity
(In US$ thousands, except share data)
Common stock
Preferred stock
Additional
paid in
capital
Accumulated
other
comprehensive
losses
Retained
earnings
(Accumulated
losses)
Noncontrolling
interest
Total
stockholders'
equity
Shares
Amount
Series A
Amount
Balance December 31, 2019
96,651,692
$
$
-
$
820,247
$
(45,206)
$
91,712
$
$
867,941
Net loss
-
-
-
-
-
-
(226,468)
(69)
(226,537)
Other comprehensive income (net of
$
2,108
deferred income tax)
-
-
-
-
-
16,400
-
-
16,400
Total comprehensive income (loss)
-
-
-
-
-
16,400
(226,468)
(69)
(210,137)
Issuance of common stock, net
41,736,198
-
-
171,168
-
-
-
171,585
Stock-based compensation for equity
classified awards
-
-
-
-
1,637
-
-
-
1,637
Dividends
-
-
-
-
-
-
(24,163)
-
(24,163)
Balance December 31, 2020
138,387,890
$
1,384
$
-
$
993,052
$
(28,806)
$
(158,919)
$
$
806,863
Net income (loss)
-
-
-
-
-
-
189,425
(2)
189,423
Other comprehensive income (net of
$
deferred income tax)
-
-
-
-
-
(15,422)
-
-
(15,422)
Total comprehensive (loss) income
-
-
-
-
-
(15,422)
189,425
(2)
174,001
Issuance of common stock, net
29,257,483
-
-
97,448
-
-
-
97,741
Stock-based compensation for equity
classified awards
-
-
-
-
(250)
-
-
-
(250)
Acquisition of non-controlling interest
-
-
-
-
(703)
-
-
(150)
(853)
Balance December 31, 2021
167,645,373
$
1,677
$
-
$
1,089,547
$
(44,228)
$
30,506
$
-
$
1,077,502
Net income
-
-
-
-
-
-
771,703
-
771,703
Other comprehensive loss
-
-
-
-
-
(47,195)
-
-
(47,195)
Total comprehensive (loss) income
-
-
-
-
-
(47,195)
771,703
-
724,508
Stock-based compensation for equity
classified awards
-
-
-
-
2,735
-
-
-
2,735
Dividends
-
-
-
-
-
-
(701,655)
-
(701,655)
Balance December 31, 2022
167,645,373
$
1,677
$
-
$
1,092,282
$
(91,423)
$
100,554
$
-
$
1,103,090
See accompanying notes to consolidated financial
statements
Coronado Global Resources Inc. Form 10-K December
31, 2022
Consolidated Statements of Cash Flows
(In US$ thousands)
Year Ended December 31,
Cash flows from operating activities:
Net income (loss)
$
771,703
$
189,423
$
(226,537)
Adjustments to reconcile net income to cash and
restricted cash provided by
operating activities:
Depreciation, depletion and amortization
165,503
175,814
197,162
Impairment of Assets
-
-
78,111
Amortization of right of use asset - operating leases
6,704
8,899
13,285
Amortization of deferred financing costs
1,933
3,133
5,546
Non-cash interest expense
31,362
29,120
22,410
Amortization of contract obligations
(36,519)
(33,967)
(33,172)
Loss on disposal of property, plant and equipment
Decrease in contingent royalty consideration
-
-
(1,543)
Gain on operating lease derecognition
-
-
(1,184)
Equity-based compensation expense (gain)
2,735
(250)
1,637
Loss on debt extinguishment
5,336
8,477
-
Deferred income taxes
40,423
24,417
(11,247)
Reclamation of asset retirement obligations
(4,543)
(4,273)
(2,859)
Change in estimate of asset retirement obligation
1,543
2,061
(5,973)
Gain on disposal of asset held for sale
-
(14,845)
-
Increase (decrease) in provision for discounting and
credit losses
3,821
(8,042)
9,298
Changes in operating assets and liabilities:
Accounts receivable - including related party receivables,
net
(156,818)
(33,545)
(38,025)
Inventories
(41,243)
(9,637)
53,652
Other current assets
(12,365)
24,573
(1,921)
Accounts payable
(27,664)
24,166
6,833
Accrued expenses and other current liabilities
84,041
64,285
(27,829)
Operating lease liabilities
(8,244)
(10,986)
(15,329)
Income tax payable
96,326
-
-
Change in other liabilities
1,754
2,776
(25,446)
Net cash provided by (used in) operating activities
926,643
442,014
(3,000)
Cash flows from investing activities:
Capital expenditures
(199,716)
(89,661)
(117,856)
Proceeds from the disposal of property, plant, and equipment
1,594
-
Proceeds from disposal of assets held for sale
-
27,451
-
Purchase of restricted deposits
(9,761)
(103,997)
(2,302)
Redemption of restricted deposits
30,281
6,030
Net cash used in investing activities
(208,343)
(134,332)
(114,128)
Cash flows from financing activities:
Proceeds from interest bearing liabilities and other
financial liabilities
-
411,524
216,953
Debt issuance costs and other financing costs
-
(15,263)
(2,955)
Principal payments on interest bearing liabilities
and other financial liabilities
(81,310)
(412,046)
(221,414)
Call premiums paid on early redemption of debt
(2,557)
(1,050)
-
Principal payments on finance lease obligations
(140)
(70)
(2,481)
Dividends paid
(700,244)
-
(24,162)
Proceeds from stock issuance, net
-
97,741
171,585
Net cash (used in) provided by financing activities
(784,251)
80,836
137,526
Net (decrease) increase in cash and restricted
cash
(65,951)
388,518
20,398
Effect of exchange rate changes on cash and restricted
cash
(37,351)
3,677
(1,215)
Cash and restricted cash at beginning of period
437,931
45,736
26,553
Cash and restricted cash at end of period
$
334,629
$
437,931
$
45,736
Supplemental disclosure of cash flow information:
Cash payments for interest
$
36,728
$
33,462
$
23,538
Cash paid (refund) for taxes
$
90,888
$
(16,582)
$
1,955
See accompanying notes to consolidated financial
statements
Coronado Global Resources Inc. Form 10-K December
31, 2022
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1.
Description of Business, Basis of Presentation
(a)
Nature of operations
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
United States, or
U.S. For details
of the
Company’s
capital structure, refer to Note 7 “Capital Structure” for
further information.
(b)
Basis of Presentation
The
Consolidated
Financial
Statements
have
been
prepared
in
accordance
with
requirements
of
the
U.S.
Generally Accepted
Accounting
Principles,
or U.S.
GAAP and
are presented
in U.S.
dollars,
unless otherwise
stated.
The Consolidated Financial Statements include the accounts of the Company and its
affiliates. The Company, or
Coronado, are used interchangeably to refer to Coronado Global Resources Inc. or Coronado Global Resources
Inc. and
its subsidiaries,
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 on consolidation.
(c)
Certain Significant Risks and Uncertainties
External
factors,
including
general
economic
conditions,
international
events
and
circumstances,
competitor
actions, governmental actions
and regulations are beyond
the Company’s control
and can cause fluctuations
in
demand for coal and
volatility in the price
of commodities. This
in turn may adversely
impact on the
Company’s
future operating results, purchase or investment opportunities
in the coal mining industry.
Concentration of customers
The Company
has a
formal written
credit policy
that establishes
procedures to
determine creditworthiness
and
credit
limits
for
trade
customers
and
counterparties
in
the
over-the-counter
coal
market.
Generally,
credit
is
extended based on
an evaluation of
the customer’s financial
condition. Collateral is not
generally required, unless
credit cannot be established.
Payments from customers are generally due between
30 to 60 days after
invoicing. Invoicing usually occurs after
shipment
or
delivery
of
goods.
The
timing
between
the
recognition
of
revenue
and
receipt
of
payment
is
not
significant.
The Company had certain customers
whose accounts receivable balances individually represented
% or more
of
the
Company’s
total
accounts
receivable,
or
whose
revenue
individually
represented
%
or
more
of
the
Company’s total revenue.
The
following
table
summarizes
any
customer
whose
revenue
individually
represented
%
or
more
of
the
Company’s total revenue in the years ended December
31, 2022, 2021 and 2020.
Year Ended December 31,
Xcoal
12%
11%
9%
Tata
Steel
19%
17%
17%
For the
year ended
December 31,
2022, $
1,848.8
million, or
52.6
% of
total revenues,
were attributable
to five
customers. In
comparison,
for the
year ended
December 31,
2021, $
971.6
million, or
46.3
% of
total revenues
were attributable to five customers and
for the year ended December 31,
2020, $
671.9
million, or
47.1
% of total
revenues were attributable
to five customers.
As of December
31, 2022, the
Company had
four customers that
accounted
for $
212.5
million,
or
51.6
%, of
accounts
receivable.
As of
December
31, 2021,
the
Company
had
four customers that accounted for $
149.2
million, or
54.7
%, of accounts receivable.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
The
following
table
presents
revenues
as
a
percent
of
total
revenue
from
external
customers
by
geographic
region:
Year Ended December 31,
North America
12%
7%
13%
Australia
4%
6%
6%
Asia
46%
48%
50%
Europe
11%
12%
13%
South America
8%
6%
4%
Brokered sales
19%
21%
14%
Total
100%
100%
100%
The Company uses shipping destination as the basis for attributing revenue to individual countries. Because title
may transfer on brokered
transactions at a point
that does not reflect
the end usage point,
they are reflected
as
exports, and attributed to an end delivery point if that knowledge
is known to the Company.
Concentration of labor
Out of the Company’s total employees,
11.5
% are subject to the Curragh
Mine Operations Enterprise Bargaining
Agreement 2019.
This agreement
covers work
carried out
by permanent,
full-time, temporary,
and casual
coal
mining employees
engaged by
Curragh to
fulfil production,
maintenance
and processing
activities. Other
than
the Curragh
Mine Operations
Enterprise
Bargaining Agreement
2019, there
are no
other collective
bargaining
agreements or union contracts covering employees of the Company
.
Transportation
The Company depends
upon port and
rail transportation
systems to deliver
coal to
its customers.
Disruption of
these
transportation
services
due
to
weather-related
problems,
mechanical
difficulties,
strikes,
lockouts,
bottlenecks, and other
events could temporarily
impair the Company’s
ability to supply
coal to its
customers. In
the past, disruptions in these services have resulted in
delayed shipments and production interruptions.
2.
Summary of Significant Accounting Policies
(a)
Newly Adopted Accounting Standards
During
the
period
there
have
been
no
new
Accounting
Standards
Updates
issued
by
the
Financial
Accounting
Standards Board that had a material impact on the Company’s Consolidated Financial Statements
.
(b)
Accounting Standards Not Yet
Implemented
To
date, there have
been no
recent accounting
pronouncements not
yet effective
that have significance,
or potential
significance, to the Company’s Consolidated Financial Statements.
(c) Use of Estimates
The preparation
of Consolidated
Financial
Statements
in conformity
with U.S. GAAP
requires
management
to
make certain
judgements, estimates
and assumptions
that affect
the reported
amounts of
assets and
liabilities
and disclosure of
contingent assets
and liabilities at
the date of
the Consolidated
Financial Statements
and the
reported amounts
of revenues
and expenses
during the
reporting periods.
Actual results
could differ
materially
from
those
estimates.
Significant
items
subject
to
such
estimates
and
assumptions
include
asset
retirement
obligations; useful
lives for
depreciation, depletion
and amortization;
deferred income
tax assets
and liabilities;
values
of
coal
properties;
fair
value
of
assets
held
for
sale,
workers’
compensation
liability
and
other
contingencies.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(d)
Foreign Currency
Financial Statements of foreign operations
The reporting currency of the Company is the U.S. Dollar,
or US$.
Functional
currency
is
determined
by
the
primary
economic
environment
in
which
an
entity
operates.
The
functional currency of
the Company
and its subsidiaries
is the US$,
with the exception
of two foreign
operating
subsidiaries, Curragh
and its
immediate parent
CAH, whose
functional currency
is the
Australian dollar,
or A$,
since Curragh’s predominant sources of operating
expenses are denominated in that currency.
Assets and liabilities
are translated at
the year-end exchange
rate and items
in the statement
of operations are
translated at average rates with gains and losses from
translation recorded in other comprehensive losses.
Foreign Currency Transactions
Monetary
assets
and
liabilities
are
remeasured
at
year-end
exchange
rates
while
non-monetary
items
are
remeasured at historical rates.
Gains and losses from foreign
currency remeasurement related to Curragh’s U.S. dollar receivables are
included
in coal revenues. All other gains and losses
from foreign currency remeasurement
and foreign currency forward
contracts
are
included
in
“Other,
net”,
with
exception
of
foreign
currency
gains
or
losses
on
long-term
intercompany
loan
balances
which
are classified
within
“Accumulated
other
comprehensive
losses”.
The
total
aggregate impact of foreign currency
transaction gains or losses on the
Consolidated Statements of Operations
and Comprehensive Income was a net gain of $
47.6
million and $
1.7
million and a net loss of $
3.2
million for the
years ended December 31, 2022, 2021 and 2020, respectively. The total impact of foreign currency transactions
related to U.S. dollar coal sales in Australia (included in the total above) was a net gain of $
15.0
million and $
8.7
million and a net loss of $
4.0
million for the years ended December 31, 2022, 2021
and 2020, respectively.
(e)
Cash and Cash Equivalents and Restricted Cash
Cash and cash
equivalents include cash
at bank and
short-term highly liquid investments
with an original
maturity
date of three months or less. At December 31, 2022 and 2021,
the Company had
no
cash equivalents.
“Cash
and
Restricted
Cash”,
as
disclosed
in
the
accompanying
Consolidated
Balance
Sheets
includes
$
0.3
million of restricted cash at December 31, 2022 and
$
0.3
million at 2021.
(f)
Trade Accounts Receivables
The Company
extends trade
credit to
its customers
in the
ordinary course
of business.
Trade
receivables are
recorded initially at fair value and subsequently at amortized
cost, less any Expected Credit Losses, or ECL.
For trade receivables
carried at amortized
cost, the Company
determines ECL on
a forward-looking
basis. The
amount of
ECL is
updated at
each reporting
date to reflect
changes in
credit risk
since initial recognition
of the
respective financial instrument.
The Company recognizes
the lifetime ECL. The
ECL is estimated
based on the
Company’s
historic credit
loss
experience,
adjusted for
factors that
are specific
to the
financial
asset, general
economic
conditions,
financial
asset
type,
term
and
an
assessment
of
both
the
current
as
well
as
forecast
conditions, including expected timing
of collection, at the
reporting date, modified for
credit enhancements such
as letters of credit obtained. To
measure ECL, trade receivables have been grouped based on shared credit risk
characteristics and the days past due.
The amount of credit
loss is recognized in
the Consolidated Statements
of Operations and Other Comprehensive
Income within “Provision for discounting and credit losses”. The Company writes off a financial asset when there
is information indicating there is no realistic prospect of recovery of the asset from the counterparty. Subsequent
recoveries of amounts
previously written off
are credited against “Provision
for discounting and
credit losses” in
the Consolidated Statements
of Operations and Other Comprehensive Income.
Factoring
The Company
has agreements
with financial
institutions to
sell selected
trade receivables
on a
recurring, non-
recourse
basis.
Under
these
agreements,
trade
receivables
sold
do
not
allow
for
recourse
for
any
credit
risk
related to the Company’s customers if such receivables
are not collected by the third-party financial institutions.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
The
Company
derecognizes
the
trade
receivables
sold
under
the
factoring
arrangement
and
the
difference
between proceeds received and carrying amount of the trade receivables sold is
recognized within “Interest, net”
in its Consolidated Statements of Operations and Comprehensive
Income.
(g)
Inventories
Coal is recorded
as inventory at the
point in time
the coal is
extracted from the
mine. Raw coal
represents coal
stockpiles that
may be
sold in
current condition
or may
be further
processed prior
to shipment
to a
customer.
Saleable coal represents coal stockpiles which require
no further processing prior to shipment to a customer.
Coal inventories are stated
at the lower of average
cost and net realizable
value. The cost of coal
inventories is
determined based
on an
average cost
of production,
which includes
all costs
incurred to
extract, transport
and
process
the coal.
Net
realizable
value
considers
the
estimated
sales
price
of
the
particular
coal
product,
less
applicable selling costs, and, in the case of raw coal, estimated
remaining processing costs.
Supplies
inventory
is
comprised
of
replacement
parts
for
operational
equipment
and
other
miscellaneous
materials and supplies
required for mining
which are stated
at cost on the
date of purchase.
Supplies inventory
is valued at
the lower of
average cost or
net realizable
value, less a
reserve for obsolete
or surplus items.
This
reserve incorporates several factors, such as anticipated usage, inventory turnover and inventory levels. It is not
customary to sell these inventories; the Company plans
to use them in mining operations as needed.
(h)
Assets held for sale
Assets
held
for
sale
are
measured
at
the
lower
of
their
carrying
amount
or
fair
value
less
costs
to
sell.
The
Company classifies
assets and
liabilities as
held for
sale (disposal
group) when
management, having
the authority
to approve the action,
commits to a plan
to sell the disposal
group, the sale is
probable within one year
and the
disposal
group
is
available
for
sale
in
its
present
condition.
The
Company
also
considers
whether
an
active
program to locate a buyer
has been initiated, whether the
disposal group is marketed actively
for sale at a price
that is reasonable in relation
to its current fair value,
and whether actions required
to complete the plan indicate
that it is
unlikely that significant
changes to the
plan will be
made or that
the plan will
be withdrawn. An
impairment
test is performed when
a disposal group is
classified as held for sale
and an impairment charge is
recorded when
the carrying
amount of
the disposal
group exceeds
its estimated
fair value,
less cost
to sell.
Depreciation
and
amortization for assets classified as held for sale are ceased.
(i)
Property, Plant and
Equipment, Impairment of Long-Lived Assets and Goodwill
Property, Plant, and
Equipment
Costs for mine development incurred to
expand capacity of operating mines or to
develop new mines and certain
mining equipment are capitalized and charged to operations on the
hours of usage or units of production method
over
the
estimated
proven
and
probable
reserve
tons
directly
benefiting
from
the
capital
expenditures.
Mine
development
costs
include
costs
incurred
for
site
preparation
and
development
of
the
mines
during
the
development stage.
Mineral rights
and reserves
acquired are
measured at
cost and
are depleted
on a
units of
production
method
over
the
estimated
proven
and
probable
reserve
tons
of
the
relevant
mineral
property.
Capitalized costs related to internal-use software are amortized on
a straight-line basis over the estimated useful
lives of the assets.
Property,
plant,
and
equipment
are
recorded
at
cost
and
include
expenditures
for
improvements
when
they
substantially
increase
the
productive
lives
of existing
assets.
Depreciation
is calculated
using
the
straight-line
method over
the estimated
useful lives
of the
depreciable assets of
to
years for machinery, mining
equipment
and
transportation
vehicles,
to
years
for
office
equipment,
and
to
years
for
plant,
buildings
and
improvements.
Maintenance and
repair costs
are expensed to
operations as
incurred. When
equipment is
retired or
disposed,
the related cost
and accumulated
depreciation are
removed from
the respective
accounts and any
gain or loss
on disposal is recognized in operations.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Impairment of long-lived assets
Long-lived
assets,
such
as
property,
plant,
and
equipment,
and
purchased
intangible
assets
subject
to
amortization,
are
reviewed
for
impairment
whenever
events
or
changes
in
circumstances
indicate
that
the
carrying amount of an
asset may not be
recoverable. If circumstances
require a long-lived asset
or asset group
be
tested
for
possible
impairment,
the
Company
first
compares
undiscounted
cash
flows
expected
to
be
generated by
that asset
or asset
group to
its carrying
amount. If
the carrying
amount of
the long-lived
asset or
asset group
is not
recoverable on
an undiscounted
cash flow
basis, an
impairment is
recognized to
the extent
that the
carrying amount
exceeds its
fair value.
Fair value
is determined
through
various valuation
techniques
including
discounted
cash
flow
models,
quoted
market
values
and
third-party
independent
appraisals,
as
considered necessary.
Refer to Note 5 “Impairment of Assets” for further disclosure
.
Goodwill
Goodwill is an asset
representing the future economic
benefits arising from other
assets acquired in a
business
combination
that
are
not
individually
identified
and
separately
recognized.
In
connection
with
the
Buchanan
acquisition on
March 31, 2016,
the Company
recorded goodwill
in the
amount of
$
28.0
million. Goodwill
is not
amortized but
is reviewed
for impairment
annually or
when circumstances or
other events
indicate that
impairment
may have occurred. The Company follows the guidance in Accounting Standards Update 2017-04 “
Intangibles -
Goodwill
and
Other:
Simplifying
the
Test
for
Goodwill
Impairment
”
(ASU 2017-04).
The
Company
makes
a
qualitative assessment of whether it
is more likely than
not that a
reporting unit’s fair value is
less than its carrying
amount. Circumstances that are considered as
part of the qualitative
assessment and could trigger a
quantitative
impairment test include but are
not limited to: a significant
adverse change in the business
climate; a significant
adverse legal judgment;
adverse cash flow
trends; an
adverse action
or assessment
by a government
agency;
unanticipated
competition;
and
a
significant
restructuring
charge
within
a
reporting
unit.
If
a
quantitative
assessment
is
determined
to
be
necessary,
the
Company
compares
the
fair
value
of
a
reporting
unit
with
its
carrying amount, including goodwill.
If the carrying amount
of a reporting unit
exceeds its fair value,
the Company
recognizes an impairment
charge for the
amount by which
the carrying amount
exceeds its fair
value to the
extent
of the amount of goodwill allocated to that reporting unit.
The Company defines reporting
units at the mining
asset level. For purposes
of testing goodwill for
impairment,
goodwill has been allocated to the reporting units to the
extent it relates to each reporting unit.
(j)
Asset Retirement Obligations
The
Company’s
asset
retirement
obligation,
or
ARO,
liabilities
primarily
consist
of
estimates
of
surface
land
reclamation
and
support
facilities
at
both
surface
and
underground
mines
in
accordance
with
applicable
reclamation laws and regulations in the U.S. and Australia
as defined by each mining permit.
The Company
estimates its ARO
liabilities for
final reclamation
and mine
closure based upon
detailed engineering
calculations of the amount
and timing of the future
cash spending for a
third party to perform
the required work.
Spending
estimates
are
escalated
for
inflation
and
then
discounted
at
the
credit-adjusted,
risk-free
rate.
The
Company records
an ARO asset
associated with
the discounted
liability for final
reclamation and
mine closure.
The obligation
and corresponding
asset are recognized
in the period
in which the
liability is incurred.
The ARO
asset
is
amortized
on
the
units-of-production
method
over
its
expected
life
of
the
related
asset
and
the
ARO
liability is accreted to the projected
spending date. As changes
in estimates occur (such as
mine plan revisions,
changes in
estimated costs
or changes
in timing
of the
performance of
reclamation activities),
the revisions
to
the
obligation
and
asset
are
recognized
at
the
appropriate
credit-adjusted,
risk-free
rate.
The
Company
also
recognizes
an
obligation
for
contemporaneous
reclamation
liabilities
incurred
as
a
result
of
surface
mining.
Contemporaneous reclamation consists primarily
of grading, topsoil replacement
and re-vegetation of backfilled
pit areas. To
settle the liability,
the obligation is paid,
and to the extent
there is a difference
between the liability
and
the
amount
of cash
paid,
a
gain
or
loss
upon
settlement
is
recorded.
The
Company
annually
reviews
its
estimated future cash flows for its asset retirement obligations.
(k)
Borrowing costs
Borrowing costs are
recognized as an
expense when they
are incurred, except
for interest charges
attributable
to major projects with substantial development and construction phases which are capitalized
as part of the cost
of the asset. There was
no
interest capitalized during the years ended December 31, 2022
and 2021.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(l)
Leases
From time
to time,
the Company
enters into
mining services
contracts which
may include
embedded leases
of
mining equipment
and other
contractual agreements
to lease
mining equipment
and facilities.
Based upon
the
Company’s
assessment
of the
terms
of a
specific
lease agreement,
the Company
classifies a
lease
as either
finance or operating.
Finance leases
Right of Use,
or ROU,
assets related
to finance
leases are
presented in
Property,
plant and
equipment, net
on
the Consolidated
Balance Sheet.
Lease liabilities
related to
finance leases
are presented
in “Lease
Liabilities”
(current) and “Lease Liabilities” (non-current) on the Consolidated
Balance Sheets.
Finance lease ROU assets and lease liabilities are recognized at the commencement date based on the present
value of the
future lease payments
over the lease
term. The
discount rate used
to determine
the present
value
of the
lease
payments
is the
rate
implicit in
the
lease unless
that
rate cannot
be readily
determined,
in which
case, the
Company utilizes
its incremental
borrowing
rate in
determining the
present value
of the
future lease
payments. The incremental borrowing
rate is the rate
of interest that the
Company would have to
pay to borrow
on
a
collateralized
basis
over
a
similar
term
an
amount
equal
to
the
lease
payments
in
a
similar
economic
environment.
Operating leases
ROU
assets
related to
operating
leases
are presented
as Right
of Use
assets
- operating
leases,
net
on the
Consolidated
Balance
Sheet.
Lease
liabilities
related
to
operating
leases
that
are
subject
to
the
ASC
measurement requirements such as operating
leases with lease terms
greater than twelve months are
presented
in “Lease Liabilities” (current) and “Lease Liabilities” (non-current)
on Consolidated Balance Sheets.
Operating lease
ROU assets and
lease liabilities
are recognized at
the commencement date
based on
the present
value of the
future lease payments
over the lease
term. The
discount rate used
to determine
the present
value
of the
lease
payments
is the
rate
implicit in
the
lease unless
that
rate cannot
be readily
determined,
in which
case, the
Company utilizes
its incremental
borrowing
rate in
determining
the present
value of
the future
lease
payments. The incremental borrowing
rate is the rate
of interest that the
Company would have to
pay to borrow
on
a
collateralized
basis
over
a
similar
term
an
amount
equal
to
the
lease
payments
in
a
similar
economic
environment. Operating
lease ROU
assets may
also include
any cumulative
prepaid or
accrued rent
when the
lease payments
are uneven
throughout the
lease term.
The ROU
assets and
lease liabilities
may also
include
options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.
The ROU
asset includes
any lease
payments made
and lease
incentives received
prior to
the commencement
date.
The
Company
has
lease
arrangements
with
lease
and
non-lease
components
which
are
accounted
for
separately.
Non-lease
components
of
the
lease
payments
are
expensed
as
incurred
and
are
not
included
in
determining the present value.
(m) Royalties
Lease rights
to coal
lands are
often acquired
in exchange
for royalty
payments. Royalties
are payable
monthly
as a percentage of the gross
realization from the sale of the coal
mined using surface mining methods
and as a
percentage
of
the
gross
realization
for
coal
produced
using
underground
mining
methods.
Advance
mining
royalties are advance
payments made to
lessors under terms
of mineral lease
agreements that are
recoupable
against
future
production.
The
Company
had
advance
mining
royalties
of
$
6.8
million
and
$
5.5
million
respectively, included
in “Other current assets” as of December 31, 2022
and 2021.
(n)
Stanwell Rebate
The
Stanwell
rebate
relates
to
a
contractual
arrangement
entered
into
by
Curragh
with
Stanwell
Corporation
Limited, a State
of Queensland
owned electricity
generator, which
requires payment
of a rebate
for export coal
sold from some of Curragh’s
mining tenements. The rebate obligation is
accounted for as an executory
contract
and the expense is recognized as incurred.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(o)
Revenue Recognition
The Company accounts for
a contract when it
has approval and commitment
from both parties, the
rights of the
parties are identified,
payment terms
are identified,
the contract has
commercial substance
and collectability
of
consideration is probable. Once a contract
is identified, the Company evaluates
whether the combined or single
contract should be accounted for as more than one performance
obligation.
The Company recognizes revenue when
control is transferred to the customer.
For the Company’s contracts,
in
order to determine
the point
in time when
control transfers
to customers, the
Company uses
standard shipping
terms to
determine
the timing
of transfer
of
legal title
and the
significant
risks
and rewards
of ownership.
The
Company also considers other
indicators including timing
of when the Company
has a present right
to payment
and
when
physical
possession
of
products
is
transferred
to
customers.
The
amount
of
revenue
recognized
includes any
adjustments for
variable consideration,
which is
included in
the transaction
price and
allocated to
each
performance
obligation
based
on
the
relative
standalone
selling
price.
The
variable
consideration
is
estimated through the course of the contract using management’s
best estimates.
The majority of
the Company’s revenue is derived
from short term
contracts where the time
between confirmation
of sales orders and collection of cash is not more than
a few months.
Taxes
assessed
by
a
governmental
authority
that
are
both
imposed
on
and
concurrent
with
a
specific
revenue-producing transaction that are collected by the
Company from a customer are excluded from revenue.
Performance obligations
A
performance
obligation
is
a
promise
in
a
contract
to
transfer
a
distinct
good
or
service
to
the
customer.
A
contract’s transaction price is allocated
to each distinct performance obligation
and recognized as revenue
when,
or as, the performance obligation is satisfied.
The Company’s contracts have
multiple performance obligations as the
promise to transfer the individual
unit of
coal
is
separately
identifiable
from
other
units
of
coal
promised
in
the
contracts
and,
therefore,
distinct.
Performance obligations, as described above, primarily relate to the Company’s
promise to deliver a designated
quantity and type of coal within the quality specifications
stated in the contract.
For
contracts
with
multiple
performance
obligations,
we
allocate
the
contract’s
transaction
price
to
each
performance obligation on a relative standalone selling price basis. The
standalone selling price is determined at
each contract inception using
an adjusted market assessment
approach. This approach focuses
on the amount
that the Company believes the market is willing to pay
for a good or service, considering market conditions, such
as benchmark pricing, competitor pricing, market awareness of the product and current market trends that affect
the pricing.
Warranties provided to customers are
assurance-type of warranties on
the fitness of
purpose and merchantability
of the Company’s goods. The Company does not
provide service-type of warranties to customers.
Revenue
is
recognized
at
a
point
in
time
and
therefore
there
are
no
unsatisfied
and/or
partially
satisfied
performance obligations at December 31, 2022 and 2021.
Shipping and Handling
The Company
accounts
for
shipping
and
handling
activities
on
Free
on
Rail
sales
after
the
customer
obtains
control of the good as an activity to fulfil the promise to transfer the good. In this instance, shipping and handling
costs
paid
to
third
party
carriers
and
invoiced
to
coal
customers
are
recorded
as
freight
expense
and
other
revenues, respectively.
(p)
Commodity Price Risk
The Company has commodity price risk arising from fluctuations
in domestic and global coal prices.
The
Company’s
principal
philosophy
is
not
to
hedge
against
movements
in
coal
prices
unless
there
are
exceptional circumstances.
Any potential hedging of coal prices would be through fixed
price contracts.
The
Company
is
also
exposed
to
commodity
price
risk
related
to
diesel
fuel
purchases.
The
Company
may
periodically enter into arrangements that protect against
the volatility in fuel prices as follows:
•
enter into fixed price contracts to purchase fuel for the U.S. Operations
.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
•
enter into derivative financial instruments to hedge exposures to fuel
price fluctuations.
There are
no
derivative contracts outstanding at December 31, 2022
and 2021.
(q)
Income Taxes
The Company uses the asset
and liability approach to account
for income taxes as required by
ASC 740, Income
Taxes,
which requires
the
recognition
of deferred
income
tax assets
and
liabilities
for the
expected
future
tax
consequences
attributable
to differences
between
the
financial
statement
carrying
amounts
of
existing
assets
and liabilities and their respective tax bases.
Valuation allowances are provided
when necessary to
reduce deferred income
tax assets to
the amount expected
to be realized, on a more likely than not basis.
The Company recognizes the
benefit of an uncertain
tax position that it has
taken or expects
to take on income
tax
returns
it
files
if
such
tax
position
is
more
likely
than
not
to
be
sustained
on
examination
by
the
taxing
authorities, based on the technical merits
of the position. These tax benefits
are measured based on the largest
benefit that has a greater than 50% likelihood of being realized
upon ultimate resolution.
The Company’s foreign
structure consists of
Australian entities which
are treated as
corporations subject to
tax
under Australian
taxing authorities.
The Curragh
entities are
treated as
a branch
for U.S.
tax purposes
and all
income flows through the ultimate parent (the Company).
(r)
Fair Value Measurements
The Company utilizes valuation
techniques that maximize
the use of observable inputs
and minimize the use of
unobservable
inputs
to
the
extent
possible.
The
Company
determines
fair
value
based
on
assumptions
that
market
participants
would
use
in
pricing
an
asset
or
liability
in
the
principal
or
most
relevant
market.
When
considering
market
participant
assumptions
in
fair
value
measurements,
the
Company
distinguishes
between
observable and unobservable inputs, which are categori
zed in one of 3 levels of inputs.
Refer to Note 25 “Fair
Value
Measurement” for detailed
information related to the
Company’s fair value
policies
and disclosures.
(s)
Derivative accounting
The Company recognizes at fair value all contracts meeting the definition of a derivative as assets or liabilities in
the Consolidated Balance Sheet.
With
respect
to
derivatives
used
in
hedging
activities,
the
Company
assesses,
both
at
inception
and
at
least
quarterly
thereafter,
whether
such
derivatives
are
highly
effective
at
offsetting
the
changes
in
the
anticipated
exposure of the
hedged item.
The change
in the fair
value of derivatives
designated as a
cash flow
hedge and
deemed highly effective
is recorded
in “Accumulated
other comprehensive
losses” until
the hedged
transaction
impacts reported earnings,
at which
time any gain
or loss is
reclassified to earnings.
If the
hedge ceases to
qualify
for
hedge
accounting,
the
Company
prospectively
recognizes
changes
in
the
fair
value
of
the
instrument
in
earnings in the
period of the
change. The
potential for
hedge ineffectiveness
is present in
the design
of certain
of the Company’s cash flow hedge relationships.
The Company’s
asset and
liability derivative
positions are
offset on
a counterparty-by-counterparty
basis if
the
contractual agreement provides for the net settlement of contracts with the
counterparty in the event of default or
termination of any one contract.
There are
no
derivative contracts outstanding at December 31, 2022
and 2021.
(t)
Stock-based Compensation
The Company has
a stock-based compensation plan
which allows for
the grant of
certain equity-based incentives
including stock options,
performance stock units,
or PSU, and
restricted stock units,
or RSU, to
employees and
executive
directors,
valued
in
whole
or
in
part
with
reference
to
the
Company’s
CDIs
or
equivalent
common
shares (on a
10.1
CDI to common share ratio).
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
The grant-date
fair value
of stock
option
award is
estimated on
the
date
of grant
using
Black-Scholes-Merton
option-pricing model. For
certain options and
PSUs, the Company includes
a relative Total
Stockholder Return,
or TSR, modifier to determine the number of shares
earned at the end of the performance period.
The fair value
of awards that include the TSR modifier is determined
using a Monte Carlo valuation model.
The expense for these equity-based incentives is based on their fair value at date of grant and is amortized over
the required service
period, generally the vesting
period. The Company accounts
for forfeitures as
and when they
occur.
Refer to
Note
23 “Stock-Based
Compensation”
for detailed
information
related
to the
Company’s
stock-based
compensation plans.
(
u)
Earnings per Share
Basic earnings per share is computed by dividing net income attributable to stockholders of the Company by the
weighted-average number of shares of common stock
outstanding during the reporting period.
Diluted net income
per share is computed
using the weighted-average
number of shares
of common stock
and
dilutive
potential
shares
of
common
stock
outstanding
during
the
period.
Dilutive
potential
shares
of
common
stock primarily consist of employee stock options and
restricted stock.
(v)
Deferred Financing Costs
The Company capitalizes costs
incurred in connection with new
borrowings, the establishment or
enhancement
of credit
facilities
and the
issuance
of debt
securities.
These costs
are amortized
as an
adjustment to
interest
expense
over
the
life
of
the
borrowing
or
term
of
the
credit
facility
using
the
effective
interest
method.
Debt
issuance costs related to a recognized
liability are presented in the balance
sheet as a direct reduction from
the
carrying amount of that liability whereas debt issuance costs
related to a credit facility are shown as an asset.
For information on the
unamortized balance of
deferred financing fees
related to outstanding
debt, see Note
“Interest Bearing Liabilities”.
3.
Segment Information
The Company has
a portfolio of operating
mines and development
projects in Queensland,
Australia and in the
states of
Pennsylvania,
Virginia
and West
Virginia
in the
U.S. The
Australian Operations
comprise the
100%-
owned
Curragh
producing
mine
complex.
The
U.S.
Operations
comprise
two
100%-owned
producing
mine
complexes (Buchanan and Logan),
one
100%-owned idled mine complex which is held for sale (Greenbrier) and
two
development properties (Mon Valley
and Russell County).
The
Company
operates
its
business
along
two
reportable
segments:
Australia
and
United
States.
The
organization of the
two
reportable segments reflects how Coronado’s chief
operating decision maker, or
CODM,
manages and allocates resources to the various components
of the Company’s business.
The CODM
uses Adjusted
EBITDA as
the primary
metric to
measure each
segment’s
operating performance.
Adjusted EBITDA is not a measure of financial performance in accordance with U.S. GAAP.
Investors should be
aware that
the Company’s
presentation of
Adjusted EBITDA
may not
be comparable
to similarly
titled financial
measures used by other companies.
Adjusted EBITDA is
defined as earnings
before interest, taxes,
depreciation, depletion and
amortization and other
foreign exchange losses. Adjusted EBITDA is
also adjusted for certain discrete items that
management exclude
in analyzing each
of the
Company’s segments’ operating performance.
“Other and corporate”
relates to additional
financial information for the corporate function such
as financial reporting and 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 Financial Statements.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Reportable segment results for the years ended December 31,
2022, 2021 and 2020 are presented below:
(US$ thousands)
Australia
United
States
Other and
Corporate
Total
Year ended December 31,
Total
revenues
$
2,116,555
$
1,454,987
$
-
$
3,571,542
Adjusted EBITDA
541,208
716,661
(42,245)
1,215,624
Net income (loss)
328,632
486,817
(43,746)
771,703
Total
assets
1,353,424
1,013,359
183,144
2,549,927
Capital expenditures
89,001
95,769
185,357
Year ended December 31,
Total
revenues
$
1,315,851
$
832,620
$
-
$
2,148,471
Adjusted EBITDA
204,992
312,048
(30,907)
486,133
Net income (loss)
64,278
220,975
(95,830)
189,423
Total
assets
1,357,132
822,222
282,058
2,461,412
Capital expenditures
38,733
50,787
1,616
91,136
Year ended December 31,
Total
revenues
$
976,369
$
485,893
$
-
$
1,462,262
Adjusted EBITDA
(8,586)
92,801
(30,416)
53,799
Net loss
(66,645)
(77,853)
(82,039)
(226,537)
Total
assets
1,307,745
908,361
(67,630)
2,148,476
Capital expenditures
47,456
74,881
1,519
123,856
The reconciliation of Adjusted EBITDA to net income attributable to the Company for
the years ended December
31, 2022, 2021 and 2020 are as follows:
Year Ended December 31,
(US$ thousands)
Net income (loss)
$
771,703
$
189,423
$
(226,537)
Depreciation, depletion and amortization
167,046
177,875
191,189
Interest expense, net
67,632
68,062
50,585
Other foreign exchange (gains) losses
(1)
(32,259)
7,049
1,175
Loss on debt extinguishment
5,336
8,477
-
Income tax expense (benefit)
231,574
53,102
(60,016)
Impairment of assets
-
-
78,111
Restructuring costs
-
2,300
-
Losses on idled assets held for sale
(2)
2,732
9,994
Gain on disposal of assets held for sale
-
(14,845)
-
Increase (decrease) in provision for discounting
and credit losses
3,821
(8,042)
9,298
Consolidated adjusted EBITDA
$
1,215,624
$
486,133
$
53,799
(1)
Refer to Note 6 “Other, net” for further discussion.
(2)
These losses relate to idled non-core assets that the Company has classified as held
for sale with the view that these will be
sold within the next
twelve months or were sold in prior periods.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
The
reconciliations
of
capital
expenditures
per
the
Company’s
segment
information
to
capital
expenditures
disclosed on
the Consolidated
Statements of
Cash Flows
for the
years ended
December
31, 2022,
2021 and
2020 are as follows:
Year Ended December 31,
(US$ thousands)
Capital expenditures per Consolidated Statement of Cash
flows
$
199,716
$
89,661
$
117,856
Payment for capital acquired in prior period
(7,475)
(6,000)
-
Accruals for capital expenditures
11,243
7,475
6,000
Advance payment to acquire long lead capital items
(18,127)
-
-
Capital expenditures per segment detail
$
185,357
$
91,136
$
123,856
Disaggregation of Revenue
The Company disaggregates the revenue
from contracts with customers by
major product group for each of
the
Company’s
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.
Year ended December 31, 2022
(US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
1,968,173
$
1,394,880
$
3,363,053
Thermal coal
110,345
54,228
164,573
Total
coal revenue
2,078,518
1,449,108
3,527,626
Other
(1)
38,037
5,879
43,916
Total
$
2,116,555
$
1,454,987
$
3,571,542
Year ended December 31, 2021
(US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
1,171,869
$
822,000
$
1,993,869
Thermal coal
107,867
6,595
114,462
Total
coal revenue
1,279,736
828,595
2,108,331
Other
(1)
36,115
4,025
40,140
Total
$
1,315,851
$
832,620
$
2,148,471
Year ended December 31, 2020
(US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
836,545
$
476,222
$
1,312,767
Thermal coal
105,681
5,151
110,832
Total
coal revenue
942,226
481,373
1,423,599
Other
(1)
34,143
4,520
38,663
Total
$
976,369
$
485,893
$
1,462,262
(1)
Included in
Other is
the amortization
of Stanwell
non-market coal
supply agreement
liability recognized
on acquisition
of Curragh.
See further
discussion in Note 19 “Contract Obligations”.
Further explanation to tables above:
The following is a description of the principal activities
by reportable segments.
•
The Company primarily offers two types of products to its
customers: metallurgical coal and thermal coal
of
varying
qualities.
The
Company’s
metallurgical
coal
is
classified
as
hard
coking
coal,
further
distinguished by its volatility (defined as high, mid, or low),
and pulverized coal injection.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
•
The Australian Operations reportable segment
includes the Curragh mine. The
Australian Operations is
a separate
reportable segment
due to
having separate
management, location,
assets, and
operations.
Curragh
mine,
included
in
the
Australian
Operations,
is
located
in
central
Queensland,
Australia
and
produces a wide variety of metallurgical coal.
•
The United States reportable segment includes the Buchanan, Logan and Greenbrier coal
mine facilities
in Virginia and West Virginia,
United States. It produces high, mid and low volatility
hard coking coal.
4. Assets Held for Sale
During the fourth quarter of 2020, the Company committed to a plan to sell the Greenbrier asset and determined
that all of
the criteria to
classify assets and liabilities
as held for
sale were met.
The asset is part
of the Company’s
U.S. segment,
located
in the
State
of
West
Virginia,
and
does
not form
part
of
the Company’s
core
business
strategy. The Greenbrier
mining asset has been idle since April 1, 2020.
The following table provides the major classes of assets and liabilities classified as held for sale as of December
31, 2022 and December 31, 2021:
December 31
(US$ thousands)
Inventories, net
-
1,795
Other current assets
2,326
1,706
Property, plant and
equipment, net
23,447
23,447
Other noncurrent assets
Total
assets held for sale
$
26,214
$
27,023
Accounts payable
Accrued expenses and other current liabilities
1,344
Current asset retirement obligations
5,137
5,140
Noncurrent asset retirement obligations
5,978
5,203
Total
liabilities held for sale
$
12,241
$
12,113
As of December 31, 2022, the assets
and liabilities held for sale represent the fair value
of the Greenbrier mining
asset, which will likely be realized through a sale within
the next 12 months.
The fair
value of
the Greenbrier
mining asset
was
primarily
determined
by reference
to non-binding
indicative
offers and Level 3 inputs such
as estimates of future cash flows which
aligns to the Company’s
best estimate of
future
market
and
operating
conditions,
including
its
current
life
of
mine
plan.
The
life
of
mine
plan
includes
assumptions in relation to coal price
forecasts, projected mine production volumes, operating costs, capital costs
and discount rate.
Sale of the Amonate Mining Asset
On
December 2, 2021
,
the
Company
sold
Amonate,
including
related
assets
and
liabilities,
to
Ramaco
Resources, Inc., a Delaware corporation,
for a purchase price of $
30.0
million and realized a pre-tax
net gain of
$
14.8
million after transaction costs of $
2.6
million, included within “Gain on disposal of
asset held for sale” in the
Company’s
Consolidated
Statement
of Operations
and
Comprehensive
Income for
the year
ended December
31, 2021.
5. Impairment of Assets
The Company concluded
that no impairment
charges were
required at any
of the Company’s
mining assets
for
the years ended December 31, 2022 and 2021.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
During the year ended
December 31, 2020, the
Company performed an
impairment assessment in
accordance
with ASC 360 - Property, Plant and Equipment, and determined that the
sum of the estimated undiscounted pre-
tax future
cash flows
of Greenbrier
long-lived assets
exceeded its
carrying amount.
As a
result, an
impairment
charge of $
78.1
million was recorded,
reducing the
carrying amount
of Greenbrier’s
long-lived assets
to its
fair
value at that time, which did not include any associated ARO
liabilities.
6.
Other, net
Other, net consists of the following:
Year Ended December 31,
(US$ thousands)
Other foreign exchange gains (losses)
(1)
$
32,259
$
(7,049)
$
(1,175)
Other income
1,536
Total
Other, net
$
33,795
$
(6,187)
$
(608)
(1)
Other foreign
exchange gains
(losses) primarily
relates to
gains and
losses recognized
on the
translation of
short-term
inter-entity
balances
between
certain
entities
within
the
Group
that
are
denominated
in
currencies
other than their respective functional currencies.
7.
Capital Structure
(a)
Stockholders’ Equity
Authorized capital stock
The Company’s Articles of Incorporation, as amended, authorize the Company to issue
1,100,000,000
shares of
$
0.01
par value
capital stock
consisting of
1,000,000,000
shares of
common stock
and
100,000,000
shares of
preferred stock.
Common Stock / CDIs
The
common
stock
is
publicly
traded
on
the
ASX
under
the
ticker
“CRN,”
in
the
form
of
CHESS
Depositary
Interests (“CDIs). CDIs are units
of beneficial ownership in shares
of common stock held by
CHESS Depositary
Nominees Pty Limited (“CDN”), a wholly-owned subsidiary
of ASX Limited, the company that operates the ASX.
As each CDI represents one tenth of a share,
holders of CDIs will be entitled to
one
vote for every
CDIs they
hold. CDI
holders
are to
receive
entitlements
which attach
to underlying
shares
such as
participation
in rights
issues, bonus issues, capital reductions and liquidation preferences.
The CDIs entitle
holders to dividends,
if any, and other rights
economically equivalent to
shares of common
stock,
including the right
to attend stockholders’
meetings. CDN, as
the stockholder of
record, will vote
the underlying
shares in accordance with the directions of the CDI holders.
The following table summarizes Common Stock activity
during the periods presented below:
Year Ended December 31,
Shares outstanding at the beginning of the year
167,645,373
138,387,890
96,651,692
Shares issued during the year
-
29,257,483
41,736,198
Shares outstanding at the end of the year
167,645,373
167,645,373
138,387,890
Coronado Group LLC
As
of
December
31,
2022,
Coronado
Group
LLC,
the
Company’s
controlling
stockholder,
beneficially
owns
845,061,399
CDIs (representing a beneficial interest
in
84,506,140
shares of common stock) representing
50.4
%
of
the
total
1,676,453,730
CDIs
(representing
a
beneficial
interest
in
167,645,373
shares
of
common
stock)
outstanding.
The
remaining
831,392,331
CDIs
(representing
a
beneficial
interest
in
83,139,233
shares
of
common stock) are owned by investors in the form of CDIs
publicly traded on the ASX.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Refer to Note 23 “Stock-Based Compensation” for
options to purchase common stock issued
and outstanding as
of December 31, 2022 and 2021.
Preferred Stock
Coronado Group
LLC holds
one share
of preferred
stock
Series A.
The holder
of Series
A Preferred
Stock
is
permitted
to
nominate
and
elect
members
of
the
Company’s
Board
of
Directors
in
relation
to
the
level
of
the
holder’s
aggregate
beneficial
ownership
of
shares
of
the
Company’s
common
stock.
The
Series
A
Preferred
Share
is
not
entitled
to
dividends
and
is
non
transferable.
The
Series
A
Preferred
Share
has
a
liquidation
preference of $
1.00
.
(b)
Dividends
The dividend
policy
and
the
payment
of future
cash
dividends
are subject
to
the
discretion
of the
Company’s
Board of Directors.
During the year ended December 31, 2022, the Company declared:
•
Dividends of $
150.9
million, or $
0.09
per CDI ($
0.90
per share of common stock), on February 24, 2022;
•
Dividends of $
200.1
million, or $
0.119
per CDI ($
1.19
per share of common stock), on May 9, 2022;
•
Dividends of $
125.7
million, or $
0.075
per CDI ($
0.75
per share of
common stock),
on August 8,
2022;
and
•
Dividends of $
225.0
million, or $
0.134
per CDI ($
1.34
per share of common stock), on
October 30, 2022.
The
Company
paid
a
total
of
$
700.2
million
to
stockholders
and
CDI
holders
on
the
ASX,
net
of
$
1.4
million
foreign exchange gain
on payment of
dividends to certain
CDI holders that
elected to be
paid in Australian
dollars,
in relation to the above declared dividends.
During the year ended December 31, 2021, the Company did
not declare or pay dividends.
During the year
ended December 31,
2020, the Company
declared a dividend
to stockholders and
CDI holders
on the
ASX of
$
24.2
million, or
$
0.025
per CDI
($
0.25
per share
of common
stock). The
dividend was
paid on
March 31, 2020.
(c)
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. During periods in which the Company incurs
a net loss, diluted weighted average shares outstanding
are equal to basic weighted average shares outstanding
because the effect of all equity awards is anti-dilutive.
Basic and diluted earnings per share was calculated as
follows (in thousands, except per share data):
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Year Ended December 31,
(US$ thousands, except per share data)
Numerator:
Net income (loss)
$
771,703
$
189,423
$
(226,537)
Less:
Net (loss) attributable to Non-controlling interest
-
(2)
(69)
Net income (loss) attributable to Company stockholders
$
771,703
$
189,425
$
(226,468)
Denominator (in thousands):
Weighted-average shares of common stock outstanding
167,645
156,710
111,073
Effects of dilutive shares
-
Weighted average diluted shares of common stock
outstanding
167,846
156,842
111,073
Earnings (Loss) Per Share (US$):
Basic
4.60
1.21
(2.04)
Dilutive
4.60
1.21
(2.04)
8. Trade Receivables, net
The Company
extends trade
credit to
its customers
in the
ordinary course
of business.
Trade
receivables are
recorded initially at fair value and subsequently at amortized
cost, less any ECL.
December 31,
(US$ thousands)
Trade
receivables - at amortized cost
$
414,490
$
272,657
Provision for discounting and credit losses (Note 9)
(4,511)
(734)
Trade receivables, net
$
409,979
$
271,923
Xcoal
At December
31, 2022,
amounts
outstanding from
Xcoal in
respect
of coal
sales
were $
69.8
million,
of which
$
34.9
million were past due, and is included within “Trade
receivables, net” on the Consolidated Balance
Sheet.
Subsequent to December
31, 2022, the Company has collected
the Xcoal past due balance in
full. The carrying
amount
of
trade
receivables
from
Xcoal,
net
of
provision
for
discounting
and
credit
losses
of
$
2.9
million,
recognized due to the uncertainty surrounding expected timing
of collection, was $
65.7
million.
At December
31,
2021, amounts
outstanding
from
Xcoal in
respect
of coal
sales
were $
35.2
million,
of which
$
17.9
million
was
past due
and was
included
in “Trade
receivables,
net” on
the
Consolidated
Balance Sheet.
Subsequent to December 31,
2021, the Company collected
Xcoal’s past due balance in
full. The carrying amount
of
trade
receivables
from
Xcoal,
net
of
provision
for
discounting
and
credit
losses
of
$
0.4
million,
was
$
34.8
million.
9. Provision for Discounting and Credit Losses
The following
table provides
the reconciliation
of the
allowance for
credit losses
that is
deducted from
financial
assets to present the net amount expected to be collected:
(US$ thousands)
Trade and
related party
trade
receivables
Other
Assets
Total
As at January 1, 2021
$
9,298
$
-
$
9,298
Change in estimates during the current period
Unwind of provision for discounting and credit losses
(9,000)
-
(9,000)
As at December 31, 2021
1,256
Change in estimates during the current period
3,777
3,821
As at December 31, 2022
$
4,511
$
$
5,077
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
10. Inventories
December 31,
(US$ thousands)
Raw coal
$
50,604
$
17,334
Saleable coal
45,913
42,006
Total
coal inventories
96,517
59,340
Supplies inventory
61,501
59,582
To
tal inventories
$
158,018
$
118,922
Coal inventories measured at its net realizable value were
$
5.0
million and $
2.2
million at December 31, 2022
and 2021, respectively,
and relates to coal designated for deliveries under the Stanwell
non-market coal supply
agreement. See further discussion in Note 19 “Contract
Obligations”.
11.
Property, Plant and
Equipment
The following
table indicates
the carrying
amount of
each of
the major
classes of
the Company’s
consolidated
depreciable assets:
December 31,
(US$ thousands)
Land
$
27,711
$
27,853
Buildings and improvements
91,336
88,079
Plant, machinery, mining
equipment and transportation vehicles
1,012,844
963,272
Mineral rights and reserves
373,309
374,326
Office and computer equipment
9,488
8,718
Mine development
565,106
566,201
Asset retirement obligation asset
87,877
75,215
Construction in process
82,713
42,055
To
tal cost of property,
plant and equipment
2,250,384
2,145,719
Less accumulated depreciation, depletion and amortization
860,836
748,356
Property, plant and
equipment, net
$
1,389,548
$
1,397,363
The amount of depreciation and amortization expense
for property, plant
and equipment for the years ended
December 31, 2022, 2021 and 2020 was $
155.8
million, $
166.2
million and $
187.7
million, respectively.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
12.
Goodwill and Other Intangible Assets
(a)
Acquired Intangible Assets
December 31, 2022
(US$ thousands)
Weighted
average
amortization
period (years)
Gross
carrying
amount
Accumulated
amortization
Net carrying
amount
Intangible assets:
Amortizing intangible assets:
Mining permits - Logan
$
1,642
$
$
Mining permits - Buchanan
3,501
2,659
Total
intangible assets
$
5,143
$
1,832
$
3,311
December 31, 2021
(US$ thousands)
Weighted
average
amortization
period (years)
Gross
carrying
amount
Accumulated
amortization
Net carrying
amount
Intangible assets:
Amortizing intangible assets:
Mining permits - Logan
$
1,642
$
$
Mining permits - Buchanan
3,501
2,784
Total
intangible assets
$
5,143
$
1,629
$
3,514
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
years
ended
December
31,
2022,
and
2020,
were
$
0.2
million,
$
0.2
million
and
$
0.2
million,
respectively.
Estimated
amortization expense for each of the next five years is
$
0.2
million.
(b)
Goodwill
In connection with the
Buchanan acquisition on
March 31, 2016, the Company
recorded goodwill in the
amount
of $
28.0
million. The
Company performed
a qualitative
assessment to
determine if
impairment was
required at
December 31, 2022
or 2021.
Based upon
the Company’s
qualitative assessment,
it is more
likely than
not that
the fair
value
of the
reporting
unit is
greater
than
the
carrying
amount at
December 31,
2022 and
2021. As
a
result,
no
impairment
was
recorded,
and
the
balance
of
goodwill
at
both
December 31,
and
was
$
28.0
million. The Company has not noted any indicators
of impairment since the acquisition date.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
13.
Other Assets
December 31,
(US$ thousands)
Other current assets:
Prepayments
$
26,831
$
24,226
Long service leave receivable
7,884
9,136
Tax
credits receivable
4,183
4,440
Other
21,290
9,845
Total
other current assets
$
60,188
$
47,647
Other non-current assets:
Favorable mineral leases
$
3,448
$
3,645
Deferred debt issue costs
2,463
4,310
Long service leave receivable
Tax
credits receivable
7,269
11,223
Deposits to acquire long lead capital items
18,126
-
Other
1,694
-
Total
other non-current assets
$
33,585
$
19,728
The Company
has other assets
which includes prepayments,
favorable mineral leases,
deferred debt issue
costs,
long service leave receivable,
equipment deposits and coalfield employment enhancement tax credit receivable.
The favorable mineral leases are amortized based on the coal tonnage removed from the lease property relative
to the total estimated reserves on that property.
Long service leave for
eligible coal mine workers
at the Company’s
Australian Operations is
paid when leave is
taken, with a subsequent
reimbursement received from
the Coal Mining Industry
(Long Service Leave Funding)
Corporation
in
Queensland,
Australia.
The
reimbursement
entitlement
is
recognized
as
a
receivable
and
is
measured as
the present
value of
expected future
reimbursements to
be received
for the
corresponding leave
liability recognized.
The deferred
issue costs
as of
December
31,
2022 and
2021,
were
incurred to
establish
the ABL
Facility (as
described in Note 17
“Interest Bearing Liabilities”) and
amortized over the life
of the facility
on a straight-line
basis
and
included
in
“Interest
expense,
net”
in
the
Company’s
Consolidated
Statements
of
Operations
and
Comprehensive Income.
The tax credits receivable relates
to the Virginia coalfield employment enhancement tax
credit for coal sales from
the Company’s mining properties in the State of West Virginia in the U.S. during the 2018 to 2021 income years.
Where the credits exceed the Company’s state tax liability for the tax year,
the excess is redeemable by the Tax
Commissioner on behalf of the Commonwealth of Virginia for
% of the face value within 90
days after filing the
return. The
tax credits
allowed can
be claimed
in the
third taxable
year following
the taxable
year in
which the
credit was earned and allowed.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
14.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the
following:
December 31,
(US$ thousands)
Wages
and employee benefits
$
38,687
$
41,187
Taxes
other than income taxes
5,988
6,246
Accrued royalties
117,131
70,237
Accrued freight costs
44,496
27,754
Accrued mining fees
103,492
65,835
Acquisition related accruals
11,669
31,201
Other liabilities
22,228
28,482
Total
accrued expenses and other current liabilities
$
343,691
$
270,942
Acquisition
related
accruals
is
an
accrual
for
the
remaining
estimated
stamp
duty
payable
on
the
Curragh
acquisition of $
11.7
million (A$
17.3
million). Refer to Note 28 “Contingencies” for further
details.
15. Leases
Information related to Company’s right-of use
assets and related lease liabilities are as follows:
Year ended December 31,
(US$ thousands)
Operating lease costs
$
8,088
$
10,863
Cash paid for operating lease liabilities
8,244
10,986
Finance lease costs:
Amortization of right of use assets
Interest on lease liabilities
Total
finance lease costs
$
$
December 31,
(US$ thousands)
Operating leases:
Right of use asset - operating leases, net
$
17,385
$
13,656
Finance leases:
Property and equipment
Accumulated depreciation
(186)
(67)
Property and equipment, net
Current operating lease obligations
7,593
8,326
Non-current operating lease obligations
15,505
12,685
Total
Operating lease liabilities
23,098
21,011
Current finance lease obligations
Non-current finance lease obligations
Total
Finance lease liabilities
Current lease obligations
7,720
8,452
Non-current lease obligations
15,573
12,894
Total
lease obligations
$
23,293
$
21,346
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
December 31,
Weighted Average Remaining
Lease Term (Years)
Weighted average remaining lease term - finance
leases
1.52
2.54
Weighted average remaining lease term - operating
leases
4.11
2.59
Weighted Average Discount
Rate
Weighted discount rate - finance lease
7.60%
7.60%
Weighted discount rate - operating lease
8.94%
7.95%
The Company’s leases have remaining lease terms of
1 year
to
5 years
, some of which include
options to extend
the terms deemed reasonable to exercise. Maturities of lease
liabilities are as follows:
(US$ thousands)
Operating
Lease
Finance
Lease
Year ending
December 31,
$
8,964
$
6,112
5,325
5,214
-
Thereafter
1,139
-
Total
lease payments
26,754
Less imputed interest
(3,656)
(150)
Total
lease liability
$
23,098
$
16.
Asset Retirement Obligations
Reclamation of
areas disturbed
by mining
operations
must be
performed
by the
Company in
accordance
with
approved
reclamation
plans
and
in
compliance
with
state
and
federal
laws
in
the
states
of
West
Virginia
and
Virginia
in
the
United
States
and
Queensland
in
Australia.
For
areas
disturbed,
a
significant
amount
of
the
reclamation will take place in
the future when operations cease. There
were
no
assets that were legally restricted
for
purposes
of
settling
asset
retirement
obligations
as
of
December
31,
and
2021.
In
addition,
state
agencies monitor compliance with the mine plans, including reclamation.
The Company records the fair value
of its asset retirement obligations using the present
value of projected future
cash flows, with
an equivalent amount
recorded in the
related long lived
asset or a
change to the
Consolidated
Statements of Operations
if the related
permit is closed.
An accretion cost,
representing the
increase over time
in the present value of
the liability, is recorded each period and the capitalized cost is
depreciated over the useful
life of the related asset. As reclamation work is performed or liabilities
otherwise settled, the recorded amount of
the liability is reduced.
Changes in
the asset
retirement obligations
for the
years ended
December 31,
2022 and
December 31,
were as follows:
(US$ thousands)
December 31,
December 31,
Total
asset retirement obligations at beginning of the year
$
120,277
$
122,144
ARO liability additions
1,835
1,642
Accretion
9,066
9,353
Reclamation performed in the year
(3,270)
(3,322)
Gain on settlement of ARO
(53)
(601)
Change in estimate recorded to net income
(2)
1,195
Change in estimate recorded to assets
15,381
(5,444)
Foreign currency translation adjustment
(4,744)
(4,690)
Total
Asset retirement obligations at end of the year
138,490
120,277
Less current portion
(10,646)
(9,414)
Asset retirement obligation, excluding current portion
$
127,844
$
110,863
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
17.Interest Bearing Liabilities
The following is a summary of interest-bearing liabilities
at December 31, 2022:
(US$ thousands)
December 31,
December 31,
Weighted Average
Interest Rate at
December 31, 2022
Final
Maturity
10.75
% Senior Secured Notes
$
242,326
$
315,000
12.14
%
(2)
ABL Facility
-
-
Discount and debt issuance costs
(1)
(9,373)
(14,831)
Total
interest bearing liabilities
$
232,953
$
300,169
(1)
Deferred debt issuance
costs incurred on
the establishment of the
ABL Facility has been
included within "Other non-current
assets" on the
Consolidated Balance Sheets.
(2)
Represents the effective interest rate.
Senior Secured Notes
On May 12, 2021,
the Company entered
into an indenture, or
the Indenture, among
Coronado Finance Pty Ltd,
an Australian proprietary company,
as the issuer or the Australian Borrower, the Company,
as parent guarantor,
the other
guarantors
party
thereto
and
Wilmington
Trust,
National
Association,
as trustee,
and
as priority
lien
collateral trustee, relating to the issuance of
10.750
% Senior Secured Notes due 2026, or the Notes.
Interest on
the Notes
is payable
semi-annually in
arrears on
May 15
and November
15 of
each year
to record
holders of the Notes on the immediately preceding May
1 and November 1, as applicable. The Notes mature
on
May 15, 2026
and are senior secured obligations of the Company.
The Notes are guaranteed
on a senior secured
basis by the Company
and its wholly-owned
subsidiaries (other
than
the
Issuer)
(subject
to
certain
exceptions
and
permitted
liens)
and
secured
by
(i)
a
first-priority
lien
on
substantially all of the Company’s assets and the assets of the other
Guarantors (other than accounts receivable
and other rights to payment,
inventory,
intercompany indebtedness, certain
general intangibles and commercial
tort claims, commodities accounts, deposit accounts, securities accounts and other related assets and proceeds
and
products
of
each
of
the
foregoing,
or,
collectively,
the
ABL
Collateral),
or
the
Notes
Collateral,
and
(ii)
a
second-priority lien on the ABL Collateral, which is
junior to a first-priority lien, for the
benefit of the lenders under
the Company’s
senior secured
asset-based revolving
credit agreement
in an
initial aggregate
principal amount
of $
100.0
million, or the ABL Facility.
The terms
of the
Notes are
governed
by the
Indenture.
The Indenture
contains
customary covenants
for high
yield bonds, including,
but not limited
to, limitations on
investments, liens, indebtedness,
asset sales, transactions
with affiliates and
restricted payments, including
payment of dividends
on capital
stock. As of
December 31, 2022,
the Company was in compliance with all applicable covenants
under the Indenture.
The Company may
redeem some or
all of the
Notes at the
redemption prices and
on the terms
specified in the
Indenture.
Partial Redemption of Notes
On November
23, 2022,
the Company
exercised its
optional redemption
rights and
redeemed $
35.0
million, or
10.0
%, of the
original aggregate principal amount
of its Notes
at a redemption
price equal to
% of the
principal
amount of the Notes, plus accrued and unpaid interest on
the Notes to, but not including, the date
of redemption.
The redemption
allocation was
determined by
lot, in
compliance with
the requirements
of the
Depository Trust
Company as provided in the Indenture governing the
Notes.
During the
year ended
December 31,
2022, in
connection
with the
dividends paid
in the
period, the
Company
offered to
purchase the
Notes pursuant
to the
terms of
the Indenture.
In connection
with the
above offers,
the
Company purchased an
aggregate principal amount, for
accepted offers, of
$
37.7
million at a
price equal to
%
of the principal amount of the
Notes, plus accrued and unpaid interest on
the Notes to, but not including, the
date
of redemption.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
In connection to the above redemptions,
the Company recorded a “Loss
on debt extinguishment” of $
5.3
million
in the
Consolidated Statement
of Operations
and Comprehensive
Income, which
represents the
premium paid
and a portion of unamortized debt issuance costs and
discount on issuance.
ABL Facility
On
May
12,
2021,
the
Company,
Coronado
Coal
Corporation,
a
Delaware
corporation
and
wholly-owned
subsidiary of the
Company,
or the U.S.
Borrower,
the
Australian Borrower and
the guarantors
entered into the
ABL
Facility
agreement
with
Citibank,
N.A.,
as
administrative
agent
and
a
lender,
and
various
other
financial
institutions, with an aggregate multi-currency lender
commitment of up to
$
100.0
million, including a $
30.0
million
sublimit for the issuance of
letters of credit and $
5.0
million for swingline loans,
at any time outstanding, subject
to borrowing base availability.
The ABL Facility matures on
May 12, 2024
.
Revolving loan
(and letter
of credit)
availability under
the ABL
Facility is
subject to
a borrowing
base, which
at
any time is equal to the sum of certain
eligible accounts receivable, certain eligible
inventory and certain eligible
supplies
inventories
and,
in
each
case,
subject
to
specified
advance
rates.
The
borrowing
base
is
subject
to
certain reserves, which may be established
by the agent in its
reasonable credit discretion, that could reasonably
be expected to have an adverse effect on the value
of the collateral included in the borrowing base.
Borrowings
under
the
ABL
Facility
bear
interest
at
a
rate equal
to
a
BBSY
rate
plus an
applicable
margin.
In
addition to paying
interest on the
outstanding borrowings
under the ABL
Facility,
the Company is
also required
to pay a fee in respect of unutilized commitments, on amounts available to be drawn under outstanding letters of
credit and certain
administrative fees.
The
obligations
of
the
borrowers
under
the
ABL
Facility
are
guaranteed
by
(a)
a
first
priority-lien
in
the
ABL
Collateral, (b)
a second
priority-lien
in
the Notes
Collateral
and (c)
solely in
the
case
of the
obligations
of the
Australian Borrower,
a featherweight
floating security
interest over
certain accounts
released from
the security
by the Australian Borrower in favor of Stanwell.
The ABL Facility contains customary covenants for
asset-based credit agreements of this type, including, among
others: (i) the requirement to deliver
financial statements, other reports and
notices; (ii) covenants related to the
payment of dividends on, or purchase or redemption
of, capital stock; (iii) covenants related to
the incurrence or
prepayment of
certain debt;
(iv) covenants
related to
the incurrence
of liens
or encumbrances;
(v) compliance
with
laws;
(vi)
restrictions
on
certain
mergers,
consolidations
and
asset
dispositions;
and
(vii)
restrictions
on
certain transactions with affiliates. Subject to customary grace periods and notice requirements, the
ABL Facility
also
contains
customary
events
of
default.
Additionally,
the
ABL
Facility
contains
a
springing
fixed
charge
coverage ratio of not less than
1.00
to 1.00, which ratio is tested if availability under
the ABL Facility is less than
a certain amount.
As of December
31, 2022, the
Company is
not subject to
this covenant.
As at December
31,
2022, the Company met its undertakings under the ABL
Facility.
As
at
December
31,
2022,
no
amounts
were
drawn
and
no
letters
of
credit
were
outstanding
under
the
ABL
Facility.
The carrying value of
debt issuance costs,
recorded as “Other
non-current assets” in
the Consolidated Balance
Sheets, were $
2.5
million and $
4.3
million at December 31, 2022 and December 31, 2021, respectively. Refer to
Note 13 “Other Assets”.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
18.
Other Financial Liabilities
The following is a summary of other financial liabilities:
(US$ thousands)
December 31,
December 31,
Collateralized financial liabilities payable to third-party financing
companies
(1)
$
12,726
$
17,794
Unsecured notes payable to insurance premium finance company,
payable in
aggregate monthly instalments ranging from $
to $
with a fixed rate
ranging up to
2.25
% per annum
-
4,536
Total
Other financial
liabilities
12,726
22,330
Less: current portion
4,458
8,508
Other non-current financial liabilities
$
8,268
$
13,822
(1)
On January
6, 2021,
the Company
entered into
an agreement
with a
third-party financier
to sell
and leaseback
items of
property, plant and
equipment
owned by
Curragh, a
wholly-owned subsidiary of
the Company.
The transaction
did not
satisfy the
sale criteria
under ASC
606 -
Revenues from
Contracts with
Customers. As
a
result, the
transaction was
deemed a
financing arrangement
and the
Company has
continued to
recognize the
underlying property,
plant and equipment
on its Consolidated
Balance Sheet. The
proceeds received from the
transaction of $
23.5
million (A$
30.2
million) were recognized as “Other financial
liabilities” on the Consolidated Balance Sheet. The
term of the financing arrangement
ranges up to
five
years
with an implied interest rate
of up to
8.1
% per annum. The carrying
amount of this financial liability, net of issuance
costs, was $
12.7
million and
$
17.8
million as at December 30, 2022 and 2021,
$
4.5
million and $
4.0
million of which were classified as a current liability, respectively.
19.
Contract Obligations
In
connection
with
the
acquisition
of
the
Logan
assets,
the
Company
assumed
certain
non-market
contracts
related to various
coal leases.
The non-market
coal leases
require royalty
payments based on
a percentage
of
the
realization
from
the
sale
of
the
respective
coal
under
lease.
On
acquisition,
the
Company
recorded
$
27.3
million related to the non-market
portion of the coal leases
and is amortizing it ratably
over the respective
estimated coal reserves as they are mined and sold.
In
connection
with
the
acquisition
of
Curragh,
the
Company
assumed
the
Stanwell
non-market
coal
supply
agreement
(CSA)
with
a
fixed
pricing
component
that
was
effectively
below
the
market
price
at
the
date
of
acquisition. As a
result, on acquisition,
the Company recorded
a liability
of $
307.0
million (A$
400.0
million) related
to the
unfavorable pricing
of the
Stanwell CSA
and is
amortizing it
ratably based
on the
tons sold
through the
contract.
The
amortization
of this
liability
for the
year
ended December
31,
2022,
and
were
$
36.2
million,
$
33.7
million
and
$
32.6
million,
respectively,
and
recorded
as
“Other
revenues”
in
the
Consolidated
Statements of Operations and Comprehensive Income.
The following is a summary of the contract obligations
as of December 31, 2022:
(US$ thousands)
Short-term
Long-term
Total
Coal leases contract liability
$
$
19,720
$
20,563
Stanwell below market coal supply agreement
39,500
74,805
114,305
$
40,343
$
94,525
$
134,868
The following is a summary of the contract obligations
as of December 31, 2021:
(US$ thousands)
Short-term
Long-term
Total
Coal leases contract liability
$
$
20,081
$
20,924
Stanwell below market coal supply agreement
39,118
121,107
160,225
$
39,961
$
141,188
$
181,149
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
20.
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
“Mineral
rights
and
reserves”
asset
and
a
corresponding
deferred
consideration liability of $
155.2
million (A$
210.0
million), calculated using the contractual pre-tax discount rate of
% representing
fair value
of the
arrangements
at the
date of
acquisition. The
deferred consideration
liability
will reflect passage of
time changes by way
of an annual accretion
at the contractual pre-tax discount
rate of
%
and will
be settled
as a
discount to
the price
of thermal
coal supplied
to Stanwell
over the
term of
a new
coal
supply agreement which
is expected to
commence in 2027.
The accretion of
deferred consideration is recognized
in “Interest expense, net” in the Consolidated Statements of Operations and Comprehensive Income. The Right-
to-mine-asset will be amortized over the coal reserves
mined from the SRA.
December 31,
(US$ thousands)
Stanwell Reserved Area deferred consideration
$
243,191
$
230,492
$
243,191
$
230,492
21.
Workers’ Compensation and Pneumoconiosis (“Black
Lung”) Obligations
In
the
United
States,
coal
mine
operations
may
lead
to
traumatic
workers
compensation
claims,
as
well
as
workers’ compensation occupational disease claims for
black lung disease. Injured workers generally file claims
for traumatic injury under
the governing state
workers compensation legislation.
Workers may file
claims due to
black
lung
under
the
governing
state
workers
compensation
legislation
or
under
a
series
of
federal
laws
that
include the Federal Coal Mine Health and Safety Act of 1969, as amended, the Black Lung Benefits Act of 1973,
and
the
Black
Lung
Benefits
Reform
Act
of
1977.
The
Company
provides
for
both
traumatic
workers
compensation claims and occupational disease claims through
an insurance policy.
The Company obtained workers
compensation insurance for work
related injuries, including black
lung, through
a
third-party
commercial
insurance
company
for
the
years
ended
December
31,
2022,
and
2020.
The
insurance policy
covers claims
that exceed
$
0.5
million per
occurrence for
all years,
or aggregate
claims in
excess
of $
22.7
million, $
22.0
million and $
15.0
million for policy years ending May 2023, May 2022 and May 2021. Per
the contractual agreements, the Company
was required to provide a collateral
deposit of $
53.1
million for policy
years 2017 through
2023, ending May 31,
2023, which is
accomplished through providing
a combination of
letters
of credit and cash collateral
in an escrow account.
As of December 31,
2022, the Company has
provided $
16.8
million of letters
of credit, $
27.1
million of cash
collateral and surety
bonds of $
6.0
million totaling $
49.9
million.
The remaining collateral is required to be provided by
March 31, 2023.
For the
years ended
December 31, 2022,
2021 and
2020, the
audited Consolidated
Statements of
Operations
and
Comprehensive
Income
included
Company
incurred
claims,
premium
expenses
and
administrative
fees
related
to
worker’s
compensation
benefits
of
$
12.2
million,
$
12.2
million
and
$
9.5
million,
respectively.
As
of
December 31, 2022 and 2021, the estimated workers’ compensation
liability was $
30.1
million and $
29.7
million,
respectively, representing claims incurred but not paid based on
the estimate of the
outstanding claims under the
coverage
limits
and
the
actuarially
determined
retained
liability
under
the
aggregate
claim
amount.
As
of
December
31,
and
2021,
$
27.1
million
and
$
25.3
million,
respectively,
are
recorded
within
“Other
non-
current liabilities” in the Consolidated Balance Sheets.
The current portion of the Company’s estimated
workers’
compensation liabilities are
recorded within “Accrued
expenses and other
current liabilities” in the
Consolidated
Balance Sheets.
22.
Employee Benefit Plans
The
Company
has
a
401(k)-defined
contribution
plan
in
which
all
U.S.
full
time
employees
are
eligible
to
participate
upon
their
date
of
hire.
Employees
generally
may
contribute
up
to
%
of
their
qualifying
compensation
subject
to
statutory
limitations.
The
Company
matches
up
to
%
up
to
the
first
%
of
the
participant’s annual compensation
for all employees except
for those employed at Buchanan.
For employees at
Buchanan,
the
Company
matches
up
to
%
of
the
first
%
of
the
participant’s
annual
compensation.
The
Company’s contributions immediately
vest. Total Company contributions
for the
years ended
December 31,
2022,
2021 and 2020 amounted to $
3.9
million, $
3.3
million and $
2.7
million, respectively.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
In the United States, the Company is self-insured for
employee health care claims up to the lesser of $
0.2
million
per
covered
person
or
an
aggregate
amount
depending
on
the
various
coverages
provided
to
employees
throughout the plan year
for all employees. The Company
has purchased coverage from a
commercial insurance
carrier to provide for any claims
in excess of these amounts. At December
31, 2022 and 2021, the Company had
provided
accruals
of
$
1.9
million
and
$
1.7
million,
respectively,
for
claims
incurred
but
not
paid
based
on
management’s estimate
of the Company’s
self-insured liability.
For the years
ended December
31, 2022, 2021
and 2020, the Company incurred claims,
premium expenses and administrative
fees related to this plan totaling
$
29.8
million, $
25.8
million and $
23.9
million respectively.
23.
Stock-Based Compensation
Total
stock-based
compensation
expense
was
$
2.7
million,
$
0.5
million
and
$
1.6
million
for
the
years
ended
December 31,
2022,
and
respectively,
and
was
included
as
a
component
of
selling,
general,
and
administrative expenses in the Company’s Consolidated Statements of Operations and Comprehensive Income.
The stock-based compensation expense includes
compensation expense recognized in full
at the grant date for
employees that meet certain retirement eligibility criteria
per the 2018 Plan (as defined below).
As
of
December 31,
the
Company
had
$
4.1
million
of
total
unrecognized
compensation
cost
related
to
nonvested stock-based
compensation awards
granted under
the plans.
This cost
is expected to
be recognized
over
3.25
years
with
a
weighted-average
period
of
2.38
years
as
stock-based
compensation
expense.
This
expected cost does not include the impact of any future stock-based
compensation awards.
a) 2018 Equity Incentive Plan
In
connection
with
the
completion
of
the
Company’s
initial
public
offering
of
common
stock,
the
Company
implemented
the
Coronado
Global
Resources Inc.
Equity
Incentive
Plan,
or
the
Plan,
which
is
designed
to
align
compensation
for
certain
key
executives
with
the
performance
of
the
Company.
Since
its
approval, there have been no updates to the 2018 Plan
or issuance of a new plan.
The 2018
Plan provides
for the
grant of
awards
including stock
options,
or Options;
stock appreciation
rights;
restricted stock
units, or
RSUs; and
restricted stock,
valued in
whole or
in part
with reference
to shares
of the
Company’s CDIs or common stock, as well as performance-based awards, including performance stock units,
or
PSUs, denominated in CDIs or shares
of common stock. Each award
is entitled to receive one
CDI with
ten
CDIs
representing one share of common stock.
The Company
measures the cost
of all stock-based
compensation, including
stock options,
at fair value
on the
grant date
and recognizes
such costs
within “Selling,
general and
administrative expense”
in the
Consolidated
Statements of
Operations and Comprehensive
Income. The
Company recognizes compensation
expense related
to Options, PSUs and RSUs
that cliff vest using
the straight-line method during
the requisite service period.
For
stock-based
awards
where
vesting
is
dependent
upon
achieving
certain
operating
performance
goals,
the
Company
estimates
the
likelihood
of
achieving
the
performance
goals
during
the
performance
period.
The
Company accounts
for forfeitures as and when they occur.
All awards require the grantee
to be employed by the
Company at the vesting date except
for grantees who meet
certain retirement criteria under the 2018 Plan.
The following awards were granted under the 2018 Plan:
Grant year
Vesting date
(1)
Performance period
Stock Options
PSUs
RSUs
01/01/2023
not applicable
-
-
393,793
01/07/2023
not applicable
-
-
255,284
01/01/2024
not applicable
-
-
151,747
01/07/2024
not applicable
-
-
343,210
31/03/2026
01/01/2022 - 31/12/2024
-
7,471,100
-
31/03/2025
01/01/2021 - 31/12/2023
-
5,998,212
-
31/03/2024
01/01/2020 - 31/12/2022
-
3,203,988
-
31/03/2023
01/01/2019 - 31/12/2021
1,336,454
1,001,914
-
30/12/2019
not applicable
-
-
54,687
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(1)
The awards shall vest on the one-year anniversary
of each testing date and no later than the disclosed date.
The Options
and PSUs granted
that will
vest are
subject to the
achievement of goals
over the
performance period.
These goals are relative total shareowner return, or TSR, and scorecard performance metrics, or the Scorecard.
TSR is determined based on the Company’s percentile ranking of TSR over the performance period relative to a
predefined comparator group of companies.
Performance metrics applicable to the Options and
PSUs granted as summarized below:
Grant year
Relative TSR
Scorecard
TSR
Safety
TSR
Cashflow
Production
Production
2022, 2021 and
33.0%
22.0%
22.0%
22.0%
-
-
25.0%
25.0%
-
-
25.0%
25.0%
Awards subject to
TSR vest based
on service
and market conditions.
The fair
value of
relative TSR was
estimated
on the grant date using a Monte Carlo simulation model.
Awards subject to Scorecard vest based on service and performance conditions. The fair value of the Scorecard
was estimated
on the
grant
date fair
value of
the Company’s
Common Stock
adjusted for
dividends foregone
during the performance period.
RSUs are only subject to service conditions.
Stock Option Awards
The Company’s 2018 stock option awards were granted
on the date of the IPO with an exercise price of $
2.84
per CDI (A$
4.00
per CDI) which was equal to the Company’s IPO
Price.
The Company’s Stock Option activity is summarized
below:
Stock Option Plan Activity
Opening at the beginning of the year
1,015,006
1,083,101
1,292,476
Granted
-
-
-
Forfeited
(833,319)
(68,095)
(209,375)
Outstanding at the end of the year
181,687
1,015,006
1,083,101
Exercisable at the end of the year
-
-
-
Weighted-average remaining contractual term (in
years)
0.25
1.25
2.25
The weighted
average
grant
date
fair
value
of all
Option
Awards
granted
was
$
0.27
.
On August
5,
2019, the
Board of Directors declared and approved return of
capital of $
0.298
(A$
0.440
) per CDI. In accordance with ASX
listing rule clause 7.22.3 the exercise price of option
awards granted under 2018 plan were reduced by the same
amount
as
the
return
of
capital
to
$
2.41
(A$
3.56
).
No
stock
option
awards
vested
during
the
year
ended
December 31, 2022.
The assumptions used to determine the Options fair value
on grant date were as follows:
2018 Grant
Expected term of the stock options (in years) (i)
7.22
Dividend yield (ii)
10%
Expected volatility (iii)
35%
Risk-free interest rate (iv)
2.46%
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
(i)
Expected
term
represents
the
period
that
the
Company’s
stock-based
awards
are
expected
to
be
outstanding and is determined using
the simplified method, which
equates to a weighted average
of the
vesting period
and total
contractual
term
of the
award.
All awards
cliff vest
at the
end
of the
requisite
service period.
(ii)
Dividend yield is the expected average yield of dividends
expected over the vesting period.
(iii)
Expected volatility
was estimated
using comparable
public company’s
volatility for
similar terms
as the
Company
does
not
have
a
long
enough
operating
period
as
a
public
company
to
estimate
its
own
volatility.
Over
time as
the
Company
develops
its own
volatility
history
it will
begin
to
incorporate
that
history into its expected volatility estimates.
(iv)
Risk-free interest
rate is based
on an interpolated
Australian Government
Bond Rate
at the time
of the
grant for periods corresponding with the expected term
of the option.
The applicable
assumptions in
determining the
fair value
of market
and performance
conditions of
the Options
awards were the same.
Performance Stock Unit Awards
Activity of the Company’s
PSUs that are ultimately
payable in the Company’s
CDIs or the equivalent
number of
shares of common stock granted under the 2018 Plan
is summarized below:
Performance Stock Units Plan Activity
Nonvested at the beginning of the year
8,501,869
4,002,783
988,721
Granted
7,471,100
5,998,212
3,203,988
Forfeited
(1,114,048)
(1,499,126)
(189,926)
Nonvested at the end of the year
14,858,921
8,501,869
4,002,783
Weighted-average grant date fair value (per CDI)
$
0.53
$
0.43
$
0.79
Weighted-average remaining term (in years)
2.54
2.79
3.01
The weighted
average grant
date fair
value of
all PSU
Awards granted
in 2022
was $
0.67
(A$
0.89
).
No
PSUs
vested during the year ended December 31, 2022.
The assumptions used to determine the PSUs fair value on
each grant date were as follow:
2022 Grant
2021 Grant
2020 Grant
2018 Grant
Time to maturity (in years) (i)
3.99
3.85
3.49
4.52
Dividend yield (ii)
16.3%
3.0%
1.6%
10.0%
Expected volatility (iii)
60.0%
60.0%
60.0%
35.0%
Risk-free interest rate (iv)
2.66%
0.35%
0.18%
2.23%
(i)
Time to maturity represents the period
that the Company’s stock-based
awards will vest. All awards cliff
vest at the end of the requisite service period.
(ii)
Dividend yield is the expected average yield of dividends
expected over the vesting period.
(iii)
For the
2018 grant,
the expected
volatility was
estimated using
comparable public
company’s
volatility
for similar terms as the Company does not have a long enough operating period
as a public company to
estimate
its
own
volatility.
For
the
2020,
and
grants,
the
volatility
was
estimated
using
comparable public company’s volatility and the Company’s
own volatility for similar terms.
(iv)
Risk-free interest
rate is based
on an interpolated
Australian Government
Bond Rate
at the time
of the
grant for periods corresponding with the expected term
of the PSUs.
The above
inputs were
consistent to
determine the
fair value
of the
market and
performance conditions
of the
PSUs awards.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Restricted Stock Units
During the year ended
December 31, 2022,
the Company issued
RSUs to certain
employees. These RSUs
are
only subject
to service
conditions and
vest at
various intervals
during the
service
period. The
fair value
of the
award
was
determined
using
the
market
price
of
the
Company’s
Common
Stock
at
the
date
of
grant
and
compensation expense is recorded over the requisite
service period.
Activity of the Company’s
RSUs that are ultimately
payable in the Company’s
CDIs or the equivalent
number of
shares of common stock granted under the 2018 Plan
is summarized below:
Restricted Stock Units Plan Activity
Nonvested at the beginning of the year
-
Granted
1,144,034
Forfeited
-
Vested
-
Nonvested at the end of the year
1,144,034
Weighted-average grant date fair value (per CDI)
$
1.22
Weighted-average remaining term (in years)
0.70
24.
Income Taxes
At December
31, 2021,
a company,
which is
not part
of the
Australian tax
consolidated group,
had tax
losses
carried forward of $
5.9
million (tax effected) for which an equal valuation
allowance has been recognized.
The tax losses of $
27.0
million (tax effected) at December 31, 2021, carried forward at the Australian Operations
were fully utilized in 2022.
The U.S. House
of Representatives
approved a
$740 billion budget
reconciliation package
that includes
a new
minimum tax on certain large corporations, an excise tax on stock buybacks, a significant increase in funding for
the Internal Revenue Service, incentives to promote climate change mitigation and clean energy,
and provisions
to promote health
care affordability.
The Inflation Reduction
Act includes a
book-minimum tax
(AMT) similar
to
that originally proposed in the House-approved
Build Back Better legislation that would
impose a
% minimum
tax on “adjusted
financial statement income”
of applicable corporations over
the “corporate AMT
foreign tax credit
for the taxable
year.”
Under the bill,
an applicable corporation’s
minimum tax would
be equal to
the amount by
which
the
tentative
minimum
tax
exceeds
the
sum
of
the
corporation’s
regular
tax
for
the
year
and
the
corporation’s base
erosion and
anti-abuse tax
liability under
section 59A.
This provision
would be
effective
for
taxable years beginning after December 31, 2022 and
it is not expected to apply to the Company.
Income (loss) from
continuing operations before
income taxes for
the periods presented
below consisted of
the
following:
December 31,
(US$ thousands)
U.S.
$
609,617
$
226,463
$
(116,354)
Non-U.S.
393,660
16,062
(170,199)
Total
$
1,003,277
$
242,525
$
(286,553)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Total
income tax expense (benefit) for the periods presented
below consisted of the following:
December 31,
(US$ thousands)
Current:
U.S. federal
$
90,933
$
30,075
$
(28,959)
Non-U.S.
75,270
(4,443)
(18,967)
State
25,347
3,480
(1,034)
Total
current
191,550
29,112
(48,960)
Deferred:
U.S. federal
13,486
18,353
Non-U.S.
35,425
6,658
(18,757)
State
4,193
3,846
(10,652)
Total
deferred
40,024
23,990
(11,056)
Total
income tax expense (benefit)
$
231,574
$
53,102
$
(60,016)
The following is a reconciliation of the expected statutory federal income tax expense (benefit) to the Company’s
income tax expense (benefit) for the periods presented
below:
December 31,
(US$ thousands)
Current:
Expected income tax expense (benefit) at U.S. federal statutory
rate
$
210,690
$
50,931
$
(60,176)
Percentage depletion
(41,047)
-
-
Permanent differences
(2,262)
(3,144)
Prior period tax return adjustments and amendments
(4,259)
-
Foreign tax deductions method change and prior year
amendments
-
-
28,952
Australian branch impact on U.S. taxes
42,049
(1,699)
(21,398)
State income taxes, net of federal benefit
21,548
7,833
(4,250)
Total
income tax expense (benefit)
$
231,574
$
53,102
$
(60,016)
Effective tax rate
23.1%
21.9%
20.9%
Deferred income taxes
reflect the net
tax effects of
temporary differences between the
carrying amounts of
assets
and liabilities
for financial
reporting purposes
and the
amount used
for income
tax purposes
using the
enacted
tax rates and laws currently
in effect. Significant components
of the Company’s deferred
income tax assets and
liabilities as of December 31, 2022 and 2021 were as follows:
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
December 31,
(US$ thousands)
Deferred income tax assets:
Accruals and provisions
$
36,409
$
29,091
Contract obligations
119,505
137,290
Asset retirement obligation
49,078
40,033
Goodwill
6,590
7,057
Tax
losses
6,886
35,078
U.S. asset on foreign deferred taxes
14,408
-
Other
31,747
22,676
Gross deferred income tax assets
264,623
271,225
Valuation allowance
(1)
(34,667)
(25,590)
Total
deferred income tax assets, net of valuation allowance
229,956
245,635
Deferred income tax liabilities:
Property, plant, equipment
and mine development, principally due to
differences in depreciation, depletion and asset
impairments
(300,968)
(272,219)
Warehouse stock
(13,980)
(14,903)
U.S. liability on foreign deferred taxes
-
(10,301)
Other
(10,679)
(9,246)
Total
deferred income tax liabilities
(325,627)
(306,669)
Net deferred income tax liability
$
(95,671)
$
(61,034)
(1)
As of December 31,
2022, the Company recorded
a valuation allowance against
a deferred tax asset
of an equal amount
which relates
predominantly to foreign tax credits, tax losses, land and
goodwill in Australia which is in the Other category in
the table. Due to the capital
character of these items and the
lack of expected capital gains,
the Australian group is not expected
to realize the benefit of this
deferred tax
asset.
Unrecognized Tax
Benefits
The
Company
provides
for
uncertain
tax
positions,
and
the
related
interest
and
penalties,
based
upon
management’s assessment of whether a tax benefit is
more likely than not to be sustained upon examination by
tax authorities.
To
the extent
that the
anticipated
tax outcome
of these
uncertain
tax positions
changes,
such
changes in estimate will impact the income tax
provision in the period in which such determination is made.
The
Company recognizes accrued interest and penalties related to uncertain tax
positions as a component of income
tax expense.
The Company
did not
identify any
new uncertain
tax positions
during the
year ended
December 31,
2021 and
2022, and as
a result the
Company does
no
t have any
recorded uncertain tax positions
as of December
31, 2022.
The Company
recorded
no
amounts related
to interest
and penalties
on uncertain
tax positions
for 2022, 2021
and 2020 and these years remain open to examination
by U.S. and Australian tax authorities.
25.
Fair Value Measurement
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.
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
Inputs:
Unadjusted
quoted
prices
in
active
markets
for
identical
assets
or
liabilities
accessible
to
the
reporting entity at the measurement date.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
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
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 December
31, 2022
and 2021,
there were
no
financial instruments
required to
be measured
at fair
value
on a recurring basis.
Other Financial Instruments
The following methods and assumptions are used to estimate the
fair value of other financial instruments as of
December 31, 2022 and 2021:
•
Cash and
restricted cash, accounts
receivable, accounts payable,
accrued expenses, lease
liabilities and
other
current
financial
liabilities:
The
carrying
amounts
reported
in
the
Consolidated
Balance
Sheets
approximate fair value due to the short maturity of these
instruments.
•
Restricted deposits,
lease liabilities,
interest bearing
liabilities and
other financial
liabilities: The
fair values
approximate the carrying amounts
reported in the Consolidated Balance Sheets.
•
Interest bearing liabilities: The
Company’s outstanding interest-bearing liabilities are carried at
amortized
cost.
As
of
December
31,
2022,
there
were
no
borrowings
outstanding
under
the
ABL
Facility.
The
estimated fair value
of the Notes
as of December
31, 2022 is
approximately $
249.7
million based upon
quoted market prices in a market that is not considered active
(Level 2).
Other than
the estimated
fair values
of the
Greenbrier
mining asset
held for
sale
described
in Note
4 “Assets
Held for Sale” and Note 5 “Impairment of Assets”, which are level
3 fair value measurements, there are no other
fair value
measurements of
assets and
liabilities that
are measured
at fair
value on
a nonrecurring
basis as
of
December 31, 2022 and 2021.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
26.
Accumulated Other Comprehensive Losses
The Company’s Accumulated
Other Comprehensive Losses
consists of foreign currency
translation adjustment
from subsidiaries not using the U.S. dollar as their functional currency.
Net
gain
(loss)
(US$ thousands)
Foreign
currency
translation
adjustments
Cash flow
fuel hedges
Total
Balance at December 31, 2020
$
(26,777)
$
(2,029)
$
(28,806)
Net current-period other comprehensive income (loss):
Gain in other comprehensive income before reclassifications
6,991
9,922
16,913
Loss on long-term intra-entity foreign currency transactions
(24,442)
-
(24,442)
Gain reclassified from accumulated other comprehensive
loss
-
(7,023)
(7,023)
Tax
effects
-
(870)
(870)
Total
net current-period other comprehensive income (loss)
(17,451)
2,029
(15,422)
Balance at December 31, 2021
(44,228)
-
(44,228)
Net current-period other comprehensive income (loss):
Loss in other comprehensive income
(19,610)
-
(19,610)
Loss on long-term intra-entity foreign currency transactions
(27,585)
-
(27,585)
Total
net current-period other comprehensive losses
(47,195)
-
(47,195)
Balance at December 31, 2022
$
(91,423)
$
-
$
(91,423)
27.
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,
$
5,493
5,365
5,258
5,127
5,101
Thereafter
26,398
Total
$
52,742
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
December
31,
2022,
purchase
commitments
for
capital
expenditures
were
$
28.6
million,
all
of
which
is
obligated within the next 12 months.
In Australia, the
Company has generally
secured the ability
to transport coal
through rail contracts
and coal export
terminal contracts that are primarily funded
through take-or-pay arrangements with terms ranging up to
13 years
.
In the U.S., the Company typically
negotiates its rail and coal terminal
on an annual basis.
As of December 31,
2022,
these
Australian
and
U.S.
commitments
under
take-or-pay
arrangements
totaled
$
0.93
billion,
of
which
approximately $
96.7
million is obligated
within the next
year,
$
203.1
million within
1-3 years, $
206.6
million 3-5
years and $
426.3
million thereafter.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
28.
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 bank
guarantees, letters of credit and performance
or surety bonds. No liabilities
related to these arrangements are reflected in the Company’s Consolidated Balance Sheets.
Management does
not expect any material losses to result from these guarantees
or off-balance sheet financial instruments.
As required
by certain
agreements,
the Company
had cash
collateral
in the
form of
deposits in
the amount
of
$
89.1
million and $
81.0
million as of December 31,
2022 and 2021, respectively, to provide back-to-back support
for bank guarantees, financial
payments, other performance obligations, various
other operating agreements and
contractual obligations
under workers
compensation insurance.
These deposits
are restricted
and classified
as
long-term assets in the Consolidated Balance Sheets.
In accordance
with the
terms of
the ABL
Facility,
the Company
may be
required
to cash
collateralize
the ABL
Facility to the extent of outstanding letters of credit after the expiration or termination date of such letter of credit.
As of December 31, 2022,
no
such letter of credit was outstanding and as such
no
cash collateral was required.
For the U.S. Operations in order to provide the required financial assurance, the Company generally uses surety
bonds for post-mining reclamation. The Company can also use bank letters of credit to collateralize certain other
obligations. As of December 31, 2022, the Company had outstanding surety bonds of $
34.9
million and letters of
credit of $
16.8
million issued from our available bank guarantees,
to meet contractual obligations under workers
compensation insurance and to secure various
obligations and commitments. Future regulatory changes relating
to these obligations could result in increased obligations,
additional costs or additional collateral requirements.
For the Australian Operations, the Company had bank guarantees outstanding
of $
27.4
million at December 31,
2022, primarily in respect of certain rail and port arrangements
of the Company.
At December 31, 2022, the Company had total outstanding
bank guarantees provided of $
44.2
million to secure
obligations and commitments.
Stamp duty on Curragh acquisition
On September 27, 2022, the Company received from
the Queensland Revenue Office, or QRO,
an assessment
of the stamp duty
payable on its
acquisition of the Curragh
mine in March
2018. The QRO assessed
the stamp
duty
on
this
acquisition
at
an
amount
of
$
55.4
million
(A$
82.2
million)
plus
unpaid
tax
interest
of
$
8.2
million
(A$
12.1
million).
On
November
23,
2022,
the
Company
filed
an
objection
to
the
assessment
and
is
currently
awaiting the outcome of this objection. The outcome of
this objection is uncertain.
The Company
has reviewed
the assessment
received and
based on
legal and
valuation advice
it has
sought,
continues to maintain its position and the estimated accrual of $
29.0
million (A$
43.0
million) stamp duty payable
on the Curragh acquisition. During
the period the Company made a partial
payment of stamp duty,
reducing the
remaining estimated accrual
for stamp duty
to $
11.7
million (A$
17.3
million) as at December
31, 2022, which
is
included within “Accrued Expenses and Other Current Liabilities”
in its Consolidated Balance sheet.
From time to time, the
Company becomes a
party to other legal
proceedings in the
ordinary course of business
in Australia, the U.S. and other countries where the Company does business.
Based on current information, the
Company believes that such other pending
or threatened proceedings are likely to
be resolved without a material
adverse
effect
on
its
financial
condition,
results
of
operations
or
cash
flows.
In
management’s
opinion,
the
Company is not currently
involved in any legal
proceedings, which individually
or in the aggregate
could have a
material effect on the financial condition, results of
operations and/or liquidity of the Company.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
29. Related
-
Party Transactions
Xcoal
On
May
27,
2021,
Xcoal
ceased
to
be
a
related
party
after
Xcoal’s
founder,
chief
executive
officer
and
chief
marketing officer,
Mr. Ernie Thrasher,
retired as a non-executive director of the Company.
“Coal
revenues
from
related
parties”
of
$
97.3
million
in
the
Consolidated
Statement
of
Operations
and
Comprehensive Income for the period up to May 27, 2021, represent
revenues from Xcoal while it was a related
party.
Revenues
from
coal
sales
to
Xcoal
after
May
27,
are
included
within
“Coal
revenues”
in
the
Consolidated Statement of Operations and Comprehensive Income.
Revenues from Xcoal of $
134.6
million for the year ended December
31, 2020, are recorded as “Coal
revenues
from related parities” in the Consolidated Statement of Operations
and Comprehensive Income.
The Energy & Mineral Group
On
May
12,
2021,
affiliates
of
The
Energy
&
Minerals
Group,
or
EMG,
which
is
the
Company’s
controlling
stockholder
through
its
ownership
of
Coronado
Group
LLC,
participated
in
the
Notes Offering
and
purchased
$
65.0
million aggregate principal amount of Notes at the closing of the Notes Offering. Following
the redemption
of
Notes
in
November
and
November
2022,
as
described
in
Note
“Interest
Bearing
Liabilities”,
the
principal amount of Notes
held by EMG reduced
to $
52.0
million and remained
unchanged as at December
31,
2022.
At
December
31,
2022,
interest
payable
to
affiliates
of
EMG
on
the
Notes
was
$
0.7
million
and
was
recorded
within
“Accrued
expenses
and
other
current
liabilities”
in
the
Consolidated
Balance
Sheet.
Interest
expense to affiliates
of EMG was
$
7.1
million for the
year ended December
31, 2022, and recorded
in “Interest
expense, net” in the Consolidated Statement of Operations
and Comprehensive Income.
Coronado Group LLC
Under
the
Coronado
Group LLC
agreement
(as
amended,
effective
October 23,
2018),
2,900
management
incentive units were designated and authorized for issuance
to certain members of management to motivate and
retain senior management.
The plan is designated
to allow key members
of management to share
in the profits
of the Company
after certain
returns are
achieved by
the equity
investors. The
incentive units
constitute “profit
interests” for the benefit of senior management in consideration
of services rendered and to be rendered.
Coronado Coal LLC and Coronado II
LLC merged to form Coronado Group
LLC in July 2015. Coronado IV
LLC
was
merged
into
Coronado
Group LLC,
the
Company’s
controlling
stockholder,
on
June 30,
2016.
Under
the
updated formation
agreement dated
June 30, 2016,
the
2,500
designated and authorized
units under the
initial
formation of
Coronado Group LLC
were replaced
by these
new units.
At December
31, 2022
and 2021,
2,900
management incentive units were outstanding.
The incentive units are comprised of three
tiers, which entitle the holders to receive
distributions from Coronado
Group LLC subordinate
to the
distributions to
be received
by Members.
As of
December 31, 2022
and 2021,
a
portion of the authorized
units have been allocated
to various members of the
Company’s management including
Mr. Garold Spindler,
CEO, who is also member of Coronado Group LLC.
Stockholder’s Agreement and Registration Rights
and Sell-Down Agreement
As
of
December
31,
2022,
Coronado
Group LLC
has
beneficial
ownership
in
the
aggregate
of
50.4
%
of
the
Company’s
Shares.
On
September 24,
2018,
Coronado
Group LLC
and
the
Company
entered
into
a
Stockholder’s Agreement
and a
Registration Rights
and Sell-Down
Agreement
which governs
the relationship
between Coronado
Group LLC
and the
Company
while the
EMG Group
beneficially
owns in
the aggregate
at
least
%
of
our
outstanding
shares
of
common
stock
(including
shares
of
common
stock
underlying
CDIs),
including certain governance matters relating to the Company. Under this Agreement, Coronado Group LLC has
the ability to
require the Company
to register its
shares under the
U.S. Securities Exchange
Act of 1934
and to
provide assistance to Coronado Group LLC in selling
some or all of its shares (including in the form of CDIs).
The Stockholder’s Agreement provides for the following:
•
Consent rights: Coronado
Group LLC (or its
successors or permitted
assigns) will have
certain consent
rights, whereby pre-agreed actions
require approval by Coronado
Group LLC prior to these
actions being
undertaken;
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December
31, 2022
•
Provision
of
information
to
Coronado
Group LLC:
There
will
be
ongoing
information
sharing
arrangements
relating
to
the
provision
of
financial
and
other
information
by
the
Company
and
its
subsidiaries to Coronado Group LLC group entities and cooperation and assistance between the parties
in connection with any financing (or refinancing) undertaken
by the Company;
•
Pro rata issuances: While Coronado Group LLC Group entities beneficially own in the
aggregate at least
% of
the outstanding
Shares, unless
Coronado
Group LLC
(or
its successors
or permitted
assigns)
agrees
otherwise,
issuances
of
equity
securities
must
have
been
offered
to
Coronado
Group LLC
in
respect of
its pro
rata shares
and any
equity securities
to be
allocated by
the Company
under a
share
incentive plan will be sourced by purchasing them in the market
rather than by issuing them; and
•
Board rights:
Certain rights
regarding the
board including
the right,
but not
the obligation,
to designate
the Directors
to be
included in the
membership of
any board committee,
except to the
extent that
such
membership would violate applicable securities laws or
stock exchange or stock market rules.
Relationship Deed
On September 24, 2018, the Company and Coronado Group LLC entered into a Relationship Deed under which
the Company provides
a number of indemnities
in favor of Coronado
Group LLC, including in
relation to certain
ASX initial public
offering, or
Australian IPO, -related
matters and also
certain guarantees
that have in
the past
been provided or
arranged by Coronado
Group LLC and
its affiliates
in support of
Company obligations.
Under
the
Relationship
Deed,
Coronado
Group LLC
also
agrees
to
indemnify
the
Company
in
relation
to
certain
Australian IPO-related matters and reimburse certain costs.
30.
Subsequent Events
Ordinary dividends
On
February
21,
2023,
the
Company’s
Board
of
Directors
declared
a
bi-annual
fully
franked
fixed
ordinary
dividend of $
8.4
million, or
0.5
cents per CDI. The
Company is not required
to make an offer
to purchase Notes
in
relation
to
this
dividend
due
to
the
available
unaccepted
portion
of
the
offer
to
purchase
Notes
made
in
connection with special dividends declared on October 30,
2022.
The dividend will
have a record
date of
March 15, 2023
, Australia time,
and be payable
on
April 5, 2023
, Australia
time.
CDIs will
be quoted
“ex” dividend
on March
14, 2023,
Australia time.
The total
ordinary dividend
will be
funded from available cash.
Coronado Global Resources Inc. Form 10-K December
31, 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To
the Shareholders and the Board of Directors of Coronado
Global Resources Inc.
Opinion on the Financial Statements
We
have
audited
the
accompanying
consolidated
balance
sheets
of
Coronado
Global
Resources
Inc.
(the
Company)
as
of
December
31,
and
2021,
the
related
consolidated
statements
of
operations
and
comprehensive
income,
stockholders’
equity
and
cash
flows
for
each
of
the
three
years
in
the
period
ended
December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In
our opinion, the consolidated financial
statements present fairly,
in all material respects, the
financial position of
the Company at December 31, 2022 and
2021, and the results of its
operations and its cash flows for
each of the
three
years
in
the
period
ended
December
31,
2022,
in
conformity
with
U.S.
generally
accepted
accounting
principles.
We
also
have
audited,
in
accordance
with
the
standards
of the
Public
Company
Accounting
Oversight
Board
(United States)
(PCAOB), the
Company's internal control
over financial
reporting as
of December
31, 2022,
based
on
criteria
established
in
Internal
Control-Integrated
Framework
issued
by
the
Committee
of
Sponsoring
Organizations of
the Treadway Commission (2013
framework) and our
report dated
February 21,
2023 expressed
an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the
Company's management. Our responsibility is to express
an opinion
on the
Company’s financial statements
based on
our audits.
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 Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to
obtain reasonable assurance about whether the
financial statements are free of
material
misstatement, whether
due to
error or
fraud. Our
audits included
performing procedures
to assess
the risks
of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to
those risks.
Such procedures
included examining,
on a
test basis,
evidence regarding
the amounts
and disclosures
in the
financial statements.
Our audits
also included
evaluating the
accounting principles
used
and significant
estimates made
by management,
as well
as evaluating
the overall
presentation of
the financial
statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matter
The critical
audit
matter communicated
below is
a matter
arising
from
the current
period audit
of the
financial
statements that was communicated
or required to be communicated
to the audit committee and that:
(1) relates
to accounts
or disclosures that
are material
to the
financial statements and
(2) involved our
especially challenging,
subjective, or
complex judgments.
The communication
of the critical
audit matter
does not alter
in any way
our
opinion on the consolidated financial
statements, taken as a whole,
and we are not, by
communicating the critical
audit matter below,
providing a separate opinion on
the critical audit matter or
on the accounts or disclosures
to
which it relates.
Coronado Global Resources Inc. Form 10-K December
31, 2022
Stamp Duty assessment on the acquisition of the
Curragh mine
Description of the
matter
As described in Note 28 to the consolidated financial statements, the Company received an
assessment from
the Queensland
Revenue Office
(“QRO”) for
the stamp
duty payable
on
the Company’s
2018 acquisition
of the
Curragh mine.
The QRO
assessed the
stamp duty
on this acquisition at an amount
of $55.4 million plus unpaid tax interest
of $8.2 million.
The
Company disputes the QRO’s calculation
of the liability, which the Company estimates to
be
$29.0 million
including unpaid
tax interest.
On November
23, 2022,
the Company
filed an
objection to the assessment and is currently awaiting its
outcome.
Auditing the accrual for the stamp duty obligation involved complex auditor judgment,
given
the
materiality
of
the
assessment
made
by
the
QRO,
the
unique
nature
of
the
property
acquired
and
the
resulting
difficulty
in
assessing
the
Company’s
judgments
around
the
interpretation and application of the law to this matter.
How we
addressed the
matter in our
audit
We
obtained
an
understanding,
evaluated
the
design
and
tested
the
operation
of
management’s controls related to the Company’s process for the recognition, measurement
and
disclosure
of
the
stamp
duty
contingency,
as
a
non-routine
judgmental
accounting
matter including the Company’s interpretation of tax
law.
Our
audit
procedures
included,
among
others,
understanding
external
legal
counsel
opinions obtained by
management to support
their interpretation and
application of the
law
in this matter. We also
discussed external legal counsel’s
opinion with external
legal counsel
directly.
We
involved
our
indirect
tax
professionals
to
help
us
evaluate
the
Company’s
judgments
around the interpretation and application
of the law to this matter and
the relative likelihood
of the multiple alternative potential outcomes. These potential outcomes included the risk of
litigation and estimations of interest and penalties payable.
We also evaluated the disclosures made in the
consolidated financial statements.
/s/
Ernst & Young
We have served as the Company’s auditor
since 2020.
Brisbane, Australia
February 21, 2023
Coronado Global Resources Inc. Form 10-K December
31, 2022

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
Coronado Global Resources Inc. Form 10-K December
31, 2022

---

ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We are
subject to
the periodic
reporting requirements
of the
Exchange Act.
We have
designed our
disclosure
controls and procedures
to provide reasonable
assurance that information we
disclose in reports
we file or
submit
under the Exchange
Act is recorded,
processed, summarized,
and reported within
the time periods
specified in
the
rules
and
forms
of
the
SEC.
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
is
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)
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.
Changes to Internal Control over Financial Reporting
There have been
no changes in
our internal control
over financial reporting
or in
other factors that
occurred during
our
last
fiscal
quarter
that
have
materially
affected,
or
are
reasonably
likely
to
materially
affect,
our
internal
controls over financial reporting.
Management’s Report on Internal Control
Over Financial Reporting
Our management
is responsible
for establishing and
maintaining adequate internal
control over
financial reporting
as
defined
in
Rules
13a-15(f)
under
the
Exchange
Act.
Internal
control
over
financial
reporting
is
a
process
designed to
provide reasonable
assurance regarding
the reliability
of financial
reporting and
the preparation
of
the Company’s
consolidated financial
statements for
external purposes
in accordance
with generally
accepted
accounting principles.
Internal control over financial reporting includes
those policies and procedures that (i) pertain
to the maintenance
of records that,
in reasonable detail,
accurately and fairly
reflect the transactions
and dispositions of
the assets
of the
Company;
(ii) provide
reasonable assurance
that
transactions
are recorded
as necessary
to permit
the
preparation of the
consolidated financial statements in
accordance with generally
accepted accounting principles,
and
that
receipts
and
expenditures
of
the
Company
are
being
made
only
in
accordance
with
appropriate
authorizations of management
and directors of
the Company; and
(iii) provide reasonable
assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s
assets that could
have a material effect on the consolidated financial
statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements. Also,
projections of
any evaluation
of effectiveness
to future
periods are
subject to
the risk
that
controls may
become inadequate
because of
changes in
conditions, or
that the
degree of
compliance with
the
policies or procedures may deteriorate.
Management
conducted
an
assessment
of
the
Company’s
internal
control
over
financial
reporting
as
of
December 31, 2022, using the framework specified in
Internal Control - Integrated Framework (2013)
, published
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission
(COSO).
Based
on
this
assessment, management
concluded that
the Company’s
internal control
over financial
reporting was
effective
as of December 31, 2022.
Our
Independent
Registered
Public
Accounting
Firm,
Ernst
&
Young,
has
audited
our
internal
control
over
financial reporting, as stated in their unqualified opinion
report included herein.
Coronado Global Resources Inc. Form 10-K December
31, 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To
the Shareholders and the Board of Directors of Coronado
Global Resources Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Coronado Global Resources
Inc.’s internal control over financial
reporting as of December 31,
2022,
based
on
criteria
established
in
Internal
Control-Integrated
Framework
issued
by
the
Committee
of
Sponsoring Organizations
of the
Treadway
Commission (2013
framework) (the
COSO criteria).
In our
opinion,
Coronado Global
Resources
Inc. (the
Company)
maintained,
in
all material
respects,
effective
internal control
over financial reporting as of December 31, 2022, based on the
COSO criteria.
We
also
have
audited,
in
accordance
with
the
standards
of the
Public
Company
Accounting
Oversight
Board
(United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021,
the
related
consolidated
statements
of
operations
and
comprehensive
income,
stockholders’
equity
and
cash
flows for each
of the three
years in the
period ended
December 31, 2022,
and the related
notes and our
report
dated February 21, 2023 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment
of the effectiveness
of internal control
over financial reporting
included in the
accompanying
Management’s Report
on Internal
Control Over
Financial Reporting.
Our responsibility
is to express
an opinion
on the
Company’s internal
control over
financial reporting
based on
our audit.
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
Commission and the PCAOB.
We conducted our audit
in accordance with the standards
of the PCAOB. Those standards
require that we plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
effective
internal
control
over
financial
reporting was maintained in all material respects.
Our audit included obtaining an understanding
of internal control over financial reporting,
assessing the risk that
a
material
weakness
exists,
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk,
and
performing
such
other
procedures
as
we
considered
necessary
in
the
circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control Over
Financial Reporting
A
company’s
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
for external purposes in
accordance with generally
accepted accounting principles.
A company’s internal
control over financial
reporting
includes those policies
and procedures that (1)
pertain to the maintenance
of records that, in
reasonable detail,
accurately and
fairly reflect
the transactions and
dispositions of the
assets of
the company;
(2) provide reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance with
generally accepted
accounting principles,
and that
receipts and
expenditures of
the company
are being
made only
in accordance
with authorizations
of management
and directors
of the
company; and
(3)
provide
reasonable
assurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use,
or
disposition of the company’s assets that could have
a material effect on the financial statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements. Also,
projections of
any evaluation
of effectiveness
to future
periods are
subject to
the risk
that
controls may
become inadequate
because of
changes in
conditions, or
that the
degree of
compliance with
the
policies or procedures may deteriorate.
/s/ Ernst & Young
Brisbane, Australia
February 21, 2023
Coronado Global Resources Inc. Form 10-K December
31, 2022

---

ITEM 9B. OTHER INFORMATION
ITEM 9B.
OTHER INFORMATION
None.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.
The information required to
be furnished by
this Item will be
set forth in
our definitive proxy statement
for the 2023
Annual Meeting of
Stockholders, or the
Proxy Statement,
under the heading
“Executive Officers
and Corporate
Governance”, and is incorporated herein by reference
and made a part hereof from the Proxy Statement.

---

ITEM 11. EXECUTIVE COMPENSATION
ITEM 11.
EXECUTIVE COMPENSATION.
The information required
to be furnished
by this Item
will be set forth
in the Proxy Statement
under the heading
“Executive
Compensation”
and
is
incorporated
herein
by
reference
and
made
a
part
hereof
from
the
Proxy
Statement.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER
MATTERS.
The
information
required
to
be
furnished
by
this
Item
will
be
set
forth
in
the
Proxy
Statement
under
the
heading “Security Ownership
of Certain Beneficial
Owners and Management
and Related Stockholder
Matters”
and is incorporated herein by reference and made a part
hereof from the Proxy Statement.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required
to be furnished
by this Item
will be set forth
in the Proxy Statement
under the heading
“Certain Relationships and
Related Transactions” and is
incorporated herein by
reference and made
a part
hereof
from the Proxy Statement.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES.
The information required
to be furnished
by this Item
will be set forth
in the Proxy Statement
under the heading
“Ratification of
Appointment of
Independent
Registered
Public Accounting
Firm” and
is incorporated
herein by
reference and made a part hereof from the Proxy Statement.
Coronado Global Resources Inc. Form 10-K December
31, 2022

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT
SCHEDULES
(a)
The following documents are filed as part of this
Annual Report:
1.
Financial Statements.
See index to
Financial Statements
and Supplementary
Data on page
of this
Annual report on Form 10-K.
2.
Financial Statements Schedules. Schedules are omitted because
they are not required or applicable, or
the required information is included in the Financial Statements
or related notes thereto.
3.
Exhibits. The
exhibits filed
with or
incorporated by
reference as
part of
this Report
are set
forth in
the
Exhibit Index.
(b)
The documents listed in
the Exhibit Index of
this Annual Report on
Form 10-K are incorporated
by reference
or are filed with this Annual Report on Form 10-K, in
each case as indicated therein.
The following documents are filed as exhibits hereto:
Exhibit No.
Description of Document
2.1*
Share Sale Agreement-Cork, dated as of December 22, 2017, by and among Coronado
Australia Holdings Pty Ltd, Coronado Group LLC and Wesfarmers Limited (filed as
Exhibit 2.1 to the Company’s Registration Statement on Form 10 (File No. 000-56044)
filed on June 28, 2019 and incorporated herein by reference)
3.1
Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s
Registration Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and
incorporated herein by reference)
3.2
Amended and Restated Bylaws (filed as Exhibit 3.2 to the Company’s Registration
Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and incorporated
herein by reference)
4.1
Stockholder’s Agreement, dated as of September 24, 2018, by and between the
Company and Coronado Group
(filed
as
Exhibit
4.1
to
the
Company’s
Registration
Statement
on
Form
(File
No.
000-56044)
filed
on
April
29,
and
incorporated
herein by reference)
4.2
Registration Rights and Sell-Down Agreement, dated as of September 24, 2018, by and
between the Company and Coronado Group (filed as Exhibit 4.2 to the Company’s
Registration Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and
incorporated herein by reference)
4.3
Description of the Company’s securities registered under Section 12 of the Securities
Exchange Act of 1934 (filed as Exhibit 4.3 to the Company’s Annual Report on Form 10-
K (File No. 000-56044) filed on February 24, 2020 and incorporated herein by reference)
4.4
Indenture, dated as of May 12, 2021, among Coronado Finance Pty Ltd, as issuer,
Coronado Global Resources Inc., as guarantor, the subsidiaries of Coronado Global
Resources Inc. named therein, as additional guarantors, Wilmington Trust, National
Association, as trustee and notes collateral agent (filed as Exhibit 4.1 to the Company’s
Current Report on Form 8-K (File No. 000-56044) filed on May 14, 2021 and
incorporated herein by reference)
4.5
Form of 10.750% Senior Secured Notes due 2026 (filed as Exhibit 4.2 to the Company’s
Current Report on Form 8-K (File No. 000-56044) filed on May 14, 2021 and
incorporated herein by reference)
10.1
Relationship Deed, dated as of September 24, 2018, by and among the Company,
Coronado Group, certain EMG Group entities and their affiliates (filed as Exhibit 10.1 to
the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April
29, 2019 and incorporated herein by reference)
10.2†‡
Syndicated Facility Agreement, dated as of May 12, 2021, among Coronado Global
Resources Inc., as guarantor, Coronado Coal Corporation, as U.S. borrower, Coronado
Finance Pty Ltd, as Australian borrower, the subsidiaries of Coronado Global Resources
Inc. named therein, as additional guarantors, and Citibank, N.A., as administrative agent
and a lender, and various other financial institutions as lenders (filed as Exhibit 10.1 to
the Company’s Current Report on Form 8-K (File No. 000-56044) filed on May 14, 2021
and incorporated herein by reference)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Exhibit No.
Description of Document
10.3‡
Coronado Global Resources Inc. 2019 Short-Term Incentive Plan (filed as Exhibit 10.3
to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April
29, 2019 and incorporated herein by reference)
10.4‡
Coronado Global Resources Inc. 2018 Equity Incentive Plan (filed as Exhibit 10.4 to the
Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April 29,
2019 and incorporated herein by reference)
10.5>‡
Coronado Global Resources Inc. 2018 Non-Executive Director Plan (filed as Exhibit 10.5
to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April
29, 2019 and incorporated herein by reference)
10.6>‡
Employment Agreement dated as of September 21, 2018, by and between Coronado
Global Resources Inc. and Garold Spindler (filed as Exhibit 10.6 to the Company’s
Registration Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and
incorporated herein by reference)
10.7>‡
Employment Agreement dated as of July 7, 2020, by and between Curragh Queensland
Mining Pty Ltd and Gerhard Ziems (filed as Exhibit 10.1 to the Company’s Current Report
on Form 8-K/A (File No. 000-56044) filed on July 7, 2020 and incorporated herein by
reference)
10.8>‡
Employment Agreement dated as of August 5, 2021, by and between Coronado Global
Resources Inc. and Jeffrey Bitzer (filed as Exhibit 10.1 to the Company’s Current Report
on Form 8-K (File No. 000-56044) filed on August 9, 2021 and incorporated herein by
reference)
10.9>‡
Contract of Employment dated as of August 4, 2021, by and between Curragh
Queensland Mining Pty Ltd and Douglas Thompson (filed as Exhibit 10.2 to the
Company’s Current Report on Form 8-K (File No. 000-56044) filed on August 9, 2021
and incorporated herein by reference)
10.10>‡
Letter Agreement dated as of February 18, 2022, by and between Curragh Queensland
Mining Pty Ltd and Douglas Thompson (filed as Exhibit 10.10 to the Company’s Annual
Report on Form 10-K (File No. 000-56044) filed on February 22, 2022 and incorporated
herein by reference)
10.11>‡
Employment Agreement dated as of July 12, 2021, by and between Coronado Global
Resources Inc. and Christopher P. Meyering (filed as Exhibit 10.11 to the Company’s
Annual Report on Form 10-K (File No. 000-56044) filed on February 22, 2022 and
incorporated herein by reference)
10.12>‡
Employment Agreement dated as of October 18, 2018, by and between Coronado
Curragh Pty Ltd and Emma Pollard (filed as Exhibit 10.11 to the Company’s Registration
Statement on Form 10 (File No. 000-56044) filed on April 29, 2019 and incorporated
herein by reference)
10.13>
Form of Stock Option Award Agreement (Long Term Incentive Grant) (filed as Exhibit
10.12 to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed
on April 29, 2019 and incorporated herein by reference)
10.14>
Form of Performance Stock Unit Award Agreement (Long Term Incentive Grant) (filed
as Exhibit 10.13 to the Company’s Registration Statement on Form 10 (File No. 000-
56044) filed on April 29, 2019 and incorporated herein by reference)
10.15>
Form of Non-Executive Director Restricted Stock Unit Award Agreement (filed as Exhibit
10.14 to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed
on April 29, 2019 and incorporated herein by reference)
10.16>
Form of Restricted Stock Unit Award Agreement (Retention Grant) (filed as Exhibit 10.15
to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April
29, 2019 and incorporated herein by reference)
10.17>
Form of Restricted Stock Unit Award Agreement (STIP Deferral Grant) (filed as Exhibit
10.16 to the Company’s Registration Statement on Form 10 (File No. 000-56044) filed
on April 29, 2019 and incorporated herein by reference)
10.18>
Summary of Non-Executive Director Compensation (filed as Exhibit 10.17 to the
Company’s Annual Report on Form 10-K (File No. 000-56044) filed on February 24,
2020 and incorporated herein by reference)
10.19>
Form of Agreement of Indemnity, Insurance and Access (filed as Exhibit 10.18 to the
Company’s Registration Statement on Form 10 (File No. 000-56044) filed on April 29,
2019 and incorporated herein by reference)
Coronado Global Resources Inc. Form 10-K December
31, 2022
Exhibit No.
Description of Document
10.20‡
Amended Coal Supply Agreement, dated as of November 6, 2009, by and between
Stanwell Corporation Limited and Wesfarmers Curragh Pty Ltd (now known as Coronado
Curragh Pty Ltd) (filed as Exhibit 10.20 to the Company’s Registration Statement on
Form 10 (File No. 000-56044) filed on June 14, 2019 and incorporated herein by
reference)
10.21‡
Deed of Amendment to the Amended Coal Supply Agreement, dated as of November
21, 2016, by and between Stanwell Corporation Limited and Wesfarmers Curragh Pty
Ltd (now known as Coronado Curragh Pty Ltd) (filed as Exhibit 10.21 to the Company’s
Registration Statement on Form 10 (File No. 000-56044) filed on June 14, 2019 and
incorporated herein by reference)
10.22‡
Curragh Mine New Coal Supply Deed, dated August 14, 2018, by and between Stanwell
Corporation Limited and Coronado Curragh Pty Ltd (filed as Exhibit 10.22 to the
Company’s Registration Statement on Form 10 (File No. 000-56044) filed on June 14,
2019 and incorporated herein by reference)
10.23
Deed of Amendment, dated September 20, 2018 and effective September 21, 2018,
among Coronado Curragh Pty Ltd, Stanwell Corporation Limited and Coronado Group
LLC (filed as Exhibit 10.23 to the Company’s Registration Statement on Form 10 (File
No. 000-56044) filed on June 14, 2019 and incorporated herein by reference)
10.24
Deed of Amendment, dated March 5, 2019 and effective May 21, 2019, between
Coronado Curragh Pty Ltd and Stanwell Corporation Limited (filed as Exhibit 10.24 to
the Company’s Registration Statement on Form 10 (File No. 000-56044) filed on June
14, 2019 and incorporated herein by reference)
10.25
Deed of Amendment, dated May 9, 2019 and effective May 21, 2019, between Coronado
Curragh Pty Ltd and Stanwell Corporation Limited (filed as Exhibit 10.25 to the
Company’s Registration Statement on Form 10 (File No. 000-56044) filed on June 14,
2019 and incorporated herein by reference)
10.26†‡
New Coal Supply Agreement, dated as of July 12, 2019, by and between Stanwell
Corporation Limited and Coronado Curragh Pty Ltd. (filed as Exhibit 10.2 to the
Company’s Quarterly Report on Form 10-Q (File No. 000-56044) filed on November 7,
2019 and incorporated herein by reference)
21.1
List of Subsidiaries
23.1
Consent of Ernst & Young
23.2
Consent of Barry Lay
23.3
Consent of Paul Wood
23.4
Consent of Marshall Miller & Associates, Inc.
31.1
Certification of the Chief Executive Officer pursuant to SEC Rules 13a-14(a) or 15d-
14(a) adopted pursuant to Section 302 of the Sarbanes -Oxley Act of 2002
31.2
Certification of the Chief Financial Officer pursuant to SEC Rules 13a-14(a) or 15d-14(a)
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
95.1
Mine Safety Disclosures
96.1
Technical Report Summary for Curragh (filed as Exhibit 96.1 to the Company’s Annual
Report on Form 10-K (File No. 000-56044) filed on February 22, 2022 and incorporated
herein by reference)
96.2
Technical Report Summary for Buchanan
96.3
Technical Report Summary for Logan
96.4
Technical Report Summary for Mon Valley
The following materials from the Company’s Annual Report on Form 10-K for the period
ended December
31,
2022,
formatted
in
iXBRL
(Inline
Extensible
Business
Reporting
Language): (i) Consolidated
Balance Sheets, (ii)
Consolidated Statements of
Operations
and Consolidated Statements of
Comprehensive Income, (iii)
Consolidated Statements
of Stockholders’ Equity/Members’ Capital, (iv) Consolidated
Statements of Cash Flows,
(v) related notes to these financial statements and (vi)
document and entity information
Coronado Global Resources Inc. Form 10-K December
31, 2022
Exhibit No.
Description of Document
Cover Page
Interactive Data
File (the cover
page XBRL
tags are embedded
within the
Inline XBRL document)
____________________
*
Portions of this
exhibit have been omitted
pursuant to Item 601(b)(2)(ii)
of Regulation S-K,
which portions
will be furnished to the Securities and Exchange Commission
upon request.
†
Certain schedules and exhibits to this
agreement have been omitted pursuant to Item
601(a)(5) and Item
601(a)(6)
of
Regulation
S-K.
A
copy
of
any
omitted
schedule
and/or
exhibit
will
be
furnished
to
the
Securities and Exchange Commission upon request.
‡
Portions
of
this
exhibit
have
been
omitted
pursuant
to
Item
601(b)(10)(iv)
of
Regulation
S-K,
which
portions will be furnished to the Securities and Exchange Commission
upon request.
>
Management contract, compensatory plan or arrangement
Coronado Global Resources Inc. Form 10-K December
31, 2022