Good day, and thank you for standing by. Welcome to the metals company Inc. First Quarter 2024 Corporate Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Craig Chesky, CFO. Please go ahead.

Thank you, and 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 uncertainty, many of which may be beyond our control. Additionally, please note that the company's actual results may differ materially from what we go through in this call and that 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, and 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. And you're welcome to follow along with our slide deck or if joining us by phone, you can access it at any time at investors.metals.co. And I'll now turn the call over to our Chairman and CEO, Gerard Barron. Gerard, please go ahead.

Thank you, Craig, and thank you to all of you for attending our first quarter 2024 corporate update conference call. It's only been 1.5 months since our last update, but even in that short time, we've seen some important project milestones and positive tailwinds in this industry. But I'd like to start with an exciting new addition to the TMC team. Last month, we were pleased to welcome Steve Jurvetson to our Board as Vice Chairman and Strategic Advisor. Steve is not just a legendary investor, but a visionary with wide and deep ranging curiosity. Among other roles, he's a current Board member of SpaceX and a former longtime Board member of Tesla. His investments represent a $800 billion in aggregate value creation and include pioneering technology companies like Tesla and Planet Labs and SpaceX and Commonwealth Fusion Systems. And I'm proud to count him both as a supporter of our mission and an exciting TMC shareholder and we are already benefiting from his contributions and connections. So I'll do a quick liquidity snapshot. Total liquidity stood at $49 million as at March 31, 2024. Since that time, TMC has drawn down $2.9 million out of that $45 million available capacity on unsecured credit facilities. And the use of these facilities provided by our 3 largest shareholders, including myself, should indicate how confident we are on the path forward and the news flow in the coming months, which we believe will be well-received by current and potential investors. The next slide is a summary since our last quarterly update in late March. I'd like to draw your attention to the news we announced this morning. We have now uploaded the largest ever submission of environmental data to the International Seabed Authority drawn from 22 offshore campaigns to the NORI-D Area. This wealth of new data adds a further 75,000 biological occurrences to the ISA's catalogue of contracted data for the Clarion Clipperton Zone, as well as a myriad of other data which will further enhance society's understanding of the deep sea ecosystem and the potential impacts of our operations. NORI's data set is the largest of its kind ever gathered in the deep sea and with much more data still to come, I am confident that our efforts over the past 12 years will provide the regulator with the data it needs to make informed decisions regarding our application. And as we move on to the agenda, you'll see we spend some time today focusing more specifically on the key questions that we'll be answering with our environmental impact assessment. The results from our investment over the past decade are now arriving almost daily, and we remain very encouraged by what we see. We are excited to share some of this with you today, along with some insight on why our team is increasingly confident that there are no showstoppers. We will progress -- also review the industry headlines, provide an update on regulatory progress and with some [Audio Gap]

Do we still have you there? I think we may have lost you. Can you hear us okay? Bear with us 1 second.

[Operator Instructions]

So until we get Gerard back, I'm happy to continue here.

One moment. I pause the conference but hold music back in. Did you want to go ahead and resume?

Yes, we'll resume.

Okay. All right. Resuming.

And then see if you can help Gerard to get back in.

One moment, transferring us back in.

Sorry about that. This is CFO, Craig Shesky. I'm going to continue with our slide until we're able to get our CEO and Chairman, Gerard Barron, dial back in. But this page I'll look at now is focusing on really what we've already achieved. And certainly, while our ride as a public company has sometimes been rocky, we're increasingly confident that we've now weathered that storm and are on a much firmer financial footing. Even amidst that volatility, it's pretty amazing to look back and see everything that our team has been able to do. So going back to the beginning of 2021, we laid out what we wanted to achieve as a public company, and then we've got to work and started checking out those boxes. For example, in early 2021, we put out 2 SEC compliant resource statements and an initial assessment of the NORI-D area signed off by AMC Consultants, noting at present value at the time of $6.8 billion. In late 2021, we completed our pyrometallurgical processing pilot, derisking our flowsheet in advance of future onshore operations. And in 2022, we completed the first successful integrated pilot system test in the Clarion Clipperton Zone since the 1970s, lifting 3,000 wet tonnes of nodules and helping to de-risk our future operations alongside our partner, Allseas. And as we discussed last quarter, we also finished the last of our 22 pre-production offshore campaigns, including the completion in late February of our environmental campaign 1 year following our pilot collection test. So we've also successfully pivoted to a capital-light model with the support of key partners like PAMCO onshore and Allseas offshore, which can provide production assets to us for our exclusive use, and then, of course, reduce pre-production CapEx requirements to a bare minimum. So our attention is…

Yes.

We're on Page 14.

Technical issues have been resolved. My apologies for that. So taking the mantle back up. So there's been a steady pace of news out of China on seafloor mining over the past few years, culminating in The Washington Post piece in October regarding Chinese keen interest in deep-seafloor resources, while also acknowledging TMC's leadership role in this industry. Chinese urgency in this space has accelerated in the last several weeks with not one, but 2 contractors submitting environmental impact statements to conduct nodule collection tests in 2025. There is still much work ahead for the Chinese contractors and we do not expect commercial production from them before the early 2030s. But certainly, these actions from China regarding deep-seafloor resources are sounding alarm bells in Washington, D.C. As reported in The Wall Street Journal in March, a bill aimed at providing support for domestic nodule collection processing and refining has been introduced by members of the House of Representatives titled, The Responsible Use of Seafloor Resources Act. Also in March, over 350 former political and military leaders, including Hillary Clinton, urged the U.S. Senate to ratify the Law of the Sea Treaty. Of course, I'm sure many of you are interested in the timing of the delivery of a report by the Pentagon to the House Armed Services Committee, assessing the opportunities offered by nodules to diversify critical mineral supply chains away from China. And we are quite interested in the date of this report as well. The Pentagon is continuing its detailed analysis. And while we do not have certainty on the date of the report's completion, the tone and tenor of the work seems to be very encouraging. And further, we're in active dialogue with members of Congress regarding the prioritization of feasibility work for the future refining of…

And that video is available in our slide deck posted on our website. For anybody that may have had video freezing issues, apologies for that. But certainly, the accumulation of baseline data over the last decade plus does represent the most comprehensive deep sea data set ever collected in the Clarion-Clipperton Zone. And it was collected in partnership with many of the world's leading marine research institutions and expert industry contractors. And this data set is generating a lot of excitement among the researchers who have truly acknowledged the rigor and the scale of this science program. This deep data is openly shared to public databases, including the ISA's DeepData library of contractor data, as well as other open-source databases like UNESCO's Ocean Biodiversity Information System, or OBIS, the world's largest catalog of marine organisms. Our environmental impact assessment has a very specific focus to assess the potential impacts of our operations on marine biodiversity and ecosystem function. To this end, our team identified 6 primary concerns related to our operations for further investigation based on discussions with stakeholders. And thanks to these efforts, a far more in-depth understanding of our expected impacts is emerging, and that contradicts much of the speculation by activists and some of the media. Off the back of our 2022 test pilot collection, we've now seen the infield observed data showing that 92% to 98% of sediment mobilized at the seafloor stays within 2 meters of the seafloor and settles locally. This finding is critically important as it addresses speculation that sediment plumes could travel tens of thousands of kilometers or could rise up 4 kilometers to the surface and impact climate change. As noted on last quarter's call, when we did a deep dive into the seafloor plume data, this is a clear example…

Yes, thank you, Craig. As I said in our earnings press release, 2024 is the year when we expect most of the activist-driven speculation about the environmental impacts of our emerging industry will be displaced by data and evidence. We're encouraged that an increasing number of countries and automakers are showing the courage to keep this transformational resource on the table. And in the meantime, our executive team will continue to work -- the work of securing strategic partnerships while keeping our eye firmly focused on the date of first production, which marches ever closer. I would like to extend my sincerest thanks to my TMC team, including our partners and contractors, and of course, to our sponsoring states. And thanks to everyone who tuned in, for your interest and attention. And with that, we'd like to turn it back to the operator for some Q&A.

[Operator Instructions]

As those questions are being compiled, we can take a question from [ Eric Goldstein ] on the webcast. I'll put this to you first, Gerard, and then I can weigh in as well. How do we expect the ISA meetings to go this year? Specifically, what do we expect in July meeting? And the [ $40,000 ] question, when are all the rules and regs going to be passed?

Sure. Look, we are expecting solid progress when the ISA meets again. Of course, it'll be the Legal and Technical Commission, the Council, and the Assembly meeting. And so what we are looking for is progress. And of course, we have the legal right to lodge our application. We notified the market that we would not lodge an application until after the July session this year and before the end of 2024. And so we know that there is an enormous amount of work happening intersessionally. And I think what we are encouraged by is that the regulations, now that there is a consolidated text that was debated back in the March session, is drawing to what we think is a robust final version.

We do have a question over the phone line. Our first question from the phone comes from Malcolm MacDonald with BofA.

Do you know who is pushing this moratorium to Tesla and GM? Is it an NGO? That's number one. Number two, if you could comment on Biden's Chinese EV tariffs today and Trump's comments -- subsequent comments, and with regards how that affects the Inflation Reduction Act, specifically how it reflects to Tesla and GM? And then lastly, what is the timeline for the Chinese entities that you mentioned earlier in the call, that are expected to conduct tests next year versus your timeline? And if the U.S. -- if the United States wanted to get in the game independently, how late are they?

Yes, look, so specifically starting with the shareholder proposals for GM and Tesla, the one for Tesla specifically, they're called As You Sow. But look, for both GM and Tesla, we don't want to get into who's behind each of them, but yes, it's NGO-driven. We also view it as a very anti-science to effectively say, as all of this new data has been coming through, as Gerard said, almost on a daily basis. Some people are now recognizing that it's not confirming their previously held belief, almost the definition of confirmation bias. So because of that you're now seeing the push for something like this to be taken off the table at a time when many other automakers are being forced to invest elsewhere in reinforced nickel, which puts them in difficult positions. So we think the science will continue to speak for itself. And frankly, we're very heartened by the fact that the Boards in both Tesla and GM recommended voting [ well ] against such proposals that would take clearly viable options off the table.

Yes. And on the China front, we -- of course, they are planning to lodge an application to be able to do a collector trial next year. And so that will take 1 year for the regulator to opine on that. And if I reflect on our own application, it was a big heavy list. It's required a lot of work. And that means they need to receive the approval to go and do that and then they need to go and do it. And so I think what the Chinese contractors have said quite openly is that they expect to be in production on the other side of this decade. And so, there's a lot of work. I mean, we were very fortunate to have our collector trial that ran so successfully in 2022, involved our first production vessel, the Hidden Gem. And as you know, we're getting that vessel ready for first production and we remain on track for that in 2026. So there is no doubt that we hold a competitive edge over all of the other contractors, including China, and that's a great opportunity for Western economies like the United States. Now, tariffs to protect the automakers, look, I don't really want to comment on that too much other than the Inflation Reduction Act was really intended to bring jobs and industry and secure supply lines and raw materials for American industry. And I think that there have been some uses of those funds, which potentially have simply, I guess, driven demand for electric vehicles, but have they really driven jobs in the United States? And so what I think is there's a great opportunity and whether it's either of the names you mentioned as the future President of the United States, I think there will be more focus on how do you build jobs and how do you help those economies build independence. And you can't do that without raw materials, without battery materials. And so we're encouraged, as I said earlier, in the messaging that we're hearing out of D.C. We continue to talk to relevant parties there. We continue to answer questions as they are asked. And based on the conversations that we're lucky enough to be part of, we're encouraged. And so the Inflation Reduction Act will hopefully be a very good thing for materials that are derived from polymetallic nodules, particularly those that TMC have their hands on.

Yes. I might also comment on that, Malc, that, as we noted upfront, really on Slide 11, which I'll pull up now if folks are able to see it, you really can't get away from the fact that nodules are composed in such a manner that lines up not just with EVs, which is the focus of that question, but also so many other applications that are experiencing demand tailwinds. What you can't really change, of course, is some of the supply realities. And even taking nickel, for example, nickel grades have declined over time. Copper grades have declined over time. It becomes more and more difficult to find new high-quality, high-grade deposits of some of these metals on land. The change of that occurs sometimes when you have a large new source like what you saw from Indonesian nickel supply over the last decade. But even Indonesia knows that at this point, let's say next decade, they're going to be running quite low of some of the higher-grade reserves. And there are going to be opportunities for nodules given how much we've seen smelter capacity get built out. So the reality is, certainly on the demand side, with the Inflation Reduction Act, tariffs on EVs, perhaps some comments from Trump noting things that he would do with the Inflation Reduction Act, it's all quite marginal when it comes to the global demand for these metals. And having this basket of very attractive commodities allows us to withstand fluctuations in a way that many land-based operators just aren't able to do.

So basically, to square the circle here, the U.S. is behind, China's trying to get ahead, but you guys are in first place. And in order for the U.S. to compete with China, they're going to have to partner with someone like yourself.

Well, that is their opportunity, that's for sure.

[Operator Instructions] Our next question comes from Frank Jones with Norbury Partners.

Great update as usual. Two questions for me. First one, pretty quick. I think I know the answer, but just confirming on a liquidity front, you mentioned we're good for 12 months meeting capital needs, and just want to make sure that's inclusive of application demands. And I guess in that, I should read that major exploration and evaluation expenses are behind this? And then the second one, I ask this every time, but I know by the next time we have one of these calls, the pre-feasibility work will probably be out. So any guidance on timing for that? And with that, the final agreements with PAMCO and Allseas and what those splits look like?

Yes, sure. Starting with those questions, I mean, let's start with the last one on the pre-feasibility side. Yes, we're pushing very hard on that. We're very encouraged. Our teams have been in Japan and the Netherlands, respectively, within the last month. So there's a lot of on-the-ground work and cooperation, which just shows how committed not only our team is, but the teams of our partners. So yes, we are not changing any update on time your guidance on that front. You did note in terms of us having the liquidity necessary to meet our working capital and capital expenditure requirements for at least in the next 12 months. That's an analysis done on committed costs. But what I would draw you to is the typical guidance that we provide in which we're happy to reiterate that, what we need to launch the application at some point following the July 2024 session of the ISA is an incremental $35 million to $45 million. You can then reduce that dollar for dollar for what we drew upon our credit facility, $2.9 million. So that range that we came out with really 2 quarters ago, actually more than 2 quarters ago, we've continued to reiterate because the spending necessary to launch that application has been under tight controls by our team. So what I would say is keep that sort of range in mind. And it's a range that is less than the total liquidity options that we have available to us, even though that may not be our ultimate choice on how we fund that next stage getting into production.

I'm currently showing no further questions over the phone line at this time. I would now like to turn it back to Craig Shesky.

We got a couple more actually. I'm happy to take a few in the webcast. There is a question from a [ Rich Woznicki ]. Does the company need the U.S. Senate to ratify the UN Convention to succeed? The answer there is no. It's really to us a sign of the increased commitment from the U.S. to this space, but also the recognition that the U.S. truly should have a seat at the table in how this very important industry is going to be regulated. And what we laid out in today's update was the actions of a lot of countries. We showed on the slide, in addition to the France-China joint statement, the new deep sea mining legislation from Belgium, that builds upon the deep sea exploration news coming out of Norway earlier this year and then pending environmental work, potentially deep sea exploitation in Norwegian territorial waters. There are just a lot of very large populace, credible industrial countries and that includes India and China, Japan, and now the United States that are very interested in this industry. And frankly, the U.S. chose not to ratify the UN Convention and not take their full seat at the table at the ISA. It just continues to underscore that the only real way they can get access to this resource would be through a contractor like TMC. And I think we have time for one more question. There is a question coming in from an anonymous investor. Can we talk, Gerard, about where you're spending your time in terms of strategic partnerships? Any updates on those efforts on the strategic front and where our time is going to be spent in the coming months?

Well, I could share my diary, of course. That would be quite revealing. But look, in the last 6 months in particular, we've spent a lot of time in Asia, and mainly in Indonesia. And we're fascinated with Indonesia, of course, because it's where all of the growth in nickel material is coming from. Unfortunately, it's coming from nickel laterites. But they have built a very strong processing industry to be able to process those materials. And as we know, you can process our polymetallic nodules with that same infrastructure. And so it's a very interesting opportunity for us. And there are some very strong corporations there who are heavily involved in nickel. The Indonesian government are trying to build out their battery material supply chain even more extensively than they have now by building battery refining. We saw companies like BYD announcing that they're actually going to build cars there. And so there's no doubt things are moving in that country. And so -- but Asia is certainly a very friendly place for TMC right now. And we see tremendous opportunity, of course, by sending our nodules to places like Indonesia. We do believe that we can slow down the expansion of some of that nickel laterite resource development and replace rainforest nickel with nodules. And that's going to be a good thing for the planet, and it seems that, that message is being well-received in that country. And so -- and of course, by being able to utilize that existing infrastructure means that we can toll our nodules through some of those processing plants, which means that we don't have to go and spend money to build processing. My team and I were recently up in Japan. We've just had 2,000 tonnes of nodules arrive with our partner, PAMCO. And that's a company that's been processing nickel ores since the 1960s. They're an amazingly competent partner for us and perfect to get us started. And -- so there are many opportunities around that region. Getting things done in Europe is harder, of course. And we do remain hopeful that in North America, our efforts in D.C. will be recognized. I don't think we'll ever build a pyrometallurgical plant in the U.S.A., but I do believe that we can send our intermediate product into the U.S.A. for further refining into battery materials, and so we are continuing to make efforts in that area.

Yes. And that makes sense too. And just adding a little color too on the pyrometallurgical side. That focus on the refining of intermediate products, potentially in the United States, is firmly in line with the D.C. strategy we've been deploying this year. And as a lot of focus is on National Defense Authorization Acts coming out this year, there continues to be a lot of support for feasibility work on something like that. And frankly, it makes perfect sense so that the U.S. avoids falling further behind. So that's all the time that we have today, but we appreciate all of you taking the time to join us. And we're certainly looking forward to sharing more progress on the next quarterly call. And for those of you who are already shareholders, we're looking forward to speaking to you at our Annual General Meeting. So thank you very much. I'm going to turn it back over to the operator.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.