TMC the metals company Inc. (NASDAQ:TMC) Q4 2021 Earnings Conference Call March 24, 2022 4:30 PM ET Company Participants Craig Shesky - Chief Financial Officer Gerry Baron - Chairman & Chief Executive Officer Vikram Handa - Managing Director, Epsilon Carbon Conference Call Participants Jake Sekelsky - Alliance Global Partners David Snow - Energy Equities John Katsingris - Wedbush Securities Malcolm MacDonald - Bank of America Operator Good afternoon, everyone and thank you for participating in the Metals C ...

Value Proposition - TMC is developing the world's largest estimated source of battery metals, potentially electrifying 280 million EVs [10] - Project One is expected to become the 2nd lowest cost nickel producer [10] - The first project, NORI-D, has a net present value of $22 billion at current metal prices, representing 22% of the company's estimated resource [11, 12] - TMC's portfolio has 16 million tonnes of total estimated resources [19] Strategic Update - Allseas intends to upgrade the pilot collection system into a commercial nodule collection system ("Project Zero System") [25] - The estimated cost of getting into production is expected to be reduced from US$163 million to less than US$110 million, to be shared equally by Allseas and TMC's subsidiary NORI [25] - Epsilon Carbon intends to deliver a pre-feasibility report ("PFR") for a nodule processing plant in India powered by renewables ("Project Zero Plant") [25] - Expected production includes 1.3 million tonnes per annum of wet nodules offshore and 30,000 tonnes of NiCuCo matte and 750,000 tonnes of Mn silicate onshore [23] Market & Resources - Nickel prices have increased by 144% since the beginning of Q4 2021 [42] - The NORI exploration area is 74,830 km2 with an estimated nodule tonnage of 4,866 million tonnes (wet) [62] - The TOML exploration area is 74,713 km2 with an estimated nodule tonnage of 768 million tonnes (wet) [62] Financials - The company had a net loss of $19.8 million in Q4 2021 [116] - The company's total cash was $84.9 million at December 31, 2021 [117]

[Part I - Financial Information](index=6&type=section&id=Part%20I%20Financial%20Information) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for TMC the metals company Inc., reflecting its pre-revenue stage, increased cash, and restatements Condensed Consolidated Balance Sheet Highlights (Unaudited) | Metric | Sep 30, 2021 ($ thousands) | Dec 31, 2020 ($ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | 112,640 | 10,096 | | Total Current Assets | 112,779 | 10,225 | | Exploration contracts | 43,150 | 43,150 | | **Total Assets** | **157,316** | **54,685** | | **Liabilities & Equity** | | | | Accounts payable and accrued liabilities | 28,343 | 4,316 | | Warrant liability | 11,623 | — | | **Total Liabilities** | **50,641** | **18,431** | | **Total Equity** | **106,675** | **36,254** | Condensed Consolidated Statements of Loss (Unaudited) | Metric | Nine months ended Sep 30, 2021 ($ thousands) | Nine months ended Sep 30, 2020 ($ thousands) | | :--- | :--- | :--- | | Exploration expenses | 80,181 | 35,744 | | General and administrative expenses | 41,138 | 3,818 | | **Operating loss** | **121,319** | **39,562** | | **Loss and comprehensive loss** | **121,501** | **39,546** | | Loss per share – Basic and diluted | $0.61 | $0.23 | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Metric | Nine months ended Sep 30, 2021 ($ thousands) | Nine months ended Sep 30, 2020 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (28,339) | (21,350) | | Net cash used in investing activities | (3,842) | (607) | | Net cash provided by financing activities | 134,701 | 20,348 | | **Net change in cash and cash equivalents** | **102,520** | **(1,609)** | - The company has restated its financial statements for the periods ended March 31, 2021, and June 30, 2021, due to a **$2.7 million** understatement of exploration expenses and accounts payable, and incorrect accounting for stock-based compensation expenses[27](index=27&type=chunk)[30](index=30&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's pre-revenue deep-sea minerals exploration, the Business Combination, increased operating losses, and cash sufficiency - The company is a deep-sea minerals exploration firm focused on collecting and processing polymetallic nodules from the CCZ, which contain high grades of nickel, copper, cobalt, and manganese[145](index=145&type=chunk)[146](index=146&type=chunk) - On September 9, 2021, the company completed its Business Combination with SOAC, receiving gross proceeds of approximately **$137.6 million**[157](index=157&type=chunk)[158](index=158&type=chunk) Comparison of Operating Expenses (Three Months Ended Sep 30) | Expense Category | 2021 ($ thousands) | 2020 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Exploration expenses | 23,848 | 4,556 | 423% | | General & Administrative | 13,334 | 2,192 | 508% | - The increase in exploration expenses for Q3 2021 was primarily driven by **$12.9 million** accrued for milestone payments to Allseas for the Pilot Mining Test System (PMTS), **$2.8 million** in higher offshore campaign costs, and a **$2.8 million** increase in stock-based compensation[209](index=209&type=chunk) - The increase in G&A expenses for Q3 2021 was mainly due to a **$5.3 million** rise in stock-based compensation, **$2.4 million** in professional fees related to the Business Combination and public company costs, and **$2.2 million** in marketing costs[210](index=210&type=chunk) - Management believes that the company's cash on hand of **$112.6 million** as of September 30, 2021, will be sufficient to meet working capital and capital expenditure requirements until at least the third quarter of 2023[220](index=220&type=chunk)[222](index=222&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=74&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks including interest rate, foreign currency, and commodity price fluctuations, with future revenue dependent on metal prices - The company's primary market risks include interest rates, foreign currency, and commodity prices[251](index=251&type=chunk) - Foreign currency risk arises from transactions in Canadian dollars, Australian dollars, and the Great British Pound, minimized by holding most cash in U.S. dollars[255](index=255&type=chunk) - Future revenue will be dependent on the sale of products containing nickel, copper, manganese, and cobalt, where a significant price decrease could materially impact the business[257](index=257&type=chunk) [Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to two material weaknesses in financial reporting, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of September 30, 2021[259](index=259&type=chunk) - Two material weaknesses were identified in internal control over financial reporting, related to deficiencies in financial close and reporting controls and the accounting for warrants issued by the SPAC[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk) - A remediation plan is underway, including appointing a new CFO, hiring experienced accounting staff, bringing the accounting function in-house, and implementing more robust controls and processes[265](index=265&type=chunk)[266](index=266&type=chunk) [Part II - Other Information](index=80&type=section&id=Part%20II%20Other%20Information) [Legal Proceedings](index=80&type=section&id=Item%201.%20Legal%20Proceedings) Discloses a shareholder class action lawsuit filed on October 28, 2021, alleging false or misleading statements and Exchange Act violations - On October 28, 2021, a shareholder filed a class action lawsuit against the company and executives Gerard Barron and Scott Leonard[272](index=272&type=chunk) - The lawsuit alleges violations of Section 10(b) and 20(a) of the Exchange Act, citing false or misleading statements about the company's operations and prospects between March 4, 2021, and October 5, 2021[272](index=272&type=chunk) - The company denies the allegations and plans to vigorously defend against the lawsuit[272](index=272&type=chunk) [Risk Factors](index=81&type=section&id=Item%201A.%20Risk%20Factors) Details extensive risks for the pre-commercial deep-sea mineral collection business, covering regulatory, technological, resource, social, and financial uncertainties - **Regulatory Risks:** The business is subject to significant regulatory uncertainty, as final exploitation regulations from the International Seabed Authority (ISA) have not yet been adopted, with no guarantee of timely or economic exploitation contract grants[274](index=274&type=chunk)[277](index=277&type=chunk)[279](index=279&type=chunk) - **Technology & Operational Risks:** The company's collection and processing technology has never been used on a commercial scale, posing risks that equipment may not be adequate, reliable, or economically viable, and the business is highly dependent on strategic partners like Allseas and Maersk[302](index=302&type=chunk)[336](index=336&type=chunk)[342](index=342&type=chunk) - **Resource & Market Risks:** Mineral resource estimates are based on limited sampling and may prove inaccurate, and profitability is highly dependent on volatile future market prices of nickel, manganese, copper, and cobalt, which are beyond the company's control[299](index=299&type=chunk)[304](index=304&type=chunk)[317](index=317&type=chunk) - **Social & Environmental Risks:** Negative public perception and opposition from environmental groups regarding deep-sea mineral collection could materially impact the business, as the full effects on marine biodiversity are not definitively known, creating uncertainty[297](index=297&type=chunk)[326](index=326&type=chunk)[330](index=330&type=chunk) - **Financial & Public Company Risks:** The company has a limited operating history, has not generated revenue, and will require significant additional capital, having identified material weaknesses in its internal financial controls, while outstanding warrants and potential future share issuances could cause significant dilution to shareholders[350](index=350&type=chunk)[371](index=371&type=chunk)[380](index=380&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=129&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Confirms no unregistered sales or repurchases of equity securities occurred during the reporting period - The company did not conduct any unregistered sales of equity securities during the reporting period[428](index=428&type=chunk) - The company did not repurchase any of its equity securities during the three months ended September 30, 2021[429](index=429&type=chunk) [Other Information](index=130&type=section&id=Item%205.%20Other%20Information) Summarizes the effect of financial restatements on previously filed unaudited pro forma condensed combined financial information, detailing adjustments Restatement Impact on Pro Forma Balance Sheet (as of June 30, 2021) | Account | As Previously Reported ($) | As Restated ($) | | :--- | :--- | :--- | | Accounts payable and accrued liabilities | 9,609 | 12,272 | | Total liabilities | 43,799 | 46,462 | | Deficit | (255,932) | (257,067) | | Total shareholders' equity | 122,253 | 119,590 | Restatement Impact on Pro Forma Statement of Operations (Six Months Ended June 30, 2021) | Account | As Previously Reported ($) | As Restated ($) | | :--- | :--- | :--- | | Exploration expenses | 57,079 | 58,676 | | General and administrative expenses | 34,756 | 34,294 | | Operating loss | 91,835 | 92,970 | | (Income) loss for the period | 82,862 | 83,997 | [Exhibits](index=131&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed or incorporated by reference into the Quarterly Report on Form 10-Q, including corporate governance documents and certifications

Market Overview - Woodmac 预计，为了达到 1.5°C 的目标，基本金属供应量需要增加五倍，需要 2 万亿美元的投资[8] - 美国原始设备制造商到 2030 年可能无法满足高达 3500 万辆电动汽车的订单[13] - 美国拥有有限的原材料生产能力，几乎没有加工能力[15] Resource and Project Development - NORI 的推断资源量为 38.66 亿吨（湿重），锰含量为 29.5%，镍含量为 1.3%，铜含量为 1.1%，钴含量为 0.2%[41] - TOML 的推断资源量为 7.56 亿吨（湿重），锰含量为 29.2%，镍含量为 1.3%，铜含量为 1.1%，钴含量为 0.2%[41] - NORI-D 项目的净现值估计为 68 亿美元[48] - NORI-D 预计在 2023 年第三季度提交勘探合同申请[36, 53] Financial Performance - 2021 年第三季度净亏损为 3670 万美元，每股亏损 0.18 美元，而 2020 年第三季度净亏损为 680 万美元，每股亏损 0.04 美元[35] - 截至 2021 年 9 月 30 日，现金和现金等价物总额约为 1.126 亿美元[36] - 2021 年第三季度运营中使用的现金为 1040 万美元，而 2020 年第三季度为 380 万美元[36]

Financial Data and Key Metrics Changes - The company reported a net loss of $36.7 million or $0.18 per share for Q3 2021, compared to a net loss of $6.8 million or $0.04 per share for Q3 2020, primarily due to increased milestone payments and offshore campaign expenses [55] - For the nine months ended September 30, 2021, the net loss was $121.5 million, up from $39.5 million in the prior year period, with exploration expenses increasing from $35.7 million to $80.2 million [58][60] - General and Administrative expenses rose from $3.8 million to $41 million during the first nine months of 2021, driven by higher stock-based compensation and overall costs associated with being a public company [58][59] Business Line Data and Key Metrics Changes - Exploration expenses for Q3 2021 were $23.8 million, significantly higher than $4.6 million for Q3 2020, attributed to milestone payments and increased offshore activity [56] - Free cash flow for Q3 2021 was negative $9.8 million, compared to negative $3.8 million in Q3 2020, indicating increased cash outflows [57] Market Data and Key Metrics Changes - The company highlighted the need for a fivefold increase in base metal supply to meet global energy transition goals, requiring an investment of $2 trillion [7] - The International Energy Agency indicated that achieving Net Zero by 2050 would require six times more mineral inputs than today [6] Company Strategy and Development Direction - The company aims to secure funding to commence production in 2024, focusing on strategic partnerships with car manufacturers and other stakeholders [50] - The development of polymetallic nodules in the Clarion-Clipperton Zone is seen as a critical opportunity to supply battery metals while minimizing environmental impact [12][16] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in conversations with strategic partners, emphasizing the importance of controlling supply chains and sustainability in the electric vehicle transition [71] - The company is optimistic about completing its pilot mining trial and securing necessary funding by Q1 2023 to support production [87] Other Important Information - The business combination with Sustainable Opportunities Acquisition Corp was completed on September 9, 2021, with the company receiving approximately $137 million in cash [26] - The company has secured exclusive exploration rights to three areas sponsored by Pacific island nations, with plans to submit an application for an exploitation contract by Q3 2023 [19][27] Q&A Session Summary Question: Changes in conversations with strategic partners - Management noted a discernible change in discussions with automakers, highlighting the need for control over supply, availability, and sustainability [71] Question: Top priorities for 2022 - Key priorities include completing the pilot mining trial and releasing more environmental data [72][75] Question: Adjustments due to PIPE funding shortfall - Management expressed disappointment over raising less money than anticipated but confirmed sufficient capital to continue value-adding activities [81] Question: Public comments on the pilot test - Feedback from stakeholders has been complimentary regarding the environmental impact study, with no significant concerns raised [90] Question: ISA decision timeline - The ISA's decision process is outlined to take 315 days, which is considered reliable by management [95] Question: China's involvement in deep-sea mining - Management acknowledged China's active role in the sector but remains confident in being the first to production [103]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to SUSTAINABLE OPPORTUNITIES ACQUISITION CORP. | (Exact name of registrant as specified in its charter) | | | | --- | --- | --- | | Cayman Islands | 001-39281 | 98-152376 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to SUSTAINABLE OPPORTUNITIES ACQUISITION CORP. (Exact name of registrant as specified in its charter) | Cayman Islands 001-39281 | 98-1523768 | | --- | --- | | (State ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to SUSTAINABLE OPPORTUNITIES ACQUISITION CORP. (Exact name of registrant as specified in its charter) | Cayman Islands | 001-39281 | 98-1523768 | | --- | --- | --- | ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to SUSTAINABLE OPPORTUNITIES ACQUISITION CORP. (Exact name of registrant as specified in its charter) | Cayman Islands | 001-39281 | 98-1523768 | | --- | --- | --- | | (S ...