Coronado Global Resources Inc. (CRN) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Coronado Global Resources 2022 Half Year Results Presentation. [Operator Instructions] I would now like to hand over to Andrew Mooney, Vice President, Investor Relations and Communications. Please go ahead.

Thank you, operator, and thank you, everyone, for joining Coronado's Half Year 2022 Investor Call. Today, Coronado released its half year financial results to the ASX and SEC, including its Form 10-Q financial statements, half year earnings release and investor presentation. Coronado has also released announcements relating to the declaration of a half year dividend and a Senior Secured Notes purchase offer. All of these materials are available on our website at www.coronadoglobal.com. Today, I'm joined by our Managing Director and CEO, Jerry Spindler; and our Group CFO, Gerhard Ziems. Within our investor presentation, you will see our important notices and disclaimers and reconciliations of non-U.S. GAAP financial measures. We encourage you to review these statements as well as our other filings with the ASX and SEC. I also remind everyone that Coronado quotes all numbers in U.S. dollars and metric tonnes. I'll now hand the call over to Gerry.

Thank you, Andrew. I'd like to commence our call today by reiterating to all of our stakeholders, who we are and what Coronado Global Resources represents. We are and seek to continue to be a leading international producer of high-quality metallurgical coal across the globe, metallurgical coal, or coking coal as it is also referred to, is an essential element in the production of steel, and will continue to be for some time to come. "steel starts here," is our motto, and this continues to ring true. The inherent chemistry of steel production requires both mined iron ore and met coal commodities, and it is these commodities that underpin existing steel uses such as for everyday white goods, automobiles, transportation infrastructure and buildings. But steel is also a critical element in the development of all low-carbon technologies, including hydro, wind, solar, nuclear and even for electric vehicles. McKinsey Research shows that steel is the #1 critical component in the development and advancement of renewables. Market research indicates that total global crude steel production is forecast to increase by 15% by 2050, and the method of generation will overwhelmingly continue to come from blast furnace methods in India and China, which rely heavily on metallurgical coal supply. We have communicated these facts before, and experts across the globe all agree that metallurgical coal is an essential building block as the world transitions to a low-carbon economy. Simply stated, met coal has a long-term future, and high-quality producers, such as Coronado, will continue to service the market for some time to come. Before Gerhard and I elaborate on the results, I will first address our half year safety results and initiatives. The safety and well-being of our workforce continues to be the most important aspect of our operations and remains Coronado's #1 core value and highest priority. I'm, therefore, pleased to advise that reportable safety rates in both Australia and the U.S. reflect improvements year-on-year and continue to remain below the relevant industry averages. In Australia, the 12-month rolling average total reportable injury frequency rate was 4.08 compared to a rate of 5.63 at the end of June 2021, reflecting a 28% year-on-year improvement. In the U.S., the 12-month rolling average total reportable incident rate was 2.01 compared to a rate of 3.04 in the prior year, reflecting a 34% year-on-year improvement. New and revived health and safety initiatives across all Coronado operations continue to be implemented quarterly. Safety results have improved year-on-year due to several factors, including hazard identification and critical control verification programs, effective methodic and enhanced training programs. In Australia, Coronado continued to reinforce the importance of safety by developing and communicating to the workforce our life-saving rules. These rules apply to all employees and contractors on site and reinforced to everyone that safety is our #1 priority and our key accountability. In the U.S., we continue to focus on training programs for our existing workforce and new hires. Significant attention to training of new miners has been critical in ensuring the development of new workers, but also to ensure compliance with Coronado's safety culture and values. Turning to Slide 8, and our financial results. In the first half of 2022, Coronado has delivered on its capital management plans. We have generated record revenue, net income and adjusted EBITDA and distributed $351 million in cash dividends to shareholders while remaining in a net cash position. Coronado's half year adjusted EBITDA eclipses the highest full year adjusted EBITDA ever reported in the history of Coronado. These strong results are due to the higher price environment, which has resulted in record price realizations for our high-quality metallurgical coal products, but also from the structural changes made to our business over the past 12 to 18 months that have allowed us to take advantage of the improved markets. I am proud of our financial results, and I'm equally proud of the significant number of other achievements delivered by the Coronado team. As I mentioned earlier, we have improved our reportable safety rate year-on-year. We released our fourth sustainability report, in which we include emission reduction plans and targets in S & P / ASX 200 index for the first time and continue to reinvest in our business via capital expenditure to secure future production plans and growth. During the first half of the year, we experienced headwinds as all did from significant wet weather events in Queensland, which impacted production and growing inflationary cost pressures to labor, transport and materials and supplies. Royalty costs also significantly increased during the period due to the substantially higher coal price. As a result, year-to-date cost per tonne, while higher, are not reflective of our cost expectations for the second half of 2022, nor are they a reasonable comparison to prior years in which we operated in a very different market dynamic. Despite the impacts of the Bowen Basin rain events, Curragh successfully completed major planned maintenance activities on the preparation plant and 2 draglines during the half year. Curragh also significantly progressed the conversion of 4 fleets to a Coronado operator model, which is now complete, and has also commenced high-wall mining operations in Curragh North. The mines focused on waste movement in the first half of the year was also evident, with waste movement year-to-date broadly aligned with the same period in the prior year despite heavy rains, all of this occasion by the changes in operating structure. All of these initiatives underpin second half weighted production for Curragh, and we, therefore, reiterate our revised full year group production guidance at the low end of 18 million to 19 million tonnes. Turning to Slide 10, Coronado share price and dividend distributions over the past 12 months have substantially outperformed the market. As you can see in the graphics, Coronado has delivered a share price growth of 90% between the 1st of July 2021, and in 30th June, 2022, while the ASX 200 and S&P 500 generated negative returns. As I mentioned earlier, Coronado has distributed $351 million in cash to shareholders year-to-date, while remaining in a net cash position. This is also seen our dividend yield significantly outperform the market. Therefore, today, I am pleased to announce that Coronado will officially declares an unfranked half-year ordinary dividend of USD 0.075 per share, equating to $125.7 million. Following the payment of this dividend, Coronado will have distributed $477 million in cash dividends to shareholders in the calendar year, and $1.2 billion in cumulative dividends since listing on the ASX in October 2018. I'll now hand over to Gerhard to go into a bit more detail on the company's financial performance and the dividend and market outlook.

Thank you, Gerry, and thank you, everybody, for joining the call. As Gerry mentioned earlier, Coronado is delivering on its capital management goals. Coronado's management strategy focuses on 4 key initiatives: #1, maintaining a strong balance sheet; #2, delivering shareholder returns; #3, investing in organic growth; and number four, positioning ourselves for inorganic growth. Our record financial results, dividend announcements and capital investment plans have aligned with this strategy and to decide Coronado reinforces its charts as an effective and agile business ready to develop its near- and longer-term growth plans. On Slide 13, the -- in order to keep upgraded how far we have come as a business in the last few years and results are impressive. The significant improvement in revenue EBITDA, the cash flows and return to a net cash position has made possible by the tough decisions we have 12 to 18 months ago when we restructured our financing arrangements. Undertaking those necessary decisions, there's now allowed us to take advantage of the improved market and made our company more resilient and weather in recent headwinds. Turning to Slide 14. Coronado report a closing cash balance of $486 million, available liquidity of $586 million and free cash flow generation for the half year of $423 million. We disclosed on this slide, the [indiscernible] between adjusted EBITDA and free cash flow. As you will notice, the company had a significant working capital build in the half. This was due to a significant increase in accounts receivable due to the elevated price experience, and we expect this working capital build to unwind in the second half of the year, particularly July and August, of course. As you can see, Coronado retained significant cash even after paying the dividend, though liquidity remained strong with our ABL remaining undrawn. Turning to Slide 15, upon today's release of the company's 10-Q financial statements and the view by auditors, the Board has decided to declare $0.075 per CDI half year dividend totaling $125.7 million to shareholders, and that is aligned with our dividend policy. Tranche 1 is a declaration of a $0.06 per CDI ordinary dividend to the value of $100.6 million unfranked. This dividend component relates to the cash generated by the company that remains unsubscribed by bondholders as part of the announced notes offer purchase following the first quarter's results release. These monies are not subject to another matching purchase offer given they have already been offered once, and therefore, the Board has decided to distribute these funds to shareholders in full. Tranche 2 is the declaration of $0.05 per CDI fixed dividend, as announced earlier in the year. The fixed dividend totaled $8.4 million unfranked. Tranche 3 is a declaration of an additional $0.01 per CDI ordinary dividend to the value of $16.7 million unfranked. The half year dividend record date is 30 August, and the dividend will be paid on 20th September, 2022. This is anticipated that the company will be able to pay franked dividends from early 2023. Per the terms of the indenture, we can now is also try to make a matching off of the bond orders for the Tranche 2 and 3 components of today's announced dividend totaling $25.2 million at 104%. This purchase offer expires on 6th September and for bond orders that except the offer, payment will be made on 9th September. Today's dividend declaration and not repurchase of line with Coronado's policy of distributing between 60% and 100% of free cash flow. Following the payment of today's declared dividends and assumed all holders except the purchase of offer, Coronado will have distributed 83% of its first half free cash flows. The company will also continue to remain in a net cash position. Coronado's year-to-date paid and declared distributions are made with the confidence that a strong balance sheet is retained. The company is cognizant of ongoing geopolitical uncertainty, global inflationary pressures, heavy expenditure plans underpinning future growth and other unforeseen events. Turning to Slide 17. We announced our revised market guidance on our call a few weeks ago, and, today, we reiterate that revised guidance. Saleable production is anticipated to be at the low end of 18 million to 19 million tonnes. We remain confident in this guidance given our second half weighted production plans and realized productivity improvements at Curragh from our draglines and recently converted fleets to Coronado's operator model. Mining costs per tonne sold, guidance is $79 to $81 per tonne and has increased in parallel with our peers due to the unforeseen events outside of our control, including lower inflationary pressures, wet weather events and geological issues impacting production. Capital expenditure is expected to be at the top end of guidance of between $170 million and $190 million due in part to global inflationary pressures, but also due to investments in existing operations given our strong cash flow generation. I'll now switch gears and talk to global coal markets. Looking at Slide 19. I understand that most participants on the call today understand our business, but it is important to emphasize again Coronado's unique diversification of geography, met coal product offering and customer base. The leading supplier of high-quality met coal, Coronado continues to support met coal customers across 5 continents. Our board range of met coal products are well established and highly valued for their attractive coke-making characteristics. Our geographically diverse asset base is located near key rail and port infrastructure, providing access to both domestic and seaborne markets. We continue to maintain a diverse high-quality customer base across a range of global markets, with India being our #1 destination for Coronado met coal. Furthermore, Coronado's peer #1 U.S. business continues to export to China, while restrictions on Australian stores will continue. Slide 20, turning to our met coal pricing. You can see that Coronado has experienced record part allocation in the first half of 2022. On a group basis, we have realized met coal prices that are 193% higher than this time last year. The record price realizations have been supported by strong demand, tight supply and geopolitical issues for much of the first 6 months of the year. However, interest in spot cargoes of met coal reduced significantly late in the half, the steel production decreased globally and Australian coal supply improved. COVID-19 lockdowns in China have also led to disruptions to logistics along with steel value chain, including the supply of steel to end users and raw materials to steel mills, lowering domestic steel and met coal demand in the short term. The different market fundamentals continue to be challenged by the pandemic and the war in Ukraine. With European gas supplies under threat and Russian coal sales restricted, the global demand for thermal coal has led to high energy prices and the market where thermal coal prices are currently above metallurgical coal process. We expect these markets to revert to historical norms over the medium term. Coronado's met coal remains in high demand. Our high-quality products and unique geographical diversification allows us to switch products into different geographical markets or market segments that provide the highest return. For example, moving U.S. exports from China to Europe of lending high-volatile coking coils for thermal education to take advantage of current unique market fundamentals created by trade subscriptions. Metallurgical coals can be utilized as thermal coal and thermal boilers if blended correctly. Depending on the technical design of the power station, there are some limitations concerning mollify matter content and free-swelling index, which must meet certain thresholds, making it harder to switch some met coal than others. For example, specific PCI or Semi-Soft Coking Coals and other High Volatile Met coals, including Coronado U.S. High Vol coals have a greater ability to switch to the thermal coal market than the premium low volatile coal, which requires specifically designed power stations. In recent times, Coronado has seen the emergence of demand for our U.S. High Vol cocking coal into the European thermal market and similar demand from Australian PCI-type coals for Asian thermal markets, and we will switch to these markets where we have the flexibility to do so. Looking at Slide 21, we are currently operating in volatile times due to global inflationary pressures, while the interest rates in the country in Ukraine. As a result, in recent times, we have seen softening in steel prices and demand. However, the global conflicts is expected to rebound led by government infrastructure stimulus primarily in India and China and expected growth in the auto motor sector. This will see the price for steel and steel imports prices in the medium term. India is forecasting GDP growth rate of 7% for 2022 and nearly 6% for 2023, underpinning steel demand and met coal forecast, which most other key markets generating modest growth rates around 2%. Coronado grow year-on-year and at a desire demand for seaborne met poles equally growing. As you can see on this slide forecast indicated 24% increase in seaborne met coal demand by 2050. Again here, these numbers are quite conservative. The majority of C1 demand growth is planned to come from blast furnace via production in India, Coronado's #1 customer. And by the way, India, were between now and 2035 or even 2040 continue to build almost exclusively in blast furnaces and the life span of blast furnaces probably more than 40 years. India's seaborne met coal demand has shopped us to increase by 11% to in 2015, the majority of which will be filed by supply growth from Australia, if it [indiscernible], there is -- there might be a gap which we can talk about where supplier may not reach demand from 2025, 2026 on. By 2050, Wood Mackenzie forecast that 61% of all global C1 net core supply will come from Australia. I'll now hand back over to Gerry to discuss our operational growth plans and key focus areas. Gerry?

Thank you, Gerhard. On Slide 24, we reiterate our substantial reserve and resource base across our Australian and U.S. operations. We maintained operating assets with resources in excess of 2 billion tonnes, and operating lives in excess of 20 years, both of which underpin our position as the premier pure-play met coal business on the ASX. Our focus areas in the near term are multifaceted, but essentially can be broken down into 3 key buckets: one, health and safety. The safety and well-being of our workforce remains our #1 priority, and we will continue to drive a stronger safety culture and continue to implement various safety initiatives to reduce injuries. Improved production. We remain inherently focused on leveraging off our achievements year-to-date and delivering second half weighted production plans from our high-quality met coal mines in order to meet our guidance targets. We are also cognizant of the current market volatility, and will remain flexible by diverting tonnages to thermal markets where possible to realize higher margins and greater recoveries. Three, financial. Maintaining a strong balance sheet will ensure we have the capacity to invest in our business, make prudent shareholder returns and provide us with optionality for potential inorganic growth as opportunities present themselves. Turning to our growth plans. We previously communicated our expectations to grow Curragh production to 13.5 million tonnes by 2025 and 14.5 million to 15 million tonnes is being evaluated. As part of the project plans to secure a 13.5 million tonnes by 2025, Curragh management have made some significant strides this year, including the establishment of a new management structure, providing clarity of purpose and a clear one Curragh strategy. The successful transition of port leads to a Coronado operator model, which has already realized cost savings and productivity improvements, and we'll detail these momentarily. The recent commencement of High-wall mining operations at Curragh North and investment in waste removal plans, including box cuts to enable higher dragline utilization rates and decrease congestion at the mine. The higher waste removal will manifest in higher coal availability and higher preparation plant utilization rates. Furthermore, expansion to 15 million tonnes per annum at Curragh still remains in our sites. We are currently assessing our options in this regard and hope to provide an update to the market later this year. High-wall mining, expanding on some of the initiatives I have just listed, I'm pleased to announce that we commenced High-wall Mining at Curragh North on the 11th of July 2022. Our High-wall miner is working extremely well and is extracting coal from the mine in areas previously inaccessible due to existing infrastructure. The coal being extracted from Curragh North is a quality met coal and is of the same specification as coal extracted from the rest of the Curragh North mine. Turning to Slide 28. The capital investment in box cuts and completion of key maintenance programs in the first half of the year at Curragh is paying dividends, and we are now realizing a 10% productivity improvement from a dragline. We have also completed the conversion of the 4 fleets previously operated by the contractor to a contractor operator model. The newly transitioned 3 excavator truck fleets and 1 shovel truck fleet to the direct operator model is realizing immediate cost savings and improved operating time in excess of 20%. All up, we have transitioned 53 individual pieces of mobile equipment to Coronado direct management. We're getting 15,000 tonnes per day from 2 years that the contractor was unable to operate in the first half of the year, and we are going to operate the second half of the year. 5 million -- That translates to 5 million bank cubic meters or 0.5 million of additional tons. Dragline improvements and productivity improvements should add another 700,000 tonnes, while mine planning changes and yields -- should yield another 400,000 tonnes of coal. Productivity improvements from this equipment as part of the One Curragh plan, will continue to be realized in the second half of 2022 and beyond, with greater waste movement efficiency, lower costs and greater coal availability. In our U.S. operations, we continue to target 6.5 million tonnes of production from Buchanan and Logan mines by 2025. When combined with Curragh, this will bring total group production to just above 20 million tonnes year, a 17% improvement on 2021 production levels. At Buchanan, we are undertaking construction works on a new raw coal storage area to increase operating capacity of the mine and decrease bottlenecks. We are also installing additional skips and will undertake preparation plant upgrades to increase throughput and yields. We also have the optionality of achieving additional volumes from processing certain reclamation works at the mine. As long as we are expecting to increase production from the Eagle mine with additional equipment and labor, the new Winifrede mine commences this month for some incremental production plus we have plans to potentially implement High-wall mining at our Logan service mine. Beyond the targeted 6.9 million tonnes from our existing U.S. operations. Coronado is also progressing permitting work on our one Valley met coal project in Southwest Pennsylvania. Once operational, the project will produce a high vol hard-coking coal, in upwards of 2 million ton metric tons per year. The project has approximately 197 metric tonnes of run of mine reserves and is strategically located along the Monongahela River, only a few miles from multiple cohort end users. Once all necessary permitting works are completed, we anticipate we could generate first coal from this project, 2.5 years after that. I would now like to briefly discuss our sustainability achievements year-to-date. Coronado strives to be a socially and environmentally conscious employer, putting the safety of its people and the community first. Underpinned by the core values of collaboration, accountability, respect and excellence, Coronado continues to positively engage with local communities and support a diverse, inclusive culture and put safety and well-being at the center of its operations. Sustainability and carbon management are increasingly important aspects of our operations, risk management and strategic planning. We recently increased our 2021 -- we recently released our 2021 sustainability report, which is available on our website. The report highlights the progress we are making across a number of areas in our business, some of which are noted on this slide, including a commitment to a 30% reduction in Scope 1 and Scope 2 emissions by 2030. I am also particularly pleased with our rehabilitation efforts in recent years with Coronado rehabilitating more than 600 hectares of land since 2018, with commitments to undertake further work this year. Turning to the next slide, Buchanan's ventilation air methane abatement project is a key initiative from Coronado, underpinning our 30% emissions reduction target. The project utilizes the latest technology to capture fugitive methane gas emissions from the mine's ventilation system and convert it to carbon dioxide. Conversion of methane to CO2 will reduce the gas emission intensity from Buchanan by approximately 22.25x. I'm pleased to announce that the VAM project officially commenced on 27 July, 2022, and is working well. Initial performance is encouraging with approximately 94% emission destruction efficiency. Overall, projections show a reduction in Buchanan emissions from this infrastructure to be approximately 61% by 2030. While Coronado was also investigating other projects to reduce its carbon footprint, if the Van projections are achieved, this project alone will meet our 30% reduction target by 2030. In closing, we are proud of our record financial results for the half year and our significant operational successes despite the headwinds. We have plans in place to grow and those plans are on target for our business. It's safe to say that metallurgical coal is here to stay, for a while yet, and high-quality producers such as Coronado will continue to service the market for some time to come. I'll now hand back to the operator to take any questions.

[Operator Instructions] Your first question comes from Paul Young with Goldman Sachs.

Gerry, a couple of questions on Curragh and, again, the medium-term plan, the 2025 plan to get to 13.5. Maybe the first question is actually around the high-wall mining. Good you see that being implemented. I know you spoke about that back in 2018. Can you maybe let us know what tonnage, what production you get out of a longwall mine? And are you planning on actually adding additional units within the 5-year plan?

The beauty of the high-wall miner that we've currently employed is that it's attacking reserves that are under the built and existing tunnel lines. So it's utilizing reserves we would not otherwise have. I don't want to identify the monthly tonnage except to note that it is comparable or exceeds that which we get in the U.S. and at other locations. And the depth of penetration is about on plan. So it's performing as we had planned. And if we can find room for additional high-wall miners, which we haven't yet, we will do so.

Okay. Yes, the next question is just on the uplift on equipment up time, the 20% improvement in utilization, I guess, on ours. How was that achieved?

Largely through extending the high fleet available time on the equipment and manning fleet with our own directed workforce that the contractor has not been able to man. In addition to that, we are getting additional efficiencies, not only above what the contractor had, but above what we had planned. So we are outperforming our expectations and the past performance. By how much, again, I don't want to go into because I can only register satisfaction and optimism with some confirmation for continued improvement in this area.

Okay. All right. Just moving on to transportation costs and trends you're seeing there on rail charges in Australia and the U.S. and also port charges. What trends are you seeing on costs on logistics at the moment?

Yes. Australia, it's fairly stable. The Australia -- the U.S. model is wildly undulating, both in performance and cost. The only thing I will say is that different from differing from most U.S. producers. We go to export largely on the N&W, and we do so from an area where performance problems haven't been so bad. And the CSX, which services Logan does so domestically and domestic CSX service has been better than export. So we're not -- it's more expensive than it used to be. And most of the railroads have gone to a proprietary percentage formula, but nevertheless, the performance hasn't been all that bad.

Okay. One question and last one is on M&A. Gerhard, you mentioned that you want to retain a net cash position very prudent. I agree with that. On a -- from an M&A perspective, now you sit back and you reflected on the Queensland royalty, the Queensland's government changes to the royalty regime. In your view, do you think this may be -- this may accelerate divestments from the majors and actually you might see more opportunities come forward at? And what's your sort of view on how that changes the M&A landscape?

Well, #1 is, it makes investments in Queensland less attractive and investments elsewhere more attractive. So that's just by the nature of things. The Queensland government has increased the cost in that area for foundry. I mean, prices above the Australian dollar $300 per tonne is taxed at 40%. So it's more the entire cost. However, that doesn't mean there won't be any expansions. I think it will have an impact on new mines, [indiscernible] developments, where a lot of people now shying away from Australia, and particularly Queensland, because they have changed, and sovereign risk has increased. When you look at us, we look at investments always on NPV or IRR basis. So we evaluate our investments on that basis. And some of our growth projects at Curragh would still make sense.

Your next question comes from Chen Jiang from Bank of America.

Just 2 questions from me, please. Could you please remind why the interim dividend of $125 million is not subject to the offer to your bondholders?

Yes. I think we explained it, but let me go back to the $100 million bond off of that was not accepted. So that doesn't require any matching at all, the first $100 million. And anything above $100 million, quite and matching. That's probably the easiest way to expand it.

Second question, your comments mentioned today, the Russia sanction effective this month. Would you please elaborate how CRN is going to take advantage of the options you have for the right situation, well, in addition to you are converting High Vol met coal to thermal coal. Any other opportunities that you can change the destination of your customers?

Yes. It's also a number of opportunities, but obvious 1 is, of course, as I explained, switching of met coal or certain met coal products into thermal. And we can do that out of the U.S., in fact all of the U.S., the high words, we already sent to Europe as thermal products in North of Australia, we can do the same into the Asian market. I think the issue is a little bit bigger as well. When you look at the Russian situation, the ban were coming to effect on the 10th of August. I think, to a large extent, steelmakers in Europe have already self-imposed a ban on Russian coal, anything coal, but the market is still 20%, 30% less that will be affected by this ban. And therefore, there will be more supply coming out of the market, and it will have an impact on -- a positive impact on price in the near future, at least in the coming weeks. So I suspect there's a little bit of a lag so we won't see that price impact straight away on the 10th of August, but I guess that will stretch probably into September. And remember, Russia wants at least 30% of PCI and PCI prices will go up in fact overnight. We further PCI deal was done into a $240 per tonne. Now that's $37 higher than the premium low volume. And the other thing is when we look at Russia, is that Russia exports about 187 million tonnes of thermal coal into the market. And that's about 20% of global thermal coal, 68 million tonnes go into the EU, U.K. and a little bit into Japan, that will not find its way particularly the tonnes that go in the Europe and the U.K. will not find its way into the Asian market simply because of infrastructure constraints. So that means we take probably just under 60 million tonnes of thermal coal out of the market, which means what I just explained, the switching from met coal into thermal coal is probably here for you to stay for quite some time, and we will take the advantage of that.

Your next question comes from Glyn Lawcock from Barrenjoey.

Gerry, I was just wondering if you could help me square the circle a little bit. When I look at your guidance, and I know you said the low end but it suggests -- Slide 26 suggest you're probably going to do 11.5 million tonnes out of Curragh, which means a 7 million tonne back half of 14 annualized, which is well in excess of even your target in '25. What's special about the back half? Is it just you've got plenty of tonnes on the stockpile to do that 14 annualized rate in the back half? And if you could maybe just elaborate what July has been like? You probably can't talk about it quantitatively, but maybe qualitatively because I understand the weather has been pretty bad in Queensland again in July.

I cannot talk about July quantitatively except that we did better than one would have supposed given the weather and the weather was worse than we thought. Let me make 2 or 3 points. And then I'm going to turn it over to Doug Thompson, who is running Curragh for us and take advantage of his additional comments. First is -- it is key in understanding this to realize that the plan for the year was always back-end loaded. And that's simply a matter of where you expose coal and how much dirt it takes to expose the coal. We haven't fallen that far behind on dirt movement, as we've noted, but the coal exposed was never going to match that coal exposed in the second half of the year. Secondly, again, because of Doug and his management team, the performance of these units that we have taken over has truly exceeded expectations. Thirdly, as has the performance of the 2 drag lines that were not impacted by shutdowns, those draglines will be available in the second half of the year, and we expect them to perform on the same basis that the first 2 did. Doug, over to you.