Coronado Global Resources

The Business

Coronado mines metallurgical coal (used in steelmaking) and thermal coal across two basins: Curragh in Queensland's Bowen Basin, and Buchanan in the US Central Appalachians. Curragh produces roughly 9.8 million tonnes a year of met and thermal coal but carries a below-market thermal supply obligation to Queensland's state-owned generator, Stanwell. Buchanan produces about 4.2 million tonnes of low-vol coking coal at lower cost. A third asset, Logan, was largely wound down through 2026. Curragh's output and cost base dominate the group, and it is the weaker of the two mines.

Recent Performance

Revenue fell from $2,508 million in FY24 to $1,950 million in FY25, a 22% decline as met coal prices retreated from cyclical highs. EBITDA (earnings before interest, tax, depreciation and amortisation) swung from a $115 million profit to a $144 million loss over the same period. The stock has been re-rated sharply lower as the market absorbed the scale of the cash burn and the compounding Stanwell liability sitting alongside conventional debt.

Outlook

We expect a slow, uneven recovery over the next two years, with revenue growth driven by a modest rebound in met coal pricing rather than volume expansion, since Curragh's thermal output is contractually capped and Buchanan is already close to capacity. EBITDA margins should improve as Curragh's cost reset (from roughly $149 a tonne toward $99 a tonne in early trials) takes hold, though that improvement has so far only been demonstrated over a limited number of quarters and is not yet proven across a full cycle. Even under constructive operating assumptions, the business is likely to remain loss-making at the net profit line through the forecast window, because interest costs and Stanwell accretion continue to outpace the pace of operating recovery.

Key Risks

Coronado's capital structure carries $1.24 billion in total financial and quasi-debt claims, a level that is not comfortably supported by the current cash-generating capacity of the mines. This is a structural feature of the balance sheet rather than a temporary mismatch, and it does not resolve itself through operating improvement alone. The Stanwell liability compounds independently of operating performance, growing from $621 million at 7.5-13% a year toward an estimated $1.5 billion by year ten, which means this particular obligation gets larger over time rather than smaller regardless of how Curragh performs. Liquidity is also tight: cash is burning at roughly $12 million a month against a $98 million balance, and while a Glencore prepayment facility at 14% interest extends the runway, it does so at a steep ongoing cost that itself adds to the claims stack.

What to Watch

The thesis-defining event is Queensland's Financial Provisioning review in November 2026, which will confirm whether Curragh is reclassified to a higher risk category, a change that would require new surety commitments the company is not well placed to fund given current liquidity.

• Nov 2026 Financial Provisioning review — a higher risk classification would be negative, forcing new surety commitments against thin liquidity.
• H1 2027 ABL covenant test — a breach would trigger acceleration of facilities and materially worsen the equity outcome.

Company Description

Coronado operates two coal mining complexes. Curragh, in Queensland, is the larger operation, producing both metallurgical and thermal coal, and carries a legacy supply contract to Stanwell (the Queensland government's power generator) that requires thermal coal to be sold well below market price. Buchanan, in Virginia's Central Appalachian coalfield, mines the Pocahontas #3 seam, prized for its low-volatility coking coal quality. A third asset, Logan, has been substantially wound down. Curragh generates the bulk of group revenue but is also the source of the group's structural cost disadvantage.

Where the Growth Is

Buchanan is the one part of the business performing as intended: record production, costs held near $95 a tonne, and roughly $60 million of annual EBITDA. It is a genuinely well-run, cost-competitive asset within the group.

But under the current capital structure, any sale proceeds from Buchanan would go to creditors ahead of shareholders, so this quality asset does not straightforwardly translate into equity value for CDI holders as things stand.

Competitive Position

Coronado's competitive standing is weak and getting weaker. Buchanan's low-vol coal quality gives it some pricing power, evidenced by repeat business from customers like Tata Steel (18% of sales), but this advantage is specific to one mine, not the group. Curragh sits on the high-cost end of the industry cost curve, disadvantaged by Queensland's progressive coal royalty regime (which scales up sharply at higher prices) and the Stanwell obligation, neither of which peers like Whitehaven or Stanmore carry to the same degree. We see no durable, group-wide competitive advantage.

Management & Capital Discipline

Capital allocation has destroyed value over the past five years. The Logan acquisition ended in a $177 million writedown, only partly offset by a well-executed Buchanan expansion. Management has leaned heavily on external consultants, AlixPartners and Odin, for basic operational restructuring work, which suggests limited internal capability to manage the turnaround unassisted. Guidance credibility has been inconsistent with actual delivery.

Financial Position

The balance sheet cannot comfortably absorb a downturn. Cash sits at roughly $98 million against monthly burn near $12 million, and total financial and quasi-debt claims run to $1.24 billion, well above what the business can service from operating cash flow at current coal prices. The Glencore prepayment facility extends liquidity but at a punitive 14% rate, and covenant headroom on the asset-based lending facility is thin.