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Edited Transcript of CRN.AX earnings conference call or presentation 24-Feb-20 11:30pm GMT

Full Year 2019 Coronado Global Resources Inc Earnings Call

Mar 24, 2020 (Thomson StreetEvents) -- Edited Transcript of Coronado Global Resources Inc earnings conference call or presentation Monday, February 24, 2020 at 11:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Ayten Saridas

Coronado Global Resources Inc. - Group CFO

* Garold R. Spindler

Coronado Global Resources Inc. - MD, CEO & Director

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Conference Call Participants

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* Daniel Porter

Wilsons Advisory and Stockbroking Limited, Research Division - Senior Resources Analyst

* Georgina Fraser

UBS Investment Bank, Research Division - Research Analyst

* Jack Gabb

BofA Merrill Lynch, Research Division - Associate

* Sam Webb

Crédit Suisse AG, Research Division - Associate

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Presentation

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [1]

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Welcome to the Fiscal Year '19 Full Year Wrap-Up for Coronado. We will start, as we always do, with safety.

We stayed below the averages for the incident rate in our respective jurisdictions throughout '19. However, we had the worst thing that can happen in this business: a fatality at the beginning of 2020. Our condolences and sympathies to the family of the deceased, and we are engaging with regulators in an ongoing investigation and redoubling our efforts to make sure that the incident or anything like this never happens again.

Now by the numbers, financial performance. We reported for fiscal year '19 net income of $305.5 million, which was up $190.9 million or 166.6% compared to fiscal year '18 and up $136.6 million and nearly 81% compared to pro forma fiscal year '18 of $168.9 million. Adjusted EBITDA of $634.2 million was up nearly 6% compared to fiscal year '18 of $598.6 million. And group mining costs, which drove the performance, dropped nearly 8% -- or a little over 8% to $51.80 a tonne as a result of operating improvements and higher production volumes. Revenue of $2.215 billion was marginally below fiscal year '18, and that was largely due to a weaker coal market towards the end of the year last year. And the net debt position of $303.4 million as of 31 December 2019 comprised $26.6 million in cash and $330 million of debt.

As far as operational performance, run-of-mine production was essentially the same. There was a further 6.4% improvement in dragline efficiency at Curragh on top of 8.1% the prior year, and that resulted in the lower costs. More of the dirt was moved by our cheapest digging tool than we had previously done thanks to greater efficiency. Saleable production was 20.2 million tonnes, again, broadly in line with fiscal year '18. Sales volumes of 19.9 million tonnes were marginally lower as a result largely of increased inventory build at Buchanan and Logan in the United States towards the end of the year given a weak market and difficulty shipping to Europe.

Group realized metallurgical pricing of $128.80 per tonne was down 3.4% compared to fiscal year '18 as a result of soft market conditions and, marginally, the product mix. And Logan has successfully commenced 3 new mining sources, all of them for metallurgical coal. And we've shut down the only dedicated thermal coal mine that existed in the company. For distributions, we have declared a fully franked dividend of $0.025 per CDI. That's U.S. dollars. And over last year, we paid $720.1 million in distributions since the IPO.

As far as fiscal year '19 achievements, we developed an accelerated mine expansion plan for Curragh, and we secured all the rail and port infrastructure necessary to support this expansion. We created the debt capacity to support the capital requirements for the expansion. And we closed the only thermal coal mine in West Virginia -- or that we had in West Virginia and expanded the metallurgical production at Logan.

From a corporate standpoint, we've successfully executed the New Coal Supply Agreement with Stanwell, which was the final step in completing the acquisition of the Stanwell reserve area. Curragh's new 3-year employee Enterprise Agreement was approved by the fair work -- by Fair Work Australia and is now in effect. We got credit-approved offers to increase the syndicated facility by an additional $200 million to $550 million and extend the term to February 2023. And we awarded Thiess a 6-year contract for Curragh North to continue the overburden removal there.

You've seen the slide on reserves before. To reiterate, we have over 1 billion tonnes of reserves available to Curragh -- or to Coronado. And every mine has at least a 20-year mine life available to the existing operations without the requirement for additional capital in either prep plant capacity or new prep plants or additional slopes. So we have a distinct advantage in our expansion opportunities from the existing sources and makes us a bad candidate to pick up greenfield projects.

Group operational performance. ROM production up a bit from Curragh. And the big news, 0.5 million tonnes of additional metallurgical coal from Curragh. Everything else is broadly in line, if not slightly lower because of the inventory build that occurred towards the end of last year.

And with that, Ayten?

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Ayten Saridas, Coronado Global Resources Inc. - Group CFO [2]

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Thanks, Gerry, and good morning, everyone. And welcome to Coronado's Full Year '19 Results. Look, before I start, I just want to remind everyone that all of the numbers that I'll be referring to today are in U.S. dollars unless we state otherwise.

Now before we delve into the numbers, I wanted to just set the scene for the FY '19 results. So the first half of the year was a period of strong prices and solid performance across the business, which delivered EBITDA for the half year of $405 million. Revenues were higher, costs were lower, and the group's realized met coal price was $137.50 for half year. The second half was a substantially different period with a 34% fall in met coal prices, the impact of the U.S.-China tariffs on the sales at Buchanan and an increase in inventory levels in the U.S. due to weaker demand and lower prices.

So that's the background for our full year results. And with that in mind, let's go through the results in a bit more detail. So with production, it was relatively flat for FY '19 at 20.2 million tonnes compared to last year. Production was lower at the U.S. sites due to softer market conditions and also, as I said, the impact of the U.S.-China tariffs on Buchanan exports into China. Now this was offset by higher production at Curragh, driven by improved dragline performance and also further efficiencies in the wash plant to deliver record sales of 12.8 million tonnes at Curragh for the year.

Sales volume of 19.9 million tonnes was slightly lower at the end of the year due to a buildup of inventories in the U.S., which has resolved since the new year. Revenues of $2.251 million (sic) [$2.215 billion] was 3.5% lower than the prior year, and that reflects a 3.5% reduction in the average met coal price compared to the year before. The overall result is an EBITDA for the year of $634 million, which is about 6% higher than the year -- last year.

The statutory net income after tax was $305.5 million. There's a few swings and roundabouts on that, and when I get to the underlying net income after tax, we can probably have a better discussion around that.

The realized met coal price for the full year was $128.80 per tonne, which was 3% lower than last year. Now even though prices were lower and production was flat for the year, the EBITDA performance benefited for the year from lower mining costs per tonne of $51.80, which was 8% lower than last year. So overall, notwithstanding the fact that we were faced with a number of headwinds in the second half of the year, I believe we delivered a very solid set of results this year.

Over to the page on revenue performance. As I mentioned earlier, sales volumes were slightly lower for the group at 19.9 million tonnes as a result of the lower volumes in the U.S. due to the weaker demand out of Europe and the impact of the U.S.-China tariffs on the exports to China from Buchanan. Now as a result of the lower sales volume, the inventories were higher at the end of the year, and that's been resolved since the new year. We also had lower sales volume in the U.S. due to the closure of the Toney Fork thermal coal mine at Logan in the second half of the year.

On the other hand, Curragh recorded a strong sales performance for the year of 12.8 million tonnes, which was 6% higher than the year before. The revenues for the year was $2.2 billion, 3% lower, mainly due to the sharp fall in the met coal prices in the second half of the year and, in particular, this last quarter of the year when the benchmark price was in the low $130s.

So going over to realized pricing. Overall, the met coal price for the year was 3% lower than FY '18 with index prices falling dramatically in the second half of the year. We've mentioned the overall price being $128.8 per tonne compared to $133.3 in the prior year. Now you can see from the chart on the right-hand side that prices have varied between the high $200s to the low $130s during the year. That's a fairly marked drop through the year. And just a reminder, when you do view these charts, you take into account that in Australia, the price are quoted on an FOB basis. And in the U.S., these prices are quoted on prices at the mine.

Our proportion of met coal sales increased in the year to 78.8% of total sales volume. And this has actually helped improve revenue. This was also partly due to the closure of the Toney Fork thermal coal mine and the introduction of new sources of met coal production at Logan.

So moving over to FY '19 EBITDA. This is one of my favorite charts. The FY '19 EBITDA was $634.2 million for the year, 6% higher than the year before. If we start with where we were in FY '18, the EBITDA for this year was negatively impacted by the sharp decline in the coal price, a moderate fall in sales volume in the U.S., but a substantial improvement in the cost of coal revenues. There were some additional freight costs in the U.S. with sales made on an FOB basis. Royalties overall were lower on the back of lower price at the back end of the year. Corporate and other costs were slightly higher for the -- with the overall net result of EBITDA of $634.2 million for the full year.

If we go over the page to the segment performance. The key points here on this slide is that Curragh represents 66% of EBITDA performance for the group, and it was a very strong year for Curragh overall. EBITDA was up 11% to $421.7 million for Curragh, driven mainly by 6% higher sales volume and lower mining costs per tonne. Curragh and Buchanan together account for 95% of total EBITDA for the group. Curragh's been an outstanding acquisition for Coronado. Now since we acquired the asset in March 2018, we paid $540 million for it. And since that time, Curragh's delivered $735 million of EBITDA to us. So it's been a very good acquisition overall.

Moving over the page to the mining costs. Now when you're in a cyclical commodity sector like we are, being able to manage the controllable aspects of our balance sheet is key to maintaining sustainable business overall. At Coronado, we always say that we're focused on making sure that we operate our assets as efficiently as we can to achieve the lowest cost per tonne that we can. Those are the things that we can control.

Now at Curragh, our mine cost per tonne was $44.50 per tonne for the year, which is 16% lower than the prior year. And this is due to improved dragline efficiencies and operating efficiencies gained at the wash plant. Since we acquired Curragh in '18, the operating efficiencies we have extracted have been fundamental to improving the margins overall for this asset.

For Buchanan, the mine costs were $52.30 per tonne. This was lower than the prior year and mainly impacted by the extended holiday shutdowns in December that we implemented to manage the inventory levels at year-end.

Just over the page on the cash flows. The underlying strong operating cash flows and the balance sheet for Coronado has allowed us to be very active on a number of fronts in FY '19. To start with, we generated $477.4 million of operating cash flows across the business. This was used to fully fund our CapEx of $183.3 million.

Using surplus cash as well as our strong balance sheet position, we also were able to fund distributions of $696 million during FY '19. We closed the year with a net debt position of $303.4 million, which was comprised of $26.6 million of cash and $330 million of drawn debt. Our overall EBITDA gearing ratio at the end of the year was 0.4x EBITDA.

The underlying net income after tax for the year was $305.5 million compared to $246.1 million in FY '18. This is a 24% increase in the underlying net income year-on-year. As you can see from the table, there were no recurring one-off or one-off items in FY '19. The effective tax rate for FY '19 was 27%, which was broadly in line with where we expected it to be.

If we go over the page to shareholder returns. As Gerry mentioned, today, the Board has announced a fully franked dividend of $0.025 per CDI. That is in U.S. dollars. Given the current market conditions and the uncertainty ahead and the number of challenges that we face in our sector, in particular, we believe this is a prudent level of distribution. But we do want to reinforce our commitment to a payout ratio of 60% to 100% of free cash flow when we can.

Now since listing Coronado in October 2018, we have made full distributions of $720 million including this distribution. We estimate that the total investment returns for IPO investors is about 27% for that whole period. On this dividend, the record date is 10th of March, and the payment date will be 31st of March. And I do want to remind all of our shareholders that they need to get their W-8BEN-E forms to Computershare so that they can get their withholding taxes treated correctly.

Now just finally, I want to finish off with just a few words on our commitment to sustainability. Our business is in the metallurgical coal business, which is a fundamental input into the production of steel. Now steel, as we know, is necessary for all of us to maintain our way of life. At the present time, we don't believe there is a viable alternative to make coal in the manufacture of steel. So for us, it's important that we maintain a sustainable business. And we do want to distinguish ourselves that we are a met coal producer.

We also recognize that in order to maintain our social license to operate that we have to manage all aspects of our business, including our environmental management, our community engagement, our financial affairs and our dealings with all of our stakeholders in an efficient and robust way. Now last year, we published our first sustainability report. Our next report is due to be published in April, and we look forward to sharing with our investors the positive things we are doing within our business to maintain our commitments and our obligations to all of our stakeholders in this regard.

Now I'll just hand over to Gerry.

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [3]

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Thank you, Ayten. A word about the market. Towards the end of last year, inventories were high, the tariffs were in place, and since then, there have been improvements and some green shoots promising continued improvement and some uplift in the benchmark pricing.

The -- as of February 15, the tariffs were ameliorated or otherwise lifted from U.S. production into China. We understand from reliable sources that Chinese inventory is quite low. Steel production has remained apace, while their own domestic coal production has not. And this shows promise for the Chinese market, and that is important particularly for our Buchanan operations.

There have been some supply issues with other producers in Queensland. So the supply side of the met trade has been tighter than expected. These were unintentional interruptions. And they have not impacted us except for the impact of the fatality. But our production capacity right now is fairly strong and there is indications even from Europe that production in Germany, steel production in Germany, may be improving or at least not continuing to deteriorate. We will benefit from the fact that this year, we have put more of our coal to domestic U.S. contracts under fixed prices. But the export market may perform better than many people thought.

From an Australian operational review, metallurgical production last year did increase 500,000 tonnes. You can see that the mix of PCI and soft coking coal marginally improved -- or marginally increased. And that impacted realization somewhat. But blending and a revised focus on the mine plan will correct that this year. From the U.S. operations point of view, the big issues are the fact that there is still inventoried coal that will be moved and that Logan will increase its metallurgical coal production, and it has shut down its low-margin thermal coal production.

Focusing on the Curragh mine plan. We continue to predict a pace of 15 million tonnes a year additional production by fiscal year '23. The expansion continues on track, and the capital investment programs to support this also continue on track with some adjustments.

The infrastructure overview. We have optimized the mine plan to integrate the SRA into Curragh North, and that's completed. Curragh East box cut for the K and L pits is going to begin in 2021, and preparations are underway for that. And the increase in truck/shovel capacity, which has already begun, will get into full swing on -- in 2021.

From a processing standpoint, we've improved the efficiency in the plant to improve the operating hours, which was really the issue in total plant capacity. Nameplate was entirely sufficient, but we suffered from a reduction in operating hours, and that is being corrected.

We've upgraded the train loadout system to accommodate quicker train loadouts and reduce the train load time. And this year, we'll be beginning the integration of an intermediate circuit to preparation -- to prep plant 2. We're improving the stacking infrastructure, and that will begin next year. And again, the automated train loadout will take -- will go into full swing over the next several years. All of this will facilitate and ensure the capacity for the full enjoyment of the expansion.

And again, from a transportation standpoint, we have the additional haulage capacity from Aurizon. And we've instigated a contract with Pacific National as well. And we have already got a subscriber -- or a substitute shipper deed through WICET for 1.6 million additional tonnes and are negotiating for even more, an additional benefit because it gives us pad storage to facilitate blending.

The Curragh cost profile shown on Slide 26 is as you've seen it before. We predict that over the period that cost will reduce about 10% simply because of the reduction in the average royalty to Stanwell because of the increased tonnage. All other efficiency plans are not in this calculation and may, in fact, occur with the addition of the efficiencies in the prep plant and the equipment expansions.

And a capital cost comparison based on the projects that are currently on the board for competitive companies gives us a distinct advantage in the capital cost per annual tonne of production for the Curragh expansion compared to greenfield or brownfield start-ups for other operations. And this is as you would expect, and -- a feature that will continue given the long length of the reserves and the additional capacity we have to enjoy some incremental tonnage.

From a marketing standpoint, you've seen the slide that indicates where coal goes. The one thing I'll point out is that for the first time, we are beginning to develop plans to take coal from the U.S. as a blended coal, a low-ash, low-phos, very low -- very high-carbon source, particularly from Buchanan, and a high fluidity from Logan to add qualities that we require to beneficiate the Curragh coals. These blending programs are just beginning. They will develop over the course of the year, but we have a target for 500,000 tonnes of blended coal for not -- from not just the U.S. but from other producers to augment our own sales and improve our own margins into the international metallurgical coal market.

From a marketing standpoint, exports remain fundamentally the same. With domestic, the big news here is the fact that, in the U.S., we have increased the percentage of coal under contract for 2020, and that is in response to the evident deterioration of the export market into Europe and into Brazil.

From an investment proposition standpoint, Coronado has a robust balance sheet, it has strong operating cash flows, and it is a low-cost producer, among the lowest average cost producers of the broadest range of metallurgical coals in the world. And the capital management has allowed us to provide distributions of over $720 million to date. The growth profile for Curragh is robust. And all of this is supported by a blending target, as I've mentioned, for 2020 of 500,000 tonnes.

In fiscal year '19, we said we would develop an accelerated mine expansion for Curragh, and we have done that. We said we would secure rail and port infrastructure to support the expansion and planned blending operations, and we've done that. We said we would create the debt capacity to support the expansion, and we've done that. And we have expanded metallurgical coal production and closed the only dedicated thermal coal mine in the company. And we are in the process of redesigning the Buchanan mine to extend the life and improve the quality by tapping into adjacent reserve areas that were not in the original plan.

For 2020, we intend to efficiently manage the capital projects that will facilitate the Curragh mine expansion. We plan to improve the metallurgical coal recovery at both plants at Curragh by 5%. And we add prime digging capacity to Curragh North to capitalize on the acquired Stanwell reserves that we've mentioned.

We'll expand our blending operations, utilizing both purchased coal and our own U.S. coals to extend production and mostly -- most significantly improve the margins. And we'll continue permitting and design work on what we now call the Mon Valley reserve, formerly the Pangburn-Shaner-Fallowfield reserve, with a target of '24 to '25 for production.

For guidance, we are predicting production in the 19.7 million to 20.2 million tonne range. Costs will be in the $55 to $57 a tonne range. CapEx will be in the $190 million to $210 million range. And the payout ratio remains at 60% to 100% of free cash flow.

Looking at the overall market picture. There are signs of recovering metallurgical coal pricing being aided by current coal supply constraints. And there is significant production growth within the current asset portfolio, a strong balance sheet, low capital intensity compared to the projects that need to be undertaken by others to extend their life and over AUD 1 billion distributed to date or USD 720 million. Frankly, we think this is a formidable performance.

Thank you. Any questions?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question is from the line of Jack from Bank of America.

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Jack Gabb, BofA Merrill Lynch, Research Division - Associate [2]

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Just 2 quick questions. Firstly, just looking at Slide 24, which has the Curragh production profiles. I guess you gave FY '20 guidance based on the prospectus of 12.8 million tonnes. However, when you gave us the new mine plan back in August for FY '20, you had prospectus of 12.9 million tonnes, but you also had an expansion of 0.6 million tonnes. Those total for the year at 13.5 million tonnes. Can you just explain that delta?

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [3]

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We have adjusted that for the time that was lost in January because of the fatality, and we intend to make up a good portion of that. But there is some adjustment that remains.

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Jack Gabb, BofA Merrill Lynch, Research Division - Associate [4]

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Okay. And then secondly, just on the net debt position. Just thinking about this for the rest of this year. How much leverage are you willing to take on to fund additional dividends this year?

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Ayten Saridas, Coronado Global Resources Inc. - Group CFO [5]

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Look, we've said that our target gearing in the long-term is about 0.5x EBITDA. We will let it rise for strategic acquisitions and the like. But that target, long-term target, has not changed. In terms of whether we'll use the balance sheet, it's a question -- it's going to come down to a question of if other priorities take place. We have used our balance sheet to fund dividend going forward. It will be a question of what we need the capital for -- what else we need the capital for.

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Jack Gabb, BofA Merrill Lynch, Research Division - Associate [6]

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Okay. Except -- but we shouldn't assume any more large special dividends that will take you beyond the 0.5x EBITDA/debt range?

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Ayten Saridas, Coronado Global Resources Inc. - Group CFO [7]

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Look, I think it's going to come down to a range of factors. Let's see what happens with the coal price. We've got very low capital for this year. A lot of that stay in business because CapEx is already funded from operating cash flows. So if we can get the gearing down and we don't have another purpose for it, we'll certainly draw down. But it's going to be subject to a number of variables that we can't predict at this stage.

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Operator [8]

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(Operator Instructions) Your next question is from the line of Sam Webb from Crédit Suisse.

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Sam Webb, Crédit Suisse AG, Research Division - Associate [9]

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Just thinking about these tonnes that you're looking to blend, I assume they're on top of your existing total production guidance. So how do we think about them as we're modeling them? Can you give us a sense of what kind of margin we should be assuming there? That's the first question.

And secondly, with your increase in haulage capacity at Curragh, so what is your total haulage capacity now? And how long do you have that extended out, hopefully?

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [10]

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You're talking about the train capacity, railroad capacity?

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Sam Webb, Crédit Suisse AG, Research Division - Associate [11]

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Yes.

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [12]

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The railroad capacity should handle the 15 million tonnes given the additional contract with Pacific National. As far as blending goes, look, the target here -- and it depends upon the kind of coal you get to blend. The easier part is to take what we would sell as semisoft and blend it to hard coking coal. The harder part is to take what we take -- what we sell as PCI and sell that as either semisoft or, hopefully, hard coking coal. And there are blend opportunities to do that if you can get the right kind of coal.

The improvements are evident in either case. But they're obviously significantly more if you can take advantage of getting a PCI coal into a hard coking coal slot. And how much of that we'll be able to get depends upon the opportunities for blended coal availability and our own inventories.

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Sam Webb, Crédit Suisse AG, Research Division - Associate [13]

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Okay. And can I also ask some follow-up? Maybe at Logan, there's 3 new mining areas. What capital did they come at? Are they already up and running? What is the requirement for us to open up new mining areas there?

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [14]

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They were minimal capital. They were some of the higher seams in the profile. So they were attacked through edits on existing benches, strip benches, and generally required very little in the way of capital, mostly just mine fan installation on the belt head and some -- in one case, some new equipment.

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Sam Webb, Crédit Suisse AG, Research Division - Associate [15]

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Okay. And maybe just one more if I can. Just on your U.S. volume, just maybe that last split in terms of export/domestic. Give us just a bit of sense around how pricing has looked for those U.S. domestic volumes.

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [16]

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The domestic volumes, we think, are secure. And we believe that there is unlikely to be an increase in what's available to get sold domestically. The increases will come from export. But we have increased our percentage of domestic sales for this year.

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Sam Webb, Crédit Suisse AG, Research Division - Associate [17]

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And pricing?

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [18]

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The pricing, it was comparable to export pricing as of the third quarter of last year. So it's significantly better than export opportunities now.

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Operator [19]

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Your next question is from the line of Daniel Porter from Wilsons.

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Daniel Porter, Wilsons Advisory and Stockbroking Limited, Research Division - Senior Resources Analyst [20]

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Just 2 from me. Just firstly, Australia and the U.S. I think, Gerry, you mentioned earlier that the built-up inventory position has unwound as of early January. Just wondering how you're seeing also a couple of shipments that you sent out from Buchanan into China in January. Did they end up finding a home? And how are you thinking about sales, particularly from Buchanan, into China over the course of this year?

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [21]

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As of the 15th, Buchanan -- there have been a couple of ships of Buchanan move into China. There was some inventory in warehouses, not on our inventory. But that was there already, and that's being consumed. So we see a fairly robust market, particularly for the Buchanan PCI market.

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Daniel Porter, Wilsons Advisory and Stockbroking Limited, Research Division - Senior Resources Analyst [22]

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Just in terms of your cost guidance as well, looking at $55 to $57 a tonne and just with Curragh operating substantially more efficiently now, should we be assuming that the bulk of that cost uplift is in the U.S.? And how much of that is inflation versus just lower production?

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [23]

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There is some cost uplift in the U.S. Most of it is inflation. For this year, there is some lower production dictated principally by conditions at Buchanan but not a lot.

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Operator [24]

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(Operator Instructions) There are no further questions -- I do apologize. Yes, we do have a question from the line of Georgina Fraser from UBS.

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Georgina Fraser, UBS Investment Bank, Research Division - Research Analyst [25]

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Would you be able to talk through the future higher costs at Greenbrier and Logan operations in the U.S.? Just a little bit more detail around how we should think about those costs going forward.

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [26]

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The Logan costs are essentially higher largely because the Toney Fork operation dropped out. Toney Fork was a 100% recovery thermal coal. It was the lowest-cost coal source at Logan, but it was also the lowest priced. So when you look at average cost for Logan, you have to realize that, indeed, the biggest impact is the loss of the thermal coal, but that was low margin anyway.

The current operations that are augmenting our existing metallurgical production have considerably higher clean tonnes per foot capabilities in the short term than we've enjoyed before. So as far as the cost of metallurgical production, it should be roughly the same or slightly better over the next several years as we enjoy the benefit of the higher production costs -- or excuse me, the higher production rates.

Greenbrier is an operation that largely depends upon the blend that you put together from the operations. And the low-cost opportunities in surface mining are going to be augmented by the higher cost. But higher-quality production from the deep mine we have there and the overall average costs to the extent that they're controllable within the 900,000 tonnes of production will depend upon our ability to do just that.

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Operator [27]

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Thank you very much. There are no further questions. Sir, please continue. Thank you.

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Garold R. Spindler, Coronado Global Resources Inc. - MD, CEO & Director [28]

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No more questions? Thank you. The presentation is closed.