管理層發言
Good day, and thank you for standing by. Welcome to The Metals Company Second Quarter 2025 Corporate Update Conference Call. Please be advised that today's conference is being recorded. I'd now like to turn the conference over to Craig Shesky, CFO of The Metals Company. Please go ahead.
Thank you, Liz. Please note that during this call, certain statements made by the company are going to 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 statements. 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 recent directly comparable GAAP financial measures can be found in our slide deck being used with this call. You are welcome to follow along with our slide deck or if joining us by phone, you can access it at any time at investors.metals.co. And I'd now like to turn the call over to our Chairman and CEO, Gerard Barron. Gerard, please go ahead.
Thanks, Craig, and thanks to all of you for attending. So firstly, I want to acknowledge everyone who made the pilgrimage to New York for our first-ever Strategy Day on August 4 last week. And that includes my leadership team, the Board of Directors, our new and long-time strategic partners, our sponsoring states, our research analysts, institutional investors, and a select group from our army of retail investors. I believe this experiment was a resounding success, probably the single most exciting workday that I've ever experienced. And if you were not part of it this year, fear not, we intend to repeat this on an annual basis, getting bigger and better each time and as our coalition of investors and partners continues to grow. Just make sure you hold enough TMC shares when the invites go up. So the day was passed with meaningful conversations, including a deep dive into our partnerships with an exciting panel, including Edward and Stephanie Heerema of Allseas and Korea Zinc Chairman, Yun B. Choi.
And in true TMC style, the evening ended on a high note, quite literally with a spirited karaoke party. The Strategy Day also featured the ringing of the NASDAQ closing bell, which our NASDAQ rep said was one of the most enthusiastic and well attended that they have ever had. And this movement gave me an opportunity to reflect on what's happened in the previous 4 years since we last rang that same bell. And I keep coming back to our key TMC motto, adapt or die. And it's not just that we've been able to adapt to a capital-light approach, it's not that we've been able to adapt to a new regulator. It's that amidst all of this adaptation, we've been able to keep the project moving forward, while so many others have been stuck at 0. And this now puts us in a unique position where we have a wide moat around the business, due in part to all of the project spending and historic milestones over the last 14 years, but also because we're one of the unique companies with competency in this new industry that can actually take the path offered by the existing U.S. seabed mining code.
Many others have no choice but to wait for the long promised and never delivered ISA mining code. And I believe that the pace of our progress is only going to accelerate from here with a PFS in hand as the only commercially viable deep seabed resource opportunity in the next several years for any potential customers, commercial partners, and of course, public shareholders. Make no mistake, TMC is here to stay, and we are just getting started. Another highlight of August 4 was the release of our PFS and initial assessment. Two documents with sign-off from qualified persons showing a combined project net present value of more than $23 billion while also showing a clear capital-efficient path to first production. The PFS also included a world first reserves for a nodule project. Now I do know that there are some who may have been hoping for production sooner than the Q4 2027 expected start date.
Well, first of all, as anyone familiar with resource investing will tell you, Q4 2027 is right around the corner when talking about a multi-decade project of this scale and value. It's also important to keep in mind that there has always been an anticipated ramp-up period post permitting, where modifications and mobilization with the Hidden Gem would be required prior to beginning commercial production. And this anticipated ramp-up period has always been expected by the research analysts who cover our stock. In fact, last year in November when the share price was below $1, we discussed the fact that we would not be making capital investment on the Hidden Gem until we had regulatory certainty. We're now excited to be ramping up this work again and with our partner, Allseas. And instead of a sequence where that work begins after the grant of a permit, we and the Board soon expect to have the confidence to get moving.
And this is due to the signals and tangible progress coming to us from D.C., not just to issue a permit but to do it in a way that can be legally defensible for many decades to come. So today's agenda. First, we'll take you through a summary of all the amazing things that have happened in the last few months, including the strategic investment from Korea Zinc. We've also renewed our partnerships with Nauru and Tonga, reaffirming our shared science and rules-based approach to delivering lasting benefits for the Pacific nations while building the secure, critical mineral supply chains underpinning reindustrialization, good jobs, and resilient economies. I will then discuss our cadence of regular predictable progress at NOAA, including our notice this week of full compliance on our exploration applications. And I'll then turn it over to Craig to discuss the PFS, DIA, and our financials. Well, I'm happy to again report that we have renewed and strengthened our agreements with both the Republic of Nauru and the Kingdom of Tonga, our long-standing sponsoring states who have led from the front since the beginning.
And these updated agreements reaffirm our shared commitment to a science rules-based approach to developing this new industry, setting a high bar for environmental stewardship, transparency, and community benefit. For Nauru and Tonga, these partnerships are designed to deliver durable economic opportunities, capacity building, and long-term revenues that can support generations to come. They provide the stable collaborative partnerships we need to responsibly advance towards first production while also contributing to U.S. and allied efforts to secure resilient supplies of critical minerals. On a personal note, I very much enjoyed our meetings in D.C. with the Nauruan delegation on August 6, and it was great to see the U.S. State Department recognize the strategic importance of our sponsoring state. In June, we announced a landmark strategic investment of $85 million from Korea Zinc, the world's largest smelter of nonferrous metals.
Korea Zinc is positioned to use TMC's USA nodule-derived materials to produce refined metals, copper foil, and pCAM in their existing facilities in South Korea and potentially build new facilities here in the U.S.A. To further that ambition in August, I traveled to D.C. with Chairman Choi. Among others, we met with David Copley, the President's critical minerals czar, to discuss securing domestic supply chains and advancing U.S. mineral independence. And I look forward to another visit with Korea Zinc on their home turf this September as we push on bringing additional investment into the United States. This quarter, we welcomed Michael Hess and Alex Spiro to the TMC Board, two highly connected leaders whose experience spans global energy, finance, law, and high stakes negotiation. Michael has spent time at Goldman Sachs and KKR and now heads the Hess Family Corporation and brings deep relationships across government and industry that will help accelerate our access to capital and strategic partnerships.
And of course, the Hess Family are recognized as one of the great industrial giants in the United States. Alex Spiro, one of America's most prominent trial lawyers and strategic advisers has represented some of the biggest names in business and technology, and his insight and network will be invaluable as we navigate the complex intersection of policy, markets, and innovation. And together, this board combines unmatched vision, credibility, and connections, giving TMC the strategic edge we need to move NORI-D into production. This quarter, we continued methodically moving the regulatory ball forward under the U.S. Deep Seabed Hard Mineral Resources Act, a clear enforceable framework that gives us visibility and confidence in our path to production. I know it's not always quick enough for everyone, but just take a step back on how fast these milestones have been achieved since the initial applications were submitted just a few months ago.
In April, application submissions. In May, substantial compliance on the exploration license applications. And in July, proposed amendments to DSHMRA to expedite the process. And on August 12, NOAA confirmed full compliance for our exploration license applications, another important milestone that validates the thoroughness of our submission and moves us to the next stage in the process. And I'm pleased to say that NOAA has begun the process of certifying these applications, a 100-day process that started on July 27 and July 28. Each regulatory milestone derisks the project and strengthens the investment case, and we are systematically progressing through a transparent U.S. regulatory process with a clear path ahead toward first production from NORI-D in Q4 2027. So we're also looking forward to this administration's proposed amendments to streamline permitting and supportive guidance from senior officials underscoring the U.S. government's intent to lead in the production and processing of deep seabed critical minerals.
The public comment period on these amendments will be concluded on September 5 this year. And in contrast to NOAA's great progress in the last several months, I'd like to acknowledge that the ISA finished their 30th session this July. The ISA continues to keep calling for regulations but doesn't seem to be particularly interested in delivering those regulations. Keep in mind that NOAA had pioneered deep-sea environmental research, and they've put in place working regulations prior to the ISA ever being formed.
Thank you, Gerard. For those in attendance or for those who have reviewed the presentation during Strategy Day, a lot of this is going to be familiar, but there was quite a bit of detail. So I'm now happy to go through some of the key points in our historic landmark pre-feasibility study and initial assessment in deeper detail. Project economic studies come with three levels of increasing confidence, an initial assessment, which gives you a sense of what the product could be within a broadband of plus or minus 50% cost estimate accuracy. We produced an IA in March 2021 over the NORI-D area. A prefeasibility study gives you a sense of what the project should be and then narrows that accuracy to within 5%. And last is the feasibility study that describes what the project will be with an even tighter cost accuracy band, and that's often the basis for project finance. So on August 4, we published two new studies, a PFS for NORI-D and a new IA that covers the rest of the resource in NORI and TOML.
Together, these two studies should give you a good sense of what our first project should be in the NORI-D area and what the rest of the resource can be in terms of economics. So taking a step back and looking at the geographical areas that each study covers. The PFS covers NORI-D, the IA covers everything else, but neither study covers the additional ground that we've applied for under U.S. law, where we know we have priority right. And our management team estimates these areas to have approximately 300 million tons of exploration potential, given the proximity to NORI-D and TOML A-F areas where we do have quite a bit of exploration data. So the results as of the middle of 2025, a total combined project comprised of an NPV of $5.5 billion for the PFS, and $18.1 billion for everything else. The estimated amount of recoverable modules for the study is 164 million wet tons. The assumed production start date is Q4 2027 with a life of mine just over 18 years.
Annual production in steady state was modeled at 10.8 million tons of wet nodules, and steady state for the PFS is defined as the years 2031 through 2043. Offshore, this level of steady-state production is going to require four converted drillships. In onshore, we assume processing in existing RKEF, rotary kiln electric arc furnace in Asia, and then building refining capacity in the United States. We expect to start relatively small towards the end of 2027, then gradually ramp up capacity before adding a second vessel in 2030 and then ramping up to steady state with four vessels by 2031, hitting our nameplate capacity of 12 million tons per year in a few years of production. But again, on average, during that steady state, it’s 10.8 million tonnes per annum. We expect to generate almost $600 per dry ton of nodules during steady-state production. As one might expect, it's not a smooth line prior to the construction of U.S. refineries.
The revenue per dry tonne will be a bit lower, a bit less than $500 per ton in 2032, for example. And then by the end of the 2030s, with two U.S. refineries running, expected revenue per ton is approximately $640. Overall, the revenue mix is expected to be quite similar to what we shared with the market over the last several years based on the initial assessment on NORI-D from 2021. 45% of revenue coming from nickel products, 28% from manganese, 17% from copper, and 9% cobalt is the smallest contributor to revenue. So where does all of that put TMC on the cost curve? Well, including the valuable byproducts, which are estimated to account for about 55% of total revenue, our C1 nickel cash costs are just over $1,000 per ton, and that's lower than nearly all producers outside of Russia, including most Indonesian producers. Even on an all-in sustaining cost basis, our nickel costs, including byproduct credits, would be just over $2,500 per ton.
Said simply, we will be profitable in nearly any nickel price environment. With steady state revenue per dry ton of just under $600 and OpEx per ton of $340, which also accounts for corporate overhead and royalties, we arrive at our EBITDA margin per ton expected to be about 43% or $254 per ton during the steady state years defined as 2031 to 2043. During that time, of course, we expect to transition from mainly selling matte from Asia to then selling higher-value refined products like nickel sulfate, cobalt sulfate, and copper cathode in the United States. So the early 2030s would see EBITDA margins in the low 30s. But by 2040, that EBITDA margin is closer to 50%. This anticipated ramp-up in profitability makes it worthwhile to spend on the onshore refinery CapEx after we begin production while also taking a huge step towards helping the U.S. establish mineral independence. So how are we going to develop these commercially viable operations?
Well, the March 2021 initial assessment for NORI-D envisioned $7 billion of upfront CapEx, of which $2.2 billion was for offshore vessel CapEx. For the prefeasibility study, we've been able to bring that offshore preproduction number down to less than $500 million for the offshore component. And where possible, we've assumed contracting the services we need and only deploying CapEx where without deploying CapEx ourselves, we wouldn't be able to get the service. As a result, our development CapEx assumes $4.4 billion onshore for construction of the refining capacity to match the offshore production. This approach ensures that we can deliver critical products to the U.S. as contemplated by NOAA regulations while significantly increasing our payables by producing a higher-value product, again, nickel sulfate, and cobalt sulfate before any U.S. refineries are built. We have an opportunity to either give offtake to Korea Zinc for alloy and matte on the condition that processed materials are returned to the U.S. or we control through their facility and return processed materials to the U.S. ourselves.
Because we've not yet developed the definitive agreements with Korea Zinc, some of the production is left at the alloy and matte level. And as far as the U.S. refining capacity, well, we're aiming to build that together. Many of the meetings that Gerard talked about and many that we expect to occur in the coming months are to that effect. But as I said earlier this month during the Strategy Day, we're not going to bite off more than we can chew. And we do expect to be in production and producing significant revenue prior to greenlighting any such onshore spending. In fact, approximately $4.2 billion of this $4.4 billion onshore CapEx estimate is assumed to be spent in the 2030s, well after we've been in production for some time, generating significant revenue. Moving on to the initial assessment. That second study shows the potential of the resource beyond NORI-D, effectively the rest of NORI and TOML.
The estimated amount of recoverable modules for the initial assessment is 670 million tons wet. The assumed production start date is 2037 with a life of mine of 23 years. This initial assessment assumes contracted services offshore with eight production vessels, each equipped with three collectors at 20 meters each. So putting it all together, adding up the NPV of $18.1 billion for the IA and $5.5 billion for the pre-feasibility study, we arrive at the total estimated resource NPV of $23.6 billion. Over the life of both projects, on an undiscounted basis, revenue of approximately $369 billion and EBITDA in excess of $200 billion and a position in the first quartile of the cost curve that makes this model very difficult to break across any commodity cycle. And yet, despite the undeniable quality and size of this resource and our expected position in the first quartile of the cost curve, we feel we remain undervalued compared to peer developers and explorers.
On the left side of this page, you'll see a TMC valuation example, which again is purely for illustrative purposes. Using a slight premium to the upper end of the nickel developer and explorer valuations and you apply that to the PFS NPV of $5.5 billion, which, keep in mind, in that PFS, we expect to have a more defensible cost curve position and generally lower CapEx per ton than many of those peers. And then you add to that the average nickel developer or explorer valuation multiplied by the initial assessment NPV, you get to a total illustrative market value based on comps of approximately $10 billion, which would be over $20 per share. From there, you can see on the right side of this page what nickel or copper producers trade at as a multiple of net asset value. This shows the potential for multiple expansion as production approaches and then begins. So moving on to our liquidity profile.
At June 30, TMC had pro forma cash of approximately $120 million. Now the headline in our filings for both our press release and our 10-Q was $115.8 million, but that $120 million includes the final registered direct offering proceeds, warrant exercises, and unsecured credit facility payments made just a few days after quarter end. So by July 4, it was $120 million. And as we disclosed last quarter, our S-3 shelf registration statement capacity has been used and current ATM expires in the fourth quarter of this year. So again, TMC expects to refresh the S-3 and ATM before year-end as a matter of good corporate housekeeping. The ATM was last used on April 17, 2025, and this was prior to the second quarter's strategic capital raises. On to the financial results. In the second quarter of 2025, TMC reported a net loss of $74.3 million or $0.20 per share compared to a net loss of $20.2 million or $0.06 per share for the same period in 2024.
The net loss for the second quarter of 2025 included exploration and evaluation expenses of $10.5 million versus $12.4 million in Q2 2024. General and administrative expenses of $11.5 million versus $7.9 million in Q2 2024, and other items totaling $52.3 million versus a slight gain in Q2 2024. Exploration and evaluation expenses decreased by $1.9 million in the second quarter of 2025 compared to the same period in 2024, primarily due to a decrease in mining, technological and process development activities, partially offset by an increase in share-based compensation due to the amortization of the fair value of restricted stock units and options granted to officers in the second quarter of 2024. G&A expenses increased by $3.6 million in the second quarter of 2025 compared to the second quarter of 2024, mainly due to an increase in share-based compensation as a result of the amortization of the fair value of RSUs and options granted to directors and officers in the second quarter of last year, as well as an increase in consulting costs pursuant to the U.S. regulatory path and other financing activities.
Other items significantly impacted the net loss in the second quarter of 2025, include the Nauru warrant costs, change in the fair value of warrant liability, and foreign exchange movements. Moving on to free cash flow. Free cash flow for the second quarter of 2025 was negative $10.7 million compared to negative $12.2 million in the second quarter of 2024. Net cash used in operating activities was $10.7 million for the second quarter, primarily due to higher payments to campaign vendors in the comparative period, and this was partially offset by an increase in environmental payments. Free cash flow is a non-GAAP measure, and I would like to point you to the non-GAAP reconciliation table included in the slide deck on our website. We do believe that the cash on hand is going to be more than sufficient to meet working capital and CapEx requirements for at least the next 12 months from today.
In the first half of 2025, of course, we had a significant increase in the cash balance following receipt of funds of $85.2 million from the Korea Zinc partnership, $35 million net proceeds from the registered direct offering, $14.8 million from the ATM use in the first half of the year, and $6.9 million from various stock option and warrant exercises. A portion of these proceeds was used to repay the $7.5 million Allseas working capital loan, along with outstanding interest prior to its maturity. Our accounts payable and accrued liabilities balance as at June 30, 2025, was $47.1 million, and this includes $32.4 million owed to Allseas for various services provided, again, the majority of which can be settled in equity at TMC’s discretion. The significant increase in warrant liability is due to the increase in the fair value of private warrants reflecting the significant increase in the company's share price. So with that, operator, we’ll turn it back over to you and take some questions from those on the line.
分析師問答
Our first question comes from Jake Sekelsky with Alliance Global Partners.
So now that the PFS is out, can you just comment or provide some color on what work needs to be done in order to get through the feasibility level and maybe the timeline there?
Yes. Look, I think the biggest thing that we're going to focus on is getting to our final agreement with our partner, Allseas. Now that we see a clear regulatory path through the United States, the next step is really not just focusing on feasibility, but getting ourselves to the FID, the investment decision to begin ordering some of the longer lead-time items to allow us to hit our target of Q4 2027 production date. So it's been this interesting dance, this balance between not wanting to spend too early, certainly when the TMC valuation was much lower. But now that we see clarity, making sure that we give sufficient information not just to Allseas, not just to ourselves, not just to the Board, but also to the market to make clear that we expect the permit to be coming, and therefore, it makes sense to begin spending a little bit to get that production system ready to go. So I would say, Jake, that's probably the #1 important point.
We also intend, of course, over the coming months to think through the financing mix of going beyond this first vessel and ensuring that we explore every opportunity that is now being presented by the U.S. government. As you've probably seen, there's quite a bit more in terms of funding opportunities from various departments, whether it's within the Department of Defense, DFC, EXIM Bank, or Department of Energy. There was $1 billion allocated for critical minerals just this week. So we're going to be very busy again with partners such as Allseas, Korea Zinc, and potentially the U.S. government laying out what that timeline is going to be. But really focusing on that first vessel is priority #1.
Okay. That's helpful. And then on the permitting side of things under NOAA. Now that you're in a certification stage, what are the next major steps or milestones that we should keep an eye out for as we head into the second half of the year in 2026?
Well, I guess, the closing of the comment period. And I think the administration and NOAA have made it very clear that they have introduced changes to those regulations to allow fast-tracking of permitting. And so I think what you should look forward to is good news coming out of the regulator. And I must say considering this is the first live application that they've had in many years or first new application, NOAA has been amazing. I think they are motivated and excited about. The work that comes with this application. And of course, these rules of DSHMRA have been around for decades. And finally, the moment is here. And so I think what you can expect to see is those amended changes adopted. And you can expect us to be having a regular cadence. Would I say we are in daily contact with our regulator? Probably, yes. Probably daily. And so of course, the big part is permitting based on the environmental impact study.
And of course, we've spent hundreds of millions of dollars and more than a decade gathering that data, which is amazingly compelling. And so look, we expect to have more information to be sharing with not only the regulator but the broader public as we make that information available because what I can tell you is it's all good news there. So I guess from a NOAA perspective, just more permanent certainty. And they want to see this resource in production. You saw the critical minerals czar, David Copley, traveled to the Cook Islands recently. We had a tremendous reception at the White House where they received not only Korea Zinc and their team led by their Chairman, but also the Republic of Nauru. And the message that they are consistently saying is critical minerals are important, and seabed minerals are super important, and the United States wants to lead that race. And obviously, we are the most advanced in that category. So it's a perfect coming together.
Our next question comes from Heiko Ihle with H.C. Wainwright.
Thanks for inviting me to your Investor Day earlier this month. I like the karaoke session that came up on this call.
Hopefully, no photos or video, but thank you for attending, Heiko.
Allegedly. You're still calling for first production in Q4 of '27 in your prepared remarks here, it was listed in the presentation. As you know from the reports we've written, we think this is a doable timeline. In your view, what main factors could either accelerate or slow down this progress, in your view, like some societal regulatory factors that may not be quite as obvious to outsiders like me that don't talk to the government and the communities on a daily, weekly basis? And is there maybe anything that you would leave us with on how to build our models a little bit more accurately?
I don't believe the government will provide us anything beyond encouragement by that deadline. We informed the market that the timetable is approximately 2 years, and we are definitely receiving enough support from the administration and the regulator for our Board of Directors to begin deploying that capital. It's important to note that we have the right processes in place and our highly qualified Board, including experienced individuals like Andy Greig, who has managed over $500 billion in capital projects in the resources sector at Bechtel. Our Board possesses a wealth of expertise in capital allocation and governance. I can assure you that we have a highly supportive Board that is committed to spending that money wisely, and we have a fantastic partner in Allseas, who is equally dedicated to getting that project into production. Additionally, the administration is eager for us to move forward. I don't anticipate any regulatory issues that should impede this process. While there are supply chain challenges, it is our responsibility, alongside Allseas, to manage those effectively. Achieving production during this administration is very important. Overall, I view the risks as standard business risks, and I believe we are well prepared to navigate them with our partners.
Fair enough. Building on that last question just a little bit. Earlier on this call, you were talking about adapt or die. And I agree with your viewpoint of having a wide moat around the business, and you alluded to that as well earlier on this call. Just thinking out loud here, given all the geopolitical risk factors, and some of that was discussed earlier this month as well, is there anything in particular that keeps you up at night or anything in particular where things have just come in substantially better than you anticipated? I mean, because from the way we look at it, a lot of things were discussed earlier this month where the support was substantially stronger than what anyone would have envisioned. I mean, you literally had some of the government representatives present with you at the hotel.
I think there have been many positive surprises. We were aware of some cabinet members from their time in opposition, so it was encouraging to see people like Secretary Rubio take significant roles in the Trump administration, especially since he had supported us while in opposition. We knew we had their backing, but there are still moments of surprise. For example, we were invited to the White House last week, where we found representatives from all major departments ready to contribute because the strong leadership from the White House is actively promoting our initiatives. It was great to see every relevant agency in attendance asking how they could assist. Additionally, I was surprised by Korea Zinc's Chairman, who initially had doubts about investment opportunities in the U.S. but has now recognized his crucial role in meeting this administration's critical mineral requirements. He produces essential minerals like antimony and gallium, which the U.S. government is eager to secure.
Overall, it's encouraging to see how the administration is mobilizing support. When I met with the Chairman from Korea Zinc last week, we inquired if they were concerned about any criticism, and their response was that they are focused on securing critical mineral supplies for the future. They've appointed several experts, which is a promising aspect of this administration. I have never witnessed a group as dedicated as this one, except for my own team. For instance, Senior Director Copley recently returned from a brief but meaningful trip to the Cook Islands to demonstrate the administration's backing for this new industry. So, in summary, there have been many positive developments.
Our next question comes from Matthew O'Keefe with Cantor Fitzgerald.
I have a question regarding the feasibility studies, especially for the PFS. It looks promising, and we've discussed it. However, I'm curious about the $492 million capital expenditure needed to reach production as outlined in the study. Given that in the past you worked with Allseas, which handles most of the shipping, how do you anticipate this cost being divided among your partners? And when can we expect to have clarity on that?
Yes. Sure, Matt. In terms of that $492 million and sort of the assumptions that go into it in a pre-feasibility study, there is allowance for contingencies, some buffers, specific growth. There are elements in there that for a point in time, relatively conservative analysis. May not ultimately end up being something that has to be cash-flow out the door between now and commercial production. What I would say in terms of bridging to, here's the breakdown of what's TMC, what's Allseas. We've had the assumption now with our partner Allseas for several years of splitting that preproduction CapEx, which we do believe is going to be much smaller ultimately than what was in the PFS. But this is what we're all drawing our eyes to now with our PFS and IA release with the Strategy Day behind us, with the applications over the line. And now with a pretty clear path from the U.S. regulatory front, that gives confidence to us on Allseas to sharpen the pencils again and make sure that we hammer out those details.
So I think it would still be a little bit premature to give a more detailed breakdown on it, but suffice it to say that it's a priority for us and for them as well. And I think that's evidenced by the fact that the Allseas Founder, Edward Heerema and Stephanie Heerema came over for the Strategy Day and spent a lot of time talking to analysts and investors on that panel kind of laying out why they've stuck with TMC through what have been some difficult times and have been key participants in nearly every major equity raise that we've done as a public company and even before that.
Yes, you have significant support from both your partners and your growing investor base. Following up on that, you previously mentioned the Department of Energy, Department of Defense, and other U.S. institutions that have funds allocated for critical metals. Have you explored those programs? Are you applying for any funding, and would any of those resources be applicable to the initial phase of the ramp-up, or would they be directed solely towards U.S. processing capabilities?
I'm glad you asked that, and it's an important point. The answer is that the funding is not exclusively for onshore efforts; some programs also have cash available for offshore initiatives. Currently, the process is quite different from when the Biden administration was focused heavily on downstream activities. Now, while the application process can be lengthy and sometimes chaotic, it allows quicker access to the right resources. Importantly, beyond the Department of Defense and Department of Energy, there are programs where funding decision-makers are still awaiting confirmation, likely to happen in September or October. As such, many discussions are in progress, and we are indeed seeking potential funding for offshore projects as well. We are cautious about providing too many details since this has been a long-standing pursuit for us. However, it’s now less about simply submitting applications. A change in U.S. government funding processes happened around late June, shifting from a fragmented application approach to a more coordinated strategy involving various councils. So rather than relying on a single application to different agencies, there’s now a collaborative effort in place, making the process more focused and intentional. Therefore, the answer is definitely yes; we are pursuing opportunities for both offshore and onshore initiatives concurrently.
That sounds promising. If I could add one more question, regarding your timeline for ramping up operations, you mentioned the possibility of having a processing plant established in the mid to early 2030s. If funding were available, it would significantly benefit the U.S. to develop some hydromet processing capabilities like you are exploring. Could you expedite that timeline, or do you still have considerable engineering and development work to complete for your processing plant?
No, we could definitely move faster, especially with Korea Zinc's involvement. They have recently constructed a state-of-the-art facility in Korea and are interested in building one here in the United States. From our viewpoint, we want to see that happen, provided the funding terms from the mentioned agencies are favorable. We believe this would greatly contribute to the U.S. reindustrialization goals. As you know, if something isn't grown, it needs to be mined. While AI is currently the focus, we should also pay attention to the need for physical resources. We need to establish the necessary infrastructure, which requires metals. The key question is where these metals will originate. Although we may not have the same appeal as the AI sector, our moment is approaching, as conversations are starting to highlight our overlooked role in this equation. This has also become a significant geopolitical topic, and we’re noticing increased interest from savvy investors. Moreover, the administration is expected to facilitate these developments, as evidenced by their recent deal with MP Materials, and we anticipate more actions like that in the future.
Our next question comes from Dmitry Silversteyn with Water Tower Research.
Just a quick follow-up or maybe not a follow-up, clarification. You didn't include it in these slides, but in your Investor Day slides, you had a more detailed timeline, and you had something called provisional approval, which you expect to get by the end of this year, if I remember correctly, the slide, and then the final approval kind of by the fourth quarter of 2026 to let you get into production in the fourth quarter of '27. What's sort of the difference between provisional approval and final approval? And does getting provisional approval do anything for you in terms of expediting the decision-making process on funding the first batch of capital expenditures? Or how should we think about that milestone approaching?
Look, the administration had been very open on this topic because there are some hoops we need to hop through. What has been made very clear to us is that if the administration came and just gave us a permit today, then we'd be tied up in legal knots. We may not achieve the objective that was set out in the executive order, which is to fast-track the permitting. The legal minds have opined on this, and it makes sense. And so what we've said, though, is it would be nice if we could have something and hence, that word provisional, that would give all of us the confidence. However, I think it's fair to say that our Board, and as you know, we've raised quite a bit of money in the last quarter. Our Board and our investors want to see us spend that money because they feel there is enough confidence coming out of the signals we have from the administration to get that permit in fine time. But the dates we mentioned at Strategy Day still stick. We think we’ll have that in a form to share by the end of the year. But it will be a confidence booster, you might say, Dmitry.
Understood. Okay. That's helpful, Gerard. Can you talk a little bit about the changing regulations that NOAA has published and are now in the comment period? You mentioned that these changes could help expedite approval processes. Specifically for your project, what impact do you think these new regulations will have on obtaining the necessary approval?
Well, the main one is that the way the regulations stood, you needed to submit an exploration application. And then once that was granted, they would start working on your commercial recovery permit. But the key driver will be to be able to do those two things in tandem because, as you know, we submitted two applications for exploration licenses, and we submitted one application for a commercial recovery permit. And so whilst that application is with the agency, the changes will just put in stone the fact that they can do those things in tandem, which will massively shrink the permitting timeframe.
Yes, to clarify, Dmitry, the reading of DSHMRA and its implementing regulations suggests that exploration licenses must be granted before the commercial recovery permit. However, it is clear that the applications or at least the review process can occur simultaneously. What we observe with the public comment period and proposed amendments confirms a logical approach, particularly for applicants like TMC, who have already completed much of the environmental work required for exploration. Additionally, there are beneficial amendments aimed at modernizing regulations from the 1980s concerning the delivery of physical copies and allowing the contractor responsible for the environmental work to draft the environmental impact statement, rather than simply handing off that work to another entity like NOAA. This clarification emerged through the NEPA process earlier this year. Essentially, as the federal register indicates, it's about updating the considerable groundwork already laid.
It's remarkable to compare the DSHMRA legislation and its regulations with the work the ISA began in the 1990s; they are incorporating valuable ideas from the U.S. seabed mining code. Overall, NOAA is refining and modernizing the regulations, including clarifying the concurrent review process that Gerard outlined. We have no further inquiries in the phone queue but there is one question from Nelson Sellers on the webcast regarding whether the administration can halt mining operations. This relates to our commitment to following a robust legal process to ensure the permit's long-term legal defensibility. Similar to land-based mining, as long as all necessary permits are obtained through the right channels, the validity of that permit should remain intact regardless of changes in administration. We don't see this as a partisan issue; critical minerals have bipartisan support and are crucial for the U.S., which relies on various sources for these minerals.
The NORI-D project can significantly reduce some dependencies. It’s unlikely that any future administration would choose to depend on Chinese sources for these critical minerals. Therefore, we expect a solid legal process to unfold, and it’s vital to allow that process to continue. Liz, do we have any other questions on the line?
No phone line questions at this time.
Gerard, I might turn it back over to you for some closing comments.
Yes. Thank you, Craig. Well, I guess, thank you, everyone, for turning up today. Thank you to my team for the amazing efforts to be able to produce these results over recent months. It's truly admirable what we achieved with a tight small team. And of course, thank you to our strategic partners and our sponsoring states. And thanks importantly, to all of our shareholders, and until next time.
This concludes today's conference call. Thank you for participating. You may now disconnect.