Coronado Global Resources Inc.

Thank you for standing by and welcome to the Coronado Global Resources Third Quarter Investor Call. All participants are in a listen-only mode. There will be a discussion of results from the CEO and CFO, followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one in your telephone keypad. I would now like to hand the conference over to Mr. Andrew Mooney, Vice President, Investor Relations and Communications. Please go ahead.

Thank you, Operator, and thank you, everyone, for joining Coronado's third quarter investor call. Today, we released our quarterly report to the ASX and SEC, in which we outline our production and sales volumes, as well as other key information related to our safety results, coal markets, and financial performance. A more detailed outline of our financial position and results will be released to the market on the 9th of November with our Form 10Q earnings release. Today, I am joined by our Managing Director and CEO, Jerry Spindler, and our Group CFO, Gerhard Ziems. Within our report, you will see our notice regarding forward-looking statements and reconciliations of certain non-US GAAP financial measures. We encourage you to review these statements in conjunction with our other filings with the ASX and the SEC. I also remind everyone that Coronado quotes all numbers in US dollars and metric tons unless otherwise stated. With that, I'll hand over to Jerry.

Thank you, Andrew, and thank you everyone for joining our call today. Before Gerhard and I elaborate on our quarterly performance, I would like to confirm that currently there is nothing further to report in relation to any potential combination transaction with Peabody Energy. At this time, confidential discussions are continuing, but no transaction has been agreed and there is no guarantee that discussions will lead to a transaction. Therefore, today we will not be in a position to answer any questions in relation to any potential deal with Peabody and will respond only to questions related to our September quarterly performance. During the September quarter, Coronado continued to deliver on its capital management strategy. We continued to manage a strong balance sheet with improved liquidity. We delivered further shareholder returns via dividends. We delivered improved production and sales volumes over the prior June quarter, and also continued to pursue our capital investment plans in both the US and Australia to underpin our strategic growth objectives. Here today, Coronado has delivered record revenues record price realizations, and distributed U.S. $470 million in cash dividends to shareholders, all while maintaining a strong balance sheet, high liquidity levels, and retaining a net cash position. Coronado is an ASX 200 index business who has outperformed the market and generated share price growth. excluding dividends of approximately 65% year-to-date, compared to negative returns from the ASX 200 Index and the S&P 500 Index. We do not release our year-to-date audited financial results until the 9th of November. However, I am pleased to report that Coronado's year-to-date EBITDA results exceed $1 billion U.S. dollars. and easily eclipsed the highest full-year EBITDA results generated in the history of the company as public. Therefore, today I am pleased to announce that Coronado declares a third quarter unfranked special dividend to shareholders of U.S. 13.4 cents for CDI, totaling U.S. $225 million. This special dividend will have a record date of 21 November 2022 and will be paid on 12 December 2022. In conjunction with this special dividend, Coronado also makes a senior secured notes purchase offer up to the value of $200 million. This purchase offer is made at a purchase price of 104% of the aggregate principal amount of the notes plus accrued interest. The offer expires on 1 December 2022 and will be paid to note holders who accept on 5 December 2022. Today's announced dividend and notes purchase offer align with our existing policy of distributing between 60% and 100% of free cash flow and we do so while expecting to remain in a net cash position post payment. The entire Coronado team are extremely proud of our strong financial results and distributions year to date. However, due to forces outside of our control, our operations have been impacted by unseasonal wet weather and global economic circumstances that are driving higher inflation rates across the globe. These events have contributed to our lower production levels and higher mining costs here to date. While we accept that the La Nina weather patterns in Queensland and global inflationary impacts will dissipate in time, today we revise our full year 2022 production and cost guidance. As we enter the fourth quarter, I remain extremely confident in our ability to address these challenges due to our strong balance sheet, our exceptional management and associates, and capital investment plans, which have us well positioned to continue to enhance value for our organization. Before we elaborate on our results, firstly, I would like to provide an overview of our year-to-date safety results. The safety and well-being of our workforce continues to be Coronado's number one priority. To that end, I am again pleased to advise that reportable rates in both Australia and the US continue to remain below the relevant industry averages. In Australia, the 12-month rolling average total reportable injury frequency rate at 30 September was 4.15. And in the United States, the total reportable incident rate was 2.08. On a consolidated basis, the group's global total reportable incident rate stands at 1.31 compared to a rate of 1.47 as of 30 September 2023, reflecting an 11% year-on-year improvement. New and revised health and safety initiatives continue to be implemented across Coronado operations quarterly. In Australia, CARA has rolled out our Lifesaving Rules Program, implemented upgrades to its safety health management system, increased training initiatives, including felt leadership, and continued to focus on hazard identification and mitigation plans. In the U.S., we continue to focus on training our existing workforce and developing new miners. This has resulted in more than 58,000 man-hours of discretionary training that has helped set solid expectations for new hires and articulate Coronado's safety culture and focus. Turning to our operational performance, Coronado completed the third quarter with improvements in production and sales volumes compared to the prior June quarter. Group run-of-mine coal production was 6.4 million tons, up 16%. Group saleable production was 4.1 million tons, up 26%. And group sales volumes were 4.1 million tons, up 5%, compared to the June quarter. Saleable production in the September quarter from our U.S. operations was 1.7 million tons, up 20%, compared to the prior June quarter, and reflects the U.S. operations best production quarter this year. The production impacts from the rock intrusion experienced at the Buchanan Mine in April are now behind us. And as a result, the mine has achieved improved production and yield rates. During the quarter, Coronado also commenced mining at the new Winifred Mett Coal Underground Mine, which is part of the Logan Mine Complex. Continued capital works at its Buchanan Mine to expand its raw coal storage space and commence construction of a second set of skips. Growth plans at our U.S. operations to produce 6.9 million tons by 2025 remain on target. Consultation and engagement with local communities and state and local governments in our U.S. expansion plans is proceeding well. Coronado has recently worked with local counties and the governor of Virginia, Mr. Glenn Youngkin, to secure grants and incentives to progress our Buchanan expansion plans. Furthermore, as I mentioned in our half-year presentation, during the quarter, we officially commissioned the Buchanan Ventilation Air Methane Abatement Project. This project utilizes the latest technology to convert fugitive methane gas emissions to carbon dioxide from our Buchanan operation. It is envisaged that this project will reduce the Buchanan mine's emissions intensity by 22 times and reduce total emissions from the mine by 61% by 2030. The initial performance from the BAM unit is encouraging. with the project achieving 94% emission destruction efficiency in its first few months of operation. While Coronado is also investigating other projects to reduce its carbon footprint, if the VAM projections are achieved, this project alone will meet the group's 30% emissions reduction target by 2030. The focus for the U.S. operations entering the fourth quarter is to continue to optimize production levels to meet the demands for U.S. source coal, particularly in China and Europe. Compared to other met coal producers, Coronado maintains a competitive advantage given its geographic diversification and ability to access the Chinese market from the U.S. plus the unique ability to take advantage of existing met and thermal coal price disparity and switch tons into the thermal export market to generate higher margins when it makes sense to do so. Turning to Australia, saleable production from the Australian operations of 2.5 million tons was 31% higher compared to the June quarter. This significant increase reflects the return on investment made in the first half of the year. The transition of four fleets at Cura North to a Coronado operator model is now complete. Sustained performance improvements from these fleets were a major contributor to the quarter's improved production result. Despite the impacts of the Bowen Basin rain events, Year-to-date CURRA has executed its capital investments in the mine plan, specifically investments targeting dragline performance and waste movement, which have translated to improved performance for the expectations of the one CURRA plan. Year-to-date waste movement is broadly aligned with the same period in the prior year, despite the above-average rainfall. Furthermore, in the September quarter, the planned high-wall mining operations commenced at Curra North to liberate restricted coal under the overland conveyor. While production improvements at Curra quarter on quarter are evident, the rain events in the Bowen Basin continued in the September quarter, which did further hinder coal production levels. The town of Blackwater, the nearest town to Curra, received 178 millimeters of rain in the quarter, representing rainfall nearly three times the 10-year average for the area. The consistent rain this year has been a key contributor to the lower production volumes and the higher mining costs per ton. However, despite the weather, quarter on quarter, Cura achieved 29% higher ROM coal production, 31% higher saleable production, 4% higher sales volumes, 14% higher closing coal stockpiles, 12% higher CHPP feed rates and availability, 13% higher dragline utilization, and 8% higher operating time from the recently converted four contractor fleets. Capital growth plans at Kura Mine continue in accordance with existing expansion plans to reach 13.5 million tons per annum by 2025. During the quarter, we completed activities on the Kura North underground pre-feasibility study and the ZPIT expansion study.