Commodities | Jan 30 2026
After a concerning December quarter, brokers consider whether higher met coal prices and mining improvement might just might make Coronado Resources worth sticking with.
- Coronado Global Resources’ December quarter disappointed
- Geological issues, fatalities, contract obligations bite
- Improvements expected in 2026
- All hinges on met coal prices
By Greg Peel
Investors were less than impressed with coal miner Coronado Global Resources’ ((CRN)) December quarter update, which showed run-of-mine, production and sales all missing consensus by -6-7% and sent the stock down -14% on the day.
Geological issues at the company’s US operations were the main culprit but not the only concern. Two recent fatalities across both US and Australian operations are not only impacting short-term production, but they raise questions regarding ongoing operational impacts at Mammoth (Curragh, Queensland), which remains suspended.
Macquarie is awaiting the regulator's response to the Mammoth contractor submission as part of the post-incident review, with the timeline around resumption of coal mining uncertain. The broker notes development activities are continuing.
Rubbing salt into the wound, higher costs and lower realised prices saw net debt increase to US$492m by year end after drawdown of the miner’s A$265m Stanwell facility.
Group realised met coal pricing was US$149/t (74% realisation to the average hard coking coal (HCC) index) with higher thermal coal (for electricity generation: cheaper) sales to fulfill contracted volumes.
(Metallurgical (or coking) coal is used in steel production, in which carbon is blended with iron, rather than released into the atmosphere. Mining of met coal nevertheless is carbon-releasing.)
In the current quarter, production at the Curragh Complex will be impacted by adverse weather conditions, an ongoing suspension of underground mining following the December 2025 fatality and a planned two-week coal handling and preparation plant (CHPP) shutdown.
A tale of woe. Is there any good news?
Cash Harvest
While the market was not impressed by Cronado's quarterly result, UBS sees improving risk/reward as operations become more resilient and predictable. Following peak capex, and a structural reset of the cost base, the miner is becoming uniquely positioned to leverage increasingly supportive met coal markets, in this broker’s view.
UBS expects further improvements in portfolio volumes and costs, and resultant balance sheet recovery, views emphasis on downside risks as overdone, and regards Coronado as an underappreciated metallurgical coal “beta” (strong correlation with met prices) as met coal markets normalise.
2025 was a challenging year for Coronado with elevated capex and depressed coal prices. The miner has shown better reliability this year by growing production 5% year on year to achieve the low end of guidance.
Ord Minnett continues to expect the outlook for free cash flow should improve in 2026 with 8% production growth and increasing coal prices, and as Stanwell’s prepayment mechanism helps to stabilise cash flow.
Bell Potter expects group performance to improve throughout 2026 as the lower-cost Mammoth and Buchanan (US) underground expansions scale towards steady state levels and Curragh’s CHPP enhancements result in throughput and yield uplifts.
Bell Potter has lowered its production outlook at the higher-cost Logan Complex in the US, believing Logan output could be curtailed with the company citing structural challenges around US high-vol met coal products.
With the HCC price hitting US$250/t, marking a significant price recovery across the complex, Coronado provides a leveraged exposure, noting the miner’s operational leverage at Curragh and financial leverage, Macquarie points out.
Following the recent financial restructuring through which the financial position of the company was secured, Macquarie notes Coronado's leverage profile is heavily exposed to spot pricing. Should spot pricing persist, based on this broker’s projections, the company would be debt free in 2029.
Should prices pull back a mere -US$10/t, that timeline extends to 2031.
Worth the Bet?
The December quarter was a disappointment, Macquarie laments, but the company is considered to be at an inflection point with production increasing and costs reducing as prices exceed consensus (and the broker’s) expectations.
But how confident is Macquarie in prices?
With the Mammoth restart uncertainty, the broker retains a cautious outlook, noting spot leverage, sticking with Underperform and a 40c target.
Ord Minnett incorporates the December quarter result and moderates forecasts for production and costs to better reflect the second half 2025 performance. This, along with the higher net debt balance, sees a target price decrease to 45c from 48c.
Ord Minnett retains a Hold rating, balancing its forecast for improving free cash flow with Coronado’s indebtedness (US$665) and historical reliability issues.
Bell Potter maintains a Speculative Hold recommendation, recognising balance sheet risks. In the near-term, Bell Potter believes operational performance is set to lift with the ramp-up of Mammoth underground and the Buchanan expansion projects, supporting production volumes and lower unit costs.
Bell Potter’s target falls to 43c from 47c.
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