TMC the metal company (US:TMC)2022-05-10 03:11Financial Data and Key Metrics Changes - For Q1 2022, the company reported a net loss of $21.1 million or $0.09 per share, compared to a net loss of $55.7 million or $0.29 per share for Q1 2021, indicating an improvement in financial performance [43] - The net operating loss for Q1 2022 was $15.9 million, primarily driven by non-cash share-based compensation of $5.7 million and $1.3 million for the pilot mining test system [43] - Exploration expenses decreased to $7.3 million in Q1 2022 from $38.1 million in Q1 2021, reflecting reduced offshore campaign spending [44] - General and administrative expenses were $8.6 million in Q1 2022, down from $17.4 million in Q1 2021, due to a reduction in share-based compensation [45] Business Line Data and Key Metrics Changes - The company is developing the NORI-D project, which is estimated to contain 356 million tons of wet nodules, representing 22% of the total estimated resource [13] - NORI-D is expected to produce up to 125,000 tons of nickel annually, which would account for approximately 10% of current global production of Class 1 nickel [13] Market Data and Key Metrics Changes - The recent rally in metal prices has significantly increased the expected net present value (NPV) for the NORI-D project to approximately $22 billion, up from an initial assessment of $6.8 billion [9][42] - Nickel prices have increased by 45% in 2022, highlighting the growing demand and supply constraints in the market [41] Company Strategy and Development Direction - The company aims to develop the largest estimated potential source of battery metals, which could electrify 280 million electric vehicles [7] - The strategy includes a capital-light approach to production, with Project Zero expected to reduce preproduction costs significantly [16] - The company is focused on sustainability, with lower ESG impacts compared to land-based mining, and aims to leverage its unique resource position to meet the growing demand for battery metals [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming supply chain risks and highlighted the importance of strategic partnerships in achieving project milestones [66] - The company anticipates that the exploitation regime will be finalized by July 2023, keeping it on track for commercial production in Q4 2024 [36] - Management believes that the current market cap represents less than 1% of the fundamental value of the estimated resource, indicating a strong investment opportunity [49] Other Important Information - The company has a cash balance of $69 million as of March 31, which is expected to fund operations and capital expenditures for at least the next 12 months [39] - The company has engaged SINTEF to analyze its manganese silicate product, which shows significant advantages over conventional land-based manganese ores [21] Q&A Session Summary Question: Were there any surprises with the equipment during deep-sea trials? - Management reported no significant surprises, with minor operational adjustments needed, indicating successful testing of the equipment [52] Question: Can you provide insight on capital spending over the next couple of quarters? - The company expects preproduction capital expenditures of approximately $55 million for Project Zero, while managing costs amid inflation [53] Question: Do you foresee any potential headwinds looking into 2022 or 2023? - Management sees more tailwinds than headwinds, emphasizing the importance of securing supply chains for battery metals amid ongoing global challenges [66] Question: What is the status of the relationship with Glencore? - The company maintains a good relationship with Glencore, which has provided off-take agreements and support [71] Question: What is the confidence level regarding the ISA process and timeline for the exploitation contract? - Management remains confident that the ISA will adopt the exploitation code by July 2023, facilitating the application for the exploitation contract [73]