Key points
- TMC reported a Q2 2023 net loss of $14.1 million, $0.05 per share, and total cash of about $20.0 million as of June 30, 2023.
- Announced a registered direct offering at $2.00 per share, an 82% premium to the prior close, for about $27 million gross, upsizable to $38 million.
- Offering led by largest shareholder ERAS Capital and strategic partner Allseas, with 50% warrant coverage at a $3.00 strike price.
- Two institutional investors could add up to $11 million more by September 15 on the same terms.
NEW YORK, Aug. 14, 2023 (GLOBE NEWSWIRE) — TMC the metals company Inc. (Nasdaq: TMC) (“TMC” or “the Company”), an explorer of lower-impact battery metals from seafloor polymetallic nodules, today provided a corporate update and financial results for the second quarter ending June 30, 2023.
Q2 2023 Financial Highlights
- Net loss of $14.1 million and per share amount of $0.05 for the quarter ended June 30, 2023
- Total cash of approximately $20.0 million at June 30, 2023
Registered Direct Offering
- Registered Direct Offering at a price of $2.00, a premium of 82% to the TMC closing share price on August 11, with expected gross proceeds of approximately $27 million based on existing commitments
- The Registered Direct Offering on significantly above-market standard terms is led by largest TMC shareholder ERAS Capital, strategic partner Allseas, and several institutional investors. Chairman and CEO Gerard Barron and CFO Craig Shesky along with several TMC board members also participated in the transaction.
- The transaction includes warrant coverage of 50% (1 warrant for every 2 common shares purchased) with a warrant strike price of $3.00 per share
- Warrants contain a call provision which forces exercise if the 30-day volume weighted-average price (“VWAP”) of TMC shares exceeds $6.50, as well as an anti-dilution mechanism in which the exercise price resets lower if the Company were to issue equity below $2.00 per share
- Two institutional investors and their designees can elect to increase commitments in this transaction at the same terms upon written notice to the Company on or before September 15 in an aggregate additional amount of $11 million, if the closing TMC share price on trading day immediately prior to such notice is $3.00 per share or less
Gerard Barron, TMC Chairman and CEO, commented: “Raising capital in volatile markets is not an easy task. However, the size, the quality and the value of our resource portfolio combined with the determination of our team to responsibly develop this resource have helped us attract a diverse range of shareholders who recognize the significant upside of this asset. We are grateful to our director and largest shareholder, Andrei Karkar, through his family office ERAS Capital and to our offshore partner and shareholder, Allseas, for their unwavering support. We are also delighted to see several institutional investors participate in this financing round. I’d also like to thank our board of directors and management for participating in this financing, demonstrating a show of faith in our future.”
Craig Shesky, Chief Financial Officer of The Metals Company, commented: “In the current market, the vast majority of follow-on offerings are issued at discounts to the current share price, but we believe a premium is warranted given that the asset we are developing is world-class, needle-moving and transformational. This transaction is an important step on the path to unlocking the asset’s true value as we approach potential first production.”
Operational Highlights
- Corporate update on application timeline and costs, increased production capacity:In August 2023, TMC provided a corporate update on expected project development timeline, production capacity and application costs for its NORI Area D Nodule Project following the recent International Seabed Authority (ISA) Council decisions on a roadmap to deliver final rules, regulations and procedures, also known as the Mining Code. TMC subsidiary Nauru Ocean Resources Inc. (NORI) intends to submit an application to the ISA for an exploitation contract for NORI Area D following the July 2024 meeting of the ISA. Assuming a one-year review process, NORI expects to be in commercial production in the fourth quarter of 2025 if the application is approved. NORI and strategic partner Allseas plan for an increased production capacity for the Project Zero Offshore System, using the Hidden Gem vessel, from an estimated 1.3 million wet tonnes to an estimated 3.0 million wet tonnes per annum, a potential increase of 130%.
- Publication of NORI data to Ocean Biodiversity Information System:In July 2023, TMC announced that data from two offshore environmental research campaigns conducted by NORI has been published by the International Seabed Authority to the Ocean Biodiversity Information System (OBIS), the world’s largest scientific knowledge base on the diversity, distribution and abundance of marine organisms. NORI is now the single largest contributor of biological occurrence data to the OBIS ISA-node, providing approximately 60% of all records. With much more data to be submitted, we expect NORI Area D will be one of the most highly-characterized deep-sea areas in the region that hosts approximately 90% of all nodule exploration.
Industry Update
- International Seabed Authority:The ISA Council concluded Part II of its 28- thSession in Kingston, Jamaica, where there was a high level of motivation and collaboration between Member States who made significant progress on the Mining Code for commercial production and agreed by consensus a roadmap to continue the elaboration of the Mining Code during formal sessions in November 2023, March 2024 and July 2024 and informal intersessional working groups.
- House leaders’ letter to Biden Administration and NDAA focus on nodules:In July 2023, TMC welcomed a letter from U.S. Congressional leaders and several members of the U.S. House of Representatives Armed Services Committee urging the Biden Administration and the Department of Defense to assess domestic processing of seafloor polymetallic nodules as a means to secure key energy transition metals and “close national security vulnerabilities.” In June 2023, TMC welcomed the inclusion of polymetallic nodules in a report requested by the House Armed Services Committee to the Assistant Secretary of Defense for Industrial Base Policy under the National Defense Authorization Act (“NDAA”) which was passed by the House on July 14, 2023. Entitled “H.R. 2670 – National Defense Authorization Act for Fiscal Year 2024; and H.R. 1282 – Major Richard Star Act”, the U.S. House Armed Services request under the NDAA includes a “roadmap recommending how the United States can have the ability to source and/or process critical minerals in innovative arenas, such as deep-sea mining, to decrease reliance on sources from foreign adversaries and bolster domestic competencies.”
Financial Results Overview
At June 30, 2023, TMC held cash of $20.0 million and held no debt. We believe that our cash on hand, the expected net proceeds from the registered direct offering and borrowing availability under our recently amended and extended credit facility with an affiliate of Allseas will be sufficient to meet our working capital and capital expenditure commitments for at least the next twelve months from today.
TMC reported net loss of approximately $14.1 million, or $0.05 per share for the quarter ended June 30, 2023, compared to net loss of $12.4 million, or $0.05 per share, for the quarter ended June 30, 2022. The net loss in Q2 2022 includes a credit of $5.7 million from the reduction in our warrants liability, while Q2 2023 reflects a charge of $0.8 million for the increase in our warrants liability. Exploration evaluation expenses during the quarter ended June 30, 2023 were $8.1 million compared to $10.2 million for the quarter ended June 30, 2022. General and administrative expenses were $5.1 million for the quarter ended June 30, 2023 compared to $8.1 million for the quarter ended June 30, 2022. The lower spending in the second quarter of 2023 reflect lower share-based compensation, as options with specific market capitalization vesting conditions were fully amortized in 2022, and lower spending on the PMTS as the collector test was completed in November 2022, offset by an increase in prefeasibility study spending and an increase in mining, technological and process development due to the engineering work which commenced in the fourth quarter of 2022.
Conference Call
TMC will hold a conference call today at 4:30 p.m. ET to provide an update on recent corporate developments, first quarter financial results and upcoming milestones.
Second Quarter 2023 Conference Call Details
| Date: | Monday, August 14, 2023 | |
| Time: | 4:30 pm ET | |
| Audio-only Dial-in: | Register Here | |
| Virtual webcast w/ slides: | Register Here |
Please register with the links above at least ten minutes prior to the conference call. The virtual webcast will be available for replay in the ‘Investors’ tab of the Company’s website under ‘Investors’ > ‘Media’ > ‘Events and Presentations’, approximately two hours after the event.
About The Metals Company
The Metals Company is an explorer of lower-impact battery metals from seafloor polymetallic nodules, on a dual mission: (1) supply metals for the clean energy transition with the least possible negative environmental and social impact and (2) accelerate the transition to a circular metal economy. The Company through its subsidiaries holds exploration and commercial rights to three polymetallic nodule contract areas in the Clarion Clipperton Zone of the Pacific Ocean regulated by the International Seabed Authority and sponsored by the governments of Nauru, Kiribati and the Kingdom of Tonga. More information is available at www.metals.co.
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