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

Good day and thank you for standing by. Welcome to the Metals Company third quarter 2026 corporate update conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would like to hand the conference over to your speaking today. Craig Chesky, please go ahead. Thank you, Kevin. Please note that during this call, certain statements made by the company will be forward-looking and based on management's beliefs and assumptions, using information available at this time. These statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. And the company's actual results may differ materially from those anticipated. And except as required by law, we undertake no obligation to update any forward-thinking statement. Our remarks today may also include non-GAAP financial measures. In additional details regarding these measures, including reconciliations to the most directly comparable gap measures, can be found in the slide deck being used with this call. And you're welcome to follow along with our slide deck or, if joining us by phone, access at any time at investors.metals.co. And I'd now like to turn the call over to our Chairman and CEO, Jared Barron. Jared, please go ahead. Yeah, thank you, Greg, and thanks to all of you for joining us today. Before we dive in, I'd like to take the time to welcome our new board member, Liam Mellon. Liam is a former president of ExxonMobil Upstream, and he joins us at a very exciting time as we prepare to move from exploration into commercial operations. And Liam brings more than 40 years of global energy and offshore operating experience, having led ExxomMobil's worldwide upstream business, overseeing $20 to $30 billion in annual capital investment. And he played a central role in some of the energy industry's most significant developments, from ExxonMobil's landmark offshore project in Guyana to its $60 billion acquisition of Pioneer Natural Resources. And since taking up his seat in September, we've benefited greatly from his expertise in moving complex and novel offshore operations into production. And Liam will chair our Sustainability and Innovation Committee, and he will be tasked in helping our project and environmental teams to improve project economics and manage environmental impacts, and my team and I look forward to his contributions moving forward. So, to the agenda, we'll start with U.S. permitting, where our USAA consolidated application stands with NOAA and the milestones ahead. Offshore, we will walk through an updated plan we've built with Allseas that protects our schedule and cuts nearly $500 million from the capital needed to reach first production. And onshore, will update you on Brownsville, where Marriott Minerals is leading feasibility level engineering and U.S. government funding agencies are now working together on our nodule city plan. We'll also cover a capital light option to start by toll processing our nodules in Japan. And on the environment, we'll share our near peer-reviewed papers from our deep sea data set published ahead of the environmental impact statement and how the research community is putting that open data to use. We will then We cover our partnerships and close with financial highlights and liquidity. So let's begin with permitting, specifically on our consolidated application over the USAA area. Following the application's publication to the Federal Register as reported last quarter, NOAA opened the first of several public comment periods to get the public's view on our application. The comment period closed on October 19, and NOAA is now reviewing those comments as part its application review. Many of you were watching for certification in October, and as I shared earlier this week, NOAA has told us in a letter that it now expects to decide on certification by mid-December. This is taking longer than we'd hoped, but ours is the first consolidated application done under DSMRA and NOAA's new review process. And the regulator is rightly following the statute, step by step. Importantly, NOAA has not identified any issues or deficiency with our application. So, what is certification? Well, it's NOAA's formal finding that TMC has the requisite finances and access to the technologies needed to commercially collect nodules, and a rigorous plan to conduct such activities as required under the Deep Seabed Hard Mineral Resources Act. It also locks in the size and location of our area of activity and signals the transition into the final environmental review stage prior to the issuance of the Commercial Recovery Permit. Assuming a positive certification decision in mid-December, the application will then proceed into environmental review phase, with NOAA publishing a Notice of Intent for this process, publication of a draft, environmental impact statement and the draft terms, conditions and restrictions, and the required public comment periods before NOAA makes its final determination. This slide shows the remaining path for USAA consolidated application. Since we last reported in August, NOAA has published the consolidated application in Federal Register, and as mentioned, has completed the first of several 60-day public comment periods and online webinars. The rigor of this review is ultimately helpful to the permit's legal defensibility in the coming decades. It also helps ensure that there are no rubber stamps available for newer applicants that have not completed anywhere near the same level of work as TNC, its subsidiaries, and our world-class partners. We've got some exciting developments with our offshore system to share. We've been working closely with all Cs on an updated offshore development plan with a clear purpose. Protect our timeline, de-risk the system, and move quickly into first production upon issuance of our commercial recovery permit. Instead of starting with the full 3 million ton per annum system, we'll begin at a million tons per annum using an upgraded version of our proven pilot system. That cuts engineering, procurement, and integration complexity, lowers the upfront capital for both TMC and all Cs, and means we can start commercial production as soon as possible after our permit is granted during the current administration. We'll then stage the major investments alongside the production ramp-up, So less capital is at risk in the early stages, running the system in sustained production builds operating experience demonstrates reliability and de-risks the move to full scale. The result is a faster, leaner start that stays close to our original five-year ramp-up and gets the system out on the water sooner. This is good for TMC and all Cs and ultimately good for our shareholders. The foundation of this plan is a simplified operating configuration with lower logistic cost, which builds upon the systems successfully demonstrated during our six-month offshore pilot in 2022. The vast majority of the direct capex reduction comes from simplifying and upgrading the existing pilot production system and eliminating the transfer vessel. And this also allows us to eliminate the vast majority of long lead time items, which helps de-risk the timeline to first production, in addition to a reduction of upfront capex. Collectively, changes to the scope of the system reduce the estimated upfront capital required to reach first production from roughly $800 million under our prior schedule, of which TMC's share was approximately $500 million, to roughly $300 million shared between the parties. Much of the remaining investment will be deferred to subsequent development phases. The simplified operating configuration and lower logistic costs also improved the economics of the initial operations, providing the potential to reach positive EBITDA even at the lower production volumes targeted during the first two years so what does this mean in practice well by upgrading and scaling up the production system during proven during our offshore pilot we can reuse existing equipment and operate this upgraded system during the first two of commercial production deferring the full capacity equipment packages and more complex transfer interfaces until they are needed while maintaining our original production ramp-up targets. We plan on upgrading the existing six-meter-wide pilot collector to nine meters, deferring the new collectors until the point we are comfortable we can sustain production over long periods of time. And at the lower production rates anticipated during the early years, we can eliminate the need for a dedicated transfer vessel and instead load our nodules directly onto bulk carriers. And by trans-shipping on U.S. West Coast before onward ship them to Japan, we can also combine nodule transport with regular offshore logistics, reducing the number of dedicated supply vessels required. Keep in mind, this is technology that both Allseas and TMC know very well, and it will undergo further optimization and testing during all seas upcoming japan pilot program so in short the perfect proven foundation for the start of commercial operations and rather than deploying the full three million ton system from the outset outset this upgraded pilot collection system will target approximately one million tons annually with the potential to increase up to one and a half million in year two and this fits with our existing production ramp-up strategy with the objective of maintaining the planned annual production profile as we progress towards 12 million tons across four production vessels. Building on our successful 2022 pilot, with further optimization and testing planned by ULCs during the upcoming Japan pilot program, we intend to upgrade the existing collector, limit initial modifications to the hidden gem and simplify offshore transport and logistics and these changes reduce complexity and both capital and operating costs i'd like to now turn over to craig to walk through our onshore partnerships as well as our latest environmental work and our financials thanks jared uh so onshore again our primary objective remains build the greenfield processing and refining facility in Brownsville, Texas. But having it up and running in time to receive the first nodules from our offshore operations may be a challenge given our anticipated permitting timeline. And that's where we may lean on, as we noted, our five-year partnership with PAMCO and their existing processing facility in Hachinohe, Japan, where they've been processing nickel laterites for many decades and where we successfully conducted an industrial scale pilot in 2024 to 2025. PAMCO will need to make some modifications to its plant to prepare for the arrival of first nodules and our team and external engineering consultants have been in Hachinohe this week working through those plans just to make sure those schedules align so taking a step back PAMCOs history of smelting nickel adderite ores goes all the way back to the 1960s and over the years they built up significant processing infrastructure with three furnaces spread across the existing site our history working together is a bit shorter but we have accomplished a remarkable amount over the past five years including industrial scale pilot processing demonstrating technical feasibility of the process using existing architecture and a feasibility study demonstrating economic viability using their 80 megawatt furnace so we know what needs to be done to bring the facility on spec in preparation for nodules and suffice it to say that our discussions with the us government do include the potential of this attractive option at the start of production and certainly members of the u.s government are in japan as we speak discussing the burgeoning seafloor minerals industry and you may have seen just moments ago the us and japanese governments published a joint statement which puts seabed minerals front and center of their plans to diversify mineral supply and support their industrial bases and two particular lines from the state department's release stand out foster trusted commercial partnerships and secure processing capacity among trusted partners. TAMCO fits that bill perfectly. But again, we remain laser-focused on ultimately bringing module processing to the USA. As a reminder, TMC-USA holds an exclusive right of negotiation over lease options for land at the Port of Brownsville. The location provides direct access to the Brownsvile shipping channel and sufficient land to evaluate an integrated processing and refining ecosystem serving TMC USA, and potentially, over time, other American operators. No investment decision has been made, and as we've said a few times before, any future capital commitment will remain contingent on U.S. government support. But we have started laying this groundwork to prepare for when bulk carriers with full nodule holds can begin arriving on U S shores. Site specific feasibility work is a prerequisite for any potential U. S government support, and we're happy to report that work is now well advanced, and the Brownsville area can Under consideration, covers nearly 1,500 acres across two parcels, 735 acres on the shipping channel and adjacent 731 acres. Pre-feasibility level engineering is nearly complete, and feasibility level engineer from the first melting stage, as we mentioned previously, is underway, along with Mariana Minerals' leadership as part of TMC's owner's team. The engineering team is also testing the interfaces among the berths, triple motors, conveyors, stockpiles, processing facilities utilities and supporting infrastructure along with material flows constructability and opportunities to face future development and in late October our TMC USA project team as well as our executive team spent four days in San Francisco with our partners at Mariana Minerals hosted at their San Francisco Bridge facility since we signed an MOU in April last year the partnership is Lufast and we signed a strategic partnership in March and a master Service Agreement in July. Mariana is a core part of our owner's team for Nautilus City, which is, again, our proposed industrial park at the Port of Brownsville in Texas. In San Francisco, the teams reviewed the engineering completed date and focused on three things. One, refining the plant's process flows, including the controls needed to meet stringent U.S. environmental requirements. Two, identifying ways to bring down CAPEX and OPEX. And three, aligning on a permitting strategy for this Brownsvile site. And that work feeds directly into the next phase of development. We also want to take a moment to highlight some of the exciting developments with our royalty holder, TMCR, where the metals company holds a 20% equity interest in their stock. And on September 28th, Masabi Metallics announced plans at the White House for a $15 billion steel complex in Iowa, described as the largest in U.S. history. Alongside its 2% royalty on our Nori area, TMCR holds a 2% gross production royalty on Masabi's Minnesota mine, although they do not have interest in the Iowa complex. So we would like to commend the teams at both Masabi and the metals royalty company on the significant step forward in rebuilding America's domestic steel supply chain. And of course, as we know, steel requires manganese as well as iron ore, and America's Re-industrialization will depend on secure supplies of all four metals found in nodules, including manganese, nickel, copper, and cobalt. So on to some developments in our environmental program. Our vast deep-sea environmental data set, by far the industry's largest, continues to bear fruit as more of the data it contains is published in peer-reviewed journals. And I'd like to highlight a few recent papers today. The first, published this week in the Journal of Marine Science and Engineering, presents the first commercial scale sediment plume modeling showing that the vast majority of mobilized settlement settles within 10 meters of collector tracks with plumes dissipating within two to five days of operation ceasing the second paper in press and soon to be published in that same journal documents tmc's world first environmental monitoring of an integrated collection system trial in near real time and the technical expertise and choreography required to gather the empirical data that is essential to inform commercial scale modeling these new papers bring total peer-reviewed studies based on our data set to 46, with almost 220 citations by other researchers. But this is just scratching the surface. Our data set is one petabyte among the largest single project data sets ever compiled, larger than the Hubble Space Telescope Archive, 1,000 Genomes Database, and Sloan Digital Sky Survey combined. And this will continue to deliver new insights with hundreds of papers expected in the coming months and years, particularly as we advance towards intensely monitored commercial operations. The size and scale of our decade-plus research effort and the resulting data set was on full display at the Underwater Minerals Conference in Japan this week, which we're pleased to attend, and many of our team members were there for the first time, along with many members of others in the industry and many people who have been publishing work based on TMC data. In fact, roughly half of all environmental research whether delivered in presentation or poster format was based on data collected during our offshore campaigns reaffirming the immense value of our extensive investment in scientific research and that investment has eclipsed 250 million dollars to date members of our team as well as our research partners shared insights on a broad array of topics including assessments of benthic impacts and recovery following test mining sediment including dynamics and monitoring and the spatial distribution of dissolved metals and our onshore team also presented on the development of our near zero solid waste flow sheet the conference is wrapping up this week and from where we sit it was incredibly satisfying to see firsthand how our findings are shaping this new industry so hopping to the financials uh liquidity and valuation uh as i'm sure you're all aware the industry valuation metrics have moved down sharply since august and while nickel and copper developers were valued at about 58 percent of nav just three months ago that same metric is now down to 34 percent for producers it's moved down from about 100 percent of nav to 80 percent and unfortunately for tmc we're valued at just four percent of the underlying net asset value per sac compliant technical reports bottom line these valuations are swinging in our view based on short-term technical and political factors rather than long-term realities for these metals that continue to be critical for the global economy so rest assured jared and i will be busy on the road in the coming months talking to new and existing investors about this very undervalued opportunity moving to liquidity tmc liquidity defined as cash plus borrowing capacity stood at 123 million dollars as at september 30th 2026 including 44 million available from our undrowned credit facility In the third quarter of 2026, TMC reported a net loss of approximately $28.4 million, or $0.06 per share, compared to a net lost of $185 million, or $.46 per share for the same period in 2025. The net loss for the third-quarter of 2027 included exploration and evaluation expenses of $23.5 million versus $9.6 million in Q3 2025, G&A of $9,500,000 versus $45.7 million in Q3 2025 and other non-operating items totaling a gain of 4.6 million versus the 125 million loss a quarter excuse me a year ago in third quarter 2025. exploration and evaluation increased by 13.9 million in third quarters 2026 compared to the same period in 2025 mainly due to higher costs to recognize the full charge of ongoing development operating and vessel costs the increase also reflects higher share based compensation increase in feasibility and increased feasibility study costs, and increase in legal and professional costs related to the project. G&A expenses decreased by $36 million in Q3 2026 as compared to same period due to $33 million lower share-based compensation expense and a decrease in legal fees. Other non-operating items in Q2 2026 include the following, a decrease of minority royalty liability of $5 million, driven by an increase in the risk-free rate used to value the liability, which compares to an increase in the royalty liability of $131 million in a comparable quarter. There was also an increase of $4.4 million in equity-counted investments resulting from TMCR's higher share-based compensation and changes in the fair value of derivative instruments and other financing costs. Net cash used in operating activities in Q3 2026 amounted to $19.4 billion in comparison to $11.5 million in Q3 2025. The increase in the outflow in Q2 2026 is mainly due to increased costs for the scaling of the nodule collection system, including $7.7 million in cash payments to all fees, payroll, pre-feasibility, stakeholder engagement costs, and legal and consulting fees. Pre-cash outflow for Q3 2026 was negative $19.4 million compared to negative $11.5 million in Q3 2020-2025. And pre-cache flow is a non-GAAP measure, and I would point you to the non-GAP reconciliation table included at the end of the slide deck. We do believe that the cash on hand is sufficient to meet working capital and CapEx commitments for at least the next 12 months from today. And investments increased by $18 million primarily due to $26.9 million in dilution gains on investment partially offset by $9.2 million for our share of the loss in our TMCR investment. The warranty, excuse me, the warrant liability decreased due to the expiration of all outstanding private warrants in Q3, and the royalty liability decreased by $5 million, driven by an increase as said before in the risk-free rate used to value the liability. With that, operator, we would like to take a moment to open it up to any questions from the audience. Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star 11 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from with AC Rainwright, your line is open Hey Gerard, hey Craig, thank you guys for taking my questions, hope you guys are doing well Hey, thankyou Let's talk a bit about the recent election results in the US Can you give a bit of color on if there's been any strategic changes following the recent midterms I assume investor questions have been focusing on that, maybe give a bit of color on what they've been asking, what you've been telling them, and building on all of that, is there anything that you think the market might be missing and that you can elaborate on on this call? Well, on the election front, I think it's important to remember that our permitting pathway is through DSHRA, and DSHRO, of course, is in statute. And so it is a reliable framework on which we are applying. And of course, critical minerals are a bipartisan issue, and we believe the timing couldn't be better. On one hand, I'm in Japan at the moment, and this week I've attended the flagship conference for the underwater mineral sector, where our team highlighted the enormous amount of environmental data that is now becoming available, which really highlights just the concerns that some people have previously had of what are the environmental impacts. And I think, you know, our very heavy investment in first-class environmental research with the help of leading institutions around the world, you know, comes together now with all of these, I think we have 47 papers, you know, being published at the moment, peer-reviewed papers, either published or about to be. And, you know, what that highlights is, you know, that the environmental impacts, you are all very manageable, that they're a fraction of what people ever thought they were. They are largely contained to the area of extraction. And, of course, I think this helps make it a bipartisan issue because critical minerals are essential to the functioning and to the security of the U.S. economy. And the only time anyone ever gave it pause was really on the environmental front that we've always maintained that the environment is actually the biggest positive for the development of this resource because of the lower environmental impacts and the lower impacts on humans. So I feel very confident that we'll be spending a lot of time in D.C. There's a lot new representatives and senators that we need to, I guess, you know highlight the important importance of this resource and uh so so we're feeling we're doing pretty good about it yeah and just add a bit of color on that as well again you know as we know jared said at the beginning noah's under the commerce department this is an executive branch agency and you know we have been going step by step through the process you know based on implementing regulations on dish mara um you know where noah was given the power to be the regulator for this industry back in the 1980s. So this is, you know, in the hands of the executive branch. But also when we look at the funding side of it, I think a lot of other people, you've seen, you Know, Heiko, a lot names, not just TNC, but others in your coverage where there have been swings back and forth based on the political winds. But the money that's available here and much of it not yet being deployed is generally devoted to certain cabinet departments and agencies based on a reconciliation process and budgeting that has already been approved so those funds are earmarked and how they want to be spent by these you know various cabins departments many of which now are working together um we're happy to report on the nodule city potential um that's all really already devoted to them and it's not something where you could necessarily see those funds at risk or taken away now over time might there be impacts on you know future years in terms of appropriations and the reconciliation process what's available to deploy sure but the money that's already been allocated and in fact there's a good article from mining.com this week where they interviewed uh bark street associates about this very point so both on the money front as well as the permitting front uh we feel we're you know in a very good position despite you know some of the narrative that's out there in the market but again this is not about an executive order. This is about a clear regulatory statute that we're following step by step. Yeah, that's a very fair and very comprehensive answer. And I think it probably soothes some of the concerns that I've gotten on the phone. And then just a quick one. You were talking about the lower CapEx hidden gem and how you're planning on converting it in year three while it's being in production. And I'm just trying to figure out how exactly that's supposed to work. How do you anticipate having the assets stay operational while you, like, increase capacity on there? No, that would be a swap out. You know, so essentially, you know, we, as custodians of your capital, We are, you know, we're very mindful of restoring value, you know, to the equity. And, of course, we are confident that as we can show that, you know, as we show how we move into commercial production, the most important thing is to get started because then, you know, it's widely acknowledged that the size and the quality of this resource. I mean, we've defined 1.6 billion tons. We think we have another 300 to 400 million tons in the area that we've applied for. So now talk about 2 billion tons of high-grade nickel, copper, cobalt, manganese. And if you put the copper and the copper equivalents, it's around 7 plus percent. So 2 billion tones of 7 plus% copper and copper equivalence. I mean there's no other resource on the planet that compares. So, you know, we took the view that keeping the schedule was of utmost importance. And, you know, we just need to get into production. And then, of course, we know that capital will be more widely available. We already have people coming to us with great capital ideas around financing new vessels and, you know, operators who want to put vessels to work, providers who would provide, you know finance to enable us to get more boats on the water and so you know we can it means that we can defer that investment until you know what we believe to be more proper and appropriate value is restored to the equity and so that would be you know would keep the first boat in production until the time was right but then we would you know move the second boat onto the area and the third and the fourth so like yeah so heiko think of it as really kind of a you know a very short-term, you know, miss of production, let's say, when we then, you know, expand the hidden gem capacity to 3 million tons. But doing that expansion, which, by the way, requires the ordering of long lead time items and, frankly, would add a bit more risk, not only in terms of money, you know, capital spent, but just, you know, what happens if a few items are delayed several months. That's not something we want to deal with if we're waiting to start first production. But if it's something you can do after production has begun and then the second vessels come on the water. That's a much better time for us to be able to do those modifications with all these, but then also do it at a time when our cost of capital would be much lower. That was a very fair answer. Perfect. I appreciate it, guys. I'm going to get back in queue and stop hogging the queue here, and thanks for taking my questions. Thanks, Hakan. We'll wait a moment for our next question. Our next question comes from Tate Sullivan with Maxim Group. Your line is open. Hi, thank you. Does the updated capital light plan require meaningful changes to the NOAA application process? No. No changes at all. Nothing at all? Okay, thank You. And then for PAMCO, the PAMC and Craig, you went into the description about making some modifications to a plant in Japan to prepare for nodules. can you remind us on the terms of the partnership? Would that be sharing those costs on the facility similar to what you're doing with All Seas as well? Yeah, good question. And the Japanese government have already put in place a financing plan to cover up to half of that cost. And we are, the arrangement with PAMCO is a tolling type arrangement. And we're having that sit down with them, you know currently to see how we might support them to cover the remaining half but while nothing has been agreed at this stage it would seem fair that you know we would we would make some contribution alongside with PAMCO themselves okay thank you very much again ladies and gentlemen if you have a question or a comment at this time please press star 1 1 on your telephone So, one moment for our next question. Our next question comes from Dimitri Silverstein with Watertower Research. Your line is open. Hello, gentlemen. Thank you for taking my call. Just wondering sort of what drove the revision and how you plan to ramp up production with Hidden Gem going from 3 million tons to 1 million tons. I mean, I understand the rationale behind it, but I'm just wondering why that wasn't approach from the beginning, and what has changed that you now think this is the right approach? Well, I think keeping the schedule was of paramount importance, and I guess what we've seen, we were perhaps a little bit optimistic on when we might have seen permits in our hands, also optimistic about when we thought a government financing arrangement for Brownsville would be put into place and so you know when you combine those two things and also combine the fact that you know the offshore oil and gas sector is quite vibrant at the moment and so you know all of those points of tension in the supply chain and so keeping the schedule was always of paramount importance and so I guess it became just an obvious decision that we should not jeopardize first production. As I said earlier, I think it's such a big, valuable resource that if we can show the world that it can be extracted and processed and we can produce these critical minerals, then all of a sudden we can be valued against that resource as opposed to the first production vessel. As far as, you know, I mean, it's a perfect scenario, you know, to have the boat moving to Japan to do some work with the Japanese government on some trials and then to be moving onto our license area once the permit is in our hands. And it means that there'll be learnings all the way along that and then it's just a you know a methodical way of identifying the next vessel and vessels and you know taking those learnings and turning them into optimized production systems and i'm not showing any further questions this time i turn the call back over jared for any further remarks yeah thank you and thanks to all our shareholders who have tuned in and uh who continue to support i think um and and thank you to all of our uh the team who are working exceptionally hard and our supply chain and um you know i i celebrate the tremendous results we've had this week up in japan as our team have showcased important environmental papers and results of the last decade or more of environmental research so yeah so stay tuned you know we think it's going to be a very exciting lead into the end of the year and I look forward to giving you those updates as they become available thank you thank you ladies and gentlemen says conclude today's presentation we thank you for your participation you may now disconnect and have a wonderful day