I thought I'd share some of my notes I have on where CRN is at...

I thought I'd share some of my notes I have on where CRN is at now, and where it is likely to be headed.

Production costs and profitability

• Average cost per tonne sold in 2024 was $107 USD. Future cost reduction is expected to drive these costs down to less than $90 per tonne. So production costs even before the cost reduction is already significantly below met coal prices of ~$150. CRN is roughly breaking even on thermal coal prices - but over 80% of  CRN coal production is Met Coal, so overall, it there is a very very profitable underlying production base, that will get more profitable with cost reductions.
• Mammoth Underground and Buchanan expansion will deliver an additional 2.5-3 million tonnes. Expected to reach full production capacity during 2H 2025.

2018 Stanwell agreement.

• This is has been the ball and chain for CRN.
• This supply agreement guarantees supply of 3.5m tonnes of coal to Stanwell power station - plus a royalty on exports.
• The result of this agreement, is that in the last quarter, the company paid 41.4m in royalties and a royalty of 22m to Stanwell off total revenues of $563m USD.
• In 2027, however, this agreement ends.
• Under the new agreement announced  only two weeks ago on 16 June:
  • the 3.5mtpa of thermal coal CRN must provide to Stanwell decreases to 2.2mtpa. Only .8 of that 1mtpa is included in the new agreement. And of that .8mtpa, .4mt will be fully exposed to the spot price.
  • The remaining .4 mtpa will be priced at a 'fixed forward curve that is higher than the current spot price'. If you want to get an idea of what these prices are - just look up the future prices for thermal coal and get your AI to produce a pricing curve (hint, futures prices are HIGHER than the current spot price).

Liquidity

• The recent falls in the coal price, big increases in cap ex for the Mammoth and Buchanan expansion, and the obligations under the current Stanwell agreement have resulted in significant liquidity risks for CRN. This is what has driven the share price from a high of $1.75 in 2024, to a low of 10c in 2025.
• The company has taken significant steps to address this by replacing the ABL facility with a more flexible arrangement that provides $150m USD in liquidity.
• The new Stanwell agreement also provides up to $150m in additional liquidity through a $75m USD prepayment (which is to be repaid from 2027 and settled by physical coal delivery over 5 years).
• The remaining $75m in liquidity is provided through a rebate waiver and deferral from April- Dec 2025.

In summary, with the additional liquidity provided by the ABL facility, new Stanwell agreement, increase in production at both Mammoth and Buchanan (additional 2.5-3Mt), falling cap ex costs (most of the additional cap ex to expand the mines is now behind the company), the company is in a realistic position of being able to be breakeven/cash flow positive from 2026, and able to make it to 2027, when its cashflows will change dramatically to generate rivers of cash.

From 2027, CRN will likely be able to generate positive cashflow that exceeds the current market cap of the company.

Yes, the company does have the debt of US$400m in US notes - but these have NO COVENANTS and is not due to be repaid until 2029. By then the company would have had two years of very good cashflow to be in a position to repay and/or refinance it at much better terms.

I think the company will start to re-rate over 2H 2025, as the cost efficiencies ($100m worth) flow through, and additional revenue from increased production across Mammoth and Buchanan starts to flow through.

I think there is perhaps some doubt in the market about the companies ability to realise the cost efficiencies, and achieve its production targets, but if the company starts to show it can in the 2H of this year - it will re-rate big time. Remember that the underlying business is very very profitable, but his hampered by short term liquidity issues largely stemming from the Stanwell agreement and exacerbated by a falling coal price. We know however, that the current agreement will end, and there is a general consensus in the market that the coal price is at its cyclical low, and it is just a matter of time before the market adjusts. Even so, at these cyclical lows - CRNs underlying production is still profitable, especially given the majority of its production is in met coal which is far more lucrative.

This is likely to be a FMG/WHC type of opportunity where short term liquidity risks have scared away a lot of potential investors and institutions that don't want any risk of having their names included in a company going bust, but the risk in my assessment, is massively mispriced. I think the probability of the liquidity issues being resolved is much higher than the market thinks, and the returns here, conservatively should be at least 5x, and more optimistically at 10x or higher.