The Metals Company Third Quarter 2026 Corporate Update Conference Call - TMC THE METALS CO INC

Financial Performance:

• Reported a net loss of $28.4 million ($0.06/share) for Q3 2026, a significant improvement from the $185 million loss ($0.46/share) in Q3 2025.
• Exploration and evaluation expenses increased to $23.5 million (vs. $9.6 million in Q3 2025) due to development costs and share-based compensation.
• General and administrative (G&A) expenses decreased to $9.5 million (vs. $45.7 million in Q3 2025), driven by a $33 million drop in share-based compensation.
• Net cash used in operating activities was $19.4 million, up from $11.5 million in the prior year, due to scaling costs and stakeholder engagement.
• Liquidity stood at $123 million as of September 30, 2026, including $44 million available under an undrawn credit facility.
• Cash on hand is deemed sufficient to meet working capital and capital expenditure commitments for the next 12 months.
• Company valuation remains at approximately 4% of underlying Net Asset Value (NAV) per SEC compliant technical report, contrasting with the sector average of 34% for producers.

Guidance and Future Outlook:

• Anticipates NOAA certification decision for the U.S. Exclusive Economic Zone (USAA) application by mid-December.
• Revised offshore development plan aims to accelerate first production to fall within the current administration's timeline.
• Updated ramp-up strategy targets 1 million tons per annum (tpa) initially, scaling to 1.5 million tpa in Year 2, before reaching full 12 million tpa capacity across four vessels.
• Long-term goal remains the construction of a greenfield processing facility in Brownsville, Texas, contingent on U.S. government support.
• Management expresses high confidence in the regulatory framework (DSHRA) being a bipartisan, statute-based process resilient to political changes.
• Plans to leverage the "Nori City" industrial park concept at Brownsville, potentially supported by earmarked federal funds.

Business Segments and Product Lines:

• Offshore: Adopted a capital-light strategy with Allseas, reducing upfront capital required to reach first production from ~$800 million to ~$300 million by simplifying the system and eliminating the transfer vessel.
• System Upgrades: Will upgrade the existing 6-meter pilot collector to 9 meters for the initial 1 million tpa phase, deferring the procurement of additional collector vessels until production is proven.
• Logistics: Will initially load nodules directly onto bulk carriers for trans-shipment on the U.S. West Coast to Japan, reducing dedicated supply vessel requirements.
• Onshore Processing: Securing a toll-processing agreement with PAMCO in Hachinohe, Japan, using their existing nickel laterite infrastructure with planned modifications to handle nodules.
• Brownsville Project: Feasibility-level engineering is underway for the 1,500-acre site, with pre-feasibility work nearly complete and engineering teams working with Mariana Minerals on process flows and permitting strategies.
• Partnerships: Strengthened relationship with Mariana Minerals (owner's team) and PAMCO (tolling partner); noted strategic alignment with the U.S.-Japan joint statement on seabed minerals.
• Royalty Investments: Holds a 20% equity interest in TMC Royalties (TMCR), which recently announced a $15 billion steel complex by Masabi Metallics.

Market and Competitive Landscape:

• Industry valuation metrics have compressed significantly, with sector multiples dropping from 58% to 34% of NAV in three months; management views current valuations as disconnected from long-term resource value.
• Company holds a unique asset with 2 billion tons of high-grade resource (7%+ copper equivalent), comprising nickel, copper, cobalt, and manganese.
• Competitive advantage highlighted by the largest single-project environmental data set (1 petabyte) with 46 peer-reviewed papers and 220 citations, reducing technical risk compared to new entrants.
• U.S.-Japan government collaboration is prioritizing secure processing capacity among trusted partners, positioning the company's Japanese tolling option favorably.
• Critical minerals identified as essential for U.S. economic security and re-industrialization, creating a bipartisan market driver.

Risks and Challenges:

• Permitting timeline delays (NOAA review taking longer than expected) necessitated the pivot to a lower-capacity, capital-light start.
• Political uncertainty regarding future funding availability, though current earmarked funds for Brownsville and DSHRA statutes are viewed as stable.
• Supply chain tensions in the offshore oil and gas sector impacting equipment lead times.
• Technical risk of transitioning from pilot to commercial scale, mitigated by the staged approach and extensive environmental data.
• Dependence on government support and financing for the Brownsville greenfield project.

Management Commentary and Tone:

• Tone is confident, emphasizing the strategic necessity of de-risking the project timeline over maximizing initial scale.
• Management highlighted the "perfect foundation" of using proven pilot technology to achieve positive EBITDA at lower volumes.
• CEO Jared Barron emphasized the company's readiness to engage with new lawmakers in Washington D.C. and the bipartisan nature of the project.
• CFO Craig Chesky expressed strong conviction that the current low valuation represents a significant opportunity for value restoration once production begins.
• Introduced new Board Member Liam Mellon (former ExxonMobil Upstream President) to oversee sustainability, innovation, and project economics.

Analyst Questions and Answers:

• Election Impact: Management confirmed the DSHRA regulatory pathway is a statute, not subject to executive orders, and funds for Brownsville are already allocated via budget reconciliation.
• Capital Light Plan Details: Confirmed no changes to the NOAA application are required due to the internal system redesign; the shift to 1 million tpa is a strategic choice to secure the timeline and defer long-lead items until post-production when capital costs may be lower.
• PAMCO Partnership: Confirmed a tolling arrangement where the Japanese government covers ~50% of facility modification costs, with TMC expected to contribute to the remaining half.
• Production Ramp Logic: Explained that starting with a smaller system allows for a "swap out" of equipment later rather than delaying production, ensuring the 1.6-2 billion ton resource base is monetized sooner.

Other Key Points:

• Added $23.5 million in exploration costs and $9.5 million in G&A to Q3 expenses, reflecting strategic investments in engineering and feasibility.
• Released new peer-reviewed papers demonstrating that sediment plumes settle within 10 meters of collector tracks and dissipate within 2-5 days.
• Attended the Underwater Minerals Conference in Japan, where half of all environmental research presented was based on the company's data.
• Noted that the "Hidden Gem" collector will be upgraded in Year 3, requiring a temporary production pause to swap equipment before adding the next vessel.
• Total corporate investment in environmental research has exceeded $250 million to date.