Coronado Global Resources Inc.

Good morning, everyone, and thank you for joining us. Before discussing the quarter, I would like to begin by addressing an important milestone for Coronado. As announced earlier this month, we are in the process of completing our leadership transition. Barry Vandermeer, currently our Chief Financial Officer, will become Chief Executive Officer on 1 August. While Sandeep Joji will assume the role of Interim Chief Financial Officer. Leadership continuity is critically important for any organization, particularly during periods of transformation. And I am pleased this transition is occurring from a position of improving stability and strengthening operational momentum. Barry has been instrumental in concluding the new arrangements with Stanwell last year and developing and launching the operational and commercial reset program currently underway. Mainly at current, he has played a central role in strengthening our focus on productivity, cash generation, operational discipline, and reducing debt in the future. Sandeep has similarly been heavily involved in the company's financial strategy, liquidity initiatives, capital management, and balance sheet improvement efforts. Importantly, there's a growing sense of positivity and momentum across the organization. Over the past several months, our teams have worked exceptionally hard to address operational challenges, improve reliability and build a stronger foundation for the future. While we still have work ahead of us, we are beginning to see tangible evidence that the reset is starting to have a positive impact and that the business is moving in the right direction. The June quarter represents an important step in that journey with stronger production, lower costs, positive earnings, and improving cash generation. With that, I will hand over to Barry.

Thank you, Jerry, and good day, everyone. Before I get into it, I want to acknowledge and thank Jerry for his leadership and contribution to Coronado. Jerry started the business and has played a foundational role in building Coronado and guiding it through both periods of growth and more challenging recent market conditions. On behalf of the board, management team, and all our employees, I'd like to thank Jerry for his commitment, passion, and dedication to the company. We are grateful for helping us launch the Reset program. I'm honored to be appointed as Coronado's Managing Director and Chief Executive Officer. The business has a lot of potential and great teams of people. The June quarter is a big improvement on March, which is a testament to the efforts of everyone involved. It's a first step in many to rebuild our credibility to deliver results. The Reset Program is a really exciting piece of work and its realization is of critical importance to restore profitability, cash generation and reduce debt. I will talk you through the Reset Program, how we envisage it working and the benefits we're expecting to get from it. Let's start with safety, our highest priority, before we talk about the business results and plans for the future. As at 30 June 2026, the group's rolling 12-month drift was 1.34. This represents only a 3% improvement from 1.39 in the March quarter. The severity rate, or the number of days lost with 200,000 hours worked, improved more materially, declining from 34 to 24 days. While the time lost due to injuries have improved, which is indicative of less severe injuries, we have a lot more work to reduce the number of injuries occurring at our sites, as it remains at an elevated level compared to the past. We'll continue to prioritise safety as the most important leadership responsibility, and we are committed to delivering long-term improvements that create a safer workplace for everyone. We recently started rolling out a new safety leadership program. This will bring together leaders from all levels of the business, and initially it will focus on frontline leaders. It's designed to reinforce accountability, improve hazard identification, and risk intervention, and strengthen the quality of safety conversations. The program aims to build a stronger safety culture founded on proactive risk management and shared ownership of safety outcomes. The initiative complements a range of ongoing actions, including a continuing focus on critical control verifications and leadership-led safety interactions. I'll now turn to the operational performance for the June quarter. If we look at the group, we expect the group to achieve about $10 million of EBITDA for the June quarter. But that's a material turnaround on the March quarter and is about a $100 million swing. was driven by much-improved mining rates and CHPP output at both sites, and then improved realized pricing from a higher proportion of met coal sales. Costs was in line with plan, despite the adverse impacts of uncontrollable higher diesel due to the ongoing Iranian conflict and a stronger AUD exchange rate, and these two both impact CARAS costs. Overall ROM production increased 18% quarter-on-quarter to 6.4 million tons, and saleable production increased almost 40% to 4.1 million tons. During this June quarter, Buchanan achieved record ROM production, and both Currah and Buchanan achieved record quarterly CHPP operating hours, which enabled higher throughput, improved recoveries, and increased saleable production. As I will discuss later on, CHPP performance and maximization of met coal production is a key value driver, and the performance during the quarter is a credit to the effort and the commitment of both operational teams. Now turning to Currah. The June quarter represented a significant recovery following the planned two-week CHPP shutdown and seasonal operational disruptions during the March quarter. Mining activities normalized during this quarter, supported by stronger coal availability and improved overburden removal. As a result, RON production at Kara increased 74% to 3.9 million tons, and sailable production increased 76% to 3 million tons. Open pit mining performance was good in both the north and the south for both waste and coal mining. While the output from the Mammoth underground mine doubled following the impact of the fatality in the March quarter, there remains opportunity for further improvement as the mining rate is still not quite what we originally planned. Mining cash costs declined 33% quarter on quarter to approximately $99 per tonne, impacted by diesel and FX. While we are pleased with this progress, we continue to see substantial further opportunity and I will talk more about what we are doing about cost and productivity. Producing the maximum possible high-margin met coal at Kara to drive stronger margins and cash flow is one of our top priorities. Therefore, a lot of effort is going into improving plant availability and throughput, and we are starting to see early evidence of the team's success in this area. During the June quarter, operating hours regularly started exceeding 150 hours per week. Average throughput rates have also improved, and while variability can be expected as these initiatives continue to embed, the results reinforce our confidence that the plant improvement program is targeting the most important constraints. The plant improvement work is seen as part of this overall reset program, and I want to talk a bit more now about its other elements. The focus at CARA is to create stability and predictability. It all starts with a mine plan. During this June quarter, we developed and began implementation of a new open pit mine plan that reduce execution risk, will over time improve pit geometries and support better productivity and lower operating costs. Coal volumes are expected to be maintained, and appropriate inventory buffers will be established across the coal value chain to support a more stable production system. When thinking about CARA, one needs to remember that the north open pits represent the long-term future and sustainability of the operation, while what remains of the south has a much shorter life, and large parts of that has a low strip ratio a lower strip ratio than the North. This represents an opportunity to think about the complex a bit differently. In the South, the new mine plan maximizes and accelerates lower strip ratio coal through terrace mining. This is better suited to truck and excavator fleets, and the focus and efficiency of the mining method allows us to park two truck and excavator fleets and the smaller drag line. This results in avoiding the upcoming major shutdown capex for that drag line and the associated operating costs with running it. The larger drag line that currently operates in the south will be walked to the north and there it'll help establish improved per geometries. Cost reductions and margin improvement driven by the south and lowering costs in the north will then enable us to fund the establishment of improved geometries in the North, the long-term sustainable part of the mine, and this will accommodate three drag lines in this transition period. It will drive future costs down, it will increase production over time, and it will help us establish the required inventory buffers across the complex to support system stability. The new plan therefore funds setting up the North for longer-term future and getting in place the key things we need for stable operations. While this approach in the South does require the acceleration of developing expert, which is currently in feasibility phase, to maintain the production profile beyond 2027, there's enough time to get that done. and the results of this reset program is expected to generate adequate cash to fund that development. It's also worth mentioning that developing expert will take priority of allocating capital if it's available to Mammoth 2 until such time as we consolidate and internalize all the learnings from Mammoth 1. At the upcoming half-year results roadshow, we will share more details about exactly how all of this is going to work. Off the back of the new mine plan, we are progressing a comprehensive review of our mining services arrangements for both the North and the South. Open-pit mining services contracts represents about 40% of CARA's mine cash costs, and we're working closely with our contractors to simplify contract structures, improve transparency, better align incentives, and capture the benefits created by the new mine plans. Our objective is to establish arrangements that are lower cost, operationally efficient, and support sustainable value creation for all parties. Alongside these mining initiatives, we continue to advance our plant improvement program that I discussed earlier to improve availability, throughput, and maximize high-margin met coal. When we combine all of these savings with savings expected from indirect spend, other procurement contracts, the organizational simplification resulting from selling Logan, and improvements across the mammoth underground from a dedicated improvement plan, this forms an integrated reset plan to improve operational reliability, lower costs, and increase cash generation. We're now reaching the end of the first phase of this reset, which entailed coming up with the plans and targets, as well as some early implementation actions. We have been supported by both Alex Partners and Odin Partnership in this work and expect to be working with both these organizations in the next phase. We will now move to full enablement of these initiatives to start yielding early benefits for the remainder of FY26 and to be fully baked for inclusion into the FY27 budget and guidance. We are making steady progress to stabilize CARA and improve it to safely and reliably deliver margin the high-margin metallurgical coal to our export customers, and thermal coal to Stanwell for 15% of Queensland's baseload electricity generation. Talking a bit about Buchanan now. Buchanan is a stable, profitable asset, and our focus at Buchanan is optimization. Its results continue to demonstrate why the expansion project was such a good investment and decision. Following completion and the successful return of both long walls to production after first quarter relocation activities, Buchanan has now established a materially higher operating base. It also delivered CHPP operating hours among its strongest quarterly results in the past three years, reflecting the reliability and consistency of this operation. Buchanan delivered record first half ROM production of 4.7 million tonnes, representing growth of more than 26% compared to the prior corresponding period. This higher production base has been achieved with on-plan cost performance. Mining costs during the quarter were approximately $91 per tonne. The operation generated approximately $63 million of earnings during the first half. More broadly in the U.S., we've now simplified the overhead structure, supporting the operation following the sale of Logan, ensuring the business is appropriately aligned to a single U.S. asset while maintaining the technical and operational capability required to support future performance. With expansion complete, capital requirements are materially lower and a great proportion of earnings can be converted into free cash flow. We therefore expect Buchanan to remain a primary contributor to group earnings, cash generation and balance sheet improvement moving forward. Sales volumes remained broadly stable for the group at 3.5 million tonnes during the quarter, despite saleable production increasing almost 40% quarter-on-quarter to 4.1 million tonnes. The difference was primarily driven by the rebuilding of inventory buffers mentioned earlier, as well as some shipment delays. Importantly, the quality of our sales mix improved this quarter. MEDCAL represented 80.4% total group sales compared to 71% in the March quarter. Export sales increased to 77% compared to 74% in the prior quarter. This reflects improved operational continuity, better plant performance, and a greater proportion of high-margin Metcalfe products, which, as I said earlier, is a key focus and ends our focus on plant performance. The improvement in product mix translated directly into stronger realized pricing. Group realized Metcalfe pricing increased 3% quarter-on-quarter to $171 per tonne. The Australian realized met coal pricing increased 6% to $172 per tonne, while the US remained strong at $168 per tonne. This improvement occurred despite benchmark PLV pricing remaining relatively stable quarter on quarter. Now briefly on markets. The met coal market remained relatively stable throughout the June quarter, the benchmark PLV pricing averaged around $240 per tonne. We saw modestly improving pricing performance for the lower quality MetGal products and the BCI Coles during the quarter, supporting broader market fundamentals. Since quarter end, benchmark pricing has softened and is currently around $220 per tonne, going into the usual seasonally softer September quarter. Despite this moderation, we continue to believe the medium-term outlook remains constructive. Producers do continue to face some pressure, however, steel demand outside China remains relatively healthy, particularly in India. Overall, we continue to believe Metcol remains well-supported over the medium term. Sandeep will now cover the financials, including our liquidity position, and will outline what we have in place and what we are working on, to ensure that we have some resilience for market volatility and operational disruptions until the full benefits of the Reset program are realized into next year. With that, I'm pleased to introduce Sandeep Deogi, who has been with Coronado for many years. Sandeep was my right-hand man when I was CFO, and I know our money matters are in good hands with you. Thank you.

Thank you, Perry. I'm also pleased to be stepping into the role of interim CFO. Having been closely involved in the company's finance and capital management initiatives, I look forward to supporting the execution of our strategy, strengthening the balance sheet and helping drive sustainable shareholder value. The operational improvements Barry described translated directly into materially stronger financial results with high quality revenue, materially lower costs and improved cash flows quarter on quarter. While total sales volumes remain broadly stable at 3.5 million tonnes, revenue quality improved significantly due to the higher proportion of metallurgical coal sales and increased export exposure. Group-realised metallurgical coal pricing increased to approximately US$171 per tonne. At the same time, group mining cash costs declined nearly 28% quarter-on-quarter to approximately US$98 per tonne, a substantial reduction delivered as operating leverage returned with volumes, despite external cost pressures including an adverse FX rate, higher fuel prices and inflationary impacts. The combination of stronger pricing and lower costs returned the business to positive earnings. a material improvement on the March quarter, and drove materially improved free cash flow. During the quarter, higher production ran ahead of shipping timing and logistics, which increased sellable coal inventory and will support stronger shipments and cash generation through the second half. It is also worth being clear on our reported results. Our half-year earnings include approximately US$30 million of losses from the Logan Complex, which was idled in the first quarter, together with non-cash impairment charge recognised against the asset. With Logan's sale expected to complete shortly, that drag will be removed, improving Group's earnings and cash flow profile. On liquidity, we ended June with approximately US$98 million of available liquidity in the form of cash. Subsequent to quarter end, we continue to advance a number of marketing and working capital initiatives with key counterparties that are expected to provide additional liquidity and financial flexibility. Discussions remain constructive and we expect these arrangements to be completed in the near term. In parallel, we have access to a range of working capital optimization initiatives across the business. including customer arrangements and other trade finance structures that can be utilized as required. Together with improving operational performance and stronger cash generation to the second half, these initiatives provide additional flexibility to support execution of the operational reset and management of liquidity. All our major growth capital programs are complete, particularly following the Buchanan expansion project delivered last year. As a result, capital expenditure requirements are materially lower than in recent years. Going forward, our focus is on maintaining momentum and converting operational improvements into sustainable earnings and free cash flow, strengthening liquidity and balance sheet flexibility, and ultimately creating the capacity to reduce leverage over time. The June quarter represents a significant improvement in both operational and financial performance. and provides a much stronger platform from which to execute our plans for the remainder of 2026. As a reminder, our quarterly financial statements will be lodged with the SEC on the 11th of August with our Form 10Q. Thank you, and I will now hand over to the operator to open the line for 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 two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Daniel Roden with Jefferies. Please go ahead.

Hello. Hi, Jerry, Barry, and thanks for taking my call. I wanted to just, just first off, I wondered if you could maybe just walk us through a bit of a, I guess, a cash bridge for Q2. You know, specifically, I guess, touching on, you know, some potential, I guess, working capital mechanisms that you may or may not have utilized, including, you know, receivable financing and, you know, I guess how much, you know, Stanwell liquidity was drawn in Q2 as well in terms of prepayments. What's the balance of Stanwell today? Sorry, there's a bit in that, but yeah, I just wanted to give you kind of walk through a bit of a cash bridge and where the balance sheet is today.

From a working capital lever perspective, there weren't many levers that we did pull in Q2. In fact, there's probably about $20 million of supply deferrals that we executed at the end of the quarter. When you look at the cash flow for the quarter, we obviously were negative, so $23 million in the quarter itself. And to answer your question, about $40 million of that was contributions that were made by Stanwell from the prepayment mechanism that we executed last year. And it is also important to note from a cash flow perspective, and as we mentioned in our quarterly result, that there was a significant amount of inventory that we built at the end of the quarter, which was really because of shipment and co-shipper issues that we faced, particularly in Australia, which means that there was about 430,000 tons of inventory that we built at the end of June, which will obviously convert into cash when we sell that in July. In fact, we've actually sold all of that by now. So if you exclude the impact of that inventory build, our cash flow, free cash flow rather, would be around breakeven or slightly positive. So, yeah, that's what I've got to contribute.

Daniel, just maybe to add, if you reflect back on the working capital levers we said we've got available when we did the full year results presentation, or the last queue actually, most of those are still available, so we've not used those. And we're working on a couple of things as well. So I think the liquidity pending realization of the full benefits of this reset program, I think we're in a fairly good position there.

Thanks, guys. That's very helpful. And I just wondered if you could touch really quickly on, I guess, the price realization specifically from Cairo have been, you know, I guess, declining to benchmark, even though you've got, you know, You see thermal contributions there are still, you know, I guess, more normalized. What are you seeing on, I guess, is that a quality thing? Is that just lagging benchmark based off of sales timing? Yeah, like how are you, How are we looking at realisations at the moment and how do you foresee those realisations going forward?

I think the colour realisations, obviously it's a reflection of the average sales mix coming out of that operation. Now, as I said, we're working hard to maximise met coal production. There's a lot of focus on the plants. So there's a physical piece of work around effectively driving up the sales mix more towards met coal and balancing the mine and the plant better that you don't end up having to bypass coal, create thermal, which then doesn't really provide a good economic return. So all of that is wrapped up in the reset program. So I'd expect us to get a better realization as a result of that. The rest of it, I think, is quite consistent with what we've had in the past, Daniel, that we need to know that CARA produces quite a bit of PCI. The PCI index has not done what the PLV index has done, if you look at it kind of year on year in particular. And then the LV index is up quite a bit, but that's kind of the rest of CARA's production. So it's against that LV index. So when I look at it year on year, We've seen the realized price. It's the group that got us close to this. The group increased from about 150 to 168. So we've seen pricing up about 12%. And that's to be expected for our mix outside of the work we're doing on improving plant uptime and throughput, which should see us doing a bit better. Does that help?

I'd be remiss if I didn't ask this last question. There's been a bit of media speculation that you're looking at and assessing a potential sell-down of Cara specifically. I just wanted to give you a few comments. Are you seeing anything in that process? Is there any progress there? If that was to transpire, what does pro-former company look like?

Yes, Dan, I think you used the key word there, which is it's media speculation. The impression, tongue-in-cheek, that I get of that article is someone's got it on auto-repeat, and it comes out every six weeks. It is just speculation, and I think if one considers what we're doing at CARA currently with the RESET program, I think it flows from that that we complete that work or get it kind of quite embedded before one would look at it. So that's pure speculation.

Thanks for your time. I appreciate your answers, and I'll head it over. Thank you.

Thanks, Dan.

Thank you. Once again, if you wish to ask a question, please press star 1 on your telephone. Our next question comes from Fintan Collins with UBS. Please go ahead.

Thanks, Gus. So you've ended the quarter with about 780,000 tons of export inventories, including 430 deferred by shipment timing. I'm just wondering how much of that inventory has so far been converted to sales and cash receipts in July and how much more we should expect through August. Thank you.

Yeah, so as I mentioned in my response to the previous question, there's about 430,000 tons which were purely timing related. And all of that time has actually been sold at the beginning of July. The other, you know, two to 300,000 tons of inventory is an optimal level of inventory that we like to sort of keep at mine at port and the intention going forward would be to sort of have that stable inventory levels through the second half of the year.

Okay, thank you. That's clear. And then just to Cara, I understand we need to build inventory buffers there to improve the production system stability. What inventory level would you view is required? Sort of how long would it take to reach and what's the cash flow impact of building that buffer?

Thank you. Yeah, sure. I mean, it's an important point for the cash flow for the rest of the year, obviously. Now, we've got some of that in place as we sit here. But, you know, if you think about that mine, so we've got the mine in the north, which that's quite far from the processing plant that sits in the south. So you'd want some ROM stocks there, so call that 200,000 to 300,000 tons maybe. And then in the south, even though it's closer to the plant, you'd want some there. So call that another 2 to 300 and then a bit of crushed in front of the plants that you can kind of service customers and get the product blend right. So it sits in that 6 to 700,000 ton range, I'd put it. And as we sat at the end of the half, we probably had about $200,000 there. So we need to build that up. We'd manage that carefully with liquidity. It is a bit of a trade-off with liquidity, but it gives you stability, as I said. And then we start thinking ahead at the wet season as well that's approaching soon. Come December, Jan. And having this set up well will ensure better stability. So a couple of trade-offs in there, but that's plus minus what we target. Not that it'll be a kind of a religious commitment to dogmatically sticking to it. We'll do what we have to do for the business too. But it gives you a bit of a guide from that.

Last one, and then just one last one from me. Assuming these strong Q2 operating rights are sustained, when would you expect Coronado to become self-funding without any more incremental customer or working capital support?

Look, I mean, as Sandeep, he stepped you through that cash flow bridge. I think we came fairly close to that in the second quarter as well. We'd have to look at pricing as it receded a bit. Maybe that'll only wash through in the fourth quarter, but maybe we'll pick up some of that in the third quarter as well. So I think we're fairly close to that position. Maximizing met coal production, that'll be important. Then realizing the savings, which the savings has to ramp up over time. That won't happen overnight. I mean, I'll leave it at saying, I think you'll run your own numbers and get to it, but I've outlined the key levers. I think we're getting there and we're approaching it well.

Very good. Thanks for taking my question, so I'll pass it on. Thanks, Vantan.

Thank you. Once again, if you wish to ask a question, please press star one. The next question comes from Kyla Ma with Baron Joey. Please go ahead.

Hi, team. Just one from me. Could you give us any sense of how the operations have been running in July? Has performance for both production and cost been improving on the June quarter? And any sense you can give us on the free cash flow generation over the month? Thanks.

Thanks, Kyla. It's a pity Glenn can't be on the call, but it's good to talk to you as well. Look, the call is not really designed to talk about July, so I don't want to get too granular about it. What I will say is I'm very happy that the operating reset at Cara has got excellent traction. It's got good traction across the team. That's what we should be focusing on. So I'm happy that the team's focusing on all the right things to get us to the right place. And we'll tell you more about July with the next quarterly.

Great, thanks.

Thank you.

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

Thank you, Operator. To conclude, this quarter is an improved performance, and we expect to continue improving for the remainder of this year. We already have stronger production, lower costs, improved margins, positive earnings, and improving cash generation. While the remains work ahead of us, the business has proven momentum, and the foundations for future improvement are set with support of our RESET program. I would like to thank all of our employees, contractors, customers, shareholders, and stakeholders for their continued support. Most importantly, I would like to thank our people for their commitment during a period of significant change. It has been a privilege to be a part of this organization. I am confident that under Barry's leadership, supported by Sandeep and the broader management team, Coronado is well positioned for its next chapter. Thank you for joining us today, and we look forward to updating you again. with our half year results in August.