TMC the metals Co Inc.(TMC)Q1 2025 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Metals Company First Quarter 2025 Corporate Update Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Craig Shesky, Chief Financial Officer.

Thank you, Michelle. Please note that during this call, certain statements made by the company will be forward-looking and based on management's beliefs and assumptions from information available at this time. These statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. Additionally, please note that the company's actual results may differ materially from those anticipated, and except as required by law, we undertake no obligation to update any forward-looking statement. Our remarks today may also include non-GAAP financial measures, including with respect to free cash flows, and additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures can be found in our slide deck being used with this call. You're welcome to follow along with our slide deck or if joining by phone. You can access it at any time at investors.metals.co. And I'll now turn the conference call over to our Chairman and CEO, Gerard Barron.

Thank you, Craig. Typically, our first-quarter conference calls are quieter since they happen about six weeks after our year-end report, but we've just gone through a significant period of advancement for our company and the industry. Although there had been speculation in the media about the Trump executive order on seabed minerals, our submission of the application months earlier than expected was a surprise, and I want to express my gratitude to our team for their remarkable efforts in accelerating the process for these three applications. Considering all the derisking milestones we've accomplished since our company's beginning, we think the primary factor that has held back our stock price was the absence of a clear regulatory pathway, which we believe we now have. Frankly, I don't think the market has fully reflected this. Despite a good rise in our stock this year, we feel that the potential remains tight.

We were also aware that another significant concern for the stock was fundraising, and we've noticed an increase in short interest. After achieving some remarkable milestones, we didn't want to enter summer without strengthening our cash reserves. This week, we did that through a $37 million registered direct offering with Michael Hess, Brian Paes-Braga, and an existing strategic investor in TMC. All these parties are committed to being with us long-term and are eager to contribute their extensive experience and networks in the resource sector, both offshore and onshore. Michael Hess has 15 years of experience in exploration and production as an investor and operator, along with strong connections throughout the United States. Brian Paes-Braga is a long-time supporter of TMC, a former Board member when it was known as DeepGreen, and continues to be a valuable advocate and friend. I would also like to officially welcome our newest executive team member, Rutger Bosland.

Rutger comes to us from our partner, Allseas, and was the lead engineer responsible for developing our Nodule Collection System, which successfully tested in 2022 with the lifting of over 3,000 tons of nodules. As our Chief Innovation and Offshore Technology Officer, Rutger is already crucial in enhancing the performance of our Nodule Collection System at commercial scale. The teams at TMC and Allseas are thrilled about maintaining project continuity as we collaborate to reach commercial readiness. So, let’s outline our agenda for today. While the milestones we've achieved in the past two months are historic, we're just getting started, and I'm very enthusiastic about some key upcoming catalysts. Later this quarter, we anticipate our applications for exploration licenses and a commercial recovery permit will be considered substantially compliant and complete by NOAA, which will initiate the next phase of technical environmental review.

This quarter, we anticipate receiving additional details from the Commerce Department and NOAA regarding concrete steps to speed up the review processes, and we look forward to sharing a clearer step-by-step permitting timeline with the market soon. We will keep seeking alternative financing options with US government departments and agencies as outlined in the executive order, as well as with strategic partners to prepare for commercial production. I want to emphasize that the recently announced equity round is more than adequate to help us through the expected review process for a commercial recovery permit. Lastly, we are excited to announce that our Pre-Feasibility Study will be finished next quarter for the commercial recovery area, enabling us to incorporate new assumptions facilitated by our US permitting strategy. Further, with this path to commercial production now coming into focus, we intend to provide more clarity on the potential valuation across our total estimated resource beyond NORI-D. So as most of you know, on April 28, TMC USA submitted the world's first application to the US government for a commercial recovery permit for deep sea minerals in international waters, alongside two exploration license applications under the Deep Seabed Hard Mineral Resources Act.

This decision followed many months of due diligence and dialogue with the US agencies and policymakers. We engaged multiple law firms to review DSHMRA and NOAA's long-standing implementing regulations, an established framework that is legally sound, robust and enforceable. In the lead up to our application, we consulted extensively with NOAA as to the regulatory requirements that we will be asked of us and since then have had productive engagements with them as well as the White House and members of Congress, all of whom recognize the strategic importance of this industry to America's energy, security and industrial base. And we believe this US-based pathway offers the greatest probability of receiving a commercial permit in a timely, transparent and legally robust manner, giving us a clear line of sight to responsible commercial operations. The application area for commercial production covers over 25,000 square kilometers in the Clarion Clipperton Zone.

And this is ground we've gotten to know very well, having conducted years of environmental research and offshore resource evaluation and where we've already defined measured and indicated resources. In parallel, we've also submitted two exploration license applications covering nearly 200,000 square kilometers. And based on our extensive data, we estimate these areas contain over 1.6 billion tons of nodules with an additional 500 million tons of exploration upside, representing approximately 15.5 million tons of nickel, 12.8 million tons of copper, 2 million tons of cobalt and 345 million tons of manganese. And we believe these license areas offer a shovel-ready pathway to help deliver critical mineral independence for the United States. As noted in the recent executive order, this could deliver over 100,000 jobs and more than $300 billion in annual GDP. So, America's role as a pioneer in deep-sea mining in the high seas is often overlooked.

But President Trump's recent executive order reminded the world of that legacy and robust regulatory framework already in place to support this industry. You'll notice the President's signature there in the middle of the map. The order directs the Secretary of Commerce to expedite permitting under the US Deep Seabed Hard Mineral Resources Act and tasks multiple federal agencies, including defense and energy to assess offtake opportunities and domestic processing capabilities. It further calls on key US development finance agencies to identify tools to support the industry. In light of our long-standing partnerships in the Pacific, we welcome the directive for a joint interagency assessment alongside US allies on the feasibility of an international seabed benefit-sharing mechanism. And rest assured that we are having continuous and productive dialogues with the governments of Nauru and Tonga on these points.

And the signal is clear. The United States is ready to again lead this industry, backed by a transparent and enforceable legal framework. For TMC, this brings the regulatory clarity that we've been seeking for our application and supports the broader investment case for developing a strategic domestic supply chain based on deep seabed minerals. It's refreshing to work with a regulator that is not only transparent, but also supportive, flexible and even enthusiastic about the strategic importance of this industry. NOAA has publicly committed to expediting the review of applications and is dedicating the resources needed to avoid undue delays. They've already taken steps to streamline interagency coordination, something we're already seeing firsthand in our early consultations. The Department of Commerce has made clear that companies like ours can apply today under existing US law, while Secretary of State, Marco Rubio, put it plainly, the United States, not China, will lead the world in responsibly unlocking seabed mineral resources and securing critical mineral supply chains with our partners and allies.

And we're encouraged by the level of professionalism and urgency from the US agency that we've so far experienced. Some in the media are also applauding the new US-focused pathway. We have always admired the quality, independent journalism, and we're pleased to see the paper once again return to the topic of deep-sea mining with two pieces. In its May 1 Leader, the paper took stock of the executive order for government agencies to ready themselves to start issuing commercial recovery permits for deep sea nodules and acknowledged TMC's front-runner position at the head of, and I quote, Mr. Trump's deep-sea queue. The paper also offered strong words to the ongoing regulatory delays at the International Seabed Authority, warning that if the body wishes to retain any influence over the development of this industry that it would do well to pay less heed to activist speculation and focus on fulfilling its legal mandate to establish regulations.

And while some media remain focused on speculative studies that ignore decades of real-world data from offshore trials, it's encouraging to see the continued acknowledgment of the need for trade-offs and that sourcing metals from deep sea nodules is far less harmful than the destruction caused by expanding mining in biodiverse rainforests. With deep sea mining firmly in the spotlight, I was honored to be invited to testify before the House Natural Resources Subcommittee on how nodules can help revitalize US industry and manufacturing. In his opening remarks, Chair, Paul Gosar, urged his colleagues to consider the positive economic implications of seabed mining and how the US, with its legacy of technological and environmental leadership, can ensure the frontier isn't ceded to China. Echoing these sentiments, my own testimony, which is available on the committee's website and YouTube, spoke to the opportunity for the US to reclaim leadership in an industry it helped pioneer while strengthening critical mineral independence and jump-starting a new era of American industrial strength.

Importantly, the hearing gave space for one of the world's leading scientists on sediment plumes to directly counter activist speculation and reinforce what the data actually show. Dr. Thomas Peacock, one of the world's leading experts on deep-sea sediment plume dynamics at MIT warned that, unfortunately, the latest scientific findings are not being used to guide decision-making on deep sea mining. Instead, outdated and debunked claims from activists, such as the fallacies that operations could impact carbon sequestration or spread sediment plumes for thousands of miles, are being amplified in the media, despite having no basis in current scientific data. But hopefully, that stale speculative narrative will continue to wear itself out in the face of increasing in-field observed data, especially once we're in production. I'd now like to turn it back over to Craig to discuss the resource a little bit further.

Thank you, Gerard. There is a strong link between the mineral composition of nodules and the materials used in EV battery cathodes and wiring. While lithium iron phosphate (LFP) batteries have gained popularity, over 90% of the LFP supply chain is in China. In contrast, nickel-rich chemistries account for more than 65% of the EV battery cathodes sold today, and this trend is expected to continue. It was exciting to see GM and LG Chemical announce their enthusiasm for new lithium manganese-rich (LMR) cathode technology, which provides 33% more energy density than LFP at a comparable cost. The sales composition of LMR stands at 65% manganese and 35% nickel, along with typical EVs needing 100 to 200 pounds of copper, indicating a strong growth market for the metals found in nodules. As automakers approach full autonomy, studies indicate that the battery power needed for computing will match that required for the powertrain, suggesting sustained demand for energy-dense nickel batteries.

Despite some opposition claiming these metals are unnecessary, the US government and global commodity experts disagree. As a former metal analyst, I find it surprising how many global NGO representatives also claim expertise in commodities. Even if all future EV demand disappeared, our product demand would remain stable. The US Department of Energy and the US Geological Survey classify these metals as critical due to their essential roles in various applications. For nickel, this includes stainless steel, generators, turbines, and power grid infrastructure. Cobalt is vital for aircraft engines, magnets, paints, and superalloys. Manganese is used in carbon steel, alloys, and building materials. Copper is essential for many uses such as wiring, piping, electronics, traditional vehicles, HVAC systems, long-haul transmission cables, and future power demands from data centers supporting artificial intelligence and other emerging technologies.

So, now that we have a better sense of the uses, we can also give you a sense of scale. What would it mean for the US to gain access to, let's say, 1 billion tons? Well, the answer is that it would be transformational. And if measured by current US consumption, 1 billion tons of nodules would provide 456 years of manganese, 165 years of cobalt, 81 years of nickel and four years of copper. But it's worth remembering that it was US companies and the US government, including NOAA which pioneered the evaluation and development of this resource back in the 1970s. The US government developed a regulatory framework and conducted strategic environmental impact assessments. US companies, including Transocean, US Steel, and Lockheed Martin developed and piloted Nodule Collection Technology. So this US leadership did slow, however, when the US did not ratify the UN convention of the Law of the Sea or UNCLOS.

The US did have the foresight, however, to enact DSHMRA so that US citizens and entities could access seabed resources in international waters. As we've said, going back to last quarter, US entities can apply to NOAA for exploration and commercial recovery licenses. And because the US has never submitted to the jurisdiction of the ISA, this US law obviously remains in full effect. There are a few handful of nations that have bilateral agreements with the US regarding each other's activities in international waters. But beyond that, US law continues to offer freedom of activity in the high seas. Now, over the last few weeks, we've gotten quite a few questions from investors and stakeholders on the legal side of this question. Many people ask about overlap between the US seabed mining code and the ISA, but that's not exactly the right way to think about it. The US isn't claiming any ground or territory in international waters; this is not a question of overlap.

Through DSHMRA and the NOAA regulation, the US is merely regulating the free activities of its citizens in international waters in accordance with any law that would apply to its citizens under the freedom of the high seas, just as it would apply to somebody on a fishing boat. As our private subsidiary, TMC USA doesn't bear obligations under UNCLOS. TMC's USA rights are solely defined by the laws of the United States, and UNCLOS does not apply to the US because the US never ratified it nor did it ratify the 1994 ISA implementation agreement. Getting a bit technical, but according to Article 34 of the Vienna convention on the Law of Treaties, a treaty does not create either obligations or rights for a third state without its consent. And under Article 14 of that same document, a treaty is binding upon the state only when it has expressed its consent to be bound typically through ratification.

So while the US does abide voluntarily by certain aspects of UNCLOS, it has never contradicted its original understanding of deep sea mining as a freedom of the high seas and has consistently opposed Part XI's framework for the ISA-led exploitation of deep seabed minerals. Turning back to our project, focusing on the onshore side of our operations, in April of this year, TMC and PAMCO welcomed over 50 representatives, including equity research analysts, commodity traders, steelmakers, battery consumers, and some TMC employees, including myself, to PAMCO's Hachinohe plant in Japan for a site visit. During the tour, attendees spoke with PAMCO engineers about TMC's commercial production flowsheet and the final specifications of its metal products, and they had the opportunity to view samples of the products up close. In February of 2025, as we previously announced, PAMCO successfully demonstrated the smelting of calcine into high-grade nickel-copper-cobalt alloy and manganese silicate products.

By using PAMCO's existing facility, TMC can eliminate the need for upfront onshore capital expenditures as part of its capital-light approach. As a reminder, our applications in NOAA are backed by one of the largest environmental data sets ever compiled based on work alongside dozens of respected research institutions and well over $200 million in cumulative environmental spending. Bottom line, we believe that we, along with the research pioneers from NOAA and others before that, have answered key questions posed for our environmental impact statement, which has now been launched as part of the NOAA process. And we strongly believe that the time has come to move forward, begin production and allow the data collection to increase exponentially and share even more evidence on the manageable impacts of deep sea nodule collection. So, now let's turn to project economics and the long-anticipated Pre-Feasibility Study or PFS.

As Gerard noted upfront, we expect to release next quarter, our PFS for our first commercial production area. But on top of that, some additional detail and higher-level valuation parameters on the resource beyond NORI-D, which to date has been nearly all of what people are focused on for underwriting our stock, often ignoring the other 78% of the estimated resource. We often get a question, why not just release all the information now? Well, for one, we've been busy getting these applications complete, but also as a NASDAQ listed and SEC regulated company, there are very specific rules on the assumptions and sign-offs required to make resource and financial projections to ensure it's all based on reality and can reasonably be relied upon by investors. Trust us, we are eager to be able to share this data with you. However, our pivot to the US earlier this year has led to some changes in long-term assumptions that do require careful consideration, accurate modeling, and sign off from a handful of external qualified persons or QPs.

Now that we have submitted our applications on an accelerated basis based on an all-hands-on-deck push, our team's attention can turn back to this important work. As we've discussed for many years, our capital-light approach is made possible by partners like Allseas and PAMCO providing existing assets. On the offshore side, the US path requires some additional steps, such as the flagging of vessels. And onshore, we are looking forward to processing in the US one day. But we in the US government understand the reality is that processing will occur outside the United States for some period of time. And now on the royalty front, that's one area where the US path is significantly different. There will be economic benefits for some allied countries as laid out in the executive order, but it's going to be a far cry from some of the more onerous proposals being discussed at the ISA over recent years.

Again, we're looking forward to sharing more in the third quarter on this important work stream to provide not only PFS level clarity on our first commercial recovery area but also additional information on the potential read-through for the entire estimated resource. So now, on to the financial results. TMC reported a net loss of approximately $20.6 million or $0.06 per share in the first quarter of 2025 compared to a net loss of $25.2 million or $0.08 per share for the same period in 2024. Exploration and evaluation expenses for the 3 months ended March 31, 2025, were $9.5 million compared to $18.1 million in 2024 due to lower mining, technological and process development costs as the comparative quarter included costs to transport nodules to PAMCO's facility, resource-definition costs incurred during Campaign 8, which was completed in the first quarter of 2024 and lower costs incurred on environmental and pre-feasibility studies, partially offset by an increase in share-based compensation.

G&A expenses in Q1 2025 were $8.5 million compared to $6.6 million in the comparative quarter due to an increase in share-based compensation, partially offset by a decrease in legal costs in the first quarter of 2025. Q1 2025 results also include a loss of $0.5 million for the change in fair value of warrants liability and charges of $1.1 million for foreign exchange losses and $1 million of fees and interest on our credit facilities and borrowings. Net cash used in operating activities in Q1 2025 amounted to $9.3 million compared to $11.8 million in 2024. The reduction in Q1 2025 is mainly due to high cash outflows relating to the Campaign 8 last year, partially offset by higher corporate costs this year. Free cash flow for Q1 was negative $9.4 million compared to negative $12.1 million in 2024. Free cash flow is a non-GAAP measure, and I would point you to the non-GAAP reconciliation table included in the appendix of this slide deck.

Now, taking a step back to liquidity and capital raising tools. TMC liquidity, which is cash flow's borrowing capacity, stood at about $44 million as of March 31, 2025, or $81 million pro forma following this month's registered direct offering of $37 million of gross proceeds. In March of 2025, we increased the principal amount of our unsecured ERAS/Barron credit facility by $6 million from $38 million to $44 million. The credit facility with the affiliate of Allseas Group SA of $25 million was terminated by mutual agreement as we previously reported, as maturity was approaching and there were no amounts outstanding. However, the maturity of the $7.5 million Allseas working capital loan was extended to September of 2025. In Q1 of 2025, the company repaid $1.8 million of previously drawn amounts on the ERAS/Barron facility and did not draw any further amounts. The company also raised in the quarter, $5.7 million under the ATM facility, issuing approximately 3 million shares at an average share price in Q1 of $1.93.

And one matter on corporate housekeeping. The $37 million registered direct offering, when combined with the $55 million in potential future proceeds from the associated warrants at $4.50 per share, would use up the majority of the existing S-3 shelf capacity. Shelf capacity calculations do assume that future exercise of any warrants must be included at the time of issue. So this financing can fund the company well beyond the key milestone of permitting for commercial production. But again, as a matter of good corporate housekeeping, TMC expects to put in place another shelf to allow for future issuance of various securities as discussions with additional strategic investors continue and as we prepare ourselves for commercial production, even strategics do like registered transactions, whether that's debt or equity securities. So it's better to have the toolkit full before we need to use it. So now I might turn it over to the operator to open it up for any Q&A.

Our first question will come from Matthew O'Keefe with Cantor Fitzgerald. Your line is open. Please go ahead.

Thanks, operator. Hi, everyone. It’s been a busy quarter with significant progress, and I want to congratulate you on that. I also appreciate the opportunity to visit the PAMCO facility; it was truly enlightening, and the strength of your partnerships is quite impressive and reassuring. I have a question regarding the application to NOAA. Specifically, it appears that the area you applied for includes the exploration ground as well as the commercial operations but also covers the two existing concessions you have under NOAA. I believe this relates to what was previously called the NORI area and the TOML area, plus an additional concession that you mentioned has around a 500 million ton potential. Could you provide more details on that and what we might expect regarding this aspect? This speaks to the potential upside you referenced.

Thank you, Matt, and I appreciate your attendance at the Japan events. It was wonderful to see many analysts present and experience the situation up there firsthand. I regret not being able to join you that day. You are correct that we haven't yet provided a map of the specific area, but we will do so soon. The additional area is highly complementary to our existing NORI and TOML ground and is unclaimed by any other sovereign entity. We believe it is essential to note that although other countries have the opportunity to lay claim to the ground currently licensed through the ISA, we intentionally chose not to pursue that route. We have the backing of Tonga and Nauru in our initiatives. If you can still hear me, I’ll continue.

Yes, we can.

Yeah. Great. So we have the support of Nauru and Tonga. But we wanted to make sure any additional ground that we did apply for would not have a competing claim over it. So, I can't tell you specifically where but it makes a beautiful mining unit, and I can't wait to share more detail on it. And we know a lot about the ground because it's neighboring to some of our other blocks. And so we can talk with some confidence about what we think is on it.

I just want to emphasize that this does not include areas designated as having particular environmental significance. We are very eager to share the details, but for commercial reasons, we prefer to complete our initial review with NOAA before providing more specific information soon.

Right. No, that makes sense. And I guess we're coming up on the first 30-day, I guess, the end of this month will be the first 30-day where you should hear back about the status of your application. Can you expand a little bit on that process and how you see it unfolding both the 30- and 60-day processes and then beyond that? Is that when we get a roadmap at that time?

That's our plan. I will be traveling to DC tomorrow, and we are in regular contact with the authority. It's fair to say that our application has generated a lot of action, and there is considerable excitement within that department as well. I have been informed that we should expect something very soon.

Great. Well, thanks. I'm looking forward to seeing this momentum continue. Thanks very much.

Yeah, thank you, Matt.

Thanks, Matt.

Thank you. And one moment for our next question. Our next question comes from the line of Jake Sekelsky with Alliance Global Partners. Your line is open. Please go ahead.

Hey, Gerard and Craig, thanks for taking my questions.

Of course. Hi, Jake.

Hi, Jake.

So a lot to unpack here, obviously, but just a few questions from my end. We've seen a wave of support, obviously, for the space for the last quarter. I'm just curious if you have any thoughts or insights on how this might translate over to the processing side of the equation. And if going downstream longer term is something that you've thought about?

Yeah, sure. I mean if we wind the clock back about two years ago, we had an application to the DoD to carry out a feasibility study on a refinery at a site we identified in Texas. And since that time, we have made tremendous progress understanding how to treat the nodules with our partner, PAMCO. We've engaged with potential processing partners in other nations as well, including Indonesia, which has a wide variety or wide number of options available to us. And one of the requirements, though, under DSHMRA is that while you can seek exemptions if there's no ability to process those nodules in the USA, that they want to see those jobs and that economic activity come back to the United States. And so we are working feverishly with two groups to evaluate that. We're excited about the progress that has been made. We're encouraged by the noises we're receiving from government agencies about the permitting cycle.

And we've also been approached by a wide number of what I call, patriot capital providers, people that are very interested in investing in hard assets on the ground to service the future needs of the United States. So we give it a lot of thought. We think it's a tremendous value-add opportunity. Of course, if we were to do this 20 years ago, then automation wouldn't be as advanced as it is today. And I think looking at how efficient we can make those processing plants is a high priority, and we're dealing with some of the best people imaginable on helping us on that at the moment.

Indeed. And make no mistake, Jake, the key equation is going to be the same as it would be prior to the US approach, which is trying to accrete shareholder value, making sure that we're evaluating each of these downstream opportunities on a stand-alone basis, based on IRR, based on sort of the return on invested capital. But the point here is, until such time as we have a commercial recovery permit, the invested capital portion needs to be as small as possible. So therefore, this is just a great opportunity to continue to bring in partners with strong balance sheets and deep pockets and great connections within the US government. And this is an amazing opportunity for us, medium term, long term. But certainly, we are always keeping an eye on not getting out of our skis in terms of going too far downstream too quickly, given the fact that all of us want to see this in commercial production in its capital light way as possible.

Got it. Okay. That's extremely helpful. That's all for me. I'll hop back in queue.

Thanks, Jake.

Thank you. And one moment for our next question. Our next question comes from the line of Dmitry Silversteyn with Water Tower Research. Your line is open. Please go ahead.

Thank you. And thank you, Gerard and Craig for taking my questions. And, Craig, I'd like to just add my comments on the trip to PAMCO facility and an excellent job that TMC and the PAMCO folks did in organizing and carrying out that trip. It was really first rate. Now to the questions. You mentioned in your remarks that you're exploring some funding opportunities within the US government framework. So what exactly are you looking to chase down here in terms of either loans or grants or any other financial assistance that the government can provide you in this scenario?

Thank you for the questions, Dmitry. It was a pleasure to spend time with you and the team during the PAMCO site visit. It was an excellent opportunity to see things firsthand. The approach we're taking is comprehensive. We want to ensure we're fully leveraging the significant opportunities available, especially with a supportive government. While I can't provide too many specific details, I recommend looking at the executive order that highlights the exploration of offtake arrangements and rights of first refusal, as well as directives from the President to the Departments of Defense and Energy regarding financing opportunities for the new seafloor nodule industrial ecosystem the U.S. aims to develop, including efforts from the Development Finance Corp and Exim Bank. There are many agencies mentioned in that executive order. In fact, it would be easier to list those we haven't engaged with than those we have. We believe the timing is right to move from theory to actual agreements, and we plan to pursue this as aggressively as possible.

Thank you for the update. Since the recent executive orders have been issued quickly over the past six weeks and you submitted the application, have you received any feedback from your contacts at ISA? I understand they are currently in discussions. Have you sensed any urgency from them, or is it primarily focused on integration and combination at this stage?

No, I think hi, Dmitry, what we're hearing is that there is action. People understand that this has highlighted the fact that the regulator has not met its obligations. If you listen to some of the comments from the SG, although they are somewhat speculative, they do indicate urgency. We hear privately from some member nations that there seems to be momentum. Our decision is made, and we are moving in this direction. I hope that the other member nations, who have relied on UNCLOS and acted in good faith by conducting research to support their license applications, will see the regulator agree on a set of terms for the mining code and join us.

Thank you for the opportunity to clarify the situation regarding the overlapping licenses. Let's say you obtain the NOAA collection license within a certain timeframe, but ISA isn't ready to issue theirs yet, and you begin collections. If ISA then gets everything in order, evaluates your application for collection in the NORI-D and TOML areas, and approves it, how would that process work? Specifically, how would the revenues from the nodules you collect be shared between Nauru under ISA rules and under NOAA rules?

Well, they won't because we won't have applied. We're not applying to the ISA. We're only going to be applying to NOAA.

Got it. So your exploration licenses will still be in effect, but you're not applying for a collection license?

Correct, correct.

Dmitry, there were some comments from some of the media or the global community, where they're kind of attempting to treat it all as one ball of wax and pierce the corporate veil. TMC USA is a private entity established 12 years ago. NORI and TOML are separate subsidiaries, and NORI and TOML will continue to do what they need to do to keep the ISA exploration contracts and compliance. But at the same time, we wouldn't want a situation where the complication of having to consider permitting over the same area from two regimes, but there would be no reason for us to relinquish our rights to those exploration contracts before any commercial recovery permit of the same area is granted.

Got it. Okay. Understood. And then one final question along similar lines. Do you foresee any issues with potential customers for your metals, for your products that are ISA member states not being able to purchase these metals from you since they will not be collected under an ISA license?

No, I do not. I've heard that reported in the media, but I don't see that as being any risk whatsoever. There seems to be a lot of unnecessary speculation around that language. However, the world is heading towards a situation where it will be short of these metals. We believe that having the United States as our sponsor is the best possible support we could hope for. We certainly don't think there are issues, especially after speaking with commodity traders in recent weeks. There seems to be renewed interest, and many are eager to have a conversation about how they can get involved, and they don't perceive any concerns either.

Okay. That’s encouraging. Thank you, Gerard.

Thanks, Dmitry.

Thanks, Dmitry.

While that's happening, Michelle, let's address a couple of questions from the webcast. Can we confirm the PFS release date? Yes, I mentioned next quarter, but to clarify, it's the third quarter of 2025. A question regarding an update on our path to commercialization and any milestones we expect to achieve in the next 12 months concerning offtake and regulatory progress. That's a great question. As Gerard mentioned, we feel positive about our discussions with potential commercial partners. During our site visit at the PAMCO facility, we had the presence of the sell-side research community as well as battery makers, precursor producers, and steelmakers. In the United States, we're seeing increasing headlines about major automakers relying on battery technology that could benefit from more nickel or manganese supply. It's important to note that most of these U.S. automakers have not yielded to pressure from global NGOs to exclude these materials from their supply chains.

As we approach commercial production, the urgency and concern about missing out will only grow. Regarding milestones, the upcoming PFS is significant, but it will also provide insights into the valuation of our entire resource portfolio. We are very eager to show a clear path, step-by-step, on what to expect in the coming quarters regarding our regulatory review once our applications are deemed substantially complete.

This will not be an opaque process. We are not just hoping for TMC to be permitted. There will be a clear outline of the milestones to anticipate. Please monitor this in the next few months, as we are excited to share more information on that topic. There was a question regarding the status of the Hidden Gem in relation to the commercial production system. Gerard, do you have any insights to share? The recent oil price dynamics have certainly been intriguing. However, our team remains focused on identifying the right scenarios for preparing the Hidden Gem for commercial production. We initially thought we had more time to prepare the Hidden Gem for our higher production target of 3 million tons. However, based on the feedback we have received since the executive order, we are now focused on how quickly we can launch the project and achieve economic viability, even if it means reducing the upper tonnage target in favor of speed. Our engineers are back at work, and we're excited to have Rutger on our team, who successfully led the commercial trials in 2022. I’m pleased to report that Allseas continues to be a fantastic partner and shareholder, and we are actively addressing these developments.

One follow-up question is whether NORI is still planning to submit an application through the ISA in June of this year.

That is correct. Just to clarify, the NORI license is set for renewal next year in 2026, and we will be renewing it since NORI is fully compliant. There is no legal reason preventing the renewal of that license. The application we are submitting through our US subsidiary to NOAA does not affect our plans to renew the license with the International Seabed Authority. We are addressing all aspects of this situation.

Michelle, I think we have time for one more question from the line if there's anybody in queue.

I am showing no further questions on the phone lines at this time. And I would like to hand the conference back over to Gerard Barron for closing remarks.

Thank you. It's been an incredible 2025, and I take immense pride in what we've accomplished. I'm proud of our team and how everyone has remained united over the last decade. We've experienced tremendous ups and downs, but we've consistently come together as a team. We have a dedicated group of individuals focused on our mission, committed to conducting top-notch environmental research, and dedicated to bringing this new resource into production. Everyone feels a sense of pride about our current position. Our Board has been an exceptional source of guidance during these recent months and years. We also have fantastic partners, especially our primary investor, Allseas, who are ready to assist us in starting production. Many of you witnessed our strong partnerships during your visit to Japan last month, along with our sponsoring states. They entered into agreements with us in 2011 for Nauru and 2012 for Tonga, in good faith under UNCLOS's protection.

Unfortunately, the commitments they relied on have not been met. Nevertheless, they remain extremely supportive, and we will always ensure their interests are safeguarded as we move forward. I want to express my deep gratitude for their unwavering support. Additionally, our retail shareholder base has grown significantly; I truly appreciate our retail shareholders for their dedication and their willingness to advocate for us and clarify our scientific achievements to those who may misunderstand. I anticipate that our institutional shareholder base will continue to expand as well. Thank you all for your support and commitment, and I look forward to an outstanding 2025 and an exciting future. Thank you for being part of our journey, and for joining us today.

This concludes today's conference call. Thank you for participating, and you may now disconnect.