Business Context and Reporting Period
This Form 8-K Current Report was filed by TMC The Metals Company Inc. on August 1, 2023, covering events as of July 31, 2023. TMC is an explorer of lower-impact battery metals from seafloor polymetallic nodules. The filing details a corporate update regarding the "Project Zero Offshore System," regulatory progress with the International Seabed Authority (ISA), and liquidity resources.
Key Financial Metrics and Liquidity
The filing provides preliminary, unaudited financial data as of June 30, 2023, and outlines current capital resources:
- Cash on Hand: Approximately $20 million as of June 30, 2023.
- Debt Facility: An amended unsecured credit facility of up to $25 million with Argentum Credit Virtuti GCV (an affiliate of Allseas), extended through November 30, 2024. The facility remains undrawn as of the filing date.
- Equity Facilities: A $30 million At-The-Market (ATM) offering program and a $100 million effective universal "shelf" registration statement, both currently unused.
- Revenue and Profit: The filing does not provide specific revenue, profit, or margin figures for the period. The company is in the exploration and development phase.
Material Changes and Agreements
Significant developments reported in this filing include:
- Exclusive Vessel Use Agreement: On August 1, 2023, TMC entered into an agreement with Allseas Group S.A. granting exclusive use of the Hidden Gem vessel until December 31, 2026, or system completion. In consideration, TMC will issue 4.15 million common shares to Allseas.
- Production Capacity Upgrade: TMC and Allseas plan to upgrade the Project Zero Offshore System to increase maximum production capacity from an estimated 1.3 million wet tonnes per annum to 3.0 million wet tonnes per annum (a 130% increase). Upgrades include a second collector vehicle and wider riser pipes.
- Credit Facility Amendment: On July 31, 2023, the unsecured credit facility was extended to November 30, 2024.
Outlook, Guidance, and Risks
Development Timeline and Costs:
- ISA Application: TMC intends to submit an application for an exploitation contract for NORI Area D following the ISA's 29th session in July 2024.
- Production Start: Assuming a one-year review and approval, first production is anticipated in the fourth quarter of 2025.
- Cash Requirements: The company estimates it requires an additional $60 million to $70 million (beyond the $20 million cash on hand) to submit the ISA application. This covers environmental assessments, pre-feasibility studies, vessel layup costs, and engineering.
Regulatory Risks:
- The ISA did not adopt final mining rules ("Mining Code") by the July 9, 2023 deadline. A roadmap targets adoption in 2025, potentially earlier in 2024.
- TMC reserves the right to submit a plan of work under UNCLOS even if the Mining Code is not finalized, but there is no assurance of provisional approval.
Forward-Looking Statements: The filing contains numerous forward-looking statements regarding financing, regulatory approval, and production timelines, which are subject to significant risks including regulatory uncertainty, environmental liabilities, and the ability to secure additional financing.
Investor Verification Checklist
- Verify the final terms of the definitive agreement with Allseas regarding the Project Zero Offshore System upgrades and costs.
- Monitor the ISA's progress on finalizing the Mining Code and the timeline for the 29th session in July 2024.
- Assess the company's ability to raise the estimated $60 million to $70 million required for the ISA application submission.
- Review the dilution impact of the 4.15 million shares issued to Allseas and potential future equity issuances under the ATM or shelf registration.
- Confirm the status of the post-collection test monitoring campaign in 2023 and its impact on the Environmental Impact Statement.