Good afternoon, everyone and thank you for participating in the Metals Company Fourth Quarter and Full Year 2021 Corporate Update Conference Call. Joining us today are the Metals Company's Chairman and Chief Executive Officer; Gerry Baron, the Metal Company's Chief Financial Officer, Craig Shesky; and Epsilon Carbon's Managing Director, Vikram Handa. Following their remarks, we'll open the call for your questions. Before we go further, I would like to turn the call over to CFO, Craig Shesky, as he reached the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements and information about the use of non-GAAP measures. Craig, please go ahead.

Thank you. Please note that during this call, certain statements made by the company will be forward-looking and based on management's beliefs and assumptions from information available at this time. These statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in the Safe Harbor provisions are forward-looking statements that can be found at the end of our fourth quarter 2021 corporate update press release. Such statements may also be found in our Form 10-Q when it's available, and other reports filed with the SEC all that provide further detail about the risks related to our business. Additionally, please note that 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-looking statement. Our remarks today may also include non-GAAP financial measures, including with respect to free cash flows. Additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures can be found in our slide deck being used with this call. This slide deck is available on our website, investors.medals.co. I'll now turn it over to Gerry Barron, the Metals Company, Chairman and Chief Executive Officer. Gerry, please go ahead.

Thank you, Craig, and good afternoon and thank you all for joining us today for our fourth quarter corporate update. You're welcome to follow along with our slide deck or as Craig mentioned, you can also access it at investors.medals.co. Today, we're going to take you through an update on strategic relationships, a discussion of recent market developments, our financial and project development highlights, and expected upcoming milestones for the company. But we'll start with a quick reminder of the TMC value proposition. We believe TMC's estimated resource of polymetallic nodules can really move the needle for battery metal supply. It's abundant. It's the largest estimated potential source of battery metals on the planet. We believe our portfolio alone has sufficient estimated in situ quantities of nickel, copper, cobalt, and manganese to electrify 280 million EVs, about the size of the entire US passenger fleet. It's secure, nodule sit in international waters and we are regulated by the International Seabed Authority or the ISA, comprised of 167 member states and the European Union. The ISA resumed in-person meetings in December after a nearly two-year hiatus due to COVID and they are meeting again as we speak in Kingston, Jamaica with a stated target of finalizing the exploitation regime by July 9th, 2023. We expect our production cost to be low due to the high grades of four metals. On land, you would possibly need three different mines to obtain these metals and the grades are falling. Nodules contain high grades of four metals in a single resource, which could put us firmly in the bottom quartile of the C1 nickel cost curve. At potential steady-state production, we expect to be the second lowest cost producer of nickel in the world and lowest outside of Russia. Importantly, we also expect to…

Thank you very much, Gerry. And it's exciting to be here. Epsilon Carbon started in 2010 with an idea that we could turn coal tar, a waste stream from steel making into high-quality carbon products. Since then, we have built a good business around the long-term exclusive raw material supply contract with JSW Steel, which happens to be India's largest steel manufacturer. We've been producing a wide range of carbon-based products for some of India's biggest needs in aluminum, carbon black, tires and other specialty products. We have done so with a low-carbon footprint, because we use waste gases to produce mesocoke and more than 80% renewable power for thermal purification. About five years ago, we decided to expand into battery business and Started Epsilon Advanced Materials deals to focus on that. The Anode Precursor Materials was a logical place for us to start, but we had ambitions to expand into Cathode materials as well. On the Anode material side, we have now had the first plant in India producing Synthetic Graphite, and we are building a plant in Finland to make Natural Graphite as well. In Cathode materials, we are working on making a precursor for the LFP battery chemistry made from the steel plant waste stream. And now with the MoU we have signed with TMC, we are thrilled at the prospect of processing nodules and producing nickel met as well that could cater to NMC and other nickel-rich battery, Cathode chemistries. We have built our entire carbon products business, on an unconventional raw material, a waste stream from the steel plant and then, invested our R&D resources to produce Synthetic Graphite. As a company, we thrive on these types of challenges, doing things that have not been done before. Polymetallic nodule resource truck as, as a game-changing opportunity to tap another unconventional resource with several intrinsic properties that could potentially allow us to develop a Cathode precursor material business with a much lower environmental and social impact. We have already started on the pre-feasibility report, subject to us reaching, binding head of terms in the next couple of months with TMC. We look forward to engineering, permitting, financing, building and operating our Project Zero Plant in India. It is a relatively small-scale plant, but we believe that the scale of TMC's resource portfolio has the potential to turn India, into a significant supply of critical minerals for battery and steel industry as well. So we're looking forward to working together and building this project in the near future.

Thank you, Vikram. I'd add here that for the last three years, we have engaged with many potential onshore partners and visited many plants around the world. Metallurgical processing tends to be a rather slow changing capital intensive business, usually run by large, established companies, not necessarily known for their innovation and entrepreneurial spirit. And having recently spent some time in India with Vikram and his team, visiting their plants and potential sites for a Project Zero plant. I can say we were very impressed. The operating philosophy of putting every bit of resource to work and nothing to waste, attention to detail, focus on people and an environment, it felt like we found a kindred spirit. And at a strategic level, I could not imagine the benefit. In Epsilon Carbon, we found a partner who is already in the battery materials and backward integrated with the steel industry, the two target industries for our products.

Thank you, Gerry. We have certainly enjoyed working with your technical team over the last few months as well. The work done by the TMC team, including a zero solid waste flow sheet and the pilot plan program results have given us a good head start as we aim to deliver a project feasibility report for Project Zero in India by year-end. I think it's important to understand that after China, India is the world's largest steel manufacturer and is planning to triple this production to 300 million tonnes by 2030. This expansion will also require a lot of manganese ore, most of which India has to import today. Project Zero plant is expected to produce a sizable volume of manganese silicate product that could be used in the production of silicon manganese alloys instead of manganese ore and appears to have several advantages, including reducing the CO2 emissions, lowering downstream power consumption and eliminating the need for blending. Over the last month, my team has been meeting with some of India's largest manganese alloy producers and have secured initial expressions of interest in the manganese product. TMC has shipped us the manganese samples, and we look forward to the next stage of testing with these customers and taking their interest ahead.

And India is, of course, home to 20% of the world's population and has a strong development led demand for raw materials. And according to un-class, polymetallic nodules in international waters is a common heritage resource. And personally, I believe that putting this resource to work in a country with the world's second largest population that needs a lot of steel for its continued development is putting such a resource to good use. I'd like to thank Vikram for taking the time to join us today, and he has kindly agreed to stay behind bringing questions at the end of this session. So in closing here, offshore, our partner Allseas has enabled us to move at a near impossible speed and capital efficiency. And onshore, we hope that our relationship with Vikram's team will allow us to do the same. In terms of governance, we announced the appointment of Kathleen McAllister to our Board in February. Kathleen is a seasoned CEO, CFO and Board Director who has held diverse leadership roles in global, capital-intensive companies in the energy value chain, including Black Hills Corporation, LNG partners and Transocean Partners. Kathleen is expected to step into the role of Audit Committee Chair in April. And Kathleen's appointment brings our gender parity to 50/50 on TMC's Board. Just 3% of S&P 500 companies Boards are comprised of 50% or more women today. So TMC is joining a small but growing number of companies delivering on gender parity goals. Under the nickel market, we've been talking about impending supply issues for nickel for awhile, that the events of the last several weeks have elevated the urgency of this topic. Since the beginning of Q4 2021, nickel prices have more than doubled, but not in a linear fashion, nickel prices started Q4 '21 at…

Hello everybody. We’re having technical difficulties. Please stay on the line. [Technical Difficulty]

Ladies and gentlemen, please remain holding. Again, ladies and gentlemen, please remain holding.

I think we're back up, Gerry, if you want to begin again. Apologies for the inconvenience there, everybody, but ready to start again.

Okay. Apologies everyone. Starting on slide 18. Okay. So the support for nodules has been growing amongst the world's largest economies for some of the most credible voices. India has an exploration contract and Prime Minister Modi is investing $530 million over the next five years in the country's Deep Ocean Mission, including funding for an integrated nodule mining system. And France also has an exploration contract and President, Macron is investing €300 million in deep-sea nodule exploration as a path to mineral independence and reindustrialization of his country. Russia controls two exploration contracts and China controls three exploration contracts, the same number as TMC. And these exploration contracts are strategic holdings with major national security implications. On the top of this page, you can read some of the positive statements made by some respected agencies on the topic of deep-sea minerals. And those opposing deep-sea mining claim that the scientific inquiry on this topic is brand new, and knowledge is insufficient. When it comes to CCZ nodules, we respectfully and strongly disagree. The environmental impacts of nodule collection have been studied for the last 50 years, including a study by NOAA from 1975 to 1980. The findings of NOAA's Deep Ocean Mining Environmental Studies or DOMES was reported to the US Congress in 1995, stating that the DOMES project has basically eliminated virtually all other environmental concerns raised about deep-sea mining, except the collective sediment plume issue that required for the study. Now much progress has been made on plumes since then. Since 2018, we and our partners have undertaken the most intensive deep-sea exploration and environmental baseline data collection effort in history, completing 14 campaigns totaling 450 days at sea, while collecting nearly 1,000 terabytes of data. Senator Lisa Murkowski, a centrist voice in the US Senate, with…

Thank you, Gerry. In March 2021, AMC Consultants issued an SEC Regulation SK 1300 compliant initial assessment of the project economics for the NORI-D area. This initial assessment is available in the Investors section of our website and the NORI area D financial model can be found beginning on page 3(10) of that document. The NORI-D area represents just 22% of our total estimated resource portfolio. The initial assessment arrived in a net present value of $6.8 billion for NORI-D at the beginning of last year, assuming $7 billion of project developer CapEx. As we know, the prices for most of our metals have reached multiyear highs and the current metal prices, except for nickel, which we run at $30,000 per ton, the net present value would triple to almost $22 billion with potential lifetime EBITDA of over $125 billion just for NORI-D lock. As potential steady-state production of 12.5 million tonnes per annum on NORI-D toward the end of this decade, we expect to be the lowest cost nickel producer in the world outside of Russia with estimated steady-state EBITDA margins above 75% at current metal prices according to our internal estimates. We believe these attractive project economics can support us in trading future margin for reduced CapEx upfront on Project One. Our recently announced arrangements with Epsilon Carbon and Allseas show our commitment to our CapEx-light strategy with the initial smaller scale production for Project Zero. And just one last note on nickel, certainly, the events of the past month have shown the world just how sensitive these metal supply chains can be to geopolitical events. And we think the outlook for Class 1 nickel is bright, but predicting future of metal prices is not our business. As such, we've included a sensitivity table to show the NPV…

Thanks, Craig. So in closing, the supply chain breakdowns and unprecedented price volatility of 2022 have spotlighted the fragility of global metal markets like nickel. There should no longer be any doubt. Securing the supplies of critical battery metals is a matter not just of national security, but of global security. And our strategy has always been to develop the polymetallic nodule resource through partnerships because it allows us to move faster and because it allows us to get into production in a apital-light manner. The two strategic developments we announced last week are very important milestones in that direction. So in summary, at a time when the inherent risks of battery metal supply chains are becoming apparent, we have taken major steps towards derisking the world's largest estimated undeveloped source of battery metals. And with that, we'd like to turn it back over to the operator for any questions.

[Operator Instructions] First question comes from the line of Jake Sekelsky with Alliance Global Partners. Please go ahead.

Hey, thanks for taking my questions.

Happy to.

So just looking at the Epsilon MOU, obviously, a major derisking event, and I know it's early there, but do you have any visibility on when we might see results of the PFS? And then secondly, does the MOU satisfy all processing requirements from Project Zero?

Well, we're fortunate to have Vikram on the line, so he can help us answer some of those questions. But -- what we've realized on the processing, if I answer the back end question first, as I mentioned in the presentation, we found there's an appetite for people to take delivery of our matte material. And so the matte that I hold in my hand before contains about 40% nickel, 30% copper and between around 4% cobalt. So it's a very attractive product, if you're a battery cell manufacturer. And what we've heard from some companies is that taking that intermediate product can help them take steps out of the process and thereby reduce the per kilowatt hour cost of production and can also deliver economic benefits to the more -- the heavier investors in the R&D side of the battery cell manufacturing. And so, if we can get almost full payables for the metals contained in that matte material but not have to run through the pyrometallurgical step, then that's a really important part of the process. But Vikram, I might throw it to you just on the timing of what we agreed on the -- with regards to the feasibility.

Yes. Thanks, Gerry. So I think on the pre-feasibility side, I think it was already working on doing some kind of basic engineering and get a more accurate number on the CapEx as well. And we aim to finish the pre-feasibility report by September this year. And I think at that stage, we'll be – I would say, plus or minus 10% on CapEx and have a really good idea on the whole project schedule of presentation and what we plan to spend to build it as well in India? I hope I answered your question.

Thanks, Vikram.

Yes, that's helpful. Thank you. And then just to be clear, the MOU is just for Project Zero, correct? It doesn't restrict PMC from exploring discussions with other partners or looking at other locations for processing for other parts of the project?

That's correct.

Yes -- that's correct.

Okay. Perfect. And then lastly ...

You can expect us to continue to be exploring all of the options. You know, I guess, we see great potential in developing countries like India who have an insatiable demand for these important base metals. And if you'd ask me five years ago, I probably would have predicted that we'd be doing a lot of this onshore processing in China, but that's obviously become problematic. And as you know, a lot of the material we make is in the manganese silicon. And so to do a lot of that onshore processing in a market that has such explosive growth in their steel industry is appearing to make a lot of sense to us.

Got it. Got it. Okay. And then just lastly, on the pilot collection program slated for later this year. I'm just curious if you're able to shed any light on the time line for when we might see some environmental impact data start to roll in there.

Sure. Well, we will -- I mean, we have collected such an enormous amount of baseline data, which we've submitted as part of our EIS. We've submitted half of that. The second half will come as those reports have failed with us from the many scientists that we've got working. And then we have a very aggressive program to monitor the collector program that will be happening in the third quarter. And so we will release a lot of those numbers as and when we submit the application. But we are very fortunate, of course, to have the benefit of some of the other contractors who have completed those trials. And I showed you a video we showed you a video of the Belgium contractor with the machine. And of course, they had a second vessel monitoring all of those activities and have started to report those results, which have been in line with our expectations. We had DHI to a lot of our pull modeling. And the pull modeling that's come in from other contractors has been in line with what we forecast -- so I think we have a pretty good steer on that already, a most. But of course, there'll be learnings that are unique to us during that program.

Okay. That's helpful. That's all for me. Thanks, again.

Thank you for the question...

Thank you, Mr. Sekelsky. Our next question comes from the line of David Snow with Energy Equities. Please go ahead.

Hi. Could you walk us through the model for 1.3 million tons a year of wet nodules selling price and the fee to your partner and any other costs if you could place starting with the selling price.

Sure. Yes, happy to take that one. So the assumption, and we noted on some of Jared's comments, is that for that 1.3 million, the products would be nickel, copper, cobalt matched and the manganese silica product. So first of all, the equation would be what payables would you give for those products as a percent of the prices from those metals on the LME. And we believe you would get 85% to 90% or more of LME pricing for that basket. One thing to keep in mind in terms of just converting web modules to dry, we've actually noted in prior disclosure that there's a 24% of moisture content. So when you're converting wet nodules to dry, we would multiply by 76%. So all-in for the products that we would intend to sell with Project Zero, total revenue per tonne would be roughly $700 at current oil prices.

700? In terms of dry or what?

That's for dry tonne.

Okay. And then on a dry tonne basis, what fee would you pay for the modules to be collected and transported?

Yeah, in terms of the collection and transshipment fee that we've agreed with Allseas, it would begin at roughly €150 per wet tonne, which if you convert to US dollars and then convert that to cost for dry tonne, it would approximate $217 per dry tonne. We have not given any detailed disclosure in terms of the onshore processing side of things, but it would be roughly $217 per dry tonne for the collection and shipment and then roughly $700 per dry tonne in revenue.

And do you have any additional costs in getting it to the point of collecting in transporting, or is that including everything on that $217?

So that's getting into short, but we would hope that we -- sorry, can you repeat that?

You're breaking up by the way.

That is everything in order to get it to shore. We haven't provided detailed guidance in terms of the cost per tonne for the processing element for Project Zero. But as we progress further along with our partner, Epsilon Carbon, we would hope to be able to provide additional information in future calls.

All right. Okay. So that would give you the cost to shore. And ballpark processing costs would be half of that or about one quarter of that?

Yes, we're not…

Go ahead, Gerry.

No, that's -- there'll be a healthy margin lift in it for us. We haven't -- we won't release that data until Vikram and his team have betted down some of those costs a little bit further. But, of course, we have a firm idea where they are, but it's a little bit early for us to release those. But even at this small scale, the project, we predict will show some attractive margin.

And then is the -- do you split the resulting profits 50/50 with Allseas, or how does that work?

No, no. As we mentioned, there is a royalty that will be paid to Allseas, and we -- on top of their costs. And so their return is aligned with the metal value of the ore at the time. But we released the numbers on the cost, and that would be the numbers that we expect will be -- reflect the entire offshore cost.

Okay.

I think we're ready for our next question.

Thank you, Mr. Snow. Our next question comes from the line of John Katsingris with Wedbush Securities. Please go ahead.

Hello. Can you hear me?

We got you.

Yes. We can.

Hello. Sounds great. Thanks for taking my question. Just looking at, I guess, bird's eye view for 2022, the two or three key strategic initiatives or goals? Thank you.

Sorry. Did you say for 2023 or 2022?

2022.

2022, yeah. So, I guess the most important thing is -- I really want to emphasize the importance of the deal we announced with Epsilon Carbon and with Allseas, because they really provide the foundation stones for us to be able to deliver on our future production. And so bedding those MOUs into binding heads of terms is going to be obviously important. But we have a very high degree of confidence that they will close in a way that we've outlined. Putting that aside, the collector trial in the second half of the year is clearly important. But it's important to recognize that Allseas have been up in the North Sea now, and basically, those trials have been going very well. And so you saw some pictures of the harvest being launched and recovered and operating on the sea floor. I guess the theme that I said on our last earnings call is that we can expect this year will be customer offtakes. And the customer offtakes will come in two forms. They will come in for our manganese silicate material. And Vikram and his team are helping us in that regard with regard to local customers in India. And as Vikram said on the call today, already, we're getting some very strong expressions of interest. But the other offtake will be for the matte material. And as I stated previously, our belief is that we will attract a consumer-facing brand into that. We already have an offtake with Glencore for some of the nickel and some of the copper, but having a consumer-facing brand way into this, because if you're an EV maker, you're staying and wait at night worried about availability, price and sustainability of your raw materials. And so clearly, those conversations have stepped up a gear this year, because of what's been going on globally in supply chains. But I think that's probably going to be the one that people will most be looking forward to. And I remain super confident that we'll deliver on both of those -- both for the manganese silicate and also for the matte material this year.

Thank you.

Thank you, Mr. Katsingris. The next question comes from the line of Malcolm MacDonald with Bank of America. Please go ahead.

Hey, guys. Just a quick question. I mean, you basically answered it a second ago, but if you could elaborate further just regarding customer offtake and Epsilon and how that would relate potentially with some other companies involved with Epsilon, that would be wonderful?

Well, Vikram, I might let you talk on the manganese side, if you're comfortable to.

Yes, sure. I'll take that question. So on the manganese side, we've been discussing the material specifications with the payer alloys customers and steel customers in India. And we'll be getting samples of the manganese silicate from the pilot planned that TMC has been running, and we'll be giving that to customers for further sampling. And we expect that soon thereafter, we can enter into some MoUs with them to take that offtake as well. So I think once the material gets with them, well, the sampling will go pretty fast, but the initial feedback has been very positive on what they're seeing on the specification side. So that's on the manganese side. On the Epsilon side, we also manufacture graphite for lithium-ion batteries, whether it's EV or ESS. So we are very plugged into the whole ecosystem of anode, cathode and from a precursor to a CAM. So we understand this space very well. So it's a very natural fit to work with TMC and develop this unique way of getting nickel, copper and cobalt into the sector.

Thank you very much. And Gerry, just one question. I mean, how much interested have you guys gotten just in light of recent nickel prices from other potential offtake customers. I mean, has it been out of this world or?

Well, I wouldn't say, it's been out of this world. But we -- as I've said previously, we are talking to a number of automakers and it served us very well by not entering into those agreements previously, because, of course, customers want to secure an economic benefit if you're -- if they're the first in or if you're some years away from production. But every day that we get closer to production, and of course, world events as they have unfolded have started to make automakers panic just a little bit a sense. And it's not just automakers, of course. It's other industries that are looking to secure the supply of these materials, including, of course, the intermediate players. But I would say we're feeling pretty confident about where we sit at the moment, Malcolm. And we're not panicking about trying to get a deal done for the sake of getting a deal done. We've been very deliberate about saying we will do the right deal at the right time. And of course, every day that goes by, we are gathering more and more environmental data, which we're sharing as soon as we can because it's consistent with our belief that making battery metals from these polymetallic nodules comes at a much lower environmental and societal costs. And so the more that we get hold of those results, the more confidence not only gives us, but of course, our customers. And so consistent with what I said before, I'm sure, by the end of this year, I'm confident by the end of this year that we will have one of those consumer-facing brands to mark down as one of our customers. And of course, having the Epsilon Carbon partnership is also really important to us because as part of the arrangement, and we spent some really quality time working with Vikram's team over the last many months. And more recently, we toured his facilities in India there's a real focus in his organization about ESG. There's a real focus on efficiency. There's a real focus on automation. And we really feel confident that with their relationship with the JSW Steel Group as well, that it's a reminder that our manganese product is just so important as a stable to any growing economy. We all talk about battery metals, but the manganese, of course, is required to make every ton of steel on the planet. And as I mentioned in my presentation, we're now seeing the EV industry look at using more manganese and battery cathodes as well. And so that's very encouraging for us and for the industry as they try and control costs that are moving in raw materials that are in short supply.

Thank you very much.

Thank you, Mr. MacDonald. Our next question was submitted by Peter Fiorella [ph], and the question is, what is the estimated date of completion on the pilot trial?

So we're not releasing that number that date, but for only one reason, and that is just for security reasons. But what I can tell you is that, the first trials were completed in the North Sea very recently. And of course, what we have announced is that, the trials will happen in the third quarter. And so we expect to see the hidden gem back in port by the end of the year.

Thank you. The next question was submitted by Jacob Basel [ph]. The question is, if I am not mistaken, TMC currently has plans for our processing plants to be located in Texas in the future. Could you comment if this indicates strategic placement for potential off-takers?

We have been exploring where we would locate our processing plant. And by all means, we have not given up on the idea that one day our processing plant might exist in Texas. But our first priority is to get our first processing plant up and running. And our intention is to do that in collaboration with Epsilon carbon, and that first plant will be in India. Will a future plant be on USA soil? Maybe, it would make sense to, right? I mean, you heard all the statistics I talked about in my presentation. And – but there seems to be a lot of talk and just not as much action coming out of the US as we're seeing in some other markets.

Yeah. And it's worth mentioning, too, we would have seen the news today from the Biden administration drafting an order invoking the Defense Production Act for critical metals based on some feedback from several US Senators. So there is quite a bit of momentum within the US, and frankly, a lot of other jurisdictions who want to locate this battery material processing onshore. But it's very important for TMC as we look to get into first production with Project Zero to find a first partner who is very supportive and as a country and the government that's very supportive as well. And as Gerry noted, some of the statements and initiatives and capital investment from Prime Minister Modi certainly underscores the welcome reception that we've been receiving in India, and we're looking forward to continuing that relationship. Bethany, I believe that's all the time we have.

Great. Thank you. There are no additional questions floating at this time. That concludes the Metals Company's Fourth Quarter and Full Year 2021 Corporate Update Conference Call. Hope you all enjoy the rest of your day. You may now disconnect your lines.