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TMC the metals Co Inc. (TMC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 advanced regulatory and project derisking: NOAA confirmed “full compliance” on TMC USA’s exploration license applications and both entered ~100‑day certification, reinforcing a clear DSHMRA path as the company targets first production in Q4 2027 .
  • Financing strengthened: quarter-end cash was $115.8M; subsequent July pro forma cash was ~$120M, supported by an $85.2M Korea Zinc strategic equity investment and a $35M registered direct offering .
  • PFS and IA released: combined project NPV of $23.6B (NORI‑D PFS NPV $5.5B; IA NPV $18.1B); steady‑state EBITDA margin modeled at 43% with C1 nickel cash costs of $1,065/t (AISC $2,569/t); production start targeted for Q4 2027 ramping to 10.8Mtpa wet nodules (2031–2043) .
  • Reported net loss increased to $74.3M ($0.20/sh), driven by non‑recurring $33.1M Nauru warrant cost and $16.2M warrant liability mark‑to‑market; free cash flow was –$10.7M; management reiterated cash is sufficient for at least 12 months .
  • Near-term stock catalysts: (1) NOAA certification completion and further permitting steps; (2) definitive Allseas capex/funding arrangements for the first vessel; (3) potential U.S. government support programs; (4) offtake/refining agreements traction post‑PFS .

What Went Well and What Went Wrong

  • What Went Well

    • Regulatory momentum under U.S. DSHMRA: NOAA confirmed full compliance on exploration applications and started certification; proposed rule revisions enable concurrent review of exploration and commercial permits, potentially shortening timelines .
    • Strategic capital and partners: $85.2M investment from Korea Zinc (plus warrants) strengthens downstream route to market; Michael Hess and Alex Spiro added to the Board; management cited strong engagement with U.S. agencies .
    • Economic case upgraded: PFS+IA combined NPV $23.6B; management emphasized first‑quartile cost position and 43% steady‑state EBITDA margins; CEO: “TMC is here to stay, and we are just getting started” .

  • What Went Wrong

    • Large GAAP loss on non‑cash items: Net loss rose to $74.3M, primarily due to a $33.1M Nauru warrant expense and $16.2M increase in warrant liability, overshadowing lower exploration expense YoY .
    • Ongoing cash burn: Free cash flow was –$10.7M in Q2 (–$12.2M in Q2 2024), reflecting pre‑revenue status and regulatory/engineering spend .
    • Execution risk flagged by analysts: Questions focused on feasibility/FID pacing, offshore capex split with Allseas, and schedule risks despite management confidence in regulatory and partner support .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Cash and Equivalents (period end)$3.48M $2.35M $115.76M
Cash Used in Operations (quarter)$13.8M $9.35M $10.6M
Operating Loss (quarter)N/A$18.02M $21.98M
Net Loss (quarter)$16.1M $20.59M $74.34M
Diluted EPS (GAAP)$0.05 loss $0.06 loss $0.20 loss
Exploration & Evaluation Expense (quarter)$8.3M $9.52M $10.50M
G&A Expense (quarter)$8.0M $8.50M $11.48M
Free Cash Flow (quarter)N/A–$9.4M –$10.7M

Notes:

  • Q2 net loss includes a $33.1M Nauru warrant cost and $16.2M warrant liability increase .
  • Management states cash is sufficient for at least the next 12 months .

KPIs and Balance Sheet Items

KPIQ4 2024Q1 2025Q2 2025
Accounts Payable & Accrued Liabilities$42.75M $45.25M $47.10M (incl. $32.4M owed to Allseas; majority settleable in equity)
Short‑term Debt$11.78M $9.98M $2.48M
Warrant Liability (period end)$0.91M $1.35M $17.58M
Pro forma Cash (early July)N/AN/A~$120M (after early‑July activities)

Segment breakdown: Not applicable (pre‑revenue) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
First production (NORI‑D)Q4 2027Not specified previouslyTarget Q4 2027 start (permit dependent) New
Offshore pre‑production capexPre‑start2021 IA: ~$2.2B offshore (of ~$7B total) PFS: “< $500M” offshore pre‑production (total capex $4.918B incl. $4.426B US refining) Lowered materially
Certification stage (NOAA exploration apps)~100 daysN/A~100 days certification underway New
Steady‑state production rate2031–2043N/A10.8Mtpa (wet nodules) New
Cash runwayNext 12 months“Sufficient” (prior quarter) “Sufficient” for ≥12 months Maintained
Cost positionSteady stateN/AC1 Ni $1,065/t; AISC $2,569/t; EBITDA margin ~43% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
U.S. regulatory path (DSHMRA/NOAA)Shift toward U.S. code; initiated NOAA pre‑application (Q4’24) . Submitted first‑ever U.S. commercial permit + two exploration apps; Executive Order support; NOAA to expedite (Q1’25) .NOAA confirmed “full compliance” on exploration apps; certification underway; proposed rule changes enable concurrent reviews, modernize process .Accelerating
Project economics/scalePAMCO processing milestone (450t calcine → alloy/Mn silicate) (Q4’24) . PFS slated for Q3’25; capital‑light reiterated (Q1’25) .PFS (NORI‑D) NPV $5.5B; IA NPV $18.1B; combined $23.6B; 10.8Mtpa steady‑state; 43% EBITDA margin; first‑quartile costs .Strengthening clarity
Financing/government supportExtended ERAS facility; ended Allseas 2023 facility; working capital loan extended (Q4’24) . Exploring U.S. gov’t tools per EO (Q1’25) .Korea Zinc $85.2M equity; $35M RDO; management pursuing DoD/DOE/DFC/Ex‑Im avenues, including offshore support .Improving
Offshore system readiness (Allseas/Hidden Gem)Team continuity, tech leadership (Q1’25) .Focus on FID/long‑lead items; Allseas partnership central; aim to move before final permit given regulatory confidence .Building toward FID
ISA vs U.S. pathSlow ISA progress; pivot to U.S. regime (Q4’24) .Management contrasts ISA delays; maintains exploration compliance; no current plan to seek ISA exploitation license .Decoupling from ISA
Environmental/scienceLargest CCZ dataset; regulatory engagement (Q4’24) . Executive Order acknowledges strategic importance; EIS launched with NOAA (Q1’25) .NOAA process advancing; management emphasizes robust, defensible process for decades .De‑risking

Management Commentary

  • “Another highlight of August 4 was the release of our PFS and initial assessment… showing a combined project net present value of more than $23,000,000,000… with a PFS in hand as the only commercially viable deep seabed resource opportunity in the next several years” — CEO Gerard Barron .
  • “On August 12, NOAA confirmed full compliance for our exploration license applications… Each regulatory milestone derisks the project and strengthens the investment case… toward first production from NORI‑D in Q4 2027” — CEO Gerard Barron .
  • “Including the valuable byproducts… our C1 nickel cash costs are just over $1,000 per ton… Even on an all‑in sustaining cost basis… just over $2,500 per ton… we will be profitable in nearly any nickel price environment” — CFO Craig Shesky .
  • “At June 30, TMC had pro forma cash of approximately 120,000,000… Net loss… $74,300,000 or 20¢ per share… Free cash flow… negative 10,700,000” — CFO Craig Shesky .

Q&A Highlights

  • Feasibility/FID timeline: Priority to finalize Allseas agreements and initiate long‑lead procurement to hit Q4 2027 start; exploring financing mix beyond first vessel, including U.S. government programs (DoD, DOE, DFC, Ex‑Im) .
  • NOAA permitting milestones: Expect cadence post‑comment period; proposed amendments to enable fast‑tracking; management reports daily regulator engagement and confidence in defensible approach .
  • Offshore capex split: PFS shows ~$492M offshore pre‑production; TMC has long assumed sharing with Allseas (details forthcoming) .
  • U.S. refining timeline: Could accelerate with funding; Korea Zinc involvement increases feasibility; intent to build in U.S. on suitable terms .
  • “Provisional approval” concept: Management expects a confidence‑boosting provisional step this year prior to final approval to support spend ramp .
  • Legal defensibility/administration risk: Permit designed to be robust for decades; critical minerals positioning seen as bipartisan .

Estimates Context

  • S&P Global (Capital IQ) consensus for quarterly EPS/Revenue was not available for TMC; no published quarterly consensus metrics were returned for near‑term periods (pre‑revenue profile, limited coverage). Values retrieved from S&P Global.*
  • Implications: With no consensus anchors, investors will likely focus on de‑risking milestones (NOAA certification/permitting), capex phasing, partner funding, and timing of offtake/refining agreements to adjust valuation frameworks .

Key Takeaways for Investors

  • Regulatory path is firming: NOAA full‑compliance and certification underway, with proposed rule changes enabling concurrent reviews — a potential timeline accelerator .
  • Capital‑light model preserved: Offshore pre‑production capex reduced to “< $500M” from ~$2.2B (2021 IA); heavy U.S. refining capex largely in the 2030s when cash flows begin .
  • Economics compelling on the modeled case: PFS+IA NPV $23.6B; first‑quartile cost position; 43% steady‑state EBITDA margin with diversified metal revenue mix .
  • Balance sheet improved: $115.8M cash at quarter end (pro forma ~ $120M in early July) and multiple funding avenues (Korea Zinc, RDO, ATM, potential U.S. programs) .
  • Execution watch‑items: (1) Definitive Allseas arrangements and vessel timetable; (2) government support timing/structure; (3) offtake/refining contracts; (4) NOAA certification completion and next steps .
  • Trading setup: Near‑term catalysts (permitting updates, partner funding clarity, U.S. policy support, investor day outputs) may drive narrative; lack of consensus estimates shifts focus to milestone delivery and PFS economics .

Appendix: Other Relevant Q2 2025 Press Releases

  • Q2 corporate update (Aug 14): Financial highlights, NOAA compliance, PFS/IA summary, strategic investments, and detailed financial statements –.
  • PFS/IA release (Aug 4): Detailed PFS/IA metrics including capex breakdown, cost curves, production ramp, and economic assumptions –.
  • Tonga sponsorship agreement update (Aug 4): Reinforces partner alignment amid ISA delays –.
  • Earnings call notice (Aug 7): Logistics for Q2 call .

*Values retrieved from S&P Global.