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Crossing Science T's and Dotting Processing I's

ISA progress shows it’s a ‘when’ not an ‘if’. Following the completion of the March ISA meetings, the agency put out a ‘way forward’ memo and, according to Reuters, mining applications would be received by the ISA beginning after July 2023. While TMC does not wish to start operations without a final mining code, it reserves legal rights under the Convention of the Law of the Sea to do so. Growing scientific data helps guide ISA’s work. TMC highlighted the positive takeaways from the BMI life cycle analysis report on deep-sea polymetallic nodule (PMN) collection and processing and its recent uploading of around 200 terabytes of scientific data gathered during its work in the CCZ to the ISA’s DeepData database. Management considers the March ISA meetings a major milestone and is encouraged by the momentum building to complete the draft and issue the final exploitation, with a growing body of scientific evidence playing a positive role in the process. Processing partner raises NORI-D’s NPV. The preliminary agreement with Pacific Metals Co Ltd. (PAMCO) to evaluate the TMC-developed near-zero tailings process at PAMCO’s existing rotary kiln-electric furnace (RKEF) facility in Japan appears likely to turn into a firm tolling agreement by the end of the year. This will secure Project-0’s originally envisioned processing needs and provide the flexibility to expand annual PMN production by three times or more, as needed. This outcome would result in TMC obtaining an onshore tolling partner whose production will qualify for the Inflation Reduction Act (IRA) tax and consumer credits, significantly raising the already impressive NPV and IRR of TMC’s NORI-D resource. Extended financial runway to find a partner. TMC has been in talks with potential strategic investors regarding asset-level funding and a productive conclusion may be reached by the end of 2023. The $25 million unsecured credit facility from Allseas and the PAMCO agreement can facilitate ongoing negotiations, as well as bring new entities to the table, giving management confidence that the ~$150 million needed for TMC to get into production with Project-0 can be obtained in a way that best protects and enhances shareholder value. Valuation discrepancy should dissipate in time. TMC’s current market cap represents less than 2% of the $13 billion NPV of NORI-D, compared with 30-40% of NPV producing onshore mineral companies trade at, suggesting investors are giving TMC a less than one in 20 chance of getting into production in the next several years, which is overly pessimistic. This report contains a transcript of the TMC fireside chat from March 30, 2023, which can be accessed on demand.