June 30, 2025 - S&P Global Ratings has downgraded Coronado Global Resources Inc. to ’CCC+’ from ’B-’ due to continued cash burn and uncertain liquidity.

The downgrade, announced Monday, reflects the metallurgical coal producer’s high operating costs and coal prices below $200 per metric ton, which S&P believes will cause the company to continue burning cash in 2025.

S&P also lowered the rating on Coronado’s senior secured debt to ’B-’ from ’B’ while maintaining a negative outlook on the company.

Despite securing a new three-year $150 million asset-based loan facility (ABL) and other liquidity support, Coronado faces challenges with tightening quarterly covenants that will be difficult to meet without a sustained recovery in coal prices.

The company’s current liquidity stands at approximately $315 million as of June end, consisting of about $240 million in cash and $75 million in undrawn capacity under the ABL. However, S&P expects Coronado to continue burning through about $10-20 million in cash monthly for at least the next three months.

Coronado has drawn $75 million from its new ABL facility and obtained an additional $75 million prepayment under a new coal supply agreement with Stanwell Corp. Ltd. The Stanwell agreement also defers coal price rebate payments from April to December 2025, estimated at about $75 million over the seven-month period, which will become payable from 2027.

S&P estimates that Coronado needs metallurgical coal prices above $220 per metric ton to break even at current operating costs. The company’s ability to slow its cash burn depends on operational improvements, including the successful ramp-up of the Mammoth underground and Buchanan expansion projects, which are expected to increase coal production by 2.5-3.0 million metric tons per annum.

If Coronado can lower its operating costs to $90-95 per metric ton from the March quarter average of $113 per metric ton, and achieve its targeted $100 million in cost cuts, its break-even coal price would decrease to about $180 per metric ton.

The company is reportedly exploring the sale of minority stakes in some assets to raise cash. From 2027, a new arrangement with Stanwell is expected to add approximately $150 million to annual cash flow.

S&P could lower the rating further if Coronado’s liquidity position weakens due to higher cash burn from weaker coal prices or persistent high operating costs, potentially leading to a breach of ABL facility covenants.