Coronado Global Resources Inc.

Thank you for standing by. Welcome to the Coronado Global Resources second quarter investor call. All participants are in a listen-only mode. There'll be a discussion of the results from the CEO and CFO, followed by a question and answer session. If you wish to ask a question, you'll need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Chantal Esser, Vice President, Investor Relations. Please go ahead.

Thank you operator and thank you everyone for joining Coronado's third quarter investor call for 2024. Today we released our quarterly report to the ASX and SEC in which we outline our production and sales statistics as well as other information related to safety, coal, markets and financial performance. You will note slight enhancement in format to improve information exchange. A more detailed outline of our financial position and results is expected to be released to the market on the 13th of November with our Form 10-Q. Today, I am joined by our Managing Director and Chief Executive Officer, Douglas Thompson, and our Group Chief Financial Officer and Head of Strategic Investment, 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 filings with the ASX and SEC. I also remind everyone that Coronado quotes all numbers in US dollars and metric tons unless otherwise stated. I'll now hand the call over to Douglas.

Thanks, Chantal. In summary, it's been a mixed quarter for us. We're pleased with the strong results achieved by US business units. the northern and southern districts at Buchanan have delivered the planned productivity increases and yield blending that underpin the strong result. We issued a new series of notes that closed oversubscribed and with improved pricing and terms. Our safety results remain better than industry averages, and we finished the northern American annual contract negotiations for next year. But we suffered from adverse geological conditions at Logan, plus mechanical and geological impacts at Currah this quarter. These impacts were further compounded by a 10-year record rainfall at Currah in August. And an unfavorable weather outlook for the remainder of the year necessitated a revision of our full year production and cost guidance. As we have previously demonstrated, there is upside to our Q3 performance, and we will continue to press for operational and cost gains in the coming quarters. Key metrics achieved in Q3 were group ROM production, 6.3 million tonnes, saleable production, 3.8 million tonnes, and sales volume, 3.9 million tonnes. We remain focused on delivering our Mammoth underground project at Currah and the expansion works at Buchanan. Both projects have extremely positive prospects and continue to be delivered from our available cash. At a group level, our total recordable Injury rate was 1.13, remaining well below industry averages in both the United States and in Australia. And in Australia, the improvement journey is very positive, with a 12-month rolling average showing a 36% improvement year on year. And in the US, we're seeing improving trends. Turning to page two, you will see our operations and sales summary. On a year-to-date basis, at September, Coronado achieved a ROM coal production of 19.7, This is up on 23 and up on 22, reflecting improved planning and efficiencies from across all of our operations. The Australian Business Unit experienced a difficult September quarter. The Currah complex delivered a wrong coal production of 2.6, which is down on the prior quarter. As previously reported, Currah was impacted by unplanned repairs to the bucket wheel and overland conveyor. Production was affected for a two-week period while the repair works were undertaken. And in addition, a geological anomaly, two zones of coal thinning, further impacted our own coal production in the quarter. This has been addressed by additional exploration drilling to better define the geology in the two impacted zone areas. These events were compounded by the heavy rainfall in August, which was more than three times a 10-year monthly average for the area. Albeit the mine has greatly improved flexibility post the recovery of historic waste deficits, these events in the quarter were beyond the operating system's ability to recover within the quarter. August adverse weather and then the La Nina forecast for spring and summer in Australia contributed to the announced change in our financial year 2024 guidance back in September. To best utilise time during the delay in production, planned dragline maintenance was brought forward, which is expected to benefit Q4 utilisation and productivity. Due to the improved productivity in our dragline system, an additional fleet can be idled in late October, which will further reduce the mining costs at the Cairo complex. The fleet planned to be idled consists of a company-owned shovel, T282 trucks and associated equipment. Once idled, the Curragh complex will have removed six fleets from the operation since April of this year. With a 4% increase in productivity across our truck and excavator fleets that has been sustained since Q1, we do not plan to return these fleets to operation. Our mine site cash costs have decreased by more than $20 million a month from this time last year. measuring Q3 2023 to Q3 2024. This shows that despite our mixed quarter at Curragh, the efforts of our people to follow our plan in a determined and disciplined manner is delivering opportunities for improvement. This plan is focused on optimising performance by enabling productivity and removing system complexity. With the completion of the historic pre-strip deficits and the subsequent removal of multiple fleets delivering quarter-on-quarter cost-based improvements. Our efforts in the quarter turned to focusing on improving productivity from our dragline systems, the system being our draglines, our dozer push, and our cast blasts. The dragline system continued to exceed improvement targets, with the ratio of waste moved by draglines compared to truck and excavator now at 47%. This is 3% above our plan for the year and is up from 37% in financial year 2023. The next major milestone in our plan is the enablement of alternate coal source, which is not impacted by wet weather and is at lower cost per tonne than our current operation. And the soon-to-be operational Mammoth Underground offers this milestone. First coal is planned for late Q4, subject to approval. And I'll elaborate on progress made on Q3 later in my address on this project. Moving to our U.S. business unit, performance remains strong. The U.S. continued to improve quarter-on-quarter throughout 2024, delivering higher production, sales volumes, and lower cost per tonne. The U.S. operations delivered ROM coal production of 3.7 million tonnes, a positive and sustained trend. The cannon's September quarter ROM and sale production was higher, as mining activities benefited from running both along walls. During the quarter, yield improved as mining conditions improved and we blended from the north and southern districts. The cannons ROM production was up 9.5% and salable production was up more than 23% quarter on quarter. The mine continues to achieve improved skip efficiencies following the maintenance works undertaken early in the year and the conveyor belt system is working well. And skip counts are at their best rate in the last two years. I'll now hand over to Gerhard to take you through a financial update and a bit of a market overlook.

Thanks, Douglas, and good day, everybody. Our September quarter group revenue was $608 million, and the September year-to-date group revenue was $1.95 billion. Revenues reflected a 10.6% fall in Benchmark Metcoil Index. combined with lower annual U.S. domestic contract pricing compared to the same period last year in 2023. On our sales volume, in the September quarter, the average benchmark MEDCOL index was $211 per ton. The group realized price per ton of MEDCOL sold for the September quarter was $180 per ton. Sales volumes for the group in the September quarter were 3.9 million tons. Year-to-date sales volumes for the group at September 2024 were 11.7 million tons, which is in line with the same period last year. And similar to prior quarter on a year-to-date basis at September, Metco sales revenues were 95.5% of total coal revenues. Turning to medical markets, in the September 24 quarter, we started to see steel markets and raw material demand coming under pressure. The ongoing weak macroeconomic environment and excessive Chinese exports of steel and coke led to a slowdown in hot metal production, and the benchmark medical index fell to a three-year low in early September. Then China's stimulus measures that were announced in late September initially boosted confidence in the steel markets, leading to a rise in steel and raw materials prices. After the announcement, the main MEDCOL index moved above $200 per ton, up to $211. However, the markets cooled after that, and steel and raw material prices retreated, with the main MEDCOL index retreating to slightly below $200 per ton. per ton levels today at $199 per ton. That's pretty stable over the last four business days. So during the coming December quarter, we expect positive momentum from India and hot metal production outside China to recover as macroeconomic conditions improve. Trade measures will also potentially reduce the impact of high Chinese steel exports, allowing non-Chinese steel production to rebound. North American annual contract negotiations for FR25 are completed. We anticipate a volume-weighted average price across all grades of met coal of approximately $159 per metric ton. That is FOR, not FOB, reflecting a price aligned with the HyVol A and HyVol B FOB US East Coast average index price between June and September and forward curve pricing estimates at the time. Just as a side note for 2024, we had a price of 161 for 2025, 159, so not a big change. This fixed price average contract price covers approximately 40% of anticipated U.S. production and 58% of anticipated U.S. cash costs in 2025. On financials, in corporate, average mining costs per tonne sold for the group increased to $117 per tonne as a result of lower production. September 24, year-to-date, average mining costs per tonne sold for the group were $111 per tonne. However, we are quite confident we will come back to revised cost guidance in quarter four, underpinned by recovering sales volumes. At the end of September, the company had a net debt position of US$94 million. and the closing cash balance of 176 million US dollars. Available liquidity was 326 million at the end of the quarter. And we announced a fully franked dividend, half a cent dividend distribution per security, per CDI with payment on 18th of September, reaffirming the company's commitment to pay dividends twice every year. On 23rd September, Coronado Finance Pty Ltd. launched an offering comprising 400 million U.S. dollars aggregate principal amount of senior secured notes that are due in 2029. The notes offering closed seven times oversubscribed on 2nd October 2024 and so $2.8 billion interest and achieved improved pricing, 9.25% coupon as opposed to 10.75% coupon on the old one, and more favorable terms. We believe the successful offering reflects the company's strong credit position, attractive earnings, growth potential, and sustained unit cost reduction implied by the development of Mammoth Underground Project in Australia and the Buchanan Expansion Project in the U.S., and then also the anticipated easing of standard commitments in 2027. Net proceeds from the notes offering were used to redeem the $242 million of outstanding senior secured notes that were due in May 2026. Pay related to fees and expenses of the offering is then the balance. The company intends to use the remaining net proceeds for general corporate purposes, providing enhanced liquidity. I hand back to Douglas.

Thanks, Mike. I'll give you a brief update on both of our projects, starting with Mammoth Underground. The Currah Underground project, Mammoth Underground, remains on budget and on schedule, subject to approval. We completed all the necessary earthworks and S-PITs in the June quarter and high-wall stabilisation works commenced in the September quarter in preparation for portal development. All procurement activities are progressing to plan and all equipment orders are placed and delivery schedules have been agreed. Mammoth Underground will offer Curragh Complex several strategic improvement opportunities. To diversify coal production, the underground mine will continue to produce coal in periods of wet weather, thereby de-risking production continuity as the two open cuts may be impacted by periods of wet weather. Reduced cost per tonne, the cost per tonne for Mammoth Mine is forecasted to be in the second cost quarter, which will reduce the overall cost per tonne for the Curragh Complex. Mammoth Underground has substantial high quality met coal, a reserve base of 41 million long tonnes. with coal quality expected to mirror the existing Curran North open-cut operations. And once fully operational, the project is expected to deliver 1.5 to 2 million tonnes per annum of sellable production in its first phase. Turning now to the US, our organic expansion plans at Buchanan remain on budget and on schedule. In the September quarter, underground steel and major component insulisation was progressed on the second set of skips, and all long lead components were received on site. Excavation works were completed on the new surface raw coal storage area, with construction starting immediately following with the reclaimed tunnel and the screening buildings. Completion of both projects is on budget and on track to be completed in Q2 2025. Ultimately, the increased voicing capacity in storage areas will reduce the risk of bottlenecks, allowing our northern and southern district long-haul equipment to run at high capacity and improve productivity, increasing production by approximately 1 million tonnes per annum of incremental tonnage out of the mine. I'll now hand over to the operator to take any questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Paul Young with Goldman Sachs. Please go ahead.

Thank you. Morning, Doug and Gerhard. Hope you both are well. Doug, first question is on Curra, just the performance in the quarter. Yeah, a number of sort of one-offs there, and it just seems like you can't get any luck at Curra at the moment, unfortunately. But just can you talk through specifically around... the conveyor and the bucket wheel reclaimer, exactly what happened there. And, you know, was there any way that you could have prevented that? And is there any sort of any comments you can make around general sort of maintenance and maintenance sort of approaches at Currah?

Thanks, Paul. You're right. I feel like somebody kicked a black cat and I'm looking for that person at Currah to look at the system delivering what it could in quarter two proves what the team has built and what the plan is capable of doing. And we've had, is one-offs. Looking at what's occurred on Overland Conveyor, yes, it's preventable. The crushing system that we have at Curranorth ROM is part of the original design without getting into the engineering of it. There's a design update to that crusher that will eliminate this risk going forward of what happened to it and then subsequently the Overland Conveyor So we've got an engineering solution for it and that's on order and will be delivered to site hopefully by the end of the year and then installed in one of our shutdown periods. So that is a preventable and will not reoccur with this engineering change. On the bucket wheel, a little bit more simplistic than that. We had a number of bolts fail on it. They sheared off. It's part of the maintenance, the ongoing maintenance to those bolts and torquing tolerances on it. We've addressed the maintenance in that area. What we did subsequent to these two events is we did an internal critical controls audit of all of our components of this nature, and then we also got it externally audited as well. And between those two audits, we've picked up a number of areas of improvement where we'll change some of the engineering that we've got there updated through our capital projects next year to get new engineering in control. and then some of our practices that we've addressed as well. But as you said, unfortunately, a few one-offs.

This call is no longer being recorded.

Yeah, okay, thanks, Doug. Sorry, there's a comment from someone there. Just maybe further to that, just a quick follow-up. Just on the conveyor, sorry to press on this, but was that just a rock that cut the belt? And is that what you're talking about, just an engineering change on... on the shale or anything? Is it related to a piece of rock cutting the belt?

No, Paul. In the Crusher design, it's got on the center spindles of it a portion called a bash plate. And one of those plates has come loose and it's made its way into the conveyor system and ripped the belt. There's a number of controls like magnets and others that pick it up and prevent damage. This damage though, the crusher is the source of the problem that is being engineered and taken out and we've got a number of preventative controls posted as well that limit the ongoing impact.

Okay, got it. And then just on the wet weather, you would have seen your peers in the region, Jalambar and Blackwater actually do pretty well in the quarter. I'm just trying to understand how your operation was impacted or say more to some of the neighbouring operations during that period.

So we had 62 mills versus an average of about 19, the 10-year average that came through. For us, the challenge was we had the two weeks where the overland conveyor couldn't produce, and then we also had in the southern mine this thinning zone area in Jaypit where we had coal that was planned to be released in the quarter. We found that the thinning was to the extent that it wasn't going to release the volumes that was anticipated. So you had these two events, and then just after that you had the wet weather event as well. And 60 moles is a lot of water compared to what is normal, but it's not beyond the system's capability of coping with. We've spent a lot of time and effort addressing wet weather controls over the last couple of years, but the compound effect of the three in the quarter, all of them coming in the month of August, is what's blown it out because you can't do the pre-stripping. And the rain was three days of pretty heavy rain, but we also had two days around it where you had light rain. So we ended up having about six days of production impact, and then you've got to bring the operation back into a staged ramp-up, which is also greatly improved. I need to call it out. We measure this. We measure everything. We generally used to have about 1.8 hours for every mull of rain that impacted the mine in getting the operations back to work. With the work that we've done over the last year and a half, we're down to 1.2 hours in the south and 1.3 hours in the north, roughly, recovery time post-awake weather event for every mull of rain. That's an average we work on. Our push is to get to one-to-one ratio with the improvements we've made.

Okay, that's good to know, Doug. And then maybe a question for Gerhard, just on cash flow, Gerhard. I know you're coming out, I think, on the 12th of August with your full sort of accounts and cash flow statement, but your net debt went up close to $100 million in the period. It makes sense, obviously, your sales were down, your production was down. But I saw in the first half, sorry, you had $100 million working cap billed.

building working cap in the half so um a question is you know what is there anything to call out on working cap you know what for the build you actually saw in the quarter if you know that thanks yeah yeah on cash look uh cash is a function of ebitda here in capex you know so you have sustaining capex you have um the the growth capex in there and and the negative ebitda number and we will disclose that of course in the in the 10Q and that led to the cash bleed in the quarter. 32 million, 33 million is related to investment CapEx, Buchanan and Mammoth. Looking at inventories, absolutely. If you look at mining costs, the main reason mining costs went up quarter and quarter and also year on year is inventory movements, actually. Of course, a little bit of that is lower sales times. But if you look at the inventory movements, that's massive. So if you look year on year for the group, it's about 90 million, so close to 100 million. If you look at quarter on quarter, it's about 80 million for the group. And most of that is coming out of Australia. And also, we had massive inventory builds in December last year that we destocked in January. And then we had also big inventory builds in june this year that we unfortunately couldn't hold you know so that pushes back a lot of mining costs you know if you look at mine cash costs which we unfortunately don't disclose we see the savings that douglas highlighted you know the 20 million per month in aussie dollars you know in the quarter at least so we see progress but unfortunately when we look at mining costs that's really disturbed by the massive inventory costs that come back into the bottom line.

Yeah, understood. Okay, thanks, Gerhard. Thanks, Doug.

The next question comes from Glenn Lawcock with Bear & Joey.

Please go ahead.

Morning, Douglas. Just firstly on the mammoth undergrounds, I'm just sort of a little confused. Last quarter, December 24 was first call. Those words have been dropped from this release. What, and we're still dealing with regulatory approvals when I thought you said it was a well-defined process that they follow. What's, what's taking time? What's the stumbling blocks to get this approved in, in first call?

Uh, Glendo, we, we still targeting first, uh, first quarter, fourth quarter of this year, December is our steely focused on, um, start date. The process we're working through is with DESE. We need a mining method change, as I've described previously. We fully permitted to mine this coal. That's not what it is. It's an environmental authority approval change from a different mining method. We're going through that process and our timeline with DESE and the submissions that we started back in May, June this year, and the timeline that we're running to for that mining method change gets us that we'll get that permit late November to mid-December, and then we're ready to start cutting coal.

Okay, so there isn't a slippage, you just admitted the December 24 first coal from today's release, that's all?

Yep, that's still the intent. Obviously, you know, we're going through a government process, so we want to affirm that we put it subject to that approval. But that's our firm focus.

But is there an official timeline? Do they have to come back in time for you to get December coal? Or can, given we've just had a change of government in Queensland and everything else, does that pose risks to your slipping?

Unfortunately, there's always those kind of risks. DESE, we've actually found our experience with them on this project to be quite favourable. Our engagements have been positive and timelines that they have, so it's a fairly bureaucratic process that this kind of approval goes through. We have set timelines, they have set timelines. Both sides are actually meeting those timelines and in some cases they've beaten their delivery dates and likewise if we beat our delivery dates in you know, request for information and response to questions and that. So we're comfortable with that set timeline, but you do call out what we've been trying to flag is this is in that style of process, but everything to date, we're well on track within our timeline.

Okay, thanks. And then maybe just turning to the business today, you know, obviously it was a tough third quarter, but where are we sitting today now? Like if we take Currah, which has been the problem child all year, Are we now back at free cash flow positive today at $200 met coal and are costs now back within the guidance range that we've got for the year?

So from a cost perspective, we're looking at a forecast of $106 and we're sitting at about $111 at the moment in a guidance. So we're within that guidance from a cost perspective. As you describe it, I would rather look at Currah as a smorgasbord of opportunity. It's got 20 years of life, fully permitted coal. It's got two large open cuts. It's got a potential of another open cut that we've described as expert. We're on the verge of developing an underground mine. The plan that we've deployed probably over the last 24 to 18 months has been a plan of two limbs. One is How do we drive productivity in the mine? And that's setting it up to be a dragline-led set of operations. And you can see in the results reporting that plan is working. We're getting it to be a dragline-led mine. And dragline system being cost those dragline is a far cheaper way of moving dirt than truck and excavate. So that's been our push. And once we've got that pre-strip behind us, we could drop those fleets off. It was a big burden on it. and also added huge complexity to the operations and also made it less efficient in the brain because we've got that alluvium material over the top. So once we cleared that of the system, there was a big limb of the plan that we had. The other was removing complexity and addressing some of the backlog maintenance because of COVID. So we've been diligently working through our drag lines, working through our prep plant and our overlaying conveyor, and report it to the market where we've got a million tonnes over the overland conveyor a while ago, so that's performing where we need it to be. The drag lines, we've addressed all of them by one. We've got one more drag line that's got a major shut next year, that's a five-year shut, and then they are where we want them to be for the next couple of years from their maintenance profile, and likewise with the prep plant. So we've been addressing that limb. The other bit in this year has been taking complexity out. So we split the mine now into three SSC regions, so they've two smaller mines that are being managed with dedicated plans and teams that, in real terms, are two large open cuts in the context of any other mine in the Bowen Basin, but not having it as a complex that brought complexity. The other thing that we've done over the last two years is take control back from our contracting partners. The way it was run previously, the operating model was controls outsourced. We've insourced that again, so now we control the mine planning, we've got a dedicated Our own mine planning teams and our contracting partners' scopes have been reduced. And over the years, we've been taking these fleets out. We've been reducing not only that, but the number of people that come to site. So with the fleets that we've taken out, about 550 people are no longer reporting to our operations every day in these steps we've been taking over the year. And as we've just said, with the drag line performance exceeding where we expected it in our plan, we expected 44%. We're now sitting at 47%. we are idling up a shovel, and that shovel is, it's old, the trucks are 14 years old. It's expensive to operate, particularly in the wet, because of its load-bearing pressure. It's not great in weather, so we initially planned to idle it through the wet weather period while we anticipated the weather that's coming. With the performance across the excavator fleet and the drag lines, we're now planning to idle that through all of next year and hopefully beyond. So we're taking these steps in the plan that takes Curra away from, as in your mind, the problem child to be in the small sport of opportunity that we see as a long-life, high-quality metcol asset that's dragline-led and at the right cost profile going forward.

Yeah, no, I appreciate that, Douglas. I mean, you know, there is an opportunity there over the long run. And I guess two years from now, when the royalty falls away on Stanwell, it'll be in a very different business. Just a final follow-up. Just on the quarter, ROM production down 32% quarter on quarter. I mean, that's essentially you lost a whole month of run of mine production. Is that all explainable by what happened, you explained with the answer to Paul's question, or is there some contractor issues regarding mining as well? Because, I mean, it feels like the conveyor belt down for two weeks. Why would you lose a whole month's worth of ROM?

We've kind of, so the elements that we've called out are obviously the major ones. We had some production issues at Logan, but, you know, fall of ground while within the system's ability to cope with it. Buchanan had a screamer, and that plan is clearly starting to show what we're investing, and the plan we have for that asset is returning handsomely and will continue to return. At Currah, it's the compounded effect of you lose two weeks that you can't put product to your prep plant. You then get into an area that you've done all the work to expose the coal and you discover that there's a lensing effect in the geological model that means that the coal isn't in the volume that you expected. As I said, we've now drilled out that bullseye around that borehole that was in Jaipur to affirm the geology and the faulting. And then you have a weather event off the back of that. And yes, all of those put together, you start looking at that kind of volume impact on the quarter. Yield in the US is up. Logan is normal. At current, it was slightly down for the month. That was predominantly because we were washing products from the south versus the north. So that took us a bit of a yield impact in the quarter as well. That wasn't in the original plan.

All right, that's great.

Thanks for that, Douglas. Appreciate it. No worries.

Your next question comes from George Eady with UBS. Please go ahead.

Yeah, g'day, Douglas and Gerhard. Just firstly on the US price negotiations, can you help remind me how that works exactly? So you're locking 40% now, but how is the price agreed? It's obviously flat year on year, but maybe some help thinking about this going forward to 26 and beyond too, please?

Yeah. Yeah, George. Look, the way that works is essentially in the US, the steel producers go out and tender for an annual fixed price offerings. And then the medical producers respond, you know. So that happened last year. This year, that's just the traditional way it works. 40% of this year's volume was contracted as an annual fixed price of 161, and then about 40% of our U.S. volume next year will be contracted as $159 per ton. I can see, if I provide an outlook for the following years, 2026 and others, I can see that the volume of annual fixed price contracted met coal will reduce simply because we see higher demand coming out of Asia, particularly India, for certain coals. So for us it would be the Buchanan and the Hyvalts out of the U.S. The problem with India at the moment is that the Indians don't want to pay for the freight differential that we see between shipping from Australia and then shipping from the U.S. So shipping from the U.S. is about $20 per ton more expensive than So the Indians don't want to do that at this stage. But as demand out of India increases and as lack of premium mid-walls, basically the demand goes up and the production goes down, basically the Indian steel producers will demand more high-walls and in our case also Buchanan out of the U.S., and will eventually have to pay the freight differential, you know, in following years. Whether that kicks in to its full extent in 2026, I'm not too sure, but I can see, bottom line, I can see that the volume of contracted Metco sales on annual fixed price in the U.S. will reduce and exports will go up.

Yep, okay, that's clear. Thanks, Gerhard.

And maybe just more broader on matter, so just... not Mammoth, so Cura and Mammoth together rather, just chasing some help thinking about costs going forward. So I guess the first part is it's a combination, I guess, of making an assumption around volume growth, cost out of parking this gear, CDX and dragline system getting more volume. You said before Mammoth will be around second quartile on the cost curve. So is it, I guess, the way to think about it going forward, putting all those parts together and making an assumption on cost going forward? I guess just given the water moving parts, could we maybe get three-year cost guidance or something at the results for next year or something, given there's so much uncertainty?

At the moment, we don't get three-year cost guidance, but in summary, you're on the right path here. So I would look at costs where we can get costs down to in Australia, probably at quarter two. So quarter two, we have demonstrated or mining costs can hit the low 80s, you know, $81 per ton. That's in a normal quarter where we are not impacted by rain or any other equipment failures. That's definitely possible. And then if you assume, let's say, 11 million tons from Kara-Orban cut and 2 million tons from Mammoth, you know, the 2 million tons would come at a cost, and I think we published it before, at least we talked about it before, come at a cost of between $60, $65 per ton, you know? So it will bring down, you can do the math now of what it means for all of color. You can see that the mammoth development will reduce overall mining costs per ton, you know?

Yeah, that's great. Thanks, Gerhard. And then just, I'm looking at the EAR that's submitted online two weeks ago. It has volumes from Mammoth at $2.13 million for Candia 25. Is there any risk of that with potential ramp-up timelines into the year?

George, the ramp-up of the project has got the first continuous miner section starting in December. The second one gets delivered in quarter one and then the third one in quarter three. We'll be running three of them as we build the mine out Now ramp up for this is you go straight on coal. So the first day we launched through the portal, we cut in coal, generating coal and generating cash out of the project, which is excellent. Each of these should be able to produce about 800,000 ROM tons. We low cover, low gas, a lovely coal seam. I'd love to get everybody out there when you've got the project going so you can see the coal seam about, just over five metres thick coal seam. It's a highly productive mining that we'll get out of it as you build the mine. But our schedule that you've seen there has got a ramp-up phase through the first six months, and then we start steady-stating into fourth quarter of next year to deliver that result.

OK, great. Thanks, Douglas. Go ahead.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Daniel Roden with Jefferies. Please go ahead.

Thanks, Douglas, and go ahead. I just wanted to ask quickly if potentially you could quantify the impacts in the quarter from the rain event, the conveyor, and the whole thing each, please.

We don't generally split them out like that because it becomes difficult from a reporting going forward, but let me have a crack at it. The weather event was about 200,000 tonnes of coal. Thinning effect was up to 300,000 tonnes of ROM production that was planned. And then the overland conveyor cost us about $400,000 to $450,000 because we had a number of mitigating strategies, including hauling coal with trucks during that period that made that number move around. And then, as I said, because we had to wash coal from the south versus what was planned, we had a bit of a yield impact on what was intended to come from the north to make those shipments.

Awesome. Much appreciated. That was great. And I just wanted to understand as well, you called out some wet weather probably into the December and March quarter next year as well, kind of coming through. The six coalfoaks that you've parked up at Currah, are you able to use those, I guess, as flex capacity if you do experience higher kind of rainfall periods and you can bring them on when it's dry and kind of, you know, sustain production at the impact of your unit cost? And I guess in that lens, what do you consider to be a focus for the company? Is it maintaining production or maintaining cost guidance if that's a trade-off?

I'd say our focus is making cash. we want to return as much as we can to our shareholders. So that's how we look at all of our mine plans and how we manage these events as they play out. From having a contractor's fleets on site, yes, fleets will be available to us. Unfortunately, with the industries after the pressures on pricing and a number of our competitors having major operational challenges, there's quite a few people out there looking for work. skilled people looking for work. So there is those opportunities, but I'll be honest, that's the last place I'd want to turn to in wet weather. Mobilising excavator fleets in period of wet to catch up production is not what you want to do because it's not productive and it costs you quite a bit of money in those circumstances. With having our four drag lines, Cosblast and Dozer, essentially our drag lines keep operating when the other fleets stop. It's very seldom that you stop a dragline fleet in a wet weather event, so we can keep exposing coal through those weather periods. That's what our mine plan has focused on for this La Nina period, being the spring and the summer that's been forecasted. Intentionally, we've designed to have high coal high, so if the bottom of your pits are wet and you can't run in them, we can still get back into coal that's engineered to be high early and keep feeding our prep plants. post the weather events if circumstances prevail and it does make sense, yes, then we'd use that flex capacity of those fleets, but not our intended plan.

Awesome. Thank you. And just a quick question on the Mammoth Underground's ramp-up profile. So that's expected for the first poll in Q4. What's its ramp-up profile to get to that 1.5 to 2 million tonne per annum run rate?

We're going to be running three continuous miner sections. So the first one starts in December, as you called out. The second one arrives in Q1 next year, and then the third one in Q3. And each of them ramp up progressively as we build them on out in that first half of next year with a steady state in quarter four next year is our planned ramp up.

Awesome. And maybe a quick one for GoHard as well on just the new senior secured notes. So you've got 400 million in the door. That's offsetting the 242 notes that are being repaid. And then there's a delta of fees and expenses. Are you able to outline the quantum of those fees and expenses?

No.

Just to get a sense of how much. Okay.

No. But it's not unusual. It's not unusually expensive as well. It's within... the usual fees the banks charge.

No, trouble at all. Thanks, guys. I really appreciate all the time today.

The next question comes from Luca Mariani with Naveen. Please go ahead.

Hey, guys.

So, good question on... current balance sheet cash so I assume the what we're seeing here on the balance sheet that's not including the cash that you got from the the extra cash you got from the transaction the debt transaction that is correct that's coming in that came in in October the additional cash so when you look at the cash and restricted cash at the end of September the 176 million dollars that's just without a new bond you know Okay. Gotcha. And then just to follow up to that, um, you know, kind of including that pro forma you're seeing, you know, from last quarter, kind of a 70 million cash burn. Um, what is, what do you expect the cadence of just, you know, that the cash use going forward to be, you know, is this something that's going to revert when just when mammoth comes online or, or should we expect less work in capital build? Um, Where do you see that going forward and do you see any issues with liquidity going forward as well?

No, no. Liquidity, I think the bond should have fixed liquidity. Obviously, we are trying to generate cash at $200 per ton levels. I think the expansions here, they will consume a little bit of cash potentially at this price level, but there won't be any liquidity issues. So, I think you will see a lot of cash sitting on the balance sheet when you look at it at the end of December. And that provides enough liquidity for us to develop Buchanan and then also Mammoth.

Thank you.

That concludes the question and answer session of today's call. I'll now hand it back to Douglas for any closing remarks.

I'd just like to thank everybody for taking the time and joining us. As you said, it's been a mixed quarter. Our plan in the United States is clearly delivering the results we expect and all of you expect, and we look forward to enjoying the return on that project when it's completed early quarter two next year. Our mammoth expansion is on track, and we're fully focused on producing first coal in December, and that, as earlier called out, can make a big difference to the life of the asset going forward. And then we've got potential beyond that when the Stanmore contract easing occurs. And then the operational capability of Currah, the two open cuts, with the work that we've done over the last couple of years, gives us that flexibility. And we look forward upon drawing that to its full potential out of the drag lines into the future. With that, thanks for your time.

That does conclude our conference for today. Thank you for participating. You may now disconnect.