Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• TMC The Metals Co Inc (NASDAQ:TMC) announced a registered direct offering led by its largest non-affiliate institutional shareholder, enhancing financial resilience.
• The company plans to submit Nori's application for an exploitation contract on June 27, 2025, which is a significant step towards unlocking value.
• TMC is developing a new services business for seafloor resource development, leveraging its expertise in exploration and environmental impact assessments.
• The company has completed a prefeasibility study for a capital-light strategy, reducing the need for preproduction CapEx.
• TMC has secured over $60 million in credit facility capacity from its largest shareholders, ensuring financial stability.

Negative Points

• TMC reported a net loss of approximately $20.5 million in Q3 2024, an increase from the $12.5 million loss in the same period of 2023.
• Exploration and evaluation expenses rose to $11.8 million in Q3 2024 from $7.9 million in Q3 2023, primarily due to increased share-based compensation.
• General and administrative expenses increased to $8.2 million in Q3 2024 from $4.6 million in Q3 2023, driven by higher personnel and legal costs.
• The company's market cap is below the total capital raised, reflecting investor concerns over regulatory uncertainties and low cash balances.
• TMC's share price has significantly decreased, from raising money at $10 per share before going public to around $1 currently.

Q & A Highlights

• Warning! GuruFocus has detected 1 Warning Sign with TMC.

Q: Can you provide more details on the potential of the new services business and its revenue model? A: Jared Baron, CEO: We are excited about leveraging our expertise in offshore campaigns and resource definition. Other contractors currently spend about $100 million annually, and this could increase tenfold once the mining code is in place. Our services business will capitalize on this without requiring significant investment, as it will utilize our existing talent and expertise.

Q: Will the services business focus solely on the Clarion Clipperton Zone, or will it extend to other areas? A: Jared Baron, CEO: While our primary focus is the CCZ, our services can extend to territorial waters and other regions. We have already engaged in discussions regarding these opportunities.

Q: How advanced are discussions with potential contractors for the services business? A: Jared Baron, CEO: Discussions are quite advanced, with RFPS already out in the market. We hope to have contracts secured by our next conference call.

Q: Can you provide more information on the $9 million government funding for domestic refining capacity? A: Craig Ssy, CFO: We have identified potential sites and have been planning this for a long time. The application process takes time, but we expect to know more in the coming quarters. This funding is more about gaining explicit government support, which can encourage further investment.

Q: Can you assure investors that the application date for the exploitation contract will not be delayed beyond June 2025? A: Craig Ssy, CFO: We are committed to the June 2025 date, which aligns with our strategic timeline and ensures clarity from the ISA on the application review process. There is every incentive to meet this deadline.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.