TMC the metal company (TMC) - 2024 Q1 - Quarterly Results

Company Overview and Q1 2024 Highlights The company's CEO highlighted environmental data validation and U.S. government interest, while Q1 2024 saw a net loss and specific liquidity figures Executive Summary & CEO Commentary The CEO emphasized 2024 as a pivotal year for validating environmental impacts with data, highlighting a significant environmental baseline data submission to the ISA. He also noted growing U.S. government interest in deep-seafloor minerals and the company's financial flexibility to support its exploitation contract application - CEO expects data to displace speculation on environmental impacts, with a large environmental baseline dataset submitted to the International Seabed Authority (ISA)[4] - The U.S. government is actively exploring deep-seafloor minerals, with the Pentagon currently analyzing domestic nodule processing and refining opportunities[4] - The company maintains financial flexibility, supported by major shareholders, to deliver a world-class application for a NORI exploitation contract[4] Q1 2024 Financial Highlights TMC reported a net loss of $25.2 million ($0.08 per share) and used $11.9 million in operations for Q1 2024. Total liquidity stood at approximately $49 million, including cash and credit facilities, with additional draws post-quarter end Q1 2024 Financial Highlights | Metric | Value (USD) | | :-------------------------------- | :---------- | | Cash used in operations | $11.9 million | | Net loss | $25.2 million | | Net loss per share | $0.08 | | Total liquidity (as of March 31, 2024) | ~$49 million | | Cash (as of March 31, 2024) | $4.0 million | | Drawn on credit facility (post-March 31, 2024) | ~$2.9 million | Operational and Industry Developments The company achieved technological milestones like nickel sulfate production and strengthened its board, alongside significant regulatory and geopolitical advancements Corporate and Technological Milestones TMC strengthened its board with Steve Jurvetson as Vice Chairman and achieved a world-first by producing nickel sulfate exclusively from deep-seafloor polymetallic nodules at pilot scale, demonstrating an efficient processing flowsheet - Steve Jurvetson, a renowned Silicon Valley investor, joined TMC's Board of Directors as Vice Chairman and Special Advisor to the CEO in April 2024[8] - TMC successfully produced the world's first nickel sulfate derived exclusively from seafloor polymetallic nodules during pilot-scale processing in April 2024[8] - The company's efficient flowsheet processes high-grade nickel-cobalt-copper matte directly to nickel sulfate, producing fertilizer byproducts instead of solid waste or tailings[8] Regulatory and Geopolitical Updates TMC's subsidiary NORI made a second extensive submission of deep-sea environmental data to the ISA's DeepData database. The ISA published a consolidated draft of deep-sea mining regulations, and the U.S. House of Representatives introduced legislation (RUSRA) supporting international governance and U.S. support for seafloor nodule collection and processing - NORI made a second extensive submission of key environmental data from prior baseline campaigns to DeepData, an open database managed by the International Seabed Authority (ISA), in May 2024[8] - The ISA published a consolidated 225-page draft of deep-sea mining regulations in February 2024, signaling the next phase in negotiations[8] - The U.S. House of Representatives introduced the Responsible Use of Seafloor Resources Act (RUSRA) in March 2024, calling for U.S. support for international governance and allied partners' seafloor nodule collection, processing, and refining[8] Financial Review The company reported a significant increase in net loss for Q1 2024, primarily driven by higher exploration and evaluation expenses, with detailed financial statements provided Financial Results Overview TMC reported a net loss of $25.2 million for Q1 2024, an increase from $13.7 million in Q1 2023, primarily due to higher exploration and evaluation expenses, which rose to $18.1 million from $7.2 million YoY, driven by increased engineering work, nodule transportation, and personnel costs. General and administrative expenses also saw a slight increase Q1 2024 vs Q1 2023 Financial Performance | Metric | Q1 2024 (USD) | Q1 2023 (USD) | Change (YoY) | | :-------------------------------- | :------------ | :------------ | :----------- | | Net loss | $25.2 million | $13.7 million | +$11.5 million | | Net loss per share | $0.08 | $0.05 | +$0.03 | | Exploration and evaluation expenses | $18.1 million | $7.2 million | +$10.9 million | | General and administrative expenses | $6.6 million | $6.2 million | +$0.4 million | - The significant increase in exploration and evaluation expenses was primarily due to a $10.4 million increase in mining, technological, and process development, including increased engineering work, expenses for nodule transportation to Japan, and higher personnel costs[10] - General and administrative expenses increased due to higher amortization of share-based compensation and consulting fees, partially offset by lower legal costs[11] Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for TMC, including the Balance Sheets, Statements of Loss and Comprehensive Loss, Statements of Changes in Equity, and Statements of Cash Flows, providing detailed financial positions and performance for the periods ended March 31, 2024, and December 31, 2023 (for balance sheet) or March 31, 2023 (for income and cash flow statements) Condensed Consolidated Balance Sheets As of March 31, 2024, total assets decreased to $65.46 million from $68.90 million at December 31, 2023, primarily driven by a decrease in cash. Total liabilities increased to $63.65 million from $57.98 million, mainly due to higher accounts payable and accrued liabilities and warrants liability. Total equity significantly decreased to $1.81 million from $10.92 million Condensed Consolidated Balance Sheets (Key Figures) | Metric | March 31, 2024 (USD thousands) | December 31, 2023 (USD thousands) | Change (vs. Dec 31, 2023) | | :-------------------------------- | :------------------------------- | :-------------------------------- | :------------------------ | | Cash | $3,991 | $6,842 | -$2,851 | | Total Current Assets | $5,944 | $8,820 | -$2,876 | | Total Non-current Assets | $59,511 | $60,076 | -$565 | | TOTAL ASSETS | $65,455 | $68,896 | -$3,441 | | Accounts payable and accrued liabilities | $36,470 | $31,334 | +$5,136 | | Total Current Liabilities | $36,470 | $31,334 | +$5,136 | | Warrants liability | $2,500 | $1,969 | +$531 | | TOTAL LIABILITIES | $63,645 | $57,978 | +$5,667 | | Common shares | $454,431 | $438,239 | +$16,192 | | Deficit | $(574,096) | $(548,902) | -$25,194 | | TOTAL EQUITY | $1,810 | $10,918 | -$9,108 | Condensed Consolidated Statements of Loss and Comprehensive Loss For the three months ended March 31, 2024, the company reported an operating loss of $24.68 million, significantly higher than $13.38 million in the prior year period. This led to a net loss of $25.19 million, or $0.08 per share, compared to a net loss of $13.75 million, or $0.05 per share, in Q1 2023. The increase was primarily driven by higher exploration and evaluation expenses Condensed Consolidated Statements of Loss and Comprehensive Loss | Metric | Three months ended March 31, 2024 (USD thousands) | Three months ended March 31, 2023 (USD thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Exploration and evaluation expenses | $18,123 | $7,169 | | General and administrative expenses | $6,559 | $6,214 | | Operating loss | $24,682 | $13,383 | | Equity-accounted investment loss | $78 | $219 | | Change in fair value of private warrants liability | $531 | $544 | | Fees and interest on credit facility | $271 | $27 | | Loss and comprehensive loss for the period | $25,194 | $13,748 | | Loss per share - basic and diluted | $0.08 | $0.05 | | Weighted average number of Common Shares outstanding | 311,521,854 | 272,029,603 | Condensed Consolidated Statements of Changes in Equity For the three months ended March 31, 2024, total equity decreased from $10.92 million at January 1, 2024, to $1.81 million, primarily due to the net loss of $25.19 million for the period, partially offset by $9.00 million from a Registered Direct Offering and $6.90 million in share-based compensation. Common shares outstanding increased to 318.29 million Key Changes in Equity (Q1 2024) | Item | Amount (USD thousands) | | :------------------------------------------------ | :--------------------- | | Total Equity as of January 1, 2024 | $10,918 | | Issuance of shares and warrants (net) | $9,000 | | Exercise of stock options | $190 | | Share-based compensation and expenses | $6,896 | | Loss for the period | $(25,194) | | Total Equity as of March 31, 2024 | $1,810 | | Common Shares Outstanding (March 31, 2024) | 318,291,383 | Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2024, net cash used in operating activities significantly decreased to $11.85 million from $23.48 million in Q1 2023, mainly due to changes in working capital. Net cash provided by financing activities was $9.05 million, primarily from a Registered Direct Offering. Overall, cash decreased by $3.14 million, ending the period with $3.99 million Condensed Consolidated Statements of Cash Flows (Key Figures) | Activity | Three months ended March 31, 2024 (USD thousands) | Three months ended March 31, 2023 (USD thousands) | | :-------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Net cash used in operating activities | $(11,852) | $(23,484) | | Net cash used in investing activities | $(340) | $0 | | Net cash provided by financing activities | $9,048 | $5,000 | | Decrease in cash | $(3,144) | $(18,484) | | Cash - end of period | $3,991 | $28,412 | - The decrease in net cash used in operating activities was largely driven by a positive change in accounts payable and accrued liabilities of $5.54 million in Q1 2024, compared to a negative change of $14.76 million in Q1 2023[23] - Financing activities in Q1 2024 included $9.00 million from a Registered Direct Offering[23] Additional Information This section provides details on the company's mission and exploration rights, conference call information, and a standard disclaimer regarding forward-looking statements About The Metals Company The Metals Company explores lower-impact battery metals from seafloor polymetallic nodules, aiming to supply metals for the global energy transition with minimal negative impacts and to establish a metals commons through tracing, recovery, and recycling. The company holds exploration and commercial rights in the Clarion Clipperton Zone - TMC's dual mission is to supply metals for the global energy transition with the least possible negative impacts and to trace, recover, and recycle metals to help create a metals commons[14] - The company holds exploration and commercial rights to three polymetallic nodule contract areas in the Clarion Clipperton Zone of the Pacific Ocean, regulated by the International Seabed Authority[14] Conference Call Information TMC scheduled a conference call for May 13, 2024, at 4:30 p.m. EDT to discuss recent corporate developments, Q1 2024 financial results, and upcoming milestones. Registration links for audio-only dial-in and virtual webcast with slides were provided Q1 2024 Conference Call Details | Detail | Information | | :----- | :---------- | | Date | Monday, May 13, 2024 | | Time | 4:30 pm EDT | | Access | Audio-only dial-in or virtual webcast with slides (registration required) | | Replay | Available on Company's website under 'Investors' tab | Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, cautioning that actual results may differ materially from projections due to various risks and uncertainties. It lists numerous factors that could cause discrepancies, including regulatory approvals, environmental impacts, financing needs, and market fluctuations, and states that the company disclaims any obligation to update these statements - The press release contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially from expectations[15] - Key risk factors include the ISA's ability to adopt the Mining Code, obtaining exploitation contracts, regulatory uncertainties, environmental impacts, financing availability, and fluctuations in metal prices[15] - The company expressly disclaims any obligation to update forward-looking statements, except as required by law[15]