Tmc The Metals Company Inc. · NASDAQ:TMC
Tmc The Metals — Q3 2022 Earnings Presentation
45 slides from Tmc The Metals's earnings presentation, Nov 15, 2022
Slide 1: The Metals Company Q3 2022 Update
The Metals Company Q3 2022 Update: Unlocking the World’s Largest Estimated Undeveloped Source of Battery Metals 15 November 2022
Slide 2: Forward looking statements
2 Forward looking statements. This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to future events, TMC the metals company Inc.’s (“TMC” or
Slide 3: Historic project development milestones achieved since last update
3 HIGHLIGHTS Historic project development milestones achieved since last update. Q3 results Milestones - Net loss of $27.9 million and loss per share of $0.12 for Q3 2022 - NORI Receives ISA Recommendation to Commence Trials: In September, we announced that compared to a net loss of $36.7 million an
Slide 4: Agenda
4 Agenda. Our value proposition 5 Market update 7 Regulatory update 9 NORI-D project update 12 Near-term milestones 23 Financial highlights 24 Appendix 29
Slide 5: Our resource alone can supply U.S. demand for nickel, cobalt and manganese
5 OUR VALUE PROPOSITION Our resource alone can The Metals Company supply U.S. demand for nickel, 15,700,000 t Ni / 2,400,000 t Co / 13,300,000 t Cu / 350,000,000 t Mn Total Resource cobalt and manganese. Estimated In situ quantities of nickel, copper, cobalt and manganese equivalent to the requireme
Slide 6: #1 and #2 largest undeveloped nickel projects on the planet
6 OUR VALUE PROPOSITION TMC: #1 and #2 largest undeveloped nickel projects on the planet, and the alternative to Russian- and Chinese-controlled supply. World’s largest nickel projects – 2022 World’s largest nickel operations ranked by resource Total est. resources (inferred, indicated & measured),
Slide 7: Potential for nodules in focus in the U.S.
7 MARKET UPDATE Potential for nodules in focus in the U.S., as Indonesia mulls OPEC-style battery metal cartel.1 Letter from U.S. Secretary of Energy Jennifer Innovative agreement will have union workers Granholm responding to Senator Lisa processing critical minerals from seafloor Murkowski (R-AK)
Slide 8: Major news coverage of TMC and nodules in the last three months
8 MARKET UPDATE Major news coverage of TMC and nodules in the last three months. TMC Gets Approval for Pilot Should we mine the Deep-Sea Mining Project deep sea? Sept 2022 Sept 2022 Battle Over Deep-Sea Mining Takes on New Urgency as Lit: America’s Future Trial Run Winds Down Sept 2022 Nov 2022
Slide 9: Regulated by the International Seabed Authority established in 1994 by UNCLOS
9 REGULATORY UPDATE Regulated by the UNCLOS Parties International Seabed UNCLOS Signatories Authority established in 1994 by UNCLOS. - The International Seabed Authority (ISA) was established in 1994 by the United Nations Convention on the Law of the Sea (UNCLOS) and regulates seabed minerals beyond
Slide 10: Most statements recognized the ISA's obligation to finalize regulations
10 REGULATORY UPDATE While some states raised concerns, most statements recognized the ISA’s obligation to finalize regulations. Closing Statement by ISA Secretary-General, Statement by Te-ara Henderson on behalf of Michael Lodge, 11 November 2022: the Cook Islands to ISA Assembly, 10 “Each chapter
Slide 11: ISA roadmap targeting final exploitation regulations by July 2023
11 REGULATORY UPDATE ISA roadmap targeting final exploitation regulations by July 2023. Timeline 2014 ISA commences work to develop exploitation regulations July 2020 ISA stated goal for adoption was delayed due to COVID 9 July 2021 Government of Nauru (Sponsor of NORI) submitted a 2-year notice Dec
Slide 12: NORI-D project at a glance
12 NORI-D PROJECT UPDATE NORI-D project at a glance. Resource - The estimated largest and highest nickel-equivalent grade undeveloped nickel project on the planet - Contained metals (Ni, Cu, Co, Mn) well matched to the critical mineral requirements of the energy transition - NORI-D as the 1st projec
Slide 13: Video: pilot collection system test
Video available here: https://vimeo.com/771306099/c2c8def3c6
Slide 14: Key objectives of NORI-D Pilot Collection System Test and Monitoring Campaign
14 NORI-D PROJECT UPDATE Key objectives of NORI-D Pilot Collection System Test and Monitoring Campaign. Objective #1: Demonstrate integrated pilot system ✓ First successful integrated pilot capable of collecting and lifting nodules system test in CCZ since 1970s Objective #2: Collect ~3,600 wet tonn
Slide 15: ~3,000 tonnes of nodules inside the hold of Hidden Gem
NORI-D PROJECT UPDATE ~3,000 tonnes of nodules inside the hold of Hidden Gem.
Slide 16: Video: nodule collection
Video available here: https://vimeo.com/766832381
Slide 17: Giving the regulator and key stakeholders eyes and ears into future operations
17 NORI-D PROJECT UPDATE Giving the regulator and key stakeholders eyes and ears into future operations. With our digital twin, a mix of sensors and cloud-based AI, we will optimize the environmental performance of operations by applying environmental constraints and limits to the mine planning proc
Slide 18: Sediment plumes: activists' speculation vs. published research
18 NORI-D PROJECT UPDATE Sediment plumes: activists’ speculation vs. published research. SPECULATION RESEARCH Deep-Sea Mining Statement Research published and field studies Midwater plume Signed by 653 people as of Nov 1, 2022 conducted in 2021-22 <10% of entrained Organized by Deep-Sea Conservation
Slide 19: Benchmark Minerals LCA: Nickel from NORI-D shows lowest impact
19 NORI-D PROJECT UPDATE Results are undergoing Benchmark Minerals LCA: Nickel third party verification from NORI-D shows lowest impact. Lowest impact value Global Warming Potential Kilogram of CO2e emissions per kilogram of nickel in nickel sulfate 120 102.0 100 80 64.2 60 40 29.2 28.5 19.2 20 13.9
Slide 20: SEC-compliant Initial Assessment, NORI-D project estimated NPV
20 NORI-D PROJECT UPDATE Based on SEC-compliant NORI-D Financial Model2 $ billions unless otherwise noted Initial Assessment, NORI-D project estimated at $6.8 Prices CRU forecast Current price Increase billion NPV (est. $15.9 billion Nickel $16,106/t $26,856/t 67% using current metal prices). Copper
Slide 21: TMC trading at ~20x lower multiple than copper developers
21 NORI-D PROJECT UPDATE TMC trading at ~20x lower multiple than average for copper developers, using NPV for NORI-D alone (22% of total estimated resource). 0.8 0.69 0.7 Price / Fundamental Value 0.6 0.5 0.43 0.34x P/NAV 0.39 Peer Average for 0.4 0.37 Copper Developers 0.3 0.28 0.27 0.26 0.23 0.2 0
Slide 22: Key de-risking milestones to unlock NORI-D project value
22 NORI-D PROJECT UPDATE Key de-risking milestones to unlock NORI-D project value. Expected timing H2 2022 H2 2023 H2 2023 H2 2024 H2 2024 >> De-risking milestones - Pilot Collection System Test ISA adopts final NORI submits NORI-D ISA grants NORI NORI-D Project Zero - P.Zero commercial terms exploi
Slide 23: Major milestones achieved in the first nine months of 2022
23 NEAR-TERM MILESTONES Major milestones achieved Completed in the first nine months In progress of 2022. Offshore nodule collection system - Deep-water tests of pilot collector in the North Atlantic - Pilot Collection System Test in the Pacific (NORI-D, CCZ) - Digital twin implementation for NORI-D
Slide 24: Income statement: three months ended September 30, 2022
24 FINANCIAL HIGHLIGHTS Income statement: three months ended September 30, 2022. ($mm) Q3 2021 Q3 2022 Change Exploration expenses 23.8 22.7 (1.1) Environmental Studies 18.6 15.4 (3.2) Exploration Labour 0.8 1.0 0.2 Mining and Process Development 0.7 0.2 (0.5) Pilot Mining Test System (PMTS) - 3.7 3
Slide 25: Cash flow: three months ended September 30, 2022
25 FINANCIAL HIGHLIGHTS Cash flow: three months ended September 30, 2022. ($mm) Q3 2021 Q3 2022 Change Cash used in operating activities 10.4 8.7 (1.7) Capital expenditures - 0.5 0.5 Settlement of deferred acquisition costs - - - Acquisition of equipment - 0.5 0.5 Less non-recurring items (1.1) - 1.
Slide 26: Balance sheet: as at September 30, 2022
26 FINANCIAL HIGHLIGHTS Balance sheet: as at September 30, 2022. ($mm) Dec 31, 2021 Sep 30, 2022 Change Total Assets 133.2 117.2 (16.0) Cash 84.9 66.9 (18.0) Accounts receivable and prepaid expenses 3.7 5.0 1.3 Exploration and evaluation assets 43.2 43.2 - Property and equipment 1.4 2.1 0.7 Total Li
Slide 27: Income statement: nine months ended September 30, 2022
27 FINANCIAL HIGHLIGHTS Income statement: nine months ended September 30, 2022. ($mm) YTD 2021 YTD 2022 Change Exploration expenses 80.2 40.3 (39.9) Environmental Studies 44.0 20.5 (23.5) Exploration Labour 2.4 3.4 1.0 Mining and Process Development 1.7 0.8 (0.9) Pilot Mining Test System (PMTS) - 6.
Slide 28: Cash flow: nine months ended September 30, 2022
28 FINANCIAL HIGHLIGHTS Cash flow: nine months ended September 30, 2022. ($mm) YTD 2021 YTD 2022 Change Cash used in operating activities 28.3 46.8 18.5 Capital expenditures 3.8 1.0 (2.8) Settlement of deferred acquisition costs 3.4 - (3.4) Acquisition of equipment 0.4 1.0 0.6 Less non-recurring ite
Slide 29: Q&A
Investor Contact investors@metals.co Q&A. Media Contact media@metals.co Follow us
Slide 30: Appendix
APPENDIX
Slide 31: Appendix: non-GAAP reconciliation
31 Appendix: non-GAAP reconciliation. Non-GAAP Financial Measures – Free Cash Outflow Excluding Non-Recurring Items Free cash outflow excluding non-recurring items is a non-GAAP financial measure. Free cash outflow excluding non-recurring items is used in addition to and in conjunction with results
Slide 32: Appendix: non-GAAP reconciliation
32 Appendix: non-GAAP reconciliation. Non-GAAP Financial Measures – Free Cash Outflow Excluding Non-Recurring Items Free cash outflow excluding non-recurring items is a non-GAAP financial measure. Free cash outflow excluding non-recurring items is used in addition to and in conjunction with results
Slide 33: Here is what a polymetallic nodule field looks like
33 Here is what a polymetallic nodule field looks like.
Slide 34: Abundant, secure, low production cost and low ESG cost potential supply of metals
34 Abundant, secure, low Abundant production cost and low ESG TMC is developing the world’s largest estimated source of battery metals with enough cost potential supply of metals. nickel, copper, manganese and cobalt in situ to potentially electrify 280 million EVs1 Secure Located on the abyssal sea
Slide 35: CCZ nodule resource much bigger than reserves of countries with U.S. FTAs
35 CCZ nodule resource much bigger than reserves of countries with U.S. FTAs. Total estimated CCZ nodule resource U.S. FTA partner Not a U.S. FTA partner Nickel Cobalt Manganese Million metric tons Million metric tons Million metric tons 274 44 5,992 95 Indonesia - 21 1,504 Australia - 20 Brazil - 1
Slide 36: Technical resource statements issued on NORI + TOML
36 TMC: technical resource statements issued on NORI + TOML, with an in situ estimated resource of Ni, Cu, Co and Mn sufficient to electrify the entire U.S. passenger car fleet1. TMC exploration contract area NORI2 TOML3 Marawa Sponsoring Republic of Kingdom of Republic of State Nauru Tonga Kiribati
Slide 37: Resource definition: 2D resource allows effective definition
37 Resource definition: 2D resource allows BOX CORE SAMPLING 1 effective definition through sampling and imagery. 250 box cores collected2 82,000 kg (wet) nodules collected2 13,950 biological samples collected2 AUV CAMERA IMAGERY1 178,591 km2 of high-res bathymetric survey2 5,439 km2 detailed seaflo
Slide 38: Nodule collection technology demonstrated in the 1970s
38 Nodule collection technology demonstrated in the 1970s. 1970’s pilot testing in CCZ Present Day Offshore Diamond Mining De Beers, NAMCO, Samicor Kennecott Copper Corp Ocean Management Inc. British Petroleum, Rio Tinto-Zinc Corp International Nickel Company Consolidated Gold Fields Metallgesellsch
Slide 39: De-risking offshore: Pilot Collection System Test complete
39 De-risking offshore: Pilot Collection System Test Completed complete; environmental Ongoing/upcoming impact monitoring continues. PILOT COLLECTOR SYSTEM TEST PROGRAM 2022 January Riser acceptance test February Thruster re-lift, dockside vessel commissioning, review of nodule offloading & handling
Slide 40: Onshore, we have demonstrated we can turn nodules into metals
40 Onshore, we have demonstrated etter etter Metals etter Metals for Metals s for E for 2 E sE s 2 2 we can turn nodules into nshore nshore nshore development: development: development: manganese silicate and NiCuCo ilotilot ilot lant lant rogress rogress lant rogress alloy & matte. WeWeWe illill st
Slide 41: NORI-D project: expected production volumes
41 NORI-D project: expected production volumes. Nickel, kt Copper, kt 150 120 130 100 110 80 100% 90 1,634Mt (wet) 60 70 50 ~125 ktpa ~93 ktpa 40 30 20 10 TOML + 0 Rest of -10 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2024 2025
Slide 42: We expect to become the second lowest-cost nickel producer in the world
42 We expect to become the second lowest-cost nickel producer in the world. Nickel C1 cost curve on a by-products’ basis1 C1 Cash Cost represents all direct costs, including mining, processing, freight, SG&A minus revenue from by-products 10.0 5.0 C1 cash cost, $ / lb 0.0 World’s cumulative nickel p
Slide 43: Near term focus on Project Zero, with plan to scale quickly
43 Near term focus on Project Zero, with plan to Products Production3 scale quickly. Nickel 125 Kt Manganese 2,903 Kt Copper 93 Kt NiCuCo alloy 25Kt Cobalt 10 Kt Mn in silicate 303Kt Fertilizer 254 Kt PROJECT ZERO ~$55M PROJECT ONE 1.3Mt (wet) Project Zero construction and 12.5Mt (wet) 1.0Mt (dry) e
Slide 44: Marine minerals: why we only focus on nodules
44 Marine minerals: why we only focus on nodules. Polymetallic nodules Cobalt crusts Seafloor massive sulfides (SMS) 27 28 25 78 29 79 47 30 25 28 29 27 Mn Ni Cu Co Co Ni Nickel Mn Manganese Pt Platinum Cu Copper AuGold AgSilver Zn Zinc Cobalt Manganese Nickel Copper Cobalt 58.693 54.938 195.084 196
Slide 45: Remoteness & depth of the site has several advantages
45 Remoteness & depth of the site has several advantages. Biomass on Earth Contained carbon kg/m2 15-30 Deforestation Child labour Social displacement Destruction of carbon sinks 3.6 0.01 Abyssal seabed Land biome average Rainforests (e.g., Indonesia) Note: The seafloor-biomass value incorporates an
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