Coronado Global Resources Inc. · ASX:CRN
Coronado Global Resources — HY19 Earnings Presentation
50 slides from Coronado Global Resources's earnings presentation, Aug 5, 2019
Slide 1: HY19 Highlights
2 HY19 Results Presentation HY19 HIGHLIGHTS GERRY SPINDLER MANAGING DIRECTOR AND CEO
Slide 2: HY19 Highlights
3 HY19 Highlights(1),(a) HY19 Results Presentation Safety Safety metrics continued to outperform national industry averages with Australian rolling 12-month TRIFR 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 reco
Slide 3: HY19 Highlights (Cont.)
4 HY19 Highlights (Cont.) HY19 Results Presentation Interim Distribution Declared interim distribution of $0.41 per CDI - fully franked interim dividend of $0.112 per CDI and Capital Return of $0.298 per CDI (total distribution of $396.3 million) Curragh Mine Plan targets 15mt of saleable production
Slide 4: Safety Performance
5 Safety Performance HY19 Results Presentation Australian Operations (TRIFR)a US Operations (TRIR)b Continued vigilance to ensure we maintain strong safety performance over the long term Total Recordable Injury Frequency Rate (TRIFR), is the number of fatalities, lost time injuries, cases or substit
Slide 5: Reserves & Resources (Mt)
6 Reserves & Resources (Mt) HY19 Results Presentation Long life assets with significant Reserves & Resources supports strong growth outlook Reserves and Resources (Mt) as 31 December 20182 1,084 2,524 311 177 155 60 201 180 957 251 220 90 493 513 0 200 400 600 800 1,000 1,200 0 500 1,000 1,500 2,000
Slide 6: Group Operational Performance
7 Group Operational Performance HY19 Results Presentation ROM Production (Mt) Saleable Production (Mt) Sales Volumes (Mt) 7 Production Mix (%) Consistent delivery of strong operating performance across all key indicators 77.8% 22.2% 83.6% 16.4% Metallurgical Thermal HY18 HY19 9.9 10.4 8 10 12 HY18 H
Slide 7: HY19 Financial Performance
8 HY19 Results Presentation HY19 FINANCIAL PERFORMANCE AYTEN SARIDAS GROUP CHIEF FINANCIAL OFFICER
Slide 8: HY19 financial metrics
9 HY19 financial metrics HY19 Results Presentation HY18 HY19 Variance Production 10.2Mt 10.4Mt 0.2Mt Sales Volumes 9.9Mt 10.4Mt 0.5Mt Revenue $1,116.2m $1,234.3m $118.1m EBITDA $263.0m $405.4m $142.4m Net Income $111.2m $214.3m $103.1m Underlying Net Income $117.6m $214.3m $96.7m Group Metallurgical
Slide 9: Revenue performance
10 Revenue performance HY19 Results Presentation Increased sales volumes and higher proportion of metallurgical coal sold underpins revenue performance Sales Volume (Mt) Revenue (US$m) “Sales volumes of 10.4Mt increased 5.3% compared to HY18, driven by improved rail availability at Curragh and new s
Slide 10: Realised pricing and Group Sales Mix
HY18 11 Realised pricing HY19 Results Presentation Group Sales Mix Metallurgical coal realised price (US$/t) Higher proportion of metallurgical coal sales and improved product mix, boosts realised pricing Thermal reduction of 9.3% HY19 “Metallurgical coal mix improved as a result of new sources of p
Slide 11: Segment performance: EBITDA
EBITDA Margin (%): 12 Segment performance HY19 Results Presentation $405.4 million Group EBITDA underpinned by strong performance at Curragh and Buchanan Curragh Buchanan Logan Greenbrier % of Group EBITDA 67% 34.2% 29% 46.3% 9% 22.6% - - Performance drivers: $586m in EBITDA generated since acquisit
Slide 12: Mining cost analysis
13 Mining cost analysis3 HY19 Results Presentation 11.1% decrease in Group mining cost driven by operational efficiencies at Curragh and low cost operations at Buchanan HY18 Mining Costa Curve (US$/t) HY19 Mining Costa Curve (US$/t) Group mining cost= $57.8/t Group mining cost = $51.4/t 67.1 93.7 55
Slide 13: Underlying Net Income After Tax
15 Underlying Net Income After Tax4 HY19 Results Presentation Net Income and Underlying Net Income is provided on a Pro-forma basis 92.7% increase on Proforma HY18 Net Income (US$ Thousands) June 30, 2019 June 30, 2018 Var Pro forma Coal revenues 919,329 874,857 44,472 Coal revenues from related par
Slide 14: Shareholder returns
16 Shareholder returns HY19 Results Presentation Strong operating performance and balance sheet underpins shareholder returns Distribution of $0.41 per CDI Fully franked interim dividend of $0.112 per CDI ($108.3 million) Capital Return of $0.298 per CDI ($288.0 million) Total Interim Distribution o
Slide 15: Key Information on Dividend and Capital Return
17 Key Information on Dividend and Capital Return HY19 Results Presentation Record Date: 26 August 2019 Payment Date: 20 September 2019 “Ex” Dividend 23 August 2019 Dividend Policy to distribute 60 – 100% of Free Cash Flow (FCF)a Commitment to payout 100% of FCF in FY19 reaffirmed Total Distribution
Slide 16: Partial Early Release of Escrow
18 Partial Early Release of Escrow HY19 Results Presentation Independent Directors of Coronado have decided that the early release of 11% of the issued capital in Coronado held by Group LLC from voluntary escrow is in the best interest of Coronado and its shareholders The release of Group LLC would
Slide 17: Guidance
19 Guidance HY19 Results Presentation FY19 PROSPECTUS FY19 GUIDANCE RANGE Production (Mt) 21.6 21.2 - 21.6 EBITDA ($m) 737 737 - 807 Cost ($pt) 51 51 - 52 Capex ($m) 160 160 - 180 Payout Ratio (%) 100 100 FY2019 Guidance
Slide 18: Operational Update
20 HY19 Results Presentation OPERATIONAL UPDATE GERRY SPINDLER MANAGING DIRECTOR AND CEO
Slide 19: Metallurgical coal market
21 Metallurgical coal market HY19 Results Presentation Cash margins of steel producers are being impacted by higher raw material prices Lead to Spot availability increasing in the Atlantic and Pacific markets Seaborne metallurgical coal markets are heavily influenced by China. Tariffs on US coal imp
Slide 20: Australian Operational Review
22 Australian Operational Review HY19 Results Presentation Operational improvements underpinned strong HY19 performance Improved dragline performance increased ROM coal production to 8.9Mt, up 16.1% compared to HY18 Increase in CHPP operating hours resulted in saleable production of 6.3Mt, an increa
Slide 21: US Operational Review
23 US Operational Review HY19 Results Presentation New sources of production at Logan improve metallurgical coal product mix Buchanan delivered production targets despite challenging mining conditions Buchanan received safety award “Best Large Deep Mine in the State of Virginia” by the Department of
Slide 22: PSF Development
24 PSF Development HY19 Results Presentation General Location Map Reserves/Resources Reserves – 147.2 Mt, Resources – 493.1 Mt Reserve Life – 65 years Production Capacity +2.25 Mt per year Coal Quality High-Vol HCC Transportation Barge with alternate rail access on CSX Seam Upper Freeport Greenfield
Slide 23: New Curragh Mine Plan
25 HY19 Results Presentation NEW CURRAGH MINE PLAN GERRY SPINDLER MANAGING DIRECTOR AND CEO
Slide 24: Coronado strategy for long term value creation
26 Coronado strategy for long term value creation HY19 Results Presentation Delivering strong growth by mining the incremental tonne, optimising production, executing new developments and strategic acquisitions Strong balance sheet management to support disciplined growth History of generating posit
Slide 25: Attractive and well timed acquisition
Attractive and well timed acquisition Asset significantly de-risked and enhanced since acquisition Improved valuation supported by recent comparative met coal asset transactions Coronado acquired Curragh for $537m on 29 March 2018 $586m in EBITDA generated since acquisition Improved Stanwell Arrange
Slide 26: New Curragh mine plan targets 15Mt by 2023
Boxcut “K” and “L” at Curragh East will underpin ROM production to increase production to 15Mt Debottlenecking the feed system in the CHPP’s to enable different products to be produced at the same time. Development of an intermediate circuit to increase plant capacity Construction of a new train loa
Slide 27: Mine plan growth stages and capital
Optimised mine plan to integrate the SRA into Curragh North. Continuation of operations no capital required Reliability initiatives: Improved efficiency in the plant to improve operating hours Upgrade train loadout system to reduce train load time Total Capital ~$8.5 million Coronado in is advanced
Slide 28: Saleable Production Uplift
30 Saleable Production Uplift HY19 Results Presentation Estimated Production Profile (Mt)a The expansion is set to deliver an additional 6.0Mt from FY20 to FY23 Growth in production is a result of debottlenecking plant and infrastructure capacity 12.1 12.9 13.5 14.3 14.8 15.0 Deliver an additional 6
Slide 29: Curragh Cost Profile
31 Curragh Cost Profile HY19 Results Presentation Estimated FOB Cost Profile (US$/t)a Sustainable production supply profiting from a unique cost structure Incremental growth benefits tiered rebate structure driving a reduction in FOB cash costs $300 million to $350 million in potential FOB cost redu
Slide 30: Investment in Accelerated Growth Plan
32 Investment in Accelerated Growth Plan HY19 Results Presentation 4 Year Capex profile Capex fully funded from operating cash flows Estimated Capex Profile (US$m) Annual Capex profile (US$m) $117m - $147m $131m - $163m $47m - $60m $57m - $72m 55% 24% 21% Sustaining Expansion Box-cut 64 66 53 58 62
Slide 31: Capital Comparison
33 Capital Comparison HY19 Results Presentation Capital Cost per Installed Capacity (US$/t)9 Accelerated expansion plan is highly compelling on installed capacity basis Source: Company reports and disclosures 221 153 130 45 0 50 100 150 200 250 Warrior Riversdale Arch Curragh BMA ~50 - 55
Slide 32: Outlook
34 HY19 Results Presentation OUTLOOK GERRY SPINDLER MANAGING DIRECTOR AND CEO
Slide 33: Future Pipeline
Future Pipeline Executing on our pipeline while maintaining flexibility to be opportunistic 12 Months (HY19) 1 – 5 Years 5+ Years Study to best integrate the SRA into the existing mine plan - complete MDL 162 Expiry of Stanwell Rebate Curragh Growth Study outlines studies to potentially develop an u
Slide 34: Production Growth Profile
36 Production Growth Profile HY19 Results Presentation Growth profile continues to firm as expansion study of Curragh progresses Forward looking statements involve risk and uncertainties. Refer to the disclaimer regarding forward looking statements on slide 39 18.0 19.0 20.0 21.0 22.0 23.0 24.0 2018
Slide 35: Questions
37 HY19 Results Presentation QUESTIONS
Slide 36: Footnotes
38 Footnotes HY19 Results Presentation 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 on a Pro-forma basis throughout this presentation unless otherwise stated. EBITDA t
Slide 37: Disclaimer
39 Disclaimer HY19 Results Presentation The material contained in this presentation is intended to be general background information on Coronado Global Resources (Coronado) and its activities. The information is supplied in summary form and is therefore not necessarily complete. It is not intended t
Slide 38: Disclaimer: 2018 JORC Resource and Reserve Statements
40 HY19 Results Presentation 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 (JORC Code) and are measured in accorda
Slide 39: Supplementary Information
41 HY19 Results Presentation Supplementary Information
Slide 40: Reconciliation of Non-GAAP measures
42 Reconciliation of Non-GAAP measures HY19 Results Presentation 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-GA
Slide 41: Balance Sheet
43 Balance Sheet HY19 Results Presentation (US$ Thousands) June 30, 2019 December 31, 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
Slide 42: Balance Sheet (cont'd)
44 Balance Sheet (cont’d) HY19 Results Presentation (US$ Thousands) June 30, 2019 December 31, 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
Slide 43: Income Statement
45 Income Statement HY19 Results Presentation (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 co
Slide 44: Cash Flow Statement
(US$ Thousands) June 30, 2019 June 30, 2018 2019 2018 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 85,404 64,354 Amortization of right of use
Slide 45: Cash Flow Statement (cont'd)
47 Cash Flow Statement (cont’d) HY19 Results Presentation (US$ Thousands) June 30, 2019 June 30, 2018 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 Acqui
Slide 46: Mining Costs per tonne Reconciliation
48 Mining Costs per tonne Reconciliation HY19 Results Presentation For six Months Ended June 30, 2019 For six Months Ended June 30, 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 8
Slide 47: Realised Pricing Reconciliation
49 Realised Pricing Reconciliation HY19 Results Presentation For six Months Ended June 30, 2019 (In US$’000, except for volume data) Australian Operations US Operations Consolidated 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
Slide 48: Adjusted EBITDA Reconciliation
50 Adjusted EBITDA Reconciliation HY19 Results Presentation For six Months Ended June 30, 2019 For six Months Ended June 30, 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 ex
Slide 49: Contacts
HY19 Results Presentation 51 Contacts Corporate: Ayten Saridas Group Chief Financial Officer t +61 437 565 833 Aidan Meka m +61 428 082 954 ameka@coronadoglobal.com.au EEwart@coronadoglobal.com.au Media: Marie Festa Cato & Clegg t +61 405 494 705
Slide 50: Contacts
Contacts Corporate: Media: ‘Ayten Saridas Marie Festa Group Chief Financial Cato & Clegg Officer +61 405 494 705 t+61 437 565 833 Aidan Meka m +61 428 082 954 ameka@coronadoglobal.com.au STEEL STARTS HERE Seronado@y HYI9 Resuts Presentaton 51
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