Coronado Global Resources Inc. · ASX:CRN
Coronado Global Resources — H1 2019 Earnings Presentation
51 slides from Coronado Global Resources's earnings presentation, Aug 5, 2019
Slide 1: 2019 Half Year Results Presentation
For personal use only 2019 Half Year Results Presentation GERRY SPINDLER Managing Director and CEO AYTEN SARIDAS Group Chief Financial Officer (All units in USD, unless otherwise noted) 5 August 2019
Slide 2: HY19 Highlights
For personal use only HY19 HIGHLIGHTS GERRY SPINDLER MANAGING DIRECTOR AND CEO HY19 Results Presentation 2
Slide 3: HY19 Highlights
HY19 Highlights(1),(a) Safety • Safety metrics continued to outperform national industry averages with Australian rolling 12-month TRIFR For personal use only of 5.46 and US rolling 12-month TRIR of 1.65 • Buchanan operations recorded 1 million man-hours without a lost time incident which was recogn
Slide 4: HY19 Highlights (Cont.)
HY19 Highlights (Cont.) Interim Distribution • Declared interim distribution of $0.41 per CDI - fully franked interim dividend of $0.112 per CDI and For personal use only Capital Return of $0.298 per CDI (total distribution of $396.3 million) Curragh Mine Plan targets 15mt of saleable production by
Slide 5: Safety Performance
Safety Performance Continued vigilance to ensure we maintain strong safety performance over the long term For personal use only Australian Operations (TRIFR)a US Operations (TRIR)b 12.0 3.50 10.0 3.00 2.50 8.0 2.00 6.0 1.50 4.0 1.00 2.0 0.50 0.0 0.00 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19
Slide 6: Reserves & Resources (Mt)
Reserves & Resources (Mt) Long life assets with significant Reserves & Resources supports strong growth outlook For personal use only Reserves and Resources (Mt) as 31 December 20182 3,000 1,200 2,524 2,500 957 1,000 2,000 800 1,500 513 600 493 1,084 1,000 311 400 251 220 177 201 180 500 155 200 60
Slide 7: Group Operational Performance
Group Operational Performance Consistent delivery of strong operating performance across all key indicators For personal use only ROM Production (Mt) Sales Volumes (Mt) 18 12 14 10 16.7 15.5 10.4 9.9 10 8 HY18 HY19 HY18 HY19 Saleable Production (Mt) Production Mix (%) 12 HY19 HY18 16.4% 22.2% 10 10.
Slide 8: Financial Performance
For personal use only HY19 FINANCIAL PERFORMANCE AYTEN SARIDAS GROUP CHIEF FINANCIAL OFFICER HY19 Results Presentation 8
Slide 9: HY19 financial metrics
HY19 financial metrics Improved operating performance drives better product mix and robust financial performance For personal use only HY18 HY19 Variance Production 10.2Mt 10.4Mt 0.2Mt Sales Volumes increase driven by operational improvements Sales Volumes 9.9Mt 10.4Mt 0.5Mt and enhanced rail availa
Slide 10: Revenue performance
Revenue performance Increased sales volumes and higher proportion of metallurgical coal sold underpins revenue performance For personal use only “Sales volumes of 10.4Mt increased 5.3% compared to HY18, driven “Revenue of $1,234.3 million increased by 10.6% compared to by improved rail availability
Slide 11: Realised pricing
Realised pricing Higher proportion of metallurgical coal sales and improved product mix, boosts realised pricing For personal use only “Metallurgical coal mix improved as a result of new sources of “A combination of improved metallurgical coal mix and strong coal production at Logan ramping up and h
Slide 12: Segment performance
Segment performance $405.4 million Group EBITDA underpinned by strong performance at Curragh and Buchanan For personal use only Curragh Buchanan Buchanan Logan Logan Greenbrier Greenbrier 300 300 300.0 EBITDA (US$m): 300 271.7 Curragh 164.8 150 150 150 150.0 116.4 99.7 35.3 15.5 1 0 0 0 0.0 HY18 HY1
Slide 13: Mining cost analysis
Mining cost analysis3 11.1% decrease in Group mining cost driven by operational efficiencies at Curragh and low cost For personal use only operations at Buchanan HY18 Mining Costa Curve (US$/t) HY19 Mining Costa Curve (US$/t) 120 120 111.9 Group mining cost= $57.8/t Group mining cost = $51.4/t 100 9
Slide 14: Cash flows and Balance Sheet
Cash flows and Balance Sheet Strong cash flows drive robust balance sheet and capacity to support strategic initiatives For personal use only 300 Liquidity Operating Cash Flow (US$m) Use of Debt Proceeds Dividend Funding Repayment of Analysis 350 (US$m) (US$m) Liabilities (US$m) (US$m) 10.6 300 125
Slide 15: Underlying Net Income After Tax
Underlying Net Income After Tax4 92.7% increase on Proforma HY18 Net Income For personal use only (US$ Thousands) June 30, 2019 June 30, 2018 Var Pro forma Coal revenues 919,329 874,857 44,472 Coal revenues from related parties 293,158 222,983 70,175 Other revenues 21,848 18,343 3,505 Total revenues
Slide 16: Shareholder returns
Shareholder returns Strong operating performance and balance sheet underpins shareholder returns Dividend & Capital Return Profile Total Investment Return7 For personal use only Distribution of $0.41 per CDI 40% • Fully franked interim dividend of $0.112 per CDI ($108.3 million) • Capital Return of
Slide 17: Key Information on Dividend and Capital Return
Key Information on Dividend and Capital Return Key Information Taxation For personal use only • Dividend Policy to distribute 60 – 100% of Free Cash Flow (FCF)a Australian tax • Dividend expected to be fully franked • Commitment to payout 100% of FCF in FY19 reaffirmed • Capital Return treated as a
Slide 18: Partial Early Release of Escrow
Partial Early Release of Escrow For personal use only • Independent Directors of Coronado have decided that the early release of 11% of the issued capital in Coronado held by Group LLC from voluntary escrow is in the best interest of Coronado and its shareholders • The release of Group LLC would fac
Slide 19: Guidance
Guidance FY2019 Guidance For personal use only FY19 PROSPECTUS FY19 GUIDANCE RANGE Production (Mt) 21.6 21.2 - 21.6 EBITDA ($m) 737 737 - 807 Cost ($pt) 51 51 - 52 Capex ($m) 160 160 - 180 Payout Ratio (%) 100 100 HY19 Results Presentation 19
Slide 20: Operational Update
For personal use only OPERATIONAL UPDATE GERRY SPINDLER MANAGING DIRECTOR AND CEO HY19 Results Presentation 20
Slide 21: Metallurgical coal market
Metallurgical coal market Demand for metallurgical coal has continued with Premium LV HCC averaging US$198.2/ta since Jan 2017 Seaborne Price (US$/t)b Key Market Points For personal use only 350 Demand for seaborne metallurgical Resulting in cuts to steel production 300 coal has been impacted by a i
Slide 22: Australian Operational Review
Australian Operational Review Operational improvements underpinned strong HY19 performance For personal use only Operational Highlights Metallurgical Coal Production (Mt) HY18 HY19 • Improved dragline performance increased ROM coal production to 8.9Mt, up 16.1% compared to HY18 5 • Increase in CHPP
Slide 23: US Operational Review
US Operational Review New sources of production at Logan improve metallurgical coal product mix For personal use only Operational Highlights Total Metallurgical Coal Production (Mt) • Buchanan delivered production targets despite challenging mining 5.0 conditions 4.1 3.7 • Buchanan received safety a
Slide 24: PSF Development
PSF Development Strategically located development opportunity providing access to high quality metallurgical coal For personal use only Reserves/Resources Reserves – 147.2 Mt, Resources – 493.1 Mt General Location Map Reserve Life – 65 years Production Capacity +2.25 Mt per year Coal Quality High-Vo
Slide 25: New Curragh Mine Plan
For personal use only NEW CURRAGH MINE PLAN GERRY SPINDLER MANAGING DIRECTOR AND CEO HY19 Results Presentation 25
Slide 26: Coronado strategy for long term value creation
Coronado strategy for long term value creation Delivering strong growth by mining the incremental tonne, optimising production, executing new developments and strategic acquisitions For personal use only 1 2 3 4 Capital Management Asset improvement Organic growth in production Inorganic Growth • Str
Slide 27: Curragh Operational Review
Curragh Operational Review Coronado has unlocked significant value at Curragh since acquisition For personal use only - Asset significantly de-risked and enhanced since acquisition Attractive and - Improved valuation supported by recent comparative met coal asset well timed transactions acquisition
Slide 28: New Curragh mine plan will target 15Mt of production by 2023
New Curragh mine plan will target 15Mt of production by 2023 • Integrate the SRA into the new mine plan which underpins continuation of production utilising current installed infrastructure. For personal use only • The SRA provides access to Pisces coal in the “T” Pit which has significantly better
Slide 29: Infrastructure Overview
Infrastructure Overview Supply chain infrastructure requirements developed to support increase in production For personal use only Mining Processing Transport Port Optimised mine plan to Reliability initiatives: Coronado in is advanced stages Agreed a Substitute Shipper integrate the SRA into Currag
Slide 30: Saleable Production Uplift
Saleable Production Uplift Deliver an additional 6.0Mt over the forecast period For personal use only Estimated Production Profile (Mt)a The expansion is set to deliver 16 an additional 6.0Mt from FY20 15.0 to FY23 14.8 14.3 14 2.1 13.5 1.9 1.4 12.9 0.6 12.1 Growth in production is a result 12 of de
Slide 31: Curragh Cost Profile
Curragh Cost Profile New mine plan has potential to deliver ~10% reduction in FOB costs over the forecast period and increasing margins For personal use only Estimated FOB Cost Profile (US$/t)a 100 Sustainable production supply $82 - $92 $78 - $89 profiting from a unique cost 90 structure $75 - $85
Slide 32: Investment in Accelerated Growth Plan
Investment in Accelerated Growth Plan Capex fully funded from operating cash flows For personal use only Estimated Capex Profile (US$m) Annual Capex profile (US$m) $117m - $147m $131m - $163m $47m - $60m $57m - $72m 70 66 64 62 60 58 53 21% 50 46 40 4 Year Capex profile 55% 30 24% 20 10 0 Sustaining
Slide 33: Capital Comparison
Capital Comparison Accelerated expansion plan is highly compelling on installed capacity basis For personal use only Capital Cost per Installed Capacity (US$/t)9 250 221 200 153 150 130 100 ~50 - 55 45 50 0 Warrior Riversdale Arch Curragh BMA a. Source: Company reports and disclosures HY19 Results P
Slide 34: Outlook
For personal use only OUTLOOK GERRY SPINDLER MANAGING DIRECTOR AND CEO HY19 Results Presentation 34
Slide 35: Future Pipeline
Future Pipeline Executing on our pipeline while maintaining flexibility to be opportunistic For personal use only FUTURE CURRAGH UNDERGROUND OPPORTUNITIES STUDYa - MDL 162 PANGBURN-SHANER-FALLOWFIELDb - Expiry of Stanwell Rebate SRA MINE INTEGRATION - Study to best integrate the SRA into the existin
Slide 36: Production Growth Profile
Production Growth Profile Growth profile continues to firm as expansion study of Curragh progresses For personal use only 24.0 23.0 22.0 21.0 20.0 19.0 18.0 2018 2019 2020 2021 2022 2023 Prospectus FY19 Guidance Range Growth Opportunities HY19 Results Presentation 36 a. Forward looking statements in
Slide 37: Questions
For personal use only QUESTIONS HY19 Results Presentation 37
Slide 38: Footnotes
Footnotes 1. All tonnages through this presentation are expressed in metric tonnes. All amounts quoted throughout this presentation are in US$ unless otherwise stated. HY18 values are quoted For personal use only on a Pro-forma basis throughout this presentation unless otherwise stated. EBITDA throu
Slide 39: Disclaimer
Disclaimer The material contained in this presentation is intended to be general background information on Coronado Global Resources (Coronado) and its activities. For personal use only The information is supplied in summary form and is therefore not necessarily complete. It is not intended that it
Slide 40: Disclaimer: 2018 JORC Resource and Reserve Statements
Disclaimer 2018 JORC Resource and Reserve Statements In this announcement, references to ore reserves (Reserves) are compliant with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 For personal use only (JORC Code) and are measured in accordance wit
Slide 41: Supplementary Information
For personal use only Supplementary Information HY19 Results Presentation 41
Slide 42: Reconciliation of Non-GAAP measures
Reconciliation of Non-GAAP measures This report which incorporates a discussion of results of operations includes references to and analysis of certain non-GAAP measures (as described below) which are financial measures not recognised in accordance with U.S. GAAP. Non-GAAP financial measures are use
Slide 43: Balance Sheet
Balance Sheet June 30, December 31, (US$ Thousands) For personal use only 2019 2018 Assets Current assets: Cash and restricted cash 46,251 124,881 Trade receivables 204,248 206,127 Related party receivables 59,665 36,716 Income tax receivable - 12,017 Inventories 129,424 95,103 Other current assets
Slide 44: Balance Sheet (cont'd)
Balance Sheet (cont’d) June 30, December 31, (US$ Thousands) For personal use only 2019 2018 Liabilities Current liabilities: Accounts payable 41,084 42,962 Accrued expenses and other current liabilities 252,351 243,496 Income tax payable 33,024 9,241 Asset retirement obligations 7,719 7,719 Conting
Slide 45: Income Statement
Income Statement For personal use only (US$ Thousands) June 30, 2019 June 30, 2018 June 30, 2018 Pro forma Coal revenues 919,329 571,343 874,857 Coal revenues from related parties 293,158 213,003 222,983 Other revenues 21,848 15,337 18,343 Total revenues 1,234,335 799,683 1,116,183 Cost of coal reve
Slide 46: Cash Flow Statement
Cash Flow Statement (US$ Thousands) June 30, 2019 June 30, 2018 2019 2018 For personal use only Cash Flows From Operating Activities: Net income 214,326 35,651 Adjustments to reconcile net income to cash and restricted cash provided by operating activities: Depreciation, depletion and amortization 8
Slide 47: Cash Flow Statement (cont'd)
Cash Flow Statement (cont’d) (US$ Thousands) June 30, 2019 June 30, 2018 For personal use only 2019 2018 Cash Flows From Investing Activities: Capital expenditures (66,430) (46,776) Purchase of deposits and reclamation bonds (906) (523) Redemption of deposits and reclamation bonds - 171 Acquisition
Slide 48: Mining Costs per tonne Reconciliation
Mining Costs per tonne Reconciliation For six For six Months For personal use only Months Ended Ended June 30, June 30, 2019 2018 Pro forma Total costs and expenses 914,744 942,885 Less: Selling, general and administrative expense 18,311 15,977 Less: Depreciation, depletion and amortization 85,279 8
Slide 49: Realised Pricing Reconciliation
Realised Pricing Reconciliation For six Months Ended June 30, 2019 Australian US For personal use only Consolidated (In US$’000, except for volume data) Operations Operations Total Revenues 794,182 440,153 1,234,335 Less: Other revenues 18,240 3,608 21,848 Total coal revenues 775,942 436,545 1,212,4
Slide 50: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation For personal use only For six For six Months Months Ended Ended June 30, June 30, 2019 2018 Pro forma Net Income 214,326 111,178 Add: Depreciation, depletion and amortization 85,279 86,636 Add: Interest expense (net of income) 17,264 31,133 Add: Other foreign exchange
Slide 51: Contacts
Contacts For personal use only Corporate: Media: Ayten Saridas Marie Festa Group Chief Financial Cato & Clegg Officer t +61 405 494 705 t +61 437 565 833 Aidan Meka m +61 428 082 954 ameka@coronadoglobal.com.au EEwart@coronadoglobal.com.au HY19 Results Presentation 51
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