Matthew O'Keefe

Matthew O'Keefe from Cantor Fitzgerald questioned the allocation of the $492 million pre-production CapEx among partners, the status of applications for US government funding for both offshore and onshore development, and the potential to accelerate the timeline for a US processing facility.

Answer

CFO Craig Shesky stated that while a detailed breakdown of the pre-production CapEx split with Allseas is premature, it is a current priority. He confirmed TMC is actively pursuing US government funding for both offshore and onshore activities. Chairman and CEO Gerard Barron added that the timeline for a US processing plant could "absolutely go quicker" with available funding, leveraging partner Korea Zinc's expertise.

Matthew O'Keefe inquired about the new exploration ground in the NOAA application, specifically the 500 million-ton potential area, and asked for an update on the 30- and 60-day review process timeline.

Answer

Chairman and CEO Gerard Barron explained that the additional exploration area is complementary to existing grounds and was deliberately chosen to avoid competing sovereign claims, with a map to be released soon. Executive Craig Shesky added that specifics are being withheld for commercial sensitivity pending initial NOAA review. Regarding the timeline, Mr. Barron confirmed regular contact with NOAA, stated he expects to hear something "very soon," and plans to provide a clear roadmap to the market.

Matthew O'Keefe of Alliance Global Partners inquired about the new services business, asking about its potential scale, revenue model, setup costs, and geographic focus beyond the Clarion-Clipperton Zone.

Answer

Chairman and CEO Gerard Barron explained that the services business leverages a decade of operational expertise and requires no significant new investment. He noted the market could grow tenfold after the mining code is adopted and confirmed that services could extend to territorial waters. Executive Craig Shesky added that this initiative is part of the company's capital-light strategy and utilizes the existing world-class team.

Matthew O'Keefe of Cantor Fitzgerald questioned the potential uses for the company's growing cash balance, specifically asking about any work on the oxide tailings project or the potential to accelerate other exploration programs.

Answer

CFO Nathan Harte responded that the primary focus for capital allocation is accelerating development at La Preciosa and pursuing regional exploration targets on their properties. President and CEO David Wolfin added that they plan to conduct infill and expansion drilling at La Preciosa's Gloria and Abundancia veins and will release those results publicly.

Matthew O'Keefe from Cantor Fitzgerald inquired about other potential uses for the company's growing cash balance, such as work on oxide tailings or accelerating other regional exploration programs.

Answer

CFO Nathan Harte explained that the primary focus for capital allocation is accelerating development at La Preciosa and expanding exploration, including regional targets. President and CEO David Wolfin added that they plan to conduct infill and expansion drilling at the Gloria and Abundancia veins at La Preciosa and will release those results publicly.

Matthew O'Keefe of Cantor Fitzgerald sought to confirm the percentage of total costs exposed to the Mexican peso and whether the cone crusher's negative impact on throughput would be less significant in Q3 compared to Q2.

Answer

CFO Nathan Harte confirmed that approximately 80% of the company's costs are denominated in Mexican pesos. VP of Technical Services Peter Latta affirmed that the cone crusher's impact on mill throughput is expected to be lower in Q3 than it was in Q2.

The analyst asked about the operating capacity of the four Spokes, questioning why operations aren't consolidated to reduce costs given the current financials. He also requested a detailed explanation of the recent debt renegotiation with Glencore, specifically regarding the restructuring of the convertible notes.

Answer

The executive explained that Spoke operating levels are adjusted based on commercial demand and that while they are focused on optimizing the network, there's a balance between consolidating throughput and the logistical challenges of shipping batteries. Regarding the debt, the executive detailed the two-part Glencore deal: a new $75 million senior secured convert and a restructuring of the old $200 million convert. The old note will be repriced in two tranches based on future milestones (DOE loan finalization and Hub production), gain security, and have its maturity extended by five years from the repricing dates.