TMC the metals Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 27, 2025
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Operator

Good day, and thank you for standing by. Welcome to The Metals Company Fourth Quarter twenty twenty four Corporate Update Conference Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to Craig Shevsky, Chief Financial Officer of The Metals Company. Please go ahead.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Thank you, Liz. 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.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

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. And 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 will now turn the call over to our Chairman and CEO, Jared Barron. Jared, please go ahead.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Thank you, Craig. Well, before we announce a material and very exciting change in our way forward, I want to revisit the premise behind our company. So in the next thirty years, we expect to need to mine more base metals than have been mined in all of our human history. So where can we get these critical metals with the least cost to humans and nature? 70% of our planet is covered by the oceans, but they are home to only 3% of living biomass.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And the abyssal zone accounts for more than half of the ocean area. And according to Grock, the abyssal zone has sparse but resilient life that thrives on sinking organic matter in a vast otherworldly expanse. Limited leftover food means limited life. So limited life to begin with means less life to impact and vast self similar abyssal zone means ample opportunities for smart conservation. And that's just the beginning of why nodules could be a great source of critical metals.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And once you get this far offshore and this deep, there are no human communities to impact, metal grades are high, and there are four metals in one resource here, while it would take three separate mines on land. And crucially, we can process this resource onshore with near zero solid waste. And this means we will not need to manage lakes of toxic sludge. And what's the alternative? Well, keep cutting down biodiverse rainforests, displace people, poison air and water and generate massive often toxic waste streams, much of which ends up in the ocean, sometimes in smothering beautiful reefs.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And as a company, we reasoned from first principles and believed that we have a better shot at responsible extraction where we have fewer impacts and fewer impact receptors. So these first principles are backed by decades of research. Since the 1970s, the Clarion Clipperton Zone has received billions of dollars of investment and hundreds of research campaigns. In fact, after three commercial mining tests in the 1970s, the initial Programmatic Environmental Impact Statement or PEIS was prepared by NOAA already in 1981 based on several research campaigns conducted by the agency and the CCZ. And by 1995, NOAA reported to Congress that their studies basically eliminated pending verification of plume behavior during monitoring of further at sea mining system tests, virtually all other environmental concerns which were raised around deep sea mining.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Starting in 2011, the metals company has repeated a lot of this work and then some in our contract area in the CCZ. We are finishing our own EIS now and we have orders of magnitude more environmental data, our mining system is much better designed and our impact modeling is much more sophisticated than in the 1970s. But our conclusions are not materially different from what Noah concluded already thirty years ago. And furthermore, thanks to last year's expedition that revisited the site of a 1970s mining test, we now have a forty five year perspective on how the deep sea ecosystem recovers from a machine that looks quite irresponsible by today's standards, cutting 20 to 80 centimeters into the sediment compared to the top three to five centimeters that our seafloor collector impacts today. So we too have a sense of the recovery from our collector immediately after and then twelve months after the test.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

So the notion that we do not know enough to evaluate the impacts of collecting these metals rich rocks is wrong. So looking back at least fourteen years of our company's existence, we and our partners have achieved numerous milestones worth writing home about. Firstly, technical statements showing a resource of 1,600,000,000 tons of nodules representing the world's two largest undeveloped nickel projects. Then there's the first integrated collection system test since the 1970s, lifting more than 3,000 tons of nodules to the surface. There was the successful industrial scale nodule processing into high grade nickel copper cobalt alloy and manganese silicate, which we announced earlier this year alongside our partner PAMCO and successful bench scale refining of our intermediate product into nickel sulfate and cobalt sulfate.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

23 offshore research campaigns in some years delivering five campaigns per year, while most contractors manage one every other year and the adoption of a capital light approach utilizing the existing assets of our partners. So we've shown that we can pick up nodules from the seafloor, we can lift them to the surface and process them onshore all the way to the refined products with minimal environmental impacts and limited capital expenditure. And though we may have achieved much in forty years, many investors are focused on a different fourteen years and that is how long the ISA has been working on the mining regulations for this industry. After repeated failures to deliver the mining code in 2020 and then 2023, based on what we've seen during the current ISA session, there remains a possibility of continued delay on the ISA's target for the mining code adoption in 2025. The ISA's timeline drift and failure to deliver its legal obligation of adopting a mining code does not change one key fact and that is that we are ready.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

We have amassed an unprecedented wealth of environmental impact data, have gone above and beyond to design a system that minimizes environmental impacts and feel confident that we now know enough to get started and prove we can manage environmental risks. What we need is a fair hearing and a regulator willing to engage. Thankfully, we have another path forward. The United States has had the legal framework and regulations for issuing exploration licenses and commercial recovery permits for deep seabed minerals in international waters in place since the 1980s. And now there is political will to put existing authorities to use.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

So today, I'm pleased to announce that our U. S. Subsidiary, The Metals Company USA LLC will submit applications in the second quarter of this year to move into commercial production through the existing U. S. Regulatory regime.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And we did not make this decision lightly. It took careful consideration and many months of legal due diligence and government conversations. We've engaged multiple law firms and have conducted thorough legal diligence on the Deep Seabed Hard Mineral Resources Act of 1980 or DISHMA as well as implementing regulations from NOAA. Congress passed DISHMA as an interim regime to allow U. S.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Citizens to pursue deep seabed mineral projects in international waters in anticipation of The United States One day ratifying UNCLOS. Forty five years later, The United States has not ratified UNCLOS while DISHMA and NOAA is implementing regulations remain on the books and have stood the test of time. The total of four exploration licenses have been issued under this regime with two still active. So we've begun a dialogue with NOAA, an agency within the U. S.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Department of Commerce authorized as the lead agency for permitting under DISHMA and have in fact initiated a formal process of pre application consultation with NOAA. We've also met with numerous officials in the White House as well as U. S. Congress regarding their support for this industry. And in fact today, it was great to see Secretary Rubio talking to leaders in The Caribbean and highlighting that developing seafloor resources responsibly was an important opportunity for everyone.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

It is our strong belief that this path offers the greatest probability of receiving a commercial permit to begin operations in a timely manner. So I'm sure you will all have many questions and I promise that we will spend the vast majority of this call talking about the details of the strategy, including the many months of meetings in DCs and legal analysis. But first, we'd like to take you through some of the rationale that led us and our Board to pursue this new path forward. And for that, I want to hand it back to Craig Shevsky, our CFO.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Thanks, Jared. Certainly very exciting moment. But first, let's assess where things stand right now with the ISA. So the ISA has missed two code adoption targets and is currently on its third. So it's worth looking at why exactly this part of the mining code is so hard.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Well, four years is about the average time that it takes to negotiate an international instrument and it took around four years for the ISA to adopt the first exploration regulations. It took around four years to negotiate the Convention on Biological Diversity, the Paris Agreement and the Arms Trade Treaty. COVID disruption certainly did not help. Yet the High Seas Treaty was also impacted by COVID, took eight years. So depending on when you start counting, if the IFA adopts the mining code in 2025, it would be fourteen years or eleven years if you count from when the work started in earnest in 2014, and it's still much longer than other instruments.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

So while coming up with regulations for the exploitation of deep sea minerals in the area may sound like a daunting task, consider the fact that most coastal states already regulate offshore extracted activities like offshore oil and gas and all countries with land mining have mining codes. There is plenty of expertise and precedent to draw on. Now the ISA Council is currently sitting for part one of its thirtieth session in Kingston, Jamaica. And as with every session, we're simply looking for progress. Contrary to the legitimate expectations of contractors and of our sponsoring states, which are set out in the convention, the IFA has persistently missed the deadlines that it has set, first in 2020 and then in 2023, and we're already three months into the third targeted year for adoption of 2025.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Now Roux's request that counsel adopt an agreed process for the review of Nori's impending application that is consistent with the ISA's obligations on our UNCLOS was opposed by Chile, the world's largest copper producer. So with no agreement on the process, we do not yet have sufficient clarity as to how our application would be treated upon submission, presenting an unacceptable level of risk for our shareholders. Of course, there is one country that doesn't mind the delays as they play catch up and that's China. Two Chinese Contractors are preparing for collection tests in the next year or so, trying to replicate what TMC and our partner AllSeas achieved in 2022. China has also built up an entire city around deep sea mining, having spent billions on the Sanya Deep Sea Technology City.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

China is also using deep sea mining as an incentive to influence geopolitics in The Pacific. After we ended our contractual relationship with Marua, it was reported that China was exploring a deep sea mining partnership with the nation of Kiribati. And in February, China signed an agreement with Cook Islands, which focused on deep sea metals. Following that surprising move, New Zealand, which is in free association with the Cook Islands announced that they would consider withdrawing their support for a moratorium on deep sea mining. And it's increasingly clear that deep sea mining is at the center of geopolitics in The Pacific.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Elsewhere in Asia, there have been encouraging headlines out of South Korea, Japan and India with respect to their support of and interest in deep sea mining. The increased focus on seafloor resources from some of the world's top economies could also have a positive impact on the total addressable market for our announced services business. In fact, we've had multiple reverse inquiries already this year on potential future work. But in the meantime, it is an all hands on deck focus on getting our applications over the line. And to that end, we believe that The United States is getting ready to retake its role as a leader in this industry and to provide explicit support for the collection of polymetallic nodules.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

So the headlines of support from The U. S. Including Marco Rubio's announcement that Jared shared have been clearly building, but why would the new administration care so much about C4 resources, particularly polymetallic nodules? The answer is simple, because they can help establish metal independence and they are the critical missing piece for U. S.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Reindustrialization. Here, China continues to dominate and has shown an increasing willingness to ban exports to The U. S. It's clear that American reindustrialization simply cannot depend on Chinese metal production. So to give you a sense of scale, what would it mean for The U.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

S. To gain access to, let's say, 1,000,000,000 tons of nodules? The answer is it would be transformational. If measured by current U. S.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Consumption, 1,000,000,000 tons of nodules would provide four fifty six years of manganese, 165 of cobalt, eighty one years of nickel and four years of copper. Nodules are not some marginal solution. They can in just TMC's contract areas alone solve U. S. Needs for several metals deemed critical by the U.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

S. Geological Survey. And it's worth remembering that it was U. S. Companies and the U.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

S. Government, including NOAA, which pioneered the evaluation and development of this resource in the 1970s. The U. S. Government developed the regulatory framework and conducted a strategic environmental impact assessment.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

U. S. Companies including Transocean, Lockheed Martin and U. S. Steel developed and piloted nodule collection and nodule process technology.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

This U. S. Leadership slowed, however, when The U. S. Did not ratify the UN Convention of the Law of the Sea.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

However, The U. S. Did have foresight to enact DHMAA so that U. S. Citizens and entities could access seabed resources in international waters.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

U. S. Entities can apply to NOAA for exploration and commercial recovery licenses. And because The U. S.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Has never submitted to the jurisdiction of the ISA, this U. S. Law remains in full effect, even if The U. S. Does eventually adopt the final mining code.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

There are a few handfuls of nations that do have bilateral agreements with The U. S. Regarding each other's activities in international waters, but generally beyond that, U. S. Law continues to offer freedom of activity in the high seas just as it did prior to UNCLOS ever being contemplated.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

And leading experts on the law of the sea, such as Stephen Groves, agreed that applying for a commercial recovery license through DISHMA and NOAA is a viable path based on a robust and well thought out regulations. Stephen Groves is with the Heritage Foundation, a leading DC think tank, as well as a former staffer for the White House counsel's office during President Trump's first term. And in fact, it was about one year ago to the day that we were talking about Steve Groves in a segment on sixty Minutes, discussing the laws surrounding deep sea mining. And it was a critical minerals arms race discussed in that piece between The U. S.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

And China and that arms race has only grown more intense. Quite simply, DISHMERA remains law today for the exact same reason as it did when it was passed into law during the Cold War in the early 1980s, national security. So if we step back and compare The U. S. Regulatory regime to what we've experienced recently at the ISA, from our perspective, The U.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

S. Regulatory regime is more attractive than what's currently on offer. If you look at the ISA draft mining code, the international regulatory regime has had issues from the outset. UNCLOS was not deemed commercially viable for deep sea mining initially, and it took another fourteen years to negotiate an implementation agreement to comprehensively modify the part of UNCLOS that was dealing with deep sea mining. It took a few years to put the exploration regulations in place, but the exploitation regulations have been in negotiations since 2014 and the process is still ongoing.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

By contrast, The U. S. Adopted DISHMA in 1980, laying a solid foundation for U. S. Citizens to pursue exploration licenses and commercial recovery permits in international waters.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

As a non signatory to UNCLOS and a conscientious objector, The United States believed that mining of the deep seabed resources is a freedom of the high seas. DISHMA then authorized NOAA to develop implementing regulations. That same year, NOAA delivered regulations for exploration licenses. It took NOAA a little over six years to put in place regulations for commercial recovery permits. It was an intense consultative process with several rounds of comments, including from other agencies, industry, NGOs and other stakeholders.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

In terms of the regulatory approach, Noah recognized the difficulty of being prescriptive with regard to an industry that has not started. So unlike the ISA, they've explicitly chosen a flexible approach that can be adapted to the specific technology and circumstances of each applicant through terms, conditions and restrictions. Noah's approach is common sense, explicitly recognizing the trade offs versus other resource types and drawing a red line at irreparable environmental harm and aiming to avoid significant adverse economic excuse me, environmental impacts. Importantly, NOA expects to engage with applicants pre application to reduce application related uncertainties and is committed to providing written binding guidance. And to that end, TMC USA has already initiated a detailed request for pre application consultation with NOAA.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Perhaps the biggest difference between the ISA approach and the NOAA approach to environmental permitting is where the regulator takes a much heavier role. NOAA has created programmatic environmental impact statements for the Domes region that covers all of the Clarion Clipperton zone. It takes the applicant's environmental data and analysis, but then develops in house or hires a third party consultant to develop a site specific EIS. So we believe The U. S.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

And the NOAA approach to environmental permitting has been put in place for very good reasons. And since NOAA or third party contractor prepares the site specific EIS, it ensures the analysis of unbiased and not influenced or perceived to be influenced by the interests of the applicant. This approach provides protection to the applicant as well because this transparency can help build public trust during the public review and comment period. This can also help build confidence amongst investors and other stakeholders who want to ensure that environmental risks have been assessed with due care. Finally, it offers a level of protection to the applicant legally and financially, as the independence and transparency of this process can further reduce the risk of future delays, fines or lawsuits.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

So taking a step back, beyond the carefully thought of regulations, NOA also helped pioneer the environmental assessment of potential nodule collection. In addition to its monitoring of 1970s trials by several U. S. Companies, NOA conducted several seafloor disturbance experiments as did other leading international research institutions. From these studies, which we visited impact sites repeatedly over a forty year period, we now have extensive data that address a common and misleading claim from activists that we don't know enough.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Thanks to these studies, we do know how the ecosystem responds and with multiple papers showing that recovery is not only possible, but likely and within just a few decades. The DISCOAL studies, which used a plow harrow attached with blades to rake the seafloor and the different studies using NOAA's deep sea sediment resuspension system, all show varying levels of recovery within just a few years. Based on a review of the studies conducted to date, full recovery of the microbes that make up 70% to 80% of the life of these depths can be expected within fifty years. This is a very encouraging result, though new data, including our own, suggests that these timelines may be quicker still. And remember, these studies were all carried out using equipment designed for one purpose to create the maximum disturbance.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Since those early pioneer trials, much effort has been devoted to ensuring that the environmental footprint of nodule collectors is reduced as much as possible. Back in 1979, the OMCO Mining Consortium piloted their robot miner with an intrusive Archimedes screw style propulsion system, raking several hundred tons of nodules from the seafloor with mechanical tines. The robot disturbed the top up to 80 centimeters of seafloor sediment, leaving deep furrows in the seafloor and blanketing nearby fauna and thick layers of mud. Fast forward to 2022 and the gentler Coanda nozzles installed on our tracked collector vehicle disturbed just roughly the top three centimeters compared to 80 in the other trial of sediment during the test mining campaign and over 95% of that settled within one kilometer of the test area. Of course, this is a very different picture to the one painted by those opposing this industry who spread baseless claims that sediment could travel tens of thousands of kilometers.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Unfortunately for them, we have the data and it shows these claims are pure fiction. We'd like to of course call out our engineering partners at AllSeas for their incredible efforts these past few years to reduce the impact footprint of our collector vehicle, while ensuring we collect maximum quantity of nodibles. And as we look ahead to commercial mining and as the industry grows, you can expect that these impacts will only get smaller. And while the media has as expected focused on the continued presence of tracks on the seafloor, which shows absolutely nothing about recovery, we believe the new papers findings are very encouraging. Four decades after the disturbance, a near total recovery of sediment dwelling macrofauna and foraminifera have been measured in both the vehicle tracks and areas affected by the plumes and the xenos, which provide a hard substrate that other organisms can live on, and they've already recolonized the area.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

In the case of the plume, which MIT retrospectively modeled, researchers reported that it had no detectable or in some cases slightly positive biological impacts. Don't expect Greenpeace to mention that one anytime soon. And by the way, we feel bad for them for the loss of that lawsuit. We have always been clear that our primary impact will be for those organisms on nodules that get collected. But as this study showed, nodules that get left behind can be quickly recolonized with megafauna present on retained nodules.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

This is very promising as if we leave some nodules as we intend to do with at least 30% left at the seafloor, then these will be available as habitats for organisms to take over. So how does this compare to our own findings? While yesterday's study measured recovery in four decades, preliminary data shows that we can do far better, thanks to the lower environmental impact of our vehicle. Our team have already found that foraminifera directly located in our collector tracks and in plume areas had recovered a 30% of background density in just twelve months and to 50% of pre disturbance density. And as we look ahead to our application, we'll be releasing these findings and much, much more.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

And we can tell you it's quite incredible what our team are finding. And findings like these are made possible by the fact that no matter where an application is launched, it's going to be backed by one of the largest environmental datasets ever compiled based on work alongside dozens of respected research institutions and over $200,000,000 in cumulative environmental spending. We have now gathered nearly one petabyte of data through the scientific research. To give you a sense of scale, the largest library in the world, the U. S.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Library of Congress manages about 20 petabytes of data in total. Bottom line, we believe that we along with research pioneers from NOAA and others before that have answered all of the key questions posed for our environmental impact statement. And we strongly believe that the time has come to move forward, begin production and allow even more evidence to be shared with the entire world. So given the magnitude of today's news, we expect many of you are going to have questions regarding the workings of DHISPRA, implications for the ISA process, impacts on economics and timelines and many, many others. And we promise that over the coming weeks and months, we will continue to put out information to help everyone get up to speed.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

For now, and in addition to this call's upcoming Q and A, we provided some answers here to anticipated questions. To summarize a few of them, yes, we believe we can pursue exploration and commercial recovery permits concurrently under DISHMA and there could be opportunities to expedite certain elements of review processes. The environmental work done so far is very robust and we don't anticipate any additional campaigns needed prior to the launch of our U. S. Applications.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Even when the ISA adopts a mining code, as The U. S. Has not ratified UNCLOS or joined the ISA, the contracts issued under DHMRA are going to stay in effect. And while some describe DHMRA as a temporary or interim measure, this law remains in full effect forty five years later. Perhaps some of the drafters had expected The U.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

S. To ratify the Law of the Sea Convention, but that didn't happen and it's not likely to happen anytime soon. Finally, as you imagine as you might imagine, the release of our PFS or pre feasibility study does require the sign off of quite a few qualified persons or QPs and given the context of today's announcement, it's prudent for us to discuss certain assumptions with them at a bit more length. And this also applies to the timing of our strategy day. We do of course still intend for that longer form session to occur, but as you can imagine, we've been laser focused on pursuing this new path in the last few months.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

So what do these actions mean for Nori, Tamil and our sponsoring states? Well, we've consulted on this application strategy with these sponsoring states. And in fact, Jared spoke just last night with the President of Nauru and the Prime Minister's office in Tonga. Our relationships with our sponsoring states are excellent and we continue to respect our agreements together. Regarding the specific areas of where we'll apply, the scope of the upcoming applications is under careful consideration and we'll continue to discuss the strategy with our sponsoring states.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

For what it's worth, DISHMA exploration licenses can be granted up to 150,000 square kilometers. And yes, we are still planning to lodge an application over the Nori area in June of twenty twenty five, but we've not yet determined with which regulator. So even after U. S. Application is launched, we still retain the Norient and thermal exploration contracts and we fully intend on remaining compliant with the requirements of those ISA contracts.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

So on to the financial results. In the last quarter of twenty twenty four, TMC reported a loss, net loss of $16,100,000 or $0.05 per share compared to a net loss of $33,500,000 or $0.11 per share for the same period in 2023. The net loss for the last quarter of twenty twenty four, including exploration and evaluation expenses of $8,300,000 versus $26,700,000 in Q4 twenty twenty three, general and administrative expenses of $8,100,000 versus $6,600,000 in Q4 twenty twenty three. Exploration and evaluation expenses decreased by $18,400,000 in the last quarter of twenty twenty four compared to the same period in 2023, mainly due to a decrease in the cost of environmental studies as Campaign eight, which commenced in the last quarter of twenty twenty three, was completed in the first quarter of twenty twenty four. Also a decrease in mining technology and process development costs due to a lower transit and layup costs in the fourth quarter of twenty twenty four compared to the prior year period.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

This decrease in exploration and evaluation cost was offset by an increase in share based compensation costs, reflecting the amortization of the fair value of restricted stock units granted to officers in the second quarter of twenty twenty four. G and A expenses increased by $1,500,000 in the last quarter of twenty twenty four compared to Q4 of twenty twenty three, mainly due to an increase in share based compensation costs as discussed and an increase in consulting and advisory costs. Other items impacting the Q4 movement in 2024 is higher fees and interest on the credit facilities in 2024, offset by foreign exchange gain year over year. In the fourth quarter of twenty twenty four, net cash used in operating activities was $13,800,000 compared to $15,200,000 for the first excuse me, for the last quarter of twenty twenty three. The lower spending in Q4 twenty twenty four reflects mainly lower spending on project development and environmental studies as compared to campaign aid spending in Q4 twenty twenty three and due to changes in working capital levels year over year.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

The free cash flow for the last quarter of twenty twenty four was negative $13,900,000 compared to negative $15,600,000 in the last quarter of twenty twenty three. Free cash flow is a non GAAP measure and I'd point you to the non GAAP reconciliation table included in the slide deck and on our website. We believe that our cash on hand and the undrawn amount of $41,500,000 from our unsecured credit facility with Gerard Baron, our Chairman and CEO and with Arris Capital will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months from today. During the fourth quarter of twenty twenty four, the company entered into a registered direct offering issuing 19,900,000.0 common shares and 9,950,000.00 Class B warrants. The share issuance was completed in February of twenty twenty five and the company received all gross proceeds of the $19,900,000 In the last quarter of twenty twenty four, the company also drew $2,500,000 from the working capital loan from AllSeas.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Our accounts payable and accrued liabilities balance at the end of twenty twenty four of $42,700,000 majority includes $25,800,000 owed to AllSeas for various services provided. And the majority of that can be settled in equity at TMC's election. TMC liquidity, which we define as cash plus borrowing capacity, stood at $62,000,000 at December 31 or $48,000,000 pro form a for the credit facility amendments in full receipt of the registered direct proceeds in the first quarter of twenty twenty five, where the final $5,000,000 came in. And in Q1 twenty twenty five, we increased the principal amount of our unsecured ARRIS Baron facility by $6,000,000 and the credit facility with an affiliate of AllSeas of $25,000,000 was terminated by mutual agreement in March as maturity was approaching the third quarter of this year and no amounts were outstanding. However, the maturity of the $7,500,000 AllSeas working capital loan was extended to September 2025.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

With that operator, we would like to turn it over to the line for some Q and A.

Operator

Our first question comes from the line of Matthew O'Keefe with Cantor Fitzgerald.

Matthew O'Keefe
Analyst at Cantor Fitzgerald

Hi, thanks operator. That was a there was a lot. So just help me through the DISHMA thing here a little bit, if you may. So this is a different it's a sort of a different regulatory body as you've described. Your licenses were issued to you under unclose with partner your sporting sponsor states.

Matthew O'Keefe
Analyst at Cantor Fitzgerald

Will the application to DISHMA be for these license areas or different license areas that are currently because I think they have four license areas under DISHMA. Are these overlapping or are they separate? How is this how are we supposed to think about this?

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Yes. Hi, Matt. I'll have first crack at that. So there's an important concept to just for everyone to get their mind around and that is the freedom of the high seas. And so, of course, what happened when they were agreeing UNCLOS was that the United Nations member countries wanted to join a treaty when it came to the extraction or development of metals in the High Seas.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

However, while 168 countries plus the European Union have now joined that treaty, The U. S. Stood fast and said, we are not going to join that treaty. And so essentially, the freedom of the high seas gives you, covers minerals, it covers freedom of passage, it covers cable lane and so on. And so America will argue that they will have access to those waters under the Freedom of the Seas treaty that any member country of the International Seabed Authority would have over those areas as well.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

We haven't announced today exactly which areas. We're still in dialogue, both internally and we will in the pre consultation process that is underway with Noah, we will also be seeking some advice there. However, what we want to do is to take advantage of all of the work we've done for the last fourteen years. And so this will not be a let's start again. This is about what pathway can get us into commercial production the fastest way.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And as we went at lengths in the presentation to talk about, there's no easy path here on the environmental oversight either. In fact, we think the environmental regulations as laid out under Deshara are sensible, workable and very, very thorough. And so stay tuned on us to announce once we formally lodge those applications and you won't have to wait long for that.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

And Matt too, we also recognize just how much of our valuation is pinned on the work that's been done with Nori and Tomel. And we've got a defined resource. We've done test mining. We've done test processing. We've done environmental work in those areas.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

So, yes, for us that is obviously the key question and we look forward to sharing more with you. But this is not something where we're just saying, okay, let's go out and cobble something together. This has been well thought out and we feel this is going to take advantage of the work that we've already done in consultation with our sponsoring states.

Matthew O'Keefe
Analyst at Cantor Fitzgerald

Okay. Okay. Some more to come there. And can I ask to from maybe this is getting a little too ahead of where we are, but if you were to decide to if you do get approval through a different path, your partner AllSeas owns the vessel? They're not I mean, vessel is in The U.

Matthew O'Keefe
Analyst at Cantor Fitzgerald

S. It's not a U. S. Based company or maybe it is I don't know if they have a U. S.

Matthew O'Keefe
Analyst at Cantor Fitzgerald

Arm or not. But I mean, could they legally participate as a partner in this situation?

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Yes, absolutely. Yes, there's some nuances with Dismer and one of them is that the production vessel needs to be U. S. Flagged. And so we have, with AllSeas, already looked into that and that is a pretty straightforward process.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And of course, the applicant that has kicked this off is our U. S. Subsidiary that we established in 2013.

Matthew O'Keefe
Analyst at Cantor Fitzgerald

Okay, cool. And maybe I ask

Matthew O'Keefe
Analyst at Cantor Fitzgerald

this one more. I've got you. Has this is this the this is the first of course investors are hearing of it. Has this idea been raised with the ISA as they're meeting right now? Or is this they're going to be are they just hearing about this now as well?

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Yes, they're bringing that to them.

Matthew O'Keefe
Analyst at Cantor Fitzgerald

Oh, okay. Okay. So we'll look

Matthew O'Keefe
Analyst at Cantor Fitzgerald

for the minutes from meetings tomorrow to see some reaction. Okay. I'll leave it open to some other questions and if I have another question come back. Thank you very much.

Matthew O'Keefe
Analyst at Cantor Fitzgerald

Thanks, Matt.

Operator

Our next question comes from the line of Jake Sikalsky with Alliance Global Partners.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Hey guys, thanks for taking my questions.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Hey Jake.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Just to confirm building on the last question a bit, is the Noah process a complete shift in the permitting pathway from the ISA pathway or more of a secondary avenue or primary avenue alongside the ISA process?

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Yes, Jake, it's definitely it's a new path and we view it as advantageous and the best chance of success. But this is not one door closing another opening. This is in our view, it's an incremental path forward and we view a better path forward. It just so happens we built on forty five years of work and a bunch of environmental work from NOAA. It's just been sitting relatively idle for some time, but the legal precedent is there.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

It's always been there. And what has been missing is the political appetite in The United States to take advantage of it. And that's the main change that has come with this administration. So there's no new legislation that has to come. There might be some adjustments, I would say, to aspects of the regulations, perhaps as you've seen for critical minerals projects throughout The U.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

S. Views about permitting perhaps being accelerated in some circumstances. But this is something where it's been on the books for a long time. What's been missing is the political appetite and that's what's changed. That's what's changed with the new election.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

So this frankly has been a door that opened to us and after the November election, we engaged in the diligence required to make this decision and we think very strongly we're making the right decision.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Okay, that makes sense. And building off that, are you able to provide any color on what this new process looks like, key milestones or even a high level timeline or is it a bit too early at this stage?

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

That will become we have a very strong sense of it already. But in respect to the dialogue that's underway with the permanent agency now, we'll come back to you with more on that. But it's a as we mentioned in the presentation, the first thing is it's a two way consultation. And that's a really important step forward when you're trying to permit a project. And so that's refreshing from AlbaSector, the fact that we can sit with the regulator and that there is a formal process which they outline in the regulations that applicants can follow.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And of course, the very unique thing about our application and hence why we talk about a recovery permit as well is that we have all this amazing data. We have an application that is coming to completion. And so it's a and the work is very consistent as follow on work to what was done under Noah's sponsorship back in the '70s and '80s. And so it's an alignment of stars.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Got it. Okay. And then just lastly, with all that being said, and I think, Craig, you touched on this. How does it impact the timeline of the upcoming economic study? Is this still something we should expect in the first half of the year?

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Or do you think it'll spill into later in the year?

Craig Shesky
Craig Shesky
CFO at TMC the metals company

No, we are still expecting it to be wrapped up and certainly in advance of our applications to The U. S. So nothing's changed on that front. And as we've reiterated, you're going to see the applications in June. It's just now that we have, in our view, some very interesting paths forward there.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

But that obviously that economic analysis is important for The U. S. As well, not just important for the ISA application. So while the new path obviously brings up additional points that we're discussing with our QPs, it's still on the front burner for us.

Jake Sekelsky
MD & Head of Metals & Mining Research at Alliance Global Partners

Okay. That's all for me. Thanks again.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Thank you.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Thank you.

Operator

Our next question comes from Dmitry Silversteyn with Water Tower Research.

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

Good afternoon, gentlemen. Thank you for taking my call. I just want to follow-up on a couple of things. So first of all, on the financial impact study, you said you're working on that now. I'm assuming that's going to be completed around or before the time you complete the economic feasibility study and the application submission in June?

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

Or is this something that's going to happen in the next few weeks?

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Well, the one of the things on our economic study is that a lot of the work has been done. And but of course, we were just going through getting expert sign offs as is necessary under SK1300 requirements and with any PFS, when it became obvious some of the other options in front of us. And so it was deemed that we should just be a little bit cautious around that. But the environmental riding is going at full speed and the environmental data has been flooding in. We held our last key environmental conference back in January in Brisbane, Australia And the team are popping the stay awake pills, working very long hours and very motivated by what they're doing because obviously it's all of this data that we've been gathering for so many years is now coming together as a comprehensive picture.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And so, yes, haptying side by side, Dimitry.

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

I understand. And then I just want to make sure I got some clarity on the application to the U. S. Government. So assuming that that goes through and you give them an exploitation license, what area are you going to be giving the license to?

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

It's not the problem in the NORAD area, right? It'll be some other area of the CCV?

Craig Shesky
Craig Shesky
CFO at TMC the metals company

As we said, Dmitry, we are going to make that clear alongside the consultations that are ongoing with our sponsoring states. But based on DISHMA laws, there is a potential for overlap.

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

Okay, got it, Greg. And then you mentioned in the press release that you've terminated your contract with a third sponsor state. What was the thinking in that? I know you haven't talked about it a lot in your presentations. There was always sort of a kind of a bad burner.

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

We'll get to it at some point type of a deal, but what has changed and why the termination now?

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Yes. So look, we put that we announced we'll put that into our filing back in November. And we didn't get a lot of inquiry about it actually until recently it was reported that Kiribati were talking with China about stepping into our shoes there. Look, it came down to priorities. It came down to the fact that we had have two very prospective blocks in Nori and Tomal.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And we had to decide where to focus our resources and those blocks require money to be spent on them. They require to lodge five year plans and to do work programs. And we had also done some exploration work and some of the results weren't the most encouraging on those blocks. And I think that's one of the things that one needs to remember what the metals company has. We have a defined resource on the Nori and Tomall ground and not all license areas are equal.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

The grades may be very consistent, but the abundances are not. And so it is generally regarded that Nori and Tomal are some of the very best ground out there. We know of more and hence Craig's answer to your question about overlap. There certainly is the prospect of some overlap in that. And so, yes, so our thinking with Marawa was, we knew that there were other parties interested to work closely with Kiribati.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Obviously Kiribati, they I mean, they're a great partner to have. They're a great developing country. They do recognize One China. And it didn't surprise me when I learned that some of the interested parties were from China. And I heard the ambassador mentioned that in some media reports in recent weeks.

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

Understood, George. And then last question, you mentioned in your comments about your service business getting some inbound inquiries and seems to be well received. Is this something that we can expect some results from in terms of revenue and profits in the next, I don't know, one to two years? Or is this still sort of in the development stage and just see how it goes kind of stage?

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Look, no, we're excited about it. And we have built so much expertise around this industry and our people are approached all the time with job offers to go and work elsewhere. But they like working at the metals company and they know we do high quality science. I think a lot of the services are focused around the environmental work programs. We also know a lot about defining these resources, that part of the business led by Tony and Sullivan.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

We've done more resource definition work than any other contractor very, very successfully. We also during the middle of COVID ran nine offshore campaigns without losing a single day to illness. And that's nine campaigns across two years. And so these are really challenging tasks which we have been able to complete very successfully. So it makes sense that we stick our team together, keep our team together.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

We do think that there will be a lot of services opportunities and in the coming years and we want to take advantage of that. And we have some very, very interesting conversations which can range from pilot mining using the hidden gem, which would obviously be something that we would have to collaborate with AllSeas on very, very closely. But of course, putting the hidden gem out to pick up nodules involves a lot of environmental planning as well. And so there's some very interesting work scopes available to us. But of course, today, those people are very busy on our own application.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

And so, we have had to turn away some opportunities simply because we need to get this application completed.

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

Okay. So it sounds like maybe second half of the year when you have a little bit more free time with your people and equipment that some of these may actually turn into contracts.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Yes, that's right. Yes, yes, yes. The business development function inside the business is chomping at the bit, whereas the scientists and other people going just slow down, just we can't take anything more until we get this application out the door.

Dmitry Silversteyn
Senior Research Analyst at Water Tower Research LLC

Got it, Gerard. Thank you. It's a nice problem to have. Thank you, gentlemen.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Yes. Thanks, Dmitry. In the meantime, Louis, I think we're going to take a question from the webcast. Eric Goldstein suggests asks a question, can we discuss our current finances? Where do we expect liquidity to be at the end of Q1?

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Did note roughly $43,000,000 of liquidity at the time of this filing. So look, the overall point here is that the element that in our view has been holding back the valuation of our stock has been the lack of regulatory certainty. Our view is that DISHRA and along with NOAA and frankly the support of this administration and Congress, In our view, it should be pretty clear to everybody that this is an industry that The U. S. Wants to get into.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

And the good news is they already have the legislation to do it. So for us, what we want to do is continue to be very cautious stewards of capital. And if we get to the point where regulatory uncertainty is no longer there and things are moving along at a very fast clip, let's say through The U. S. Process, well, that may put us in a different financial position.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

But what remains is what we told the market late last year that we are not going to be raising a lot of money for preproduction capital spending until such time as we have that regulatory certainty. And that doesn't have to be through the ISA. We've heard from many investors, look, if the U. S. Administration took real action here, that could be something to get people off the sidelines.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

We think after months of consultations as you've seen certainly on social media, Jared and I have spent a lot of time in the rest of our team, Eric and Kristin Henkstebeck and everybody heading down to Washington DC to have diligent sessions and to make sure that we're kicking the tires on all of these legal questions. This was made after many, many months of detailed conversation, including that with our Board of Directors. So we view this as a path that can truly unlock regulations and allow us to move forward in the commercial production. But it doesn't change the fact that we do need to show that regulatory certainty before we're going to be out there raising tons and tons of money and spending it on preproduction capital. So that perspective on our finances has not changed and that's why we've had some modifications to our credit facilities to pick out maturities and ensure that they're white sized for what we need to do to get these applications over the line.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

But the basic spending and what we need to do to get the applications ready doesn't really differ that much from what was necessary to prepare for the ISA. And that's in part because we've already front end loaded much of that work and we've done the test mining, we've done the test processing and we've also done all of the environmental research campaigns. So from a financial perspective, I would say, we are looking forward greatly to the point when these applications are over the line and we can show the market that regulatory certainty, frankly, that's been missing over the last few years as a public company.

Operator

I'm showing good.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Yes. Sorry, Liz, is there anything else on the line for questions?

Operator

No phone questions at this time.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

One more question actually from the webcast. Somebody asked, they're not clear whether or not we're going to submit an application contract on June 27 with the ISA. Jared, do you want to reiterate what we said on that?

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Well, we have what I'll say is what we said earlier in the call and that is, we will keep our standing with the ISA and we will preserve our rights there. We will have an application ready on June 27, but we are undecided where that application will land. But the decisions that will drive that are permitting certainty.

Craig Shesky
Craig Shesky
CFO at TMC the metals company

Okay. Well, I think that's it for the conference call today. Perhaps we'll turn it back over to Jared for any closing remarks.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

No. I'd like to thank everyone for attending today. I'd like to thank my team and my board for the support, our partners who work with us and our shareholders who have been amazing supporters on this journey as a public company and before that as a private company. And we're greatly encouraged by all of the stars aligning right now and the environmental results coming through are offering us tremendous encouragement. And I hope this news will be able to see this industry in production and supplying metals with the lightest planetary and human touch as quickly as humanly possible.

Gerard Barron
Gerard Barron
Chairman and Chief Executive Officer at TMC the metals company

Thank you very much.

Operator

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

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