TMC The Metals Company Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The company is an exploration-stage, pre-revenue deep-sea minerals developer; it has not begun commercial collection or received an ISA exploitation contract.
Business context and outlook
TMC is developing polymetallic nodule projects in the Clarion-Clipperton Zone, targeting nickel, copper, cobalt and manganese products. It holds exploration rights through NORI and TOML and commercial rights tied to Marawa. Its plans depend on regulatory approval, environmental review, commercial-scale collection and processing, and additional financing.
- NORI plans to submit an exploitation-contract application following the ISA meetings in July 2024. Management’s target for first offshore production is the end of the first quarter of 2026, assuming approval and an approximately one-year review.
- Project Zero is planned to ramp from 1.3 million to as much as 3.0 million wet tonnes of nodules annually. The 2023 binding MoU with Japan’s PAMCO provides for a feasibility study expected by Q3 2024 and contemplated toll processing from Q2 2026, subject to definitive agreements and approvals.
- The 2022 pilot collected about 4,500 wet tonnes and lifted more than 3,000 tonnes to the surface. Commercial-scale performance has not been demonstrated.
Financial results and liquidity
| Metric (US$ millions, except per-share data) | 2023 | 2022 |
|---|---|---|
| Revenue | None | None |
| Exploration and evaluation expense | 49.8 | 144.6 |
| General and administrative expense | 22.5 | 29.5 |
| Operating loss | 72.4 | 174.1 |
| Net loss | 73.8 | 171.0 |
| Basic and diluted loss per share | $0.26 | $0.71 |
| Cash used in operating activities | 59.6 | 66.6 |
Lower 2023 losses mainly reflect the absence of a $69.9 million non-cash Allseas warrant expense recognized in 2022, lower environmental and pilot-test costs, and lower share-based compensation. Higher engineering and process-development costs partly offset those reductions. There is no operating revenue or meaningful operating margin to assess.
- Cash was $6.8 million at year-end, down from $46.9 million. Total assets were $68.9 million; current accounts payable and accrued liabilities were $31.3 million. Cash plus receivables and prepayments totaled $8.8 million, below current liabilities.
- Total liabilities were $58.0 million and equity was $10.9 million. Liabilities included a $14.0 million royalty liability, a $10.7 million deferred tax liability, and a $2.0 million warrant liability. The company reported no amounts drawn on its Allseas-affiliate credit facility at year-end.
- Management said it expects sufficient funds for obligations due over the next 12 months, based on year-end cash and available borrowing. It also estimates it needs another $35–45 million, beyond year-end cash and $9 million received in January 2024, to prepare the NORI application; this excludes potential credit-facility drawdowns.
- After year-end, TMC extended an available Allseas-affiliate facility of up to $25 million to August 2025 and entered into a separate facility of up to $20 million with its CEO and a director-affiliated fund, subject to conditions. These are financing capacity, not reported year-end cash or drawn debt.
Material changes, risks and unusual items
- In 2023, TMC exchanged a 2% gross overriding royalty on NORI for $5 million cash and a 35% initial equity interest in Low Carbon Royalties. The royalty was recorded as a $14 million liability; TMC retained rights to repurchase part of it under specified terms.
- TMC restated its 2023 quarterly reports after determining the royalty transaction should have been accounted for as a royalty liability rather than a sale of a non-financial asset. The correction did not change year-end audited results or reported cash, but changed quarterly balance-sheet and first-quarter loss presentation.
- Management reported ineffective disclosure controls and a material weakness in accounting for significant, unusual transactions, associated with inadequate and untimely involvement of appropriately qualified stakeholders and technical advisers. The company is developing training and other remediation measures. The auditor did not audit internal-control effectiveness.
- The ISA missed the July 2023 deadline for exploitation rules; it has a roadmap aiming for adoption in 2025, but timing and final terms remain uncertain. Some ISA members support a ban, moratorium or precautionary pause. No exploitation contracts have been issued for CCZ nodule collection.
- Environmental impacts, ecosystem recovery and mitigation remain uncertain. TMC lacks required exploitation and onshore processing permits; opposition and operational disruption are risks. Greenpeace obstructed part of a 2023 research campaign, though NORI completed its work.
- The company faces substantial funding, execution, commodity-price, partner-dependence and dilution risks. Key relationships, including Allseas and the proposed PAMCO processing arrangement, are not fully covered by definitive commercial agreements. TMC also disclosed ongoing securities and private-placement litigation, an SEC investigation relating to the TOML acquisition and business combination, and that potential losses in certain cases cannot be reliably estimated.
Important facts for investors to verify
- Progress and timing of the ISA Mining Code, NORI’s application, and required environmental approvals.
- Cash runway, actual availability and terms of credit facilities, and the amount and timing of additional financing needed.
- Completion and findings of PAMCO’s feasibility study, definitive processing terms, and Allseas commercial-system agreements and costs.
- Whether the pilot results can be scaled commercially and whether environmental studies support approval and acceptable operating conditions.
- Remediation of the material weakness and subsequent financial reporting; status and potential exposure of litigation and the SEC investigation.
- Resource figures are estimates, not reserves; the filing cautions that mineral resources do not demonstrate economic value. The NORI Area D estimate includes 345 million wet tonnes measured and indicated, but commercial recovery and project economics remain unproven.