Q3 2022 TMC the metals company Inc Earnings Call
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Yeah.
Good afternoon, everyone and thank you for participating in the metals company second quarter 2022, corporate update conference call.
Joining us today are the metal company's chairman and Chief Executive Officer, Jeremy Barron, and Chief Financial Officer, Craig Schatsky.
Following their remarks, we'll open up the call for your questions before we go further I would like to turn the call over to CFO , Craig Shushed U S. He reads the company's safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995.
Provides important cautious cautions regarding forward looking statements and information about the use of non-GAAP measures. Greg. Please go ahead.
Thanks, very much thanks for joining our third quarter 2022 conference call and please note that during this call certain statements made by the company will be forward looking and based on managements.
Beliefs and assumptions from information available at this time.
These statements are subject to known and unknown risks and uncertainties many of which are 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 third quarter 2022, corporate up eight update press release such statements May also be found in our annual report on Form 10-K for the year ended December 31st 2000 <unk>.
We won another reports subsequently filed with the SEC all of that provides further detail about the risks related to our business.
Additionally, please note that the company's actual results may differ materially from those anticipated and except as required by law. We undertake no obligation to update any forward looking statement.
Remarks today May also include non-GAAP financial measures, including with respect to free cash flows 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 and the slide deck is available on our website at investors don't metals Ducks, CEO and I'll now turn it.
Over to Jared Berlin metals, company's chairman and Chief Executive Officer Jared. Please go ahead.
Thank you Craig and good afternoon, and thank you all for joining us today for our third quarter 2022 corporate update call.
You're welcome to follow along with our slide deck or if you're joining us by phone you can access it at any time at investors dumped metals Dot code.
The last few months have been filled with historic achievements with TMC, Laurie and our strategic partner <unk>.
Speaking to you now for Mexico, right before welcoming back the hidden gem.
And it's remarkable team from a long and complex campaign testing our pilot system.
<unk> D area.
Following the I S. A's recommendations in September to begin pilot nodule collection trials on minority area Ocs commissioned an integrated pilot collection system from the hidden gem.
And in October we celebrated the first integrated collection and lift a poly metallic nodules in the Ccs since the 19 seventies.
Over the following weeks all six put the system to the test driving the pilot collector over 80 kilometers across the sea floor collecting Florida half thousand tons of nodules and lifting of the 3000 tons to this assets.
Beyond demonstrating the operational capabilities of the system. The pilot collection trial is the single most important milestone in terms of generating environmental impact data.
Before this pilot trial began 16 offshore campaigns were executed in the northern area to collect environmental baseline data.
During the pilot trials the team is environmental.
Independent researchers scientists and contractors, we're monitoring the environmental impacts of the trials and they will continue their work onsite until the end of the year to survey the poster trials environment. We look forward to sharing this data with the global community in the coming months.
This quarter also saw some important financial milestones on our last corporate update call and Olga August we shared details on the $30 million pipe financing funded mainly by our existing investors.
With that cash infusion, we believe our cash runway extends for at least another 12 months.
And I'll tell you that the SEC deemed effective the $100 million Universal shelf registration statement and this adds additional financial flexibility. However, it remains our firm intention to continue working on asset level financing options to raise the funds needed to get into production while minimizing dilution.
To GNC shareholders.
They will take you through a brief reminder of the scale of our resource market and regulatory updates and update on the <unk> project, a recap of our near term milestones and some financial updates.
The scale of our resource and its potential to supply the metal needed.
For the energy transition is at the heart of our value proposition.
Lori and Tamil areas containing <unk> quantities of nickel copper and cobalt and manganese equivalent to their requirements of about 218 million electric vehicles or roughly the entire U S passenger fleet.
By contrast, the total results of the Eagle mine in Michigan.
Currently operating nickel mine in the United States and expected to wind down in 2025 contained nickel and cobalt roughly equivalent to the requirements of $2 5 million Evs and there is a total resource of still to be permitted tamarac project in many.
So there is about the same size.
Planned giga factories and processing facilities are attracting record levels of funding that they can't produce anything without raw materials.
Chinese investment aside global investment in raw material continues lagging behind it's a train wreck in slow motion and to deliver on energy transition goals countries like the U S need to tap unconventional resources like nodules that can truly move the needle for nickel rich battery chemistry.
Fees or they will need to go all in on alternative technology solutions.
Quick reminder, norrie and tomo were ranked earlier this year by mining dot com as the world's largest undeveloped nickel projects larger than other projects in the pipeline in Canada, and the U S and about an order of magnitude higher in grade.
Collectively our norrie and Tamil projects rival today's largest producers both in Russia and Indonesia.
And it was recently reported that Indonesia, the world's largest nicole producer that expects to deliver most of the future growth in nickel from underneath their rainforest is now contemplating an OPEC style battery metal cartel.
And at the same time, Indonesia is talking about forming and OPEC rainforest.
It'll be interesting to see how they reconcile these seemingly opposing goals.
The insecurity of nickel supply and potential of the nodule resource are increasingly and focus in the U S.
Earlier this year Senator Lisa Makowski of Alaska, a leader on critical mineral issues addressed the department of energy on this subject U S Secretary of energy Jennifer Granholm responded this summer in a letter, stating that the impact of collecting nodules shouldnt be compared on a level playing field to mess.
It'll from onshore extraction, something we've been advocating for some time.
Secondary grant had them also noted that the D. O is working with inter agency partners to consider all potential sources of critical minerals, including poly metallic nodules.
I'm also happy to report that in September we reached a labor neutrality agreement with the UAW with regard to a potential full scale plant in the U S.
Forward thinking organizations like the UAW doesn't want to see factories shut down due to the lack of battery metals.
As they were last year due to a lack of semiconductors.
The UAW has nearly a century of experience managing the production of automotive parts and has earned a reputation for protecting workers protecting the environment and fighting for justice.
We're making the very first contribution to set up birthday to its active.
Does active position in the civil rights movement. The UAW has an impressive record of leadership on social and environmental issues.
And together TMC and UAW have the opportunity to create a battery metals industry that works for everyone consumers workers businesses and the planet.
Nodules and TMC, specifically have been unused topic over the last few months with coverage in the Wall Street Journal, The New York Times BBC at ABC News and two of these stories also resulted in an episode on two of America's most popular podcast, the New York Times the daily podcast.
On the Wall Street Journal the Journal podcast.
And while most people on this call are familiar with our story. This emerging industry is still news to most people.
Not everyone, who reads about also listened to a podcast or national New segment will be supportive.
But the awareness of this project is certainly increasing as we keep hitting our milestones.
And things continue to be eventful on the regulatory front our activities in the Tcs that are regulated by the international seed that authority or the I S. A and Intergovernmental organization established in 1994 based on the United Nations Convention on the Lora The C.
The assay is mandated to regulate exploration and exploitation of seabed minerals, while protecting marine environment.
The latest ISI Council took place from October 31 to November 11 in person in Kingston, Jamaica, where the regulator continues its development of the exploitation regulations and committed to continued work on the regulations in the session.
During the <unk> session. The majority of participate participating states expressed their continued support.
For negotiating robust regulations that ensure the protection of the marine environment and we're concerned by the position taken by France, calling for a ban on exploitation activities.
Despite the amplification of the vocal minority buy the media.
Only about 10 out of the 167 member states are calling for a precaution.
While most member states continue to support negotiating the draught exploitation regulations in good faith.
During the ISI Council session are sponsoring state now Ru noted that an ex Blake patient contract application for the Nori D area would not be submitted until the I S. A July 2023 session had been concluded.
A gesture of good faith as work continues in earnest on the regulations.
We still we still estimate being ready to submit our application for minority exploitation contract to the USA in the second half of 2023.
Which brings us to the update on where we are in the <unk> project.
As a reminder, norrie D is the first project we are developing it represents about 22 decided our total estimated resource so far we've invested over a decade of work and over $250 million.
Last year, we completed a pilot pyro metallurgical pilot plant program using 70 tons of nodules that we collected from noisy.
We proved we can turn our modules into valuable metal products, thereby de risking our future onshore operations.
And this year nearly every month for a new milestone to help derisk, our offshore operations, culminating in the successful conclusion of the pilot collection system test in the northern area.
I'd like to play a short video with highlights of the collected tests over the last few months.
Anyone on the audio only call this will take about three minutes.
So please stick with us.
Okay.
Good morning.
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As we announced yesterday, all CS and Norrie achieved all significant pilot milestones, while collecting approximately $4 5000 tons of sea floor poly metallic nodules and over 3000 tons were lifted up that four three kilometer long riser system to the hidden gem vessel, while the addition.
<unk> 1500 tonnes of nodules were purposely left behind on the sea floor.
<unk> system achieved sustained production rate of 86.4 tonnes per hour and gave us valuable operational data to inform future system op optimizations that upgrades project zero system will be targeting an average production rate of over 200 tons per hour.
As any complex technology trial, it came with its own share of challenges and operational issues to solve.
But I cant reiterate how impressed we obtained with our <unk> partner <unk> and what they have accomplished.
Key objectives set out for this pilot collection system have been achieved.
As laid out in the pilot mining test agreement all season is entitled to a third and final $10 million milestone payment, which they have agreed to receive in the form of 10 million shares at a dollar. Each in addition to the expected exercise of the warrants in the fourth quarter of this year.
The hidden gem is back in port.
But in fact will be tomorrow, I should say that the post trials environmental monitoring work continues into December and we're happy to report that we gathered all of the environmental data during the test that we plan to.
In case, you are wondering what 3000 tons of nodules look like this is a small amount in the modules in the whole of the hidden gem vessel.
The environmental campaign that monitor at every part of the process on how these nodules were collected and lifted is the key part of the 100 million dollar Norrie D.
ESI a program.
I'd like to play a short video that highlights from this ongoing campaigns, starring our own Katie Allen, our environmental associated lead offshore representative.
Okay.
Okay.
Yeah.
Yes.
Okay.
Okay Allen laid off shore mine representative and environmental associates for the metals company my role is to implement the noisy.
Environmental monitoring and geotechnical program.
The purpose of this campaign.
Great.
Technical performance on a prototype no collective vehicle.
And investigate.
Part of that.
And a controlled area.
You can think of this as an experiment with three fiber.
The first phase is the baseline and monitoring program.
Collecting information.
The natural state of the ecosystem.
Impact.
If we collect.
Monitoring program, where all the collector activities this is where the.
So the ecosystem is occurring and we will be measuring.
You may all time, there'll be a simultaneous mapping and sampling operations occurring with AAV.
Hey.
Hey.
This instrument to look at it listen to and collect all the relevant information that we need about the ecosystem.
And finally, we have phase three which is our first collect the program, where we repaid all the previous wax.
Our previous baseline work.
If they start to.
I understand in SaaS.
How they are responding to the impact.
Thank you.
Thank you.
We're undertaking one of the nice comprehensive.
<unk> Research program.
The scientific insights we gain from this research will fail.
Fundamental knowledge, Scott about the safety environment. Most importantly, it will form part of an open source scientific data set that the international community can access and benefit from.
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Okay.
So Katie you spent about six months at sea this year, she's a real Rockstar like other members of our team working onshore.
And this requires uncommon levels of resilient stamina, and commitment and Katie and the rest of our team have them in spades.
As part of this ongoing campaign together with comes back we've been testing. The first prototype of the digital twin a precursor for a full scale adaptive management system or a M S.
All of us at North <unk>, and TNC had access to the system and we're able to track real time movements of the pilot collection system in Northern D.
And a host of operational metrics.
We are now working with Australia, CSIRO, and New Zealand Niwa to develop a scientific framework for ecosystem based environmental management.
Once in place, we will integrate ecosystem data and add environmental management capabilities like implementing environmental guardrails for any future operations.
To us the MFS will enable real time, environmental and operational management of our operations.
But to our regulator and key stakeholders it will serve as eyes and ears on our operations just because we plan to operate far offshore does not mean, we will be out of sight.
In recent media reporting certain outlets keep citing old speculations from anti DSM actavis, rather than the published research based on actual field trials.
Landmark Clooney study from M. I T and Scripps was published as the cover story of the September 23rd issue of Science advances, which concludes that the single most discussed impact of Nacho collection is far less extensive.
Then previously speculated.
During the GSR collected test last year. The study found that 92% to 98% of the plume from the pilot Nacho collected vehicle rose only two meters above the CFO before settling close to the test area.
And to quote the professor Tom Peacock, it's quite a different picture of what these claims look like compared to some of the conjecture.
We continue to expect that we will be able to significantly compressed environmental and social costs compared to land based miners.
No social displacement no deforestation no digging node lasting no drilling no child labor and no tailings.
And the tailings issue is again, making headlines with nickel prices spiking. This week on use of the tailings dam leakage garro nickel mine in new Caledonia, which will be forced to cut Q4 production as this issue is hopefully sorted out.
And this year, we engaged industry, leading metal research firm benchmark mineral intelligence to produce a lifecycle assessment of the environmental impacts of the <unk> project and how they compared to producing the same metals from conventional landolt using typical processing routes.
The results on this page our preview of the initial results that are currently undergoing third party review to be completed by the end of this month.
The graph shows the global warming potential per kilogram of nickel and nickel sulphate with the Nori D project, having the lowest footprint of all assessed alternatives.
And the table below shows the LCA outcomes, but other assessed impact categories like ozone depletion acidification water consumption.
And Nicole form.
Norrie D projects shows the lowest impact value among the compared process processing routes.
The results of this independent LCA are broadly consistent with the early results of the 2020 white paper, but offer a much more rigorous LCA based on the most recent norrie do project data and the advantage of comparing Norrie D project impacts to specific processing routes instead of global.
Beverages, and we look forward to releasing the full study after the completion of third party reviewed.
I'll now turn it over to Craig to discuss project economics valuation and our financial results.
Thanks, a lot Jerry.
So we've seen this slide many times before.
Third in previous update calls in March of 2021, AMC consultants issued SEC.
Regulation SK <unk> hundred compliant initial assessment of the project economics for the <unk> area and.
I missed the initial assessment is available in the investors section of our website at <unk> financial model can also be found beginning on page 310 of that document and investors that metals Darko.
The initial assessment arrived at a net present value of $6 8 billion for the northern area at the beginning of last year.
But running the same model simply updated for current metal prices. The net present value of <unk> would be approximately $16 billion.
I'm, just 22% of our total estimated resource.
However in terms of valuation, we think we're trading at a multiple of fundamental value that's effectively 20 times lower.
We would expect for preproduction base metal company at this stage of project life, creating a huge potential re rating opportunity as we continue to Derisk. This project appears on this page are mainly copper producers.
Difficult to find a handful of pure play publicly traded nickel comps at similar stages of pre production and its further underscores the opportunity but.
But how do we get away from this undervalued position, while this page lays out some of the critical milestones. We believe are key to unlocking the potential of minority project and the rest of the resource portfolio.
We secured financing for at least another 12 months, we've completed the pilot collection system trials and we're working to lock in commercial terms for project zero on some of the next critical milestones would be one the IFA finalizing expectation regulations to northeast submitting an application coronary des for an exploitation contra.
Correct.
III V RSA granting norrie and exploitation contract and then for the beginning of commercial production shortly thereafter.
Now in 2022, we're happy to report that we've completed most of our stated 2022 milestones, particularly those on the project development side.
Things have admittedly taken a bit longer and delivering a PFS for the project zero plant in part due to bottlenecks in global Arcadia, That's rotary kiln electric furnace processing engineering capacity.
And this was holding up our ability to reach definitive agreement for that project zero plan, but we're working on resolving this and expect to have more specific news to share in our next earnings call.
So onto the financial results in.
In the third quarter of 2022, TMC reported a net loss of $27 9 million or 12 per share compared to a net loss of $36 $7 million or <unk> 18 per share for the third quarter of 2021.
Net loss for the third quarter of 2022 include exploration and evaluation expenses of $22 $7 million versus $23 8 million in Q3, 2021 general and administrative expenses of $5 9 million.
Versus $13 3 million in Q3 2021.
Partially offset by a gain of <unk> 4 million due to a decrease in the value of our warrants.
Exploration and evaluation expenses decreased in the third quarter of 2022 compared to the same period in 2021 as a result of a decrease in offshore environmental campaign activity. Following the completion of <unk> environmental baseline campaigns in the fourth quarter of 2021. The results also reflect the decrease in share based compensation, partially offset by.
An increase in the expenses incurred on the trials of the pilot mining system and the collector test monitoring survey work.
<unk> expenses decreased in the third quarter of 2022 compared to the third quarter of 2021, reflecting a reduction in share based comp and a reduction in communication and advertising costs, partially offset by higher personnel legal and other expenses associated with being a public company.
Yes.
Now in the third quarter of 2022, the net cash used in operating activities amounted to $8 7 million compared to $10 4 million for the third quarter of 2021.
Excluding nonrecurring items free cash flow for the third quarter of 2022 was negative $9 2 million compared to negative $9 3 million in the third quarter of 2021.
Now regarding our balance sheet as of September 32022, we closed out the quarter with cash balance of $67 million, which includes approximately $30 million of funds rates would be August type financing and again, we believe gives us runway for the next 12 months with a cash position.
For the nine months.
Beginning 2022, TMT reported an operating loss of $62 8 million and a net loss of $61 4 million or 27 per share for the first nine months of 2022 compared to the operating loss of $121 3 million and a net loss of $121 5 million or <unk> 61 per share.
For the nine months ended September 32021.
The net loss for the nine months ended September 32022 included exploration and evaluation expenses of $43 million versus $80 2 million for the same period in 2021, G&A expenses of $22 $5 million versus $41 1 million for the same period in 2021, partially offset by a gain of <unk> 9 million.
Due to a decrease in the value of our warrants exploration and evaluation expenses decreased in the first nine months of 2022 compared to the same period in 2021.
As a result of a decrease in offshore campaign activity. Following the completion of <unk> environmental baseline campaigns in the fourth quarter last year, a decrease in share based compensation, partially offset by an increase in the expenses incurred in 2022 for the <unk> trials and collective test monitoring survey work <unk>.
G&A expenses decreased in the first nine months of 2022 compared to the same period in 2021, reflecting a reduction in share based compensation and a reduction in consulting communication and advertising cost expenses. As these expenses were higher in the 2021 period due to the business combination and listing of the company on the NASDAQ the decrease in the G&A.
Costs in 2022, partially offset by higher personnel legal and other expenses associated with being a public company.
Finally in the first nine months of 2022, the net cash used in operating activities amounted to $46 8 million compared to $28 3 million for the first nine months of 2021, excluding nonrecurring items free cash flow for the first nine months of 2022 was negative $47 8 million compared to negative $23 3 million.
The same period of 2021 increase.
The increased cash spending in the first nine months of 2022 included payments made for various offshore campaigns, including $10 $5 million payment to Maersk relating to 2021 campaigns, a $10 million payment to also use the second milestone payment and increased payments for environmental monitoring costs and the PMT as trials I would now like to turn it back over to Jerry for some.
Closing remarks, and then we'd be happy to take any questions Jared over to you.
Yeah. Thanks, Craig So before we wrap up I would like to extend an official welcome to Andy Greg who recently joined the TMC Board and has now assumed the role as lead independent director.
Andy was previously amend.
Of the deep Greenboard, our predecessor company and brings extensive experience working on <unk> international construction projects in the mining sector.
35 year career at Bechtel.
I'd also like to welcome Grant Linda on Board as our project directed Signori Grad has spent the last 25 years of Bechtel and BHP delivering over $26 billion in project value and holding various senior roles in mining and marine projects.
You've got to spend time with our entire team last month, and it's clear that he's going to fit in well as a leader at TMC and.
And at the same time it was with sadness that we reported our Chief development Officer, Tonio Sullivan's upcoming departure due to personal and health reasons.
Tony has been a pioneer in this new industry and he is a dear friend and colleague Im pleased that he'll be staying on to the next year and a transition period and I know I'll be able to count on his counsel and wisdom far beyond that point.
Tony and the rest of the project team put the company on a path to success and it's been great to see the fruits of those efforts culminated in some of the historic milestones achieved by TMC Norrie and our partner <unk> over the last few months.
So thank you for your interest and attention today and with that.
We'd like to turn it back over to the operator for any Q&A.
Thank you to ask a question you will need to press star one one on your telephone once again Thats star one one please standby or compile the Q&A roster.
One moment.
Once again Thats star one one.
While we are waiting for that went to compile we might take one of the questions from the chat when would we released an analysis and evaluation of the metallurgical content of the 3000 tons of Nigel is collected.
I think what's important to keep in mind with those nodules is coming from minority area, where you've actually moved the majority of the resource from inferred to indicated and then some of it from indicated a measured it's a very consistent resource in terms of the metal content per nodule. In fact this was the railroad. If you were to look at a similar type of <unk>.
On land, but in going from indicated the measured for those modules. There was actually an increase of roughly 7% in <unk>.
Terms of the resource size for that measured.
So it is a very consistent and we're confident that overall. These 3000 tonnes of modules are generally similar characteristics to everything else that we reported in our public filings.
And once again as a reminder that star one one.
One moment for questions.
Our first question comes from the line of.
Dmitry Silverstein from Watertown Research your line is open.
Good afternoon, gentlemen, this is dmitry Silverstein with Wolfe research just wanted to follow up on a couple of comments you made in your presentation.
Number one you talked about the deliverables for.
2022, and there are still some blue.
Sort of ongoing items left in the year can you talk a little bit if I know you mentioned briefly that there were some bottlenecks, but can you expand on that and provide a little bit more granularity on what's going on with those milestones and when do you expect them to get done now.
Craig do you want to take that.
Sorry, Dmitry youre talking specifically on the milestones with respect to.
Some of the engineering bottlenecks that we had run correct correct when you talked about sort of.
Proving or delivering them.
Objectives over the next couple of years.
And Thats why you still have some areas ongoing rather than complete it.
Yeah. So specifically, we had referenced to that some of the engineering.
Capacity for PFS work for our key yes, there is a bit of a bottleneck globally.
But we do anticipate being able to move some of that forward in the next couple of months, we did receive proposals.
To that end in September so it is moving just a little bit slower than we anticipated and I think it's also important to remember that for project zero.
We have a plan for how we're going to build that facility, but there is a lot of rts capacity around the world.
There are plenty of places that are sitting somewhat idle given the fact that Indonesia has banned the export of raw nickel. So we're always evaluating our opportunities and the cost benefit equation of.
To a place where it looks like would be built or potentially using.
<unk> lines.
Through a tolling arrangement so stay tuned on that over the next couple of months.
Okay, great. Thank you.
And then second question.
Well I guess the two part question. One you mentioned that you left about 50 to 100 tons.
Modules behind on the floor you touched on the rate I mean, what's the rationale behind that.
And how is that going to help with the post collection monitoring.
<unk> study that you are going to be published and secondly.
Along those same lines I think you said that the post collection phase III is going to be going through the end of the year.
So when do you expect the results a bit environmental results of your pilot program to be published or made available.
Yes.
Well firstly on the 3000 tons.
We one of the purposes of the trial of course was to test the harvest stuff and the other was to test the riser.
And so we.
We were successful in both of those and.
We actually deemed 3000 tons was sufficient.
We think that number will average a little bit higher than that but.
Because we now have the problem of well we have to store them, we have to unload them, we have to put them somewhere because as part of our exploration contract, we're not allowed to sell them.
And so.
We debated whether we would even bring that much and to be honest.
And as for the as for the post collect monitoring that will be done by Christmas and where we'll start releasing results.
In a in a gradual sense over the coming 12 months and so we're very keen to get some of those results out because we've been very encouraged by what we've seen as I mentioned, we were able to collect all the data we were looking for and certainly.
One of the risks and these campaigns is being able to make sure you can track the balloon because particularly in the mid water, it's a particularly small diluted team. So.
We were very successful at doing that and were also very successful at capturing the plume and and our visual observations.
Our consistent with those numbers, we reported from them on.
A study that they monitored last year, but you can assume we are keen to get those results out as quickly as we can and there will be many many dozens of papers that will be published as a result of this work that's been going on not just during this campaign that but over the last years. So.
Obviously, it all comes together in our application, but we'll be keen to get that.
As soon as we possibly can.
That's great and then final question just on the cash position. So you did raise $30 million with the pipe.
<unk>.
You mentioned that you have cash basically little less sure, but the next 12 months at least.
There is a possibility that IFA may take longer than July .
July of 2020 breed to get there.
Final regulations out there so.
Youre not in a position to sort of get into production in the second half of 2024.
Sure.
What are the steps you're contemplating.
Bridge that they're providing.
Or that capital gap well.
Well, it's true that every day.
As we deliver more of these milestones.
We get more and more inquiry and.
As we mentioned on the last earnings call and reiterated today.
Our preference is to be raising our future capital at the asset level and this is very typical for companies.
Two of our earnings type arrangements to other more more significant companies, whether it's in the mining of the oil and gas industry, where those majors will typically come in to an asset and an.
The important thing about our project is that we don't need a lot of money to get over that into production hurdle.
For those familiar with the natural resources industry.
These capital numbers tend to be many hundreds of millions or billions of dollars that we already have our first production asset we already have the hidden gem, which will be our first.
The project zero and as Craig alluded to we think we can come up with a no capex solution for the onshore processing side as well. So look all I can say dmitry is we're very encouraged by the conversations that are underway at the moment.
And they are all focused on asset level discussions.
The norm.
Let me just add Eric.
Yes, just a little commentary dmitry as well it is important to keep in mind that this has been a period over the last year, plus a pretty expensive project development work.
We're talking about nearly really.
Several years.
In the high teens and the number of offshore campaigns for Laurie we had a successful pilot pyro metallurgical program.
Showing that we can turn the modules into valuable metal that wrapped up at the end of last year and then this environmental research program that we're reaching the culmination of we're going to be talking about over $100 million spent on that when all of a sudden done. So the discreet amount that we have to spend to get into production. That's in line with the commentary made last quarter that it is.
Circa $100 million, the additional cash that we need to get into production.
When you are talking about a potential delay, let's say things were delayed a month two three months whatever you wanted to assume where T. Mobile has been 40 people.
So we think we could be running this business at maybe $4 million or less per quarter in terms of cash burn if we have to be in sort of a wait and see mode for a very short amount of time. So we think some of the financial tools that we have at our disposal, we have about $100 million shelf registration statement, we don't want to have to.
Put our handle that cookie jar and go to that we'd prefer to raise funds at the asset level, but we think we're in a much stronger position financially.
And what it takes to actually keep this business going given how smaller team is and how efficient we run it really isn't that much per quarter.
That's very helpful. Greg Thanks, Craig Thank you very much.
Thank you.
Once again Thats star one one for questions on moment for our next question.
Our next question comes from the line of knock on Mcdonald from Bank of America. Your line is open.
Hey, guys.
Malcolm here Dmitry just.
Now my question so.
I mean, I really don't have anything else.
Thanks Martin.
Thank you.
And I'm not showing any further questions in the queue I would like to now turn the conference back to Jared for any closing remarks.
There are a couple of more Jared sorry, there are two more questions in the metros Ping through because we are a little bit more time, yes, yes sure.
Yes.
So I guess one question is we have these 3000 tonnes of modules whats the plan.
What are we going to do with them.
Maybe over to you on some of those thoughts.
Yeah. So we're not allowed to sell them, but we are allowed to turn them into products and so.
As we've articulated we have completed the onshore.
Pyro metallurgical pilot work.
However, there is some scope to engage with more partners because we now have some.
Additional tonnage.
Partners, who are looking to get involved in this industry and we're also quite enamored with the idea of having some batteries running around the place made from our hub.
For now.
<unk> off the license area, we wouldn't be able to sell them of course, but we can certainly make them and give them to people.
That would be more a marketing issue than anything yes.
So it provides a fair bit of flexibility for us of course, we can monetize them.
Once we get a license.
But until such time that our exploration turns into an exploitation license.
They can't be turned into cash.
And I see another question here for David Larkham at Edison Research.
You provide some granularity on the cash requirements for the next 12 months and I think we've addressed that.
At one point in particular.
It sounds like no further cash is required for <unk>.
Did.
Finalize the amount for the third milestone payment.
So wanted to flag that but we are still now endeavoring I bet everybody is back in the shore.
Work to the final economic agreement for project zero with our partner <unk>, We already did lay out earlier this year that roughly $55 million of preproduction spending would be on TMC zone account to get the system ready for production towards the end of 2024, So I would just flag those items, but we're looking very much forward to.
Pushing that relationship forward and making sure that we're able to come up with an economic arrangement.
Makes sense for everybody on project zero.
Okay.
Okay.
With that I'd like to thank everyone for taking the time to join US on today's call and we look forward to sharing even more progress on our fourth quarter update which will be in March 2023.
Thank you everyone.
Thanks Al.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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