Q3 2023 TMC Metals Co Inc Earnings Call
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Thank you for your patience today's conference will begin momentarily again, please standby today's conference will begin momentarily.
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Good afternoon, everyone and thank you for participating in the metals company's third quarter 2023, corporate update conference call.
Joining us today are the metals company's chairman and Chief Executive Officer, Jarrett, Barron and Chief Financial Officer, Craig Husky.
Following their remarks, we'll open the call for your questions.
Before we go further I would like to turn the call over to CFO, Craig Cheskey as he reads 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 the use of non-GAAP measures break. Please go ahead.
Thank you very much. Please note that during the call certain statements made by the company will be forward looking and based on managements beliefs assumptions from information available at this time.
These statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control.
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 statements. Our remarks. Today May also include non-GAAP financial measures, including with respect to free cash flows and additional details regarding non-GAAP financial measures can be found in our slide deck with this call.
And you're welcome to follow along with the slide deck Corp. Joining us by phone you can access at any time at investors Dot metals that C O.
And I will now turn the call over to our chairman and CEO Jerry Byrd Jared. Please go ahead.
Okay.
Yeah.
Thanks, Craig and thanks to all of you joining us today for our third quarter 2023, corporate update call and thanks for also in order to my team for that.
Tremendous effort this quarter as we remain on track for the expected launch of our application for an exploitation contract out of the norm D area. Following the July 2024, I'd say session.
I'm pleased to say, we've made significant progress on pre feasibility work this quarter as well as our environmental impact statement, both of which are key prerequisites for all application.
Our environmental program has not been cheap with cumulative spending of approximately $150 million over the last decade, plus but that investment in science is resulting in a growing body of data that we believe is meant making a definitive case for the responsible collection a poly metallic nodules we.
We've already been sharing this environment mental data with stakeholders around the world, including presentations during the recent I'd say media in Jamaica, and it's heartening to see how well received these insights have been.
This body of evidence will continue to grow and will include the results of our previously disclosed upcoming offshore campaign. The companys 20th Environmental campaign in the Ccs Ed in order to gather further information on ecosystem recovery and functioning 12 months after last year's successful Nacho collection.
In system test.
Im also delighted that we've published our second annual impact report, which examines the full scope of our existing and future potential impacts, including lifecycle comparisons versus land based resources.
We also recently debuted our sustainability approach and I'd encourage everyone to read through our press release from October 31 with links to these documents and of course, we're always looking to improve so feel free to share any feedback.
By impacts at metals Dot code.
At the same time progress on the regulatory front continues at the I S. A member states continue to work on streamlining the various regulatory tax into one document.
I say Secretary General Michael large summarize the progress this week in a press briefing reported on the Dow Jones Newswire and I quote I can't say, it's going to be exactly the same by the time it's adopted.
The financial times are open for discussion, but what you have on paper right now is a pretty good indication of the overall shape of the document unquote.
We're excited to see this progress continue over the next two scheduled I S. A meetings and into sessional work as member states put their shoulders into this final push to adopt the mining code as is legally mandated by them Clos in the 1994 implementation agreement to allow for the commercial exploitation.
<unk> of this important resource.
Well. The first question. We get asked is typically about the regulations. The second is usually about our capital position and as we've shown before we had very committed shareholders and this was demonstrated again with the capital raise announced in August at $2 <unk>.
Yeah, plus across a wide mainly from existing investors, including our two largest shareholders <unk> capital and <unk>.
We provided a further update on this capital raise in October, noting that we expected gross proceeds of $25 million or roughly 23, and a half net of fees, including $9 million of additional closings at the same tons from Erez capital over the next few months.
This in this puts our pro forma liquidity position at roughly $56 million inclusive of the $9 million expected additional capital raise proceeds plus our cash balance of 22 and a half million as of September 30.
And our Undrawn 25 million unsecured credit facility from Ocs.
So on the agenda today, we're going to take you through the following items. A brief reminder of tmc's value proposition and update on the progress without Norrie D projects.
Further detail on our recently.
Released impact report and sustainability approach a snapshot of the environmental case for TNC and nodule collection more broadly a regulatory update on this one science Acs session and finally, our financial update.
So as we've said many times before our resources at outlier amongst the worlds nickel projects not only honoree in Tamil ranked by mining Dotcom. Tom is the largest two undeveloped nickel projects in the world, but the nickel equivalent grade of this resource truly stands apart.
The location of this resource wholesale makes it special given that nodules can be collected and shipped to wherever the processing and refining capacity exists and this presents an important alternative feedstock to a nickel market, which is increasingly dominated.
The supply controlled and funded by China.
And while China is well ahead in processing and refining battery metals on land.
They do not yet dominate in the deep ocean, but they are certainly making strides in fact, the Washington post release to long form piece on October 19 regarding China's increasing activity in the deep ocean as well as their increased involvement at the I S. A and the article notes. The TNC is ahead in.
Technology following our successful integrated collection tests last year with all six.
The China is looking to catch up and become a leader in this space.
China's deep sea Mighty ambitions are also the focus one week later in a Bloomberg piece by U S Admiral James strive Adas.
Former Supreme Allied commander of NATO in which he implored the United States to focus more on what he calls a strategically essential resource.
So this elevated media attention has also led to prior prioritization of the issue from certain leaders in Washington D C with.
It's repeated calls to action by congressional members to the defense and energy departments on a plan for developing the processing and refining capabilities for deep Sea nodules.
The latest news was a letter this week from five U S House members from the state of Texas.
Right into the department of defense advocating for funding support for a potential processing and refining facility on the Texas Gulf Coast for nodules from Tmc's Norrie area.
This does not change our capital light approach to begin production at existing facilities, such as time goes in Japan, but it underscores the massive long term potential that we represent for the U S, which could go from near total import dependence for nickel cobalt manganese to metal independents.
All three just from our contract areas alone.
Now for an update on the Norway project and as I said at the outset, we're devoting a majority of our resources to the environmental impact statement in the pre feasibility work and it's proving to be money and time very well spent.
Well zoom in first on the pre feasibility work for the offshore segment of the PFS together with all six we've gone through several mine planning iterations and design reviews of the project Zero Nodule collection and transport system.
And as announced in August together, we have upgraded the expected maximum capacity of the hidden gem vessel to 3 million wet tonnes of modules per year, a 130% increase versus the previous estimate of $1 3 million wet tonnes per year.
So the offshore segment of the PFS, we've made great progress sorry, the onshore.
Segment, we've made great progress in Japan, where Pacific metals carrier or PEMCO as we know them has done considerable work and validated that seafloor nodules can be told through their current facility producing indymedia products that align with our specification.
The expected binding agreements with all CS and Pam code, both of which are anticipated to be finalized before the end of this year will be key inputs for our PSS modeling work, including Capex and Opex estimates for project zero.
And with the help of one of the world's leading EPC firms in Bechtel. We expect this PFS work to be complete in the first half of 2024.
And as you see on the right hand side of this page a PFS work will inform many of the key components of our application for an exploitation contract over the Nori D area.
Expected to be launched following the July 2024 session of the RSA.
So for over a decade Norrie has been gathering key data to inform its environmental and social impact assessment.
Since our first campaign in 2011 Norrie has embarked upon 20 offshore research expeditions to better understand the natural resource and develop a rigorous environmental baseline of the ecosystem of the Nori D area.
But of course to understand the absolute impacts of potential nodule collection, you have to go out and collect nodules.
The three offshore campaigns that made up last year's prototype Nacho collection system test and environmental monitoring marked a watershed moment.
In our data collection asset, providing infield observations of the impacts of collecting nodules from the seafloor and lifting about four kilometers to the surface.
As a company working at the forefront of a new industry. We knew that we could not do this alone that's why norrie partner with many of the world's leading marine research institutions and expert industry contractors to ensure that our application is founded on the best possible science prepared by the best minds in marine.
Research.
After more than a decade of exploration, we are entering the final stages that environmental and social impact assessment the.
The gray boxes represent the work completed with the blue representing work ongoing.
And running in parallel with our environmental baseline and impact studies, we continue to invest in research to better understand how nodules before against traditional mining operations on land.
This again in 2019 with an in depth lifecycle assessment, COVID-19 different impact categories in drawing upon norrie data to assess the comparative impacts of sourcing metals for approximately 1 billion evs from both modules and land based oils.
And then following successful tests without pilot offshore system and onshore processing technology.
We commissioned a benchmark minerals for a project specific.
Specific lifecycle assessment to compare our Norrie D project against key land based production routes for the same target metals.
They are their scopes DISA the big picture remains the same the Nori D project model outperformed all analyzed land based production routes to nickel and copper and most Chicago.
Thanks to this investment we now have a refined assessment of the <unk> project impact hotspots that we can address prior to starting commercial production.
You know an overall impact report last year, we outlined who we are why we exist and how we intend to go about delivering our mission.
And this year's report focuses on the significant progress made in understanding the potential impacts of our operations and the work we're doing right now to reduce and mitigate these as much as possible.
Several developments merit, highlighting our subsidiary Norrie executed a complex three vessel campaign, while independent scientists carefully monitored the absolute impacts of our pilot nodule collection impact system.
And benchmark minerals completed their lifecycle assessment about Norrie D project, providing a clear picture of the relative impacts of our planned operations against terrestrial sources of metal supply.
Nor is that 145 days at sea in 2022 alone as it continues to build upon its rich deep sea dataset.
It has been fantastic to see the novel insights uncovered by the scientific community with the help of this inflation with eight peer reviewed papers now in publication and many many more to come.
We also advanced our industry first digital twin deepening our engagement with Kongsberg digital digital to bring AI and hybrid machine learning to all future deep Sea nodule collection operations with potential applications on land as well.
And work is well underway for the first social impact assessment for a seabed mineral project in international waters without team engaging a broad cross section of stakeholders and our sponsoring state of Nauru.
The details of our project and its potential implications for this developing island nation.
And of course, the incredible work that our in country teams in both Nauru Antonio.
Doing to support community projects and the next generation of leaders continue to go from strength to strength.
With grants to over 40, grassroot initiatives and two doesn't fully funded scholarships and trainee opportunities awarded in 2022 alone.
And finally this year, we were proud to join other private companies Ngos and multilateral institutions to pioneer in ESG Handbook for Marine minerals, and initiative, which has transparency at top of mind, and which will serve as a blueprint for disclosing material topics associated with marine mineral.
Projects, while showcasing best practices.
As a company our destination is clear a carefully managed metal comments that is used in recovered and reused to generations to come.
And getting there will be a challenge for as long as the world's metal demand keeps growing.
<unk> metal stocks will not be enough and so we have made it our mission to find a workable path to this feature.
Alongside this year's impact report the sustainability team have been hard at work behind the scenes preparing for our new sustainability approach, which outlines the principles that will guide our decisions as we work towards realizing this vision.
As part of this approach the team has developed a comprehensive set of sustainability goals and while two exhaustive list here I courage you all to encourage you all to visit our website, where you can share your thoughts on our approach the goals, we have set ourselves and how you feel these may be improved.
We are sharing this approach now so that it may serve as the basis for a broad dialogue about how we intend to go about our business and and welcome all stakeholder feedback.
That will bring valuable insights to refine and finalize the road this robust set of targets and Kpis and we look forward to publishing these early next year.
If the assessment of these impacts against the comprehensive environmental baseline.
That has been the primary focus of our team for the past decade.
And through our work in this regard remains ongoing.
The extreme depth pressure in near freezing temperatures of the perpetually dark environment in which nodule CIT, bringing some clear advantages over other ecosystems, commonly impacted by metal extraction.
I always say that if all our goal is to supply metals with the least planetary impact.
And it makes sense to go to parts of the planet, where there is the least life not the most life.
And that's what we have on the abyssal seafloor with biomass levels.
Our measured in grams, and a lower than any other ecosystem on the planet and roughly 1500 times lower than in the tropical rainforest that a source that other source of most new nickel production.
And this lower abundance of life.
Also has a bearing on species diversity on the seafloor.
The Ocean plays host to relatively few of the world species and at the extreme depths, where all our operations will take place the lack of sunlight and other challenging conditions mean that millions of trees plants insects, and vetted raise that exists on land absence.
But while the abyssal ecosystem exhibits relatively low levels of by diversity compared to other terrestrial ecosystems that does not mean that what is down that is an important and that's why we spent over a decade developing a very robust environmental baseline so that we can understand.
What could be impacted by our operations and then develop strategies to minimize those impacts as much as possible.
In July we announced that data from two of nor is offshore campaigns had been published to the ocean biodiversity information system and that Norrie had become the single largest data contributor to the Airbus I say node, providing 60% of total records.
And research is continue the painstaking process of going through the remaining biodiversity data from a further seven campaigns as well as data concerning ocean geochemistry.
Inventory and pelagian biodiversity.
It has been fantastic to see the scientific community engaged with this rich wealth of information.
And so those are the Kenai you may remember how in Q2 update we reported how nor as total dataset had been downloaded some 300 times and specific interrogations of taxa had seen norrie occurrences downloaded over 22 million times.
Well I am pleased to report that engagement with the Nori data library has greatly accelerated in the last quarter and we are fast approaching 1000 downloads of the full dataset with over 70 million downloads of Norrie occurrences.
Further the localized in low lying nature of seafloor plumes also has encouraging implication in terms of limiting biodiversity impacts.
As I mentioned earlier last year's collection system test proved a historic moment in the development of this industry.
Beyond the 3000 tons of nodules collected one of the most important outcomes of the test was.
The ability to observe real time impacts and generate hundreds of terabytes of infield data.
This information is particularly important when it comes to sediment plumes at the sea floor.
We now have multiple lines of evidence from infield Verifications sedimentation models built by leading experts as well as through pioneering methods like thorium, tracing which paint a remarkably different picture to the Wan put forward by Actavis and in the media and clearly infield.
Observed data is more powerful than speculation.
Yeah.
Leading experts in the field of deep sea sediment plume dynamics, including a team led by Professor Tom Peacock at MFC and researches at Scripps have found that 92% to 98% of sediment disturbed during offshore system trials conducted by fellow contracted GSR.
Remained within two meters of the seasonal.
As they noted in the conclusion of that study, it's quite a different picture of what these claims look like compared to some of the conjecture.
And on our own ground in the northern <unk> area preliminary findings by leading experts at D. H I support the findings of MHC.
Our teams had over 50 monitoring stations in the water to monitor every aspect of the plume during noise collected trials last year and using this data <unk> had built a model that bring some clarity to how plumes actually behave at these extreme depths.
Infield observe data indicate that the sediment plume has low lying.
Over 90% of the sediment initially stays less than two meters above the sea floor and the sediment plume initially forms the turbidity current.
<unk> is a gravity driven spreading of sediment laden water under its own weight away from the collect attracts meaning that the flu does not waft higher into the water column, but instead follows the contour of the seasonal behaving more like a liquid than a gas.
In this model by our partner <unk>. The cloud represents the plume that was generated and the colors show different densities with yellow representing the highest density of sediment particles in purple the lowest the purple and blue bonds represent setup.
<unk> concentrations less than 20 milligrams per liter.
Which would not be visible to the naked eye.
The key takeaway here is that contrary to widespread conjecture.
Disturbed sediment settles rapidly with projections, indicating that impacts from the flu will be highly localized around the mining footprint and are highly unlikely to extend beyond the boundaries of the contract area.
And this high quality data is actually leading to tangible change amongst those prone to speculation.
Following <unk> presentation at ISI side event, just a few days ago the.
The deep Sea conservation coalition or DSC, a lead our position NGO against this industry change their website wording on plans to reduce the suggested scale of potential impact by nearly 100 times.
Instead of the previous Gse's, Dfc website, where inclusions of sediment, possibly spreading tens of thousands of square kilometers beyond the mining side, the new Dcs DSC wording states, the plans, which could disperse of it to hundreds of kilometers. It may look like a subtle change.
But upon careful reading it knocks two zero is off of the scale of their initial speculation and we believe the evidence shows that they are still overstating the potential impacts.
As noted at the outset of this call we've been encouraged by the progress at the most recent IFA median Jamaica as further evidenced by the positive commentary. This week from the ISI Secretary General on how he believes the close to final form of the regulations that take taking share.
<unk>.
This latest ISI meeting as in prior sessions. So a clear majority of participating states expressing their continued support for negotiating robust regulations that ensure the protection of the marine environment in line with their legal obligations.
Twenty-three RSA member states, representing a relatively small minority of the 169 ISI members.
Under strong pressure from Ngos have called for a precautionary pause or moratorium or ban on deep sea mining most recently, the United Kingdom and Monica.
However, the legal obligations on member states to deliver the mining code has not changed and this obligation was reiterated in July following a compromise consensus decision reached.
In fact, what we've observed on the ground in Jamaica at the USA is a recognition from the majority of member states, including many of those in the pause of moratorium can that the best path forward is to finalize a robust set robust set of regulations in a timely fashion to ensure.
The effective protection of the marine environment, while also delivering on the obligation to allow this industry to begin.
And this will continue to be a noisy topic.
And they may ultimately be a few more that joined the pause of moratorium list.
It will clearly continue to be a very small minority in the context of the entire assay and the truth is that there continues to be no legal basis for moratorium and the obligation to deliver the mining code is a legal obligation is and is not up for debate.
As noted earlier, we maintained our previous guidance on our intention to launch our application for for an exploitation contract over the northern area. Following next year's July ISI meeting.
On the next slide you will see the timeline for exploitation contract to review from the draft regulations.
The breakdown may change a little bit between now and our expected submission, but they should provide an illustrative guide for the review process at.
And again, we are encouraged by the keen interest in our ISR side events, which have allowed us to present, our environmental findings to stakeholders as well as the <unk> legal and technical Commission the body of experts, who will be reviewing our application and making a recommendation to the ISI Council.
So I'd now like to turn the call back to our CFO Craig <unk>.
Thanks, very much Gerry.
As shared in previous calls this will be very familiar slide.
That in March 2021, AMC consultants issued a SEC Reg FK 1300 compliant initial assessment of the project economics for the northern area and that initial assessment is available in the investors section of our website, both an excel and PDF form.
Initial assessment arrived in net present value of $6 8 billion at the time for <unk> and that was around the beginning of 2021 and.
And running the same model simply updated for current metal prices. The net present value of <unk> will be approximately $8 6 billion.
This is a lower valuation than what we've shown previously due mainly to nickel prices being down approximately 40% year to date.
Yes, that's still a whole lot of value and that's why we're fortunate to have four key metals and one resource and we anticipate being able to withstand commodity cycles better than most women production due to the high grades of these metals inherent in the resource.
Now the next page lays out some of the critical milestones that head that can lead to re ratings potentially enter public valuation even amidst tough point in the commodity cycle and we're still only treating a roughly three 5% of the underlying NPV for Lori D. A criminal prices keep in mind, that's only roughly 22%.
Our total estimated resource.
Now.
The milestones ahead.
Can lead to potential valuation changes are as follows reaching binding agreements commercially with our partners all season, PEMCO, which will then feed into a pre feasibility study.
Realization of our environmental impact statement.
<unk> progress from the IFA, which Jerry discussed Norrie submitting an application for an exploitation contract over the mowry. The area. Following the July 2024 session.
IFA ultimately granting marine exploitation contract and then the beginning of commercial production shortly thereafter.
And to submit an application following the July 2024 session. We disclosed in August that we would expect to need roughly an incremental $60 million to $70 million of additional funding and this was announced prior to the announcement of the registered direct offering. So the proceeds from that registered direct offering are expected to offset that forecast dollar for dollar, indicating a remaining funding amount.
Roughly 35% to $45 million over that same timeframe to deliver the application.
So onto our third quarter financial results.
PMT reported a net loss of approximately $12 5 million or <unk> <unk> per share in the third quarter of 2023 compared to a net loss of $27 9 million or 12 cents a share for the quarter ended September 32022.
Exploration and evaluation expenses during the third quarter of 2023 were $7 9 million compared to $22 7 million for the same period in 2022.
The decrease in 2023 was primarily due to a reduction in environmental study spending and a reduction on the pilot and mining test system. The collector test was completed in November of 2022, partially offset by increased spending in 2023 on pre feasibility studies.
As well as mining technological and process development activities due to engineering work, which commenced in the fourth quarter of 2022 and increased spending on sponsorship programs.
General and administrative expenses were $4 $6 million in the third quarter of 2023 compared to $5 9 million in the third quarter of 2022.
The lower spending in 2023 reflects lower share based compensation and a decrease in insurance costs and these decreases were partially offset by higher consulting cost for the corporate activities and other expenses.
Free cash flow for the third quarter of 2023 was negative $12 6 million compared to negative $9 1 million in the third quarter of 2022, reflecting an operating loss of $12 5 million a decrease in working capital of $2 9 million due to timing of payments offset with equity settled expenses of $2 5 million and other noncash items.
And finally on the balance sheet at the end of September.
<unk> included a new asset related to the agreement with <unk> on our exclusive use of the hidden gem vessel.
In consideration for the exclusivity we showed $4 one 5 million common shares to also use on August 14th 2023, and recorded a right of use asset with an unamortized value of $6 2 million.
At September 32023, TMC held cash of $22 $5 million in held no debt.
Total pro forma liquidity stands currently at $56 million, including cash our upcoming additional closings of $9 million on the registered direct offering from Ares capital and the $25 million <unk> Undrawn credit facility.
We believe that this liquidity will be sufficient to meet our working capital and capital expenditure requirements for the next 12 months from today.
With respect to committed amounts.
I would now like to turn the call back over to Jerry just for some quick closing remarks, and then we will open it up for Q&A.
Okay.
Yeah. Thank you Craig so in closing as certainly feels good to see how much progress we continue to make and finally, we are at a stage where the results of our hard work over the last decade, plus on the environmental and social impacts can be shared openly with stakeholders around the globe and we're delighted by those initial.
Actions.
In the quarters ahead I can promise you. This we will remain laser focused on the key deliverables in front of us being prudent with our cash and achieving what we say we're going to achieve in a transparent manner.
As the first contract expected to launch an application for the mining of the <unk> resources in international waters.
World.
Should expect no less.
I would like to extend my sincerest, thanks to my entire TMC team to our extensive network of highly skilled partners.
Okay.
The kingdom of trauma and Kiribati.
Two the team of highly skilled engineers designing a new offshore collector system at all <unk>. Thank you for your dedication to this very important project and thanks to everyone, who tuned in for your interest and attention and with that we'd like to turn it back over to the operator for some Q&A.
If you'd like to ask a question at this time. Please press star one one on your Touchtone telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
Yes.
As a reminder, that is star one one to ask a question.
Please standby will be compile the Q&A roster.
Our first question comes from the line of Matthew O'keefe with Cantor Fitzgerald.
Hey, Matt.
Good good thanks, Thanks for taking my call and.
Providing that extensive overview.
Not a lot of work obviously going down.
Pausing here on slide 21.
As the regulatory update and you've highlighted twenty-three member states.
Out of 169 publicly expressing reservations, which which is great that you actually did highlight that but im just wondering if you can provide any.
Kind of a sense of there's a lot there I mean, I've heard Canada, and I've heard France come out, but the other nations is there a common theme among them and do any of these hold more sway or less way within the assembly than others.
<unk>.
What's to prevent more delays.
Not to say that the last delay was.
Politically motivated but I was just wondering if you had a little more color around this.
Yes happy to provide some in Jared happy for you to weigh in as well I think our takeaway is look there is some times a.
GAAP into what is said coming out of let's say, a president or Prime Minister's office versus what you sometimes see on the ground in terms of everybody focused on rolling up their sleeves and delivering what the RSA is mandated to deliver which is a mining code, which protects the environment from serious harm, but does allowed us to go forward. This isn't a.
A question.
Yes. So it is a question of one.
The future exploitation of the resource has always been contemplated and that's why we obviously had a dual mandate first put in place the exploration rigs allow us to deliver those exploitation legs. So in terms of who has more or less influence we may not get into that but suffices to say, what we did see in July.
From a lot of the member states, even some of those who are on the list of supporting extensively a pause or moratorium.
Real good faith effort to say look here's the additional time that we need to push this forward with additional three meetings we think.
There was a view that.
Providing this additional time to them by TMC and noting that we had a recommendation from the legal and technical Commission to do some additional environmental work, which we are embarking upon that.
That would be the right path forward so.
We do see that the statements that you sometimes see from those 'twenty three member States don't always line up with the reality of how hard they continue to work on the ground at the IFA Jerry.
I'm not sure if you want to add anything to that.
We may have lost the connection but.
But that's okay and with respect to other states I think you should expect going forward.
While we continue to hear a lot in terms of.
Those who might take a position against it they do represent a minority.
And what we are seeing now is that.
Out of the more silent majority.
Youre getting more states that are pushing ahead and also we would expect to see.
Some additional states, perhaps coming out in support and trying to be sponsoring face themselves. So.
We get closer to final regulations. So I think we can expect it's not just going to be before.
The voices coming from one side, but are you willing or allowed us, but a more varied approach to public opinion.
Okay. Thanks for that.
Hi.
I'll, let someone else ask a question.
Our next question comes from the line of Gamete.
Dmitry Silverstein with water tower research.
Hey, Dmitry can you hear us okay.
You may be on mute.
As a reminder that is star one wanted to ask a question at this time.
As we're waiting for that to compile where you have a question on the chat for Christian Hornbeck at current projections, if nothing changes negatively when do we expect the company to turn a profit.
You could expect to see a lot more detail on what the economic model is going to look like as we release.
Some of the results we will pre feasibility study.
We do expect that even with the first vessel at relatively small scale that it won't take very long for us to be free cash flow positive on that vessel.
But we're going to allow ourselves a little more time to put that pen to paper and you can expect quite a bit more detail on that coming up in the first half of 2024.
We have a question from the line of Dmitry Silverstein with water Tower Research. Your line is now open.
Okay.
It looks like Dimitri might be having some technical difficulties so.
Could we see if there are any else on the audio queue and I'll also have a little look at the <unk>.
Q&A chat online.
Not showing any further questions on the phone at this time.
There's a question online from.
Timothy burn would have been done with the processing of the 22 million tons of module centered Japan and the remaining 3000 tonnes of modules.
That is a good question that we get this one a fair amount, but 22 tons that we deliver to Pacific metals in Japan are already been used to really show that they can use their existing facilities to produce the intermediate products such as the nickel copper cobalt alloys, and manganese silicate product. So that 'twenty two tonnes was really constructive in.
Giving us confidence both on our side and telcos to potentially take that next step and entered into a binding agreement and again all of that would roll into our pre feasibility studies as well so that 22 tons.
Has already done quite a lot and showing and demonstrating the viability of this capital light approach.
With Pimco in Japan.
In terms of the remaining roughly 2980 tonnes.
We before we had our exploitation contract cannot commercially fellows.
We do have them, we wont say, specifically, where they are at any point in time, but we are using that massive sample to potentially share with other potential strategic partners.
Make sure that others, who want to be able to do some test work on the nodules can use this as a sample.
But there is no ability for us to fill those modules prior to being in commercial production with an exploitation contract.
Again to ask a question on the phone lines that is star one one.
So dmitry was able to get in touch via the chat the questions over 9 million still to be collected on the capital rates or whats the timing of that and why the delay.
As we negotiated this and there is some detail on it back in August when we released it with.
With Arris capital there was a view of.
We wanted to participate at $2 a share.
But for reasons in terms of portfolio of construction and some of the other positions within <unk> capital It made sense to.
Funded in this staggered approach, we would have approximately $2 5 million of that funding coming in as expected by the end of November and then the other amount to be received in the month of January of $6 5 million.
Of course, <unk> capital remains our largest shareholder.
Drake Harcar as family offices.
Our board of directors and has consistently been a great supporter of us.
Total royalties.
Terms of these recent capital raises that we've done.
So that was the reason for it and some additional context beyond that.
Now the operator.
If you don't mind, giving a call back to Jared you should be able to get back in here and I will take a few more questions from the chat another one from Christian Hornbeck with China active in the Pacific.
Is there any concern that they might begin mining illegally I was just going to be an issue. What we would say is it's very constructive with the way the Chinese behaving with the IFA there.
More engaged certainly as we've seen over the last couple of years and it's highlighted in the Washington Post article from October.
They are really using their sphere of influence to make sure that regulations are put in place. So we're not going to speculate on what they may or may not do in the future, but we.
I would say that.
The work that they've been doing at the IFA, Jamaica continues to be constructive.
Okay.
And then from Dmitry Silverstein of water to our research with the post collection test campaign when will it be undertaken or how long will it be at fee and then how long before the data shared good questions there as well dmitry.
We are not giving specific data on when the campaign is launching.
Part of that for security reasons.
But it will be at three four.
Good amount of time and I would say we do.
You already have.
Some sense of what the environmental regeneration in the collector Taft area might look like in part because we were there for effectively a month following the collector test last year and measuring some of those post.
Disturbance.
So we do anticipate that what we're going to fee out of this post marketing campaign is going to further add to the quality of our application and we don't expect there to be any showstoppers, but of course, we're going to see what the research brings US you can expect that some of the initial results are likely start rolling out probably.
Probably towards the end of Q1 next year, and then quite a bit more of that in.
In the second quarter is all of that rolls into our environmental impact statement as a prerequisite for our application for an exploitation contract.
We might take one more from the chat and then if the operator can check if there is any other questions in the queue on the phone.
Ray Figaroa is there a possibility that China will also submit an application in July of 2024.
I think what's important to keep in mind here is.
In terms of the technology to collect our modules that's something that we see a lot of parties are potentially able to do and investing in it and it's not just China, Norway is investing heavily in this.
And youre seeing some individual companies maybe.
Mainly in the offshore oil and gas space, not only all fees, but transocean and others, who are devoting assets here. So the technology is something that.
Really that's noteworthy competitive advantages with our competitive advantages is having a great resource having resources very abundant in high grade, but also having a team that has been willing to over the course of the last decade, plus focus so much on the resource definition and environmental work, if China were to want to submit their application.
There is a prerequisite to have at least three plus years of environmental baseline data.
So that's not something that you can really accelerate that is not something that you can say well, we're going to try to compress about down until a couple of months you really have to put your equipment out there and then just observed for a while and set a baseline to measure.
Your operations and what those impacts would be against that baseline. So that's the element that would make it unlikely for China or frankly, any other contractor to submit an application.
Within several years of TMT.
Again that is star one one to ask a question.
Not seeing any phone questions at this time.
Yeah.
And then we will take one more question from the chat David Larkham at Edison Research, what's the likely cost of the additional offshore campaign and is it within the guidance cash flow for the requirements for the application.
David It is within our guidance, saying that what we need to deliver that application. Following the July 2024 session.
That amount of the initial guidance would be offset dollar for dollar for the capital raise that we've announced so.
Assuming that $23 5 million of net proceeds that would leave you in the ballpark of 35% to $45 million of funding remaining that does incorporate all of the costs anticipated for this post mining campaign in fact, the timing of our announcement for.
The capital raise did coincide with us deciding for certain based on feedback from the legal and technical Commission.
That look if this is a campaign that needs to be done, let's go out and make sure that we raised funding to keep the project on track and most of that funding was raised with a view to spend it on the post collection test campaign.
So that is within our estimate for us within the guidance, we provided and were happy to be kicking out operation.
Are there any more questions on the line.
No questions on the phone lines at this time.
Very good well everybody. Thank you for your attention sorry to those who may not have been able to answer or excuse me to ask a question, but feel free to reach out.
Reach out to us directly through our website or the investors.
At metals Dot cope and we'd be happy to follow up thanks again for your attention.
And we look forward to chatting with you soon on our next quarterly update call in March and a lot of progress to be reported between now and then thank you all very much.
This concludes today's conference call.
Thank you for participating you may now disconnect.
Okay.
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