Good day and thank you for standing by. Welcome to the metals company Second 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 first speaker today, Craig Shesky, CFO. 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 maybe beyond our control. 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 statements. 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 can also follow along with our slide deck or, if joining us by phone, you can access it at any time at investors.metals.co. I will now turn the conference call over to our Chairman and CEO, Gerard Barron. Gerard, please go ahead.

Thanks, Craig, and thanks to all of you for joining our second quarter conference call. During this call, we’re going to spend time setting the record straight on some exaggerated claims picked up by media on the topic of so-called dark oxygen. It’s funny that studies like this similar to the nonevent of alpha radiation in 2023 are usually coordinated to come out around ISA meetings. We believe this is another example of activism disguised as science. Rest assured that we have the data to counter on this topic, and we look forward to filing our rebuttal soon. And we’re pleased to see that other scientists have really begun doing the same. We’ll also spend some time discussing the progress achieved and the progress they had from the ISA Council on the mining code, and what the draft review process looks like when TMC expects to launch its application for an exploitation contract prior to the next ISA meeting in March. But I’d like to start with our improved liquidity position. We had liquidity of $40 million at the end of June, but this liquidity has increased in August due to the upsized borrowing limits on our credit facilities. We also used our ATM opportunistically in the second quarter, raising $2.6 million, an average share price of $1.61, and we will continue to be judicious if we elect to use this in the future, depending market on conditions. Borrowing capacity from our unsecured credit facilities has increased by $7.5 million by $2.5 million each from myself, Allseas, and ERAS Holdings, the family office of our Director and largest shareholder, Andrei Karkar. We believe we’ve shown in the last few months that we can reliably draw on these facilities whenever needed, and we intend to draw several million more from Allseas…

Thanks, Gerard. This quarter saw yet more momentum created for this emerging industry with the three most populous countries on the planet as well as other leading industrial economies taking notable action on sea floor resources. As concerns over China’s dominance of key critical mineral supply chains continues to garner more U.S. government funding and attention in the media, the U.S. House announced that it had allocated $2 million towards the studying of the processing of nodule derived intermediate products on U.S. shores. China, for its part, is moving forward aggressively on the technology development side and has announced its intention to conduct two separate collector tests next year through Chinese sponsored contractors. And of course, China is playing an assertive role in driving the regulatory process forward at the ISA. Meanwhile, other credible industrial economies, including those with significant offshore industries like Japan and Norway, continue to press ahead with plans for seafloor minerals with Norway announcing it would be opening up part of its territorial waters for mineral exploration applications and Japan acknowledging the discovery of hundreds of millions of tons of nodules in its waters, which it hopes to collect in trials next year. And in another clear win for evidence-based decision-making, we are encouraged to see NGO proposals to support a moratorium on deep-sea mining overwhelmingly rejected by the shareholders of two of the biggest names in the auto business, Tesla and General Motors. Shareholders agree with both Boards with a tally of around 90% rejecting the proposal as both Boards noted that they have been engaging with third parties making science-based evaluations on seafloor resources. We also pride ourselves on being driven by science, and we question the motives of those pushing companies and major metal consumers to adopt activist positions before environmental impact assessments…

[Operator Instructions] I am showing no questions at the time. I would now like to turn it back to Gerard Barron, CEO, for closing remarks.

Well, we are actually going to wait for a minute or so to see the Q&A questions compile just to ensure that some of them on the webcast chat have a chance to type that out. So, please stay tuned for just a minute, please. Thank you.

Our first question comes from the line of Rich Wolinsky of – Rich Wolinsky, your line is now open.

Hello Rich.

Yes. Can you hear me?

Yes, we can.

I was wondering how many nodule collection machines that you own?

Well, TMC does not own the nodule collection machines. What we want to do as a resource company is explore and develop the resource itself. And thankfully, we are blessed to have partners like Allseas who are able to provide the collection technology such as the Hidden Gem vessel as well as the collectors themselves. So, for TMC, it’s really less about a technology play or focusing on patents or the ownership of resources and more about ramping up production in a very capital-light way. And that capital-light production is something that we can achieve by using existing assets offshore, such as those provided by Allseas as well as using existing facilities to process those nodules such as those that exist in Japan with Pacific Metals, or other RKF lines [ph] that we know are available in India – or excuse me, Indonesia, China, Malaysia and other locations. So, while we don’t own the collector, we feel very good that by developing this resource on which TMC has exclusive rights to explore. And then once we move with commercial production, exclusive rights to collect the nodules commercially for a period of 30 years. We think that’s the right place to be in the value chain. But thank you for the question.

[Operator Instructions] I am showing no questions at this time and I…

Okay. I am sorry, operator. We now have some questions that are populating in the chat. Given that it’s the middle of August, I imagine a lot of people are taking it from the road, so we will get them from here. So, Gerard, from Dmitry Silversteyn, the Water Tower Research analyst, what do we expect in terms of PAMCO completing the trial run of 2,000 tons of nodules?

Yes. Hi Dmitry. Look, we are making good progress. Our Head of Onshore has been up in Japan and in Indonesia over the last weeks, and we will be doing another run there on August 27th, and we are very pleased with the progress. And PAMCO, an amazing partner to have given the wealth of experience being – having processed nodule material, poly metal material, particularly nickel laterite since the 1960s. And so we expect those trials to be completed during the third quarter and results coming out soon after that. But you are there when it’s happening, we are getting learnings. We are getting refinements and having those nodules that we could complete these trials has been a tremendous benefit as we prepare to move into commercial production.

Thank you. We have a question from Ryan Bolle. Wondering if we can clarify the statement about the ISA council groups. Yes. Certainly, Ryan, the point is if the LTC recommends the approval of the NORI application for a plan of work. In order to, I guess stop commercial production, in order to overturn that positive LTC recommendation, one would need to see the ISA Council states in a majority above two-thirds vote to overturn that, in addition to a simple majority of each of the ISA Council groups. So, said another way, it’s quite a high bar to return – overturn what would otherwise be a positive LTC recommendation. I also see a question from Eric Goldstein, one of our shareholders. Can you clarify, it looks like you raised $11.6 million in the first half of 2024 and $9 million was from the registered direct offering. Yes, Eric, the GAAP represents the funds that were raised during that period from the use of the ATM. 1.6 million shares issued at an average price of $1.61. So, over the course of the time that the ATM has been out since the end of 2022, I think we have shown quite a bit of discipline in waiting to use it. And when we saw a market opportunity and ensuring that we are keeping the project on time and on track as we continue to have strategic discussions, we felt like the right time to use it in a very judicious way. But certainly, market conditions are going to dictate that. And we have no desire to be using that anywhere close to where the share price is now. Gerard, a question from somebody within Manulife Securities, do you have an indication of where the majority of the council stands on exploitation, should the current draft mining code end up being the final version. Basically, just wondering how do we think the current makeup of the ISA Council sits with respect to their views on the mining code adoption?

Yes. Thank you. The vast majority of member countries support getting the regulations in place. And obviously, it was very pleasing to see the newly elected Secretary General reaffirm her position that she does not support moratoriums. She supports regulations to allow the development of this industry while protecting the marine environment. If we look at the Council, by far, we have a majority of countries that are supportive. And in fact, even if you look at the countries who are supporting our precautionary pause, they are still at the table negotiating those final regulations. And so I think those numbers are safe. And I think as we get more environmental evidence, then that is further helping us secure the support of those member countries who are encouraged by the results they have seen and the rigor of our science program.

Thank you. And we will take one more question here from David Larkam, the analyst at Edison Research. There has been a well-documented slowdown in the rate of EV adoption. We have often spoken of potential partners at the project level. Is the EV adoption slowdown having any impact in the interest of an asset level investment for TMC subsidiaries?

Yes. Look, and I think the asset level interest, we have had primarily comes in the form of either prepay off-take and it all comes in the form from a strategic that is currently in the resource extraction industry. So, I guess no is the answer to that question. I think the – it doesn’t have an impact other than if you are a consumer-facing brand, you are really wanting to see the results of our environmental program before you make long-term commitments. We have seen – you heard us talk about GM and Tesla, the fact that they have resisted any pressure to join moratorium causes, they just want to follow the science, and that’s what they will continue to do. And I think as the science becomes more watertight around the sort of impacts that you incur when you collect nodules and turn them into battery metals, we will find that category of customers, i.e., consumer-facing brands, wanting to get more of the supply because of the lower impact, both from an environmental and a human perspective.

Yes. And just a follow-on to that as well, with nickel, copper, cobalt and manganese, really manganese is focused on steelmaking, carbon steel making and nickel, still over 60% of the demand coming from stainless steel. So, while EVs represent a great growth market, stainless demand is still growing at above GDP rates globally. So, truly, the types of metals that we have here and the materials that we will be selling, it’s really tough to see a scenario where they are all not in much higher demand down the road. Keep in mind that what you see in terms of fluctuations for commodity trading markets is driven by short-term commodity trading accounts, many of which have 3-month to 6-month time horizons. Goldman says quite often – or Jeff Curry, who is formerly at Goldman, commodities are not anticipatory assets, the same way that securities would be. So, oftentimes, you see overhangs from spot pricing that don’t really reflect the long-term secular supply-demand stories. And we think we are seeing a bit of that right now. But look, in terms of EV demand estimates, in terms of EV mix, all of that will work itself out. But keep in mind that the majority of our revenue will be coming from metals that are majority focused on industrial applications. We will take one more question for Cantor Fitzgerald from analyst, Matt O’Keefe. What are we expecting in terms of our feasibility update? And can we expect something this year or perhaps in advance of our application to the ISA? Yes. So, on that point too, it’s important to note that the feasibility work, the PFS and FS, is a key tenet of that application. We feel very good about the coordination on that point. And while we don’t want to give you a timeline, what you can expect is when we next report in November, we are going to have quite a bit more to say on that front, and sort of when the public release can be there. That’s very important for us as well. We think it’s important for a lot of our potential partners. So, we are laser focused on it. And I would just say, stay tuned because that is certainly in the works.

Okay. Well, with that, I would like to extend my sincere thanks to my team at TMC, including our partners and contractors and of course, our sponsoring states. And thanks to everyone who tuned in for your interest and attention today. And for those now in the Northern hemisphere, enjoy the rest of your summer.

Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.