TMC

Business Context and Reporting Period

TMC The Metals Company Inc. (TMC) is a deep seabed minerals developer focused on the collection, processing, and refining of polymetallic nodules in the Clarion Clipperton Zone (CCZ). The company operates as a pre-revenue entity in the development stage, pursuing regulatory approval under the U.S. Deep Seabed Hard Mineral Resources Act (DSHMRA) via its subsidiary TMC USA, while maintaining exploration contracts with the International Seabed Authority (ISA) through subsidiaries NORI and TOML.

Reporting Period: Quarterly period ended June 30, 2026.

Key Financial Metrics

Material Changes vs. Prior Period

• Net Loss Reduction: Net loss decreased to $60.1 million for the three months ended June 30, 2026, from $74.3 million in the same period of 2025. For the six-month period, the loss decreased to $80.7 million from $94.9 million.
• Exploration Expenses Surge: Exploration and evaluation expenses increased significantly to $56.1 million (Q2 2026) from $10.5 million (Q2 2025). This $45.6 million increase was primarily driven by a $37.2 million charge related to the new commercial agreement with Allseas (including $32.8 million for settlement of initial costs and $4.4 million for negotiated costs).
• Non-Operating Gains: The company recorded a non-cash dilution gain of $18.5 million in Q2 2026 (totaling $23.1 million for the six months) due to share issuances by its equity-accounted investee, The Metals Royalty Company (TMCR), at prices above TMC's carrying value.
• Warrant Liability: The fair value of the private warrant liability decreased by $2.2 million in Q2 2026 (total decrease of $12.8 million for six months) due to declines in the company's share price and public warrant prices.
• Share-Based Compensation: Share-based compensation expenses increased, contributing to higher General and Administrative (G&A) and Exploration expenses, driven by the amortization of RSUs granted in late 2025 and 2026.

Guidance, Outlook, and Risks

Management Commentary and Outlook

• Regulatory Milestones: NOAA determined TMC USA's consolidated application for an exploration license and commercial recovery permit (USA-A area) is in "full compliance" with DSHMRA requirements (April 2026). The USA-B exploration license application was certified by NOAA (May 2026), advancing to the Environmental Impact Statement (EIS) stage.
• Commercial Agreements: TMC signed a definitive agreement with Allseas for the development and operation of the first commercial nodule collection system ("Hidden Gem"), targeting commissioning in Q4 2027. The agreement involves a 50% cash/50% production-based repayment structure for development costs.
• Liquidity: Management believes current cash ($98.7 million) and available credit facilities are sufficient to meet obligations for the next 12 months. However, the company expects to incur significant expenses and will require additional financing for long-term operations.

Risks and Contingencies

• ISA Inquiry: The International Seabed Authority (ISA) is conducting an inquiry into possible non-compliance by NORI and TOML. While the Seabed Disputes Chamber of the International Tribunal for the Law of the Sea (ITLOS) issued provisional measures requiring the ISA to respect due process, the inquiry continues. An adverse outcome could jeopardize exploration contracts.
• Contract Extensions: NORI's exploration contract was extended for five years (to July 2031). TOML's contract expires January 2027; an extension application has been filed but is pending review.
• Legal Proceedings: A lawsuit regarding the 2021 private placement (Atalaya Special Purpose Investment Fund II LP et al. v. TMC) is in the summary judgment phase. A separate claim by American Metal Inc. was settled in June 2026.
• Going Concern: As a pre-revenue company with an accumulated deficit of over $1 billion, the company's ability to continue as a going concern depends on securing regulatory permits, successful technology deployment, and access to additional capital.

Investor Verification Checklist

• Regulatory Status: Verify the timeline and potential conditions for the final issuance of the NOAA commercial recovery permit following the "full compliance" determination.
• Allseas Agreement Terms: Review the specific cost-sharing mechanisms and production volume triggers in the new Allseas agreement to understand future cash flow obligations.
• ISA Inquiry Outcome: Monitor the status of the ISA inquiry and the ITLOS proceedings, as a negative ruling could invalidate ISA exploration rights.
• Cash Burn Rate: Assess the sustainability of the current cash balance ($98.7 million) against the projected capital expenditures required to reach commercial production in 2027.
• Investment in TMCR: Evaluate the impact of the dilution gain on the financial statements and the strategic value of the remaining 22.4% stake in The Metals Royalty Company.