Collecting Nodules and Scientific Data as Regulation Timeline Nears



KEY POINTS
  • Pilot validates offshore portion of project. Earlier this month, TMC completed its large-scale pilot project in the Pacific Ocean, collecting more than 4,500 metric tons (mt) of polymetallic nodules off the ocean floor, 4 km below sea level, and transporting 3,000 mt of the collected nodules to a surface ship, reaching sustained collection rates of 86 mt/hour and largely de-risking the offshore collection portion of the process.
  • Regulatory timetable remains on track. Despite some governments’ calls for a pause or ban on deep-sea exploitation of resources, the International Seabed Authority (ISA) is progressing with its work to finalize exploitation rules and regulations by 2H23, as it is mandated to do by the United Nations Convention on the Law of the Sea (UNCLOS) and regardless of any erroneous claims of absence of sufficient scientific data to adequately assess the environmental risks of such mining activities, which we believe must be examined within the context of developing onshore reserves as an alternative.
  • Underpriced on risk-adjusted basis. With ownership rights to the #1 and #2 largest unexploited nickel reserves in the world, TMC’s net present value (NPV) of NORI-D resource, which represents 22% of company’s total resource area, is approximately $16 billion at current metal prices, well in excess of the company’s <$250 million market cap, suggesting material undervaluation, even accounting for the absence of regulatory framework and TMC’s need to raise additional capital to get to Project-1 to scale.
  • Near-term deliverables. We believe the release of scientific data collected in conjunction with the pilot test, announcements of a strategic partner that would help fund TMC’s path to Project-1, and growing realization of pending metal shortages that can drive metal prices even higher could serve as positive catalysts for TMC’s valuation re-rating over the next six to 12 months.

THE COMPANY

TMC the metals company, Inc. (TMC) is poised to become the world’s largest miner and processor of metals critical to the EV, energy storage, and renewable energy industries, such as nickel, cobalt, copper, and manganese. The company is a pioneer in the deep-sea mining industry and is working to develop the capabilities needed to safely and cost- effectively extract polymetallic nodules found at the bottom of the Pacific Ocean in international waters off the coast of Mexico and Southern California. These fist-sized nodules contain the aforementioned critical metals in higher concentrations than can be found in conventional onshore metal deposits, making their subsequent processing more efficient, while cutting CO2 and other emissions by approximately 90% compared with mining and processing conventional onshore ores. TMC is aiming to begin collecting (a more appropriate term than “mining”) polymetallic nodules and delivering them to onshore processing plants at commercial scale by the end of 2024, after receiving the required exploitation permits from the ISA.

For more information, visit www.metals.co.

The TMC fireside chat from November 16, 2022, can be accessed on demand.

Pilot validates offshore portion of project. Earlier this month, TMC completed its large-scale pilot project in the Pacific Ocean, collecting more than 4,500 metric tons (mt) of polymetallic nodules off the ocean floor, 4 km below sea level, and transporting 3,000 mt of the collected nodules to a surface ship, reaching sustained collection rates of 86 mt/hour and largely de-risking the offshore collection portion of the process.

EXECUTIVE DISCUSSION

Dmitry Silversteyn: Joining me today are Gerard Barron, Chairman and CEO of TMC the metals company; Craig Shesky, the company’s CFO; and Grant Lindner, who was recently brought on board as a Project Director for NORI, which is the company’s first resource project in the Pacific Ocean.

Dmitry Silversteyn: Gerard, my first question is for you. TMC is an explorer of deep-sea polymetallic nodules in the Pacific Ocean’s so-called CCZ, which is an area of the ocean between the Hawaiian Islands and Mexico. What does it all mean? Tell us about the resource itself, how big it is, and what it is that TMC is hoping to accomplish here?

Gerard Barron: We have three licenses in this one area of the Pacific Ocean. It’s an area known as the CCZ. It is littered with these polymetallic nodules, like the one I hold in my hand, or you can see in the picture, that literally lie on the seafloor. They formed through a very slow precipit...

ABOUT THE EXECUTIVES
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Gerard Barron

Chairman and Chief Executive Officer

TMC the metals company, Inc.

Gerard Barron is a seasoned entrepreneur with a track record of building global companies in battery technology, media and future-oriented resource development both as a chief executive and strategic investor. He became involved in the early strategic development and financing of DeepGreen (TMC’s predecessor) during its formation in 2011 and stepped into the role of Chairman and CEO in 2017. In 2001, he founded Adstream, a global advertising technology and services provider, and served as the company’s Chief Executive Officer until December 2013. During that time, Adstream grew from a single office in Sydney to more than 40 offices in 30 countries around the world and more than $100 million in global revenue per year.

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Craig Shesky

Chief Financial Officer

TMC the metals company, Inc.

Craig has over 15 years combined experience in public investing, metals research and investment banking. He spent 12 years at King Street Capital Management, most recently as a senior analyst in charge of recommending investments in the global metals & mining sector. Craig has significant experience navigating complex, legal-driven investments around the world. He worked closely with administrators, creditors, lawyers and advisors to reach settlements, form JVs and accelerate recoveries, particularly in US, UK, German, Swiss and Dutch Lehman administrations.

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Grant Lindner

Project Director for NORI

TMC the metals company, Inc.

Grant brings extensive experience in delivering complex resource projects in the construction and mining industries and has delivered over $26 billion in project value during his 25-year career at leading engineering and construction group, Bechtel, and mining major, BHP. He has held senior executive roles for large-scale mining, smelter and refinery, material handling and marine projects and has a record of building high-performing teams to ensure efficient project delivery. Grant will play a key role in advancing all areas of the NORI-D Project including the submission of the Environmental Impact Assessment and exploitation application to the International Seabed Authority, and the safe delivery of offshore and onshore development plans.

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