v3.25.4
Contract Obligations
 12 Months Ended
Dec. 31, 2025
Contract Obligations [Abstract]  
Contract Obligations
14. Contract Obligations
The following is a summary of the Company’s
contract obligations as of December 31, 2025:
(US$ thousands)
Short-term
Long-term
Total
Coal leases contract liability
$
843
$
18,818
$
19,661
Stanwell below-market coal supply agreement
21,602
2,355
23,957
Stanwell deferred consideration liability
—
346,768
346,768
Stanwell prepaid coal supply liability
—
155,027
155,027
$
22,445
$
522,968
$
545,413
The following is a summary of the Company’s
contract obligations as of December 31, 2024:
(US$ thousands)
Short-term
Long-term
Total
Coal leases contract liability
$
843
$
19,156
$
19,999
Stanwell below-market coal supply agreement
36,247
8,616
44,863
Stanwell deferred consideration liability
—
285,050
285,050
$
37,090
$
312,822
$
349,912
Coal leases contract liability
In
connection
with
the
acquisition
of
the
Logan
assets,
the
Company
assumed
certain
non-market
contracts
related to various
coal leases.
The non-market
coal leases
require royalty
payments based on
a percentage
of
the
realization
from
the
sale
of
the
respective
coal
under
lease.
On
acquisition,
the
Company
recorded
$
27.3
million related to the non-market
portion of the coal leases
and is amortizing it ratably
over the respective
estimated coal reserves as they are mined and sold.
Stanwell below market coal supply agreements
In connection with
the acquisition of
Curragh, the Company
assumed a below-market coal
supply agreement with
Stanwell, which
had a fixed
pricing component
that was
below the
market price at
the date of
acquisition. As
a
result,
on
acquisition,
the
Company
recorded
a
liability
of
$
307.0
million
(A$
400.0
million)
related
to
the
unfavorable pricing of the
Stanwell coal supply agreement
and is amortizing it
ratably as the base
tons are sold
pursuant to the contract. The
amortization of this liability for
the years ended December 31,
2025, 2024 and 2023
was
$
23.4
million,
$
31.1
million
and
$
32.8
million,
respectively,
and
was
recorded
as
“Other
revenues”
in the
Consolidated Statements of Operations and Comprehensive
Income.
Stanwell deferred consideration liability
On August 14, 2018, the Company completed the acquisition of rights to mine in the Stanwell Reserved Area, or
the
SRA,
adjacent
to
the
current
Curragh
mining
tenements.
These
rights
were
acquired
on
a
deferred
consideration
basis,
and
on
acquisition
the
Company
recognized
a “Mineral
rights
and reserves”
asset
and
a
corresponding deferred consideration liability of
$
155.2
million (A$
210.0
million), calculated using the
contractual
pre-tax discount rate of
13
%, which represented the fair value of the arrangement at the date of acquisition.
The
deferred consideration liability reflects the passage
of time by way of an annual accretion
at the contractual pre-
tax discount rate
of
13
% and will
be settled as
a discount to
the price of
thermal coal
supplied to
Stanwell over
the term of a
New Coal Supply Agreement which is expected
to commence in the first half
of 2027. The accretion
of the deferred consideration liability is recognized within “Interest expense, net” in the Consolidated Statements
of Operations
and Comprehensive
Income. The
right-to-mine-asset
is amortized
over the
coal reserves
mined
from the SRA.
Stanwell prepaid coal supply liability
On June 10, 2025, the Company and
Stanwell entered into a deed of amendment
,
or the First Amendment, and
amended
the
New
Coal
Supply
Agreement
dated
July
12,
2019,
or
NCSA,
whereby
Stanwell
provided
approximately
$
150.0
million
of
near-term
liquidity
to
the
Company
in
exchange
for
the
supply
of
additional
tonnage of thermal coal under the NCSA.
The First Amendment included a $
75.0
million (A$
116.1
million) prepayment for thermal coal on completion, and
a rebate waiver and deferral from April
2025 to December 2025 of $
67.2
million (A$
103.1
million), both of which
will be settled through reduction of
the gross proceeds to be received
on the physical delivery of
thermal coal to
Stanwell, expected to start in the first half of 2027, of up to
0.8
MMt per annum over
five years
, or until such time
that the obligation is fully settled. This prepaid coal supply
liability bears interest at
13
% per annum.
For
the
year
ended
December
31,
2025,
the
Company
recognized
interest
expense
of
$
8.1
million
(A$
12.4
million) related to the financing component of the prepaid
coal supply liability.
The contract liability
related to this
arrangement,
including accrued interest, will
be settled as
the physical delivery
of coal occurs and the performance obligation is satisfied.
As
of
December
31,
2025,
the
carrying
value
of
the
Stanwell
prepaid
coal
supply
liability
was
$
155.0
million
(A$
231.6
million).
The Second Amendment Deed
On November
27, 2025,
the Company
entered into
the Second
Amendment
Deed that,
among other
matters,
amended the terms of the ACSA and the NCSA, by
providing for:
●
a waiver of rebate
amounts that would
have otherwise been
payable by the
Company under the
ACSA
from January 1, 2026 until the final
delivery date, which date is expected to occur in
the first half of 2027;
●
a deferral of the Company’s obligations to
deliver certain values of coal to Stanwell for prepaid
amounts
under the First
Amendment and
amounts to
which Stanwell
is otherwise
entitled in
relation to
the SRA
deferred consideration,
or the Deferred Amounts;
●
prepayments
by
Stanwell
to
the
Company
in
relation
to
its future
annual
nominated
contract
tonnage
under the ACSA and the NCSA
equal the difference between
the current contracted prices
under these
arrangements and an
agreed, fixed price
roughly equivalent to
market prices at
the time of
the Second
Amendment, or the ACSA Prepayments and
the NCSA Prepayments. Stanwell’s
obligation to make the
ACSA
Prepayments
and
NCSA
Prepayments
are
subject
to
certain
liquidity
tests.
More
specifically,
Stanwell (i)
will advance
all of
the relevant
prepayment when
the Company’s
monthly liquidity
is below
$
200.0
million,
(ii)
will
advance
only
half
of
the
relevant
prepayment
in
months
when
the
Company’s
liquidity is between $
200.0
million and $
250.0
million, and (iii) will not be obligated to make prepayments
when the Company’s monthly liquidity is above
$
250.0
million; and
●
an extension
of the
NCSA term
from 2037
to 2043
and an
option for
Stanwell to
make broader
annual
nominations ranging from
1.2
MMt to
2.24
MMt per year under the NCSA.
The
value
of
the
ACSA
Prepayments,
NCSA
Prepayments
and
Deferred
Amounts,
or
the
Prepayment
and
Deferred Payment
Balance, will
be settled
through delivery
of coal
to Stanwell
in months
when the
Company’s
liquidity
exceeds
$
300.0
million.
The
Prepayment
and
Deferred
Payment
Balance
bears
interest
at
7.5
%
per
annum
and
the
total
balance
(including
accrued
interest)
will
be
capped
at
1.2
times
of
the
Prepayment
and
Deferred Payment Balance until the final delivery date
pursuant to the NCSA.
The
Second
Amendment
Deed
also
includes
restrictions
on
the
Company’s
ability
to
pay
distributions
to
shareholders (e.g.,
dividends)
such that
the Company
will be
required to
maintain a
minimum cash
liquidity of
$
300.0
million
following
payment
of
such
distribution,
the
repurchase
of
any
Notes
in
connection
with
the
distribution, and the payment of an equal or greater amount to Stanwell to reduce
the Prepayment and Deferred
Payment Balance.
The Prepayment and Deferred Payment Balance may become repayable
if there is an unremedied default under
the
ACSA
and
NCSA.
Additionally,
the
rebate
amounts
waived
under
the
Second
Amendment
Deed
will
be
repayable if there is
a change of control
of the Company that
occurs within two years
of the date of
the Second
Amendment. Refer to Note 24. “Contingencies” for further
information.
The ACSA and the NCSA
are secured by a third-priority
lien on substantially all
of the Company’s
assets, other
than the ABL Collateral (described below).