Q1 2024 TMC Metals Co Earnings Call and Bussiness Update

Operator: Good day, and thank you for standing by. Welcome to the metals company first quarter 2024 corporate update conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question via the phone line, during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised.

Okay.

Good day, and thank you for standing by.

Speaker Change: Welcome to the metals company first quarter 2020 for corporate update conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question via the phone line during the session you will need to press star one on your telephone.

Speaker Change: You will then hear an automated message advising him. This race to withdraw your question. Please press star one again.

Operator: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Craig Shesky, CFO. Please go ahead.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your Speaker today, Craig Schatsky CFO. Please go ahead.

Craig Shesky: Forward-looking statements are based on management's beliefs and assumptions from information available at this time. These statements are subject to known and unknown risks and uncertainty, many of which may be beyond our control. Additionally, please note that the company's actual results may differ materially from what we go through in this call and that, 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. Additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, can be found in the slide deck being used with this call.

Craig Shesky: Thank you and 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 this time. These statements are subject to known and unknown risks and uncertainties many of which maybe beyond our control. Additionally, please note that the company's actual results may differ materially from them.

Craig Shesky: We go through on this call 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 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 you.

Craig Shesky: And you're welcome to follow along with our slide deck or, if joining us by phone, you can access it at any time at investors.metals.co. I'll now turn the call over to our Chairman and CEO, Gerard Barron. Gerard, please go ahead. Thank you, Craig, and thank you to all of you for attending our first quarter 2024 Corporate Update conference call. It's only been a month and a half since our last update, but even in that...

Craig Shesky: Welcome to follow along with our slide deck work is joining us by phone you can access it at any time at investors Dot metals Dot C O and I will now turn the call over to our chairman and CEO Jerry Byrd Jared. Please go ahead.

Gerard Barron: Thank you, Craig, and thank you to all of you for attending our first quarterly 2024 Corporate Update conference call. It's only been a month and a half since our last update, but even in that short time, we've seen some important project milestones and positive tailwinds for this industry. But I'd like to start with an exciting new addition to the TMC team.

Jerry Byrd: Thanks, [noise]. Thank you Craig and thank you to all of you for attending our first quarter 2020 for corporate update conference call.

Jerry Byrd: It's already been a bump and a half since our last update but even in that short time, we've seen some important project milestones and positive tailwind for this industry.

Gerard Barron: Last month, we were pleased to welcome Steve Jefferson to our board as vice chairman and strategic advisor. Steve is not just a legendary investor but a visionary with wide and deep-ranging curiosity. Among other roles, he's a current board member of SpaceX and a former longtime board member of Tesla.

Jerry Byrd: But I'd like to start with an exciting New addition to the T. M. C team last month, we were pleased to welcome Steve Jefferson to our board as Vice Chairman and strategic adviser Steve.

Jerry Byrd: Steve is not just the legendary invested that a visionary with wide and deep ranging curiosity.

Jerry Byrd: Among other roles. He has a current board member of Spacex and former longtime board member at Tesla.

Gerard Barron: His investments represent over $800 billion in aggregate value creation and include pioneering technology companies like Tesla and Planet Labs and SpaceX. Commonwealth Fusion Systems, and I'm proud to count him both as a supporter of our mission and an exciting TMC shareholder, and we are already benefiting from his contributions and connections. So onto a quick liquidity snapshot. Total liquidity stood at $49 million as at March 31st, 2024. Since that time, Tmc has drawn down $2.9 million out of our $45 million available capacity on unsecured credit facilities.

Jerry Byrd: As investments represent of the 800 billion in aggregate value creation and include pioneering technology companies like Tesla and planet Labs, and Spacex and Commonwealth fusion systems, and I'm proud to count him both as a supporter of our mission and an exciting TMC shareholder and we are already benefiting.

Jerry Byrd: From his contributions and connections.

Jerry Byrd: So I'll do a quick liquidity snapshot total liquidity stood at 49 million as at March 31st 2024.

Jerry Byrd: Since that time TNC has drawn down $2 9 million out of about 45 million available capacity on unsecured credit facilities.

Gerard Barron: And the use of these facilities provided by our three largest shareholders, including myself, should indicate how confident we are on the path forward and the news flow in the coming months, which we believe will be well received by current and potential investors. The next slide is a summary of the progress since our last quarterly update in late March. I'd like to draw your attention to the news we announced this morning. We have now uploaded the largest ever submission of environmental data to the International Seabed Authority.

Jerry Byrd: And the use of these facilities provided by our three largest shareholders, including myself should indicate how confident we are on the path forward.

Jerry Byrd: And the news flow in the coming months, which we believe will be well received by current and potential investors.

Jerry Byrd: The next slide is a summary, since our last quarterly update in late March I would like to draw your attention to the news we announced this morning.

Jerry Byrd: We have now uploaded the largest ever submission of environmental data to the international C that authority draw.

Gerard Barron: Drawn from 22 offshore campaigns to the Norrie D area, this wealth of new data adds a further 75,000 biological occurrences to the ISA's catalogue of contracted data for the Clarion-Clifton Zone, as well as a myriad of other data, which will further enhance society's understanding of the deep sea ecosystem and the potential impacts of our operations.

Jerry Byrd: Drawn from 'twenty, two offshore campaigns to the Nora D area. This wealth of new data adds a further 75000 biological occurrences to the I S. A's catalog of contracted day, that's a bit tiring pivot inside as well as a myriad of other data, which will further enhance societies understood.

Jerry Byrd: <unk> is the deep sea ecosystem and the potential impacts of the operations.

Gerard Barron: Nori's data set is the largest of its kind ever gathered in the deep sea, and, with much more data still to come, I am confident that our efforts over the past 12 years will provide the regulator with the data it needs to make informed decisions regarding our application. And as we move on to the agenda, you'll see that we spend some time today focusing more specifically on the key questions that we'll be answering with our environmental impact assessment.

Jerry Byrd: Nor is dataset is the largest of its kind ever gathered in the deep sea and with much more data is still to come I am confident that our efforts over the past 12 years, we will provide the regulator with the data it needs to make informed decisions regarding our application.

Jerry Byrd: And as we move onto the agenda, you'll see we spend some time today focusing more specifically on the key questions that will be answering without environmental impact assessment.

Gerard Barron: The results from our investment over the past decade are now arriving almost daily, and we remain very encouraged by what we see. We're excited to share some of this with you today, along with some insight on why our team is increasingly confident that there are no showstoppers. We will then progress, also review the industry headlines, provide an update on regulatory progress, and end with...

Jerry Byrd: The results of our investment over the past decade are now arriving almost daily and we remain very encouraged by what we see.

Jerry Byrd: We are excited to share some of this with you today along with some insight on why our team is increasingly confident that there are no showstoppers.

Jerry Byrd: We will progress also review the industry headlines provide an update on regulatory progress.

Jerry Byrd: And with <unk>.

Operator: Gerard, do we still have you there? I think we may have lost you. Can you hear us okay? Oh, bear with us for one second. Please remain on the line. Your conference will resume shortly.

Jerry Byrd: Gerry do we still have either I think we may have lost you can you hear us okay.

Speaker Change: Bear with Us one second.

Speaker Change: Please remain on the line your conference will resume shortly.

Speaker Change: Okay.

Speaker Change: [music].

Craig Shesky: Sorry about that. This is CFO Craig Shesky. I'm going to continue with our slides until we're able to get our CEO and Chairman, Gerard Barron, dialed back in. But this page that we're looking at now is really focusing on what we've already achieved. And certainly, while our ride as a public company has sometimes been rocky, we're increasingly confident that we've not weathered that storm and are on a much firmer financial footing. Even amidst that volatility, it's pretty amazing to look back and see everything that our team has been able to do.

Speaker Change: Okay.

Speaker Change: Okay, sorry about that.

Speaker Change: Oh, sorry.

Speaker Change: Sorry about that that the CFO Craig Husky.

Speaker Change: Going to continue with their slide mature, we're able to get our CEO and chairman Jared Baron dial back in.

Craig Shesky: But this piece of work on it now is focusing on really what we've already achieved and certainly while the rate of the public company has sometimes been rocky we're increasingly confident that we've got weather that storm and a much firmer financial footing.

Gerard Barron: Even amidst the volatility it's pretty amazing to look back and see everything that our team has been able to do so going back to the beginning of 2021, we laid out what we wanted to achieve as a public company and they've got to work and started checking all those boxes. For example in early 2021 we put out to FCC compliant resource statements and an initial assessment, Illinois the area.

Craig Shesky: So going back to the beginning of 2021, we laid out what we wanted to achieve as a public company, and then we got to work and started checking off those boxes. For example, in early 2021, we put out two SEC-compliant resource statements and an initial assessment of the Noriega area, signed off by AMC consultants, noting an at-present value at the time of $6.8 billion. In late 2021, we completed our pyrometallurgical processing pilot, de-risking our flow sheet and advancing the future onshore operation.

Gerard Barron: Signed off by AMC consultants, noting a net present value at the time of $6 $8 billion.

Gerard Barron: In late 2021, we completed our pilot metallurgical processing pilot Derisking, a flow sheet and advance the future onshore operations.

Craig Shesky: And in 2022, we completed the first successful integrated pilot system test in the clearing Clipperton zone since the 1970s, lifting 3,000 wet tons of nodules and helping to de-risk our future operations alongside our partner, All Seas. And, as we discussed last quarter, we also finished the last of our 22 pre-production offshore campaigns, including the completion in late February of our environmental campaign, one year following our pilot collection.

And in 2022, we completed the first successful integrated pilot system tests, and acquiring clippard inbound since the 19th Sotheby's lifting 3000 wet tons of nodules and helping to Derisk, our future operations alongside our partner Mall CS and as we discussed last quarter. We also finished the last of our 22 preproduction offshore campaigns, including the completion.

Gerard Barron: In late February of our environmental campaign, one year following our pilot collection test.

Craig Shesky: So, we've also successfully shifted to a capital-light model with the support of key partners like PAMCO, Onshore, and Allseas Offshore, which can provide production assets to us for our exclusive use and then, of course, reduce pre-production CapEx requirements to a bare minimum. So, our attention is now laser focused on the main prerequisites for the milestone of launching our application for an exploitation contract of the minority heir, particularly our pre-feasibility study and our environmental impact.

Gerard Barron: So we've also successfully pivoted to a capital light model with the support of key partners like Pankow onshore and all six offshore which can provide production assets to us for our exclusive use and then of course reduce preproduction capex requirements to a bare minimum.

Gerard Barron: So our attention is now laser focused on the main prerequisite for the milestone of launching our application for an exploitation contract of the minority area.

Gerard Barron: Particularly our pre feasibility study and our environmental impact statements.

Craig Shesky: So, from first principles, why are we interested in deep sea flora nodules in the first place? Well, for starters, the abyssal plain represents an area of the planet with the least life per square meter, as measured by biomass, but also relatively low biodiversity.

Gerard Barron: Okay.

Gerard Barron: From first principles why are we interested in vitry tornadoes in the first place well for starters deepest will play represents an area of the planet with the lease life per square meter as measured by biomass, but also relatively low biodiversity.

Craig Shesky: These modules contain high grades of four metals in one ore, and sourcing battery metals from modules requires no digging or blasting and produces near zero solid waste and no tailoring. And far offshore, we don't have to display some human communities nor build the costly infrastructure necessary to access mineral resources on land. And this is why we can take a capital light approach, which is almost unheard of for research projects and resource projects.

Gerard Barron: These modules contain high grades for metals in one order and sourcing battery metals from novels requires no digging are blasting and produces near zero solid waste and no tailings and for offshore we don't have to displace some human communities don't build the costly infrastructure necessary to access mineral resources on land and this is why we can take.

Gerard Barron: Capital Light approach, which is almost unheard of for research projects resource projects.

Craig Shesky: There is also a remarkable correlation between the nodule's mineral composition and the composition of UV battery cathodes and wires. Rich in nickel, copper, cobalt, and manganese, these modules closely fit the requirements for the majority of the electric vehicle battery cells being sold today. And based on our continued conversations with major automakers, many new batteries are expected to continue to rely upon nickel-rich chemistry. And this is a very good time to remind you of our press release in early April demonstrating we can turn nodules into nickel sulfate, indicative of battery market suitability pending confirmation of those preliminary assets.

Gerard Barron: There is also a remarkable correlation between the nodules middle mineral composition and the composition of BD battery Cathodes inquiry.

Gerard Barron: Richard nickel copper cobalt manganese nodules closely fit the requirements for the majority of the electric vehicle battery capital being sold today.

Gerard Barron: Based on our continued conversations with major automakers. Many new batteries are expected to continue to rely upon nickel rich chemistries and this is a very good time to remind you of our press release in early April demonstrating we can.

Gerard Barron: Term nodules into nickel sulphate indicative of battery market suitability pending confirmation of those preliminary assays.

Craig Shesky: And yes, even though EV outlooks have softened in recent months, the metallic composition of nodules means they're also remarkably suited for use in diverse other applications across the energy, infrastructure, and defense sectors. This is where it's so advantageous to have a basket of metal products, each of which has exposure to sectors which will be geopolitically critical in the coming decade. Whether it's the generation of nuclear power, the production of steel for use in infrastructure, wind turbines, and the like, or in alloys for both commercial and defense sectors, nickel has numerous competing uses.

Gerard Barron: And yes, even though EV outlooks have softened in recent months the metallic compositional nodules mean theyre also remarkably suited for Houston diverse other applications across the energy infrastructure and defense sectors.

Gerard Barron: And this is worth so advantageous to have a basket of metal products, each of which has exposure to sectors, which will be geopolitical critical in the coming decades, whether it's the generation of nuclear power. The production of steel for use of infrastructure wind turbines and the like or in alloys for both commercial and defense sectors nickel has numerous competing uses.

Craig Shesky: Likewise, cobalt is garnering increasing interest for its use in the production of hydrogen and its use in hydrogen fuel cells, as well as other defense applications. And, of course, copper and manganese have underpinned nearly all global infrastructure in place today, and that will be built up in the future as we look to meet the needs of the industrialization of the developing world and the multi-billion global population. Already this quarter, copper prices have increased by 17%, driven in part by expectations of data center needs for powering AI, and prices for manganese this quarter, our second most important product, are up by nearly 30%.

Gerard Barron: Likewise, cobalt is garnering garnering increasing interest for its use in production of hydrogen and use of hydrogen fuel cells as well as other defense applications and of course copper manganese sort of underpin nearly all global infrastructure in place today and that will be built out in the future as we look to meet the needs of the industrialization of the developing.

Gerard Barron: World.

Gerard Barron: Multibillion global population growth.

Already this quarter copper prices have increased by 17% driven in part by expectations of datacenter needs for powering AI.

Gerard Barron: And prices for manganese this quarter, our second most important product are up by nearly 30%.

Craig Shesky: So, as we've said many times before, our resource truly is an outlier among the world's nickel projects, and not only are Nori and Tomo ranked by mining.com as the largest two undeveloped nickel projects in the world, but the nickel equivalent grade of the resource is truly remarkable. And after a very rough 2023 in the nickel market due to low cost supply from the underneath the Indonesians, excuse me, underneath the Indonesian rainforest, nickel prices have begun to stabilize and are now up 18% so far in the second quarter, with a nickel equivalent grade over 3% and four key metals in one resource.

Gerard Barron: So as we've said many times before our resource truly is an outlier among the world's nickel projects and not only our laureate tomo ranked by mining dot com and the largest two undeveloped nickel projects in the world, but the nickel equivalent grade of that resource is truly remarkable.

Gerard Barron: After a very rough 2023 in the local market due to low cost supply from the underneath the Indonesia.

Clearly underneath the Indonesian right Horst nickel prices have begun to stabilize and are now up 18% so far in the second quarter.

Gerard Barron: With the nickel equivalent grade over 3% and four key metals and one resource T M C.

Craig Shesky: Tmc is able to withstand commodity price volatility better than a typical project and provide alternatives to the portion of the nickel market controlled and funded by China and Russia. And, as noted on the previous slide, we are levered to metal markets that each have a significant application in the defense sector amidst an increasingly tenuous global order.

Gerard Barron: To withstand commodity price volatility better than a typical project and provide alternatives to the portion of the nickel market controlled and funded by China and Russia.

Gerard Barron: And as noted on the previous slide we are levered to little market that each has a significant application in the defense sector.

And increasingly tenuous global order.

Operator: At a time of heightened geopolitical competition, there's been a lot of media coverage that's been devoted to the ongoing visit by President Xi of China to France. And one aspect of President Xi's visit, which flew under the radar, was the quiet publication of a joint China-France declaration in which both parties committed themselves to remaining engaged in the development of regulations at the ISA and support for ongoing environmental impact assessments to support evidence-based decision-making.

Gerard Barron: So at a time of heightened geopolitical competition, there's a lot of media coverage. It has been devoted to the ongoing visit by president of China to France, and one aspect of President <unk> visit which flew under the radar was the quiet publication of a joint China for its declaration in which both parties committed themselves.

Gerard Barron: To remaining engaged in the development of regulations at the eye and say and support for ongoing environmental impact assessments to support evidence based decision making.

Operator: France has split flopped on its support for this industry in the past, and the softened language on display in this joint statement reflects an interesting development in its stance, perhaps suggesting that the French government is now taking seriously its obligations that are not class and that China's favorable view of this industry is rubbing off on France rather than the other way around. Gerard, I see that you're back on. If you'd like to hop back in, we're on page 14.

Gerard Barron: Francis flip flopped and support for this industry in the past.

Gerard Barron: And the soften language on display in the joint statement reflects an interesting development in that stance, perhaps suggesting that the French government is now taking seriously its obligations that are on class and that chinas favorable view of this industry is rubbing off on trends rather than the other way around.

Gerard Barron: Okay.

Speaker Change: Hi, Jared I see mature backup on if you'd like I'll take anywhere on page 14 technical issues have been resolved by apologies for that.

Gerard Barron: Technical issues have been resolved. My apologies for that.

Gerard Barron: So taking the mantle back up. There's been a steady pace of news out of China on seafloor mining over the past few years, culminating in a Washington Post piece in October regarding Chinese keen interest in deep sea floor resources while also acknowledging TMC's leadership role in this industry. Chinese urgency in this space has accelerated in the last several weeks, with not one but two contractors submitting environmental impact statements to conduct nodule collection tests in 2025.

Speaker Change: So taking the mental backup so there's been a steady pace of news out of China on see slow mining.

Speaker Change: Over the past few years, culminating in the Washington Post P. Sand October regarding Chinese keen interest in deep sea floor.

Speaker Change: Flow resources, while also acknowledging tmc's leadership role in this industry.

Speaker Change: Chinese urgency in this space has accelerated in the last several weeks with not one but two contractors submitting environmental impact statements to conduct nodule collection tests in 2025.

Gerard Barron: There is still much work ahead for Chinese contractors, and we do not expect commercial production from them before the early 2030s. But certainly, these actions from China regarding deep seafloor resources are sounding alarm bells in Washington, D.C. As reported in the Wall Street Journal in March, a bill aimed at providing support for domestic nodule collection, processing, and refining has been introduced by members of the House of Representatives, titled the Responsible Use of Seafloor Resources Act. Also in March, over 350 former political and military leaders, including Hillary Clinton, urged the U.S. Senate to ratify the Law of the Sea Treaty.

Speaker Change: There is still much work ahead for the Chinese contract is and we do not expect commercial production from them before the early 2000 and thirties.

Speaker Change: Certainly these actions from China regarding deep seafloor resources are sounding alarm bells in Washington D C.

Speaker Change: As reported in the Wall Street Journal in March a bill aimed at providing support for domestic nodule collection processing and refining has been introduced by members of the house of representatives titled the responsible use of seafloor results of that.

Speaker Change: Also in March over 350 form of political and military leaders, including Hillary Clinton urged the U S Senate to ratify the law of the Sea Treaty.

Gerard Barron: Of course, I'm sure many of you are interested in the timing of the delivery of a report by the Pentagon to the House Armed Services Committee assessing the opportunities offered by nodules to diversify critical mineral supply chains away from China. And we are quite interested in the date of this report as well. The Pentagon is continuing its detailed analysis, and while we do not have certainty on the date of the report's completion, the tone and pace of the work seem to be very encouraging.

Speaker Change: Of course I'm sure. Many of you are interested in the timing of the delivery of a report by the Pentagon to the house Armed Services Committee assessing the opportunities offered by nodules to diversified critical mineral supply chains away from China.

Speaker Change: And we are quite interested in the date of this report as well the Pentagon is continuing its detailed analysis and while we do not have certainty on the date of the reports completion, the tone and tenor of the work seems to be very encouraging.

Gerard Barron: And further, we're in active dialogue with members of Congress regarding the prioritization of feasibility work for the future refining of nodule-derived products in the United States, building on the existing base of support demonstrated in last year's National Defense Authorization Act. So we look forward to sharing more developments on this front in the coming weeks and months. Despite activist efforts to sway OEMs, we were encouraged this month to see two of the world's largest car companies and EV heavyweights, Tesla and General Motors, stand up for evidence-based decision making and recommend the rejection of proposals to support a moratorium.

Speaker Change: And further we're in active dialogue with members of Congress regarding the prioritization of feasibility work for the future refining of nodule derived products in the United States.

Speaker Change: Building on the existing base of support demonstrated in last year's National Defense Authorization Act.

Speaker Change: So we look forward to sharing more developments on this front in the coming weeks and months.

Speaker Change: Despite activist efforts to sway Oems we were encouraged to this month to see two of the world's largest car companies and EV heavyweights Tesla and general Motors standup four evidenced based decision, making and recommend the rejection of proposals to support a moratorium.

Gerard Barron: And we hold firmly to the belief that all projects, whether on land or on the deep sea floor, must be judged by merit, and we remain confident in the clear advantages offered by the nodal resource. And, of course, as Benchmark found in the recent LCA of the NORI-D project, nodules would outperform key land-based production routes for nickel, cobalt, representing 90% of global supply, and copper, 20% of global supply, in almost every impact category analyzed.

Speaker Change: And we held firmly to the belief that all projects whether on land or on the deep sea saw must be judged by merits and we remain confident in the clear advantages offered by the natural resource.

Speaker Change: And of course as benchmark found in their recent L. C. A of minority project nodules would outperform key land based production routes, so nickel cobalt, representing 90% of global supply and copper 20% of global supply in almost every impact category analyzed.

Gerard Barron: But again, this will not be a one-size-fits-all situation. The needs of the energy transition will require a mosaic approach where all options remain on the table, to be judged on their merits based on science rather than an actor's vision. I'd now like to play a short video on that environmental work and then turn the call over to Craig to take you through some details on the NORAD project.

Speaker Change: And again this will not be a one size fit all situation.

Speaker Change: The needs of the energy transition will require a mosaic approach where all options remain on the table.

Speaker Change: To be judged on their merits based on science rather than activism.

Speaker Change: I'd now like to play a short video that environmental work and then turn the call over to Craig to take you through some detail on the North <unk> project.

Gerard Barron: Developing the Norrie D nodule project without causing serious harm to the marine environment is a core objective for the metals company and a prerequisite for the International Seabed Authority to permit commercial production. This is why the Environmental Impact Statement, or EIS, is the largest and arguably most important component of the NORAD Exploitation Application to the ISA.

Speaker Change: Yeah.

Craig: Developing the nori D knowledgeable project without causing serious harm to the marine environment as our core objective for the metals company and a prerequisite for the international seabed authority to permit commercial production.

Craig: This is why the environmental impact statement for <unk> is the largest and arguably most important component of the nori D exploitation application to the assay our environmental impact statement is the outcome of a decade long exploration work program mix started with our first offshore campaign in two.

Gerard Barron: Our Environmental Impact Statement is the outcome of a decade-long exploration work program that started with our first offshore campaign in 2012. Since then, we have executed a total of 22 environmental campaigns, spending 507 days. This work program was carried out in collaboration with researchers from the world's leading marine institutions and expert industry contractors. Over 100 studies have been conducted in total, first to characterize the marine environment in the Norrie D area, also known as the environmental baseline, and then to monitor how this environment was impacted by our pilot technology to collect nodules from the seafloor and lift them to the surface.

Craig: 12. Since then we have executed the total of 22 environmental campaigns spending 507 days onsite in the northern area. This.

Craig: Work program was executed in collaboration with researchers from the world's leading marine institutions and expert industry contractors.

Over 100 studies have been conducted in total first to characterize the marine environment on the Northern D area also known as environmental baseline and then to monitor how this environment was impacted by our pilot technology to collect nodules from the seafloor and lift them to the surface this scope and.

Gerard Barron: This scope and depth of research for an environmental impact assessment for a natural resource project is unprecedented. On land, EIAs for resource projects typically focus on the largest and most vulnerable species that exist above ground, with little consideration for smaller organisms like microbes and biodiversity below ground. In the ocean, we investigate biological communities that exist throughout the water column, from the largest mammals and fish in the uppermost sunlit zone to the microscopic organisms that live in the sediment and make up the majority of living biomass on the abyssal seafloor.

Craig: Depth of research for an environmental impact assessment for our natural resource project is unprecedented on land EIA for resource projects typically focus on the largest and most vulnerable species that exist above ground with little consideration for smaller organisms like microbes and biodiversity below ground.

Craig: In the Ocean, we investigate biological communities that exists throughout the water column from the largest mammals in fish in the upper most sunlit zone to the microscopic organisms that live in the sediment and make up the majority of living biomass at the abyssal seafloor.

Gerard Barron: How do we make sense of the hundreds of terabytes of environmental data collected in the Norrie D area? Based on a public consultation with deep-sea researchers, Norrie structured the assessment around five key potential impacts, each investigated by a team of specialist researchers. For example, one plume.

Craig: How do we make sense of the hundreds of terabytes of environmental data collected in the northern <unk> area.

Craig: Based on our public consultation with deep sea researchers nor restructured the assessment around five key potential impacts each investigated by a team of specialist researchers one plumes.

Gerard Barron: 2 Noise, 3, Ecotoxicity, 4, Biodiversity, and 5, CO2. Each part of the assessment required thousands of hours of high-tech equipment deployment, data capture, and intensive analysis. All underlying environmental data is shared with public databases like the ISA's DeepData and UNESCO's OBIS database on marine biodiversity. Once completed and submitted as part of our exploitation application for the Norrie D. Nodule project, the EIS will provide the International Seabed Authority with a science-based assessment of the impacts of our proposed operations, enabling the regulator to make informed decisions.

Craig: <unk> noise.

Craig: Three ecotoxicity for biodiversity and five C O two.

Craig: [music] each part of the assessment required thousands of hours of high tech equipment deployment data capture and intensive analysis.

Craig: Underlying environmental data are shared with public databases like the assays are deep data and <unk> Nasco is Obi is database on marine biodiversity.

Craig: Once completed and submitted as part of our exploitation application for the Norrie did nodule project. The EIF will provide the international seabed authority with the science based assessment of the impacts of our proposed operations, enabling the regulator to make informed decisions.

Craig Shesky: That video is available in our slide deck posted on our website for anybody that may have had video freezing issues. Apologies for that.

Craig: And that video is available in our slide deck posted on our website for anybody in EMEA pad video freezing issues apologies for that but certainly the accumulation of baseline data over the last decade, plus does represent the most comprehensive deep sea dataset ever collected.

Craig Shesky: But certainly, the accumulation of baseline data over the last decade plus does represent the most comprehensive deep-sea data set ever collected in the Clarion-Clipperton zone, and it was collected in partnership with many of the world's leading marine research institutions and expert industry contractors. And this data set is generating a lot of excitement among researchers who have truly acknowledged the rigor and the scale of this science program. This deep data is openly shared with public databases, including the ISA's Deep Data Library of Contractor Data, as well as other open source databases like UNESCO's Ocean Biodiversity Information System, or OBIS, the world's largest catalog of marine organisms.

Craig: In the clearing quicker things up and.

Craig: And it was collected in partnership with many of the world's leading marine research institutions and expert industry contractors. In this dataset is generating a lot of excitement among researchers who have truly acknowledged the rigor and the scale of this science program.

Craig: This deep data is openly shared to public databases, including the Isa's deep data library of contractor data as well as other open source databases like UNESCO Ocean biodiversity information system or <unk>, the world's largest catalog of marine organisms.

Craig Shesky: Our environmental impact assessment has a very specific focus on assessing the potential impacts of our operations on marine biodiversity and ecosystem function. To this end, our team identified six primary concerns related to our operations for further investigation based on discussions with stakeholders. Thanks to these efforts, a far more in-depth understanding of our expected impacts is emerging, and that contradicts much of the speculation by activists and some of the media. For example, off the back of our 2022 test pilot collection, we've now seen in-field observed data showing that 92 to 98 percent of sediment mobilized at the seafloor stays within two meters of the seafloor and settles locally.

Craig: Our environmental impact assessment has a very specific focus to X assessing the potential impacts of our operations on marine biodiversity and ecosystem function to this end our team identified six primary concerns related to our operations for.

Craig: For further investigation based on discussions with stakeholders and thanks to these efforts are far more in depth understanding of our expected impacts is emerging and that contradicts much on the speculation by actavis than some of the media off the back of our 2022 test pilot collection. We've now seen the infield observed data showing that 92% to 98% of setup.

Craig: <unk> mobilized the seafloor stays within two meters of the seafloor and settles locally. This finding is critically important as it addresses speculation that settlement proves controllable tens of thousands of kilometers or could rise up four kilometers to the surface and impactful unchanged.

Craig Shesky: This finding is critically important as it addresses speculation that sediment plumes could travel tens of thousands of kilometers or could rise up four kilometers to the surface and impact climate change. As noted on last quarter's call, when we did a deep dive into the sea flow and plume data, this is a clear example of why and why, excuse me, why the speculation of opposition groups was very wrong. And infield observed data needs to take precedence over such speculation.

Craig: As noted on last quarter's call when we did a deep dive into the CFO, including data. This is a clear example of why and what's really why the speculation of opposition groups was very wrong and infield observed data leads to take precedence over such speculation.

Craig Shesky: We've also made significant strides in assessing the impacts of noise from our test mining and last week received a comprehensive report from H.R. Wallingford, which outlined how the underwater noise model they have been developing predicts that impairment to the hearing of marine mammals does not occur beyond a distance of 20 meters from the nodule collection activity under the assumption that the animals can swim away. Even without that assumption, the temporary threshold shift is predicted between 20 and 1100 meters from the mining site, and the permanent threshold shift between 10 and 65 meters.

Craig: We've also made significant strides in assessing the impacts of noise from our test mining and last week received a comprehensive report from HR, Wallingford, which outlines how the underwater noise model. They have been developing predicts that impairment the hearing of marine mammals does not occur beyond the distance of 20 meters from the module collection activity under the assumption that the.

Can swim away.

Even without that assumption the temporary threshold shift as predicted between 'twenty and 1100 meters from the mining and permanent threshold shift between 10, and 65 meters and given that wells don't dive within thousands of meters of planned module collection. We view this as very good news and content are.

Craig Shesky: And given that whales don't dive within thousands of meters of a planned module collection, we view this as very good news and are confident, or very confident, that noise concerns will not be a significant impediment. And while some claim that nodule collection would irreversibly destroy abyssal habitats, the reality is that such operations would result in the transformation of patches of seafloor from one habitat type that is ubiquitous in the deep sea to another.

Craig: We're very confident that those concerns will not be a significant impediment.

Craig: And while some claim that natural collection with irreversibly destroy a missile habitats. The reality is that such operations with a result of the transformation of patches of seafloor from one habitat type that is ubiquitous in the deep sea to another.

Craig Shesky: Even assuming that all current exploration contracts proceeded to production, only 0.18% of the global seafloor would be transformed in this way. And, as our recent offshore campaigns to assess ecosystem recovery showed, life has begun returning to those areas most directly impacted by sediment plumes within a year. And several of those primary concerns I just went through are interrelated. For example, if the seafloor pool is limited, as we know it is, it also limits the potential impact on seafloor biodiversity and the relatively low amount of carbon stored in seafloor sediment.

Craig: Even assuming that all current exploration contracts proceeded to production only 0.18% the global CFO would be transformed in this way and as our recent offshore campaigns to assess ecosystem recovery showed life has begun returning to those areas most directly impacted by settlement claims within a year.

Craig: And several of those primary concerns I just went through are interrelated for example, with the <unk> Foods Ltd. As we know it is it also limits the potential impact on <unk> biodiversity and the relatively low amount of carbon stored in people or settlement.

Craig Shesky: As noted above, we now know that 92 to 98% of sediment mobilized at the seafloor rises no more than a couple of meters and settles within hours or days. As a result, there is no known pathway for this negligible amount of carbon to make its way four kilometers up to the surface and reach the atmosphere. And our oceans do indeed store significant amounts of carbon, but less than 5% of this carbon is contained in seafloor sediments. And despite covering almost 90% of the global ocean area, abyssal plains account for a fraction of the total carbon locked away in seafloor sediments, none of which appears to be available for microbial conversion to CO2.

Craig: As noted above we now know that 90% to 98% sediment mobilize the seahawk rises no more than a couple of meters and settles within hours or days and as a result, there is no known pathway for this negligible amount of carbon to make its way four kilometers up to the surface and reached the atmosphere.

Craig: And our oceans do indeed store significant amounts of carbon but less than 5% of its carbon is contained in CCAR sentiments.

Craig: And despite covering almost 90% of the global Ocean area Abyssal planes account for a fraction of the total carbon locked away and seafloor sediments, none of which appears to be available for microbial conversion to C. O two.

Gerard Barron: As the true environmental impacts of nodule collection become clear, thanks to the wealth of emerging data, activists may continue to spread misinformation, but it's going to be the actual in-field observed data that matters to the adults in the room who will be making these key permitting decisions, which brings us to the Regulatoria. We were very encouraged by the progress at the most recent ISA meeting in Jamaica, in line with the positive commentary on this industry's inevitability from Secretary General Micah Lodge to CNBC earlier this year.

Craig: As the true environmental impacts of nodule collection become clear thanks to the wealth of emerging data Actavis may continue to spread misinformation, but it's going to be the actual infield observed data that matters to the adults in the room, who will be making these key permitting decisions, which brings us to the regulatory update.

Craig: We're very encouraged by the progress at the most recent IFA meeting in Jamaica in line with the positive commentary on this industry's inevitability from Secretary general like a large to CNBC earlier this year.

Gerard Barron: The current president of the ISA Council, Mr. Olav Mikkelbst of Norway, spoke of the substantive advancements made during the March session in his closing remarks. Quote: I'm very pleased with the progress made by the Council. We are moving forward with the development of regulations on the exploitation of deep seabed minerals with strong environmental protection at a good pace.

Craig: The current president of the IC Council, Mr. OLED nickel bust of Norway spoken to subsidence advancements made during the March session. In his closing remarks quote I am very pleased with the progress made by the Council. We are moving forward with the development of regulations on the exploitation of deep sea bed minerals with strong environmental protection at a good.

Gerard Barron: And, as noted in our last call, the consolidated regulatory text was released in late February, signaling the transition to the final phase of the mining code negotiation, and we at TMC continue to intend to launch our application for an exploitation contract over the Noriega area at some point following this year's July ISA meeting. One of the key decisions in our application is the recommendation from the Legal and Technical Commission, or LTC, and the individuals of the LTC review the application, and they're all subject matter experts.

Pes unquote.

Craig: And as noted in our last call. The consolidated regulatory text was released in late February signaling the transition to the final phase of the mining code negotiations.

Craig: And we are TMC continue to.

Craig: Turning to launch our application for an exploitation contract over the northern area at some point following this year's July meeting.

Craig: One of the key decisions on our application is the recommendation from the legal and technical Commission or LTC and the individuals of the LTC review the application. We're all subject subject matter experts if consensus on an approval recommendation for that reached the decision is made by a simple majority vote.

Gerard Barron: If consensus on an approval recommendation is not reached, the decision is made by simple majority vote, and if the LTC recommends approval, the Council reviews and, if acceptable, approves the recommendation. A two-thirds majority of the ISA Council would be needed to overturn a positive LTC recommendation.

Craig: LTC recommends approval the council reviews, and it's acceptable approves the recommendation.

Craig: Two thirds majority of the Eisai counsel would be needed to overturn a positive LTC recommendation.

Craig Shesky: And certainly, we expect plenty of back and forth and questions from the LTC, both before and following our application. But we feel very good about our ability to have the application stand on its merits during what will be a very well thought-out and thorough review process. So, on to the project. In March 2021, AMC Consultants issued a SEC Reg SK-1300 Compliant Initial Assessment of the Project Economics for the Nordic Area. The initial assessments are available in the investors section of our website, as are the resource statements for both Nori and Tom.

Craig: And certainly we expect plenty of back and forth and questions from the LTC, both before and following our application, but we feel very good about our ability to have the application stand on its merits during what will be a very well thought out and thorough review process.

Craig Shesky: The initial assessment arrived at a net present value of $6.8 billion for Nori D at the beginning of last year, excuse me, at the beginning of 2021. Running the same model solely updated for current metal prices, the net present value of Noradu would be approximately $11.5 billion, and our current market cap would represent just about 4% of that number, despite the very significant milestones already achieved on a project less than two years away from expected commercial production, and still a huge discount to tiering nickel or copper developers at this stage of pre-production.

Craig: So onto the project economics in March 2021, AMC consultants issued SEC Reg S. K 300 compliant initial assessment of the project economics from annuity area.

Craig: The initial assessments available in the investors investors section of our website as are the resource statements for both new Oriental.

The initial assessment arrived at a net present value of $6 8 billion for North <unk> at.

Craig: At the beginning of last excuse me at the beginning of 2021.

Craig: Running the same model solely updated for current metal prices. The net present value of <unk> would be approximately 11 5 billion and our current market cap would represent just about 4% of that number. Despite the very significant milestones already achieved on a project. We're left with two years away from expected commercial production.

Craig: And still a huge discount to peers Nicola copper developers at this stage of preproduction.

Craig Shesky: Now going through the financial results. In the first quarter of 2024, Tmc reported a net loss of $25.2 million, or $0.08 per share, compared to Tmc's net loss of $13.7 million, or $0.05 per share, for the same period in 2023. The net loss for the first quarter of 2024 included exploration and evaluation expenses of $18.1 million versus $7.2 million in Q1 2023, general and administrative expenses of $6.6 million, and versus $6.2 million in Q1 2023.

Craig: Now going through the financial results in the first quarter of 2020 for TNC recorded a net loss of $25 2 million or <unk> <unk> per share compared to <unk> net loss of $13 7 million or <unk> <unk> per share for the same period in 2023.

Craig: Net loss for the first quarter of 2024 included exploration and evaluation expenses of $18 1 million versus $7 2 million in Q1, 2023 general and administrative expenses of $6 $6 million and versus $6 2 million in Q1 2023.

Craig Shesky: Exploration and evaluation expenses increased by $10.9 million in the first quarter of 2024 compared to the same period in 2023. The significant increase is primarily due to an increase in mining, technological, and process development of $10.5 million, specifically tied to increased geotechnical work, which was the majority of the costs incurred this quarter for offshore Campaign 8B, which concluded in February, plus some additional expenses incurred on the transportation of nodules to PAMCO's facility in Japan and some higher personnel costs.

Craig: Exploration and evaluation expenses increased by $10 9 million in the first quarter of 2024 compared to the same period in 2023.

Craig: Significant increase is primarily due to an increase in mining technological and process development of $10 5 million, specifically tied to the increased geotechnical work, which was the majority of the costs incurred this quarter for offshore campaign, ETB, which concluded in February plus some additional expenses incurred on the transportation of nodules to pimco facility in <unk>.

Craig: And some higher personnel costs.

Craig Shesky: This is partially offset by a decrease in environmental study costs, as the cost for Campaign 8, which commenced in the fourth quarter of 2023, was completed in the first quarter of this year. General and administrative expenses increased slightly by $0.4 million in the first quarter of 2024 compared to the first quarter of 2020. The increase is due to higher amortization of share-based comp and higher consulting fees, offset by lower legal costs.

Craig: This was partially offset by decrease in environmental study costs as the cultural campaign, eight which commenced in the fourth quarter of 2023 was completed in the first quarter. This year.

Craig: General and administrative expenses increased slightly by <unk> $4 million in the first quarter of 2024 compared to the first quarter of 2023.

Craig: The increase is due to higher amortization of share based comp and higher consulting fees offset by lower legal costs.

Craig Shesky: In the first quarter of 2024, the net cash used in operations and operating activities amounted to $11.9 million, compared to $23.5 million for the first quarter of 2023. The large gap between the net loss for Q1 2024 and the net cash used in operating activities for the same period is due to share-based compensation and expenses settled with equity and some changes in working capital. The free cash flow for the first quarter of 2024 was negative $12.1 million compared to negative $23.5 million in the first quarter of 2023. Free cash flow is a non-GAAP measure, and I point you to the non-GAAP reconciliation table included in the slide deck and on our website regarding the balance sheet as of March 31st, 2024.

Craig: In the first quarter of 2024, the net cash used in operation and operating activities amounted to $11 9 million compared to $23 5 million for the first quarter of 2023, the large gap between the net loss for Q1 2024, and the net cash used in operating activities. During the same period is due to share based compensation and <unk>.

Craig: Spencer settled with equity and some changes in working capital.

Craig: Free cash flow for the first quarter of 2024 was negative $12 1 million compared to negative $23 5 million in the first quarter of 2023.

Free cash flow is a non-GAAP measure and I point, you to the non-GAAP reconciliation table, including included in the slide deck and on our website.

Craig: Regarding the balance sheet as debt.

Craig: March 31 2024.

Craig Shesky: We closed the quarter with $4.0 million in cash, and as we noted, we have sufficient liquidity on hand to continue to meet our working capital and capital expenditure requirements for at least the next 12 months from today. So I'm now going to turn it back over to our Chairman and CEO, Gerard Barron, for some closing remarks. And then from that point on, we will take some questions, both on the phone line as well as via webcast. Gerard, back over to you.

Craig: We closed the quarter with $4 8 million in cash and as we noted we have sufficient liquidity on hand to continue to meet our working capital and capital expenditure requirements for at least the next 12 months from today.

Craig: I'm now going to turn it back over to our chairman and CEO, Jerry Baron for some closing remarks, and then from that point, we will take some questions. Both on the phone lines as well as the webcast Jared back over to you.

Gerard Barron: Yeah, thank you, Craig. As I said in our earnings press release, 2024 is the year when we expect most of the activist driven speculation about the environmental impact of our emerging industry will be displaced by data and evidence. We're encouraged that an increasing number of countries and automakers are showing the courage to keep this transformational resource on the table. And in the meantime, our executive team will continue to work on securing strategic partnerships while keeping our eye firmly focused on the date of first production, which marches ever closer.

Gerard Barron: Yes, Thank you Craig.

Gerard Barron: As I said at our earnings press release.

Gerard Barron: And we expect most of the Actavis driven speculation about the environmental impacts of our emerging industry will be displaced by data and evidence. We're encouraged that an increasing increasing number of countries and automakers are showing the courage to keep this transformational resource on the table.

And in the meantime, our executive team will continue to work the work of the securing strategic partnerships, while keeping our eyes firmly focused on the data first production, which marches ever closer.

Gerard Barron: I would like to extend my sincerest thanks to my Tmc team, including our partners and contractors, and, of course, to our sponsoring states. And thanks to everyone who tuned in for your interest and attention. And with that, we'd like to turn it back to the operator for some Q&A. Thank you. As a reminder, to ask a question, please press STAR.

Speaker Change: I would like to extend my sincerest, thanks to my TNC team, including our partners and contractors and of course to our sponsor and states and thanks to everyone, who tuned in for your interest and attention and with that we'd like to turn it back to the operator for some Q&A.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A list.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again please.

Please standby, while we compile the Q&A roster.

Operator: As those questions are being compiled, we can take a question from Eric Goldstein on the webcast. I'll put this to you first, Gerard, and I can weigh in as well.

Speaker Change: As those questions are being compiled we can take a question probably her goldstein on the webcast.

Her Goldstein: I'll put this to you first year, then I can weigh in as well how do we expect the IAC meetings to go this year specifically.

Operator: How do we expect the ISA meetings to go this year? Specifically, what do we expect at the July meeting? And the $40,000 question: when are all the rules and regulations going to be passed? Joe. Look, we are expecting.

Her Goldstein: Specifically, what do we expect in the July meeting and.

Her Goldstein: 40000. Another question when are all the rules and regs going to be passed.

Gerard Barron: Sure. Look, we are expecting solid progress when the ISA meets again. Of course, it'll be the Legal and Technical Commission, the Council, and the Assembly meeting. And so, what we are looking for is progress. And, you know, of course, we had the legal right to lodge our application. But we notified the market that we would not lodge an application until after the July session this year and before the end of 2024. And so, we know that there is an enormous amount of work happening intercessionally.

Speaker Change: Sure look we are expecting solid progress when when the ISI meets again.

Speaker Change: So it'll be the legal and technical Commission the council and the Assembly meeting.

Speaker Change: And so what we are looking for is progress and you know.

Of course, we had the legal right to la gel application, we notified the market that we would not large and application until after the July session. This year and before the end of 2024.

Speaker Change: And so.

Speaker Change: We know that there is a.

Speaker Change: And out of work happening intercession, Lee and I think what we are encouraged by is that the regulations now that there is a consolidated text that was debated back in the March session.

Gerard Barron: And I think what we are encouraged by is that the regulations, now that there is a consolidated text that was debated back in the March session, are drawing to what we think is a robust final version.

Speaker Change: Is drawing to a what we think is a a robust final version.

Operator: Thank you. We do have a question over the phone line. Our first question from the phone comes from Malcolm MacDonald with BofA. Your line is now open.

Speaker Change: Thank you we do have a question over the phone line.

Speaker Change: Our first question from the phone comes from.

Speaker Change: Okay.

Speaker Change: Malcolm Macdonald with Bofa. Your line is now open.

Malcolm Macdonald: Hey, guys. Do you know who is pushing this moratorium on Tesla and GM? Is it an NGO? That's number one.

Malcolm Macdonald: Hey, guys.

Malcolm Macdonald: Do you know who is pushing this moratorium to Tesla in GM and NGO.

Malcolm Macdonald: Number two, if you could comment on Biden's Chinese EV tariffs today and Trump's comments, subsequent comments, and with regard to how that affects the Inflation Reduction Act, specifically how it affects Tesla and GM. And then lastly, what is the timeline for the Chinese entities that you mentioned earlier in the call that are expected to conduct tests next year versus your timeline? And if the US, you know, if the United States wanted to get in the game independently, how late are they?

Malcolm Macdonald: Number one.

Malcolm Macdonald: Number two if you could comment on by these Chinese EV tariffs today in Trump's comment subsequent comments.

Speaker Change: And with regards to how that affects the inflation reduction act specifically, how it reflects to Tesla in GM.

Speaker Change: And then lastly.

Speaker Change: And what is the timeline for the Chinese entities that are.

Speaker Change: You mentioned earlier on the call that are expected to conduct tests next year versus your timeline.

Speaker Change: And after the U S.

Speaker Change: The United States wanted to get in the game independently how late are they.

Speaker Change: Okay.

Craig Shesky: Yeah, look, specifically starting with the shareholder proposals for GM and Tesla. The one for Tesla specifically calls it as you so. But look, for both GM and Tesla, we don't want to get into who's behind each of them. But yes, it's NGO driven.

Speaker Change: Yeah look so specifically starting with the shareholder proposals for GM and Tesla.

Speaker Change: The one for telco, specifically called as you sow.

Speaker Change: But look for both of them and tell them, we don't want to get into who is behind each of them, but yes, it's NGO driven.

Craig Shesky: We also view it as, you know, very anti-science to effectively say, as all of this new data has been coming through, as Gerard said, almost on a daily basis. Some people are now recognizing that it's not confirming their previously-held belief, almost the definition of confirmation bias. So because of that, you're now seeing the push for something like this to be taken off the table at a time when many other automakers are being forced to, you know, invest elsewhere in reinforced nickel, which puts them in difficult positions.

Speaker Change: We also view it as.

Very anti science to effectively say as all of this new data has been coming through as Jared said almost on a daily basis.

Speaker Change: Some people are now recognizing that its not confirming their previously held belief almost by definition of confirmation bias. So because of that you are now seeing a push for something like this to be taken off the table at a time when many other automakers are being forced to invest elsewhere and <unk>.

Speaker Change: And for cynical.

Craig Shesky: So, you know, we think the science will continue to speak for itself. And, frankly, we're very heartened by the fact that the boards of both Tesla and GM recommended voting no against such proposals that would take clearly viable options off the table.

Speaker Change: Which puts them in a difficult position. So we think the science will continue to speak for itself and frankly, we're very heartened by the fact that the boards of both Tesla and GM recommended voting against such proposals that we take clearly viable options off the table.

Gerard Barron: Yeah, and on the China front, we Of course, they are planning to lodge an application to be able to do a collector trial next year. And so that will take a year for the regulator to, you know, decide on that.

Speaker Change: Okay.

Speaker Change: Yeah and on the China front we.

Speaker Change: Of course, they are planning to launch.

Speaker Change: That application to be able to do a collector trial next year.

Speaker Change: And so that will take.

Speaker Change: A year so the regulator to.

Speaker Change: You had a pine on that.

Gerard Barron: And if I reflect on our own application, it was a big, heavy lift. It required a lot of work. And that means they need to receive the approval to go and do that, and then they need to go and do it. And so I think what the Chinese contractors have said quite openly is that they expect to be in production on the other side of this decade. And so, you know, there's a lot of work.

Speaker Change: And if I, if I reflect on our own application. It was a big heavy lift it's required a lot of work.

Speaker Change: And that means they need to receive the approval to go and do that and then they need to go and do it and so I think what the Chinese contractors have said quite openly is that they expect to be in production on.

Speaker Change: On the other side of this decade.

Speaker Change: So.

Gerard Barron: I mean, we were very fortunate to have a collector trial that ran so successfully in 2022 involving our first production vessel, the Hidden Gem. As you know, we're getting that vessel ready for first production, and we remain on track for that in 2026. So there is no doubt that we hold a competitive edge over all of the other contractors, including China. And that's a great opportunity for Western economies like the United States.

Speaker Change: There's a there's a lot of lot of work I mean, we were very fortunate to have a.

Speaker Change: Our collective trial that ran so successfully in 2022 involved our first production vessel the hidden gem and as you know where we're getting that that vessel ready for first production.

Speaker Change: We remain on track for that in 2026. So there is no doubt that we hold a competitive edge over all of the other contractors, including China.

Speaker Change: And that's a great opportunity for western economies like the United States now.

Gerard Barron: Tariffs to protect the automakers. Look, I don't really want to comment on that too much other than the Inflation Reduction Act was really intended to bring jobs and industry and secure supply lines and raw materials for American industry. And I think that there have been some uses of those funds, which potentially have simply driven demand for electric vehicles. But have they really driven jobs in the United States? And so, what I think is there's a great opportunity.

Speaker Change: Tariffs to protect the automakers.

Speaker Change: Automakers look I I don't really want to comment on that too much other than the inflation reduction act was really it.

Speaker Change: <unk> tended to bring jobs and industry and secure supply lines and raw materials for American industry, and I think that.

Speaker Change: There have been some uses of those funds, which potentially have simply.

Speaker Change: I guess driven demand for electric vehicles, but have they really driven jobs in the United States and so what I think is there's a great opportunity and whether it's.

Gerard Barron: Whether it's either of the names you mentioned as the future president of the United States, I think there will be more focus on how you build jobs and how you help those economies build independence. And you can't do that without raw materials, without battery materials.

Speaker Change: Either of the names you mentioned is the future president of the United States.

Speaker Change: I think there will be more focus on how do you build jobs and how do you help those economies.

Build independence, and you can't do that without raw materials without battery materials and so.

Gerard Barron: And so, you know, we're encouraged, as I said earlier, by the messaging that we're hearing out of DC. We continue to talk to relevant parties there. We continue to answer questions as they are asked, and based on the conversations that we're lucky enough to be part of, we're encouraged. And so, you know, the Inflation Reduction Act will hopefully be a very good thing for materials that are derived from polymetallic nodules, particularly those that Tmc has their hands on.

Speaker Change: We're encouraged as I said earlier in the messaging that we're hearing out of D. C.

We continue to.

Speaker Change: Talk to relevant parties. There we continue to answer questions as they asked and based on the conversations that we're lucky enough to be part of we're encouraged and so.

Speaker Change: The inflation reduction act will hopefully be a very good thing to materials that are derived from poly metallic nodules, particularly those that TMC.

Craig Shesky: Yeah, I might also comment on that, Malc, as we noted up front really on slide 11, which I'll pull up now if folks are able to see it, you really can't get away from the fact that nodules are composed in such a manner that lines up not just with EVs, which is the focus of that question, but also so many other applications that are experiencing demand tailwinds. What you can't really change, of course, is some of the supply realities.

Speaker Change: Have their hands on.

Speaker Change: Yeah, I might also comment on that milk that you know as we noted.

Speaker Change: Upfront really on slide 11, which will pull up now as folks are able to see it.

You really can't get away from the fact, the nodules are composed and such amount of that behind them not just with you know.

Speaker Change: Evs, which is the focus of that question, but also saw many other applications that are experiencing demand tailwind.

Speaker Change: Can't really change of course as some of the supply realities.

Craig Shesky: And even taking nickel, for example, you know, nickel grades have declined over time. Copper grades have declined over time, too. It is becoming more and more difficult to find new high-quality, high-grade deposits of some of these metals on land. The change in that occurs sometimes when you have a large new source like what you saw from, you know, the Indonesian nickel supply over the last decade. But even Indonesia knows that, you know, at this point, let's say next decade, they're going to be running quite low on some of the higher-grade reserves.

Speaker Change: Even taking a nickel for example, nickel grades have declined over time copper grades have declined over time.

Speaker Change: Comes more and more difficult to find new high quality high grade deposits of some of these metals on land.

Speaker Change: The change of that of course, sometimes when you have a large new source like what you saw from Indonesian nickel supply over the last decade, but even Indonesia, but.

Speaker Change: At this point lets say next decade, they're going to be running quite low of some of the higher grade reserves and.

Craig Shesky: And, you know, there are going to be opportunities for nodules, given how much, you know, we've seen smelter capacity get built out. So the reality is, certainly on the demand side, the Inflation Reduction Act, tariffs on EVs, perhaps some comments from Trump noting things that he would do with the Inflation Reduction Act, it's all quite marginal when it comes to the global demand for these metal And having this basket of very attractive commodities allows us to withstand fluctuations in a way that many land-based operators just aren't able to do.

Speaker Change: They are going to be opportunities for nodules, but given how much we've seen smelter capacity to get built out. So the reality is certainly on the demand side would be inflation reduction of enacting of tariffs on evs.

Speaker Change: Perhaps some comments from Trump loading.

Speaker Change: Things that he would do with the inflation reduction act, that's all quite marginal when it comes to the global demand for these metals and having this basket of very attractive commodities allows us to withstand fluctuations in a way that many land based operators just aren't able to do.

Malcolm Macdonald: Thanks, so basically, to square the circle here, the US is behind China in trying to get ahead, but you guys are in first place. And in order for the US to compete with China, they're going to have to partner with someone like yourself.

Speaker Change: So so basically to square the circle here.

Speaker Change: S is behind China trying to get ahead, but you guys are in the first place.

Speaker Change: In order for the U S.

Speaker Change: Compete with China, they're going to have to partner with someone.

Gerard Barron: Well, that is their opportunity, that's for sure.

Speaker Change: Yourself.

Speaker Change: Well that is there opportunity that's for sure.

Speaker Change: Well.

Speaker Change: Thanks, guys.

Operator: Once again, to ask a question over the phone line, please press star 11 on your telephone and wait for your name to be announced. Once again, to ask a question over the phone line, please press star 11. One moment for our next question. Our next question comes from Frank Jones with Norbury Partners. Your line is now open.

Speaker Change: Thank you.

Speaker Change: Once again to ask a question over the phone lines. Please please press star one one on your telephone and wait for your name to be announced again to ask a question over the phone lines. Please press star one one.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Frank Jones with Norbury Partners. Your line is now open.

Operator: Hey guys, great update, as usual.

Frank Jones: Hey, guys.

Frank Jones: Great update as usual.

Frank Jones: She made her first one pretty quick I think I think the answer but.

Frank Jones: Just confirming on a liquidity front you mentioned were good for 12 months median capital needs.

Frank Jones: To make sure that inclusive of application demands and I guess in that I should read that major exploration and evaluation expenses are behind US and then the second one I ask this every time, but I know by the next time, we have one of these calls that profitability, where it will probably be out so any guidance on timing for that and with that the final agree.

Frank Jones: Two questions for me. First one, pretty quick, I think I know the answer, but just confirming on a liquidity front that you mentioned we're good for 12 months, meeting capital needs, and just want to make sure that's inclusive of application demands. And I guess in that, I should read that major exploration and evaluation expenses are behind us. And then the second one, I ask this every time, but I know by the next time we have one of these calls, the pre-feasibility work will probably be out. So any guidance on timing for that, and with that, the final agreements with PAMCO and all Cs, and what those splits look like?

Frank Jones: <unk> with Pimco and all season, what those explicitly.

Craig Shesky: Yeah, sure. Starting with those questions, I mean, let's start with the last one on the pre-feasibility side.

Speaker Change: Yes, sure starting with those questions.

Craig Shesky: Yeah, we're pushing very hard on that. We're very encouraged. You know, our teams have been to Japan and the Netherlands, respectively, within the last month.

Speaker Change: Let's start with the last one on the pre feasibility side, yes.

Speaker Change: Yes, we're pushing very hard on that and we're very encouraged our teams have been in Japan, and the Netherlands, respectively within the last month.

Craig Shesky: So there's a lot of on-the-ground work and cooperation with You know, it just shows how committed not only our team is but the teams of our partners. So, yes, we are not changing any update on timely guidance on that front. You did note in terms of, you know, us having the liquidity necessary to meet our working capital and capital expenditure requirements for at least the next 12 months. That's an analysis done on committed costs.

Speaker Change: So theres a lot of on the ground work in cooperation with <unk>.

Speaker Change: Just shows how committed not only our chinas, but the teams are our partners.

Speaker Change: So yes, we are not changing any update on timing or guidance on that.

Speaker Change: You didn't note in terms of.

Speaker Change: US having the liquidity necessary to meet our working capital and capital expenditure requirements for at least in the next 12 months.

Speaker Change: That's an analysis done on committed costs, but what I would draw you to is the typical.

Craig Shesky: But what I would draw you to is the typical guidance that we provide, which we're happy to reiterate that, you know, what we need to launch the application at some point following the July 2024 session of the ISA is an incremental 35 to 45 million dollars. You can then reduce that dollar for dollar against what we drew upon our credit facility, 2.9 million. So, that range that we came out with really two quarters ago, actually more than two quarters ago, we've continued to reiterate because the spending necessary to launch that application has been under tight controls by our team.

Speaker Change: The guidance that we provide in which we're happy to reiterate that what we need to launch the application at some point following the July 2024 session of the ISI as an incremental $35 million to $45 million. You can then reduce that dollar for dollar for what we drew upon our credit facility $2 9 million. So that range that we came up.

Speaker Change: With really two quarters ago.

Speaker Change: Actually more than two quarters ago, we've continued to reiterate because spending necessary to launch that application has been under tight control by our team.

Craig Shesky: So, what I would say is keep that sort of range in mind, and it's a range that is less than the total liquidity options that we have available to us, even though that may not be our ultimate choice on how we fund that next stage of getting into production.

Speaker Change: So what I would say is keep that sort of range in mind and it's a range that is less than the total liquidity options that we have available to us even though that may not be our ultimate choice on how we fund that next stage getting into production.

Craig Shesky: Got it. Super helpful. Thank you both.

Speaker Change: Got it Super helpful. Thank.

Speaker Change: Thank you.

Operator: Thank you. I'm currently showing no further questions over the phone line at this time. I would now like to turn it back to Craig Shesky. Uh, we got a couple more actually.

Speaker Change: Thank you.

Speaker Change: I'm currently showing no further questions over the phone line at this time I would now like to turn it back to Craig Cheskey.

Craig Shesky: There is a question from Rich Woznicki: Does the company need the U.S. Senate to ratify the UN Convention to succeed? The answer is no.

Craig Shesky: We got a couple more actually. I'm happy to take a few in during the webcast.

Craig Shesky: We got a couple more actually I'm happy to take a few of the webcast.

Speaker Change: There is a question.

Speaker Change: A question for rich Wozniacki does the company need the U S Senate to ratify the convention to succeed.

Craig Shesky: It's really, to us, a sign of the increased commitment from the U.S. to this space but also the recognition that the U.S. truly should have a seat at the table in how this very important industry is going to be regulated. And what we laid out in today's update was the actions of a lot of countries. We showed on the slide, in addition to the France-China joint statement, the new deep-sea mining legislation from Belgium.

Rich Wozniacki: The answer is no.

Craig Shesky: It's really to US a sign of the increased commitment from the U S to this space, but also the recognition that the U S truly should have a seat at the table and how this very important industry is going to be regulated and what we laid out in today's update was the actions of a lot of countries. We showed on the slide in addition to the France, China Joy.

Craig Shesky: That builds upon the deep-sea exploration news coming out of Norway earlier this year and the impending environmental work, potentially deep-sea exploitation, in Norwegian territorial waters. There are just a lot of very large, populous, credible industrial countries, and that includes India and China, Japan, and now the United States, that are very interested in this industry. And frankly, if the U.S. chose not to ratify the UN Convention and not take their full seat at the table at the ISA, it just continues to underscore that the only real way they could get access to this resource would be through a contractor like TNC.

Craig Shesky: <unk>.

Craig Shesky: Lew deep sea mining legislation can Belgium that builds upon the deep sea exploration news coming out of Norway earlier. This year, and then pending environmental work potentially deeply exploitation and Norwegian territorial waters. There just a lot of very large pockets credible industrial countries and that includes India.

Craig Shesky: Trying to Japan, and now in the United States that are very interested in this industry and frankly, if the U S chose not to ratify the UN convention and not take their full seat at the table with the ISC interest continues to underscore that the only real way. They can get access to this resource will be through a contractor like TNC.

Craig Shesky: Yeah.

Craig Shesky: And I think we have time for one more question. There is a question coming in from an anonymous investor. Can we talk, Gerard, about where you're spending your time in terms of strategic partnerships, any updates on those efforts on the strategic front, and where our time is going to be spent in the coming months.

Speaker Change: And I think we have time for one more question.

There is a.

Speaker Change: A question coming in from an allowance investor.

Speaker Change: Can we.

Speaker Change: Talk generally about where you're spending your time in terms of strategic partnerships any update on those efforts.

Speaker Change: On the strategic fronts.

Speaker Change: Our time is going to be spent in the coming months.

Speaker Change: Well.

Gerard Barron: Well, I could share my diary, of course; that would be quite revealing, but look, in the last six months, in particular, we've spent a lot of time in Asia, and mainly in Indonesia. And we're fascinated with Indonesia, of course, because it's... It's where all of the growth in nickel material is coming from. Unfortunately, it's coming from nickel laterites, but... They have built a very strong processing industry to be able to process those materials. And as we know, you can process our polymetallic nodules with that same infrastructure.

Speaker Change: Hi.

Speaker Change: If I could share my diary of course that would be quite revealing that look in the last.

Speaker Change: Six months in particular, we've spent a lot of time.

Speaker Change: In Asia, and mainly in Indonesia and.

Speaker Change: We're fascinated with Indonesia of course, because it's.

Speaker Change: It's where all of the growth in nickel.

Speaker Change: Material is coming from unfortunately, it's coming from nickel laterites, but.

Speaker Change: They have built a very strong processing industry to be able to process those materials and as we know you can process, a poly metallic nodules and with that same infrastructure and so.

Gerard Barron: And so, you know, it's a very interesting opportunity for us. And there are some very strong corporations there who are heavily involved in nickel. The Indonesian government is trying to build out a battery material supply chain even more extensively than they have now by building, Battery refining, and we saw companies like BYD announcing that they're actually going to build cars there.

Speaker Change: You know, it's a very interesting opportunity for us and there are some very strong.

Speaker Change: Corporations, there who are heavily involved in nickel the Indonesian government is trying to build out a battery materials supply chain.

Speaker Change: Even more extensively than they have now by building.

Speaker Change: Battery.

Speaker Change: Refining we saw companies like BYD announcing that they're actually going to build cars there and so there's no doubt things are moving in that country and so.

Gerard Barron: And so there's no doubt things are moving in that country. And so, but, you know, Asia is certainly a very friendly place for TMC right now, and we see tremendous opportunity, of course, by sending our nodules to places like Indonesia. We do believe that we can slow down the expansion of some of that nickel laterite resource development and replace rainforest nickel with nodules, and that's going to be a good thing for the planet.

Speaker Change: But Asia is certainly a very.

Speaker Change: A very friendly place for TNC right now.

Speaker Change: And.

Speaker Change: And we see tremendous opportunity of course by Sandy or nodules to places like Indonesia, We do believe that we can slow down the expansion of some of that nickel laterite resource development.

Speaker Change: And replace rainforest, Nicole with nodules, and that's going to be a good thing for the planet and it seems that.

Gerard Barron: And it seems that that message is being well received in that country. And so, and of course, by being able to utilize that existing infrastructure means that we can toll our nodules through some of those processing plants, which means that we don't have to go and spend money to build processing facilities. My team and I were recently up in Japan.

Speaker Change: That message is being well received in that country, and so and of course by being able to utilize that existing infrastructure means that we can tell our nodules through some of those processing plants, which means that we don't have to go and spend money.

Speaker Change: You know to build processing.

Speaker Change: And I were recently up in Japan.

Gerard Barron: We've just had 2,000 tons of nodules arrive with our partner, PAMCO. And that's a company that's been processing nickel ores since the 1960s. They're an amazingly competent partner for us, and perfect to get us started.

Speaker Change: Just had 2000 tons of nodules arrive with our partner <unk>.

Speaker Change: And you know.

Speaker Change: That's a company that's been processing nickels since the 19 sixties that they are an amazingly confident partner for us.

Speaker Change: Perfect to get Us started.

Gerard Barron: And so there are many opportunities around that region. Getting things done in Europe is, of course, harder. And we do remain hopeful that in North America, our efforts in Washington, DC will be recognized. But I don't think we'll ever build a pyrometallurgical plant in the USA. But I do believe that we can send our intermediate product to the USA for further refining into battery materials. And so we are continuing to make efforts in that area.

Speaker Change: And so there are many opportunities around that region.

Speaker Change: Getting things done in Europe is harder of course and we.

Speaker Change: We do remain hopeful that in North America, our efforts in D C will be recognized.

Speaker Change: I don't think we'll ever build a pyro metallurgical plant in the USA.

Speaker Change: But I do believe that we can send out intermediate product into the USA for further refining into battery materials and so we we are continuing to make efforts in that area.

Craig Shesky: Yep, and that makes sense too. And just adding a little color on the pyrometallurgical side, that focus on, you know, the refining of intermediate products, potentially in the United States, is firmly in line with the DC strategy we've been deploying this year. And, you know, as a lot of focus is on the National Defense Authorization Acts coming out this year, there continues to be a lot of support for feasibility work on something like that. And, frankly, it makes perfect sense so that the US avoids falling further behind.

Speaker Change: Yes, and that makes sense to it than just adding a little color to you on the pyro metallurgical side that focus on the refining of intermediate products potentially in the United States is firmly in line with the D. C strategy, we've been deploying this year.

Speaker Change: As a lot of focus is on National Defense authorization Act coming out this year.

Speaker Change: There continues to be a lot of support for feasibility work on.

Speaker Change: Something like that and frankly, it makes perfect sense.

Craig Shesky: So that's all the time that we have today, but we appreciate all of you taking the time to join us. And we're certainly looking forward to sharing more progress on the next quarterly call. And for those of you who are already shareholders, we're looking forward to speaking to you at our annual general meeting. So thank you very much. I'm going to turn it back over to the operator.

Speaker Change: So that the U S avoids falling further behind.

Speaker Change: So that's all the time that we have today, but we appreciate all of you taking the time to join US and we're certainly looking forward to sharing more progress on the next quarterly call and for those of you who are already shareholders.

Speaker Change: We're looking forward to speaking to you at our annual General meeting.

Speaker Change: So thank you very much and I'll turn it back over to the operator.

Operator: Thank you for participating; you may now disconnect.

Speaker Change: Thank you.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].