Why Did Coronado Global Suffer a $96M Loss Despite Operational Resilience?

• Q1 2025 net loss of $96.2 million driven by subdued metallurgical coal markets
• Coal revenues down 30% year-over-year to $441.5 million
• Liquidity includes $229.5 million cash and $95.7 million undrawn ABL Facility
• Company faces substantial doubt over going concern status within one year
• Operational resilience despite weather and equipment challenges; dividend declared and paid

Financial Performance Amid Market Headwinds

Coronado Global Resources Inc. (ASX: CRN) released its Form 10-Q for the quarter ended March 31, 2025, revealing a net loss of $96.2 million. This marks a significant deterioration compared to a $29.0 million loss in the same period last year, primarily due to a steep decline in metallurgical coal prices and lower sales volumes. Coal revenues fell by 30.3% to $441.5 million, reflecting a $53 per metric ton drop in average realised metallurgical coal prices, which averaged $151.3 per metric ton during the quarter.

Despite the challenging market environment, Coronado’s production remained broadly on plan. The company reported saleable production of 3.5 million metric tons, slightly higher than the prior year quarter, although sales volume was 0.3 million metric tons lower, impacted by inventory drawdowns in the previous year. Operational challenges such as adverse weather in Australia and equipment downtime in the U.S. were effectively managed, underscoring the company’s operational discipline.

Cost Management and Segment Performance

Coronado achieved meaningful cost reductions, with mining costs decreasing by $76.6 million year-over-year, driven by contractor demobilisation in Australia and favourable foreign exchange rates. Mining costs per metric ton sold fell to $112.8, down $12.8 from the prior year. Segment adjusted EBITDA showed a loss of $72.8 million, a sharp reversal from a positive $14.6 million in Q1 2024, reflecting the revenue pressures partially offset by cost savings.

Segment-wise, the Australian operations saw coal revenues decline by 37.8% to $266 million, with a 30.3% drop in average realised metallurgical coal prices. The U.S. operations experienced a 14.6% revenue decline to $175.4 million, with prices down $21.9 per metric ton. Operating costs in the U.S. decreased modestly, though unforeseen maintenance and geological issues impacted mining costs.

Liquidity and Going Concern Challenges

Liquidity remains a critical concern for Coronado. As of March 31, 2025, the company held $229.5 million in cash and cash equivalents, with an additional $95.7 million available under its senior secured asset-based revolving credit facility (ABL Facility). However, the company has been granted temporary waivers on key financial covenants, including interest coverage ratio requirements, reflecting ongoing covenant breaches amid subdued earnings.

Management disclosed substantial doubt about the company’s ability to continue as a going concern within the next year, citing risks from volatile coal markets, tariff impacts on export coal trade, and the uncertainty of securing further covenant waivers or refinancing. Coronado is actively pursuing refinancing options, including non-binding term sheets for an alternative asset-based lending facility with a borrowing base of up to $150 million, alongside cost control and operational initiatives.

Corporate Actions and Outlook

Despite financial headwinds, Coronado declared and paid a fully franked dividend of $8.4 million during the quarter. The company continues to invest in capital expenditures, with $72.1 million spent in Q1 2025 to support organic growth projects in both Australian and U.S. operations.

Looking ahead, Coronado expects an improvement in financial performance in the second half of 2025, driven by increased production volumes from a new underground mine in Australia and the completion of major capital programs in the U.S. Nonetheless, the company faces significant uncertainties, including the availability of liquidity, coal market dynamics, and regulatory risks.

Bottom Line?

Coronado’s Q1 results underscore the fragile balance between operational resilience and financial strain amid a volatile coal market and looming liquidity risks.

Questions in the middle?

• Will Coronado secure further covenant waivers or refinancing beyond May 2025 to sustain operations?
• How will ongoing tariffs and trade policies impact Coronado’s export coal markets and pricing?
• What is the timeline and expected impact of the new underground mine ramp-up on cash flow and profitability?