TMC the metal company (TMC) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net loss of approximately $14.1 million or $0.05 per share for Q2 2023, compared to a net loss of $12.4 million or $0.05 per share for Q2 2022 [33] - Exploration and valuation expenses decreased to $8.1 million in Q2 2023 from $10.2 million in Q2 2022, primarily due to reduced share-based compensation and lower spending on environmental studies [34] - General and administrative expenses were $5.1 million for Q2 2023, down from $8.1 million in Q2 2022, reflecting lower share-based compensation and decreased insurance costs [34] Business Line Data and Key Metrics Changes - The company plans to increase production capacity for the Project Zero offshore system from an estimated 1.3 million wet tonnes per annum to 3.0 million wet tonnes per annum, a potential increase of 130% [8] - The company indicated that approximately $60 million to $70 million in additional cash is needed to reach the application point for exploitation, with about half of this amount allocated to the environmental and social impact assessment [50] Market Data and Key Metrics Changes - The company noted a shift in media coverage supporting nodule collection, with significant endorsements from influential figures like James Cameron [12][13] - The U.S. government is increasingly focused on securing critical minerals, with recent legislative actions emphasizing the importance of nodule processing for national security [4][15] Company Strategy and Development Direction - The company intends to submit an application for an exploitation contract for NORI Area D following the July 2024 ISA session, with production expected to begin in Q4 2025 [7][19] - The company is focused on strengthening its environmental dataset through additional offshore campaigns to support its application [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the likelihood of receiving contract approval due to the positive environmental data being gathered [40] - The geopolitical landscape is seen as favorable, with increasing support for nodule collection as a means to secure critical minerals and reduce reliance on land-based mining [46][47] Other Important Information - The company raised approximately $27 million in gross proceeds at $2 per share, with a potential for an additional $11 million by mid-September [10] - The company has no debt and held cash of $20 million as of June 30, 2023, which, along with the recent capital raise, is expected to meet working capital and capital expenditure commitments for at least the next 12 months [35] Q&A Session Summary Question: Can you discuss the recent financing and investor confidence? - Management highlighted the recognition of the asset's value and the political tailwinds supporting the clean energy transition as key factors driving investor confidence [37][38] Question: How will the political landscape affect ISA discussions? - Management indicated that the ISA is expected to complete the mining code, with geopolitical factors playing a significant role in the discussions [42][44] Question: What is the breakdown of the $60 million to $70 million needed for the application? - Approximately half of the costs are related to the environmental and social impact assessment, with the remainder covering operational expenses and capital expenditures [50] Question: What is the status of the Bechtel prefeasibility study? - Management stated that the prefeasibility study will be crucial for updating the resource classification and improving the economic model for the project [59]