TMC the metals company Inc.

Good afternoon, everyone, and thank you for participating in the Meadows Company's second quarter 2022 corporate update conference call. Joining us today are the Meadows Company's chairman and chief executive officer, Jared Barron, and chief financial officer, Craig Sheskey. Following their remarks, we'll open up the call for your questions. Before we go further, I would like to turn the call over to CFO Craig Sheskey. as he reads 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.

Thanks very much. Thanks for joining our third quarter 2022 conference call. And please note that during this call, certain statements made by the company will be forward-looking and based on management's uh beliefs and assumptions from information available at this time these statements are subject to known and unknown risks and uncertainties many of which are beyond our control including those set forth in our safe harbor provisions for forward-looking statements that can be found at the end of our third quarter 2022 corporate update update press release such statements may also be found in our annual report on form 10k for the year ended december 31st 2021 and other reports subsequently 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 statements. 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. And the slide deck is available on our website at investors.metals.co. And I'll now turn it over to Jared Barron, the Metals Company's Chairman and Chief Executive Officer. Jared, please go ahead.

Thank you, Craig, and good afternoon, and thank you all for joining us today for our third quarter 2022 corporate update call. You're welcome to follow along with our slide deck, or if you're joining us by phone, you can access it at any time at investors.metals.co. The last few months have been filled with historic achievements for TMC, Nori, and our strategic partner, Maltese. I'm speaking to you now from Mexico right before welcoming back the hidden gem, and its remarkable team from a long and complex campaign testing our pilot system in the Nori-D area. Following the ISA's recommendations in September to begin pilot nodule collection trials on the Nori-D area, ALSI has commissioned an integrated pilot collection system from the Hidden Gem. And in October, we celebrated the first integrated collection and lift of polymetallic nodules in the CCZ since the 1970s Over the following weeks, Allseas put the system to the test, driving the pilot collector over 80 kilometers across the seafloor, collecting 4,500 tons of nodules and lifting over 3,000 tons to the surface. Beyond demonstrating the operational capabilities of the system, the pilot collection trial is the single most important milestone in terms of generating environmental impact data. Before this pilot trial began, 16 offshore campaigns were executed in the Nori area to collect environmental baseline data. And during the pilot trials, a team of environmental independent researchers, scientists, and contractors were monitoring the environmental impacts of the trials. And they will continue their work on site until the end of the year to survey the post-trials environment. We look forward to sharing this data with the global community in the coming months. This quarter also saw some important financial milestones. On our last corporate update call in August, we shared details on the $30 million pipe financing funded mainly by our existing investors. With that cash infusion, we believe our cash runway extends for at least another 12 months. In October, the SEC deemed effective our $100 million universal shelf registration statement. And this adds additional financial flexibility. However, it remains our firm intention to continue working on asset-level financing options to raise the funds needed to get into production while minimizing dilution to TMC shareholders. Today, we'll take you through a brief reminder of the scale of our resource, a market and regulatory update, an update on the NORI-D project, a recap of our near-term milestones, and some financial updates. The scale of our resource and its potential to supply the metal needed for the energy transition is at the heart of our value proposition. Our Nori and Tomal areas contain in situ quantities of nickel, copper, cobalt, and manganese, equivalent to the requirements of about 280 million electric vehicles, or roughly the entire U.S. passenger fleet. By contrast, the total resource of the Eagle mine in Michigan, the only currently operating nickel mine in the United States and expected to wind down in 2025, contained nickel and cobalt roughly equivalent to the requirements of 2.5 million EVs. And the total resource of still-to-be-permitted Tamarack project in Minnesota is about the same size. Planned gigafactories and processing facilities are attracting record levels of funding, but they can't produce anything without raw materials. Chinese investment aside, global investment in raw material continues lagging behind. It's a train wreck in slow motion. And to deliver on energy transition goals, countries like the U.S. need to tap unconventional resources like nodules that can truly move the needles in nickel-rich battery chemistries. or they will need to go all in on alternative technology solutions. A quick reminder, Nori and Toml were ranked earlier this year by Mining.com as the world's largest undeveloped nickel projects, larger than other projects in the pipeline in Canada and the US, and about an order of magnitude higher in grade. Collectively, our Nori and Toml projects rival today's largest producers, both in Russia and Indonesia. And it was recently reported that Indonesia, the world's largest nickel producer that expects to deliver most of the future growth in nickel from underneath their rainforests, is now contemplating an OPEC-style battery metal cartel. And at the same time, Indonesia is talking about forming an OPEC for rainforests. It'll be interesting to see how they reconcile these seemingly opposing goals. The insecurity of nickel supply and potential of the nodule resource are increasingly in focus in the U.S. Earlier this year, Senator Lisa Murkowski of Alaska, a leader on critical mineral issues, addressed the Department of Energy on this subject. U.S. Secretary of Energy Jennifer Granholm responded this summer in a letter stating that the impact of collecting nodules should be compared on a level playing field to metal from onshore extraction. something we've been advocating for some time. Secretary Granholm also noted that the DOE is working with interagency partners to consider all potential sources of critical minerals, including polymetallic nodules. I'm also happy to report that in September, we reached a labor neutrality agreement with the UAW with regard to our potential full-scale plant in the US. Forward-thinking organizations like the UAW don't want to see factories shut down due to the lack of battery metals, as they were last year due to a lack of semiconductors. The UAW has nearly a century of experience managing the production of automotive parts and has earned a reputation for protecting workers, protecting the environment, and fighting for justice. From making the very first contribution to set up Earth Day to its active to his active position in the civil rights movement, the UAW has an impressive record of leadership on social and environmental issues. And together, TMC and UAW have the opportunity to create a battery metals industry that works for everyone, consumers, workers, businesses, and the planet. Nodules and TMC specifically have been a news topic over the last few months with coverage in the Wall Street Journal, the New York Times, BBC and ABC News. And two of these stories also resulted in an episode on two of America's most popular podcasts, the New York Times The Daily podcast and the Wall Street Journal's The Journal podcast. And while most people on this call are familiar with our story, this emerging industry is still news to most people. Not everyone who reads about us or listens to a podcast or a national news segment will be supportive. But the awareness of this project is certainly increasing as we keep hitting our milestones. And things continue to be eventful on the regulatory front. Our activities in the CCZ are regulated by the International Seabed Authority, or the ISA, an intergovernmental organization established in 1994 based on the United Nations Convention on the Law of the Sea. the ISA is mandated to regulate exploration and exploitation of seabed minerals while protecting marine environment. The latest ISA council took place from October 31 to November 11 in person in Kingston, Jamaica, where the regulator continued its development of the exploitation regulations and committed to continue work on the regulations intercessionally. During this ISA session, session, the majority of participating states expressed their continued support for negotiating robust regulations that ensure the protection of the marine environment and were concerned by the position taken by France calling for a ban on exploitation activities. Despite the amplification of the vocal minority by the media, only about 10 out of the 167 member states are calling for a precaution while most member states continue to support negotiating the draft exploitation regulations in good faith. During the ISA Council session, our sponsoring state, Nauru, noted that an exploitation contract application for the Nori-D area would not be submitted until the ISA July 2023 session had been concluded, a gesture of good faith as work continues in earnest on the regulations. we still estimate being ready to submit our application for the Nori-D exploitation contract to the ISA in the second half of 2023. Which brings us to the update on where we are on the Nori-D project. As a reminder, Nori-D is the first project we are developing. It represents about 22% of our total estimated resource. So far, we've invested over a decade of work and over $250 million. Last year, we completed our pyrometallurgical pilot plant program using 70 tons of nodules that we collected from Nori-Z. We proved we can turn our nodules into valuable metal products, thereby de-risking our future onshore operations. And this year, nearly every month, brought a new milestone to help de-risk our offshore operations, culminating in the successful conclusion of the pilot collection system test in the Noready area. I'd like to play a short video with highlights of the collector test over the last few months. For anyone on the audio-only call, this will take about three minutes, so please stick with us.