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Forging Ahead with PFS and EIS

1Q24 continues to show progress toward application goal. TMC reported 1Q24 results and accomplishments, including higher exportation and evaluation expense of $18.1 million versus $7.2 million in 1Q23, due to $10.9 million in mining, technological, and process development costs associated with the latest sea campaign completed in February, and a modest increase in SG&A expenses ($6.8 million versus $6.2 million in the year-ago period). As a result, quarterly loss increased to $25.2 million from $13.7 million in 1Q23, with EPS of ($0.08) versus ($0.05) in 1Q23. Capital position improved. Despite significant cash use during the quarter, with $4 million of cash left at the end of the period, TMC maintains sufficient cash and borrowing capacity in the form of a $25 million term loan from Allseas and a $20 million term loan provided by TMC’s top two shareholders, as well as an untapped $30 million ATM program. Management feels the cash on hand and its borrowing capacity are sufficient to continue to fund its operating and capex expenses for the next 12 months while it continues to work to secure asset level funding. Geopolitical environment improving. Following a visit by China’s Chairman Xi, France’s stance on seabed nodule ban, or even a moratorium, has softened, as evidenced by the two countries’ joint statement after the meetings, while two Chinese entities, China Minmetals Corporation (CMC) and Beijing Pioneer Hi-Tech Development Corporation (BPC), have applied to the ISA for exploration licenses to begin environmental impact studies in China-owned license areas of the CCZ. TMC believes China is on pace to begin exploiting its license areas in 2030s, well after TMC itself is expecting to get into production. Furthermore, following Norway’s lead, Belgium has also enacted a deep-sea mining law, putting in place a framework in which exploitation of seabed resources can be carried out responsibly. Combined with growing government actions in the US, including an introduction of a House bill (Responsible Use of Seafloor Resources Act) and the Pentagon’s pending report on the use of seafloor nodules to help break supply chain dependence on China, and the ISA’s release of consolidated regulatory text of proposed mining regulations following its March 2024 meetings appear to suggest the political will is there to complete the ISA mission in 2024, allowing TMC to submit its exploitation application in 2H24 as previously envisioned. Nickel sulfate production marks another step forward. In April, TMC disclosed the first successful pilot scale production of nickel sulfate, the battery material needed for the EV industry directly from Ni-Co-Cu matte derived from earlier processing of polymetallic nodules, together with its partner SGS Canada, Inc. further validating TMC’s flowsheet and moving the company along the value curve, as it continues to prove out its manufacturing capabilities. Work continues in anticipation of application filing. TMC remains on track to submit its Environmental Impact Statement (EIS) and Preliminary Feasibility Study (PFS) to the ISA in 2H24. As scientific data collected during 22 sea campaigns conducted by TMC over the years is published and submitted, science should begin to replace alarmist conjectures when it comes to seafloor plumes, midwater plumes, noise, biodiversity loss, habitat destruction, and sequestered carbon release, allowing the ISA to complete the establishment of a regulatory framework.