管理層發言
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. Well, usually, our first quarter conference calls are a bit quieter as they occur roughly six weeks after our year-end report but we have just experienced a six-week period in which our company and this industry have taken some historic leaps forward. While the Trump executive order on seabed minerals had been rumored for some time in the media, the filing of our application months ahead of expectations was not, and I'd like to personally thank our team for the tremendous efforts to get these three applications over the line in an accelerated fashion. Given all of the derisking milestones achieved since our company's inception, we believe that the one thing previously holding back our stock price was the lack of a clear regulatory pathway. And we believe we now have it. And frankly, I don't think the market has accurately priced that in. Despite a nice run-up this year, we believe that the spring remains tightly coiled for the stock.
Still, we were cognizant that another key overhang of the stock was fundraising, and we've seen short interest tick upward. And even after some incredible achievements, we did not want to drift into summer without shoring up the cash balance. So this week, we did just that through a $37 million registered direct offering from Michael Hess and Brian Paes-Braga, and an existing strategic investor in TMC. These are all parties that want to be with us for the long haul and are ready, willing and able to roll up their sleeves to help us continue to create shareholder value through significant experience and networks in the resource space, both offshore and onshore. Michael Hess, from the Hess corporate family has 15 years of exploration and production experience as both an investor and operator along with deep relationships across the United States. And Brian Paes-Braga is a long-time investor in TMC, a former Board member when the company was known as DeepGreen and continues to be a valuable supporter of the company and a good friend.
And I'd like to take this opportunity to officially welcome our newest member of the executive team, Rutger Bosland. Rutger joins us from our partner, Allseas, and was the Pioneering Engineer and Technical Lead on the development of our Nodule Collection System, leading up to the successful test in 2022, in which we lifted over 3,000 tons of nodules to the surface. And as our Chief Innovation and Offshore Technology Officer, Rutger is already playing a key role in optimizing the performance of our commercial scale Nodule Collection System. The teams at TMC and Allseas are excited about the continuity maintained on this project as we work together to drive toward commercial readiness. So here is our agenda for today. And while the milestones achieved in the last two months are historic, we are just getting warmed up. And I'm very excited about some key catalysts in the near term. Later this quarter, we expect our applications for exploration licenses and a commercial recovery permit to be deemed substantially compliant and complete respectively by NOAA, which kicks off the next stage of technical environmental review.
Also this quarter, we expect further detail from the Commerce Department and NOAA on tangible actions to expedite these review processes and look forward to providing a more definitive step-by-step permitting timeline to the market soon after. We will continue to explore alternative financing sources with US government departments and agencies as directed in the executive order as well as strategic partners to prepare for commercial production. But let me be very clear, the equity round just announced is more than sufficient to get us past the expected review process on a commercial recovery permit. Finally, we are pleased to announce that our PFS will be completed next quarter for the commercial recovery area, which we applied for, allowing us to reflect new assumptions made possible 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 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 got 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. And as noted in the recent executive order, 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. And 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, with assessing offtake opportunities and domestic processing capabilities. It further calls on key US development finance agencies to identify tools to support the industry. And 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 the 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 Economist for its 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 Economist continue to acknowledge 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 shows. 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 significant connection between the mineral content of nodules and the materials used in EV battery cathodes and wiring. While lithium iron phosphate (LFP) battery technologies are becoming more popular, over 90% of the LFP supply chain is located in China. In the Western markets, nickel-rich formulations account for more than 65% of the EV battery cathodes sold today, and this trend is expected to continue. It was encouraging to see GM and LG Chemical express their enthusiasm for new lithium manganese-rich (LMR) cathode technology, which offers 33% more energy density than LFP while maintaining similar costs. LMR consists of 65% manganese and 35% nickel, and since typical EVs need 100 to 200 pounds of copper, there will be strong demand growth for the metals found in nodules. As automakers near full autonomy, studies indicate that the battery power required for computing will match that needed for the powertrain, suggesting ongoing high demand for energy-dense nickel batteries.
However, some opposing groups claim we do not need these metals, but the U.S. government and global commodity experts would disagree. I’m amazed at how many representatives from global NGOs consider themselves commodity experts. However, even if all current and future EV demand were to disappear, demand for our products would remain strong. The U.S. Department of Energy and the U.S. Geological Survey classify these four metals as critical due to their importance in numerous applications. Nickel is essential for stainless steel, generators, turbines, and power grid infrastructure. Cobalt is necessary for aircraft engines, magnets, paints, and superalloys. Manganese is used in carbon steel, alloys, and building materials. Copper, on the other hand, is crucial for wiring, piping, electronics, traditional cars, HVAC systems, long-haul transmission cables, as well as future power requirements for data centers that support artificial intelligence and other technologies.
Now, what if the U.S. were to gain access to approximately 1 billion tons of these resources? That would be revolutionary. Based on current U.S. consumption, 1 billion tons of nodules could provide 456 years of manganese, 165 years of cobalt, 81 years of nickel, and four years of copper. It’s important to remember that it was U.S. companies and the government, including NOAA, that began evaluating and developing this resource back in the 1970s. They created a regulatory framework and carried out strategic environmental assessments. Companies like Transocean, U.S. Steel, and Lockheed Martin developed and tested Nodule Collection Technology. However, U.S. leadership in this area diminished when the U.S. did not ratify the UN Convention on the Law of the Sea (UNCLOS). Nevertheless, the U.S. prudently enacted DSHMRA, allowing citizens and entities to access seabed resources in international waters.
As mentioned last quarter, U.S. entities can apply to NOAA for exploration and commercial recovery licenses, and because the U.S. has not submitted to the jurisdiction of the ISA, this law remains intact. While a few countries have bilateral agreements with the U.S. regarding activities in international waters, U.S. law continues to permit freedom of action on the high seas. Recently, we've received numerous inquiries from investors about the legal aspects of U.S. seabed mining laws and their relationship to the ISA. It's a misconception to think of these as overlapping. The U.S. is not asserting a claim to territory in international waters; rather, through DSHMRA and NOAA regulations, it is merely overseeing the activities of its citizens in accordance with the freedoms applicable in high seas areas, similar to regulations for fishing vessels. Since TMC USA operates privately, it is not subject to UNCLOS obligations.
TMC's rights are determined by U.S. law, not UNCLOS, since the U.S. did not ratify it or its 1994 implementation agreement. To get a bit technical, according to Article 34 of the Vienna Convention on the Law of Treaties, a treaty does not impose rights or obligations on a third state without its consent. Under Article 14 of the same convention, a treaty binds a state only when it has consented to be bound, usually through ratification. The U.S. does adhere to certain aspects of UNCLOS voluntarily but maintains its original position on deep-sea mining as a freedom of the high seas and opposes the framework for ISA-led exploitation of seabed minerals. Now, shifting focus back to our project and onshore operations. In April, TMC and PAMCO invited over 50 individuals, including equity research analysts, commodity traders, steelmakers, and battery consumers, to visit PAMCO's Hachinohe plant in Japan.
Attendees interacted with PAMCO engineers regarding TMC's production processes and product specifications and had the chance to observe product samples closely. In February 2025, PAMCO successfully demonstrated high-grade nickel-copper-cobalt alloy and manganese silicate production using its existing facility, allowing TMC to adopt a capital-light approach without significant upfront costs. Our NOAA applications draw from one of the most extensive environmental datasets ever compiled, with over $200 million invested in cumulative environmental research. Overall, we believe we, together with NOAA researchers, have addressed critical questions for our environmental impact statement, which has been submitted as part of the NOAA process. We strongly feel it's time to progress, begin production, and enhance data collection to provide further evidence about the manageable impacts of deep-sea nodule collection.
Now, regarding project economics and the upcoming Pre-Feasibility Study (PFS), as Gerard mentioned earlier, we expect to announce our PFS for our first commercial production area next quarter. In addition, we will provide further details and valuation parameters beyond the NORI-D resource, which has so far drawn most attention, often overshadowing the other 78% of the estimated resources. We frequently get asked why we don't just disclose all this information at once. Firstly, we have been focused on completing our applications, and as a NASDAQ-listed, SEC-regulated company, we must follow specific rules for making resource and financial projections to ensure they are reliable for investors. We are eager to share this data with you, but our recent shift to the U.S. has necessitated a reevaluation of long-term assumptions requiring careful modeling and approval from qualified external individuals.
With our applications now submitted quickly, our team can refocus on this important project. As mentioned before, our capital-light strategy relies heavily on partnerships with organizations like Allseas and PAMCO that provide existing resources. The offshore strategy in the U.S. entails some extra steps, including the flagging of vessels. We also look forward to processing some day in the U.S., though we recognize that for a while, processing will likely occur outside the U.S. Regarding royalties, there are notable distinctions in the U.S. approach. While allies may see economic benefits as outlined in the executive order, it will differ vastly from some stringent proposals discussed at the ISA in recent years. We anticipate sharing more information in the third quarter about this work, both providing clarity on our first commercial recovery area and insights into the entire estimated resource.
Now let’s review financial results. TMC reported a net loss of about $20.6 million or $0.06 per share for 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 costs for the three months concluded March 31, 2025, amounted to $9.5 million, down from $18.1 million in 2024, due to reduced mining, technology, and process development expenses, as the previous year included costs for transporting nodules to PAMCO and incurred resource-definition costs during Campaign 8, which ended in early 2024, along with a decrease in environmental and pre-feasibility study costs, partially offset by increased share-based compensation. General and administrative expenses in Q1 2025 reached $8.5 million compared to $6.6 million in the prior year due to rising share-based compensation, offset in part by lower legal expenses during this period.
The results for Q1 2025 also reflected a loss of $0.5 million from changes in fair value of warrants liability, foreign exchange losses totaling $1.1 million, and $1 million in fees and interest on credit facilities and borrowings. Net cash used in operating activities for Q1 2025 was $9.3 million, compared to $11.8 million in 2024, mainly reflecting prior year's significant cash outflows related to Campaign 8, slightly countered by higher corporate expenses this year. Free cash flow for Q1 was negative $9.4 million against negative $12.1 million in 2024. Free cash flow is a non-GAAP measure, and the non-GAAP reconciliation table is present in the appendix of this slide deck. Regarding liquidity and capital-raising initiatives, TMC's liquidity, comprising cash flow and borrowing capacity, was approximately $44 million as of March 31, 2025, or $81 million pro forma after this month’s registered direct offering yielding $37 million in gross proceeds.
In March 2025, we raised the principal of our unsecured ERAS/Barron credit facility from $38 million to $44 million by $6 million. We mutually agreed to terminate the $25 million credit facility with an affiliate of Allseas Group SA, as maturity was approaching with no amounts outstanding. However, the maturity date of the $7.5 million Allseas working capital loan was postponed to September 2025. In Q1 2025, the company paid back $1.8 million of prior drawn amounts on the ERAS/Barron facility without drawing further. Additionally, we raised $5.7 million in the quarter through the ATM facility, issuing about 3 million shares at an average price of $1.93. Concerning corporate housekeeping, the $37 million registered direct offering, along with potential future proceeds of $55 million from associated warrants priced at $4.50 per share, utilizes most of the existing S-3 shelf capacity. These calculations consider that future exercise of any warrants must be included at the time of issue.
This financing will support the company well beyond the crucial milestone of obtaining permits for commercial production. As part of prudent corporate housekeeping, TMC plans to establish another shelf for future security issuance as discussions with additional strategic investors move forward in anticipation of commercial production; even strategic partners favor registered transactions, whether in debt or equity. It's wise to ensure we have all necessary tools before we need them. I will now turn it over to the operator to commence the Q&A session.
分析師問答
Our first question is from Matthew O'Keefe with Cantor Fitzgerald. Your line is open. Please go ahead.
Thanks, operator. Hi, everyone. It has been a busy quarter with significant progress, so congratulations on that. I appreciate the invitation to visit the PAMCO facility; it was truly enlightening, and the strength of the partnerships you've established is quite impressive and reassuring. I have a question regarding your application to NOAA. It appears that the ground you applied for includes the exploration ground and the commercial operations, but it also covers the two existing concessions you have under NOAA, which were previously under the ISA in the NORI area and the TOML area. Additionally, there seems to be an extra concession you mentioned that has a potential of about 500 million tons. Could you provide more details about its location or what we can expect regarding that? This relates to the potential upside you will discuss.
Sure. Firstly, thank you, Matt, and I appreciate everyone attending the events in Japan. It was great to see several analysts there and to experience the reality of our operations firsthand. I regret that I couldn't be present that day. You are correct that we haven't yet released a map of the specific area, but we will do so very soon. The additional area we are considering complements some of the existing NORI and TOML ground and is currently unclaimed by any other sovereign entity. It's significant that while other countries have the option to claim areas under license through the ISA, we intentionally chose not to pursue that route. We have the backing of Tonga and Nauru in our endeavors. Can you still hear me?
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.
Yeah. And just to add one point on that, too. It does not also encompass any areas that had been set aside as areas of particular environmental interest. So look, we are very eager to share, Matt, exactly where it is. But for commercial sensitivity reasons, it makes sense to get past our initial review with NOAA and then share quite a bit more detail very 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?
Look, that's our plan. I'm traveling to DC tomorrow, and we are in regular contact with the authority. It's fair to say there has been a lot of action generated by our application, and there is a lot of excitement inside that department as well. I have good reason to believe we should be expecting 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?
Sure. Looking back about two years, we submitted a proposal to the Department of Defense for a feasibility study on establishing a refinery at a site we identified in Texas. Since then, we have made significant progress in understanding how to process the nodules with our partner, PAMCO. We are also in discussions with potential processing partners in other countries, including Indonesia, which presents us with numerous options. However, a key requirement under DSHMRA is that while exemptions can be sought if processing in the U.S. is not feasible, there is an emphasis on bringing jobs and economic activity back to the United States. We are actively collaborating with two groups to evaluate this. We are pleased with the progress made and the positive feedback we have received from government agencies regarding the permitting process. Additionally, we have attracted interest from a variety of investors eager to fund tangible assets that meet the future needs of the U.S. We see this as a valuable opportunity.
If we had pursued this 20 years ago, we wouldn’t have had the same level of automation available today. Thus, maximizing the efficiency of processing plants is a top priority, and we are currently working with some of the best experts in the field to achieve this. We are committed to pursuing this initiative in the United States and have received numerous inquiries from interested parties looking to partner with us in this investment.
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 standalone 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 the 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 a great opportunity to see it firsthand. Our approach is comprehensive; we want to ensure that we explore every possibility during this favorable time with a supportive government. While I can't provide too many details, I would point you to the executive order that outlines the exploration of offtake arrangements and rights of first refusal, as well as the directives from the President to the Departments of Defense and Energy. This also includes exploring financing opportunities for the new seafloor nodule industrial ecosystem that the U.S. aims to develop, with initiatives from the Development Finance Corporation and Exim Bank. There were numerous agencies named in that executive order, and I can confidently say that it would be easier to list the ones we haven't engaged with than those we have been in active discussions with. We believe the timing is right to move from theory to actual agreements, and we plan to pursue this as vigorously as possible.
Understood. Thank you for that. Given the rapid issuance of executive orders in the last six weeks and your submission of the application, what insights do you have from your contacts at ISA? Since they are currently in discussions, have you sensed any urgency from them, or is the focus primarily on integration and combination at this moment?
No, I think hi, Dmitry, what we’re hearing is that there is action. People understand that this situation has highlighted the regulator’s obligations, which have not been met. While some comments from the SG may be speculative, they indicate urgency. Discretely, we hear from some member nations that there seems to be momentum. Our decision has been made; we are moving in this direction. I hope that for the other member nations who have relied on UNCLOS and have acted in good faith by conducting research to support their license ground, the regulator can agree on terms for the mining code and join us.
Thank you for that. I just want to clarify how the overlapping licenses will function. For example, if you obtain the NOAA collection license in the near future, but before ISA is ready to issue theirs and you start collections, once ISA gets everything organized, implements the regulatory code, and approves your application for collection in the NORI-D and TOML areas, how will that work? Specifically, how will the revenues from the nodules you collect be divided between Nauru under ISA rules and 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 product 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 see any risk in that. I've heard the media reports, but I don't believe they reflect the reality. There seems to be some unnecessary concern around this topic. The world is on a path to experiencing a shortage of these metals. Additionally, we believe that having the support of the United States is the best possible situation for us. Conversations with commodity traders in recent weeks indicate a strong interest in our offerings, and they do not perceive any issues in this regard.
Okay. That’s encouraging. Thank you, Gerard.
Thanks, Dmitry.
Thanks, Dmitry.
While that’s happening, Michelle, let’s address a couple of questions that have come in through the webcast. Can we confirm the PFS release date? Yes, I mentioned next quarter, but specifically, it will be the third quarter of 2025. There’s also a question asking for an update on our commercialization path and any milestones anticipated in the next 12 months regarding offtake and regulatory progress. This is a great question. As Gerard mentioned, we are having discussions with potential commercial partners and feel optimistic about our direction. During our visit to the PAMCO facility, we were joined by not only the sell-side research community but also battery manufacturers, precursor producers, and steelmakers. In the U.S., we’ve seen increasing mentions of major automakers depending on battery technology that will require more nickel or manganese supply. Importantly, most of these U.S. automakers did not give in to pressures from global NGOs to exclude these materials from their supply chains.
As we approach commercial production, the urgency and fear of missing out will only grow. Regarding milestones, we believe the upcoming PFS will be significant, and it will also provide insights into the valuation of the rest of our resource portfolio. We are very eager to show a clear path for the regulatory review process as soon as our applications are deemed substantially complete or compliant. This will not be a mystery; there will be a transparent outline of the expected milestones. So watch for updates in the coming months, and we look forward to sharing more information. There’s also a question about the status of the Hidden Gem related to the commercial production system. Gerard, do you have any comments on that? The environment has been quite interesting regarding oil prices lately, but our team remains focused on the right scenarios to prepare the Hidden Gem for commercial production.
We initially believed we had more time to prepare Hidden Gem for a higher production target of 3 million tons. However, based on recent feedback following the executive order, we're now focused on how soon we can get it operational and ensure it's economically viable, even if it means adjusting our upper production capacity to prioritize speed. Our engineering team is working diligently on this. We're excited to welcome Rutger to our team; he was the Project Director for the successful commercial trials completed in 2022. Allseas continues to be incredibly supportive as both a shareholder and engineering partner, and we are currently addressing these challenges together.
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. To clarify, the NORI license is set for renewal next year, and we intend to renew it since NORI is fully compliant. There is no legal reason preventing the renewal of that license. Additionally, our application through our US subsidiary to NOAA does not affect our intention to renew the license with the International Seabed Authority. We are addressing all aspects.
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 am very proud of what we've accomplished. I appreciate how our team has remained united over the last decade, even during challenging times. We've experienced both successes and setbacks, but our commitment to each other has never wavered. We have a dedicated group of individuals focused on achieving our goals, conducting top-notch environmental research, and bringing our new resource into production. Everyone can take pride in our current position. Our Board has provided exceptional guidance throughout recent months and years, and our partners, especially our largest investor, Allseas, are ready to assist us in starting production. Many of you saw our strong partnerships in Japan last month, as well as our sponsoring states, Nauru and Tonga, who entered agreements with us in 2011 and 2012, respectively. Although the commitments they relied on have not been met, their support has been unwavering, and we will always prioritize their interests as we move forward.
I want to extend my gratitude to them for their continuous support, as well as to our shareholders. Our retail shareholder base is growing significantly, and I truly value their commitment and advocacy for our work and the scientific results we are achieving, especially in clarifying any misconceptions. I also expect our institutional shareholder base to expand. Thank you all for your support and loyalty to our mission. I look forward to an amazing 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.