Coronado Global Resources Inc. · ASX:CRN
Coronado Global Resources — FY2018 Earnings Presentation
46 slides from Coronado Global Resources's earnings presentation, Feb 19, 2019
Slide 1: 2018 Full Year Results Presentation
For personal use only 2018 Full Year Results Presentation GERRY SPINDLER Managing Director and CEO AYTEN SARIDAS Group Chief Financial Officer 19 February 2019
Slide 2: Section 1: Financial & Operational Highlights
For personal use only Section 1: Financial & Operational Highlights Gerry Spindler FY18 Results Presentation 2
Slide 3: FY18 Highlights
FY18 Highlights Safety For personal use only ✓ Achieved record safety performance across both Australian Operations (TRIFR 3.3) and US Operations (TRIR 2.31) Financial ✓ Total Production of 20.2Mt and Total Sales of 20.1Mt, with met coal sales of 15.8Mt in line with Prospectus ✓ EBITDA of $595.3m, u
Slide 4: FY18 Highlights (Cont.)
FY18 Highlights (Cont.) Operational ✓ The Curragh acquisition positions Coronado as the largest dedicated met coal For personal use only producer globally, with FY18 Total Production of 20.2Mt ✓ Successfully integrated Curragh and delivered improved dragline efficiency by 8.1% and prime strip ratio
Slide 5: Achieved safest year on record with lowest reportable incident rates
Achieved safest year on record with lowest reportable incident rates For personal use only Australian Operations (TRIFR) US Operations (TRIR) 20 18.8 15 14.8 12 15 9 10 6 5.0 4.9 5 4.2 3.7 3.3 3 0 0 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 FY12 FY13 FY14 FY15 FY16 FY17 FY18 YTD TRIR M
Slide 6: Long life assets supported by significant Reserves & Resources
Long life assets supported by significant Reserves & Resources For personal use only Reserves and Resources (Mt) as 31 December 2018 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 90 0 0 Group Curragh Buchanan Logan Greenbrier PSF
Slide 7: Section 2: FY18 Financial Performance
For personal use only Section 2: FY18 Financial Performance Ayten Saridas 7
Slide 8: FY18 Strong Financial Metrics
FY18 Strong Financial Metrics Group Results Overview For personal use only FY18 FY18 Variance to Prospectus Actual Prospectus Production 21.2Mt 20.2Mt (1.0Mt) Sales Volume 20.9Mt 20.1Mt (0.8Mt) Revenue $2,279.1m $2,296.7m $17.6m EBITDA $577.7m $595.3m $17.6m Statutory Net Income $166.1m $114.6m ($51
Slide 9: Improved pricing drives revenue growth
Improved pricing drives revenue growth For personal use only Revenues $18m above Prospectus from higher Sales Volumes impacted by rail network realised prices and higher proportion of met coal disruptions at Curragh, partially offset by higher sales shipments from Buchanan Revenue (US$) Sales Volume
Slide 10: Capturing higher margin opportunities
Capturing higher margin opportunities For personal use only 78.6% of total sales derived from higher value Total Group met coal realised price above met coal, with continued focus on reducing forecast with Curragh $5.8/t above expectations thermal coal production from improved sales mix and higher p
Slide 11: FY18 EBITDA above forecast
FY18 EBITDA above forecast For personal use only Group Proforma EBITDA Breakdown (US$m) FY18 Results Presentation 11
Slide 12: Underlying Net Income After Tax
Underlying Net Income After Tax Underlying Net Income After Tax (US$m) For personal use only FY18 FY18 FY18 Actual Statutory Actual Proforma Proforma Prospectus Net income 114.6 232.9 275.6 Add back: Stamp Duty 33.0 - - FX Swap 11.0 - - Curragh Acquisition Costs 6.4 6.4 - Loss on Debt 40.7 - - Extin
Slide 13: Competitively positioned on the met coal cost curve
Competitively positioned on the met coal cost curve For personal use only Cost Per Tonne (US$/t) Coronado Cost Curve (Actual) (US$/t) 120 120 97.9 100 92.4 100 80 80 69.9 62.3 56.6 60 51.0 53.1 53.9 52.4 54.6 60 56.6 40 40 53.1 52.4 69.9 97.9 20 20 0 0 Curragh Buchanan Logan Greenbrier Group Curragh
Slide 14: FY18 Capital Expenditure
FY18 Capital Expenditure For personal use only FY18 Group Capex (US$m) • Capex $12.7m below 140.0 forecast due to timing of 127.0 projects and equipment lead 120.0 114.3 times 100.0 • Capex represents stay-in- business capex 80.0 • SIB capex fully funded from 60.0 operating cash flows 46.2 47.2 44.0
Slide 15: Strong operating cash flows and balance sheet
Strong operating cash flows and balance sheet For personal use only Statutory FY18 Cash Flow (US$m) 1,200.0 720.1 543.8 442.3 862.9 1,000.0 800.0 600.0 364.8 400.0 200.0 114.2 90.6 124.9 28.1 - Opening Operating Borrowings Acquisition of IPO Proceeds Repayment of Capex/disposals Other Closing Balanc
Slide 16: Delivering returns to shareholders
Delivering returns to shareholders Dividend Highlights: Valuation Metrics For personal use only - Total dividend of $299.6m EV/EBITDA Dividend Yield 4 25% - Ordinary dividend $0.06 per CDI 3.7x - Special dividend $0.25 per CDI 21.5% - Dividend funded from available cash approx. $199.6m and 20% debt
Slide 17: Section 3: Delivering Growth and Creating Value
For personal use only Section 3: Delivering Growth and Creating Value Gerry Spindler FY18 Results Presentation 17
Slide 18: World class portfolio of met coal assets
World class portfolio of met coal assets For personal use only Production 20.2Mt AUGUST 2011 Coronado DECEMBER APRIL 2013 MARCH 2016 2014 MARCH 2018 founded by Acquired Acquired Acquired Logan Acquired Curragh Garold Spindler Greenbrier from Buchanan from from Cliffs Natural from Wesfarmers and Jame
Slide 19: Growth through the incremental tonne, product optimisation, new project development and acquisitions
Growth through the incremental tonne, product optimisation, new project development and acquisitions For personal use only • Operational scale to deliver sustainable incremental production growth • Leverage existing capital employed to improve operation efficiency and Asset Optimisation reduce costs
Slide 20: Fifth largest met coal producer globally
Fifth largest met coal producer globally For personal use only Coronado Group Australian Operations US Operations Note: Based on FY17 met coal production - Diversified production base with total saleable production 20.1Mt in 2018 across two significant coal basis (Bowen Basin and CAPP region) - Geog
Slide 21: Curragh is strategically located in one of the world's premier met coal producing regions
Curragh is strategically located in one of the world's premier met coal producing regions For personal use only Curragh Complex - Met coal sold by Curragh is globally recognised and valued for consistent quality delivery - Produces Hard Coking Coal (HCC), Semi Coking Coals (SCC), Pulverised Coal Inj
Slide 22: Coronado is already unlocking significant value at Curragh
Coronado is already unlocking significant value at Curragh For personal use only Attractive and - Asset significantly de-risked and enhanced since acquisition well timed - Improved valuation supported by recent comparative met coal asset acquisition transactions - Acquired SRA in August 2018 providi
Slide 23: Incremental volumes drive substantial margin uplift
Incremental volumes drive substantial margin uplift Incremental tonnes at lower marginal cost For personal use only - Incremental volumes put through lower cost RG Tanna Coal FY2019 indicative incremental cost (US$/t) Terminal - Incremental tonnes above 7Mtpa incur the 2 rebate being a US$/t 120 low
Slide 24: Solid production performance in FY18, upside expected in FY19
Solid production performance in FY18, upside expected in FY19 Saleable Production by Asset (Mt) For personal use only Met Coal Production by Asset 10.0 9.2 8.7 8.0 6.0 4.6 4.7 4.6 4.3 4.0 2.0 1.9 2.0 0.8 0.6 - Curragh Buchanan Logan Greenbrier Thermal Prospectus Actual FY18 Results Presentation 24
Slide 25: Positioned to capitalise on a strong met coal price environment
Positioned to capitalise on a strong met coal price environment FY17 AUS Operation Sales Mix FY18 AUS Operation Sales Mix For personal use only 38% 37% 47% 51% 13% 15% Hard Coking Coal Semi Coking Coal PCI Hard Coking Coal Semi Coking Coal PCI FY17 US Operation Sales Mix FY18 US Operation Sales Mix
Slide 26: Steady growth in BOF steel production will drive demand for met coal
Steady growth in BOF steel production will drive demand for met coal For personal use only Steel Production Forecast (Mt) Seaborne Import Demand Forecast (Mt) 2,200 450 2,000 400 350 1,800 300 1,600 250 1,400 200 150 1,200 100 1,000 50 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 0 Cr
Slide 27: Section 4: Outlook and Guidance
For personal use only Section 4: Outlook and Guidance Gerry Spindler FY18 Results Presentation 27
Slide 28: Future Pipeline
Future Pipeline Extremely well positioned to take advantage of organic growth opportunities For personal use only FUTURE CURRAGH GROWTH OPPORTUNITIES STUDY1 - MDL 162 PANGBURN-SHANER-FALLOWFIELD2 - Expiry of Stanwell Rebate SRA MINE INTEGRATION - Study currently underway to best integrate the SRA in
Slide 29: Early assessment supports uplift in production profile across the Group
Early assessment supports uplift in production profile across the Group For personal use only Production Growth Profile 23.5 23.0 22.5 22.0 21.5 21.0 20.5 20.0 19.5 19.0 18.5 2018 2019 2020 2021 2022 2023 Prospectus FY19 Guidance Range Growth Opportunities Note: * The tonnes outlined in ‘Prospectus’
Slide 30: Upgrade to FY19 Guidance
Upgrade to FY19 Guidance For personal use only FY19 Guidance FY19 PROSPECTUS FY19 GUIDANCE RANGE Production (Mt) 21.6 21.6 - 22.0 EBITDA ($m) 737 737 - 807 Cost ($pt) 51 51 - 52 Capex ($m) 160 160 - 180 Payout Ratio (%) 100 100 FY18 Results Presentation 30
Slide 31: Questions
For personal use only Questions FY18 Results Presentation 31
Slide 32: Section 5: Appendices
For personal use only Section 5: Appendices FY18 Results Presentation 32
Slide 33: Glossary
Glossary For personal use only Key Terms Mt Million tonnes, metric Kt Thousand tonnes, metric ROM Run of Mine, coal mined Strip Ratio Ratio of overburden removed to coal mined (ROM) Sales Volume Sales to third parties Saleable Production Coal available to sell, either washed or bypassed Realised Pri
Slide 34: Large and low cost met coal producer in US
Large and low cost met coal producer in US Portfolio of high quality met coal products leveraged by well demonstrated blending expertise For personal use only Buchanan: - One of the largest and lowest cost met coal mines operating in the US - Buchanan has an extensive network of sales into domestic
Slide 35: All operations well serviced by existing transport infrastructure
All operations well serviced by existing transport infrastructure For personal use only - Australian operations linked to Central Queensland Coal Network - US operations have access to multiple transportation infrastructure options including rail, road and river barge - Coal is hauled by rail to the
Slide 36: Progressing Pangburn-Shaner-Fallowfield opportunity
Progressing Pangburn-Shaner-Fallowfield opportunity For personal use only U.S. Steel Clairton Coke Works - Pangburn-Shaner-Fallowfield Reserves and Resources located in Southwest Pennsylvania in established coal region in close proximity to key customers - Reserves included mineral deed ownership of
Slide 37: MDL development project
MDL 162 development project - MDL 162 is a 100%-owned development project situated For personal use only between and adjacent to Curragh East Mining Area and Curragh North Mining Area Overview - The project is expected to produce coal products suitable for export markets - The arrangement with Stanw
Slide 38: Other development opportunities
Other development opportunities For personal use only - Russell County is a greenfield project located near Buchanan - Coronado acquired the asset through its acquisition of Buchanan in March 2016 - Land is 11% owned and 89% leased Russell County - Capable of potentially producing over 1.5Mt per yea
Slide 39: Statutory Income Statement (US$m)
Statutory Income Statement (US$m) For personal use only (million $) Actual FY18 Prospectus FY18 Variance Coal revenue 1,945.6 1,929.6 16.0 Other revenue 34.9 33.3 1.6 Total Revenue 1,980.5 1,962.9 17.6 Cost of coal revenues 992.0 995.9 3.9 Freight 117.7 122.9 5.2 Depreciation, depletion and amortiza
Slide 40: Statutory EBITDA reconciliation (US$m)
Statutory EBITDA reconciliation (US$m) For personal use only (million $) Actual FY18 Prospectus FY18 Variance Net income after tax 114.6 166.1 (51.5) Add: Income tax (benefit) expense 75.2 32.4 42.8 Add: Loss on debt extinguishment 58.1 3.9 54.2 Add: other net (excluding FX swap) 9.0 - 9.0 Add: Inte
Slide 41: Reserves Reconciliation
Reserves Reconciliation For personal use only Group Reserves Reconciliation Opening balance at 1 Closing balance at 31 Operation Additions Depletion Jan 2018 December 2018 Curragh 2521 82 23 311 Buchanan 185 0 8 177 Logan 158 3 6 155 Greenbrier 61 0 1 60 Amonate 133 0 0 133 Russell 47 0 0 47 Pennsyl
Slide 42: FY19 pricing forecast
FY19 pricing forecast For personal use only Mine Benchmark WoodMackenzie Forecast Price (US$t, Nominal) Q4 Q1 Q2 Q3 Q4 FY18 FY19 FY19 FY19 FY19 Queensland HCC FOB 217.14 212.52 195.91 181.80 184.83 Curragh (Qnsl LVCC) Newcastle SSCC 141.14 144.52 137.13 127.26 129.38 Curragh (NSW SSCC) 149.83 153.02
Slide 43: Statutory Cash Flow Statement (US$m)
Statutory Cash Flow Statement (US$m) FY2018 Actual (Stat Basis) Statutory Forecast $m Total FY2018 Variance For personal use only Net income (loss) 114.6 166.1 (51.5) Depreciation, depletion and amortisation 162.4 145.5 16.9 Amortisation of Stanwell and Other below market CSA (31.9) (27.6) (4.3) Oth
Slide 44: 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 45: Disclaimer (Cont.)
Disclaimer (Cont.) 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 accord
Slide 46: Contacts
Contacts: For personal use only Corporate: Media: Ayten Saridas Marie Festa Group Chief Financial Cato & Clegg Officer t +61 405 494 705 t +7 3031 7777 Ellen Ewart m +1 203 541 1249 eewart@coronadocoal.com EEwart@coronadoglobal.com.a u Aidan Meka m +61 428 082 954 ameka@coronadoglobal.com.au EEwart@
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