Q2 2022 TMC the metals company Inc Earnings Call

Good afternoon every.

And thank you for participating in metals company's second quarter 2022, corporate update conference call. Joining us today are the metals company's chairman and Chief Executive Officer.

Darrin and Chief Financial Officer, Craig Schatsky following their remarks, we'll open the call for your questions before we go further I would like to turn the call over to the Chief Financial Officer, Craig Cheskey.

As you reach the company's Safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward looking statements and information about use of non-GAAP measures. Craig. Please go ahead.

Please note that during this call certain statements made by the company will be forward looking and based on management's beliefs and assumptions from information available at the time.

Statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our safe Harbor provisions for forward looking statements that can be found at the end of our second quarter 2022, corporate update press release such statements May also be found in our annual report on Form 10-K for the year ended December 31, 2021 another report.

When we filed with the SEC I'll provide further detail about the risks related to our business. Additionally, please note that the company's actual results may differ materially from those anticipated except as required by law. We undertake no obligation to update any forward looking statement.

Our remarks today May also include non-GAAP financial measures, including with respect to free cash flows and additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures can be found in our slide deck being used with this call.

The slide deck is now available on our website at investors metals Dot CEO and I would now like to turn it over to Jerry bearing the metals company, Chairman and Chief Executive Officer. Jerry. Please go ahead.

Thank you Craig and good afternoon, and thank you all for joining us today for our second quarter 2022 corporate update.

You are welcome to follow along with Us.

My deck or is joining us by phone you can access it at any time at investors don't metals Docker today will take you through the highlights from Q to.

A discussion of recent market and regulatory developments and update on the nor a D projects expected upcoming milestones for the company and financial updates.

Well, it's been an intense and action packed quarter for us on several fronts. Most of the action for US has been offshore we have been planning and mobilizing for the most complex campaign, we have ever attempted as a company are collected test in environmental monitoring Cat campaign and the C. C. You said.

It requires coordination between three vessels that are the 250 people across dozens of organizations in onshore we wrapped up the analysis of our pyrite metallurgical pilot work and progressed, our bench scale refineries has to work.

And in May we released our inaugural impact report, which lays out why were on this mission, what we expect our future impacts might be and what we can do to manage and mitigate them.

Intensity is also ramping up at the international Seabed authority as they work towards final exploitation code they.

They just finished a month long session and we will meet again in November 'twenty two in March 2023, and again in July 2023, and combined with intercession of working groups. We're confident that the regulations remain on track.

Our cash balance as of March 31st was $46 million in light of sudden inflation Redevelopments. This two required mobilization on our part.

During quarter, two we have seen inflation to the.

In the cost of our offshore collected test environmental monitoring campaign and to deal with these impacts and to ensure we.

Keep at least a 12 month cash runway in front of US we raised $30 million committed pipe financing.

Approximately 70% of the committed funds came from existing TMC shareholders, including all fees Erez capital, who are the family office solves a board member Andre Kaka.

SaaS group managing partner, Brian pace, Braga front end, chairman and CEO Majid Al Ghassan My family and myself.

We've also welcomed some great new shareholders to the company.

This additional cash also provides us the strength and flexibility to continue exploring options to raise capital at the asset level, including royalties off takes and earning structures.

Protecting shareholder equity is front of mind for us and of course, we would've preferred to raise this funding at a much better valuation thoughts we are glad to get this injection of cash and confidence into the company.

Going forward, we will continue to tighten our belts and have identified areas of potential cost savings as we remain laser focused on devoting every possible dollar to the work leading up to our exploitation application over the north Sea area.

So previously we have started out earnings call with a recap of the TMC value proposition.

I'm pleased to say that recent regulatory developments in the USA have made this recap very topical TMC.

TMC is developing the largest estimated potential source of battery metals on the planet.

We believe our portfolio alone has sufficient estimated institute quantities of nickel copper cobalt manganese to electrify 280 million mid size Tvs about the size of the entire U S passenger fleets.

And with all of the raw material inflation squeezing automakers. This is the right time to be developing a resource that can actually move the needle for them.

The resources also to secure the jurisdiction in proximity of this resource to the U S is becoming increasingly important as we will discuss in a moment.

And we expect production cost to be low as nodules contain high grades of full metals in a single resource, which could put us firmly in the bottom quartile of the C. One nickel cost curve at steady state production and.

And importantly, we also expect to significantly compressed the environmental and social costs compared to land based minus those social displacement no deforestation no digging their blasting drilling and no child labor and importantly, no tailings, we anticipate much lower.

Cabot impacts compared to land based miners and nearly zero solid waste.

And finally, even despite the recent temporary near the early a rally in metal prices, we see a large increase in the expected net present value for Nori D. The first project we are developing.

Using the initial assessment done by AMC and updating to current metal prices.

Debated net present value for Nori D would be $15 billion, all other inputs being equal.

So last week, both the U S Senate and the house of Representatives passed the inflation reduction active 2022.

Among other goals the act stipulates, a rather muscular set of measures to lessen current reliance on China and reshuffle, the EV supply chain in North America.

The energy Security issue. This act takes on is now well understood China has established a stronghold on the EV supply chain at every step.

And when it comes to mining cobalt may be coming from the D. C. But projects are often Chinese controlled.

Nicole may be mined and processed in Indonesia, but it is heavily reliant on Chinese investment, so China dominates metal refining and battery cell production.

And while the act contains a $7500 tax credit on Uavs. This credit comes with two types of limitations.

First the easy credit would be disqualified if any critical mineral mining process, you know manufacturing for a battery is done by a foreign entity of concern there.

There are 10 countries on the current list, including China, and Russia, and this requirement takes effect in 2024 for the battery components and in 2025 for critical minerals. So if you want to qualify for the tax credit you would not be able to use Russian nickel, which represents 20% of battery.

Grade nickel or Chinese critical minerals or battery components, which represent most of existing supply.

The second set of requirements to qualify is about where the critical minerals like lithium and nickel and cobalt should come from.

Starting in 2023, 40% of these minerals in the EV battery must be mined and processed or recycled in the U S or a free trade partner and this ramps up over time hitting 18% in 2026.

Only 20 countries currently have free trade agreements with the U S. In this list excludes the largest nicole producing country being Indonesia at the largest cobalt producing country in the DRC.

So this creates favorable conditions for nodules in the clarity and clipping and designers as they could easily be easily transported for processing and refining in the U S.

And we have been actively exploring for our first full scale plant.

Alternatively, we could now also located processing and refining facilities in American free trade partners, like Canada, or Mexico, without losing qualification for the new EV tax credit.

It's worth reminding everyone that nearly all net supply growth on land for nickel is expected to come from Indonesia. The majority of which has been locked up already by China through offtake agreements.

Given that Indonesia is not an American free trade partner, Nicole from Indonesia would not qualify U S manufactured evs for tax credits.

There is also a risk the Chinese control of nickel projects in Indonesia, two could disqualify evs made with their nickel and cobalt from tax credits.

Indonesia strategy is to keep more and more of the nickel supply chain in the country.

Back in 2014 at bad Nicole laterite or exports falling domestic production of and P. I nickel pig iron and Sarah nickel.

Then partially reversed the ban in 2017, and then band or exports again in 2020 for good.

So these flip flops caused repeated turmoil in the nickel market and left processing facilities in countries like China scrambling for feedstocks.

Last week, the Indonesian investment Minister confirmed that.

One's a mining permits have been revoked including over a 100 permits for nickel mines in an effort to tightened governance on the mining sector and.

And now Indonesia is planning new export taxes on nickel that would incentivize battery grade nickel sulphate production in the country instead of X boring precursors like NIH P or nickel mat.

If implemented this export tax would effectively eliminate any scope for reassuring nickel sulphate production in the U S or it's free trade partners using Indonesian nickel as feedstock.

However, there is one resource that can truly move the needle for the U S. Automakers and is conveniently located off the U S. Western seaboard if.

If you look at where critical mineral resources are you can see that the total estimated Ccs Zed nodule resolved so there's not any bigger.

The reserves of the U S free trade partners, but bigger than all of the land based reserves combined.

This is true for nickel, it's true for cobalt and it's true for manganese.

So if we now look specifically at the size of the estimated cc natural resource in the TMC portfolio alone.

We believe there is enough in situ resource of nickel cobalt and manganese to electrify the entire U S passenger car fleets and following the passage of the inflation reduction Act that U S. Passenger car fleet has a narrowing set of options on land to electrify in a cost effective manner.

So previously we've shown this comparison of the world's largest nicole produces stacked up against the largest undeveloped nickel projects, nor orient TAMO individually bigger than any other undeveloped projects.

But now the flags underneath the daus carries significant consequences. If you look at the existing operations none of them would help qualify for the U S. E V tax credit both China, and Russia are foreign entities of concern in Indonesia is not a free trade partner.

So if you look at the largest undeveloped nickel projects, Indonesia would help for that tax credit the U S and Canadian nickel projects are in order of magnitude lower grade compared to the TNC portfolio in and often face significant permitting risk with the largest U S. Nicole projects seen its federal permit rejected in 2000.

And in 'twenty one.

And in addition, ESG rating agency MSCI estimates that 97% of all nickel reserves and resources in the U S are located within 35 miles of native American reservations, and many proposed projects risk infringing infringing on areas of.

Cultural and environmental significance.

If it wasn't already clear it should be now there is simply no path to the U S to satisfy its expected nickel need from domestic sources and we believe nodules are the obvious choice.

The list of those who share this conviction is growing.

Most recently, we've seen Admiral Blair and make the case in the Wall Street Journal that and I quote securing new supplies of battery grade nickel should be a priority for achieving America's energy security goals and that supply options include vast sources of nickel contained in poly metallic nodules.

Unquote.

We also continue to see increasing concern over the impacts of nickel from Indonesia.

Tesla has been rumored to be negotiating with the Indonesian government was targeted by engineers urging them not to proceed on environmental and social concerns.

And the Oems, who have confirmed their interest in Indonesia nickel now include Volkswagen Ford and GM are testament to the lack of producing O rapidly deployable nickel assets outside of Indonesia.

Some of this interest comes is nonbinding Mou is and now that the <unk> are a critical minerals requirements are clear these oems might be having second thoughts about using Indonesian nickel in the evs for the U S market.

Last quarter, we released our first impact report.

We are an impact driven company. So we felt that our inaugural impact report was the right place to tell the full big picture story of who we are why we exist and how we go about delivering on our mission.

It also contains more conventional section that gives you an insight into our impacts and initiatives today.

If you are interested in understanding us as a company better I wholly highly recommend reading this report.

We started work on industry level lifecycle assessments back in 2018 and have relied on published peer reviewed I don't see as to quantify how metal production from nodules would compared to conventional production and on this page Youll seen an example of lifecycle impacts for one kilogram of.

Nicole.

As our project development matured further in Q2, we commissioned benchmark minerals to run an independent L. C. A analysis of for our Norrie D projects and compare that to the global database for land based battery metal projects.

This is a formidable undertaking as BMI is looking at multiple impact indicators to each of the full battery metals and we expect to be in a position to share the results of their work later this year.

Now shifting gears to the regulatory update our activities into C. C. Z are regulated by the international C that authority the I S. A and intergovernmental organization that was established in 1994 based on the United Nations Convention on the law of the sea or Unclos as we know.

All land based mining projects fall under the jurisdiction of a single sovereign.

By contrast, the Isa's mandate is global in nature.

As it supported by 167 sovereigns plus the European Union.

On this map you can see parties and signatories to the convention with the notable exception of the USA most countries member states of the I S. A.

The USA has an observer status and is actively engaged in the process.

And it's 28 years of existence. The ISI has developed exploration regulations in and granted than has ever seen 19 nodule exploration contracts. It is now in the final stages of developing the exploitation regulations.

The advantage is once in place the exploitation regulations and standards and guidelines to the commercial phase of the industry will have been painstakingly agreed by most of the world countries.

The ISI started working on the exploitation regs in 2014 in and had to postpone its July 2020 goal to finalize the these regulations due to COVID-19.

Following the action by the Republic of Nauru last year, the new target has been set for July 2023, and the ISI approved a work plan for 2022 and 2023 that included an increased cadence of meetings.

The ISI counsel is expected to meet again in November 'twenty two in March 2023, and again in July 2023, along with into Sessional working groups in order to complete that drafting of the regulations.

The most recent month long in person I say working session took place in Kingston.

Jamaica from July four until August five there.

There was strong in person participation from states, including constructive participation from the Chinese delegation, which attended in person for the first time since pre COVID-19.

And we believe the increased participation and engagement reflects the progress being made.

The importance of the development of this regulatory regime.

I'd now like to turn it back to Craig to speak a bit about the project economics.

Thank you Jared and very quickly to just correct something said earlier the $46 $3 million of cash was at the end of June 30, as I'm sure. Most of you soon.

But now back to the slide deck. This page views and on some of the key attributes of minority area. Our first project, which represents just 22% of our total estimated resource.

PMT for market cap is certainly disappointing to us resource companies looking to grow their battery metals portfolios. We typically focus on the size and quality of this underlying resource and on that basis massive and hybrid project like Lori D is truly rare.

<unk> alone will be the largest undeveloped nickel project in the world without even considering the rest of northern tunnel.

Project into which we've already invested over a decade of work and approximately $215 million.

As Jeremy mentioned earlier, we are exploring options to raise capital at the asset level, which might include royalties off takes are earning structures and an earnings specifically pursues could be away for a resource company on materially to grow their future battery metal portfolio and a way for us to potentially raise funds without having to issue equity at the wholesaler.

As shared in previous update calls in March 2021, AMC consultants issued an SEC regulation S. K 2000, 1400 compliant initial assessment of the project economics within the R&D area.

This initial assessment is available in the investors section of our website at <unk> financial model can be found beginning on page three of that.

Yes.

The initial assessment arrived at a net present value of $6 8 billion.

For <unk> at the beginning of last year and that assumes 7 billion of project development Capex. Our announcements earlier this year with all season, that's on carbon provided a roadmap of power capital light approach can help develop this project.

Now running the same model simply updating it for criminal prices as Jared said earlier, the NPV of Normandy today would be approximately $15 billion.

Which again is just 22% of our total estimated resource.

But how are we going to start unlocking that when we put together this next phase, which lays out some of the milestones, which we believe will be key steps towards unlocking the massive potential of annuity project and not to mentioned the rest of the portfolio.

Milestones include the upcoming collector test of course minority area over the coming months, the Isc's Finalization of regulations with a target of July 2023.

Application and eventual grants unexpected.

Based on some expectation contract at the beginning of commercial production shortly thereafter.

This project or on land at the same size resource grade in a stage of development. We believe some of the value to be unlocked for those upcoming milestones might already be baked into teams whose market cap.

To that example page 43 of the slide deck filed with the SEC on March four 2021, alongside the business combination announcement.

I know comps to other preproduction metal companies, some of which were trading between 20% to 60% or higher net asset value and yet despite being at mid pre feasibility stage a record capital imply that we're trading at just over 1% on the fundamental value have been already area accrual metal prices.

We feel like the path is now clearly laid out in front of us and that these milestones should help us take steps upward towards that fundamental value.

Jerry back over to you. Thanks.

Thanks, Rick.

We wanted to briefly remind you of the strategic developments announced in March that can potentially allow us to get into production in a capital light manner.

Project Zero is our first small scale commercial production project expected to collect and process $1 3 million wet tons of nodules annually from the north area in.

In March we signed a nonbinding term sheet with Lcs and a nonbinding Mou with Epsilon carbon.

We continue to work closely with <unk> on the project zero commercial arrangement and were pleased to receive their vote of confidence through our commitment in the $30 million a pipe financing announced today.

We're also making good progress with the team at Epsilon carbon and are happy to report that a suitable site has been identified for project zero plant in India.

During our last call we reported on the progress of the pilot collection system, including the harbour wet tests, the dynamic positioning trials and the drive tests of the collective vehicle in deep water on the sea floor of the Atlantic.

In May we announced that engineers aboard the hidden gem deployed the flexible jumper hose connected it to the base of the Riser and then launched the pilot riser.

Lowering the assembly to a depth of about 650 meters and using the hidden gems RV engineers that meda, a subsea connection between the jumbos and the collect the vehicle, which was previously deployed to the seafloor and 745 meter water depth.

<unk> used the former Drillships Derrick for Etsy.

<unk> of the pilot riser system, which will ultimately extend to four kilometers deep.

So this progress keeps us on track to test the system and the <unk> Z commencing this quarter.

When nodules in our contract area will be generally lifted off the seafloor incentive the hidden gem.

On the surface through the airlift riser system.

And I was pleased to visit the hidden gem recently in Mexico.

And see the elements of this integration integrated system myself and I've got to say it is so incredibly exciting and we're going to play you a short clip from that visit.

Okay.

Good morning.

Yes.

Hawaii.

Sure.

Great.

Yes.

Got it.

Okay.

Okay.

Sure.

We know that we've identified $1 6 billion.

Just on <unk>.

Okay.

Good morning.

It was pretty cool.

Turning to our environmental program, our environmental motto is to let the science do the talking.

We now have some of the most credible and well respected voices in the world of Ocean research to help craft, our environmental management and monitoring plan.

M M P.

In July we announced that we had retained CSI are.

And the niwa and others in a scientific consortium.

CSIRO as Australia's National Science agency, and they are well known to many accomplishments over the last hundred years, one of which is helping to design the great barrier reef restoration.

And adaptation program in 2018.

Niwa is new Zealand's leading offshore environmental management agency with a dozen of their scientists receiving its share of the 2007 Nobel Peace Prize with other contributors to the intergovernmental panel on climate change.

The scientific consortium will leverage tncs baseline data to help to develop appropriate indicators and tolerance limits to safely and responsibly collect seafloor nodules and this work will also form the scientific basis of our future adaptive management system, including our digital twin.

Which will give eyes and is on our operations to our regulator and stakeholders.

I will now play a short clip where you can see and hear about this amazing program from Dr. Gregg Stone Who's our chief Ocean scientists in the former.

<unk> scientists the conservation international.

We're at the dawn of a new age people need to see what's happening.

With large industrial activities on the planet that concern everybody's welfare.

And it's important that it be transparent that people can see and understand what's going on and we as a company. The metals company are developing the hardware and the software to monitor our activities, where we collect poly metallic nodules to supply metals for the world people will be able to go to their computer and see.

What's happening the way to think about it as like Guardrails on a highway.

Have a certain area of operation that we know is where we want to be that we feel is acceptable and if for some reason something unforeseen happens we will know right away. We can hit the stop button and make a new plan and this is something it's very new and we're very proud to be developing this and be leaders in this area I'm devoting all of.

My time tool.

So as you can see from the light Blue bullets on this page we've already completed many of our stated 2022 milestones and we will keep our foot down on the pedal for the rest of the year as well.

With that I'll turn it back over to Craig to speak on Tmc's second quarter results.

Thank you Jerry.

In the second quarter of 2022, TLC reported a net loss of $12 $4 million or five cents per share compared to <unk> net loss of $29 1 million or <unk> 15 per share for the second quarter of 2021.

Loss for the second quarter of 2022 include exploration and evaluation expenses of $9 9 million versus $18 2 million in the same period last year.

General and administrative expenses of $8 3 million.

Versus $10 4 million in the same period last year, partially offset by a decrease in the value of our warrants a $5 7 million.

Exploration and evaluation expenses decreased in the second quarter of 2022.

Same period in 2021 as a result of a decrease in offshore campaign activity. Following the completion of Naughty here the environmental baseline campaigns in the fourth quarter of 2021.

Increase in share based compensation and an increase in the expenses incurred on the trials might be tough system.

General and administrative expenses decreased in the second quarter of 2022 compared to the second quarter of 2021, reflecting a reduction in share based compensation and a reduction of communication and advertising costs, partially offset by higher personnel legal and other expenses associated with being a public company.

Excluding nonrecurring items free cash flow for the second quarter of 2022 was negative $22 9 million.

Third to negative $6 $6 million in second quarter of 2021.

The significant cash payments made during the quarter or the second milestone payment of all fees of $10 million.

And final payments to Maersk for offshore campaigns to $5 million.

Okay.

Looking at the six month period, <unk> reported an operating loss of $32.

$34 2 million and a net loss of $33 5 million or <unk> 15 per share for the six months ended June 32022, compared to PMC as a net loss of $84 9 million or 44 per share for the six months ended June 32021, the net loss for the six months ended June 32.

<unk> thousand 22, including exploration and evaluation expenses were $17 $17 3 million versus.

Versus $56 $3 million from the same period in 2021.

G&A expenses of $16 9 million versus $27 $8 million from same period in 2021, partially offset by a decrease in the value of our warrants.

$5 million.

Exploration and evaluation expenses decreased in the first half of 2022 compared to the same period in 2021 as a result of a decrease in offshore campaign activity. Following the completion of the ordinary the environmental baseline campaigns in the fourth quarter of 2021, a decrease in share based compensation, partially offset by an increase in the expected excuse me.

And the expenses incurred in 2022 for the Pmt's trials and monitoring survey work in advance of Pmt's works and the clearing equivalents.

Pmt's pilot line test system.

Oral administration expenses a decrease in the first half of 2022 compared to the same period in 2021, reflecting reductions in share based compensation communication and advertising and consulting fees related to the business combination, partially offset by higher personnel legal and other expenses associated with being a public company.

Excluding nonrecurring items free cash flow for the first half of 2022 was negative $38 6 million.

Compared to negative $14 million in same period of 2021, the increased cash spending in the first half of 2022 included payments made for various offshore campaigns, including $10 5 million tumors $10 million. Peter also uses the second milestone payment and increased payments for environmental monitoring costs.

TFS trials.

I'd now like to turn the call back over to Jerry for some closing remarks, and then we'd be happy to open it up for any questions.

Thanks, Greg.

So first of all I'd like to thank our team or their commitment and efforts in this revolutionary and truly historic endeavor.

I'd like to thank our shareholders and our partners many of whom have committed more capital to the project to standing term alongside us and while this year has been undoubtedly a tumultuous chapter in the company's story, we're excited to turn the page to the dawn of this new industry, which will produce immense.

That's for our shareholders our team our stakeholders.

And so the common heritage of humankind for many decades to come.

The pieces of this puzzle are falling into place.

He is pushing ahead targeting July of next year to finalize regs.

We are embarking on a fully integrated collected tests to demonstrate our <unk> technology and we have engaged some of the brightest people and brands for our environmental and social impact assessment.

And political leaders in the U S I laid out a clear choice for automakers.

<unk> sources for battery metals, like nickel and cobalt outside of the borders of Indonesia in the DRC, China, and Russia, and others or risk, losing substantial EV incentives and short it couldnt be a better time to be developing the number one and number two largest nicole projects on the planet.

Thank you for your interest and attention with that we'd like to turn it back over to the operator for any questions.

Thank you.

As a reminder to ask a question you will need to press star one one on your telephone.

You May also ask questions via the webcast. This type in your question and hit submit one moment, while we compile the Q&A roster.

And I'm currently showing no.

<unk>.

Actually one moment.

One moment for your first question.

Actually there are some that I won't go through the chat.

There was one from Jon Ellman does the company plan to get initial exploration contracts or from the I would say beyond the three that they already have and are there additional blocks are available now and how does it relate to the reserve areas the areas in particular environmental interest in acquiring equipment.

So Gerry do you want to provide some commentary on that.

Yeah, absolutely thanks, John .

As of today, there are no plans to.

Push forward with new areas and other blocks available well there are but the one thing we've learned about the Ccs Ed is that while the grade of nodules is very consistent the abundances or not and so we believe that many of the unclaimed areas may in fact be.

Not as economic as the ones. We have so we have a lot of resource one 6 billion tons, and we're pretty happy with where we're sitting there at the moment.

Okay next question.

And our next question one moment.

Yeah.

This comes from the line of Michael Macdonald from <unk>. Your line is open.

Hi, guys.

Two quick questions.

One what is the estimated cost to get into production.

And then number two.

Where else outside of the United States that you are looking at creating processing facility.

Yes.

Yeah, Hi, Marco.

Well in answer to your first question.

We think it's circa $100 million.

So that is what's required to on top of our current funding to move into production, but the good news is.

The spending of that money would not be cold for until after the code is in place and so we.

We do think the final regulations being adopted.

Our major valuation changes for this company and for this industry.

In answer to your second question.

Look we have been thinking about the answer to that question for many many years.

We know that the messages that are coming from the U S. Government are consistent with the messages coming from other nations as well.

I happen to be in Saudi Arabia at the moment and if you study the vision 2030 plan it's fascinating.

They understand that metals will be important to their future and I think you'll find the same for every developed country around the world.

And so a big.

Influencer and where we will locate those processing plants will be government support and the cost of the funding and of course as Craig and I both mentioned in our presentation.

We'll explore every avenue, including the very conventional farm in type arrangements that results companies use to develop projects and the size and quality of this resource is unmatched as we've as we've said and so that makes it a great conversation starter.

And I think.

<unk>.

Yes, no. Thank you Malcolm dovetails into a question that we have on the chat from <unk> <unk> from Wedbush.

Future financing plans.

So I think John just touched on it but we're always going to be opportunistic and as conditions change, we'll reevaluate but.

Certainly one of the attractive elements of.

The transaction that we announced today was that it does give us that runway that runway as the point when the ISO is targeting.

Final exploitation of regulations and gives us a lot more breathing room to pursue some of the other.

Asset level financings that should be available to us in the coming months.

So normally we might turn it back to the question on queue.

As a reminder, ladies and gentlemen that star one wanted to ask your question.

Okay.

And Im currently showing no further questions in the queue at this time.

Yes.

So we'll go to the questions and the chat.

Feel free to coupon populating those.

First question from John <unk>.

It will be net present value include the total cost of processing modules.

Yes, it does.

For more information, we encourage you to go to the new Oriental assessments and the tomo resource statement available at investors Dot metals Dot CEO and Youll see some of the assumptions both in terms of our capital costs and operating expenses that went into those mtv's. So the $6 8 billion NPV that was released.

Our first quarter of 2021 from AMC consultants in that document included roughly $7 billion of preproduction Capex and again, we expect to significantly reduce that with our capital light approach and it also included.

Opex assumptions that are available in that model.

So you have steep NPV that we mentioned the $6 8 billion from AMC consultants, which we believe would be $15 2 billion today for Normandy updating just metal prices do include full processing costs.

And again as a reminder, ladies and gentlemen, Thats Star one wanted to ask a question.

Okay I see ignore Hendricks has asked a question that Craig.

Be happy to have the answer.

They have asked earlier in the presentation that claim was made to reduce spending. Please specify some examples where cost can be reduced.

Look we have always run this business very lean Lee.

We did have a large corporate office overhead.

Something that we were once upon a time looking to change and then of course came COVID-19 and we're very grateful for not having it.

And going forward. There is no doubt that we will be wanting to bring the team together at the moment, we tend to operate ourselves and we use a shared office services as required.

When you look at the work program that we do it is very heavy and a lot of the cost reduction has fallen on the shoulders of the team who I think today, because we did plan on adding significant personnel to enable us to carry out this work program and we just.

Haven't been able to afford to do it yet we've maintained our ambitious program.

And.

For that I really do think out team and we.

We run this business in a very very tight cost control manner and.

Certainly there are no pay rises we.

We look for every single dollar and we've taken out every bit of consulting expense.

We've talked to our advisers, we've looked under every stone without compromising our ability to get the job done and the job is to complete the.

The pre feasibility work that allows us to submit an application.

I also see a question from Bill there.

Craig asking what's the status of any pending litigation.

And what kind of effect will this have on the company.

We.

Well of course, there was a.

Our class action filed and we.

We were fortunate enough to have one of the world's leading law firms put together a defense for us.

Which they did on a on a contingency basis and.

You can read the response that's filed in the courts.

Suddenly I thought it was a it was a well prepared response that gave me a lot of confidence radiant and we will.

We remain.

Confident and hopeful that that can be assessed.

Okay.

There was also a question now from David Karp, and the chat is there any incentives to bring forward production from our current plan.

2024.

Look I think the answer on that is.

We believe so.

We are of course doing all the work necessary to put us in a position to apply.

To be I would say for an exploitation contract with that late 2023 timeline.

The final crews in place and then from that point I'd say its a process of roughly 315 days for reviewing our application.

News about a project like this certainly is not something that you would see on land that theres not a bunch of fixed infrastructure to be able to fund them.

Construct prior to beginning production. Our first production system is that pilot collection system that you saw video earlier, so we anticipate that upon its successful.

Exploitation contracted grants from the IFC over the north area.

We could begin production very shortly thereafter in a matter of a couple of months.

And our normalized <unk> for the.

Chuck.

That's it for our questions. So we might turn it back over to Gerry.

Thank you.

Yeah, well just before we do I see a couple of people asked about the <unk>.

Pro team CBD listed because that prices under a dollar.

NASDAQ are very clear on that you have 30 days to rectify. It then you receive a notice and you have six months to rectify it we're very confident that shareholders will start to see that.

True value that lies behind the equity and and there are well proven pods that companies can take.

If in fact, they find themselves through store consolidations, it's not something that.

We're concerned about but we're working very hard to make people see the value in the company and that's by delivering on our milestones as we as we move towards first production.

Okay.

Okay.

So thank you for taking the time to join US today on this conference call and we look forward to sharing even more progress on our third quarter corporate updates in November .

Thank you very much ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect everyone have a wonderful day.

Okay.

The conference will begin shortly.

As Johan during Q&A, you can dial star one one.

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