TMC the metals company Inc. Common Stock 2026 Q2 Earnings Call

Today, we are going to be going through a call where certain statements may be made by the company using forward-looking assumptions and based on management's beliefs and assumptions using information available at this time. These statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. 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. Additional details regarding these measures, including reconciliations to the most comparable GAAP measures, can be found in the slide deck being used with this call. You are welcome to follow along with the slide deck posted on our website at investors.metals.co. I will now turn the call over to our Chairman and CEO, Gerard Barron.

Thank you, Craig, and thanks to all of you for joining us today. Today, we will provide an update on TMC USA's applications and the progress both projects are making under the U.S. regulatory regime. We will also discuss how Allseas is advancing the first commercial collection system from engineering into procurement, a significant step forward translating years of development and successful offshore testing into a commercial scale operation. We will talk about the American deep seabed critical mineral supply chain from offshore nodule collection and transportation to processing and refining. We will provide some detail on some exciting new partnerships that have recently been announced and the potential for additional partnerships in the coming quarters. We will discuss recent developments at the ISA and ITLOS, revisit the economics of our resource, and close with our liquidity and second-quarter financial results.

I will also spend some time on the progress being made in D.C. to support this industry. As noted in our corporate update press release, the company is actively engaged in funding processes with multiple U.S. agencies named in President Trump's executive order regarding plans to build nodule processing and refining in the United States. While these processes continue confidentially, the company does not currently intend to pursue other capital market transactions until such time as further updates are publicly released. The company will provide more substantive detail at the appropriate time. So let's begin with permitting, where NOAA is now advancing both TMC USA applications through important milestones. For USA-A, our consolidated application covers approximately 65,000 square kilometers and includes both an exploration license and a commercial recovery permit.

NOAA's publication of that application in the Federal Register will bring the application into public view and begins the formal public comment process. For USA-B, which covers approximately 122,000 square kilometers, NOAA is expected to soon publish its Notice of Intent to prepare an environmental impact statement. This follows NOAA's certification of the application in May and will move USA-B into formal environmental review and public scoping. Together, these milestones, expected imminently, demonstrate the steady and transparent progress of two separate applications under established U.S. law. This slide shows the remaining path to USA-A consolidated application. Since submission in January, NOAA has completed its substantial compliance and full compliance determinations, and the application is expected to imminently be posted in the Federal Register.

NOAA has advised that certification is now expected in October 2026, citing a delay caused due to administrative issues rather than any issue with our application. Given that timing, we no longer believe a permanent grant in the first quarter of 2027 is likely. The bottom line is that even though NOAA is not moving as fast as we would like, we still do expect the permit well in advance of targeted vessel commissioning in the fourth quarter of 2027. Whether the permit arrives a few months before or a couple of quarters before should not affect our plans. The next steps include inter-agency review and certification, a notice of intent for the NEPA process, publication of a draft environmental impact statement, and draft terms, conditions, and restrictions, and the required public comment periods before NOAA makes its final determination.

The rigor of this review is ultimately helpful to the permit's legal defensibility in the coming decades. It also helps ensure that there are no rubber stamps available for new applicants that have not completed anywhere near the same level of work as TMC, its subsidiaries, and our world-class partners. We are increasingly bringing together the capabilities required to move from resource development towards commercial production offshore. That means combining TMC USA's resource, environmental, and permitting work with proven collection technology, marine operations, vessels, and specialized survey capabilities. Onshore, it means integrating process engineering, project development, smelting and refining expertise, product qualification, and established commercial relationships across the metals value chain.

The objective is not simply to develop one offshore system or one plant, it is to connect the pieces of an American deep seabed critical mineral supply chain, from collection and transportation through processing, refining, and delivery of metal products to customers. This opportunity extends well beyond a single offshore system or processing plant. We are working with both innovative American startups, such as Mariana Minerals, and established industry participants across shipbuilding, marine logistics, security, environmental monitoring, equipment, software-first plant execution, processing, refining, and rare earth development. Over time, this will build a more integrated American supply chain, including U.S.-built autonomous vessels and specialized equipment, U.S. flagging and re-domiciling, nodule offtakes, and domestic processing of both base metals and rare earth-bearing streams. Our first-mover position gives us the ability to help shape that ecosystem and potentially serve other American operators as the nodule industry develops.

One example is our new agreement with Eco Minerals, a U.S. exploration company advancing its own NOAA application. Under the Mutual Master Services Agreement, Eco Minerals is expected to provide vessel charter, autonomous underwater vehicle equipment, marine survey, and related offshore services to TMC, subject to availability. The MMSA also contemplates attractive preferential pricing on vessel and AUV rates. In return, TMC will make available resource definition, environmental impact assessment, and permitting services based on our roughly 15 years of work in the CCZ. The framework also supports potential joint third-party work in a campaign later this year, which we believe will increase resource certainty on those areas covered within our consolidated application. Turning back to the offshore system, our May agreement with Allseas establishes the framework to complete development, commissioning, and operation of the first commercial nodule production system.

The initial operating configuration is designed for a production capacity of 3 million wet tons of nodules per year and will include two collector vehicles and their launch and recovery systems, the riser system, the Hidden Gem production vessel, and a transfer vessel. Allseas is expected to fund a significant portion of the pre-production development cost recoverable through production revenues, closely aligning both organizations around successful delivery and operation of the system. With the development and operating framework in place, the program is moving into procurement and subcontracting phase. Basic engineering is complete for the critical long-lead systems, including the riser, launch and recovery systems, and the collector umbilical. The next packages cover the compressor spread, navigation equipment, riser handling equipment, the derrick upgrade, storage, and offloading systems.

Fabrication is expected to run from the fourth quarter of this year through to the third quarter of 2027, alongside preparations for installation. During that period, the major components will be assembled, interfaces managed and tested, and the integrated system prepared for offshore operations. So that work leads into installation and commissioning targeted for the fourth quarter of 2027, preparing the vessel and sub-sea production system for offshore operations. Even before beginning production, our team and our partners are actively exploring ways to reduce operating cost offshore. In parallel, TMC is accelerating the integration of autonomous offshore logistics, an exploration framework leveraging rapidly emerging USV and AUV technologies to enhance supply efficiency, expand situational awareness, enable continuous low-impact monitoring across the production areas, and support ongoing resource definition.

Once a bulk carrier is fully loaded in the Clarion-Clipperton Zone, and assuming we proceed with our domestic onshore plans, it would begin a roughly 3,800 nautical mile voyage to Brownsville, Texas. A typical shipment would carry approximately 60,000 tons of polymetallic nodules recovered from the sea floor. After about 2,200 nautical miles of sea, the vessel reaches the Panama Canal, where it transits from the Pacific toward the Caribbean and the Gulf of Mexico. The Panama Canal is our base case, but water availability, vessel traffic, and draught restrictions are all part of voyage planning. We are also analyzing an alternative route around Cape Horn, which may be particularly attractive as the availability of autonomous vessels increases in the years ahead. The final destination for the bulk carrier would be the Port of Brownsville, where we refer to the proposed site as Nodule City.

TMC USA holds an exclusive right of negotiation over a lease option for land at the port. The location provides direct access to the Brownsville shipping channel and sufficient land to evaluate an integrated processing and refining ecosystem serving TMC USA and potentially other American operators. No investment decision has been made, and any future capital commitment would remain contingent on U.S. government support. Meanwhile, in Japan, we continue to maintain our partnership with Pacific Metals Co. to ensure that we retain optionality for our processing plans. Site-specific feasibility work is a prerequisite for any potential U.S. government support, and that work is now well advanced. The Brownsville area under consideration covers 1,466 acres across two parcels, 735 acres on the shipping channel and an adjacent 731 acres.

Pre-feasibility level engineering for a potential 12-million tonne per annum industry park is nearing completion, and feasibility level engineering for the first smelting stage is underway with Mariana Minerals' leadership. The engineering team is also testing the interfaces among the berth, ship uploaders, conveyors, stockpiles, processing facilities, utilities, and supporting infrastructure. Along with the material flows, constructability, and opportunities to phase further development. This rendering provides a closer look at how Nodul City site could bring together the individual elements of the onshore system together. A dedicated berth and ship unloading system would receive nodules from the bulk carriers and transfer them by conveyor to managed stockpiles. From there, an integrated material handling network would provide a steady feed to the processing facilities.