EDGAR 10-K Filing

Company CIK: 1770561
Filing Year: 2024
Filename: 1770561_10-K_2024_0001562762-24-000028.json

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ITEM 1. BUSINESS
Item 1.
“Business-Regulatory Matters-Australia” and “Business-Regulatory
Matters-United States.”
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
a
material 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,
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.
Economic, Competitive and Industry Risks
Our
business
may
be
adversely
affected
by
the
impact
on
the
global
economy
due
to,
among
other
events, ongoing civil unrest, wars or other significant
geopolitical tensions.
Geopolitical tensions, ongoing civil unrest and wars can have
a significant impact on global markets, influencing
both the
supply
and
demand
of coal
we sell
into the
export market
and the
cost
or availability
of supplies
we
consume in producing our coal.
For example, global markets
are experiencing volatility
and disruption with current
geopolitical tensions and the
military invasion of
Ukraine by Russia.
This military conflict
led to sanctions
and other penalties
being levied by
the United States, the European Union and other countries against Russia, including expansive bans on imports
and exports of products to and from Russia.
The
extent
and
duration
of
such
conflicts
could
lead
to
market
disruptions,
including
significant
volatility
in
commodity prices, such as
the coal we
sell and diesel 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.
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.
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;
Coronado Global Resources Inc. Form 10-K December 31,
•
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 global pandemics.
Met coal has
been a volatile
commodity over the
past ten years.
Although coking coal
index prices improved
in
the second
half of
2023 due
to tight
supply,
on average
coking coal
prices were
significantly lower
than 2022
when
supply
in
global
met
coal
market
was
readjusting
from
the
impact
of
the
Russia
and
Ukraine
war.
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.
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.”
Coronado Global Resources Inc. Form 10-K December 31,
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.
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. There
can be
no guarantee
that tariffs,
import quota
restrictions, bans
or other
trade barriers
will
not be
imposed (whether
as a
result of
geopolitical tensions
or for
other reasons)
for our
products. We
may or
may
not
be
able
to
access
alternate
markets
for
our
coal should
interruptions
and
trade
barriers
occur
in
the
future. An inability
for Met
coal suppliers
to access
international markets
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
Coronado Global Resources Inc. Form 10-K December 31,
•
terrorist attacks, natural disasters, the impact from global pandemics
or other events.
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, 2023.
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 our profitability could
be reduced or we could experience a delay or halt in
our production.
Prices
for equipment,
materials,
supplies
and employee
labor
contractor
services
increased during
2023,
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.
Coronado Global Resources Inc. Form 10-K December 31,
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.
Our
business,
financial
condition
and
results
of
operations
may
be
adversely
impacted
by
global
pandemics or other widespread public health concerns.
Global pandemics
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 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.
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, 2024 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.
Coronado Global Resources Inc. Form 10-K December 31,
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.
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 2017 nationwide permit
program was 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.
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.
Coronado Global Resources Inc. Form 10-K December 31,
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 workers, 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 could
result in us
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.
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 global pandemics);
•
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 could disrupt systems we rely on for
our operations; 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;
•
geopolitical risks;
•
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.
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, includi
ng:
Coronado Global Resources Inc. Form 10-K December 31,
•
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 and
Golding Contractors Pty Ltd.
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,
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.
Coronado Global Resources Inc. Form 10-K December 31,
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.
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,
Douglas
Thompson,
our Group
Chief
Operating
Officer, Jeffrey Bitzer and our Group
Chief Financial Officer and Head
of Marketing and Strategy, Gerhard Ziems.
Mr. Thompson’s,
Mr. Bitzer’s and Mr. Ziems’ 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.
Although all
our Australian
based employees
have contracts
of employment,
in the
United States,
we have
not entered
into employment
contracts
with
any
of
our key
personnel
(other
than
Mr. Bitzer,
Mr.
Christopher
Meyering,
our
Vice
President,
Chief Legal
Officer and
Mr.
Brett Holbrook,
our Vice
President Operations
U.S.), 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.
Coronado Global Resources Inc. Form 10-K December 31,
Cybersecurity
attacks
and
other
similar
crises
or
disruptions
may
negatively
affect
our
business,
financial condition and results of operations.
Our
business
may be
impacted
by cybersecurity
attacks
or failures.
Strategic
targets,
such
as
energy-related
assets, may
be at greater
risk of
cybersecurity attacks
than other targets
in the United
States or
Australia. Our
insurance may
not protect
us against
such occurrences.
It is
possible that
any such
occurrences 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.
Financial and Strategic Risks
The loss
of, or
significant reduction
in, purchases
by our
largest customers
could adversely
affect our
revenues.
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.
For the
year ended
December 31,
2023, our
top ten
customers comprised
74.2% of
our total
revenue and
our
top five customers comprised
53.3% of our total revenue. For the year ended December
31, 2023, sales to Tata
Steel and AcelorMittal represented
20.5% and 10.0%,
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, or otherwise, may adversely affect our
business, financial condition and results of operations.
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.
Coronado Global Resources Inc. Form 10-K December 31,
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 $150.0
million,
or
the
New
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,
2023,
we
had
$242.3
million
aggregate
principal
amount
of
our
senior
secured
notes
outstanding. As of December 31, 2023, the
letter of credit sublimit had been partially used
to issue $21.9 million
of bank guarantees on behalf of the Company and no amounts were drawn under the revolving credit sublimit of
the New ABL Facility.
As of December 31, 2023,
the available borrowing
capacity under this facility
was $128.1
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.
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.
Our ability to service
our debt obligations
could be impacted
by the consummation
of the SGI Transaction.
See
“-Consummation of the
proposed SGI Transaction may constitute
a change of
control under our
Senior Secured
Notes Indenture
and our
New ABL
Facility,
which could
materially and
adversely affect
our business,
financial
condition and results of operations.”
Coronado Global Resources Inc. Form 10-K December 31,
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 New
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,
recently,
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
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.
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.
Coronado Global Resources Inc. Form 10-K December 31,
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, five 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
13.9 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.
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 expiration
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 $277.4 million (A$405.6 million) as of December
31, 2023.
Coronado Global Resources Inc. Form 10-K December 31,
Stanwell may assert contractual consent rights
or termination rights that may be triggered
by the consummation
of the Stanwell Transaction. See “-Uncertainty about the effects of the SGI Transaction may affect our potential
and
existing
financial
arrangements
and
customer
relationships,
including
contractual
rights
triggered
upon
a
change of control in connection with the SGI Transaction, and may materially and adversely affect our business,
results of operations and financial condition”.
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, 2023,
we provided $44.0
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. There can be no
assurance that our risk category
allocation
will not change in future years.
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
$163.9 million
as of
December 31,
2023,
based upon
permit requirements
and the
historical
experience at
our operations,
and depend
on a
number
of
variables involving assumptions and estimation and therefore may be subject to change, including the estimated
future
asset
retirement
costs
and the
timing
of
such
costs,
estimated
proven
reserves,
assumptions
involving
third-party contractors, inflation rates
and discount rates.
If these accruals
are insufficient or our
liability in a
future
year is
greater than
currently anticipated,
our future
operating results
and financial
position could
be adversely
affected. See
Item 7. “Management’s Discussion
and Analysis
of Financial
Condition and
Results of
Operations-
Critical Accounting Policies and Estimates.”
We are subject to foreign exchange risks involving
certain operations in multiple countries.
Loss sustained from adverse movements
in currency exchange rates
can impact our financial performance
and
financial position and the level of additional funding required to support
our businesses. Our financial results are
reported
in
US$
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
Secured
Overnight
Financing
Rate,
or
SOFR,
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. The U.S-dollar
LIBOR was discontinued in June 2023. The Alternative
Reference Rates Committee has proposed SOFR as its
recommended alternative to LIBOR.
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.
Coronado Global Resources Inc. Form 10-K December 31,
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,
2023, we
had 1,878
employees.
In addition,
as of
December 31,
2023, there
were 2,335
contractors
supplementing
the
permanent
workforce,
primarily
at
Curragh.
As
of
December
31,
2023,
approximately
10.8%
of our
total employees,
all at
our
Australian Operations,
were represented
by organized
labor unions and covered by the
EA. In July 2023, the Australian Fair
Work Commission approved the
four year
Curragh Mine
Enterprise Agreement
2023. This
EA has
a four-year
expiration date
and will
remain in
place by
operation of
the Fair
Work Act
2009 (Cth)
until replaced
or terminated
by the Fair
Work Commission.
Our U.S.
Operations employ a 100% non-union labor force.
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.
Coronado Global Resources Inc. Form 10-K December 31,
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.
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.
Coronado Global Resources Inc. Form 10-K December 31,
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, 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 $56.2
million
(A$82.2
million)
plus
unpaid
tax
interest.
On
November 23, 2022, the Company filed an objection to the assessment.
On January 9, 2024, the Company’s objection
to the assessed stamp duty was disallowed by the
QRO.
The Company, based on legal
and valuation advice
obtained, continues to
maintain its position
and the estimated
stamp duty payable of $29.4 million (A$43.0 million) on
the Curragh acquisition.
As per the Taxation
Administration Act (Queensland)
2001, the Company
can only appeal
or apply for a
review
of QRO’s
decision if
it has
paid the
total assessed
stamp duty
of $56.2
million (A$82.2
million) plus
unpaid tax
interest of $14.5 million (A$21.2 million). Such appeal
must be lodged by March 11,
2024.
The Company
disputes the
additional amount
assessed of
stamp duty
and unpaid
tax interest
and is
currently
considering its options to either appeal the decision to the Supreme Court of
Queensland or apply for a review of
QRO’s decision by the Queensland Civil and
Administrative Tribunal.
Given that
the Company
is unable
to avoid
the payment,
and the
recovery of
such amount
through litigation
is
uncertain,
the
additional
accrual
of
$41.3
million
has
been
recognized
within
“Accrued
Expenses
and
Other
Current Liabilities”
in the
Consolidated Balance
Sheet as
at December
31, 2023,
and a
corresponding amount
recognized
under
“Selling,
general
and
administrative”
expense
in
the
Company’s
Consolidated
Statement
of
Operations and
Comprehensive Income.
The total
accrual of
$53.7 million
(A$79.0 million)
as at
31 December
is
based
on
the
Company’s
estimate
of
the
outstanding
stamp
duty
payable,
the
additional
accrual
recognized, less partial payments to date of $17.6 million
(A$25.7 million).
We cannot guarantee that the steps we take to
defend our position on this matter will be successful.
In 2022, the Queensland State Government in Australia amended the
Mineral Resources Regulation 2013 (Qld)
introducing
additional
higher
tiers
to
the
coal
royalty
rates
effective
from
July
1,
2022,
increasing
the
royalty
payable by our Australian Operations.
The tiers currently applicable are as set out below:
•
7% for average coal price per Mt sold up to and including
A$ 100 per Mt;
•
12.5% for average coal price per Mt sold from A$100 to
A$150 per Mt;
Coronado Global Resources Inc. Form 10-K December 31,
•
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.
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.
Coronado Global Resources Inc. Form 10-K December 31,
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.
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. Upon the
closing of the
SGI Transaction,
EMG Group will
no longer own
at least 10%
of our
voting stock and we will be
governed by Section 203 at that
time. See “-Following the consummation of the SGI
Transaction, we expect that Coronado Group LLC and SGI
will have significant influence over corporate matters,
including control over
certain decisions that
require the approval
of stockholders”.
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,
2023, 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.
Coronado Global Resources Inc. Form 10-K December 31,
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.”
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.
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;
•
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.
Coronado Global Resources Inc. Form 10-K December 31,
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.
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 a
global 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.
Coronado Global Resources Inc. Form 10-K December 31,
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 Senior Secured Notes Indenture governing our Notes and covenants under the New 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.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy:
Coronado
has
implemented
software
governance
tools
to
assess,
identify,
and
manage
material
risks
from
cybersecurity threats. Coronado heavily relies on information technology systems throughout its operations, and
acknowledges
the
critical
importance
of
safeguarding
its
digital
assets
and
protecting
sensitive
information.
Regular security assessments are conducted
to monitor technological implementations against
global standards.
Coronado
also
maintains
a
suite
of
security
measures
to
help
defend
against
unauthorized
access
and
misappropriation
of
technology.
Additionally,
the
Coronado
IT
department
distributes
training
and
awareness
information covering email security,
password security,
data handling security,
and cloud security.
Coronado’s cybersecurity
risk management
is integrated
into its Group
risk management
processes, which
are
governed
by
the
Group
Risk
Management
Framework
and
Risk
Management
Policy.
The
Risk
Management
Framework and Risk Management Policy outline:
●
Risk management responsibilities;
●
Risk assessment frequency;
●
Risk assessment criteria (likelihood and consequence);
●
The requirement to implement internal controls; and
●
The level within the organization risk assessments are
to be performed.
Certain key controls considered through Coronado’s
internal control processes are linked to cybersecurity
risks,
these include controls over access and change management for key financial
systems. Where the management
of
these
key
financial
systems
is
outsourced
to
third
parties,
Coronado
receives
assurance
reports
on
the
effectiveness
of
key
vendor
controls.
Additionally,
Coronado
uses
third
parties
to
conduct
cybersecurity
penetration testing at Coronado's US and Australian
operations. In 2023, Coronado created the
Digital Advisory
Committee (Committee), which is
chaired by the
Vice President of
Information Technology.
As part of
Coronado’s
processes to
oversee and
identify cybersecurity
threats associated
with its
use of
third-party service
providers,
the Committee
is tasked
with reviewing
new software
requests from
Coronado’s various divisions.
The Committee
is comprised
of
business
systems,
plant,
and
operational
personnel
from
both
Coronado’s
US
and
Australian
operations.
As of
the filing
of this
Annual Report
on Form
10-K, Coronado
is not
aware of
any cybersecurity
incidents that
have occurred
since the
beginning of
2023 that
have materially
affected,
or are
reasonably likely
to materially
affect, Coronado, including Coronado’s
business strategy,
results of operations or financial condition.
Coronado
could be subject to cybersecurity incidents in
the future which may have a material
adverse effect on Coronado’s
business strategy, results of operations or financial
condition. For further information on
Coronado’s risks relating
to cybersecurity threats, see “Operation and Technology
Risks” in “Risk Factors” on page 51
of this Form 10-K.
Governance:
The
Board
of
Directors
(Board)
is
responsible
for
reviewing,
ratifying,
and
monitoring
systems
of
risk
management,
internal
control,
and
legal
compliance.
This
includes
identifying
the
main
risks
associated
with
Coronado's
businesses,
including
cybersecurity
risk,
and
implementing
appropriate
systems
to
manage
such
risks. As outlined in the Audit Governance and Risk
Committee (AGRC) charter, the
Board has delegated to the
AGRC responsibility for
overseeing corporate and governance
risk management, financial risk
management, and
compliance with applicable laws,
regulations, standards, and best
practice guidelines. In 2024,
the AGRC charter
was amended
to confirm
that this
responsibility includes the
oversight of
cybersecurity risk. The
AGRC is
informed
of cybersecurity risks by management, which includes an annual cybersecurity
risk presentation. As part of their
review of reports
from management,
the AGRC reports
cybersecurity risk
updates to the
Board, which enables
the Board to incorporate the insights of such reports into its
overall risk oversight analysis.
Supporting
this
governance
framework,
the
Executive
Leadership
Team
(ELT)
is
responsible
for
maintaining
effective systems of risk management and internal control, as well as responding to cybersecurity incidents. The
Vice
President
of
Information
Technology
is
responsible
for
the
cybersecurity
function.
The
Vice
President
of
Information
Technology
has
experience
in
various
roles
involving
managing
information
systems
and
cybersecurity functions
and developing
cybersecurity strategies.
The Vice
President of
Information Technology
reports to the Group Chief Financial Officer (Group
CFO), who is a member of the ELT.
Coronado Global Resources Inc. Form 10-K December 31,
In order to prevent, detect, mitigate and
remediate cybersecurity incidents, Coronado maintains a Cyber Incident
Response
Plan
(Plan).
The
Plan
outlines
Coronado's
approach
to
identifying
and
containing
cybersecurity
incidents, along with recovery
and improvement processes.
The Plan includes incident
assessment criteria that
allow for
escalation of
potentially material
cybersecurity
incidents. The
Group CFO
reports to
the AGRC
in the
event
of
a
potentially
material
cybersecurity
incident.
Additionally,
annual
reviews
of
Coronado’s
current
cybersecurity status are presented to the Board and the AGRC
by management.
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 idled, production-
stage
mine
complex
(Greenbrier)
and
two
development
properties
(Mon
Valley
Minerals
(formerly
called
Pangburn-Shaner-Fallowfield)
and
Russell
County).
Figures
and
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,
13.6
12.8
26.4
12.4
25.3
12.8
12.6
25.4
Australia
United States
Group
ROM production (Mt)
FY21
FY22
FY23
11.1
6.3
17.4
9.8
6.2
16.0
10.0
5.8
15.8
Australia
United States
Group
Saleable production (Mt)
FY21
FY22
FY23
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, 2023, 2022 and 2021.
See the descriptions of our material mining properties
under “-Curragh,” “-Buchanan,” “-Logan” and “-Mon
Valley”
below
for
more
information.
Table
below
contains
a
summary
of
the
key
information
relative
to
the
various
Coronado
properties.
Tables
and
provide
a
summary
of
our
coal
resources
and
reserves,
respectively, as of December
31, 2023.
Coronado Global Resources Inc. Form 10-K December 31,
Table 1.
Summary of 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 &
Underground
(4)
HCC, SCC,
PCI, Thermal
Various (Rangal
Coal Measures)
CPP1 - 1,100 raw
Mt per hour;
CPP2 - 1,200 raw
Mt per hour; Rail
Loadout
Buchanan
(Production)
25,853 hectares
leased
(3)
; 7,725
hectares owned
1 Permit
Underground
Low-Vol
Pocahontas #3
(Pocahontas
Formation)
CPP - 1,270 raw
Mt per hour; Rail
Loadout
Logan
(Production)
13,114 hectares
leased
(3)
; 69
hectares owned
27 Permits
Surface &
Underground
HVA, HVB,
Thermal
Various
(Kanawha
Formation)
CPP - 1,088 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,
2023.
(1)
Coal Resources (In Situ, MMt)
(2)
Quality (Air-Dried Basis)
Measured
Indicated
Measured
+
Indicated
Inferred
Ash
Sulfur
Volatile
Matter
Australia
Curragh Open Cut
22.9%
0.6%
19.1%
Curragh Underground
18.6%
0.4%
18.1%
Total
Australia
United States
Buchanan
-
16.0%
0.8%
18.0%
Logan
17.0%
1.0%
31.0%
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,
2023, 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, 2023.
(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 Open Cut
12.2%
0.5%
19.5%
Curragh Underground
10.0%
0.3%
16.9%
Total
Australia
United States
Buchanan
6.0%
0.7%
20.0%
Logan
8.0%
0.9%
35.0%
Mon Valley
8.0%
1.2%
(3)
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, 2023,
see the
individual property disclosures below.
(2)
For more information regarding moisture assumptions used in the calculation of coal
reserves as of December 31, 2023, see the
individual property disclosures below.
(3)
Life-of-mine,
or
LOM,
sulfur
for
Pangburn
is
an
estimated
1.2%;
however,
overall
Mon
Valley
complex
reserve
average
is
1.4%sulfur.
(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.
Coronado Global Resources Inc. Form 10-K December 31,
Curragh
Curragh is a
production-stage mining property that
consists of two
active, open cut,
surface mines (Curragh
North
and Curragh Main) and one proposed
underground mine (east of the Curragh
North open cut mine).
Coal mine
development at
the Curragh
property has
been historically
accomplished by
surface mining
methods since
the
mine’s inception in 1983.
Presently, coal mine development at the Curragh property
is accomplished by surface
mining
methods
and
by
an
underground
development
project,
which
is
undergoing
operational
readiness
in
preparation for
execution and
commencement of
underground coal
production in
late 2024.
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 the Curragh tenements is shown in Figure 3.
Figure 3.
Coronado Curragh Mine Complex Property Location
Map.
Coronado Global Resources Inc. Form 10-K December 31,
The Curragh mine
complex is
located within the
Bowen Basin coalfields,
approximately 200
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
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
CPPs.
There
is
adequate power
on site
for establishing
the underground
mine and
commencing the
first two
continuous miner
units;
however,
upgrades
to
the
site
infrastructure
are
required
for
full
underground
production
with
four
continuous miner units.
The Mineral Resources
Act 1989 (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 a ML.
We
control
the
coal
mining
rights
at
Curragh
under
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 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” for additional
information regarding Curragh’s Tenements.
Property control and mining rights at Curragh are entirely expressed in the MLs and MDLs mentioned above. An
overlapping petroleum tenure exists over the
southern and eastern extents of
the Tenements.
Under the Mineral
and
Energy
Resources
(Common
Provisions)
Act
(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 regulated tiered
structure introduced July
1, 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 Curragh
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
11.1 MMt in
2021, 9.8 MMt in 2022 and 10.0 MMt
in
2023.
Coronado Global Resources Inc. Form 10-K December 31,
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.
Recently,
we
have
increasingly
focused
on
an
underground
exploration program,
which has
included seismic
2-D
and 3-D
surveys and
core drilling
for gas,
geotech, coal
quality
and
spontaneous
combustion
evaluation.
Additional
exploration
has
included
permeability
and
hydrological assessments.
Open cut 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 additional fleets of hydraulic excavators.
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
1,100 raw tons
per hour, or tph
(as received).
CPP2 has a
documented
nameplate capacity of 1,200 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.
Prior
to
Coronado
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
has continued
since acquisition.
This program
helps 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, 2023, the book value of Curragh and its associated plant
and equipment was $767.8 million.
Studies
for
determining
the
feasibility
of
underground
mining
of
the
Curragh
North
mine
east
of
the
existing
Curragh
North
open
cut
mine
has
been
undertaken
between
2020 to
2023, comprising
a
pre-feasibility
study
completed
in
the
first quarter
of 2023
and
a subsequent
more
detailed
feasibility
study
on the
South
planned
operations
area in
the Mammoth
Seam. The
selected
mining
method for
the underground
project is
bord and
pillar mining using
primary extraction
of panels
with roadway
widths of
6.5 meters,
reducing to
6 meters
where
the overburden thickness or
mining conditions require. The
project is currently in
the operational readiness phase
and preparation is currently underway
for execution and commencement
of underground coal production
in late
2024. The ROM
coal is planned
to be transported
on the existing
installed overland conveyor south
to the existing
CPPs for
processing. The
product coal
will be
handled through
the existing
product coal
stockpile system
and
train load out facility at Curragh.
Underground mine access is planned
via four portal entries from the
southern end of the final highwall
of one of
the open
cut pits
in Curragh,
called S-Pit.
Surface infrastructure
planned for
the underground
mine includes
a
ROM stockpile
pad, conveyor
and radial
stacker, Mine Industrial
Area and
workshop. This
is planned
to be
located
adjacent to the S-Pit
portal entries from the
open cut, with access
to the underground mine
via mobile vehicles.
The mine access methodology and
surface infrastructure arrangement is consistent with other
underground bord
and pillar mines operating from existing open cut mines
in Queensland.
The underground mine has been
planned with three mining areas: South, Central and
North. Planned production
transitions
from
South
to
Central
and
then
North
areas
as
reserves
deplete
and
geographical
expansion
is
required to maintain
the required LOM
production. The mine
is expected to
commence in the
South area in
the
Mammoth Seam in late 2024 with two continuous miner
units, then later introducing additional continuous miner
units, with full production
using four units by
2026. Production is planned
to commence in the
Mackenzie Seam
in 2034 and continue throughout the expected LOM of approximately
20 years for the underground mine.
We are
not aware of
any significant
encumbrances or
defects in title
with respect
to the Curragh
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.
Summaries of Curragh’s
coal resources
and reserves estimates as
of December 31, 2023
and 2022 are shown
in Tables
4 and 5, respectively.
Coronado Global Resources Inc. Form 10-K December 31,
Table
4.
Curragh
-
Summary
of
Coal
Resources
Exclusive
of
Reserves
at
the
End
of
the
Fiscal
Year
Ended December 31, 2023 and 2022.
(1)
Coal Resources
(Wet Tons, In Situ, MMt)
(2)(3)
Quality (Air-Dried Basis)
Measured
Indicated
Measured
+
Indicated
Inferred
Ash
Sulfur
Volatile
Matter
December 31, 2023
Open Cut
22.9%
0.60%
19.1%
Underground
18.6%
0.40%
18.1%
Total
December 31, 2022
Open Cut
19.5%
0.50%
18.4%
Total
(1)
Curragh determines the resources exclusive of reserves below a 15:1
in-situ strip ratio as being suitable for
open pit mining, and
above 15:1 in-situ strip ratio being suitable for underground
mining with a minimum seam thickness of 1.8
meters.
(2)
There are resources suitable for open
cut mining outside of the declared
reserves.
The initial economic assessment
for resources
exclusive of
reserves as
of December
31, 2022,
and 2023
assumed revenue
pricing based
on an
assumed long-term
average
realized sales prices
of $143 per
Mt (FOB) and
$133 per Mt (FOB),
respectively, for the open cut
resources and $147
per Mt (FOB)
and $140 per Mt (FOB), respectively, for the underground
resources. This is explained further in
Section 11.5 of the Curragh TRS.
(3)
Table 1-1 of the Curragh TRS provides a summary of Curragh resource tons inclusive
of reserve tons as of December 31, 2023.
(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, 2023 and 2022.
(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, 2023
Open Cut
12.2%
0.5%
19.5%
Underground
10.0%
0.3%
16.9%
Total
December 31, 2022
Open Cut
10.7%
0.4%
19.0%
Total
(1)
Based on
long-term revenue
pricing assumption
data outlined
by Coronado
described in
Section 16
of the
Curragh TRS.
The
pricing data assumes an average
realized price of $141 per
Mt produced over the LOM
as of December 31, 2022
and $131 per Mt
sold over the LOM as of December 31, 2023.
(2)
The December 31,
2022 marketable reserves
are reported on
an 11.0%
moisture basis. For
the December 31,
2023 marketing
reserves, the
open cut
marketable reserves
are
reported on
a
9.5% product
moisture
basis and
the underground
marketable
reserves are reported on a 10% product 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,
2022,
to
December
31,
2023,
measured
and
indicated
resources
decreased
by
approximately 32%, from
512 MMt
to 350 MMt.
This decrease in
measured and indicated
resources is attributable
to the conversion of resources
to reserves being declared in
2023 for the underground project.
From December
31, 2022, to December 31,
2023, total marketable coal
reserves increased by approximately 9%,
from 205 MMt
to approximately 223 MMt. This increase
in marketable coal reserves is attributable
mainly to the addition of the
Curragh North
underground project
reserves estimate.
A TRS
with respect
to Curragh,
updating the
TRS with
respect to Curragh
incorporated by reference
into Coronado’s
Annual Report on
Form 10-K for
the year ended
December 31,
2022, was
prepared in
February
2024 due
to material
differences
in the
key modifying
factors,
including the addition of
an underground LOM plan
and changes to coal
sales price assumptions, operating
costs
and capital costs, from December 31, 2022 to December
31, 2023.
Coronado Global Resources Inc. Form 10-K December 31,
Barry Lay,
BSc Geology (Hons);
MAusIMM of Resology
Pty Ltd, Daniel
Millers, B. Eng.;
MAusIMM(CP), who
is
employed full-time as the Superintendent Long Term
Planning of our subsidiary, Coronado Curragh Pty Ltd, and
Chris Wilkinson, BSc
(Mining); MAusIMM(CP);
Director Mining
Consultancy Services
(Australia) Pty Ltd,
whom
we
refer
to,
collectively,
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
16, 2024,
or the Curragh
TRS, is filed
as Exhibit 96.1
hereto. None of
Mr. Barry
Lay,
Resology
Pty
Ltd,
Mr.
Chris
Wilkinson
or
Mining
Consultancy
Services
(Australia)
Pty
Ltd
are
affiliated
with
Coronado.
The Australian QPs prepared the estimates of Curragh
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 Curragh,
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
reserve
estimates
were
classified
as
proven
or
probable,
with
consideration given to
“modifying factors,”
including mining, processing,
metallurgical, infrastructure,
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.
As
summarized
in
Section
7.1
of
the
Curragh
TRS,
the
concentration
of
exploration
drill
holes
varies
slightly
across the Curragh
property.
The location of
the drilling
is shown on
the maps
included in Section
7.
Points of
observation include
exploration drill
holes, degas
holes and
mine measurements,
which have
been fully
vetted
and
processed
into
a
geological
model.
The
geological
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 whether there
are reasonable prospects
for economic extraction of
a
coal resource
and
the economic
viability
of a
coal
reserve.
These quality
attributes
aided
in converting
in-situ
resource tons to
demonstrated coal
reserves (recoverable washed
tons). The reserve
and resource criteria
are
presented in
Sections 12.1
and 11.3,
respectively,
of the Curragh
TRS, including
assumptions related
to seam
density, minimum
cut-off thickness, and recoveries.
Pricing data as provided
by Coronado is described in
Table
16.2 of the Curragh TRS.
These are weighted-average realized values across
the LOM schedule.
Regarding
production
rates
as
described
in
Section
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. 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.
Coronado Global Resources Inc. Form 10-K December 31,
Figure 4.
Coronado Buchanan Mine Complex Property Location
Map.
The Buchanan
mine complex
is located
approximately
6.4 kilometers
southeast of
Oakwood, Virginia,
and 16
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 290
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
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 33,578 total hectares, of which 25,853 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 2042.
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 4.4
MMt in 2021, 3.9 MMt
in 2022 and
3.6 MMt in 2023.
Coronado Global Resources Inc. Form 10-K December 31,
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 1.57 meters within the mining
area.
The Buchanan
mine currently
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, 2023, the book value of Buchanan and its
associated plant and equipment was $464.7 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,
2023 and 2022 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, 2023 and 2022.
(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, 2023
-
16.0%
0.8%
18.0%
December 31, 2022
-
25.0%
0.7%
16.0%
(1)
Pricing for
resources is
described in
Section 11.3.1
of the
Buchanan TRS
(as defined
below).
Based on
assumed long-term
average price of $110 per Mt (FOB loadout) for Buchanan
resources as of December 31,
2022 and $143 per Mt (FOB
loadout) for
resources at
December 31,
2023, 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, 2023.
(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, 2023 and 2022.
(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, 2023
6.0%
0.7%
20.0%
December 31, 2022
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, 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.
For Buchanan reserves as of December 31, 2023, the pricing data assumes
a weighted average domestic
and international FOB-mine
price of approximately
$172 per Mt for
calendar year 2024;
the weighted
average price decreases to approximately $138 to $145 per Mt through year 2028 and averages approximately $173 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,
to
December
31,
2023,
total
reserves
decreased
approximately
1%,
from
approximately
93.0
MMt
to
approximately
92.0
MMt.
This
net
reduction
of
1.0
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, 2022, was
prepared in February
2024 due to
material differences
in the
key financial modifying factors, including mining plans, coal sales price assumptions, operating costs and capital
costs from December 31,
2022 to December 31,
2023. Mining plans
are discussed in Section
13 of the Buchanan
TRS. 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,
2022 to
December
31,
2023.
From
December 31,
2022 to
December 31, 2023,
measured and
indicated resources decreased
by approximately 13%,
due to conversion of a
portion of the resources
to reserves.
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
of the Buchanan
TRS, did
not have
a material
impact on the
measured and
indicated resource
estimates
as
of
December
31,
2023,
as
compared
to
the
measured
and
indicated
resource
estimates
as
of
December 31, 2022.
Coronado Global Resources Inc. Form 10-K December 31,
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, 2023
summarized in Tables
and 7.
A copy of the U.S. QPs’ TRS with respect to Buchanan, dated as of February 16, 2024, or the Buchanan
TRS, is filed as Exhibit 96.2 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
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 15,725
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
and supporting
infrastructure that
produce High-Volatile
Met coal
using the
room and
pillar mining
method and
two
active
surface
mines
(Toney
Fork
and
Elklick)
and
supporting
infrastructure
that
produce
both
Met
and
thermal coal using
the contour
and highwall
mining methods.
Underground mine
operations were
active during
2023 at
the
Lower
War
Eagle,
Eagle
No.
and
Muddy
Bridge
Mines
with
three,
three
and
two
active
mining
sections, respectively.
The North Fork Winifrede Mine was active but was fully depleted in 2023.
The Powellton
No. 1
Mine
was
in
the
process
of being
rehabilitated
and had
minimal
production
during the
fourth
quarter
of
2023, with plans to initiate
full production with one mining
section in the first quarter
of 2024.
The Logan complex
life plan includes
13 proposed mines,
consisting of ten
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 27
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
16 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
individual
leases,
and
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
2057.
One lease
expires in 2032; however,
Coronado is projected to have previously exhausted th
e
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
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 1.9 MMt in 2021, 2.1 MMt in 2022 and 2.5 MMt
in 2023.
Coronado Global Resources Inc. Form 10-K December 31,
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. A few of the seams lie below drainage;
however, a substantial number of metallurgical coal
seams
are
situated
above
drainage.
Logan
also
produces
thermal
coal
from
upper
portions
of
the
Kanawha
Formation.
As of December
31, 2023, underground
mine operations
were active at
the Lower
War Eagle,
Eagle No. 1
and
Muddy
Bridge
Mines
with
three,
three
and
two
active
mining
sections,
respectively,
using
the
room-and-pillar
method.
The North Fork
Winifrede Mine was
fully depleted in
2023.
The Powellton No.
1 Mine was in
process
of
being
rehabilitated
and
had
minimal
production
during
the
fourth
quarter
of
2023,
with
plans
to
initiate
full
production with one mining section in the first quarter of
2024.
All 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 roof
bolters, four
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
and
Elklick
surface
mines
extract
Met
and
thermal
coal
using
the
contour
and
area
mining
methods.
The
mines
use
spreads
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 and Elklick to the
CPP site for cleaning or to the loading site to be shipped
directly to customers.
Our
current
plans
at
Logan
contemplate
proposed
mines,
consisting
of
ten
underground
mines
and
three
surface mines,
including the
six 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.
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, 2023, the book value of Logan and its associated
plant and equipment was $244.1 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
27 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 $0.61 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, 2023
and 2022 are
shown in Tables
and 9, respectively.
Coronado Global Resources Inc. Form 10-K December 31,
Table 8.
Logan - Summary of Coal Resources Exclusive
of Reserves at the End of the
Fiscal Year Ended
December 31, 2023 and 2022.
(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, 2023
17.0%
1.0%
31.0%
December 31, 2022
24.0%
1.0%
28.0%
(1)
Pricing for resources is described in Section
11.3.1 of the
Logan TRS (as defined below).
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.
For Logan resources
as of December
31, 2023, 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, 2023.
(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, 2023 and 2022.
(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, 2023
8.0%
0.9%
35.0%
December 31, 2022
8.0%
0.9%
36.0%
(1)
Pricing data as
provided by Coronado is
described in Section
16.2 of the
Logan TRS.
For Logan reserves
as of December
31,
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. For Logan reserves as of
December 31, 2023, the pricing data assumes respective HVA,
HVB and thermal FOB-mine prices of approximately $162, $144,
and $120 per Mt for calendar year 2024.
HVA, HVB, and thermal prices respectively decrease to approximately $161, $143, and
$114 per Mt through year 2026, and then increase to $308, $273, and
$212 per Mt through year 2057.
(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, 2022
to December
31, 2023,
total reserves
remain unchanged.
This consistent
number of
total
reserves
was
attributable
to
a
combination
of
updates
to
the
mine
plans,
including
conversion
of
select
resources to reserves, 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, 2022,
was prepared
in February
2024 due to
material differences
in the key
financial modifying
factors including
coal
sales price
assumptions,
operating
costs
and
capital
costs
from
December
31,
2022, to
December
31,
2023.
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
and
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, 2023, as compared
to the reserve estimates as of
December
31,
2022.
From
December
31,
2022,
to
December
31,
2023,
measured
and
indicated
resources
decreased
by
approximately
8.5%,
from
approximately
MMt
to
MMt.
This
net
reduction
of
MMt
of
measured and indicated
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,
including
conversion
of
resources
to
reserves,
as
discussed
in
Section
11.3
of
the
Logan
TRS,
did
not
have
a
material
impact
on
the
measured
and
indicated
resource estimates
as of December
31, 2023, as
compared to the
measured and
indicated resource
estimates
as of December 31, 2022.
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, 2023
summarized in Tables
and 9.
A copy of the U.S. QPs’ TRS with respect to Logan, dated as of February 16, 2024, or the Logan TRS, is
filed as Exhibit 96.3 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 Logan conducted by numerous
entities over time.
Most of this information was obtained
prior to
our acquisition
of the prop
erty,
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.
As summarized in Section 7.1 in the Logan TRS, the U.S. QPs utilized 1,133 available core, rotary, and gas well
drilling on and around
the Logan property. Mine data from active
underground mines was supplied to
supplement
the exploration
drillhole records,
by seam.
Points of
observation
include exploration
drill holes,
gas wells,
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 of 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
cut-off
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,
2023.
Each mine is scheduled
to operate one
to three production
sections.
All 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.
Coronado Global Resources Inc. Form 10-K December 31,
Figure 6.
Coronado Mon Valley
Mine Complex Property Location Map.
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
or
Duquesne
Light.
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 2101.
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.
Coronado Global Resources Inc. Form 10-K December 31,
Under our current
mine development
plans, production
would begin at
the Pangburn
mine in 2033,
followed by
the Shaner mine in
2039 and, finally, the Fallowfield mine in
2058.
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, 2023, the book value of Mon
Valley was $17.5 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, 2023 and 2022. Table 1-1 of the
Mon Valley
TRS (as
defined below)
provides a summary
of Mon Valley
resource tons
inclusive of
reserve tons
as of December 31, 2023.
A summary of Mon Valley’s
coal reserves as of December 31, 2023 and 2022 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, 2023 and 2022.
(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, 2023
8.0%
1.2%
(3)
35.0%
December 31, 2022
8.0%
1.2%
35.0%
(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,
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
$208
and
$178
per
Mt,
respectively, through year 2050, and
then increased by 2% annual inflation thereafter.
For Mon Valley reserves as
of December
31, 2023, the pricing data assumes
a blended HVB domestic and
export FOB-mine nominal price
of $164 per Mt for calendar
year
2029; HVB domestic and export prices respectively
are increased by 2% annual inflation thereafter.
(2)
Reported on a 6.0% moisture basis.
(3)
LOM sulfur for Pangburn is an estimated 1.2%; however, overall Mon
Valley Complex reserve average is 1.4% sulfur.
(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.
Total
reserves
did
not
change
from
December
31,
2022,
to
December
31,
2023.
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, 2022,
was prepared in February
2024 due to material differences
in the key financial
modifying factors
including coal sales
price assumptions,
operating costs
and capital
costs from
December 31,
2022, to
December
31,
2023.
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 16,
2024, or the Mon
Valley
TRS, is
filed as Exhibit 96.4 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
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
cut-off
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.
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, and
thus no update was
completed for Greenbrier in
2024. Resources exclusive
of reserves are based
on assumed
(December 31, 2022)
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
December
31,
2022,
reserve
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%.
Coronado Global Resources Inc. Form 10-K December 31,
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 $263
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
•
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.
Coronado Global Resources Inc. Form 10-K December 31,
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 LOM 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 1989
(Qld)”. These royalties
are in addition
to the Stanwell
rebate, as described
in Item
1. “Business-Customers-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-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, 2023, we had 167,645,373
shares of our common stock issued
and outstanding with 7,735
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 7,734 registered owners
of our
CDIs on December 31, 2023.
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 Senior Secured
Notes Indenture governing
our 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, 2023.
Purchases of Equity Securities by the Issuer and
Affiliated Purchases
We had no repurchases of equity securities for the
three months ended December 31, 2023.
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 6.
[Reserved]
Coronado Global Resources Inc. Form 10-K December 31,
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, 2023,
we produced and sold
15.8 MMt of coal.
Met coal and
thermal coal sales
represented 75.8% and 24.2%, respectively,
of our total volume of coal
sold and 91.4% and 8.6%,
respectively,
of total coal revenues.
During the year ended December 31, 2023, Coronado navigated through some operational headwinds that were
out of our control.
Our
Australian
Operations
suffered
production
downtime
as
a
result
of
severe
weather
events,
including
significant
rainfall
in
the
March
and
December
quarters,
and
unscheduled
downtime
of
a
dragline
due
to
mechanical failure. Despite these adverse
events, our Australian Operations completed
planned maintenance on
its
two
coal
preparation
plants
and
invested
in
additional
fleets
to
advance
pre-strip
waste
movement,
to
decongest the
operating pits,
and to
improve the
mine’s strike
-length and
future coal
availability.
In addition
to
lost production from
the unforeseen events,
our Australian Operation
also experienced significant
shipping delays
in the December quarter
due to labor
issues faced at the
RG Tanna
Coal Terminal
resulting in deferral
of sales
volumes to 2024.
Our U.S. Operations
were impacted
by geotechnical
issues at the
Buchanan mine, specifically
a roof fall
in the
December
quarter,
resulting
in
days
outage
to
production
to
repair
equipment
and
secure
additional
roof
support, and the
impact of
a rock intrusion
in the September
quarter resulting
in a 14-day
outage to production
as
we
mined
through
the
intrusion.
Both
events
have
been
successfully
addressed,
with
normal
longwall
operating conditions restored at the mine.
Overall, for
the year
ended December
31, 2023,
saleable production
was 0.2MMt
lower and sales
volume was
0.6MMt compared to the year ended December 31, 2022.
The
benchmark
PLV
HCC
FOB
AUS average
for
the
year
ended
December
31,
2023,
of
$296.3
per
Mt
was
18.5% lower compared to
$363.7 per Mt for
the year ended December 31,
2022, when we saw
record high prices
as global Met coal supply readjusted from the impact
of the Russia and Ukraine war.
Met coal
market remains
buoyant as
demand
in emerging
and developing
economies,
such as
India, a
major
export destination, continues
to be strong. The
PLV HCC
FOB AUS index price
trended upwards in
the second
half of 2023 increasing 39% to $323.8 per Mt at the end of December 31, 2023. This increase
is primarily due to
a combination of tight supply
from Australia, caused by
adverse weather events and
reduced port throughput in
Queensland,
and
heightened
demand
from
Indian
and
Asian
steel
makers
who
were
restocking
from
lower
inventory levels.
Coal revenues of $2,830.7
million for the year ended
December 31, 2023, 19.8%
lower compared to 2022,
was
largely driven by lower sales
volumes, 0.6MMt lower compared to
2022 and lower average realized Met
price per
Mt sold,
which was
$50.2 per
Mt lower
than the
average realized
Met price
of $265.8
per Mt
sold for
the year
ended December 31, 2022.
Mining costs for the
year ended December 31, 2023, were
$273.1 million and $19.2 per
Mt sold higher compared
to the
corresponding period in
2022, largely
driven by
the impacts of
lower production
following significant weather
events
and
equipment
breakdown
at
our
Australian
Operations,
adverse
geological
conditions
at
our
U.S.
Operations,
combined
with
elevated
inflation
levels
mobilization
of
additional
fleets,
and
port
constraints
impacting sales volumes at our Australian Operations.
Dividends
During the year
ended December
31, 2023, Coronado
paid total dividends
of $16.7 million
to stockholders
and
CDI holders on the ASX.
Coronado Global Resources Inc. Form 10-K December 31,
Liquidity
As of December
31, 2023,
our net cash
position was
$96.7 million,
comprised of
$339.0 million
cash and cash
equivalents
(excluding
restricted
cash)
less
$242.3
million
aggregate
principal
amount
of
Notes
outstanding.
Coronado
had
available
liquidity
of
$489.0
million
as
of
December
31,
2023,
consisting
of
cash
and
cash
equivalents
(excluding
restricted
cash),
unrestricted
short-term
deposits
of
$21.9
million
and
$128.1
million
availability under our New ABL facility.
Safety
For
our
Australian
Operations,
the
twelve-month
rolling
average
Total
Reportable
Injury
Frequency
Rate
at
December 31, 2023
was 1.83 compared
to 3.92 at
the end of
December 31,
2022. At our
U.S. Operations,
the
twelve-month rolling average Total
Reportable Incident Rate, at December 31, 2023 was 1.44 compared to 2.42
at the end of December 31, 2022.
These strong results reflect a record
safety rate at our U.S. Operations
under
Coronado’s ownership, and the best safety
rate since May 2018 for our Australian
Operations. Reportable rates
for our Australian and U.S. Operations are below the relevant
industry benchmarks.
Our Lower
War Eagle
mine, part
of our
Logan mining
complex at
our U.S.
Operations, which
includes multiple
underground and surface mines, achieved 4 years of being Lost
Time Injury,
or LTI, free
in 2023.
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. Coronado
continues to implement
safety initiatives to
improve our
safety rates
every quarter.
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; (vi) average segment operating costs per
Mt
sold, which we define as segment operating costs
divided by sales volumes for the respective segment
and (vii)
net cash, which we define
as cash and cash equivalents
(excluding restricted cash)
less outstanding aggregate
principal amount of the Notes.
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.
In circumstances
where
we sell
through
intermediaries
to the
export market from our
U.S. Operations, sales
are 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,
Segment
Adjusted EBITDA and mining
costs, which are financial
measures not recognized in
accordance with U.S. GAAP.
Non-GAAP financial
measures, including
Adjusted EBITDA,
Segment Adjusted
EBITDA and
mining costs,
are
useful to our investors to measure our operating performance.
Coronado Global Resources Inc. Form 10-K December 31,
Non-GAAP financial measures are intended to provide additional information only and do not have any standard
meaning prescribed
by U.S.
GAAP.
These measures
should not
be considered
in isolation
or as
substitute for
measures of performance prepared in accordance with
U.S. GAAP.
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
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,
2023 Compared to Year
Ended December 31, 2022
Summary
The financial and operational highlights for the year ended December
31, 2023 include:
•
Net income of $156.1 million for the
year ended December 31, 2023, decreased
by $615.6 million, from
$771.7 million for the year
ended December 31, 2022. The
decrease was primarily driven
by lower coal
revenues
and
higher
mining
and
operating
costs,
partially
offset
by
an
income
tax
benefit
in
compared to an income tax expense in 2022.
•
Average realized Met price per
Mt sold of $215.7 for the year
ended December 31, 2023 was
$50.2 per
Mt sold lower compared to $265.8 per Mt sold for the year ended December 31, 2022, largely a result of
lower Met coal index price in 2023 compared to the record
highs in 2022 from the impacts of the Russia
and Ukraine war.
The first half
of 2023 saw
Met coal index
prices decline significantly
as steel demand
weakened, however,
Met coal prices trended upwards in the second half of 2023 due to tight supply and
port constraints in Australia.
•
Total sales volume was 15.8 MMt for the
year ended December 31, 2023,
or 0.6 MMt lower
than the year
ended December 31, 2022. The lower sales volumes were primarily driven by port constraints impacting
shipments from RG Tanna
Terminal
in Queensland, Australia
and production downtime
from significant
wet weather events
and equipment breakdowns
at our Australian
Operations combined
with geological
issues at our U.S. Operations.
•
Adjusted EBITDA for
the year ended
December 31, 2023,
totaled $381.7 million,
a decrease of
$833.9
million, from Adjusted EBITDA of $1,215.6 million
for the year ended December 31, 2022.
This decrease
was a result of lower coal revenues and higher operating
costs.
Coronado Global Resources Inc. Form 10-K December 31,
For Year Ended December 31,
(US$ in thousands)
Change
%
Revenues:
Coal revenues
2,830,689
3,527,626
(696,937)
(19.8%)
Other revenues
59,914
43,916
15,998
36.4%
Total
revenues
2,890,603
3,571,542
(680,939)
(19.1%)
Costs and expenses:
Cost of coal revenues (exclusive of items shown
separately below)
1,731,630
1,515,585
216,045
14.3%
Depreciation, depletion and amortization
160,711
167,046
(6,335)
(3.8%)
Freight expenses
259,710
249,081
10,629
4.3%
Stanwell rebate
136,523
165,995
(29,472)
(17.8%)
Other royalties
345,882
385,065
(39,183)
(10.2%)
Selling, general, and administrative expenses
84,177
42,499
41,678
98.1%
Total
costs and expenses
2,718,633
2,525,271
193,362
7.7%
Other income (expenses):
Interest expense, net
(56,751)
(67,632)
10,881
(16.1%)
Loss on debt extinguishment
(1,385)
(5,336)
3,951
(74.0%)
Decrease (increase) in provision for discounting and
credit losses
4,216
(3,821)
8,037
(210.3%)
Other, net
5,764
33,795
(28,031)
(82.9%)
Total
other expense, net
(48,156)
(42,994)
(5,162)
12.0%
Income before tax
123,814
1,003,277
(879,463)
(87.7%)
Income tax benefit (expense)
32,251
(231,574)
263,825
(113.9%)
Net income
156,065
771,703
(615,638)
(79.8%)
Net income attributable to Coronado Global
Resources Inc.
156,065
771,703
(615,638)
(79.8%)
Coal revenues
Coal
revenues
were
$2,830.7 million
for
the
year
ended
December
31,
2023,
a
decrease
of
$696.9
million,
compared to $3,527.6 million for
the year ended
December 31, 2022.
This decrease was driven
by 0.6 MMt
lower
sales volumes in 2023 and lower average realized Met price per Mt sold of $215.7 for the year ended December
31, 2023, compared to $265.8 per Mt sold in 2022.
Other revenues
Other revenues
were $59.9 million
for the
year ended
December 31, 2023,
an increase of
$16.0 million,
compared
to $43.9 million for the same
period in 2022. This increase was
primarily driven by termination fee revenue
from
a coal sales contract cancelled at our U.S. Operations.
Cost of coal revenues (exclusive of Items shown
separately below)
Cost of coal revenues 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 $1,731.6 million for
the year ended
December 31, 2023,
an increase of $216.0
million, compared to $1,515.6 million for the same period
in 2022.
Cost of coal revenues for our Australian Operations for the year ended
December 31, 2023, were $155.8 million
higher compared to
the same period
in 2022, primarily
driven by additional
fleets mobilized in
2023 to advance
pre-strip
overburden
removal,
the
inflationary
impact
on
labor,
contractor
and
other
supply
costs,
higher
maintenance
expenses
from
unexpected
equipment
failures,
partially
offset
by
lower
purchased
coal
and
favorable foreign
exchange
rate on
translation
of our
Australian Operations
for the
year
ended December
31,
2023,
of
A$/US$:
0.66
compared
to
0.70
for
the
same
period
in
2022.
Cost
of
coal
revenues
for
our
U.S.
Operations were
$60.3 million
higher for
the year
ended December
31, 2023,
compared to
the same
period in
2022,
also
impacted
by
an
elevated
inflationary
environment
and
higher
consumables
and
unplanned
maintenance costs following a rock intrusion and a roof
collapse in 2023.
Coronado Global Resources Inc. Form 10-K December 31,
Depreciation, depletion and amortization
Depreciation, depletion and amortization were $160.7 million for the
year ended December 31, 2023, a
decrease
of $6.3 million, compared to
$167.0 million for the
year ended December 31,
2022. The decrease was
associated
with assets fully depreciated, lower depreciation
rates following annual useful life review at
the beginning of 2023
and
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, 2023.
Freight expenses
Freight expenses
totaled
$259.7
million for
the year
ended December
31, 2023,
an increase
of $10.6
million,
compared to $249.1 million
for the same
period in 2022. Rail
costs at our Australian
Operations contributed $13.2
million to the
increase, mainly
due to higher
regulated costs
associated with access
to the Central
Queensland
Coal Network, partially offset by lower freight costs
at our U.S. Operations due to lower sales volumes.
Stanwell rebate
The Stanwell rebate was
$136.5 million for the
year ended December
31, 2023, a decrease
of $29.5 million, as
compared
to
$166.0
million
for the
year
ended
December
31,
2022.
The
decrease
was
due
to
lower
realized
reference coal pricing
for the prior
twelve-month period used to
calculate the rebate compared
to the same
period
in 2022 and favorable average foreign exchange rate
on translation of the Australian Operations.
Other royalties
Other
royalties
were
$345.9 million
for
the
year
ended
December
31,
2023,
a
decrease
of
$39.2 million,
as
compared
to $385.1
million
for the
year
ended December
31,
2022. Our
Australian
Operations
contributed
to
$36.0
million
of
the
decrease
due
to
lower
coal
revenues
and
favorable
exchange
rate
on
translation
of
the
Australian Operations, partially
offset by
the adverse impact
of the new
QLD royalty regime,
effective from
July
1, 2022, which resulted in $59 million additional royalty
cost in 2023.
Selling, general, and administrative expenses
Selling,
general,
and
administrative
expenses
increased
by
$41.7
million
to
$84.2
million
for
the
year
ended
December 31, 2023, compared
to $42.5 million for
the year ended December
31, 2022. The increase
relates to
the additional accrual of $41.3 million relating to the stamp
duty on Curragh’s acquisition assessed by the
QRO.
The Company
disputes
the
amount
assessed by
the
QRO. Refer
to Part
II, Item
8. Financial
Statements and
Supplementary Data, Note 26 “Contingencies” for further
information.
Interest Expense, net
Interest
expense,
net
was
$56.8
million
for
the
year
ended
December
31,
2023,
a
decrease
of
$10.9
million
compared
to
$67.6
million
for
the
same
period
in
2022.
The
decrease
was
due
to
lower
aggregate
principal
amount of the Notes outstanding following redemptions
of $72.7 million in the fourth quarter of 2022.
Decrease (increase) in Provision for Discounting and
Credit Losses
Decrease in provision for discounting
and credit losses of $4.2 million for
the year ended December 31, 2023,
a
favorable movement
of $8.0 million
compared to
increase in
provision for
discounting and
credit losses
of $3.8
million for the
year ended December
31, 2022. The
lower provision was
primarily driven by
collection of certain
overdue trade receivables at December 31, 2022 during
the year ended December 31, 2023.
Other, net
Other,
net was
$5.8 million
in the
year ended
December 31,
2023, a
decrease of
$28.0 million
compared to
of
$33.8 million
for the
year ended
December
31, 2022.
The decrease
largely
relates
to lower
foreign
exchange
gains recognized
in 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.
Income tax benefit (expense)
Income tax benefit
of $32.2 million
for the year
ended December
31, 2023, compared
to $231.6 million
income
tax
expense
for
the
year
ended
December
31,
2022,
primarily
driven
by
loss
before
tax
from
our
Australian
operations and the benefit of prior year tax return adjustments
and amendments.
The income tax benefit for
the year ended December 31,
2023 resulted in an annual effective
tax rate of (26.0%).
Coronado Global Resources Inc. Form 10-K December 31,
Year Ended December 31,
2022 Compared to Year
Ended December 31, 2021
The Company’s comparison of 2022 results to
2021 results is included in the
Company’s
Annual Report on Form
10-K for the fiscal year ended December 31, 2022
,
under Part II Item 7,
“Management’s Discussion and Analysis
of Financial Condition and Results of Operations”.
Supplemental Segment Financial Data
Year Ended December 31,
2023 Compared to Year
Ended December 31, 2022
Australian Operations
For Year Ended December 31,
(US$ in thousands)
Change
%
Sales Volume (MMt)
9.9
10.0
(0.1)
(1.0)%
Total
revenues ($)
1,681,522
2,116,555
(435,033)
(20.6)%
Coal revenues ($)
1,645,752
2,078,518
(432,766)
(20.8)%
Average realized price per Mt sold ($/Mt)
167.0
208.9
(41.9)
(20.0)%
Met sales volume (MMt)
6.8
6.5
0.3
4.2%
Met coal revenues ($)
1,557,471
1,968,173
(410,702)
(20.9)%
Average realized Met price per Mt sold ($/Mt)
230.2
303.1
(72.9)
(24.1)%
Mining costs ($)
1,058,598
864,616
193,982
22.4%
Mining costs per Mt sold ($/Mt)
108.5
89.5
19.0
21.2%
Operating costs ($)
1,679,954
1,575,786
104,168
6.6%
Operating costs per Mt sold ($/Mt)
170.5
158.3
12.2
7.7%
Segment Adjusted EBITDA ($)
2,249
541,208
(538,959)
(99.6)%
Coal revenues
for our
Australian Operations
for the
year ended
December
31, 2023,
were $1,645.8
million,
a
decrease of $432.8 million, or 20.6%, compared to $2,078.5 million for the year ended December 31, 2022. This
decrease was primarily driven by lower average realized Met price of $230.2 per Mt, a decrease of
$72.9 per Mt,
compared to $303.1 per Mt sold during the
same period in 2022. The higher realized price during the
year ended
December
31,
2022,
was
a
result
of
higher
Met
coal
index
prices
from
disruptions
in
trade
flows
and
supply
dynamics caused by
the war between
Russia and Ukraine.
Significant wet weather
events and port
constraints
during
impacted
the
recovery
from
low
sales
volumes
in
and
overall
sales
volumes
remained
consistent year on year.
Operating costs increased
by $104.2 million, or
6.6%, for the year
ended December 31,
2023, compared to the
year ended
December 31,
2022. The
increase was
driven by
higher mining
costs and
freight expense.
Mining
costs were $194.0
million, or 22.4%,
higher for the
year ended December 31,
2023, compared to the
same period
in
2022,
due
to
additional
fleets
mobilized
in
2023,
inflationary
impact
on
costs
and
additional
repairs
and
maintenance
costs
associated
with
equipment
failures.
Higher
mining
costs
were
partially
offset
by
favorable
average foreign exchange on translation of our Australian Operations, lower Stanwell rebate and other royalties’
expense as a result
of lower sales volume
and lower price
realizations. Mining and
Operating costs per
Mt sold
increased by
$19.0 and $12.2,
respectively,
compared to
the same
period in 2022,
due to increased
costs and
lower sales volume.
For
the
year
ended
December
31,
2023,
Segment
Adjusted
EBITDA
was
$2.2
million,
a
decrease
of
$539.0
million compared
to Segment
Adjusted EBITDA
of $541.2
million for
the year
ended December
31, 2022.
This
decrease was a result of lower coal revenues and higher
mining and operating costs.
Coronado Global Resources Inc. Form 10-K December 31,
United States
For Year Ended December 31,
(US$ in thousands)
Change
%
Sales Volume (MMt)
6.0
6.4
(0.4)
(7.2)%
Total
revenues ($)
1,209,081
1,454,987
(245,906)
(16.9)%
Coal revenues ($)
1,184,937
1,449,108
(264,171)
(18.2)%
Average realized price per Mt sold ($/Mt)
198.4
225.2
(26.8)
(11.9)%
Met sales volume (MMt)
5.2
6.2
(1.0)
(14.9)%
Met coal revenues ($)
1,031,012
1,394,880
(363,868)
(26.1)%
Average realized Met price per Mt sold ($/Mt)
196.9
226.5
(29.6)
(13.1)%
Mining costs ($)
610,925
531,812
79,113
14.9%
Mining costs per Mt sold ($/Mt)
106.0
86.5
19.5
22.5%
Operating costs ($)
793,791
739,940
53,851
7.3%
Operating costs per Mt sold ($/Mt)
132.9
115.0
17.9
15.6%
Segment Adjusted EBITDA ($)
421,093
716,661
(295,568)
(41.2)%
Coal revenues
for our
U.S. Operations
decreased by
$264.2 million,
or 18.2%,
to $1,184.9
million for
the year
ended
December
31,
2023,
as
compared
to
$1,449.1
million
for
the
year
ended
December
31,
2022.
This
decrease was driven
by a lower
average realized Met
price per Mt
sold for the
year ended December
31, 2023
of $196.9
compared to
$226.5 per
Mt sold
for the
same period
in 2022,
a result
of lower
Met coal
price index,
product mix skewed towards lower quality Met
coal and lower sales volumes driven primarily
by lower production
as a result of adverse geological conditions experienced
at the Buchanan mine.
Operating costs
increased by
$53.9 million,
or 7.3%,
to $793.8
million for
the year
ended December
31, 2023,
compared to
operating costs
of $739.9
million for
the year
ended December
31, 2022,
driven by
higher mining
costs, partially offset
by lower royalties
and freight expenses
from lower sales volume.
Mining costs contributed
$79.1 million
of the
increase driven
by continued
inflationary
impact on
labor and
supply costs
and unplanned
maintenance costs. Mining
and Operating costs
per Mt sold
increased by $19.5
and $17.9, respectively,
due to
lower sales volume and higher costs for the year ended December
31, 2023.
Segment Adjusted EBITDA
of $421.1
million for
the year ended
December 31,
2023, decreased by
$295.6 million,
or 41.2%, compared to
$716.7 million for the
year ended December 31, 2022.
This decrease was primarily
driven
by lower coal revenues and higher mining and other
operating costs.
Corporate and Other Adjusted EBITDA
The following table presents a summary of the components
of Corporate and Other Adjusted EBITDA:
For Year Ended December 31,
(US$ in thousands)
Change
%
Corporate and other expenses
42,856
42,499
0.8%
Other, net
(1,227)
(254)
(973)
383.1%
Total
Corporate and Other Adjusted EBITDA
41,629
42,245
(616)
(1.5)%
Corporate
and
other
costs
decreased
$0.6
million
to
$41.6
million
for
the
year
ended
December
31,
2023,
compared to $42.2 million for the year ended December
31, 2022, due to the timing of certain corporate costs
.
Coronado Global Resources Inc. Form 10-K December 31,
Mining and operating costs for the Year Ended December 31, 2023 compared to Year
December 31, 2022
A reconciliation of
segment costs and
expenses, segment operating
costs, and segment
mining costs is
shown
below:
For Year Ended December 31, 2023
(US$ in thousands)
Australia
United States
Other /
Corporate
Total
Consolidated
Total costs and
expenses
1,756,635
876,753
85,245
2,718,633
Less: Selling, general and administrative expense
(30)
-
(84,147)
(84,177)
Less: Depreciation, depletion and amortization
(76,651)
(82,962)
(1,098)
(160,711)
Total operating costs
1,679,954
793,791
-
2,473,745
Less: Other royalties
(294,467)
(51,415)
-
(345,882)
Less: Stanwell rebate
(136,523)
-
-
(136,523)
Less: Freight expenses
(166,980)
(92,730)
-
(259,710)
Less: Other non-mining costs
(23,386)
(38,721)
-
(62,107)
Total mining costs
1,058,598
610,925
-
1,669,523
Sales Volume excluding non-produced
coal (MMt)
9.8
5.8
-
15.5
Mining cost per Mt sold ($/Mt)
108.5
106.0
-
107.6
For Year Ended December 31, 2022
(US$ 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 ($/Mt)
89.5
86.5
-
88.4
Average realized Met price for the Year
Ended December 31, 2023 compared to Year
December 31, 2022
A reconciliation of the Company’s average realized
Met coal revenue is shown below:
For Year Ended December 31,
(US$ in thousands)
Change
%
Met sales volume (MMt)
12.0
12.7
(0.7)
(5.5)%
Met coal revenues ($)
2,588,483
3,363,053
(774,570)
(23.0)%
Average realized met price per Mt sold ($/Mt)
215.7
265.8
(50.2)
(19.0)%
Coronado Global Resources Inc. Form 10-K December 31,
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA
For year ended December 31,
(US$ in thousands)
Reconciliation to Adjusted EBITDA:
Net income
156,065
771,703
189,423
Add: Depreciation, depletion and amortization
160,711
167,046
177,875
Add: Interest expense, net
56,751
67,632
68,062
Add: Other foreign exchange (gains) losses
(2,899)
(32,259)
7,049
Add: Loss on debt extinguishment
1,385
5,336
8,477
Add: Income tax (benefit) expense
(32,251)
231,574
53,102
Add: Uncertain stamp duty position
41,321
-
-
Add: Restructuring costs
-
-
2,300
Add: Losses on idled assets held for sale
4,846
2,732
Add: Gain on disposal of asset held for sale
-
-
(14,845)
Add: (Decrease) increase in provision for discounting
and credit losses
(4,216)
3,821
(8,042)
Adjusted EBITDA
381,713
1,215,624
486,133
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 our debt
facilities.
Our main uses of cash have historically been, and are expected to continue to be, the funding of our
operations,
working capital,
capital
expenditure,
debt
service
obligations,
business
or assets
acquisitions
and
payment
of
dividends. Based
on our
outlook for
the next
twelve months,
which is
subject to
completion of
the SGI
Transaction,
continued changing demand from our customers, volatility in coal prices, ongoing interruptions and uncertainties
surrounding China’s import restrictions, such as trade barriers imposed by China on Australian sourced coal and
the
uncertainty
of
impacts
from
ongoing
civil
unrest
and
wars,
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.
Under
the
Senior
Secured
Notes
Indenture,
upon
a
change
of
control,
we
are
required
to
make
an
offer
to
purchase the Notes from the holders at a
price of 101% of the principal amount thereof,
plus accrued and unpaid
interest.
Under the New ABL Facility,
a change of control constitutes a Review Event pursuant to which the Lenders may
request to meet
and consult with
us to agree
a strategy to
address the relevant
Review Event including
but not
limited to a restructure of the terms of the New ABL Facility
to the satisfaction of the Lenders.
Refer to Part II, Item 8. Financial Statements and Supplementary Data - Note 16. “Interest Bearing Liabilities” for
further information.
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.
Coronado Global Resources Inc. Form 10-K December 31,
Liquidity as of December 31, 2023 and December 31,
2022 was as follows:
December 31,
(US$ in thousands)
Cash and cash equivalents, excluding restricted cash
339,043
334,378
Short-term deposits
21,906
-
Availability under the Predecessor ABL Facility
-
100,000
Availability under the New ABL Facility
(1)
128,094
-
Total
489,043
434,378
(1)
The New ABL Facility
provides for up
to $150.0 million
in borrowings, including
a $100.0 million
sublimit for the issuance
of letters of
credit,
of which $21.9 million has been issued, and $70.0 million sublimit as a revolving credit facility. The letter of credit sublimit contributes to our
liquidity as the Company can replace cash collateral, provided in the form of restricted deposits, with letters of credit allowing the release of
such restricted deposits to cash and cash equivalents.
Our total indebtedness as of December 31, 2023 and
December 31, 2022 consisted of the following:
(US$ in thousands)
Interest bearing liabilities, excluding current installments
242,326
242,326
Current installments of other financial liabilities and finance
lease obligations
2,893
4,585
Other financial liabilities and finance lease obligations, excluding current
installments
5,307
8,336
Total
250,526
255,247
Liquidity
As
of
December
31,
2023,
available
liquidity
was
$489.0
million,
comprising
of
cash
and
cash
equivalents
(excluding restricted cash)
of $339.0 million,
short-term deposits of $21.9
million and $128.1 million
of available
borrowings under our New 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 and cash equivalents
Cash
and
cash
equivalents
are
held
in
multicurrency
interest
bearing
bank
accounts
available
to
be
used
to
service
the
working
capital
needs
of
the
Company.
Cash
balances
surplus
to
immediate
working
capital
requirements
are
invested
in
short-term
interest-bearing
deposit
accounts
or
used
to
repay
interest
bearing
liabilities.
Senior Secured Notes
As
of
December
31,
2023,
the
outstanding
principal
amount
of
our
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
Senior
Secured
Notes
Indenture,
which
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
Senior Secured
Notes 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
Coronado Global Resources Inc. Form 10-K December 31,
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.
Based on information that
we are currently aware
of, on completion of
the SGI Transaction, a “Change
of Control”
as defined under the Senior
Secured Notes Indenture may occur.
Refer to Part II, Item 8.
Financial Statements,
Note 16. “Interest Bearing Liabilities” for further information.
As of December 31, 2023, we were in compliance with all applicable covenants under the Senior Secured Notes
Indenture.
New ABL Facility
On May 8, 2023, we entered into
a senior secured asset-based revolving credit agreement in an
initial aggregate
amount of $150.0 million, or the New ABL Facility.
On August 3, 2023, the
Company satisfied all conditions
precedent under the New ABL
Facility,
at which time it
became effective and replaced the predecessor
ABL Facility.
The New
ABL Facility
matures in
August 2026
and provides
for up
to $150.0
million in
borrowings, including
a
$100.0 million sublimit for the issuance
of letters of credit and $70.0
million sublimit as a revolving
credit facility.
Availability under the New
ABL Facility is
limited to an
eligible borrowing base, determined
by applying customary
advance rates to eligible accounts receivable and inventory.
Borrowings under the New
ABL Facility bear interest
at a rate per
annum equal to applicable
rate of 2.80% and
BBSY,
for loans denominated in A$, or SOFR, for loans
denominated in US$, at the Borrower’s election.
Subject
to
customary
grace
periods
and
notice
requirements,
the
New
ABL
Facility
also
contains
customary
events of default.
Based on information that
we are currently aware
of, on completion of
the SGI Transaction, a “Change
of Control”
as defined
under the
terms of
the New
ABL Facility
may occur.
Refer to
Part II,
Item 8.
Financial Statements,
Note 16. “Interest Bearing Liabilities” for further information.
As at
December 31 2023,
letter of
credit sublimit had
been partially used
to issue $21.9
million of bank
guarantees
on behalf
of the
Company and no
amounts were drawn
under the
revolving credit sublimit
of the
New ABL Facility.
As at
December 31,
2023, the
Company was
in compliance
with all
applicable covenants
under the
New ABL
Facility.
Predecessor ABL Facility
On August 3, 2023, we satisfied all conditions precedent under the New ABL Facility at which time the New ABL
Facility replaced
the predecessor ABL
Facility. As a result
of the
early termination of
the predecessor ABL
Facility,
we
recorded
a
loss
on
debt
extinguishment
of
$1.4
million
in
our
Consolidated
Statement
of
Operations
and
Comprehensive Income for the year ended December
31, 2023.
Surety Bonds, Letters of Credit and Bank Guarantees
We
are
required
to
provide
financial
assurances
and
securities
to
satisfy
contractual
and
other
requirements
generated in the
normal course of
business. Some of
these assurances are provided
to comply with
state or other
government agencies’ statutes and regulations.
For
the
U.S.
Operations
in
order
to
provide
the
required
financial
assurance
for
post
mining
reclamation,
we
generally
use
surety
bonds.
We
use
surety
bonds
and
bank
letters
of
credit
to
collateralize
certain
other
obligations including contractual obligations under
workers’ compensation insurances. As of
December 31, 2023,
we had outstanding surety bonds of $44.0 million and letters of credit of $16.8 million issued from available bank
guarantees under the New ABL Facility.
For the Australian
Operations as
at December 31,
2023, we had
bank guarantees
outstanding of $24.4
million,
including $5.1 million issued from the New ABL Facility, primarily in respect of certain rail and port arrangements
of the Company.
As at December 31, 2023,
we, in aggregate, had total
outstanding bank guarantees provided
of $41.2 million to
secure obligations and commitments, including $21.9
million issued from the New ABL Facility.
Coronado Global Resources Inc. Form 10-K December 31,
Future regulatory changes relating to the above obligations could result in
increased obligations, additional costs
or additional collateral requirements.
Restricted deposits - cash collateral
As required by certain agreements,
we had cash collateral in the form
of deposits in the amount of $68.7
million
and $89.1
million
as of
December
31,
and
2022, 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 New
ABL Facility,
we may
be required
to cash
collateralize the
New 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, 2023, no such letter
of credit was outstanding after the expiration or termination date
and no
cash collateral was required.
Dividend
During the year ended December 31, 2023, we paid $16.7 million in dividends to stockholders or CDI holders on
the ASX,
net of $0.1
million foreign exchange
gain on payment
of dividends to
certain CDI holders
that elected
to be paid in Australian dollars.
On
February
19,
2024,
the
Company’s
Board
of
Directors
declared
a
bi-annual
fully
franked
fixed
ordinary
dividend of $8.4 million, or
0.5 cents per CDI. The
dividend will have a
record date of March
12, 2024, Australia
time, and
be payable
on April
4, 2024,
Australia time.
The total
ordinary dividend
will be
funded from
available
cash.
Capital Requirements
Our main uses of cash have historically been the funding
of our operations, working capital, capital expenditure,
the payment of
interest and dividends.
We intend
to use cash
to fund debt
service payments
on our Notes,
the
New ABL Facility and our
other indebtedness, to fund
operating activities, working capital,
capital expenditures,
partial redemption of the Notes, business or assets acquisitions
and, if declared, payment of dividends.
Historical Cash Flows
The
following
table
summarizes
our
cash
flows
for
the
year
ended
December
31,
2023,
and
as
reported in the accompanying Consolidated Financial Statements:
Cash Flow
For Year Ended December 31,
(US$ in thousands)
Net cash provided by operating activities
268,282
926,643
442,014
Net cash used in investing activities
(238,168)
(208,343)
(134,332)
Net cash (used in) provided by financing activities
(24,679)
(784,251)
80,836
Net change in cash and cash equivalents
5,435
(65,951)
388,518
Effect of exchange rate changes on cash and cash
equivalents
(769)
(37,351)
3,677
Cash and cash equivalents at beginning of period
334,629
437,931
45,736
Cash and cash equivalents at end of period
339,295
334,629
437,931
Operating activities
Net cash provided
by operating activities
was $268.3 million
for the year ended
December 31, 2023,
compared
to $926.6
million
for the
year
ended
December
31,
2022.
The
decrease
in
cash
from
operating
activities
was
primarily driven by lower coal revenues,
higher operating costs and income tax
paid of $147.1 million during the
year.
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.
Coronado Global Resources Inc. Form 10-K December 31,
Investing activities
Net cash
used in
investing
activities was
$238.2 million
for the
year
ended December
31, 2023,
compared
to
$208.3 million
for the
year ended
December 31,
2022. Cash
spent on
capital expenditures
for the
year ended
December
31,
2023,
was
$237.2
million,
of
which
$65.4
million
was
related
to
the
Australian
Operations
and
$171.2
million was related to the U.S. Operations.
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,
2022, was
$199.7 million,
of which
$79.4
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
deposits
were
provided
by
our
Australian Operations to satisfy contractual requirements
in the normal course of business.
Financing activities
Net cash used in financing activities was $24.7
million for the year ended December 31, 2023,
compared to cash
used
in
financing
activities
of
$784.3
million
for
the
year
ended
December
31,
2022.
The
net
cash
used
in
financing activities for the year ended December 31, 2023, largely related to dividend payments of $16.8 million,
payment of debt issuance costs in connection with the establishment
of the New ABL Facility of $3.4 million and
the remainder related to repayment of other financial liabilities.
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
$2.6 million
of premium
paid on
redemption,
and the
remainder related to repayment of other financial liabilities.
Contractual Obligations
The following is a summary of our contractual obligations
at December 31, 2023:
Payments Due By Year
Less than
-
-
More than
(US$ in thousands)
Total
1 Year
Years
Years
5 Years
Long
-
term debt obligations
(1)
9,172
3,466
5,706
-
-
Senior secured notes
(2)
242,326
-
242,326
-
-
Mineral lease commitments
(3)
53,075
5,795
10,703
10,415
26,162
Lease commitments
99,229
29,218
48,989
21,022
-
Unconditional purchase obligations
(4)
20,872
20,872
-
-
-
Take
-
or
-
pay contracts
(5)
788,431
94,688
187,326
189,295
317,122
Total
contractual cash obligations
1,213,105
154,039
495,050
220,732
343,284
(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 Note 16 “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
Note
“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 2024.
(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
Coronado Global Resources Inc. Form 10-K December 31,
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 $163.9 million as of
December 31, 2023.
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
Long-Lived Assets
We
review
the
carrying
value
of
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.
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,
2023,
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,
2023, 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
Coronado Global Resources Inc. Form 10-K December 31,
points throughout
the current
and prior
year for
other purposes
to ensure
there is
no contrary
evidence to
our
analysis. At
December 31,
2023, we
did not
perform a
quantitative impairment
assessment as
we determined,
based on our qualitative assessment, that no impairment
indicators existed.
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,
2023. In
addition, state
agencies monitor
compliance with
the mine
plans, including reclamation.
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
Coronado Global Resources Inc. Form 10-K December 31,
•
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
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
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,
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. Met
coal prices
were lower
in 2023
compared to
record highs
achieved
in 2022 from the impacts of the Russia and Ukraine war. The first half of 2023 saw Met coal index prices
decline
significantly as steel
demand weakened,
however,
Met coal prices
trended upwards
in the second
half of 2023
due to
tight supply
and port
constraints in
Australia. 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
Access to
international markets
may be
subject to
ongoing interruptions
and trade
barriers due
to policies
and
tariffs
of
individual
countries.
We
may
or
may
not
be
able
to
access
alternate
markets
of
our
coal
should
interruptions
or
trade
barriers
occur
in
the
future.
An
inability
for
metallurgical
coal
suppliers
to
access
international markets 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 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,
2023, we had
$11.9
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 $1.2 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,
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). The
expectation of
future prices
for diesel
depends upon
many
factors
beyond
our
control.
The
current
Israel-Palestine
conflict
could
create
significant
uncertainty
regarding
interruptions to global oil supply causing significant
volatility in prices of related commodities,
including the price
of diesel fuel we
purchase. 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 2024 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
our
financial
performance,
investment
decisions
and
stockholder
return.
Our
objectives
in
managing
our
exposure
to
interest
rates
include
minimizing
interest
costs
in
the
long
term,
providing
a
reliable
estimate
of
interest costs for the
annual work program
and budget and ensuring
that changes in interest
rates will not have
a material impact on our financial performance.
As
of
December
31,
2023,
we
had
$250.5
million
of
fixed-rate
borrowings
and
no variable-rate
borrowings
outstanding.
We currently do not hedge against interest rate
fluctuations.
Foreign Exchange Risk
A significant portion of our
sales are denominated in US$.
Foreign exchange risk is
the risk that our earnings
or
cash flows are adversely impacted by movements in
exchange rates of currencies that are not in US$.
Our main exposure
is to the
A$-US$ exchange rate
through our Australian
Operations, which have
predominantly
A$
denominated
costs.
In
2023,
greater
than
70%
of
expenses
incurred
at
our
Australian
Operations
were
denominated in
A$. Approximately
30% of
our Australian
Operations’
purchases were
made with
reference
to
US$, 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 $122.8 million for the year ended December
31, 2023.
Under normal market conditions, we generally do not consider it necessary to hedge our
exposure to this foreign
exchange risk.
However,
there
may be
specific commercial
circumstances,
such
as the
hedging
of significant
capital
expenditure,
acquisitions,
disposals
and
other
financial
transactions,
where
we
may
deem
foreign
exchange hedging
as appropriate
and
where a
US$ 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.
We
are
also
exposed
to
counterparty
credit
risk
arising
from
our
operating
activities,
primarily
from
trade
receivables. Customers who wish to trade
on credit terms are subject to credit
verification procedures, including
an assessment of their independent credit rating, financial position, past experience and industry reputation.
We
monitor the financial performance
of counterparties on a routine
basis to ensure credit
thresholds are achieved.
Where required, we will request additional credit
support, such as letters of credit,
to mitigate against credit risk.
Credit
risk
is
monitored
regularly,
and
performance
reports
are
provided
to
our
management
and
Board
of
Directors.
Coronado Global Resources Inc. Form 10-K December 31,
As of December
31, 2023,
we had financial
assets of
$694.7 million, comprising
of cash and
cash equivalents,
trade
receivables,
short
term
deposits
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 $0.9 million
was recorded
as of
December 31,
2023. See
Item 8.
Financial Statements and Supplementary Data-Note
8. Provision for Discounting and Credit Losses.
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY
DATA
Page
Number
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
(PCAOB
ID:
)
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Balance Sheets
(In US$ thousands, except share data)
Assets
Note
December 31,
December 31,
Current assets:
Cash and cash equivalents
$
339,295
$
334,629
Trade receivables, net
263,951
409,979
Income tax receivable
44,906
-
Inventories
192,279
158,018
Other current assets
103,609
60,188
Assets held for sale
-
26,214
Total
current assets
944,040
989,028
Non-current assets:
Property, plant and
equipment, net
1,506,437
1,389,548
Right of use asset - operating leases, net
80,899
17,385
Goodwill
28,008
28,008
Intangible assets, net
3,108
3,311
Restricted deposits
68,660
89,062
Deferred income tax assets
27,230
-
Other non-current assets
19,656
33,585
Total
assets
$
2,678,038
$
2,549,927
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
113,273
$
61,780
Accrued expenses and other current liabilities
312,705
343,691
Income tax payable
-
119,981
Asset retirement obligations
15,321
10,646
Contract obligations
40,722
40,343
Lease liabilities
22,879
7,720
Other current financial liabilities
2,825
4,458
Liabilities held for sale
-
12,241
Total
current liabilities
507,725
600,860
Non-current liabilities:
Asset retirement obligations
148,608
127,844
Contract obligations
61,192
94,525
Deferred consideration liability
277,442
243,191
Interest bearing liabilities
235,343
232,953
Other financial liabilities
5,307
8,268
Lease liabilities
61,692
15,573
Deferred income tax liabilities
100,145
95,671
Other non-current liabilities
34,549
27,952
Total
liabilities
$
1,432,003
$
1,446,837
Common stock $
0.01
par value;
1,000,000,000
shares authorized,
167,645,373
shares issued and outstanding as of December 31, 2023 and
December 31, 2022
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, 2023 and
December 31,
-
-
Additional paid-in capital
1,094,431
1,092,282
Accumulated other comprehensive losses
(89,927)
(91,423)
Retained earnings
239,854
100,554
Total
stockholders’ equity
1,246,035
1,103,090
Total
liabilities and stockholders’ equity
$
2,678,038
$
2,549,927
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
$
2,830,689
$
3,527,626
$
2,010,996
Coal revenues from related parties
-
-
97,335
Other revenues
59,914
43,916
40,140
Total
revenues
2,890,603
3,571,542
2,148,471
Costs and expenses:
Cost of coal revenues (exclusive of items shown
separately below)
1,731,630
1,515,585
1,195,250
Depreciation, depletion and amortization
160,711
167,046
177,875
Freight expenses
259,710
249,081
241,862
Stanwell rebate
136,523
165,995
55,403
Other royalties
345,882
385,065
142,751
Selling, general, and administrative expenses
84,177
42,499
30,666
Restructuring costs
-
-
2,300
Total
costs and expenses
2,718,633
2,525,271
1,846,107
Other income (expenses):
Interest expense, net
(56,751)
(67,632)
(68,062)
Loss on debt extinguishment
(1,385)
(5,336)
(8,477)
Decrease (increase) in provision for discounting and
credit losses
4,216
(3,821)
8,042
Gain on disposal of asset held for sale
-
-
14,845
Other, net
5,764
33,795
(6,187)
Total
other expense, net
(48,156)
(42,994)
(59,839)
Income before tax
123,814
1,003,277
242,525
Income tax benefit (expense)
32,251
(231,574)
(53,102)
Net income
156,065
771,703
189,423
Less: Net loss attributable to noncontrolling
interest
-
-
(2)
Net income attributable to Coronado Global
Resources Inc.
$
156,065
$
771,703
$
189,425
Other comprehensive loss, net of income taxes:
Foreign currency translation adjustment
1,496
(47,195)
(17,451)
Net gain on cash flow hedges, net of tax
-
-
2,029
Total
other comprehensive gain (loss)
1,496
(47,195)
(15,422)
Total
comprehensive income
157,561
724,508
174,001
Less: Net loss attributable to noncontrolling
interest
-
-
(2)
Total
comprehensive income attributable to
Coronado Global Resources Inc.
$
157,561
$
724,508
$
174,003
Earnings per share of common stock
Basic
6 (c)
0.93
4.60
1.21
Diluted
6 (c)
0.93
4.60
1.21
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
(Accumulated
losses)
Retained
earnings
Noncontrolling
interest
Total
stockholders'
equity
Shares
Amount
Series A
Amount
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 loss (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
Net income
-
-
-
-
-
-
156,065
-
156,065
Other comprehensive income
-
-
-
-
-
1,496
-
-
1,496
Total comprehensive income
-
-
-
-
-
1,496
156,065
-
157,561
Stock-based compensation for equity
classified awards
-
-
-
-
2,149
-
-
-
2,149
Dividends
-
-
-
-
-
-
(16,765)
-
(16,765)
Balance December 31, 2023
167,645,373
$
1,677
$
-
$
1,094,431
$
(89,927)
$
239,854
$
-
$
1,246,035
See accompanying notes to consolidated financial
statements
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Statements of Cash Flows
(In US$ thousands)
Year Ended December 31,
Cash flows from operating activities:
Net income
$
156,065
$
771,703
$
189,423
Adjustments to reconcile net income to cash and
cash equivalents provided
by operating activities:
Depreciation, depletion and amortization
163,862
165,503
175,814
Amortization of right of use asset - operating leases
12,415
6,704
8,899
Amortization of deferred financing costs
4,300
1,933
3,133
Non-cash interest expense
30,997
31,362
29,120
Amortization of contract obligations
(33,026)
(36,519)
(33,967)
Loss on disposal of property, plant and equipment
Equity-based compensation expense (gain)
2,149
2,735
(250)
Loss on debt extinguishment
1,385
5,336
8,477
Deferred income taxes
(21,338)
40,423
24,417
Reclamation of asset retirement obligations
(5,334)
(4,543)
(4,273)
Change in estimate of asset retirement obligation
(3,151)
1,543
2,061
Gain on disposal of asset held for sale
-
-
(14,845)
(Decrease) increase in provision for discounting and
credit losses
(4,216)
3,821
(8,042)
Changes in operating assets and liabilities:
Accounts receivable - including related party receivables,
net
155,056
(156,818)
(33,545)
Inventories
(32,774)
(41,243)
(9,637)
Other current assets
(477)
(12,365)
24,573
Accounts payable
40,159
(27,664)
24,166
Accrued expenses and other current liabilities
(25,435)
84,041
64,285
Operating lease liabilities
(14,597)
(8,244)
(10,986)
Income tax payable
(164,834)
96,326
-
Change in other liabilities
6,560
1,754
2,776
Net cash provided by operating activities
268,282
926,643
442,014
Cash flows from investing activities:
Capital expenditures
(237,205)
(199,716)
(89,661)
Proceeds from the disposal of property, plant, and equipment
-
1,594
Proceeds from disposal of assets held for sale
-
-
27,451
Purchase of restricted and other deposits
(27,213)
(9,761)
(103,997)
Redemption of restricted and other deposits
26,250
30,281
Net cash used in investing activities
(238,168)
(208,343)
(134,332)
Cash flows from financing activities:
Proceeds from interest bearing liabilities and other
financial liabilities
-
-
411,524
Debt issuance costs and other financing costs
(3,436)
-
(15,263)
Principal payments on interest bearing liabilities
and other financial liabilities
(4,361)
(81,310)
(412,046)
Call premiums paid on early redemption of debt
-
(2,557)
(1,050)
Principal payments on finance lease obligations
(127)
(140)
(70)
Dividends paid
(16,755)
(700,244)
-
Proceeds from stock issuance, net
-
-
97,741
Net cash (used in) provided by financing activities
(24,679)
(784,251)
80,836
Net increase (decrease) in cash and cash equivalents
5,435
(65,951)
388,518
Effect of exchange rate changes on cash and cash equivalents
(769)
(37,351)
3,677
Cash and cash equivalents at beginning of period
334,629
437,931
45,736
Cash and cash equivalents at end of period
$
339,295
$
334,629
$
437,931
Supplemental disclosure of cash flow information:
Cash payments for interest
$
28,632
$
36,728
$
33,462
Cash paid (refund) for taxes
$
147,106
$
90,888
$
(16,582)
Restricted cash
$
$
$
See accompanying notes to consolidated financial
statements
Coronado Global Resources Inc. Form 10-K December 31,
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 6 “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
the
Company’s
future operating results, purchase or investment opportunities
in the coal mining industry.
Concentration of customers
The Company has a 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 coal revenues in the year ended
December 31, 2023.
Year Ended December 31,
Tata
Steel
21%
19%
17%
ArcelorMittal
10%
8%
7%
For the
year ended
December 31,
2023, $
1,509.1
million, or
53.3
% of
total coal
revenues, were
attributable to
five
customers. In
comparison, for
the year
ended December
31, 2022,
$
1,848.8
million, or
52.6
% of
total coal
revenues were
attributable to
five
customers and for
the year ended
December 31, 2021,
$
971.6
million, or
46.3
%
of
total
revenues
were
attributable
to
five
customers.
As
of
December
31,
2023,
the
Company
had
three
customers that
accounted for
$
152.9
million, or
57.9
%, of
accounts receivable.
As of
December 31,
2022, the
Company had
four
customers that accounted for $
212.5
million, or
51.6
%, of accounts receivable.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
The
following
table
presents
revenues
as
a
percent
of
total
revenue
from
external
customers
by
geographic
region:
Year Ended December 31,
Asia
50%
46%
48%
North America
11%
12%
7%
South America
8%
8%
6%
Europe
6%
11%
12%
Australia
4%
4%
6%
Brokered sales
21%
19%
21%
Total
100%
100%
100%
The Company uses shipping destination as the
basis for attributing revenue to individual
countries. The transfer
of title on
brokered transactions
may occur at
a point that
does not reflect
the end usage
point, therefore
these
sales are reflected as exports and classified as brokerage sales.
Concentration of labor
Out
of
the
Company’s
total
employees,
10.8
%
as
of
December
31,
2023,
are
subject
to
the
Curragh
Mine
Enterprise
Agreement
2023.
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 Enterprise
Agreement 2023,
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, or FASB,
that had a material impact on the Company’s Consolidated
Financial Statements.
(b)
Accounting Standards Not Yet
Implemented
Accounting Standards
Update, or
ASU, No. 2023-07
“Segment Reporting”
(Topic
280)
: In November
2023, the
FASB
issued
ASU
2023-07,
which
intended
to
improve
reportable
segment
disclosure
requirements
through
enhanced disclosures of significant segment expenses. The guidance is effective for fiscal years
beginning after
December 15, 2023,
and interim periods
within fiscal years
beginning after December
31, 2024. Early
adoption
is permitted. The
updated standard is
to be applied
retrospectively to all
prior periods presented
in the financial
statements. The
Company is
currently evaluating
the impact
that the updated
standard will
have in its
financial
statement disclosures.
ASU 2023-09
“Income Taxes”
(Topic
740):
In December
2023, the
FASB
issued 2023-09,
which modifies
the
rules on
income tax
disclosures to
require companies
to disclose:
specific categories
in the
rate reconciliation,
the income
or loss
from continuing
operations before income
tax expense
or benefit
(separated between
domestic
and
foreign)
and
income
tax
expense
or
benefit
from
continuing
operations
(separated
by
federal,
state,
and
foreign). The updated standard is
effective for annual periods beginning after December
15, 2024. The Company
is currently evaluating the impact that the updated standard
will have in its financial statement disclosures.
There have been
no other recent
accounting pronouncements not yet
effective that have significance,
or potential
significance, to the Company’s Consolidated Financial
Statements.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
(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 contingent
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; expected credit
losses; deferred
income tax
assets and
liabilities; values
of coal
properties;
goodwill; workers’
compensation
liability and
other
contingencies.
(d)
Foreign Currency
Financial Statements of foreign operations
The reporting currency of the Company is the U.S. Dollar,
or US$.
Functional
currency
is
determined
by
the
primary
economic
environment
in
which
an
entity
operates.
The
functional currency of
the Company
and its subsidiaries
is the US$,
with the exception
of two foreign
operating
subsidiaries, Curragh
and its
immediate parent
CAH, whose
functional currency
is the
Australian dollar,
or A$,
since Curragh’s predominant sources of operating
expenses are denominated in that currency.
Assets and liabilities
are translated at
the year-end exchange
rate and items
in the statement
of operations are
translated at average rates with gains and losses from
translation recorded in other comprehensive losses.
Foreign Currency Transactions
Monetary
assets
and
liabilities
are
remeasured
at
year-end
exchange
rates
while
non-monetary
items
are
remeasured at historical rates.
Gains and losses from foreign
currency remeasurement related to Curragh’s U.S. dollar receivables are
included
in coal revenues. All other gains and losses
from foreign currency remeasurement
and foreign currency forward
contracts
are
included
in
“Other,
net”,
with
exception
of
foreign
currency
gains
or
losses
on
long-term
intercompany
loan
balances
which
are classified
within
“Accumulated
other
comprehensive
losses”.
The
total
aggregate impact of foreign currency
transaction gains or losses on the
Consolidated Statements of Operations
and Comprehensive
Income was
a net
gain of
$
2.5
million, $
47.6
million and
$
1.7
million for
the years
ended
December 31,
2023,
2022 and
2021, 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
loss of
$
1.0
million, net
gain of
$
15.0
million and $
8.7
million for the years ended December 31, 2023, 2022
and 2021, respectively.
(e)
Cash and Cash Equivalents
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, 2023,
the Company had $
130.0
million of short-term highly liquid
investments classified as cash equivalents. At December
31, 2022, the Company had
no
cash equivalents.
“Cash
and
cash
equivalents”,
as disclosed
in
the
accompanying
Consolidated
Balance
Sheets,
includes
$
0.3
million of restricted cash at December 31, 2023 and
2022.
(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.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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.
(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.
All criteria
must be met at or prior to balance sheet date for a long-lived asset to qualify as held for
sale. 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.
When any
of the
criteria are
not met
after initial
classification, the Company ceases to classify the asset as held for sale and reclassify the asset as held for use.
On reclassification, the asset is measured
at the lower of its (a) carrying
amount before it was classified
as held
for sale, adjusted
for any depreciation
expense or impairment
losses that would
have been recognized
had the
asset been continuously classified as held and used or
(b) fair value at the date of reclassification.
(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,
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.
The
Company
concluded
that
no
impairment
charges
were
required
at
any
of
the
Company’s mining assets for the years ended December
31, 2023, 2022 and 2021.
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, 2023 and 2022.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
(l)
Leases
From time to
time, the Company
enters into contractual
agreements to
lease property,
plant and equipment.
In
addition, the Company also enters into mining services contracts which may include embedded leases of mining
equipment. 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
$
8.9
million
and
$
6.8
million
respectively, included
in “Other current assets” as of December 31, 2023
and 2022.
(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,
(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, 2023 and 2022.
Shipping and Handling
The Company
accounts
for
shipping
and
handling
activities
on
Free
on
Rail
sales
after
the
customer
obtains
control of the good. In this instance,
shipping and handling costs
paid to third party carriers and
invoiced to coal
customers are recorded as freight expense and other revenues, respectively.
(p)
Commodity Price Risk
The Company has commodity price risk arising from fluctuations
in domestic and global coal prices.
The
Company’s
principal
philosophy
is
not
to
hedge
against
movements
in
coal
prices
unless
there
are
exceptional circumstances.
Any potential hedging of coal prices would be through fixed
price contracts.
The
Company
is
also
exposed
to
commodity
price
risk
related
to
diesel
fuel
purchases.
The
Company
may
periodically enter into arrangements that protect against
the volatility in fuel prices as follows:
•
enter into fixed price contracts to purchase fuel for the U.S. Operations
.
•
enter into derivative financial instruments to hedge exposures to fuel
price fluctuations.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
There are
no
derivative contracts outstanding December 31, 2023 and
2022.
(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 categorized
in one of 3 levels of inputs.
Refer to Note 23 “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, 2023
and 2022.
(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
:1 CDI to common share ratio).
The grant-date
fair value
of stock
option
award is
estimated on
the
date
of grant
using
Black-Scholes-Merton
option-pricing model. For
certain options and
PSUs, the Company includes
a relative Total
Stockholder Return,
or TSR, modifier to determine the number of shares
earned at the end of the performance period. The
fair value
of awards that include the TSR modifier is determined
using a Monte Carlo valuation model.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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
21 “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
(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,
Reportable segment results for the years ended December 31,
2023, 2022 and 2021 are presented below:
(US$ thousands)
Australia
United
States
Other and
Corporate
Total
Year ended December 31,
Total
revenues
$
1,681,522
$
1,209,081
$
-
$
2,890,603
Adjusted EBITDA
2,249
421,093
(41,629)
381,713
Total
assets
1,322,610
1,010,199
345,229
2,678,038
Capital expenditures
55,412
171,686
227,758
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
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
Total
assets
1,357,132
822,222
282,058
2,461,412
Capital expenditures
38,733
50,787
1,616
91,136
The reconciliation of Adjusted EBITDA to net income attributable to the Company for
the years ended December
31, 2023, 2022 and 2021 are as follows:
Year Ended December 31,
(US$ thousands)
Net income
$
156,065
$
771,703
$
189,423
Depreciation, depletion and amortization
160,711
167,046
177,875
Interest expense, net
(1)
56,751
67,632
68,062
Income tax (benefit) expense
(32,251)
231,574
53,102
Other foreign exchange (gains) losses
(2)
(2,899)
(32,259)
7,049
Loss on debt extinguishment
1,385
5,336
8,477
Uncertain stamp duty position
(3)
41,321
-
-
Restructuring costs
-
-
2,300
Losses on idled assets
(4)
4,846
2,732
Gain on disposal of assets held for sale
-
-
(14,845)
(Decrease) increase in provision for discounting
and credit losses
(4,216)
3,821
(8,042)
Consolidated adjusted EBITDA
$
381,713
$
1,215,624
$
486,133
(1)
Includes interest income of $
7.6
million, $
1.5
million, and $
0.1
million for the years ended December 31, 2023,
2022, 2021, respectively.
(2)
Refer to Note 5 “Other, net”
for further discussion.
(3)
Relates to stamp duty on Curragh’s acquisition.
Refer to Note 26 “Contingencies” for further discussion.
(4)
These losses
relate to idled
non-core assets
that the Company
has an
active plan
to sell. Prior
to March
31,
2023, the Company had idled assets that were classified as
held for sale.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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, 2023,
2022 and
2021 are as follows:
Year Ended December 31,
(US$ thousands)
Capital expenditures per Consolidated Statement of Cash
flows
$
237,205
$
199,716
$
89,661
Payment for capital acquired in prior period
(11,243)
(7,475)
(6,000)
Accruals for capital expenditures
10,790
11,243
7,475
Advance payment to acquire long lead capital items
(8,994)
(18,127)
-
Capital expenditures per segment detail
$
227,758
$
185,357
$
91,136
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, 2023
(US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
1,557,471
$
1,031,012
$
2,588,483
Thermal coal
88,281
153,925
242,206
Total
coal revenue
1,645,752
1,184,937
2,830,689
Other
(1)
35,770
24,144
59,914
Total
$
1,681,522
$
1,209,081
$
2,890,603
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
(1)
Included
in
Other
revenue
for
Australian
Operation
is
the
amortization
of
Stanwell
non-market
coal
supply
agreement liability recognized
on acquisition
of Curragh. See
further discussion in
Note 17
“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,
•
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
mining asset, or
the
Greenbrier asset, and determined that all of
the criteria to classify assets and liabilities as
held for sale were met.
The Greenbrier asset is part
of the Company’s U.S. segment, located
in the State of
Virginia in the United States.
The Greenbrier asset does not form part
of the Company’s core business
strategy and has been idle since April
1, 2020.
The
Company
remains
committed
to
a
plan
to
sell
the
Greenbrier
asset,
however,
on
March
31,
2023,
the
Company concluded that
the timing
of the
sale within the
next twelve months
is uncertain. As
such, the
Greenbrier
mining asset
has been
classified
as held
and
used since
March
31, 2023,
as it
does not
meet
the criteria
for
classification as held for sale.
The assets and liabilities
of the Greenbrier asset
met the criteria for
classification as held for
sale as of December
31, 2022,
therefore
the Consolidated
Balance Sheet
continues to
reflect these
asset
and liabilities
as held
for
sale as of that date.
5.
Other, net
Other, net consists of the following:
Year Ended December 31,
(US$ thousands)
Other foreign exchange gains (losses)
(1)
$
2,899
$
32,259
$
(7,049)
Other income
2,865
1,536
Total
Other, net
$
5,764
$
33,795
$
(6,187)
(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.
6.
Capital Structure
(a)
Stockholders’ Equity
Authorized capital stock
The Company’s Certificate 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 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
167,645,373
138,387,890
Shares issued during the year
-
-
29,257,483
Shares outstanding at the end of the year
167,645,373
167,645,373
167,645,373
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
A portion of the
Company’s 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
.
As of December 31,
2023,
831,392,221
CDIs (representing beneficial
interest in
83,139,233
shares of common
stock) were owned by investors in the form of CDIs publicly
traded on the ASX.
Coronado Group LLC
As
of
December
31,
2023,
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.
Refer to Note 21 “Stock-Based Compensation” for
options to purchase common stock issued
and outstanding as
of December 31, 2023 and 2022.
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, 2023, the Company
declared:
•
Dividends of $
8.4
million, or $
0.005
per CDI ($
0.05
per share of common stock),
on February 21, 2023;
and
•
Dividends of $
8.4
million, or $
0.005
per CDI ($
0.05
per share of common stock), on August 7, 2023.
The Company paid a
total of $
16.7
million to stockholders and CDI
holders on the ASX, net
of $
0.1
million foreign
exchange gain on
payment 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, 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 to certain CDI
holders that elected to be paid in Australian dollars,
in relation
to the above declared dividends.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
During the year ended December 31, 2021, the Company did
no
t declare or pay dividends.
(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):
Year Ended December 31,
(US$ thousands, except per share data)
Numerator:
Net income
$
156,065
$
771,703
$
189,423
Less:
Net loss attributable to non-controlling interest
-
-
(2)
Net income attributable to Company stockholders
$
156,065
$
771,703
$
189,425
Denominator (in thousands):
Weighted-average shares of common stock outstanding
167,645
167,645
156,710
Effects of dilutive shares
Weighted average diluted shares of common stock
outstanding
168,066
167,846
156,842
Earnings Per Share (US$):
Basic
0.93
4.60
1.21
Dilutive
0.93
4.60
1.21
7. Trade Receivables, net
The Company
extends trade
credit to
its customers
in the
ordinary course
of business.
Trade
receivables are
recorded initially at fair value and subsequently at amortized
cost, less any ECL.
December 31,
(US$ thousands)
Trade receivables
$
264,218
$
414,490
Provision for discounting and credit losses (Note 8)
(267)
(4,511)
Trade receivables, net
$
263,951
$
409,979
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
8. 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
receivables
Other
Assets
Total
As at January 1, 2021
$
$
$
1,256
Change in estimates during the current period
3,777
3,821
As of December 31, 2022
4,511
5,077
Change in estimates during the current period
(4,244)
(4,216)
As of December 31, 2023
$
$
$
9. Inventories
December 31,
(US$ thousands)
Raw coal
$
55,998
$
50,604
Saleable coal
81,314
45,913
Total
coal inventories
137,312
96,517
Supplies inventory
54,967
61,501
Total
inventories
$
192,279
$
158,018
Coal inventories measured at its net realizable value were
$
2.4
million and $
5.0
million at December 31, 2023
and 2022, respectively,
and primarily relates to coal designated for deliveries under
the Stanwell below market
coal supply agreement. See further discussion in Note
17 “Contract Obligations”.
10.
Other Assets
December 31,
(US$ thousands)
Other current assets:
Prepayments
$
34,175
$
26,831
Long service leave receivable
8,438
7,884
Tax
credits receivable
3,265
4,183
Deposits to acquire mining equipment
18,935
-
Short term deposits
21,906
-
Other
16,890
21,290
Total
other current assets
$
103,609
$
60,188
Other non-current assets:
Favorable mineral leases
$
3,310
$
3,448
Deferred debt issue costs
2,672
2,463
Long service leave receivable
1,485
Tax
credits receivable
4,004
7,269
Deposits to acquire long lead mining equipment
8,185
18,126
Other
-
1,694
Total
other non-current assets
$
19,656
$
33,585
The Company
has other assets
which includes prepayments,
favorable mineral leases,
deferred debt issue
costs,
long service leave receivable
,
equipment deposits, short
term deposits and coalfield
employment enhancement
tax credit receivable.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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 Company
recognized tax
credits receivable
relating 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
to
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
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.
Deposits to acquire long lead mining equipment are advance
payments made for future mining equipment.
Short term deposits
are term deposits
held with financial
institutions with
maturity greater
than ninety
days and
less than twelve months and that do not meet the cash
and cash equivalents criteria.
The favorable mineral leases were recognized on acquisition of certain U.S. assets
that are amortized based on
the
coal
tonnage
removed
from
the
lease
property
relative
to
the
total
estimated
acquired
reserves
on
that
property.
The deferred debt issue costs as of December 31, 2023 and
December 31, 2022, are unamortized costs relating
to the
establishment of
the senior
secured asset-based
revolving credit facilities
(refer to
Note 16
“Interest Bearing
Liabilities” for
further description
of these
facilities). The
deferred issue
costs are
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
.
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
$
28,282
$
27,711
Buildings and improvements
102,642
91,336
Plant, machinery, mining
equipment and transportation vehicles
1,189,088
1,012,844
Mineral rights and reserves
389,868
373,309
Office and computer equipment
9,771
9,488
Mine development
579,717
565,106
Asset retirement obligation asset
88,384
87,877
Construction in progress
143,041
82,713
Total
cost of property,
plant and equipment
2,530,793
2,250,384
Less accumulated depreciation, depletion and amortization
1,024,356
860,836
Property, plant and
equipment, net
$
1,506,437
$
1,389,548
The amount of depreciation and amortization expense
for property, plant
and equipment for the years ended
December 31, 2023, 2022 and 2021 was $
152.4
million, $
155.8
million and $
166.2
million, respectively.
12.
Goodwill and Other Intangible Assets
(a)
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, 2023 and 2022. Based upon the Company’s qualitative assessment,
it is more likely than not that
the fair value
of the reporting
unit is greater
than its carrying amount
at December 31, 2023 and
2022. As a
result,
no
impairment was required, and
the balance of
goodwill at both
December 31, 2023 and 2022
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,
(b)
Acquired Intangible Assets
December 31, 2023
(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
$
1,068
$
Mining permits - Buchanan
3,501
2,534
Total
intangible assets
$
5,143
$
2,035
$
3,108
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
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,
2023,
and
2021,
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.
13.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the
following:
December 31,
(US$ thousands)
Wages and employee benefits
$
42,348
$
38,687
Taxes
other than income taxes
6,728
5,988
Accrued royalties
45,770
117,131
Accrued freight costs
47,549
44,496
Accrued mining fees
89,622
103,492
Acquisition related accruals
53,700
11,669
Other liabilities
26,988
22,228
Total
accrued expenses and other current liabilities
$
312,705
$
343,691
Acquisition
related
accruals
is
an
accrual
for
the
remaining
estimated
stamp
duty
payable
on
the
Curragh
acquisition of $
53.7
million (A$
79.0
million). Refer to Note 26 “Contingencies” for further
details.
14. Leases
During the year ended December 31,
2023, the Company entered into a
number of agreements to lease
mining
equipment.
Based
on
the
Company’s
assessment
of
terms
within
these
agreements,
the
Company
classified
these leases as
operating leases. On
mobilization of th
ese leased mining
equipment, the Company
recognized
right-of-use assets and operating lease liabilities of $
72.5
million.
Information related to Company’s right-of use assets
and related lease liabilities are as follows:
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Year ended December 31,
(US$ thousands)
Operating lease costs
$
17,013
$
8,088
Cash paid for operating lease liabilities
14,597
8,244
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
$
80,899
$
17,385
Finance leases:
Property and equipment
Accumulated depreciation
(309)
(186)
Property and equipment, net
Current operating lease obligations
22,811
7,593
Non-current operating lease obligations
61,692
15,505
Total
Operating lease liabilities
84,503
23,098
Current finance lease obligations
Non-current finance lease obligations
-
Total
Finance lease liabilities
Current lease obligations
22,879
7,720
Non-current lease obligations
61,692
15,573
Total
lease obligations
$
84,571
$
23,293
December 31,
Weighted Average Remaining
Lease Term (Years)
Weighted average remaining lease term - finance
leases
0.5
1.5
Weighted average remaining lease term - operating
leases
3.7
4.1
Weighted Average Discount
Rate
Weighted discount rate - finance lease
7.6%
7.6%
Weighted discount rate - operating lease
9.0%
8.9%
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
The Company’s leases have remaining lease terms of
1 year
to
5 years
, some of which include
options to extend
the terms
where the
Company deems
it is
reasonably certain
the options
will be
exercised. Maturities
of lease
liabilities as at December 31, 2023, are as follows:
(US$ thousands)
Operating
Lease
Finance
Lease
Year ending
December 31,
$
29,148
$
28,361
-
20,628
-
12,235
-
Thereafter
8,787
-
Total
lease payments
99,159
Less imputed interest
(14,656)
(2)
Total
lease liability
$
84,503
$
15.
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,
reclamation
is
performed
progressively,
however,
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,
2023 and 2022.
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,
2023 and
December 31,
were as follows:
(US$ thousands)
December 31,
December 31,
Total
asset retirement obligations at beginning of the year
$
138,490
$
120,277
ARO liability additions - new disturbances
9,923
1,835
Accretion
11,252
9,066
Reclamation performed in the year
(5,334)
(3,270)
Reclass of asset held for sale
(1)
11,115
-
Gain on settlement of ARO
-
(53)
Change in estimate recorded to operations
(3,151)
(2)
Change in estimate recorded to assets
15,381
Foreign currency translation adjustment
(4,744)
Total
Asset retirement obligations at end of the year
163,929
138,490
Total
Asset retirement obligations at December 31
(15,321)
(10,646)
Asset retirement obligation, excluding current portion
$
148,608
$
127,844
(1)
Refer to Note 4 “Assets Held for Sale”
for further information.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
16. Interest Bearing Liabilities
The following is a summary of interest-bearing liabilities
at December 31, 2023:
(US$ thousands)
December 31,
December 31,
Weighted Average
Interest Rate at
December 31, 2023
Final
Maturity
10.75
% Senior Secured Notes
$
242,326
$
242,326
12.14
%
(2)
New ABL Facility
-
-
Discount and debt issuance costs
(1)
(6,983)
(9,373)
Total
interest bearing liabilities
$
235,343
$
232,953
(1)
Relates to discount
and debt
issuance costs
on the establishment
of the Notes.
Deferred debt
issuance costs
incurred on
the establishment
of the New 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 New ABL Collateral), or the Notes Collateral, and (ii) a
second-priority lien on the New 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 $
150.0
million, or the New 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, 2023,
the Company was in compliance with all applicable covenants
under the Indenture.
Under the terms of the
Indenture, upon the occurrence of a “Change
of Control” (as defined in the
Indenture), the
issuer
is
required
to
make
an
offer,
or
a
Change
of
Control
Offer,
to
repurchase
the
Notes
at
%
of
the
aggregate principal
amount thereof,
plus accrued
and unpaid
interest, if
any,
to, but
excluding, the
repurchase
date. Alternatively,
if the
issuer elects
to redeem
all of
the Notes,
during the
12-month period
commencing
on
May 15 of
the years set
forth below at
the redemption
prices (expressed in
percentages of principal
amount on
the redemption date) set forth below, plus accrued and unpaid interest to,
but not including, the redemption date,
the issuer is not required to make a Change of Control
Offer:
Period
Redemption price
104.03%
2025 and thereafter
100.00%
New Asset Based Revolving Credit Facility
On May
8, 2023,
the Company, Coronado Coal
Corporation, a Delaware
corporation and wholly
owned subsidiary
of the Company,
Coronado Finance Pty
Ltd, an Australian
proprietary company
and a wholly
owned subsidiary
of the Company,
or an Australian
Borrower, Coronado
Curragh Pty Ltd,
an Australian proprietary
company and
wholly
owned
subsidiary
of
the
Company,
or
an
Australian
Borrower
and,
together
with
the
other
Australian
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Borrower, the Borrowers,
and the other guarantors party
thereto, collectively with the Company,
the Guarantors
and, together
with the
Borrowers, the
Loan Parties,
entered into
a senior
secured asset-based
revolving credit
agreement in
an initial
aggregate amount
of $
150.0
million, or
the New
ABL Facility,
with Global
Loan Agency
Services Australia
Pty Ltd,
as the
Administrative Agent,
Global Loan
Agency Services
Australia Nominees
Pty
Ltd, as the
Collateral Agent,
the Hongkong and
Shanghai Banking Corporation
Limited, Sydney
Branch, as the
Lender, and DBS Bank
Limited, Australia Branch,
as the
Lender and, together
with the other
Lender, the Lenders.
On August 3, 2023, the Company
satisfied all conditions precedent
under the New ABL Facility,
at which time it
became effective and replaced the predecessor
ABL Facility.
The New
ABL Facility
matures in
August 2026
and provides
for up
to $
150.0
million in
borrowings, including
a
$
100.0
million sublimit for the issuance
of letters of credit and $
70.0
million sublimit as a revolving
credit facility.
Availability under the New
ABL Facility is
limited to an
eligible borrowing base, determined
by applying customary
advance rates to eligible accounts receivable and inventory.
Borrowings under
the New
ABL Facility
bear interest
at a
rate per
annum equal
to an
applicable rate
of
2.80
%
plus BBSY,
for loans denominated in A$, or SOFR, for loans denominated
in US$, at the Borrower’s election.
The New
ABL Facility
is guaranteed
by the
Guarantors.
Amounts outstanding
under the
New ABL
Facility are
secured by
(i) first
priority lien
in the
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, collectively,
the New ABL Collateral, (ii)
a second-priority lien on substantially
all of the Company’s
assets and the assets
of
the guarantors, other than the New ABL
Collateral, and (iii) solely in the case of
the obligations of the Australian
Borrower, a featherweight
floating security interest over certain
assets of the Australian Borrower,
in each case,
subject to certain customary exceptions.
The New
ABL Facility
contains customary representations
and warranties
and affirmative and
negative covenants
including, among
others, a
covenant regarding
the maintenance
of leverage
ratio to
be less
than
3.00
times, a
covenant regarding maintenance of interest coverage ratio to be more than
3.00
times, covenants relating to the
payment of dividends, or purchase or redemption of, with respect to any Equity Interests of Holdings or
any of its
Subsidiaries,
covenants
relating
to
financial
reporting,
covenants
relating
to
the
incurrence
of
liens
or
encumbrances, covenants relating to the incurrence or prepayment of certain debt, compliance with laws, use of
proceeds, maintenance of properties, maintenance of insurance, payment obligations, financial accommodation,
mergers and
sales of all
or substantially all
of the Borrowers
and Guarantors’, collectively
the Loan Parties,
assets
and limitations on changes in the nature of the Loan Parties’
business.
Subject
to
customary
grace
periods
and
notice
requirements,
the
New
ABL
Facility
also
contains
customary
events of default.
Under the terms of New ABL Facility,
a Review Event (as defined in the New ABL Facility) is triggered if, among
other matters, a “change of control” (as defined in the
New ABL Facility) occurs.
Following the
occurrence of
a Review
Event, the
Borrowers must
promptly meet
and consult
in good
faith with
the Administrative Agent and the Lenders to agree a
strategy to address the relevant Review Event including but
not limited to a restructure of the terms of the New ABL Facility to the satisfaction of the Lenders.
If at the end of
a period
of
business days
after the
occurrence
of the
Review Event,
the Lenders
are not
satisfied
with the
result of their discussion or meeting with the Borrowers or do not
wish to continue to provide their commitments,
the Lenders may declare all amounts owing
under the ABL Facility immediately due and payable,
terminate such
Lenders’
commitments
to
make
loans
under
the
ABL
Facility,
require
the
Borrowers
to
cash
collateralize
any
letter of credit obligations and/or exercise any and all remedies
and other rights under the New ABL Facility.
To establish
the New ABL Facility, the Company incurred debt issuance costs of $
3.4
million. The Company has
elected an accounting
policy to present debt
issuance costs incurred
before the debt liability
is recognized (e.g.
before the debt
proceeds are received)
as an asset
which will be
amortized ratably
over the term
of the facility.
The costs
will not
be subsequently
reclassified as
a direct
deduction of
the liability.
The carrying
value of
debt
issuance costs, recorded
as “Other non-current
assets” in the
Consolidated Balance
Sheet was
$
2.7
million as
at December 31, 2023.
As
at
December
31,
2023,
the
letter
of
credit
sublimit
had
been
partially
used
to
issue
$
21.9
million
of
bank
guarantees on
behalf of
the Company
and
no
amounts were
drawn under
the revolving
credit sublimit
of New
ABL Facility. As at December 31, 2023, the Company was in compliance with all applicable covenants under the
New ABL Facility.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Predecessor ABL Facility
On
August
3,
2023,
the
New
ABL
Facility
replaced
the
predecessor
ABL
Facility.
As
a
result
of
the
early
termination of the predecessor ABL Facility, the Company recorded a loss on
debt extinguishment of $
1.4
million
in the
Consolidated Statement of
Operations and Comprehensive
Income for the
year ended December
31, 2023.
17. 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
below
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
years
ended December
31, 2023,
2022 and
2021 were
$
32.8
million,
$
36.2
million
and
$
33.7
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, 2023:
(US$ thousands)
Short-term
Long-term
Total
Coal leases contract liability
$
$
19,476
$
20,319
Stanwell below market coal supply agreement
39,879
41,716
81,595
$
40,722
$
61,192
$
101,914
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
18.
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
arrangement
at
the
date
of
acquisition.
The
deferred
consideration
liability
reflects 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
liability is
recognized
within
“Interest
expense,
net”
in
the
Consolidated
Statements
of
Operations
and
Comprehensive
Income. The Right-to-mine-asset are amortized over the
coal reserves mined from the SRA.
December 31,
(US$ thousands)
Stanwell Reserved Area deferred consideration
$
277,442
$
243,191
$
277,442
$
243,191
19.
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.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
The Company obtained workers
compensation insurance for work
related injuries, including black
lung, through
a third-party
commercial
insurance company.
The insurance
policy covers
claims
that exceed
$
0.5
million
per
occurrence for all years, or aggregate claims in excess of $
29.1
million, $
22.7
million and $
22.0
million for policy
years ending May 2024,
May 2023 and May
2022. Per the contractual
agreements, the Company
was required
to provide a collateral
security of $
63.4
million for policy
years 2017 through 2024,
ending May 31, 2024,
which
is accomplished through providing a combination of letters of credit and cash collateral in an escrow account.
As
of December 31,
2023, the Company
has provided $
16.8
million of letters
of credit, $
28.4
million of cash
collateral
and surety bonds of $
15.2
million totaling $
60.4
million. The remaining collateral
was provided in January 2024,
as required.
For the
years ended
December 31, 2023,
2022 and
2021, 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
$
16.3
million,
$
12.2
million
and
$
12.2
million,
respectively.
As of
December 31, 2023 and 2022, the estimated workers’ compensation
liability was $
37.6
million and $
30.1
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
2022,
$
32.6
million
and
$
27.1
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.
20.
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, 2023,
2022 and 2021 amounted to $
5.5
million, $
3.9
million and $
3.3
million, respectively.
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, 2023 and 2022, the Company had
provided
accruals
of
$
2.3
million
and
$
1.9
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, 2023, 2022
and 2021, the Company incurred claims,
premium expenses and administrative fees
related to this plan totaling
$
35.0
million, $
29.8
million and $
25.8
million, respectively.
21.
Stock-Based Compensation
Total
stock-based
compensation
expense
was
$
2.9
million,
$
2.7
million
and
$
0.5
million
for
the
years
ended
December 31,
2023,
and
2021,
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,
2023,
the
Company
had
$
5.4
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
2.25
years,
with
a
weighted-average
period
of
1.76
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.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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 outstanding under the 2018
as of December 31, 2023:
Grant year
Vesting date
Performance period
PSUs
RSUs
31/03/2026
01/01/2023 - 31/12/2025
4,823,269
-
01/01/2024
not applicable
-
43,650
01/07/2024
not applicable
-
88,760
01/01/2024
not applicable
-
359,291
01/07/2024
not applicable
-
243,192
31/03/2026
01/01/2022 - 31/12/2024
6,899,512
-
31/03/2025
01/01/2021 - 31/12/2023
4,901,843
-
31/03/2024
01/01/2020 - 31/12/2022
1,367,829
-
The Options
and PSUs granted
that will
vest are
subject to the
achievement of goals
over the
performance period.
These goals are relative total shareholder 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 peer group of similar companies.
Performance metrics applicable to the Options and
PSUs granted as summarized below:
Grant year
Relative TSR
Scorecard
TSR
Safety
TSR
Cashflow
33.3%
33.3%
-
33.3%
2022, 2021 and 2020
33.3%
22.2%
22.2%
22.2%
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.
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:
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Stock Option Plan Activity
Opening at the beginning of the year
181,687
1,015,006
1,083,101
Forfeited
-
(833,319)
(68,095)
Vested
(181,687)
-
-
Outstanding at the end of the year
-
181,687
1,015,006
Exercisable at the end of the year
181,687
-
-
Weighted-average remaining contractual term (in
years)
-
0.25
1.25
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 $
2.44
(A$
3.56
).
181,687
stock option awards vested during the year remained
exercisable as at December 31, 2023.
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
14,858,921
8,501,869
4,002,783
Granted
4,872,122
7,471,100
5,998,212
Forfeited
(1,451,677)
(1,114,048)
(1,499,126)
Vested and settled
(286,913)
-
-
Nonvested and outstanding at the end of the year
17,992,453
14,858,921
8,501,869
Weighted-average grant date fair value (per CDI)
$
0.58
$
0.53
$
0.43
Weighted-average remaining term (in years)
1.82
2.54
2.79
The weighted average grant date fair value of all PSU
Awards granted in 2023 was $
0.74
(A$
1.11
).
The assumptions used to determine the PSUs fair value
on each grant date were as follow:
2023 Grant
2022 Grant
2021 Grant
2020 Grant
Time to maturity (in years) (i)
2.98
3.99
3.85
3.49
Dividend yield (ii)
7.8%
16.3%
3.0%
1.6%
Expected volatility (iii)
60.0%
60.0%
60.0%
60.0%
Risk-free interest rate (iv)
2.98%
2.66%
0.35%
0.18%
(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)
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,
Restricted Stock Units
RSUs issued to certain employees 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
1,144,034
-
Granted
144,506
1,144,034
Forfeited
(46,593)
-
Vested and settled
(507,054)
-
Nonvested and outstanding at end of the year
734,893
1,144,034
Weighted-average grant date fair value (per CDI)
$
1.26
$
1.22
Weighted-average remaining term (in years)
0.23
0.70
Change in Control
Under the
Company’s
Equity
Incentive
Plan,
the
change
of control
provisions
may
also
be
triggered
on
completion
of
the
SGI
Transaction,
however
the
Compensation
and
Nominating
Committee
of
the
Board
of
Directors, at its
sole discretion, will determine
how the outstanding awards
under the plan
will be dealt
with, which
may include acceleration of vesting condition and related compensation
costs.
22.
Income Taxes
Income from continuing operations before income
taxes for the years presented
below consisted of the following:
December 31,
(US$ thousands)
U.S.
$
334,373
$
609,617
$
226,463
Non-U.S.
(210,559)
393,660
16,062
Total
$
123,814
$
1,003,277
$
242,525
Total
income tax expense (benefit) for the periods presented
below consisted of the following:
December 31,
(US$ thousands)
Current:
U.S. federal
$
(6,303)
$
90,933
$
30,075
Non-U.S.
(2,715)
75,270
(4,443)
State
(1,895)
25,347
3,480
Total
current
(10,913)
191,550
29,112
Deferred:
U.S. federal
28,943
13,486
Non-U.S.
(45,976)
35,425
6,658
State
(4,305)
4,193
3,846
Total
deferred
(21,338)
40,024
23,990
Total
income tax (benefit) expense
$
(32,251)
$
231,574
$
53,102
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
The following is a reconciliation of the expected statutory federal income tax expense (benefit) to the Company’s
income tax (benefit) expense for the periods presented below:
December 31,
(US$ thousands)
Current:
Expected income tax expense at U.S. federal statutory rate
$
26,001
$
210,690
$
50,931
Percentage depletion
(17,871)
(41,047)
-
FDII deduction
(7,796)
-
-
Permanent differences
2,176
(2,262)
Prior period tax return adjustments and amendments
(46,060)
(4,259)
Uncertain tax positions
21,243
-
-
Australian branch impact on U.S. taxes
(14,552)
42,049
(1,699)
State income taxes, net of federal benefit
4,608
21,548
7,833
Total
income tax (benefit) expense
$
(32,251)
$
231,574
$
53,102
Effective tax rate
(
26.0
%)
23.1%
21.9%
The
prior
period
tax
return
adjustment
relates
predominantly
to
a
Foreign
Derived
Intangible
Income
(“FDII”)
deduction
in
the
U.S.
which
the
Company
has
chosen
to
deduct
after
undertaking
a
study
to
confirm
the
Company’s eligibility.
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, 2023 and 2022 were as follows:
December 31,
(US$ thousands)
Deferred income tax assets:
Accruals and provisions
$
44,373
$
36,409
Contract obligations
108,672
119,505
Lease obligations
35,312
-
Asset retirement obligation
55,322
49,078
Goodwill
6,653
6,590
Tax
losses
59,964
6,886
Interest limitation carried forward
1,766
14,408
Other
19,574
31,747
Gross deferred income tax assets
331,636
264,623
Valuation allowance
(1)
(33,894)
(34,667)
Total
deferred income tax assets, net of valuation allowance
297,742
229,956
Deferred income tax liabilities:
Property, plant, equipment
and mine development, principally due to
differences in depreciation, depletion and asset
impairments
(297,915)
(300,968)
Warehouse stock
(12,824)
(13,980)
Right of use asset
(34,021)
-
U.S. liability on foreign deferred taxes
(19,075)
-
Other
(6,822)
(10,679)
Total
deferred income tax liabilities
(370,657)
(325,627)
Net deferred income tax liability
$
(72,915)
$
(95,671)
(1)
As of
December 31,
2023, the
Company recorded
a valuation
allowance against
a deferred
tax asset
of an
equal amount which relates
predominantly to tax losses
and land and goodwill.
A company,
which is not part
of
the Australian tax consolidated group,
had tax losses carried forward
of $
10.9
million (tax effected) for
which an
equal valuation allowance has been recognized. Due to the capital character of
land and goodwill and the lack of
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
expected capital gains, the Group is not expected to realize
the benefit of this deferred tax asset.
The Australian tax consolidated group has tax
losses of $
48.7
million carried forward at December 31, 2023.
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 15% 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 was effective for taxable
years beginning after December 31, 2022 and did not
have any impact to the Company.
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.
During the
year ended
December 31,
2023, the
Company identified
unrecognized tax
benefits of
$
20.8
million
that, if recognized,
would affect the
effective tax rate.
The Company did
no
t identify or
record any uncertain
tax
positions during the years ended December 31, 2022 and 2021.
December 31,
(US$)
At beginning of the year
$
-
Additions based on tax positions related to current year
6,388,281
Additions for tax positions of prior years
14,395,565
At end of the year
20,783,846
The Company
recorded
no
amounts related
to interest
and penalties
on uncertain
tax positions
for 2023, 2022
and 2021 as these were not material.
The Company is subject to taxation in
the United States and Australia. As of December 31, 2023,
tax years 2018
to 2022 are open to review
from taxation authorities in the United States. In
Australia, tax years 2019 to 2022 are
open to review and the Australian Taxation
Office is presently conducting a review
of these years.
23.
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,
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, 2023
and 2022,
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, 2023 and 2022:
•
Cash
and
cash
equivalents,
accounts
receivable,
short-term
deposits,
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,
2023, there were
no
amounts drawn under the
revolving credit sublimit of
the
New ABL
Facility. The estimated fair
value of
the Notes as
of December
31, 2023
is approximately $
251.4
million based upon quoted market prices in a market that
is not considered active (Level 2).
24.
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.
(US$ thousands)
Foreign
currency
translation
adjustments
Balance at December 31, 2021
$
(44,228)
Net current-period other comprehensive income (loss):
Loss in other comprehensive income before reclassifications
(19,610)
Loss on long-term intra-entity foreign currency transactions
(27,585)
Total
net current-period other comprehensive loss
(47,195)
Balance at December 31, 2022
(91,423)
Net current-period other comprehensive income (loss):
Gain in other comprehensive income before reclassifications
(2,367)
Gain on long-term intra-entity foreign currency transactions
3,863
Total
net current-period other comprehensive losses
1,496
Balance at December 31, 2023
$
(89,927)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
25. 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,
$
5,795
5,423
5,280
5,241
5,174
Thereafter
26,162
Total
$
53,075
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,
2023,
purchase
commitments
for
capital
expenditures
were
$
20.9
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
12 years
.
In the U.S., the Company typically
negotiates its rail and coal terminal
on an annual basis.
As of December 31,
2023, these Australian
and U.S. commitments
under take-or-pay
arrangements totaled
$
788.4
million, of which
approximately $
94.7
million is obligated
within the next
year,
$
187.3
million within
1-3 years, $
189.3
million 3-5
years and $
317.1
million thereafter.
26. Contingencies
Surety bond, letters of credit and bank guarantees
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.
For
the
U.S.
Operations
in
order
to
provide
the
required
financial
assurance
for
post
mining
reclamation,
the
Company generally uses
surety bonds. The
Company uses surety
bonds and bank
letters of credit
to collateralize
certain
other
obligations
including
contractual
obligations
under
workers’
compensation
insurances.
As
of
December 31,
2023, the
Company had
outstanding surety
bonds of
$
44.0
million and
letters of
credit of
$
16.8
million issued from available bank guarantees under the
New ABL Facility.
For the Australian
Operations as at
December 31, 2023, the
Company had bank
guarantees outstanding of $
24.4
million,
including
$
5.1
million
issued
from
the
New
ABL
Facility,
primarily
in
respect
of
certain
rail
and
port
arrangements of the Company.
As at December 31, 2023, the Company, in aggregate, had total outstanding bank guarantees provided of $
41.2
million to secure obligations and commitments, including $
21.9
million issued from the New ABL Facility.
Future regulatory changes relating to the above obligations could result in
increased obligations, additional costs
or additional collateral requirements.
Restricted deposits - cash collateral
As required
by certain
agreements,
the Company
had cash
collateral
in the
form of
deposits in
the amount
of
$
68.7
million and $
89.1
million as of December 31,
2023 and 2022, respectively, to provide back-to-back support
for bank guarantees, financial
payments, other performance obligations, various
other operating agreements and
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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 New
ABL Facility,
the Company
may be
required to
cash collateralize
the
New 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,
2023,
no
such letter
of credit
was outstanding
after the
expiration or
termination
date and
no
cash collateral was required.
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 $
56.2
million (A$
82.2
million) plus unpaid tax interest. On November 23,
2022, the Company filed an objection to the assessment
.
On January 9, 2024, the Company’s objection
to the assessed stamp duty was disallowed by the
QRO.
The Company,
based on legal
and valuation advice
obtained, continues to
maintain its position and
the estimated
stamp duty payable of $
29.4
million (A$
43.0
million) on the Curragh
acquisition. In October 2022,
the Company
made a partial payment prior to filing the filing of the objection of stamp duty, reducing the Company’s
estimated
accrual to $
11.8
million (A$
17.3
million).
As per the Taxation
Administration Act (Queensland)
2001, the Company
can only appeal
or apply for a
review
of QRO’s
decision if
it has
paid the
total assessed
stamp duty
of $
56.2
million (A$
82.2
million) plus
unpaid tax
interest of $
14.5
million (A$
21.2
million). Such appeal must be lodged by March 11,
2024.
The Company
disputes the
additional amount
assessed of
stamp duty
and unpaid
tax interest
and is
currently
considering its options to either appeal the decision to the Supreme Court of
Queensland or apply for a review of
QRO’s decision by the Queensland Civil and Administrative
Tribunal.
Given that
the Company
is unable
to avoid
the payment,
and the
recovery of
such amount
through litigation
is
uncertain,
the
additional
accrual
of
$
41.3
million
has
been
recognized
within
“Accrued
Expenses
and
Other
Current Liabilities”
in the
Consolidated Balance
Sheet as
at December
31, 2023,
and a
corresponding amount
recognized
under
“Selling,
general
and
administrative”
expense
in
the
Company’s
Consolidated
Statement
of
Operations and
Comprehensive Income.
The total
accrual of
$
53.7
million (A$
79.0
million) as
at 31
December
is
based
on
the
Company’s
estimate
of
the
outstanding
stamp
duty
payable,
the
additional
accrual
recognized, less partial payments to date of $
17.6
million (A$
25.7
million).
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.
27. 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.
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 to date, the principal amount of Notes held by EMG reduced to
$
52.0
million as at December 31, 2023.
At December
31, 2023
and 2022,
interest payable
to affiliates
of EMG
on the
Notes was
$
0.7
million and
$
0.7
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
million, respectively, and was recorded within
“Accrued expenses and other
current liabilities” in
the Consolidated
Balance
Sheets.
Interest
expense
to
affiliates
of
EMG
was
$
5.6
million
and
$
7.1
million
for
the
years
ended
December
31,
and
2022,
respectively,
and
recorded
in
“Interest
expense,
net”
in
the
Consolidated
Statement of Operations and Comprehensive Income.
SGI Transaction
On September 25, 2023, Energy &
Minerals Group, the Company’s controlling stockholder through its ownership
of Coronado Group
LLC, including through
certain of its
affiliates and managed
funds (the Sellers),
advised the
Company
that
it
had
entered
into
a
membership
interest
purchase
agreement,
or
MIPA,
with
Sev.en
Global
Investments
a.s.,
or
SGI.
A
copy
of
the
MIPA
has
not
been
made
available
to
the
Company
or
the
Special
Committee
referred
to
below
as
of
the
date
of
this
Annual
Report
on
Form
10-K.
However,
the
Company
understands that, pursuant
to the terms of
the MIPA,
the Sellers agreed to
sell all of their
interests in Coronado
Group LLC to
a wholly-owned
subsidiary of
SGI. We
refer to the
proposed transaction
as the SGI
Transaction.
The
Company
also
understands
that,
under
the
MIPA,
the
SGI
Transaction
is
subject
to
customary
closing
conditions including regulatory approvals in the U.S. and Australia.
The Board of
Directors has appointed
a special committee
of independent
directors, or the
Special Committee,
to, among other things, assess
the impact and consequences of the
SGI Transaction on the
Company and take
such actions as the Special Committee deems appropriate
in connection with the SGI Transaction.
The Energy and
Minerals Group
has reported that
following the
closing of
the SGI Transaction,
SGI will
be the
direct or indirect
owner of Coronado
Group LLC. As
of the date
of this Annual
Report on Form
10-K, Coronado
Group LLC
is currently
the direct
owner of
845,061,399
CDIs (representing
a beneficial
interest in
84,506,140
shares
of common
stock,
or
50.4
% of
the Company’s
outstanding
total common
stock)
and the
one
Series
A
Share.
Based on information that the Company is currently aware of,
on completion of the SGI Transaction, a change of
control as defined under the terms of Notes and New
ABL Facility may occur. Refer to Note 16. “Interest Bearing
Liabilities” for further information.
Under the
Company’s
Equity
Incentive
Plan,
the
change
of control
provisions
may
also
be
triggered
on
completion
of
the
SGI
Transaction,
however
the
Compensation
and
Nominating
Committee
of
the
Board
of
Directors, at its
sole discretion, will determine
how the outstanding awards
under the plan
will be dealt
with, which
may include acceleration of the vesting conditions.
In
addition,
certain
contract
counterparties,
including
Stanwell,
customers,
suppliers
and
third-party
providers
may assert
contractual rights, such
as consent or
termination rights that
may be triggered
by the
change of control
resulting from the consummation of the SGI Transaction.
For a number of
customers and supplier agreements, including
contractor agreements, the completion of
the SGI
Transaction
may
trigger
a
financial
or
suitability
assessment
by
the
counterparty,
which
may
entitle
the
counterparty
to
terminate
the
agreement,
request
further
security
or
seek
amendments
to
the
terms
of
the
agreement.
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, 2023
and 2022,
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, 2023
and 2022,
a
portion of the authorized
units have been allocated
to various members of the
Company’s management including
Mr. Garold Spindler,
our former CEO and current Executive Chair, who is also member of Coronado Group LLC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Stockholder’s Agreement and Registration Rights
and Sell-Down Agreement
As
of
December
31,
2023,
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;
•
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.
28. Material Transactions
Curragh Housing Transaction
On May 8, 2023, the Company entered into an
agreement, the Curragh Housing Agreement, for accommodation
services
and
to
sell
and
leaseback
housing
and
accommodation
assets
included
in
property,
plant
and
equipment.
The
transaction
did
not
satisfy
the
sale
criteria
under
ASC
-
Revenues
from
Contracts
with
Customers
and
was
deemed
a
financing
arrangement.
As
a
result,
the
Company
continues
to
recognize
the
underlying property,
plant and equipment on its Consolidated
Balance Sheet. Upon completion, the proceeds
of
$
23.7
million (A$
34.6
million) received from the transaction will
be recorded as “Other Financial Liabilities”
on the
Company’s Consolidated
Balance Sheet.
The term
of the
financing arrangement
is
ten years
with an
effective
interest rate of
12.8
%.
In connection
with this
transaction, the Company
will borrow an
additional amount of
$
27.6
million (A$
40.4
million)
which will
be recorded
in “Interest
Bearing Liabilities”
on completion
date. The
term of
the arrangement
is
ten
years
with an effective interest rate of
12.8
%.
The Curragh Housing Agreement is subject to conditions
precedent not satisfied as at December 31, 2023.
In line
with the
Company’s
capital management
strategy,
the above
transactions provide
additional liquidity.
In
addition, the accommodation
services component of the
Curragh Housing Agreement
is anticipated to enhance
the level of service for our employees at our Curragh
mine.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
29.
Subsequent Events
Ordinary dividends
On
February
19,
2024,
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
for this dividend due to the available and unaccepted portion of the offer
to purchase the Notes previously made
in connection with special dividends declared on October
30, 2022.
The dividend will have
a record date of
March 12, 2024
, Australia time, and
be payable on
April 4, 2024
, Australia
time. CDIs
will be
quoted
“ex”
dividend on
March
11,
2024, Australia
time. The
total ordinary
dividend will
be
funded from available cash.
Coronado Global Resources Inc. Form 10-K December 31,
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
2022,
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, 2023, 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, 2023 and
2022, and the results of its
operations and its cash flows for
each of the
three
years
in
the
period
ended
December
31,
2023,
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, 2023,
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 20,
2024 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,
Stamp Duty assessment on the acquisition of the
Curragh mine
Description
of
the
matter
As
described
in
Note
Contingencies
to
the
consolidated
financial
statements,
on
September 27, 2022, the Company received
an assessment from the Queensland Revenue
Office (“QRO”) for
the stamp
duty payable on
the Company’s acquisition
of the
Curragh mine
in March 2018. The
QRO assessed the stamp duty
on this acquisition at
an amount of $56.2
million plus unpaid tax interest, which the Company disputes.
On November 23, 2022, the Company filed
an objection to the stamp duty assessment.
On
January
9,
2024,
the
QRO
disallowed
the
Company’s
objection.
The
Company
is
considering its options to either appeal the decision to the Supreme Court of
Queensland or
apply
for
a
review
of
the
QRO’s
decision
by
the
Queensland
Civil
and
Administrative
Tribunal.
Under the
relevant
legislation,
the
Company
can only
appeal or
apply
for a
review
of the
QRO’s decision, if the full amount of the assessed stamp duty
(including interest) is paid by
March 11, 2024.
While the Company disputes the amount
of assessed stamp duty and interest
assessed by
the QRO,
it has
recorded an
additional accrual
and expense
of $41.3
million reflecting
the
additional payment the Company is required
to make, which may not be recovered
through
litigation.
Auditing the
accrual for
the stamp
duty payable
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,
including
the
QRO’s
decision
to
disallow the Company’s objection.
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 payable,
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 tax professionals to help us evaluate management’s judgments around the
interpretation and application of the law to this matter.
We also evaluated the disclosures made in the consolidated financial statements in relation
to this matter.
/s/
Ernst & Young
We have served as the Company’s auditor
since 2020.
Brisbane, Australia
February 20, 2024
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
Coronado Global Resources Inc. Form 10-K December 31,
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, 2023, 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, 2023.
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,
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,
2023,
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, 2023, 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, 2023 and 2022,
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, 2023,
and the related
notes and our
report
dated February 20, 2024 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 20, 2024
Coronado Global Resources Inc. Form 10-K December 31,
ITEM 9B.
OTHER INFORMATION
During
the quarter
ended
December
31, 2023,
no
director
or officer
(as
defined
in Rule
16a-1(f)
promulgated
under the Exchange
Act) of the
Company
adopted
or
terminated
a “Rule
10b5-1 trading arrangement”
or “
non
-
Rule
10b5-1
trading arrangement” (as each term is defined in Item
408 of Regulation S-K).
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS
THAT PREVENT
INSPECTIONS
None.
Coronado Global Resources Inc. Form 10-K December 31,
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 2024
Annual General
Meeting of
Stockholders, or
the Proxy
Statement, under
the headings
“Executive Officers
and
Corporate
Governance”
and
“Delinquent
Section
16(a)
Reports”,
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
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 headings
“Certain
Relationships
and
Related
Transactions”
and
“Executive
Officers
and
Corporate
Governance”
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
Ernst & Young as the Company’s Independent Registered Public
Accounting Firm
for the Fiscal Year
Ending December 31, 2024” and is
incorporated herein by reference and made a
part hereof
from the Proxy Statement.
Coronado Global Resources Inc. Form 10-K December 31,
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 Annual Report on Form
10-K
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)
Coronado Global Resources Inc. Form 10-K December 31,
Exhibit No.
Description of Document
10.2†‡
Syndicated Facility Agreement, dated as of May 8, 2023, among Coronado Global
Resources Inc., as guarantor, Coronado Finance Pty Ltd, as Australian borrower,
Coronado Curragh Pty Ltd, as Australian borrower, the subsidiaries of Coronado Global
Resources Inc. named therein, as additional guarantors, and Global Loan Agency
Services Australia Pty Ltd, as administrative agent, Global Loan Agency Services
Australia Nominees Pty Ltd, as collateral agent, the Hongkong and Shanghai Banking
Corporation Limited, Sydney branch, as a lender and DBS Bank Limited, Australian
branch, as a lender (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K
(File No. 000-56044) filed on May 8, 2023 and incorporated herein by reference)
10.3
Second Amendment to Syndicated Facility Agreement, dated as of July 1, 2023, among
Citibank, N.A., as administrative agent, Coronado Coal Corporation, as U.S. Borrower,
Coronado Finance Pty Ltd, as Australian Borrower, and the other Loan Parties,
Administrative Agent and the lenders named therein (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K (File No. 000-56044) filed on July 6, 2023 and
incorporated herein by reference)
10.4‡
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)
10.5‡
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)
10.6
Coronado Global Resources Inc. 2018 Equity Incentive Plan (incorporated by reference
to Appendix A to the Proxy Statement)
10.7
Coronado Global Resources Inc. Employee Stock Purchase Plan (incorporated by
reference to Appendix B to the Proxy Statement)
10.8>‡
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)
10.9>
Employment Agreement, dated as of May 25, 2023, between Coronado Global
Resources Inc. and Garold Spindler (filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K (File No. 000-56044) filed on May 31, 2023 and incorporated herein
by reference)
10.10>‡
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.
>‡
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)
10.12>
Appointment Agreement, dated as of May 25, 2023, between Coronado Global
Resources Inc. and Douglas G. Thompson (filed as Exhibit 10.3 to the Company’s
Current Report on Form 8-K (File No. 000-56044) filed on May 31, 2023 and
incorporated herein by reference)
10.13>‡
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)
10.14>‡
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)
Coronado Global Resources Inc. Form 10-K December 31,
Exhibit No.
Description of Document
10.15>
Appointment Letter Agreement, dated as of May 25, 2023, between Coronado Global
Resources Inc. and William (Bill) Koeck (filed as Exhibit 10.2 to the Company’s Current
Report on Form 8-K (File No. 000-56044) filed on May 31, 2023 and incorporated herein
by reference)
10.16>
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)
10.17>
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)
10.18>
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)
10.19>
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)
10.20>
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)
10.21>
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)
10.22>
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)
10.23‡
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)
10.24‡
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)
10.25‡
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)
10.26
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)
10.27
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)
10.28
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)
10.29†‡
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
Coronado Global Resources Inc. Form 10-K December 31,
Exhibit No.
Description of Document
23.2
Consent of Barry Lay
23.3
Consent of Daniel Miller
23.4
Consent of Christopher Wilkinson
23.5
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
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,
2023,
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
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,
ITEM 16.
FORM 10-K SUMMARY
None.
Coronado Global Resources Inc. Form 10-K December 31,
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/ Douglas Thompson
Douglas Thompson
Managing Director and Chief Executive Officer (as
duly
authorized officer and as principal executive officer
of
the registrant)
Date: February 20,
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/ Douglas Thompson
Managing
Director
and
Chief
Executive
Officer (Principal Executive Officer)
February 20, 2024
Douglas Thompson
/s/ Gerhard Ziems
Group
Chief
Financial
Officer
(Principal
Financial Officer and Principal Accounting
Officer)
February 20, 2024
Gerhard Ziems
/s/ Garold Spindler
Director
February 20, 2024
Garold Spindler
/s/ William Koeck
Director
February 20, 2024
William Koeck
/s/ Philip Christensen
Director
February 20, 2024
Philip Christensen
/s/ Greg Pritchard
Director
February 20, 2024
Greg Pritchard
/s/ Laura Tyson
Director
February 20, 2024
Laura Tyson
/s/ Aimee R. Allen
Director
February 20, 2024
Aimee R. Allen
/s/ Jan C. Wilson
Director
February 20, 2024
Jan C. Wilson

---

ITEM 1B. UNRESOLVED STAFF COMMENTS

---

ITEM 2. PROPERTIES

---

ITEM 3. LEGAL PROCEEDINGS

---

ITEM 4. MINE SAFETY DISCLOSURE

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY

---

ITEM 6. SELECTED FINANCIAL DATA

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS

---

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. Met
coal prices
were lower
in 2023
compared to
record highs
achieved
in 2022 from the impacts of the Russia and Ukraine war. The first half of 2023 saw Met coal index prices
decline
significantly as steel
demand weakened,
however,
Met coal prices
trended upwards
in the second
half of 2023
due to
tight supply
and port
constraints in
Australia. 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
Access to
international markets
may be
subject to
ongoing interruptions
and trade
barriers due
to policies
and
tariffs
of
individual
countries.
We
may
or
may
not
be
able
to
access
alternate
markets
of
our
coal
should
interruptions
or
trade
barriers
occur
in
the
future.
An
inability
for
metallurgical
coal
suppliers
to
access
international markets 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 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,
2023, we had
$11.9
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 $1.2 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,
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). The
expectation of
future prices
for diesel
depends upon
many
factors
beyond
our
control.
The
current
Israel-Palestine
conflict
could
create
significant
uncertainty
regarding
interruptions to global oil supply causing significant
volatility in prices of related commodities,
including the price
of diesel fuel we
purchase. 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 2024 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
our
financial
performance,
investment
decisions
and
stockholder
return.
Our
objectives
in
managing
our
exposure
to
interest
rates
include
minimizing
interest
costs
in
the
long
term,
providing
a
reliable
estimate
of
interest costs for the
annual work program
and budget and ensuring
that changes in interest
rates will not have
a material impact on our financial performance.
As
of
December
31,
2023,
we
had
$250.5
million
of
fixed-rate
borrowings
and
no variable-rate
borrowings
outstanding.
We currently do not hedge against interest rate
fluctuations.
Foreign Exchange Risk
A significant portion of our
sales are denominated in US$.
Foreign exchange risk is
the risk that our earnings
or
cash flows are adversely impacted by movements in
exchange rates of currencies that are not in US$.
Our main exposure
is to the
A$-US$ exchange rate
through our Australian
Operations, which have
predominantly
A$
denominated
costs.
In
2023,
greater
than
70%
of
expenses
incurred
at
our
Australian
Operations
were
denominated in
A$. Approximately
30% of
our Australian
Operations’
purchases were
made with
reference
to
US$, 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 $122.8 million for the year ended December
31, 2023.
Under normal market conditions, we generally do not consider it necessary to hedge our
exposure to this foreign
exchange risk.
However,
there
may be
specific commercial
circumstances,
such
as the
hedging
of significant
capital
expenditure,
acquisitions,
disposals
and
other
financial
transactions,
where
we
may
deem
foreign
exchange hedging
as appropriate
and
where a
US$ 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.
We
are
also
exposed
to
counterparty
credit
risk
arising
from
our
operating
activities,
primarily
from
trade
receivables. Customers who wish to trade
on credit terms are subject to credit
verification procedures, including
an assessment of their independent credit rating, financial position, past experience and industry reputation.
We
monitor the financial performance
of counterparties on a routine
basis to ensure credit
thresholds are achieved.
Where required, we will request additional credit
support, such as letters of credit,
to mitigate against credit risk.
Credit
risk
is
monitored
regularly,
and
performance
reports
are
provided
to
our
management
and
Board
of
Directors.
Coronado Global Resources Inc. Form 10-K December 31,
As of December
31, 2023,
we had financial
assets of
$694.7 million, comprising
of cash and
cash equivalents,
trade
receivables,
short
term
deposits
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 $0.9 million
was recorded
as of
December 31,
2023. See
Item 8.
Financial Statements and Supplementary Data-Note
8. 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:
)
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 cash equivalents
$
339,295
$
334,629
Trade receivables, net
263,951
409,979
Income tax receivable
44,906
-
Inventories
192,279
158,018
Other current assets
103,609
60,188
Assets held for sale
-
26,214
Total
current assets
944,040
989,028
Non-current assets:
Property, plant and
equipment, net
1,506,437
1,389,548
Right of use asset - operating leases, net
80,899
17,385
Goodwill
28,008
28,008
Intangible assets, net
3,108
3,311
Restricted deposits
68,660
89,062
Deferred income tax assets
27,230
-
Other non-current assets
19,656
33,585
Total
assets
$
2,678,038
$
2,549,927
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
113,273
$
61,780
Accrued expenses and other current liabilities
312,705
343,691
Income tax payable
-
119,981
Asset retirement obligations
15,321
10,646
Contract obligations
40,722
40,343
Lease liabilities
22,879
7,720
Other current financial liabilities
2,825
4,458
Liabilities held for sale
-
12,241
Total
current liabilities
507,725
600,860
Non-current liabilities:
Asset retirement obligations
148,608
127,844
Contract obligations
61,192
94,525
Deferred consideration liability
277,442
243,191
Interest bearing liabilities
235,343
232,953
Other financial liabilities
5,307
8,268
Lease liabilities
61,692
15,573
Deferred income tax liabilities
100,145
95,671
Other non-current liabilities
34,549
27,952
Total
liabilities
$
1,432,003
$
1,446,837
Common stock $
0.01
par value;
1,000,000,000
shares authorized,
167,645,373
shares issued and outstanding as of December 31, 2023 and
December 31, 2022
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, 2023 and
December 31,
-
-
Additional paid-in capital
1,094,431
1,092,282
Accumulated other comprehensive losses
(89,927)
(91,423)
Retained earnings
239,854
100,554
Total
stockholders’ equity
1,246,035
1,103,090
Total
liabilities and stockholders’ equity
$
2,678,038
$
2,549,927
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
$
2,830,689
$
3,527,626
$
2,010,996
Coal revenues from related parties
-
-
97,335
Other revenues
59,914
43,916
40,140
Total
revenues
2,890,603
3,571,542
2,148,471
Costs and expenses:
Cost of coal revenues (exclusive of items shown
separately below)
1,731,630
1,515,585
1,195,250
Depreciation, depletion and amortization
160,711
167,046
177,875
Freight expenses
259,710
249,081
241,862
Stanwell rebate
136,523
165,995
55,403
Other royalties
345,882
385,065
142,751
Selling, general, and administrative expenses
84,177
42,499
30,666
Restructuring costs
-
-
2,300
Total
costs and expenses
2,718,633
2,525,271
1,846,107
Other income (expenses):
Interest expense, net
(56,751)
(67,632)
(68,062)
Loss on debt extinguishment
(1,385)
(5,336)
(8,477)
Decrease (increase) in provision for discounting and
credit losses
4,216
(3,821)
8,042
Gain on disposal of asset held for sale
-
-
14,845
Other, net
5,764
33,795
(6,187)
Total
other expense, net
(48,156)
(42,994)
(59,839)
Income before tax
123,814
1,003,277
242,525
Income tax benefit (expense)
32,251
(231,574)
(53,102)
Net income
156,065
771,703
189,423
Less: Net loss attributable to noncontrolling
interest
-
-
(2)
Net income attributable to Coronado Global
Resources Inc.
$
156,065
$
771,703
$
189,425
Other comprehensive loss, net of income taxes:
Foreign currency translation adjustment
1,496
(47,195)
(17,451)
Net gain on cash flow hedges, net of tax
-
-
2,029
Total
other comprehensive gain (loss)
1,496
(47,195)
(15,422)
Total
comprehensive income
157,561
724,508
174,001
Less: Net loss attributable to noncontrolling
interest
-
-
(2)
Total
comprehensive income attributable to
Coronado Global Resources Inc.
$
157,561
$
724,508
$
174,003
Earnings per share of common stock
Basic
6 (c)
0.93
4.60
1.21
Diluted
6 (c)
0.93
4.60
1.21
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
(Accumulated
losses)
Retained
earnings
Noncontrolling
interest
Total
stockholders'
equity
Shares
Amount
Series A
Amount
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 loss (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
Net income
-
-
-
-
-
-
156,065
-
156,065
Other comprehensive income
-
-
-
-
-
1,496
-
-
1,496
Total comprehensive income
-
-
-
-
-
1,496
156,065
-
157,561
Stock-based compensation for equity
classified awards
-
-
-
-
2,149
-
-
-
2,149
Dividends
-
-
-
-
-
-
(16,765)
-
(16,765)
Balance December 31, 2023
167,645,373
$
1,677
$
-
$
1,094,431
$
(89,927)
$
239,854
$
-
$
1,246,035
See accompanying notes to consolidated financial
statements
Coronado Global Resources Inc. Form 10-K December 31,
Consolidated Statements of Cash Flows
(In US$ thousands)
Year Ended December 31,
Cash flows from operating activities:
Net income
$
156,065
$
771,703
$
189,423
Adjustments to reconcile net income to cash and
cash equivalents provided
by operating activities:
Depreciation, depletion and amortization
163,862
165,503
175,814
Amortization of right of use asset - operating leases
12,415
6,704
8,899
Amortization of deferred financing costs
4,300
1,933
3,133
Non-cash interest expense
30,997
31,362
29,120
Amortization of contract obligations
(33,026)
(36,519)
(33,967)
Loss on disposal of property, plant and equipment
Equity-based compensation expense (gain)
2,149
2,735
(250)
Loss on debt extinguishment
1,385
5,336
8,477
Deferred income taxes
(21,338)
40,423
24,417
Reclamation of asset retirement obligations
(5,334)
(4,543)
(4,273)
Change in estimate of asset retirement obligation
(3,151)
1,543
2,061
Gain on disposal of asset held for sale
-
-
(14,845)
(Decrease) increase in provision for discounting and
credit losses
(4,216)
3,821
(8,042)
Changes in operating assets and liabilities:
Accounts receivable - including related party receivables,
net
155,056
(156,818)
(33,545)
Inventories
(32,774)
(41,243)
(9,637)
Other current assets
(477)
(12,365)
24,573
Accounts payable
40,159
(27,664)
24,166
Accrued expenses and other current liabilities
(25,435)
84,041
64,285
Operating lease liabilities
(14,597)
(8,244)
(10,986)
Income tax payable
(164,834)
96,326
-
Change in other liabilities
6,560
1,754
2,776
Net cash provided by operating activities
268,282
926,643
442,014
Cash flows from investing activities:
Capital expenditures
(237,205)
(199,716)
(89,661)
Proceeds from the disposal of property, plant, and equipment
-
1,594
Proceeds from disposal of assets held for sale
-
-
27,451
Purchase of restricted and other deposits
(27,213)
(9,761)
(103,997)
Redemption of restricted and other deposits
26,250
30,281
Net cash used in investing activities
(238,168)
(208,343)
(134,332)
Cash flows from financing activities:
Proceeds from interest bearing liabilities and other
financial liabilities
-
-
411,524
Debt issuance costs and other financing costs
(3,436)
-
(15,263)
Principal payments on interest bearing liabilities
and other financial liabilities
(4,361)
(81,310)
(412,046)
Call premiums paid on early redemption of debt
-
(2,557)
(1,050)
Principal payments on finance lease obligations
(127)
(140)
(70)
Dividends paid
(16,755)
(700,244)
-
Proceeds from stock issuance, net
-
-
97,741
Net cash (used in) provided by financing activities
(24,679)
(784,251)
80,836
Net increase (decrease) in cash and cash equivalents
5,435
(65,951)
388,518
Effect of exchange rate changes on cash and cash equivalents
(769)
(37,351)
3,677
Cash and cash equivalents at beginning of period
334,629
437,931
45,736
Cash and cash equivalents at end of period
$
339,295
$
334,629
$
437,931
Supplemental disclosure of cash flow information:
Cash payments for interest
$
28,632
$
36,728
$
33,462
Cash paid (refund) for taxes
$
147,106
$
90,888
$
(16,582)
Restricted cash
$
$
$
See accompanying notes to consolidated financial
statements
Coronado Global Resources Inc. Form 10-K December 31,
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 6 “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
the
Company’s
future operating results, purchase or investment opportunities
in the coal mining industry.
Concentration of customers
The Company has a 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 coal revenues in the year ended
December 31, 2023.
Year Ended December 31,
Tata
Steel
21%
19%
17%
ArcelorMittal
10%
8%
7%
For the
year ended
December 31,
2023, $
1,509.1
million, or
53.3
% of
total coal
revenues, were
attributable to
five
customers. In
comparison, for
the year
ended December
31, 2022,
$
1,848.8
million, or
52.6
% of
total coal
revenues were
attributable to
five
customers and for
the year ended
December 31, 2021,
$
971.6
million, or
46.3
%
of
total
revenues
were
attributable
to
five
customers.
As
of
December
31,
2023,
the
Company
had
three
customers that
accounted for
$
152.9
million, or
57.9
%, of
accounts receivable.
As of
December 31,
2022, the
Company had
four
customers that accounted for $
212.5
million, or
51.6
%, of accounts receivable.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
The
following
table
presents
revenues
as
a
percent
of
total
revenue
from
external
customers
by
geographic
region:
Year Ended December 31,
Asia
50%
46%
48%
North America
11%
12%
7%
South America
8%
8%
6%
Europe
6%
11%
12%
Australia
4%
4%
6%
Brokered sales
21%
19%
21%
Total
100%
100%
100%
The Company uses shipping destination as the
basis for attributing revenue to individual
countries. The transfer
of title on
brokered transactions
may occur at
a point that
does not reflect
the end usage
point, therefore
these
sales are reflected as exports and classified as brokerage sales.
Concentration of labor
Out
of
the
Company’s
total
employees,
10.8
%
as
of
December
31,
2023,
are
subject
to
the
Curragh
Mine
Enterprise
Agreement
2023.
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 Enterprise
Agreement 2023,
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, or FASB,
that had a material impact on the Company’s Consolidated
Financial Statements.
(b)
Accounting Standards Not Yet
Implemented
Accounting Standards
Update, or
ASU, No. 2023-07
“Segment Reporting”
(Topic
280)
: In November
2023, the
FASB
issued
ASU
2023-07,
which
intended
to
improve
reportable
segment
disclosure
requirements
through
enhanced disclosures of significant segment expenses. The guidance is effective for fiscal years
beginning after
December 15, 2023,
and interim periods
within fiscal years
beginning after December
31, 2024. Early
adoption
is permitted. The
updated standard is
to be applied
retrospectively to all
prior periods presented
in the financial
statements. The
Company is
currently evaluating
the impact
that the updated
standard will
have in its
financial
statement disclosures.
ASU 2023-09
“Income Taxes”
(Topic
740):
In December
2023, the
FASB
issued 2023-09,
which modifies
the
rules on
income tax
disclosures to
require companies
to disclose:
specific categories
in the
rate reconciliation,
the income
or loss
from continuing
operations before income
tax expense
or benefit
(separated between
domestic
and
foreign)
and
income
tax
expense
or
benefit
from
continuing
operations
(separated
by
federal,
state,
and
foreign). The updated standard is
effective for annual periods beginning after December
15, 2024. The Company
is currently evaluating the impact that the updated standard
will have in its financial statement disclosures.
There have been
no other recent
accounting pronouncements not yet
effective that have significance,
or potential
significance, to the Company’s Consolidated Financial
Statements.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
(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 contingent
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; expected credit
losses; deferred
income tax
assets and
liabilities; values
of coal
properties;
goodwill; workers’
compensation
liability and
other
contingencies.
(d)
Foreign Currency
Financial Statements of foreign operations
The reporting currency of the Company is the U.S. Dollar,
or US$.
Functional
currency
is
determined
by
the
primary
economic
environment
in
which
an
entity
operates.
The
functional currency of
the Company
and its subsidiaries
is the US$,
with the exception
of two foreign
operating
subsidiaries, Curragh
and its
immediate parent
CAH, whose
functional currency
is the
Australian dollar,
or A$,
since Curragh’s predominant sources of operating
expenses are denominated in that currency.
Assets and liabilities
are translated at
the year-end exchange
rate and items
in the statement
of operations are
translated at average rates with gains and losses from
translation recorded in other comprehensive losses.
Foreign Currency Transactions
Monetary
assets
and
liabilities
are
remeasured
at
year-end
exchange
rates
while
non-monetary
items
are
remeasured at historical rates.
Gains and losses from foreign
currency remeasurement related to Curragh’s U.S. dollar receivables are
included
in coal revenues. All other gains and losses
from foreign currency remeasurement
and foreign currency forward
contracts
are
included
in
“Other,
net”,
with
exception
of
foreign
currency
gains
or
losses
on
long-term
intercompany
loan
balances
which
are classified
within
“Accumulated
other
comprehensive
losses”.
The
total
aggregate impact of foreign currency
transaction gains or losses on the
Consolidated Statements of Operations
and Comprehensive
Income was
a net
gain of
$
2.5
million, $
47.6
million and
$
1.7
million for
the years
ended
December 31,
2023,
2022 and
2021, 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
loss of
$
1.0
million, net
gain of
$
15.0
million and $
8.7
million for the years ended December 31, 2023, 2022
and 2021, respectively.
(e)
Cash and Cash Equivalents
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, 2023,
the Company had $
130.0
million of short-term highly liquid
investments classified as cash equivalents. At December
31, 2022, the Company had
no
cash equivalents.
“Cash
and
cash
equivalents”,
as disclosed
in
the
accompanying
Consolidated
Balance
Sheets,
includes
$
0.3
million of restricted cash at December 31, 2023 and
2022.
(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.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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.
(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.
All criteria
must be met at or prior to balance sheet date for a long-lived asset to qualify as held for
sale. 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.
When any
of the
criteria are
not met
after initial
classification, the Company ceases to classify the asset as held for sale and reclassify the asset as held for use.
On reclassification, the asset is measured
at the lower of its (a) carrying
amount before it was classified
as held
for sale, adjusted
for any depreciation
expense or impairment
losses that would
have been recognized
had the
asset been continuously classified as held and used or
(b) fair value at the date of reclassification.
(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,
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.
The
Company
concluded
that
no
impairment
charges
were
required
at
any
of
the
Company’s mining assets for the years ended December
31, 2023, 2022 and 2021.
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, 2023 and 2022.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
(l)
Leases
From time to
time, the Company
enters into contractual
agreements to
lease property,
plant and equipment.
In
addition, the Company also enters into mining services contracts which may include embedded leases of mining
equipment. 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
$
8.9
million
and
$
6.8
million
respectively, included
in “Other current assets” as of December 31, 2023
and 2022.
(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,
(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, 2023 and 2022.
Shipping and Handling
The Company
accounts
for
shipping
and
handling
activities
on
Free
on
Rail
sales
after
the
customer
obtains
control of the good. In this instance,
shipping and handling costs
paid to third party carriers and
invoiced to coal
customers are recorded as freight expense and other revenues, respectively.
(p)
Commodity Price Risk
The Company has commodity price risk arising from fluctuations
in domestic and global coal prices.
The
Company’s
principal
philosophy
is
not
to
hedge
against
movements
in
coal
prices
unless
there
are
exceptional circumstances.
Any potential hedging of coal prices would be through fixed
price contracts.
The
Company
is
also
exposed
to
commodity
price
risk
related
to
diesel
fuel
purchases.
The
Company
may
periodically enter into arrangements that protect against
the volatility in fuel prices as follows:
•
enter into fixed price contracts to purchase fuel for the U.S. Operations
.
•
enter into derivative financial instruments to hedge exposures to fuel
price fluctuations.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
There are
no
derivative contracts outstanding December 31, 2023 and
2022.
(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 categorized
in one of 3 levels of inputs.
Refer to Note 23 “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, 2023
and 2022.
(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
:1 CDI to common share ratio).
The grant-date
fair value
of stock
option
award is
estimated on
the
date
of grant
using
Black-Scholes-Merton
option-pricing model. For
certain options and
PSUs, the Company includes
a relative Total
Stockholder Return,
or TSR, modifier to determine the number of shares
earned at the end of the performance period. The
fair value
of awards that include the TSR modifier is determined
using a Monte Carlo valuation model.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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
21 “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
(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,
Reportable segment results for the years ended December 31,
2023, 2022 and 2021 are presented below:
(US$ thousands)
Australia
United
States
Other and
Corporate
Total
Year ended December 31,
Total
revenues
$
1,681,522
$
1,209,081
$
-
$
2,890,603
Adjusted EBITDA
2,249
421,093
(41,629)
381,713
Total
assets
1,322,610
1,010,199
345,229
2,678,038
Capital expenditures
55,412
171,686
227,758
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
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
Total
assets
1,357,132
822,222
282,058
2,461,412
Capital expenditures
38,733
50,787
1,616
91,136
The reconciliation of Adjusted EBITDA to net income attributable to the Company for
the years ended December
31, 2023, 2022 and 2021 are as follows:
Year Ended December 31,
(US$ thousands)
Net income
$
156,065
$
771,703
$
189,423
Depreciation, depletion and amortization
160,711
167,046
177,875
Interest expense, net
(1)
56,751
67,632
68,062
Income tax (benefit) expense
(32,251)
231,574
53,102
Other foreign exchange (gains) losses
(2)
(2,899)
(32,259)
7,049
Loss on debt extinguishment
1,385
5,336
8,477
Uncertain stamp duty position
(3)
41,321
-
-
Restructuring costs
-
-
2,300
Losses on idled assets
(4)
4,846
2,732
Gain on disposal of assets held for sale
-
-
(14,845)
(Decrease) increase in provision for discounting
and credit losses
(4,216)
3,821
(8,042)
Consolidated adjusted EBITDA
$
381,713
$
1,215,624
$
486,133
(1)
Includes interest income of $
7.6
million, $
1.5
million, and $
0.1
million for the years ended December 31, 2023,
2022, 2021, respectively.
(2)
Refer to Note 5 “Other, net”
for further discussion.
(3)
Relates to stamp duty on Curragh’s acquisition.
Refer to Note 26 “Contingencies” for further discussion.
(4)
These losses
relate to idled
non-core assets
that the Company
has an
active plan
to sell. Prior
to March
31,
2023, the Company had idled assets that were classified as
held for sale.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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, 2023,
2022 and
2021 are as follows:
Year Ended December 31,
(US$ thousands)
Capital expenditures per Consolidated Statement of Cash
flows
$
237,205
$
199,716
$
89,661
Payment for capital acquired in prior period
(11,243)
(7,475)
(6,000)
Accruals for capital expenditures
10,790
11,243
7,475
Advance payment to acquire long lead capital items
(8,994)
(18,127)
-
Capital expenditures per segment detail
$
227,758
$
185,357
$
91,136
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, 2023
(US$ thousands)
Australia
United States
Total
Product Groups:
Metallurgical coal
$
1,557,471
$
1,031,012
$
2,588,483
Thermal coal
88,281
153,925
242,206
Total
coal revenue
1,645,752
1,184,937
2,830,689
Other
(1)
35,770
24,144
59,914
Total
$
1,681,522
$
1,209,081
$
2,890,603
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
(1)
Included
in
Other
revenue
for
Australian
Operation
is
the
amortization
of
Stanwell
non-market
coal
supply
agreement liability recognized
on acquisition
of Curragh. See
further discussion in
Note 17
“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,
•
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
mining asset, or
the
Greenbrier asset, and determined that all of
the criteria to classify assets and liabilities as
held for sale were met.
The Greenbrier asset is part
of the Company’s U.S. segment, located
in the State of
Virginia in the United States.
The Greenbrier asset does not form part
of the Company’s core business
strategy and has been idle since April
1, 2020.
The
Company
remains
committed
to
a
plan
to
sell
the
Greenbrier
asset,
however,
on
March
31,
2023,
the
Company concluded that
the timing
of the
sale within the
next twelve months
is uncertain. As
such, the
Greenbrier
mining asset
has been
classified
as held
and
used since
March
31, 2023,
as it
does not
meet
the criteria
for
classification as held for sale.
The assets and liabilities
of the Greenbrier asset
met the criteria for
classification as held for
sale as of December
31, 2022,
therefore
the Consolidated
Balance Sheet
continues to
reflect these
asset
and liabilities
as held
for
sale as of that date.
5.
Other, net
Other, net consists of the following:
Year Ended December 31,
(US$ thousands)
Other foreign exchange gains (losses)
(1)
$
2,899
$
32,259
$
(7,049)
Other income
2,865
1,536
Total
Other, net
$
5,764
$
33,795
$
(6,187)
(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.
6.
Capital Structure
(a)
Stockholders’ Equity
Authorized capital stock
The Company’s Certificate 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 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
167,645,373
138,387,890
Shares issued during the year
-
-
29,257,483
Shares outstanding at the end of the year
167,645,373
167,645,373
167,645,373
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
A portion of the
Company’s 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
.
As of December 31,
2023,
831,392,221
CDIs (representing beneficial
interest in
83,139,233
shares of common
stock) were owned by investors in the form of CDIs publicly
traded on the ASX.
Coronado Group LLC
As
of
December
31,
2023,
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.
Refer to Note 21 “Stock-Based Compensation” for
options to purchase common stock issued
and outstanding as
of December 31, 2023 and 2022.
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, 2023, the Company
declared:
•
Dividends of $
8.4
million, or $
0.005
per CDI ($
0.05
per share of common stock),
on February 21, 2023;
and
•
Dividends of $
8.4
million, or $
0.005
per CDI ($
0.05
per share of common stock), on August 7, 2023.
The Company paid a
total of $
16.7
million to stockholders and CDI
holders on the ASX, net
of $
0.1
million foreign
exchange gain on
payment 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, 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 to certain CDI
holders that elected to be paid in Australian dollars,
in relation
to the above declared dividends.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
During the year ended December 31, 2021, the Company did
no
t declare or pay dividends.
(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):
Year Ended December 31,
(US$ thousands, except per share data)
Numerator:
Net income
$
156,065
$
771,703
$
189,423
Less:
Net loss attributable to non-controlling interest
-
-
(2)
Net income attributable to Company stockholders
$
156,065
$
771,703
$
189,425
Denominator (in thousands):
Weighted-average shares of common stock outstanding
167,645
167,645
156,710
Effects of dilutive shares
Weighted average diluted shares of common stock
outstanding
168,066
167,846
156,842
Earnings Per Share (US$):
Basic
0.93
4.60
1.21
Dilutive
0.93
4.60
1.21
7. Trade Receivables, net
The Company
extends trade
credit to
its customers
in the
ordinary course
of business.
Trade
receivables are
recorded initially at fair value and subsequently at amortized
cost, less any ECL.
December 31,
(US$ thousands)
Trade receivables
$
264,218
$
414,490
Provision for discounting and credit losses (Note 8)
(267)
(4,511)
Trade receivables, net
$
263,951
$
409,979
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
8. 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
receivables
Other
Assets
Total
As at January 1, 2021
$
$
$
1,256
Change in estimates during the current period
3,777
3,821
As of December 31, 2022
4,511
5,077
Change in estimates during the current period
(4,244)
(4,216)
As of December 31, 2023
$
$
$
9. Inventories
December 31,
(US$ thousands)
Raw coal
$
55,998
$
50,604
Saleable coal
81,314
45,913
Total
coal inventories
137,312
96,517
Supplies inventory
54,967
61,501
Total
inventories
$
192,279
$
158,018
Coal inventories measured at its net realizable value were
$
2.4
million and $
5.0
million at December 31, 2023
and 2022, respectively,
and primarily relates to coal designated for deliveries under
the Stanwell below market
coal supply agreement. See further discussion in Note
17 “Contract Obligations”.
10.
Other Assets
December 31,
(US$ thousands)
Other current assets:
Prepayments
$
34,175
$
26,831
Long service leave receivable
8,438
7,884
Tax
credits receivable
3,265
4,183
Deposits to acquire mining equipment
18,935
-
Short term deposits
21,906
-
Other
16,890
21,290
Total
other current assets
$
103,609
$
60,188
Other non-current assets:
Favorable mineral leases
$
3,310
$
3,448
Deferred debt issue costs
2,672
2,463
Long service leave receivable
1,485
Tax
credits receivable
4,004
7,269
Deposits to acquire long lead mining equipment
8,185
18,126
Other
-
1,694
Total
other non-current assets
$
19,656
$
33,585
The Company
has other assets
which includes prepayments,
favorable mineral leases,
deferred debt issue
costs,
long service leave receivable
,
equipment deposits, short
term deposits and coalfield
employment enhancement
tax credit receivable.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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 Company
recognized tax
credits receivable
relating 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
to
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
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.
Deposits to acquire long lead mining equipment are advance
payments made for future mining equipment.
Short term deposits
are term deposits
held with financial
institutions with
maturity greater
than ninety
days and
less than twelve months and that do not meet the cash
and cash equivalents criteria.
The favorable mineral leases were recognized on acquisition of certain U.S. assets
that are amortized based on
the
coal
tonnage
removed
from
the
lease
property
relative
to
the
total
estimated
acquired
reserves
on
that
property.
The deferred debt issue costs as of December 31, 2023 and
December 31, 2022, are unamortized costs relating
to the
establishment of
the senior
secured asset-based
revolving credit facilities
(refer to
Note 16
“Interest Bearing
Liabilities” for
further description
of these
facilities). The
deferred issue
costs are
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
.
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
$
28,282
$
27,711
Buildings and improvements
102,642
91,336
Plant, machinery, mining
equipment and transportation vehicles
1,189,088
1,012,844
Mineral rights and reserves
389,868
373,309
Office and computer equipment
9,771
9,488
Mine development
579,717
565,106
Asset retirement obligation asset
88,384
87,877
Construction in progress
143,041
82,713
Total
cost of property,
plant and equipment
2,530,793
2,250,384
Less accumulated depreciation, depletion and amortization
1,024,356
860,836
Property, plant and
equipment, net
$
1,506,437
$
1,389,548
The amount of depreciation and amortization expense
for property, plant
and equipment for the years ended
December 31, 2023, 2022 and 2021 was $
152.4
million, $
155.8
million and $
166.2
million, respectively.
12.
Goodwill and Other Intangible Assets
(a)
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, 2023 and 2022. Based upon the Company’s qualitative assessment,
it is more likely than not that
the fair value
of the reporting
unit is greater
than its carrying amount
at December 31, 2023 and
2022. As a
result,
no
impairment was required, and
the balance of
goodwill at both
December 31, 2023 and 2022
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,
(b)
Acquired Intangible Assets
December 31, 2023
(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
$
1,068
$
Mining permits - Buchanan
3,501
2,534
Total
intangible assets
$
5,143
$
2,035
$
3,108
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
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,
2023,
and
2021,
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.
13.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the
following:
December 31,
(US$ thousands)
Wages and employee benefits
$
42,348
$
38,687
Taxes
other than income taxes
6,728
5,988
Accrued royalties
45,770
117,131
Accrued freight costs
47,549
44,496
Accrued mining fees
89,622
103,492
Acquisition related accruals
53,700
11,669
Other liabilities
26,988
22,228
Total
accrued expenses and other current liabilities
$
312,705
$
343,691
Acquisition
related
accruals
is
an
accrual
for
the
remaining
estimated
stamp
duty
payable
on
the
Curragh
acquisition of $
53.7
million (A$
79.0
million). Refer to Note 26 “Contingencies” for further
details.
14. Leases
During the year ended December 31,
2023, the Company entered into a
number of agreements to lease
mining
equipment.
Based
on
the
Company’s
assessment
of
terms
within
these
agreements,
the
Company
classified
these leases as
operating leases. On
mobilization of th
ese leased mining
equipment, the Company
recognized
right-of-use assets and operating lease liabilities of $
72.5
million.
Information related to Company’s right-of use assets
and related lease liabilities are as follows:
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Year ended December 31,
(US$ thousands)
Operating lease costs
$
17,013
$
8,088
Cash paid for operating lease liabilities
14,597
8,244
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
$
80,899
$
17,385
Finance leases:
Property and equipment
Accumulated depreciation
(309)
(186)
Property and equipment, net
Current operating lease obligations
22,811
7,593
Non-current operating lease obligations
61,692
15,505
Total
Operating lease liabilities
84,503
23,098
Current finance lease obligations
Non-current finance lease obligations
-
Total
Finance lease liabilities
Current lease obligations
22,879
7,720
Non-current lease obligations
61,692
15,573
Total
lease obligations
$
84,571
$
23,293
December 31,
Weighted Average Remaining
Lease Term (Years)
Weighted average remaining lease term - finance
leases
0.5
1.5
Weighted average remaining lease term - operating
leases
3.7
4.1
Weighted Average Discount
Rate
Weighted discount rate - finance lease
7.6%
7.6%
Weighted discount rate - operating lease
9.0%
8.9%
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
The Company’s leases have remaining lease terms of
1 year
to
5 years
, some of which include
options to extend
the terms
where the
Company deems
it is
reasonably certain
the options
will be
exercised. Maturities
of lease
liabilities as at December 31, 2023, are as follows:
(US$ thousands)
Operating
Lease
Finance
Lease
Year ending
December 31,
$
29,148
$
28,361
-
20,628
-
12,235
-
Thereafter
8,787
-
Total
lease payments
99,159
Less imputed interest
(14,656)
(2)
Total
lease liability
$
84,503
$
15.
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,
reclamation
is
performed
progressively,
however,
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,
2023 and 2022.
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,
2023 and
December 31,
were as follows:
(US$ thousands)
December 31,
December 31,
Total
asset retirement obligations at beginning of the year
$
138,490
$
120,277
ARO liability additions - new disturbances
9,923
1,835
Accretion
11,252
9,066
Reclamation performed in the year
(5,334)
(3,270)
Reclass of asset held for sale
(1)
11,115
-
Gain on settlement of ARO
-
(53)
Change in estimate recorded to operations
(3,151)
(2)
Change in estimate recorded to assets
15,381
Foreign currency translation adjustment
(4,744)
Total
Asset retirement obligations at end of the year
163,929
138,490
Total
Asset retirement obligations at December 31
(15,321)
(10,646)
Asset retirement obligation, excluding current portion
$
148,608
$
127,844
(1)
Refer to Note 4 “Assets Held for Sale”
for further information.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
16. Interest Bearing Liabilities
The following is a summary of interest-bearing liabilities
at December 31, 2023:
(US$ thousands)
December 31,
December 31,
Weighted Average
Interest Rate at
December 31, 2023
Final
Maturity
10.75
% Senior Secured Notes
$
242,326
$
242,326
12.14
%
(2)
New ABL Facility
-
-
Discount and debt issuance costs
(1)
(6,983)
(9,373)
Total
interest bearing liabilities
$
235,343
$
232,953
(1)
Relates to discount
and debt
issuance costs
on the establishment
of the Notes.
Deferred debt
issuance costs
incurred on
the establishment
of the New 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 New ABL Collateral), or the Notes Collateral, and (ii) a
second-priority lien on the New 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 $
150.0
million, or the New 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, 2023,
the Company was in compliance with all applicable covenants
under the Indenture.
Under the terms of the
Indenture, upon the occurrence of a “Change
of Control” (as defined in the
Indenture), the
issuer
is
required
to
make
an
offer,
or
a
Change
of
Control
Offer,
to
repurchase
the
Notes
at
%
of
the
aggregate principal
amount thereof,
plus accrued
and unpaid
interest, if
any,
to, but
excluding, the
repurchase
date. Alternatively,
if the
issuer elects
to redeem
all of
the Notes,
during the
12-month period
commencing
on
May 15 of
the years set
forth below at
the redemption
prices (expressed in
percentages of principal
amount on
the redemption date) set forth below, plus accrued and unpaid interest to,
but not including, the redemption date,
the issuer is not required to make a Change of Control
Offer:
Period
Redemption price
104.03%
2025 and thereafter
100.00%
New Asset Based Revolving Credit Facility
On May
8, 2023,
the Company, Coronado Coal
Corporation, a Delaware
corporation and wholly
owned subsidiary
of the Company,
Coronado Finance Pty
Ltd, an Australian
proprietary company
and a wholly
owned subsidiary
of the Company,
or an Australian
Borrower, Coronado
Curragh Pty Ltd,
an Australian proprietary
company and
wholly
owned
subsidiary
of
the
Company,
or
an
Australian
Borrower
and,
together
with
the
other
Australian
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Borrower, the Borrowers,
and the other guarantors party
thereto, collectively with the Company,
the Guarantors
and, together
with the
Borrowers, the
Loan Parties,
entered into
a senior
secured asset-based
revolving credit
agreement in
an initial
aggregate amount
of $
150.0
million, or
the New
ABL Facility,
with Global
Loan Agency
Services Australia
Pty Ltd,
as the
Administrative Agent,
Global Loan
Agency Services
Australia Nominees
Pty
Ltd, as the
Collateral Agent,
the Hongkong and
Shanghai Banking Corporation
Limited, Sydney
Branch, as the
Lender, and DBS Bank
Limited, Australia Branch,
as the
Lender and, together
with the other
Lender, the Lenders.
On August 3, 2023, the Company
satisfied all conditions precedent
under the New ABL Facility,
at which time it
became effective and replaced the predecessor
ABL Facility.
The New
ABL Facility
matures in
August 2026
and provides
for up
to $
150.0
million in
borrowings, including
a
$
100.0
million sublimit for the issuance
of letters of credit and $
70.0
million sublimit as a revolving
credit facility.
Availability under the New
ABL Facility is
limited to an
eligible borrowing base, determined
by applying customary
advance rates to eligible accounts receivable and inventory.
Borrowings under
the New
ABL Facility
bear interest
at a
rate per
annum equal
to an
applicable rate
of
2.80
%
plus BBSY,
for loans denominated in A$, or SOFR, for loans denominated
in US$, at the Borrower’s election.
The New
ABL Facility
is guaranteed
by the
Guarantors.
Amounts outstanding
under the
New ABL
Facility are
secured by
(i) first
priority lien
in the
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, collectively,
the New ABL Collateral, (ii)
a second-priority lien on substantially
all of the Company’s
assets and the assets
of
the guarantors, other than the New ABL
Collateral, and (iii) solely in the case of
the obligations of the Australian
Borrower, a featherweight
floating security interest over certain
assets of the Australian Borrower,
in each case,
subject to certain customary exceptions.
The New
ABL Facility
contains customary representations
and warranties
and affirmative and
negative covenants
including, among
others, a
covenant regarding
the maintenance
of leverage
ratio to
be less
than
3.00
times, a
covenant regarding maintenance of interest coverage ratio to be more than
3.00
times, covenants relating to the
payment of dividends, or purchase or redemption of, with respect to any Equity Interests of Holdings or
any of its
Subsidiaries,
covenants
relating
to
financial
reporting,
covenants
relating
to
the
incurrence
of
liens
or
encumbrances, covenants relating to the incurrence or prepayment of certain debt, compliance with laws, use of
proceeds, maintenance of properties, maintenance of insurance, payment obligations, financial accommodation,
mergers and
sales of all
or substantially all
of the Borrowers
and Guarantors’, collectively
the Loan Parties,
assets
and limitations on changes in the nature of the Loan Parties’
business.
Subject
to
customary
grace
periods
and
notice
requirements,
the
New
ABL
Facility
also
contains
customary
events of default.
Under the terms of New ABL Facility,
a Review Event (as defined in the New ABL Facility) is triggered if, among
other matters, a “change of control” (as defined in the
New ABL Facility) occurs.
Following the
occurrence of
a Review
Event, the
Borrowers must
promptly meet
and consult
in good
faith with
the Administrative Agent and the Lenders to agree a
strategy to address the relevant Review Event including but
not limited to a restructure of the terms of the New ABL Facility to the satisfaction of the Lenders.
If at the end of
a period
of
business days
after the
occurrence
of the
Review Event,
the Lenders
are not
satisfied
with the
result of their discussion or meeting with the Borrowers or do not
wish to continue to provide their commitments,
the Lenders may declare all amounts owing
under the ABL Facility immediately due and payable,
terminate such
Lenders’
commitments
to
make
loans
under
the
ABL
Facility,
require
the
Borrowers
to
cash
collateralize
any
letter of credit obligations and/or exercise any and all remedies
and other rights under the New ABL Facility.
To establish
the New ABL Facility, the Company incurred debt issuance costs of $
3.4
million. The Company has
elected an accounting
policy to present debt
issuance costs incurred
before the debt liability
is recognized (e.g.
before the debt
proceeds are received)
as an asset
which will be
amortized ratably
over the term
of the facility.
The costs
will not
be subsequently
reclassified as
a direct
deduction of
the liability.
The carrying
value of
debt
issuance costs, recorded
as “Other non-current
assets” in the
Consolidated Balance
Sheet was
$
2.7
million as
at December 31, 2023.
As
at
December
31,
2023,
the
letter
of
credit
sublimit
had
been
partially
used
to
issue
$
21.9
million
of
bank
guarantees on
behalf of
the Company
and
no
amounts were
drawn under
the revolving
credit sublimit
of New
ABL Facility. As at December 31, 2023, the Company was in compliance with all applicable covenants under the
New ABL Facility.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Predecessor ABL Facility
On
August
3,
2023,
the
New
ABL
Facility
replaced
the
predecessor
ABL
Facility.
As
a
result
of
the
early
termination of the predecessor ABL Facility, the Company recorded a loss on
debt extinguishment of $
1.4
million
in the
Consolidated Statement of
Operations and Comprehensive
Income for the
year ended December
31, 2023.
17. 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
below
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
years
ended December
31, 2023,
2022 and
2021 were
$
32.8
million,
$
36.2
million
and
$
33.7
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, 2023:
(US$ thousands)
Short-term
Long-term
Total
Coal leases contract liability
$
$
19,476
$
20,319
Stanwell below market coal supply agreement
39,879
41,716
81,595
$
40,722
$
61,192
$
101,914
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
18.
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
arrangement
at
the
date
of
acquisition.
The
deferred
consideration
liability
reflects 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
liability is
recognized
within
“Interest
expense,
net”
in
the
Consolidated
Statements
of
Operations
and
Comprehensive
Income. The Right-to-mine-asset are amortized over the
coal reserves mined from the SRA.
December 31,
(US$ thousands)
Stanwell Reserved Area deferred consideration
$
277,442
$
243,191
$
277,442
$
243,191
19.
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.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
The Company obtained workers
compensation insurance for work
related injuries, including black
lung, through
a third-party
commercial
insurance company.
The insurance
policy covers
claims
that exceed
$
0.5
million
per
occurrence for all years, or aggregate claims in excess of $
29.1
million, $
22.7
million and $
22.0
million for policy
years ending May 2024,
May 2023 and May
2022. Per the contractual
agreements, the Company
was required
to provide a collateral
security of $
63.4
million for policy
years 2017 through 2024,
ending May 31, 2024,
which
is accomplished through providing a combination of letters of credit and cash collateral in an escrow account.
As
of December 31,
2023, the Company
has provided $
16.8
million of letters
of credit, $
28.4
million of cash
collateral
and surety bonds of $
15.2
million totaling $
60.4
million. The remaining collateral
was provided in January 2024,
as required.
For the
years ended
December 31, 2023,
2022 and
2021, 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
$
16.3
million,
$
12.2
million
and
$
12.2
million,
respectively.
As of
December 31, 2023 and 2022, the estimated workers’ compensation
liability was $
37.6
million and $
30.1
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
2022,
$
32.6
million
and
$
27.1
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.
20.
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, 2023,
2022 and 2021 amounted to $
5.5
million, $
3.9
million and $
3.3
million, respectively.
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, 2023 and 2022, the Company had
provided
accruals
of
$
2.3
million
and
$
1.9
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, 2023, 2022
and 2021, the Company incurred claims,
premium expenses and administrative fees
related to this plan totaling
$
35.0
million, $
29.8
million and $
25.8
million, respectively.
21.
Stock-Based Compensation
Total
stock-based
compensation
expense
was
$
2.9
million,
$
2.7
million
and
$
0.5
million
for
the
years
ended
December 31,
2023,
and
2021,
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,
2023,
the
Company
had
$
5.4
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
2.25
years,
with
a
weighted-average
period
of
1.76
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.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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 outstanding under the 2018
as of December 31, 2023:
Grant year
Vesting date
Performance period
PSUs
RSUs
31/03/2026
01/01/2023 - 31/12/2025
4,823,269
-
01/01/2024
not applicable
-
43,650
01/07/2024
not applicable
-
88,760
01/01/2024
not applicable
-
359,291
01/07/2024
not applicable
-
243,192
31/03/2026
01/01/2022 - 31/12/2024
6,899,512
-
31/03/2025
01/01/2021 - 31/12/2023
4,901,843
-
31/03/2024
01/01/2020 - 31/12/2022
1,367,829
-
The Options
and PSUs granted
that will
vest are
subject to the
achievement of goals
over the
performance period.
These goals are relative total shareholder 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 peer group of similar companies.
Performance metrics applicable to the Options and
PSUs granted as summarized below:
Grant year
Relative TSR
Scorecard
TSR
Safety
TSR
Cashflow
33.3%
33.3%
-
33.3%
2022, 2021 and 2020
33.3%
22.2%
22.2%
22.2%
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.
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:
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Stock Option Plan Activity
Opening at the beginning of the year
181,687
1,015,006
1,083,101
Forfeited
-
(833,319)
(68,095)
Vested
(181,687)
-
-
Outstanding at the end of the year
-
181,687
1,015,006
Exercisable at the end of the year
181,687
-
-
Weighted-average remaining contractual term (in
years)
-
0.25
1.25
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 $
2.44
(A$
3.56
).
181,687
stock option awards vested during the year remained
exercisable as at December 31, 2023.
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
14,858,921
8,501,869
4,002,783
Granted
4,872,122
7,471,100
5,998,212
Forfeited
(1,451,677)
(1,114,048)
(1,499,126)
Vested and settled
(286,913)
-
-
Nonvested and outstanding at the end of the year
17,992,453
14,858,921
8,501,869
Weighted-average grant date fair value (per CDI)
$
0.58
$
0.53
$
0.43
Weighted-average remaining term (in years)
1.82
2.54
2.79
The weighted average grant date fair value of all PSU
Awards granted in 2023 was $
0.74
(A$
1.11
).
The assumptions used to determine the PSUs fair value
on each grant date were as follow:
2023 Grant
2022 Grant
2021 Grant
2020 Grant
Time to maturity (in years) (i)
2.98
3.99
3.85
3.49
Dividend yield (ii)
7.8%
16.3%
3.0%
1.6%
Expected volatility (iii)
60.0%
60.0%
60.0%
60.0%
Risk-free interest rate (iv)
2.98%
2.66%
0.35%
0.18%
(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)
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,
Restricted Stock Units
RSUs issued to certain employees 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
1,144,034
-
Granted
144,506
1,144,034
Forfeited
(46,593)
-
Vested and settled
(507,054)
-
Nonvested and outstanding at end of the year
734,893
1,144,034
Weighted-average grant date fair value (per CDI)
$
1.26
$
1.22
Weighted-average remaining term (in years)
0.23
0.70
Change in Control
Under the
Company’s
Equity
Incentive
Plan,
the
change
of control
provisions
may
also
be
triggered
on
completion
of
the
SGI
Transaction,
however
the
Compensation
and
Nominating
Committee
of
the
Board
of
Directors, at its
sole discretion, will determine
how the outstanding awards
under the plan
will be dealt
with, which
may include acceleration of vesting condition and related compensation
costs.
22.
Income Taxes
Income from continuing operations before income
taxes for the years presented
below consisted of the following:
December 31,
(US$ thousands)
U.S.
$
334,373
$
609,617
$
226,463
Non-U.S.
(210,559)
393,660
16,062
Total
$
123,814
$
1,003,277
$
242,525
Total
income tax expense (benefit) for the periods presented
below consisted of the following:
December 31,
(US$ thousands)
Current:
U.S. federal
$
(6,303)
$
90,933
$
30,075
Non-U.S.
(2,715)
75,270
(4,443)
State
(1,895)
25,347
3,480
Total
current
(10,913)
191,550
29,112
Deferred:
U.S. federal
28,943
13,486
Non-U.S.
(45,976)
35,425
6,658
State
(4,305)
4,193
3,846
Total
deferred
(21,338)
40,024
23,990
Total
income tax (benefit) expense
$
(32,251)
$
231,574
$
53,102
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
The following is a reconciliation of the expected statutory federal income tax expense (benefit) to the Company’s
income tax (benefit) expense for the periods presented below:
December 31,
(US$ thousands)
Current:
Expected income tax expense at U.S. federal statutory rate
$
26,001
$
210,690
$
50,931
Percentage depletion
(17,871)
(41,047)
-
FDII deduction
(7,796)
-
-
Permanent differences
2,176
(2,262)
Prior period tax return adjustments and amendments
(46,060)
(4,259)
Uncertain tax positions
21,243
-
-
Australian branch impact on U.S. taxes
(14,552)
42,049
(1,699)
State income taxes, net of federal benefit
4,608
21,548
7,833
Total
income tax (benefit) expense
$
(32,251)
$
231,574
$
53,102
Effective tax rate
(
26.0
%)
23.1%
21.9%
The
prior
period
tax
return
adjustment
relates
predominantly
to
a
Foreign
Derived
Intangible
Income
(“FDII”)
deduction
in
the
U.S.
which
the
Company
has
chosen
to
deduct
after
undertaking
a
study
to
confirm
the
Company’s eligibility.
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, 2023 and 2022 were as follows:
December 31,
(US$ thousands)
Deferred income tax assets:
Accruals and provisions
$
44,373
$
36,409
Contract obligations
108,672
119,505
Lease obligations
35,312
-
Asset retirement obligation
55,322
49,078
Goodwill
6,653
6,590
Tax
losses
59,964
6,886
Interest limitation carried forward
1,766
14,408
Other
19,574
31,747
Gross deferred income tax assets
331,636
264,623
Valuation allowance
(1)
(33,894)
(34,667)
Total
deferred income tax assets, net of valuation allowance
297,742
229,956
Deferred income tax liabilities:
Property, plant, equipment
and mine development, principally due to
differences in depreciation, depletion and asset
impairments
(297,915)
(300,968)
Warehouse stock
(12,824)
(13,980)
Right of use asset
(34,021)
-
U.S. liability on foreign deferred taxes
(19,075)
-
Other
(6,822)
(10,679)
Total
deferred income tax liabilities
(370,657)
(325,627)
Net deferred income tax liability
$
(72,915)
$
(95,671)
(1)
As of
December 31,
2023, the
Company recorded
a valuation
allowance against
a deferred
tax asset
of an
equal amount which relates
predominantly to tax losses
and land and goodwill.
A company,
which is not part
of
the Australian tax consolidated group,
had tax losses carried forward
of $
10.9
million (tax effected) for
which an
equal valuation allowance has been recognized. Due to the capital character of
land and goodwill and the lack of
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
expected capital gains, the Group is not expected to realize
the benefit of this deferred tax asset.
The Australian tax consolidated group has tax
losses of $
48.7
million carried forward at December 31, 2023.
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 15% 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 was effective for taxable
years beginning after December 31, 2022 and did not
have any impact to the Company.
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.
During the
year ended
December 31,
2023, the
Company identified
unrecognized tax
benefits of
$
20.8
million
that, if recognized,
would affect the
effective tax rate.
The Company did
no
t identify or
record any uncertain
tax
positions during the years ended December 31, 2022 and 2021.
December 31,
(US$)
At beginning of the year
$
-
Additions based on tax positions related to current year
6,388,281
Additions for tax positions of prior years
14,395,565
At end of the year
20,783,846
The Company
recorded
no
amounts related
to interest
and penalties
on uncertain
tax positions
for 2023, 2022
and 2021 as these were not material.
The Company is subject to taxation in
the United States and Australia. As of December 31, 2023,
tax years 2018
to 2022 are open to review
from taxation authorities in the United States. In
Australia, tax years 2019 to 2022 are
open to review and the Australian Taxation
Office is presently conducting a review
of these years.
23.
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,
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, 2023
and 2022,
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, 2023 and 2022:
•
Cash
and
cash
equivalents,
accounts
receivable,
short-term
deposits,
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,
2023, there were
no
amounts drawn under the
revolving credit sublimit of
the
New ABL
Facility. The estimated fair
value of
the Notes as
of December
31, 2023
is approximately $
251.4
million based upon quoted market prices in a market that
is not considered active (Level 2).
24.
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.
(US$ thousands)
Foreign
currency
translation
adjustments
Balance at December 31, 2021
$
(44,228)
Net current-period other comprehensive income (loss):
Loss in other comprehensive income before reclassifications
(19,610)
Loss on long-term intra-entity foreign currency transactions
(27,585)
Total
net current-period other comprehensive loss
(47,195)
Balance at December 31, 2022
(91,423)
Net current-period other comprehensive income (loss):
Gain in other comprehensive income before reclassifications
(2,367)
Gain on long-term intra-entity foreign currency transactions
3,863
Total
net current-period other comprehensive losses
1,496
Balance at December 31, 2023
$
(89,927)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
25. 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,
$
5,795
5,423
5,280
5,241
5,174
Thereafter
26,162
Total
$
53,075
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,
2023,
purchase
commitments
for
capital
expenditures
were
$
20.9
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
12 years
.
In the U.S., the Company typically
negotiates its rail and coal terminal
on an annual basis.
As of December 31,
2023, these Australian
and U.S. commitments
under take-or-pay
arrangements totaled
$
788.4
million, of which
approximately $
94.7
million is obligated
within the next
year,
$
187.3
million within
1-3 years, $
189.3
million 3-5
years and $
317.1
million thereafter.
26. Contingencies
Surety bond, letters of credit and bank guarantees
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.
For
the
U.S.
Operations
in
order
to
provide
the
required
financial
assurance
for
post
mining
reclamation,
the
Company generally uses
surety bonds. The
Company uses surety
bonds and bank
letters of credit
to collateralize
certain
other
obligations
including
contractual
obligations
under
workers’
compensation
insurances.
As
of
December 31,
2023, the
Company had
outstanding surety
bonds of
$
44.0
million and
letters of
credit of
$
16.8
million issued from available bank guarantees under the
New ABL Facility.
For the Australian
Operations as at
December 31, 2023, the
Company had bank
guarantees outstanding of $
24.4
million,
including
$
5.1
million
issued
from
the
New
ABL
Facility,
primarily
in
respect
of
certain
rail
and
port
arrangements of the Company.
As at December 31, 2023, the Company, in aggregate, had total outstanding bank guarantees provided of $
41.2
million to secure obligations and commitments, including $
21.9
million issued from the New ABL Facility.
Future regulatory changes relating to the above obligations could result in
increased obligations, additional costs
or additional collateral requirements.
Restricted deposits - cash collateral
As required
by certain
agreements,
the Company
had cash
collateral
in the
form of
deposits in
the amount
of
$
68.7
million and $
89.1
million as of December 31,
2023 and 2022, respectively, to provide back-to-back support
for bank guarantees, financial
payments, other performance obligations, various
other operating agreements and
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
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 New
ABL Facility,
the Company
may be
required to
cash collateralize
the
New 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,
2023,
no
such letter
of credit
was outstanding
after the
expiration or
termination
date and
no
cash collateral was required.
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 $
56.2
million (A$
82.2
million) plus unpaid tax interest. On November 23,
2022, the Company filed an objection to the assessment
.
On January 9, 2024, the Company’s objection
to the assessed stamp duty was disallowed by the
QRO.
The Company,
based on legal
and valuation advice
obtained, continues to
maintain its position and
the estimated
stamp duty payable of $
29.4
million (A$
43.0
million) on the Curragh
acquisition. In October 2022,
the Company
made a partial payment prior to filing the filing of the objection of stamp duty, reducing the Company’s
estimated
accrual to $
11.8
million (A$
17.3
million).
As per the Taxation
Administration Act (Queensland)
2001, the Company
can only appeal
or apply for a
review
of QRO’s
decision if
it has
paid the
total assessed
stamp duty
of $
56.2
million (A$
82.2
million) plus
unpaid tax
interest of $
14.5
million (A$
21.2
million). Such appeal must be lodged by March 11,
2024.
The Company
disputes the
additional amount
assessed of
stamp duty
and unpaid
tax interest
and is
currently
considering its options to either appeal the decision to the Supreme Court of
Queensland or apply for a review of
QRO’s decision by the Queensland Civil and Administrative
Tribunal.
Given that
the Company
is unable
to avoid
the payment,
and the
recovery of
such amount
through litigation
is
uncertain,
the
additional
accrual
of
$
41.3
million
has
been
recognized
within
“Accrued
Expenses
and
Other
Current Liabilities”
in the
Consolidated Balance
Sheet as
at December
31, 2023,
and a
corresponding amount
recognized
under
“Selling,
general
and
administrative”
expense
in
the
Company’s
Consolidated
Statement
of
Operations and
Comprehensive Income.
The total
accrual of
$
53.7
million (A$
79.0
million) as
at 31
December
is
based
on
the
Company’s
estimate
of
the
outstanding
stamp
duty
payable,
the
additional
accrual
recognized, less partial payments to date of $
17.6
million (A$
25.7
million).
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.
27. 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.
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 to date, the principal amount of Notes held by EMG reduced to
$
52.0
million as at December 31, 2023.
At December
31, 2023
and 2022,
interest payable
to affiliates
of EMG
on the
Notes was
$
0.7
million and
$
0.7
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
million, respectively, and was recorded within
“Accrued expenses and other
current liabilities” in
the Consolidated
Balance
Sheets.
Interest
expense
to
affiliates
of
EMG
was
$
5.6
million
and
$
7.1
million
for
the
years
ended
December
31,
and
2022,
respectively,
and
recorded
in
“Interest
expense,
net”
in
the
Consolidated
Statement of Operations and Comprehensive Income.
SGI Transaction
On September 25, 2023, Energy &
Minerals Group, the Company’s controlling stockholder through its ownership
of Coronado Group
LLC, including through
certain of its
affiliates and managed
funds (the Sellers),
advised the
Company
that
it
had
entered
into
a
membership
interest
purchase
agreement,
or
MIPA,
with
Sev.en
Global
Investments
a.s.,
or
SGI.
A
copy
of
the
MIPA
has
not
been
made
available
to
the
Company
or
the
Special
Committee
referred
to
below
as
of
the
date
of
this
Annual
Report
on
Form
10-K.
However,
the
Company
understands that, pursuant
to the terms of
the MIPA,
the Sellers agreed to
sell all of their
interests in Coronado
Group LLC to
a wholly-owned
subsidiary of
SGI. We
refer to the
proposed transaction
as the SGI
Transaction.
The
Company
also
understands
that,
under
the
MIPA,
the
SGI
Transaction
is
subject
to
customary
closing
conditions including regulatory approvals in the U.S. and Australia.
The Board of
Directors has appointed
a special committee
of independent
directors, or the
Special Committee,
to, among other things, assess
the impact and consequences of the
SGI Transaction on the
Company and take
such actions as the Special Committee deems appropriate
in connection with the SGI Transaction.
The Energy and
Minerals Group
has reported that
following the
closing of
the SGI Transaction,
SGI will
be the
direct or indirect
owner of Coronado
Group LLC. As
of the date
of this Annual
Report on Form
10-K, Coronado
Group LLC
is currently
the direct
owner of
845,061,399
CDIs (representing
a beneficial
interest in
84,506,140
shares
of common
stock,
or
50.4
% of
the Company’s
outstanding
total common
stock)
and the
one
Series
A
Share.
Based on information that the Company is currently aware of,
on completion of the SGI Transaction, a change of
control as defined under the terms of Notes and New
ABL Facility may occur. Refer to Note 16. “Interest Bearing
Liabilities” for further information.
Under the
Company’s
Equity
Incentive
Plan,
the
change
of control
provisions
may
also
be
triggered
on
completion
of
the
SGI
Transaction,
however
the
Compensation
and
Nominating
Committee
of
the
Board
of
Directors, at its
sole discretion, will determine
how the outstanding awards
under the plan
will be dealt
with, which
may include acceleration of the vesting conditions.
In
addition,
certain
contract
counterparties,
including
Stanwell,
customers,
suppliers
and
third-party
providers
may assert
contractual rights, such
as consent or
termination rights that
may be triggered
by the
change of control
resulting from the consummation of the SGI Transaction.
For a number of
customers and supplier agreements, including
contractor agreements, the completion of
the SGI
Transaction
may
trigger
a
financial
or
suitability
assessment
by
the
counterparty,
which
may
entitle
the
counterparty
to
terminate
the
agreement,
request
further
security
or
seek
amendments
to
the
terms
of
the
agreement.
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, 2023
and 2022,
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, 2023
and 2022,
a
portion of the authorized
units have been allocated
to various members of the
Company’s management including
Mr. Garold Spindler,
our former CEO and current Executive Chair, who is also member of Coronado Group LLC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
Stockholder’s Agreement and Registration Rights
and Sell-Down Agreement
As
of
December
31,
2023,
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;
•
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.
28. Material Transactions
Curragh Housing Transaction
On May 8, 2023, the Company entered into an
agreement, the Curragh Housing Agreement, for accommodation
services
and
to
sell
and
leaseback
housing
and
accommodation
assets
included
in
property,
plant
and
equipment.
The
transaction
did
not
satisfy
the
sale
criteria
under
ASC
-
Revenues
from
Contracts
with
Customers
and
was
deemed
a
financing
arrangement.
As
a
result,
the
Company
continues
to
recognize
the
underlying property,
plant and equipment on its Consolidated
Balance Sheet. Upon completion, the proceeds
of
$
23.7
million (A$
34.6
million) received from the transaction will
be recorded as “Other Financial Liabilities”
on the
Company’s Consolidated
Balance Sheet.
The term
of the
financing arrangement
is
ten years
with an
effective
interest rate of
12.8
%.
In connection
with this
transaction, the Company
will borrow an
additional amount of
$
27.6
million (A$
40.4
million)
which will
be recorded
in “Interest
Bearing Liabilities”
on completion
date. The
term of
the arrangement
is
ten
years
with an effective interest rate of
12.8
%.
The Curragh Housing Agreement is subject to conditions
precedent not satisfied as at December 31, 2023.
In line
with the
Company’s
capital management
strategy,
the above
transactions provide
additional liquidity.
In
addition, the accommodation
services component of the
Curragh Housing Agreement
is anticipated to enhance
the level of service for our employees at our Curragh
mine.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Continued)
Coronado Global Resources Inc. Form 10-K December 31,
29.
Subsequent Events
Ordinary dividends
On
February
19,
2024,
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
for this dividend due to the available and unaccepted portion of the offer
to purchase the Notes previously made
in connection with special dividends declared on October
30, 2022.
The dividend will have
a record date of
March 12, 2024
, Australia time, and
be payable on
April 4, 2024
, Australia
time. CDIs
will be
quoted
“ex”
dividend on
March
11,
2024, Australia
time. The
total ordinary
dividend will
be
funded from available cash.
Coronado Global Resources Inc. Form 10-K December 31,
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
2022,
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, 2023, 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, 2023 and
2022, and the results of its
operations and its cash flows for
each of the
three
years
in
the
period
ended
December
31,
2023,
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, 2023,
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 20,
2024 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,
Stamp Duty assessment on the acquisition of the
Curragh mine
Description
of
the
matter
As
described
in
Note
Contingencies
to
the
consolidated
financial
statements,
on
September 27, 2022, the Company received
an assessment from the Queensland Revenue
Office (“QRO”) for
the stamp
duty payable on
the Company’s acquisition
of the
Curragh mine
in March 2018. The
QRO assessed the stamp duty
on this acquisition at
an amount of $56.2
million plus unpaid tax interest, which the Company disputes.
On November 23, 2022, the Company filed
an objection to the stamp duty assessment.
On
January
9,
2024,
the
QRO
disallowed
the
Company’s
objection.
The
Company
is
considering its options to either appeal the decision to the Supreme Court of
Queensland or
apply
for
a
review
of
the
QRO’s
decision
by
the
Queensland
Civil
and
Administrative
Tribunal.
Under the
relevant
legislation,
the
Company
can only
appeal or
apply
for a
review
of the
QRO’s decision, if the full amount of the assessed stamp duty
(including interest) is paid by
March 11, 2024.
While the Company disputes the amount
of assessed stamp duty and interest
assessed by
the QRO,
it has
recorded an
additional accrual
and expense
of $41.3
million reflecting
the
additional payment the Company is required
to make, which may not be recovered
through
litigation.
Auditing the
accrual for
the stamp
duty payable
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,
including
the
QRO’s
decision
to
disallow the Company’s objection.
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 payable,
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 tax professionals to help us evaluate management’s judgments around the
interpretation and application of the law to this matter.
We also evaluated the disclosures made in the consolidated financial statements in relation
to this matter.
/s/
Ernst & Young
We have served as the Company’s auditor
since 2020.
Brisbane, Australia
February 20, 2024
Coronado Global Resources Inc. Form 10-K December 31,

---

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,

---

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, 2023, 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, 2023.
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,
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,
2023,
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, 2023, 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, 2023 and 2022,
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, 2023,
and the related
notes and our
report
dated February 20, 2024 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 20, 2024
Coronado Global Resources Inc. Form 10-K December 31,

---

ITEM 9B. OTHER INFORMATION
ITEM 9B.
OTHER INFORMATION
During
the quarter
ended
December
31, 2023,
no
director
or officer
(as
defined
in Rule
16a-1(f)
promulgated
under the Exchange
Act) of the
Company
adopted
or
terminated
a “Rule
10b5-1 trading arrangement”
or “
non
-
Rule
10b5-1
trading arrangement” (as each term is defined in Item
408 of Regulation S-K).

---

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 2024
Annual General
Meeting of
Stockholders, or
the Proxy
Statement, under
the headings
“Executive Officers
and
Corporate
Governance”
and
“Delinquent
Section
16(a)
Reports”,
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
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 headings
“Certain
Relationships
and
Related
Transactions”
and
“Executive
Officers
and
Corporate
Governance”
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
Ernst & Young as the Company’s Independent Registered Public
Accounting Firm
for the Fiscal Year
Ending December 31, 2024” and is
incorporated herein by reference and made a
part hereof
from the Proxy Statement.
Coronado Global Resources Inc. Form 10-K December 31,

---

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 Annual Report on Form
10-K
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)
Coronado Global Resources Inc. Form 10-K December 31,
Exhibit No.
Description of Document
10.2†‡
Syndicated Facility Agreement, dated as of May 8, 2023, among Coronado Global
Resources Inc., as guarantor, Coronado Finance Pty Ltd, as Australian borrower,
Coronado Curragh Pty Ltd, as Australian borrower, the subsidiaries of Coronado Global
Resources Inc. named therein, as additional guarantors, and Global Loan Agency
Services Australia Pty Ltd, as administrative agent, Global Loan Agency Services
Australia Nominees Pty Ltd, as collateral agent, the Hongkong and Shanghai Banking
Corporation Limited, Sydney branch, as a lender and DBS Bank Limited, Australian
branch, as a lender (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K
(File No. 000-56044) filed on May 8, 2023 and incorporated herein by reference)
10.3
Second Amendment to Syndicated Facility Agreement, dated as of July 1, 2023, among
Citibank, N.A., as administrative agent, Coronado Coal Corporation, as U.S. Borrower,
Coronado Finance Pty Ltd, as Australian Borrower, and the other Loan Parties,
Administrative Agent and the lenders named therein (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K (File No. 000-56044) filed on July 6, 2023 and
incorporated herein by reference)
10.4‡
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)
10.5‡
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)
10.6
Coronado Global Resources Inc. 2018 Equity Incentive Plan (incorporated by reference
to Appendix A to the Proxy Statement)
10.7
Coronado Global Resources Inc. Employee Stock Purchase Plan (incorporated by
reference to Appendix B to the Proxy Statement)
10.8>‡
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)
10.9>
Employment Agreement, dated as of May 25, 2023, between Coronado Global
Resources Inc. and Garold Spindler (filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K (File No. 000-56044) filed on May 31, 2023 and incorporated herein
by reference)
10.10>‡
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.
>‡
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)
10.12>
Appointment Agreement, dated as of May 25, 2023, between Coronado Global
Resources Inc. and Douglas G. Thompson (filed as Exhibit 10.3 to the Company’s
Current Report on Form 8-K (File No. 000-56044) filed on May 31, 2023 and
incorporated herein by reference)
10.13>‡
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)
10.14>‡
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)
Coronado Global Resources Inc. Form 10-K December 31,
Exhibit No.
Description of Document
10.15>
Appointment Letter Agreement, dated as of May 25, 2023, between Coronado Global
Resources Inc. and William (Bill) Koeck (filed as Exhibit 10.2 to the Company’s Current
Report on Form 8-K (File No. 000-56044) filed on May 31, 2023 and incorporated herein
by reference)
10.16>
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)
10.17>
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)
10.18>
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)
10.19>
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)
10.20>
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)
10.21>
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)
10.22>
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)
10.23‡
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)
10.24‡
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)
10.25‡
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)
10.26
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)
10.27
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)
10.28
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)
10.29†‡
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
Coronado Global Resources Inc. Form 10-K December 31,
Exhibit No.
Description of Document
23.2
Consent of Barry Lay
23.3
Consent of Daniel Miller
23.4
Consent of Christopher Wilkinson
23.5
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
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,
2023,
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
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,