Earnings call transcript: Coronado Global sees Q2 2025 production boost

Coronado Global Resources Inc., with a market capitalization of $1.6 billion, reported a significant increase in production for the second quarter of 2025, with Group ROM production rising by 20% to 7 million tonnes. Despite challenging market conditions, the company maintained a low-cost production profile and completed key expansion projects. Coronado’s stock remained stable, closing at $2.58, showing a notable 26% gain over the past year. According to InvestingPro analysis, the stock currently appears undervalued based on its Fair Value assessment.

Key Takeaways

• Group ROM production increased by 20% in Q2 2025.
• The company completed major expansion projects on schedule.
• Coronado maintained a low-cost production profile with mining costs at the bottom end of its guidance range.
• Global steel markets remain under pressure, affecting demand.

Company Performance

Coronado Global Resources demonstrated resilience in Q2 2025, achieving a 20% increase in ROM production. The company completed its Buchanan expansion and initiated operations at the Mammoth Underground mine. Despite a challenging market environment, Coronado managed to keep its mining costs at the lower end of its guidance range, showcasing its operational efficiency.

Financial Highlights

• Q2 Group ROM production: 7 million tonnes (20% increase)
• Saleable production and sales volumes: 3.7 million tonnes
• Positive EBITDA in June, covering capital expenditure
• Mining cost per tonne sold: $92
• Operating cash burn: $19 million in Q2
• Available liquidity: $284 million

Outlook & Guidance

Coronado expects material volume increases in the second half of 2025, driven by the ramp-up of production at Mammoth and Buchanan. The company is targeting a cost per tonne around $92 or lower and is exploring potential product mix variations to adapt to market demands.

Executive Commentary

Douglas Thompson, CEO of Coronado Global Resources, emphasized the company’s operational flexibility: "We’ve demonstrated that we’ve got mines and operating team and a management plan that can flex the business and trim our sales to sell through challenging markets." He expressed optimism about the long-term outlook for seaborne metallurgical coal, stating, "We maintain the view that the long term outlook for seaborne met coal remains very positive."

Risks and Challenges

• Global steel markets are under pressure, with declining demand from China due to real estate weakness.
• The company faces potential challenges from ongoing tariffs and supply rationalization.
• Managing costs remains crucial, especially with the idling of one surface operation in the US.

Coronado Global Resources continues to navigate a complex market landscape, leveraging its operational strengths and strategic expansions to position itself for future growth.

Full transcript - Coronado Global Resources Inc (CRN) Q2 2025:

Darcy, Conference Moderator: I would now like to hand the conference over to Chantel Esser, Vice President, Investor Relations. Please go ahead.

Chantel Esser, Vice President, Investor Relations, Coronado: Thank you, Darcy, and everyone for joining Coronado’s June investor call for 2025. Today, we released our quarterly report to the ASX and SEC in which we outline our key information related to safety, production, sales, coal markets and financial performance. A more detailed outline of our financial position and results is expected to be released to the market on the August 12 with our Form 10 Q. Today, I am joined by our Managing Director and Chief Executive Officer, Douglas Thompson and our Chief Financial Officer, Barry Van Damier. Within our report, you will see our notice regarding forward looking statements and reconciliations of certain non U.

S. GAAP financial measures. We encourage you to review these statements in conjunction with our other filings with the ASX and SEC. I also remind everyone that Coronado quotes all numbers in U. S.

Dollars and metric tons unless otherwise stated. I’ll now hand over the call to Douglas.

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: Thank you, Chantal, and thank you everybody for making the time to join us today. Overall, we’ve demonstrated significant progress in the last quarter. We’ve executed to our plan and ended the June on a six year record ROM production despite weather events in the quarter, idling one of our mines and other assets and planned shutdowns to enable our growth projects. We’ve improved our business resilience, and this reflects the capability of our mines to be operated to meet the market, a great result by our team under current market conditions. And we expect H2 to materially grow in returns with our expansion projects now in full execution.

June EBITDA was also positive, covering our capital expenditure in the month. Our cost reductions have delivered and we continue to execute these to plan, and our costs have reduced to below guidance levels in the quarter and have improved on prior quarter and on prior year. We will deliver material volume increases increases in the second half of this year as our high return Mammoth and Buchanan growth projects are both in production with three panels now operating at Mammoth and the Buchanan expansion producing its first coal. We expect the annual incremental run rate of approximately 3,000,000 tonnes to show in the second half of this year as these projects now ramp up to full capacity. We closed the new ABL facility and the Stanwell transaction to the end of the quarter with improved immediately available liquidity of $284,000,000 Given the extended market conditions, we continue to work through a series of steps to extend and optimize our liquidity further if required.

Key metrics achieved in quarter two were group ROM production 7,000,000 tonnes, up 20% and our saleable production and our sales volumes were both 3,700,000 tonnes in the quarter. At a group level, our total recordable injury rate was one point zero five, remaining well below industry averages for both The U. S. And Australia. On our group performance, as I’ve said, June was a six year record ROM performance and the quarter delivered a 7% improvement in saleable production.

And our total inventory at the end of the quarter was approximately 1,000,000 tonnes. From a group perspective, the increased production is expected to have a material impact on EBITDA and free cash flow growth in the second half. Moving on to operations, specifically in the quarter. For our Australian business unit, the June month was significant. We exceeded plan from a ROM production perspective and achieved plan for saleable production.

Our ability to recover volumes after unplanned events has been more consistent than in the past, demonstrating the resilience that we’ve built into the business. And performance this quarter reflects the ability to manage the mines to meet the market. The increased production is before the incremental volume increases expected from our growth projects as these are still in ramp up phase. Cost reductions continue to be realized, and the average mining cost per tonne sold in quarter two was below our forecast and budget and well below the lower end of our guidance levels. The third continuous miner commenced production in late June at Mammoth, and Mammoth now has three production panels in operation, and they are online to achieve their full year planned production.

Mammoth is expected to deliver a run rate in the second half of the year of up to an additional 2,000,000 incremental tonnes. Moving to our US business unit, we had our planned longwall move in the quarter, and we also undertook shutdowns These were enabling shutdowns that tie the new infrastructure for the expansion project into the existing infrastructure. The U. S.

Continues to make incremental improvements every quarter, delivering higher ROM production, saleable production and sales volumes than the same time last year and last quarter despite these additional shutdowns idling one of our mines and idling select assets. Our Buchanan expansion is now 100% complete, on budget and on schedule. And I’ll note, this is the second project our team has delivered on time and on budget. We are producing coal and finalizing commissioning of the shaft. The project is expected to deliver approximately additional 1,000,000 annualized run rate from the second half of this year.

Together with the dual longwalls now at Buchanan, we expect The U. S. Business unit to exceed 7,000,000 tonnes per annum going into the future. This additional capacity has been created by this expansion project. It’s great to celebrate the successful completion of two major projects, the Buchanan expansion and the Mammoth underground within a six month period.

And we’re looking forward to enjoying the incremental tonnage that will come from these projects as they ramp up in the second half of this year. And with that, I’ll hand over to Barry who will speak to our financial position. Thank you, Douglas, and

Barry Van Damier, Chief Financial Officer, Coronado: good morning, everyone. As Douglas outlined earlier, the June performance outcomes were strong. It shows that we set up the business to be more resilient and responsive as the June ROM production, a six year record performance, clearly shows. While prices continue to be weak, we are controlling the controllables through reliable production, ramping up the expansion projects and controlling costs. During the quarter, good progress was also made to extend the company’s liquidity runway through the ABL of Oaktree and prepayment and rebate deferral of Standwell.

Our efforts to further strengthen the liquidity position continues, considering the expected continuing weak near term price environment. The PLV index was volatile during the first half of the year, trading as low as $166 per tonne in March and as high as $196 per tonne in May. The quarter on quarter PLV index average was very similar at $184 per tonne. The average Australian dollar exchange rate for the June was 2.2% stronger than the March, but was in line with our guidance assumption of $0.63 Our planning assumptions for the rest of the year is in line with current market prices. The 20% increase in ROM production was driven primarily by KARA that produced 1,000,000 tons more, a 41% quarter on quarter increase.

This and approximately $30,000,000 of cost savings realized in the quarter drove a reduction of 18% in mining cost per tonne sold to 92 per tonne, the bottom end of our guidance range. This unit cost was achieved without a material contribution to production from our expansions, which are only starting to ramp up now, and the majority of cost savings are to be realized in the second half. The strong production result built a 600,000 tonne ROM stockpile at Carra, which will support production resilience of the open pits in the second half. The completion of the Mammoth and Buchanan expansions, as Douglas said before, will mean that half two CapEx cash flows will be approximately $60,000,000 lower than half one, with cash capital expenditure of approximately $230,000,000 expected for the full year. At an operating level, before capital expenditure of $75,000,000 the group consumed only $19,000,000 of cash during the June.

This is after $17,000,000 in Queensland state royalty payments, dollars 8,000,000 in stand well rebates paid up to May before the rebate deferral started, and $7,000,000 absorbed into working capital. The increased ROM stocks amounting to about $35,000,000 was funded by a short term prepayment arrangement. Cash outflows included cash backing of $31,000,000 of guarantees, dollars 4,000,000 of transaction costs, which are not expected to recur, and payment of the final dividend for FY24 of $8,000,000 which is more than offset by inflows of $170,000,000 from the ABL drawdown and the Stanwell prepayment and rebate deferral. It’s worth noting that even at these prices and before state royalties and the Standwell rebate, KARA was in a cash breakeven position for the first half after funding the completion of the Mammoth underground expansion. More We than 75,000,000 of the $150,000,000 facility.

Dollars 75,000,000 remains available to be drawn subject to having adequate eligible inventory and debtors, 22,000,000 of which was immediately available at thirty June. There are no covenant testing for the June and the covenant thresholds and calculation methodologies up to the March 2026 have been set in a manner that accounts for a low price environment. Oaktree’s support of our business and the recent review event resulting from credit ratings downgrades driven by the expectation of lower for longer prices were completed without any change to the facility’s terms or availability. We plan on drawing the facility further in half two as required to fund working capital increases. The transaction with Standwell for $75,000,000 in cash upfront and approximately $75,000,000 through progressive monthly rebate deferrals will increase liquidity by approximately $150,000,000 by the end of the year.

The liquidity support will be repaid in coal tons beyond 2026, after which annual cash flow is expected to improve by approximately $150,000,000 per year at current prices. At thirty June, we had $284,000,000 in immediately available liquidity, a further $53,000,000 under the ABL that will fund future inventory and debtors increases, and about $50,000,000 future rebate deferrals from Standby. As we’ve said previously, we continue to pursue all options available to us to maximize our liquidity and financial flexibility during this downturn in met coal markets and time of global macroeconomic uncertainty and volatility. We’ll be releasing our quarterly financial results on the ASX and SEC on twelfth August. I’ll now hand you back to Douglas for a market overview.

Thanks.

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: Thank you, Barry. We continue to see the steel markets and raw material demand coming under pressure. Global demand feels weak and prices have remained subdued. China’s declining domestic demand due to real estate weakness is assumed to be partially offset by exports and manufacturing, which is having a prolonged impact on the global demand supply dynamics. Trade flows and product mixes are changing in response to tariffs, causing changes in dynamics in pricing at different pricing and product tiers.

Having said this, the outlook for the second half of this year has potential supported by several key factors: an anticipated recovery in global steel production outside of China, ongoing tariffs on China steel that has been exported around the world, and ongoing supply rationalization, and continued indicators of steel production and demand in India. We’ve seen positive signs out of India. India have extended the coke import quota to the end of the year and the potential post monsoon demand and restocking to rebuild inventories will be seen. And in China, the coke and met pricing have improved in recent days, and they’ve announced some substantial projects domestically. We maintain the view that the long term outlook for seaborne met coal remains very positive, And we remain confident that our second half production profile and our plan will support positive returns at today’s prices, and we’ve demonstrated this in the June.

And with that, I’ll hand over to Darcy to take your questions.

Darcy, Conference Moderator: Thank you. If you wish to ask a question, please press one on your telephone and wait for your name to be announced. If you wish to cancel your request, Your first question comes from Rob Stein from Macquarie. Please go ahead.

Rob Stein, Analyst, Macquarie: Okay. Thanks for the thanks for the opportunity. Just looking at the cost result. Just wondering, you know, in terms of overburden removal and the like, are are we do you expect a a drift back to, you know, more productive movement going forward in future quarters given that, obviously, due to the current prevailing market conditions, you’ve had to take some pretty drastic cost measures. Just trying to get a handle on how sustainable the the cost position is.

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: Obviously, there’s fluctuations from quarter to quarter as inventories move. But if you look at the last two years journey, Rob, at Curra, we went on a product productivity drive led by our draglines, and you’ll see in our results the performance out of our dragline systems have improved materially over the last eighteen months and have sustained that we’re moving more than half of our volumes through draglines. So as a result, if you compare year on year, about 45% of our installed capacity by truck and excavator has been removed from the system, dramatically reducing cost, but also enabling simplicity of operations, mine planning in the way in which the mine is the mines, the two open cuts are set up. What we’re enjoy going forward at at KARA is now with the incremental tons that’ll come from the underground operations as that ramps up, and those costs are below the costs of the open cut. So we’ll enjoy that production further.

So what we’ve done at at Kara and the continued ramp up will definitely be sustained and enjoyed. What we’ve done in The US recently to address costs, as I said, we’ve idled one of our surface operations. It was probably the higher cost operations and not the most favorable product. So it was a net benefit from a cash perspective. We’ve got that in idle.

And if the market presents itself in time, we can turn those volumes back on. We’ve also addressed some of our development units at Buchanan and taking advantage of the investment we’ve made in the past with lead days on our longwalls to gear back some of that. That cost will come back into the business, but the incremental tons that we’ll get out of the system now that we’ve finished the project at Buchanan, the growth profile there will more than offset the costs. And then importantly, from a cash management perspective in this market, the discipline remains. We’re tightly controlling our capital.

The capital projects that we’ve spent to date now come to an end, and our cost reduction initiatives that we spoke about at previous calls will continue into the months to come.

Rob Stein, Analyst, Macquarie: So so specifically at Curra, we’re not seeing an an overburdened debt build in the quarter given that there is a time lag between, you know, truck and shovel movements regarding overburdening and lag those draglines. You know, a good, you know, a good length to to sort of attack the scene?

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: No. What we did diligently, probably starting three years ago, is catch up pre strip deficits by the investment that we did back then. We’ve maintained a stable mine plan. Everybody in this market will be taking advantage of stripping ratio advantages that have selecting pits that have got better margin ranking. We, like everybody else, will be doing that because that’s just prudent works.

But we do have a sustainable mine plan at KARA, and it’s dragline led.

Barry Van Damier, Chief Financial Officer, Coronado: Perfect. Thank you.

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: In short, we haven’t high graded the mine to an unsustainable position.

Rob Stein, Analyst, Macquarie: Perfect. Thank you very much.

Darcy, Conference Moderator: Thank you. Your next question comes from Glyn Lawcock from Baron Joey. Please go ahead.

Glyn Lawcock, Analyst, Baron Joey: Good morning, Douglas. Wondering if you mentioned just before in the question, costs fluctuate from quarter to quarter as the inventory moves. You gave us $92 a tonne for the June, 72 a tonne for the month of June mining costs. You know, what do you think it is on a cash basis? You know, if you strip out if you strip out the inventory noise, where do you think this business can get to?

And therefore, you know, at current prices, and you’ve already, you know, prices lag by a quarter, can this business generate free cash flow in the second half?

Barry Van Damier, Chief Financial Officer, Coronado: Glenn, so on that first one, I think that when we look at that metric of cost per ton sold, it is on a per sold basis. It’s not a produced basis, you know. So if you the other way to look at it is if we actually sell if we work through those inventories, we expense the cost, your denominator in that cap would go up. So it’s not an artificial $92 a ton. It’s it it was $92 a ton even if if you sold those inventories through and expense the cost.

I think that $92 a ton sitting at the bottom end of guidance, and our guidance was 92 to one

Glyn Lawcock, Analyst, Baron Joey: Did you drop in?

Barry Van Damier, Chief Financial Officer, Coronado: Because in in the performance for the quarter, we’ve not had much of the ramp up expansion, the ramp up tons. So you would think with the majority of cost savings to come through in the second half and then the additional tons coming from the expansions, the 92 and less should give you a good indication of where it should sit in the second half. You then need to kind of roll that through to kind of what the second half looks like. I mean, the prices are tough. The prices are low.

We gave a bit of a steer in the quarterly report as to how the underlying operating cash flows look for the second quarter of the year. So there was $19,000,000 of operating cash flow burn in the second quarter. We had high CapEx, so that exacerbated the, call it, the net mine cash flow position that was also a burn. But I think it’s important to realize that the second quarter, I think the best indication I can give you, as we said, yes, there was cash burn in the quarter. CapEx is coming down into the second quarter.

So these prices, you probably would still see some cash consumption, but it won’t be as extreme as it was in the first half because the CapEx is coming down and the cost savings are washing through.

Glyn Lawcock, Analyst, Baron Joey: Alright. Thanks, Barry. You dropped out a little bit when you were answering the question. Well, it did for me anyway. So just if I think about that then, so you what you’re saying is $92 a ton is a a good number that’s cash, and I could multiply that by your saleable production, say, 18,000,000 tons.

Right? So we’re looking at a business that’s sort of $11,650,000,000.00 cash to to from a mining perspective, and then I’ve got my royalties and everything else. I guess, it’s what I’m just trying to make sure I that’s a true cash number, what you think 92 as opposed to because it does jump around as you say inventory, but that’s a good cash number. Okay. Cool.

Thanks very much for that. And then

Barry Van Damier, Chief Financial Officer, Coronado: Or or less. I mean, you need to factor it off side of the second half in, etcetera, but I think that’s that’s a fair cash number.

Glyn Lawcock, Analyst, Baron Joey: Okay. And then just on the the the Oaktree debt, and I I appreciate you’re gonna test the covenant at the end of the September, and it’s you know, I think you made comments that it’s not as it’s not as onerous as normal. It’s set for a low price environment. But given the lag on pricing, I mean, myself and the market, it’s expecting you to report negative EBITDA for q three given the pricing’s pretty much locked away. How how do how do you pass a covenant test with negative EBITDA, or are we missing something in the testing?

Barry Van Damier, Chief Financial Officer, Coronado: The the the the EBITDA will be the EBITDA. If you look at and the financial results will come out, and you’ll see what the second quarter EBITDA was. But that was that was pretty much line ball for the second quarter. So, again, as you see volumes lifting to q three with the expansions, we’d expect that to be a plus and not a minus. A bit more detail on those covenants, so the thresholds are looser, but then the test will work on an annualized quarterly EBITDA.

So you’ll go q three EBITDA times four, and that’ll be the basis of the test. I mean, technically, you’re right. If you make an EBITDA loss, you’ve got nowhere to go, but that’s not that’s not our our assessment of what q three is gonna be.

Glyn Lawcock, Analyst, Baron Joey: Okay. No. That’s good. And then just to finish off, if I may, given all the cost initiatives, capital reductions, you’ve you’ve you’ve made the comment about ABL and Stamwell agreement expected to meet current needs. Does that mean a sell down of KARA or other portfolio adjustments are now off the table and you feel you’ve done everything you need to to get through?

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: No. As we said, in the current market and prolonged outlook on pricing being range bound, we’re looking at all options. So, you know, there’s a lot of speculation about what we’re doing and aren’t doing that. We don’t indulge in the speculation. We have a plan, and we stick to our plan.

But to make sure that that plan considers all prudent options, we keep the door open and looking at what makes sense. And as you said, minority sell downs have been spoken about a lot in the market market recently. We’re having inbound inquiries. I think most producers in Queensland are getting inbound inquiries because the world’s pretty nervous about what is Queensland gonna do with the royalty rate and the pressure that’s on these operators. Will there be sustained growth into the future?

Because the product’s clearly be need gonna be needed. We’re hearing more and more blast furnaces getting realigned and arc furnace projects being deferred. So product demand into the future is going to be there, and people are concerned the supply is not going to be there. So with us having growth projects and producing product that clients want, there’s a lot of interest. So we will prudently assess those and determine if they’re right for our business.

But what we’ve done as a team is built ourselves a very secure runway even in this really hard market to make decisions in a timely controlled manner that are right for all of our shareholders.

Glyn Lawcock, Analyst, Baron Joey: Yep. No worries. Appreciate that. Thanks very much, Douglas, Barry.

Barry Van Damier, Chief Financial Officer, Coronado: No worries. Sure.

Darcy, Conference Moderator: Thank you. Your next question comes from Daniel Roden from Jefferies. Go ahead.

Daniel Roden, Analyst, Jefferies: Hey, Doug and Barry. Thanks for taking my question. Just wanted to ask, I guess, commentary on Maneth has been fairly wide in terms of how it’s going. I just wanted to provide a bit of an update on, I guess, the the operational progress. Are you seeing any challenges, you know, from the continuous miners punching into the kind of respective sections?

And, you know, I guess, are you seeing seeing confidence that you’re gonna be hitting, you know, production guidance into half two and, you know, any indication on where and how that performance might go into half two?

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: Daniel, thank you. As as I said, we’ve put the third continuous mining unit into production. So we’ve got now three panels. The permanent vent fans have gone in. The underground infrastructure for material landing conveyor belt systems and the like has gone.

In the portals in December. Late December to where we are now, where we fully built out three panels and got all this infrastructure built into the mine and all the crews mobilized and trained and delivering. We’re now standing in the position where we’ve got enough space that’s been built underground for these units to operate productively and go through up the go through the ramp up curve and with both the enabling infrastructure like ventilation districts and appropriate ventilation controls that they can operate optimally. The equipment itself is performing well. We are, like, all projects going through a period of learning as we build out the mine.

That’s what this first six months was intended to be. We’ve got those, and we understand the geology and the geotech around it. And most conditions are playing out the way that we anticipated them to be. So we’re in a good position for for the ramp up for the rest of the year. The product that we’re producing out of the mine, as we said, is the same product that we produce out of the Northern Open Cut Mine.

But clearly, it’s been extracted in a different manner. So through continuous miner, it’s a lot finer, and we’ve been running a number of trials as we’ve been alluding to in this quarter on how do we put that product to the prep plant, how do we tie that infrastructure in just like in The US where we’ve been doing times and shutdowns to enable. We’re putting that product through the prep plant and seeing what upside opportunities do we have, particularly using our bypass circuit and having some upside capacity not only on prep plant throughput, but then also on yield side of of the product that’ll come out of that mine. So so there’s some detail on how Mammoth is going, but we’re in a great position now for the second half of the year for the teams to take full advantage of what they’ve been provided and ramp up.

Daniel Roden, Analyst, Jefferies: Yeah. Thank you. Yeah. You you touched on my my follow-up there a little bit, but I’m just wondering if there was any expectations on product mix, like, pricing mix changes into the second half of the ramp up of Mammoth or, you know, you kinda touched on yields and and product quality there. So I guess, is there any expectations on on those kind of changes?

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: We’re talking to a number of our clients that have expressed interest in some of the products that’ll come out of the mine going forward. For example, there’s a really good PCI that we could put through out of Mammoth. We we packaged up some samples and sent those to clients. The other that we’re seeing in The US with the Northern Longwall District and Southern Longwall District is we’ve got slightly different products that are coming out of the South with different reflectance as an example, and clients are expressing interest in those. So we will explore different products with our clients going going forward and seeing if the value is there.

But we don’t see material change to the products that we’re gonna be producing or what the market is seeking from us. So we’ll keep our our cake mix pretty standard going forward.

Daniel Roden, Analyst, Jefferies: Okay. And guess I appreciate that you’re still in, you know, your ramp up curve for for moments between the three continuous models. But I was wondering if, I guess, from a cost front, are you seeing the costs becoming broadly in line with where you’re you know, you expect them to be at this point in time? And do you think you’d be able to hit that? Yeah.

I guess the the cost guidance that you put out on the project before is around $90 a tonne from memory. Is that you know, I guess, is that target still realistic? And just as a probably, in addition to that, in front of the operating cost and and CapEx guidance of ’25, does that CapEx include a portion of capitalized costs for Mammoth as it’s going through its ramp up still?

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: So the the easy way to answer that is yes, yes, and yes. But so from a from a Mammoth managing its costs, absolute dollar spend, and across all of our business, if you look at our results, the team have done a great job in reducing costs if you compare quarter on quarter on year on year, particularly at KARA. So mammoth is is spending actually slightly below budget at the moment. It’s the denominator at the moment because, obviously, there’s much smaller tonnes that are coming through. But as those tonnes ramp up, we very strongly anticipate to get to the the numbers that we’ve put out previously in what you’ve quoted.

And then in the ramp up, yes, there is development meters that would be defined as capital that’ll serve the mine for the mine life, and those will get defined as development and get capitalized. And, yes, that is in the in the capital numbers, the the cash capital numbers that Barry referred to.

Daniel Roden, Analyst, Jefferies: Brilliant. Thanks, Doug. I appreciate your answers. Thank you very much.

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: No worries. Thank you.

Darcy, Conference Moderator: Thank you. Your next question comes from Dikash Agarwal from Primus Asset Management. Please go ahead.

Dikash Agarwal, Analyst, Primus Asset Management: Hi. Thank you, guys. Can you hear me?

Barry Van Damier, Chief Financial Officer, Coronado: Yes. We can.

Dikash Agarwal, Analyst, Primus Asset Management: Yeah. Hi. Great. A couple of questions from my side. First, on the production.

So the ramp up for the expansion at Mammoth and Buchanan. So based on what the first half production numbers are, favorable volume is about 7.2. So can we expect this annual run rate of 1.3 showing up in second half?

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: Sorry. I just didn’t catch the loss a little bit. Did you quote a number that’ll show up in the second half? If you could just repeat.

Dikash Agarwal, Analyst, Primus Asset Management: For the production. Yeah. The expansion the incremental annual production, you have three MTPA. From the expansion, how much of this will show up in second half?

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: So the the the The US ramp up is unlocking and debottlenecking the longwalls that are already producing at at the run rates that we require. We’ve been skipping over a thousand skips a day out of the the old shop. So the enabling now that’ll come through with that demote bottleneck with that shop will almost come immediately. There’ll be some growth into it, so we plan in our production profiles that through this quarter, there’ll be a ramp up. And then in the fourth quarter, that’ll be pretty much running at at full capacity.

And as of my briefing from the team this morning, I can share with you that by tomorrow, we’re hoping to go to full up automation in that in that new shaft. We’re at the back end of the commission phase, and that’ll unlock the capacity there. So, yes, that will ramp up. From a mammoth perspective, we’ve built this progressive ramp up profile of one continuous unit that started in December, then in the second quarter, two. At the June, we put the third one into production.

So in the third quarter, we’ll still have a bit of a ramp up phase as those become fully productive. But in the fourth quarter of this year, that run rate of 2,000,000 ton incremental additional will be at the run rate that we expect out of the project at this stage, and we planned it in. So it’s a it’s a logical and well thought through ramp up profile that we will enjoy the production capacity, the additional production capacity that will come through the system.

Dikash Agarwal, Analyst, Primus Asset Management: Got it. And in terms of the ABL review event which happened in July post the downgrade of June, was there any cost associated or additional fees which needs to be incurred for that review event?

Barry Van Damier, Chief Financial Officer, Coronado: No. There was none of that. We we reviewed the business with OP, and we moved on without any changes to the facility or any cost.

Dikash Agarwal, Analyst, Primus Asset Management: Got it. And the next few event is in scheduled in September.

Barry Van Damier, Chief Financial Officer, Coronado: Just say that again, Vikash.

Dikash Agarwal, Analyst, Primus Asset Management: I’m seeing the next review event for the deal is scheduled in September.

Barry Van Damier, Chief Financial Officer, Coronado: No. There’s the review events are triggers in the facility. So, like, if there’s a credit rating downgrade, then that causes a review event where you have to pause, sit down, kind of review the business. But the next covenant test is for the September, which will be tested in kind of November.

Dikash Agarwal, Analyst, Primus Asset Management: Oh, got it. So that’s more maintenance covenants?

Barry Van Damier, Chief Financial Officer, Coronado: Correct. That’s maintenance covenants. Yep.

Dikash Agarwal, Analyst, Primus Asset Management: Okay. Great. And last question from my side for the realized price. Do you have any number you can share for the current exit rate for July?

Barry Van Damier, Chief Financial Officer, Coronado: No. Unfortunately, not because we can’t. We can only talk about what we’ve got in the quarterly at this stage.

Dikash Agarwal, Analyst, Primus Asset Management: Got it. No problem. Thanks a

Barry Van Damier, Chief Financial Officer, Coronado: lot. Good.

Darcy, Conference Moderator: Thank you. Your next question comes from Glyn Lawcock from Baron Joey. Please go ahead.

Glyn Lawcock, Analyst, Baron Joey: Morning. Thanks again. I just wanted to ask, is there any rights that The US bondholders have given all the issues you’re having at the moment with cash flow and everything you’re doing? Like, is there any rights they have, or are they it’s they’re they’re very clean and vanilla? Thanks.

Barry Van Damier, Chief Financial Officer, Coronado: Can you be a little bit more specific, Glenn? I mean, what are you talking about covenants? Or

Glyn Lawcock, Analyst, Baron Joey: Yeah. Yeah. I I guess yeah. Sorry, Barry. I mean, I guess I’m just like, is there anything they can do?

Like, if you wanted to sell an asset or, you know, everything you’re doing at the moment, do they have any ability to to to pop their heads in and and sort of demand anything, or are they very much like you know, you’ve got your Oaktree testing every quarter. Mean, I how how do The US bonds work? Just wanted to make sure that there’s any rights that that they’ve got in figuring this situation.

Barry Van Damier, Chief Financial Officer, Coronado: No. That’s that’s good, Glenn. I mean, they they are first the first ranking creditors in in the group. So they’ve got the top of the pile of the security, and that flows into the facility in that it it is kind of less covenant restricted. So there’s no maintenance covenants under the bonds.

And so you don’t have leverage and interest cover or any of those things. The the document is more about what incremental indebtedness you can incur. There’s certain buckets and the rules and tests around that. So it’s more about can you add can you add it to the business is is what they’re interested in, or are you eroding the collateral? So if you are specific with respect to setting a stake in one of the mines, The the document, the indenture actually allows for that, but you have to spend that money in the business within a year on capital.

So as long as you’re not eroding the collateral, you’ve got a lot of flexibility under the indenture, under the notes to do certain things.

Glyn Lawcock, Analyst, Baron Joey: Okay. That’s great. Thanks very much, Barry.

Darcy, Conference Moderator: Thank you. That concludes the question and answer section of today’s call. I’ll now hand back to Douglas for any closing remarks.

Douglas Thompson, Managing Director and Chief Executive Officer, Coronado: Thank you, Darcy. Just to say thanks to everybody for making the time to join us today to understand how we’ve gone in the quarter. The business has clearly demonstrated that we’ve got mines and operating team and a management plan that can flex the business and trim our sales to sell through challenging markets, and we’ve got the runway now as a business to set ourselves up to make prudent decisions into the future. And very pleasingly, we’ve completed these two large enabling projects that unlock huge shareholder value in a challenging market, and we look forward to enjoying the benefits of the incremental time that will come from these into the future. Thanks for your time.

And if you’ve got any further questions, please do not hesitate to contact our team, and we’ll set up discussions. Thank you.

Darcy, Conference Moderator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.