Coronado to ‘splash cash’ following record quarter

Given that the materials sector took the brunt of today’s falls, down -3.72% at noon, it comes as no surprise that Coronado Global Resources (ASX: CRN) was also sold down today (-3.36 at noon) even after announcing plans to splash surplus cash, following a record quarterly result.

Buoyed by strong commodity prices, the Qld and US large-cap coal miner plans to pay $US200m in special unfranked dividends totalling US11.9c per CDI on June 21.

As well as achieving a number of records in the first quarter of FY22, Coronado was also one of the first pure-play coal operators in the world to return to a net cash position of $257m (and available liquidity of $671m at 31 March 2022) following the impacts of covid and a lower price cycle.

Underpinning plans to issue special unfranked dividends were the following highlights:

• A 152% to $US947m increase in group revenue

• Net income also growing to a record $US270m, reversing losses in the previous period

• Quarterly adjusted earnings totalled $US411m, up $US403m on the March 2021 quarter

• Average coal realised price for the period was $US215 per tonne, up from $US83.3 previously

• For metallurgical coal, the average price was $US266.5 per tonne, higher than the $US94.3 per tonne in the prior period

• Due higher royalties, inflationary pressures and operational activities at the Curragh coal mine in Queensland Bowen Basin, costs increased to US$121.5 per tonne sold, from US $83.2

• March quarter sales volumes for the group were 4.4 Mt, 1.4% higher than December quarter.

Since releasing the March quarter update, the $3.7bn market-cap business has confirmed that merger talks with US coal miner Arch Resources have ended.

Outlook

The Russia/Ukraine war pushed seaborne met coal prices to the highest levels in history with the PLV HCC FOB AUS price reaching $670/tonne in March.

Coronado expects met coal prices to moderate from their current highs over the course of 2022. Yet due to the ongoing trade constraints from Russia and China, the group expects prices to remain elevated above historical averages.

Overall, Coronado expects met coal demand to continue to be positive in 2022, with improved supply from both Australia and Mongolia moving the market back into some semblance of balance.

Meantime, while limited works were completed on the Mon Valley Minerals (MVM) project in the March quarter, Coronado plans to re-commence core hole drilling, subsurface geotechnical exploration and permitting works later in the year.

While no exploration drilling works were completed in the quarter at the Curragh Complex, additional reserve and gas drilling is also planned for later in the year.

Coronado will hold an Annual General Meeting (AGM) of security holders at 10.00am on 26 May 2022 (AEST).

Coronado Global Resources: A six month share price snapshot.