Good day and thank you for standing by. Welcome to The Metals Company Third Quarter 2024 Corporate Update Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Craig Shesky, CFO. Please go ahead.

Thanks, everybody and please accept our apologies for a bit of a delay here. We appreciate you joining for our third quarter 2024 corporate update conference call. Please note that during this call, certain statements made by the company will be forward-looking based on management's beliefs and assumptions from information available at this time. These statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. 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 flow and 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 you're welcome to follow along with our slide deck or joining by phone, you can access at any time at investors.metals.co. And I will now turn the call over to our Chairman and CEO, Gerard Barron.

Thanks, Craig and thanks to all of you for joining our third quarter conference call. Typically, in these calls, we remind everyone about our value proposition and provide incremental project updates. But if you're listening, you likely already know that this is a world-class high-grade resource that is significantly undervalued based on any reasonable metric. You may even be sick of us reminding you of that. All of that information is still readily available and included in the appendix. What we'd really like to talk about is our strategy to start unlocking that significant value now, rather than waiting for first production. And over the last 2 weeks, we've seen some events that we believe are going to be watershed moments in TMC's journey. Last week, we saw a U.S. election where Republicans will see themselves take the White House and both houses of Congress. We have allies on both sides of the aisle and have been talking with the Biden administration for years. But since people ask us all the time if this was a good outcome for TMC, the answer is an emphatic yes. But more on that shortly. Earlier this week, we issued a press release which confirms our plans to submit NORI's application for an exploitation contract on June 27, 2025, along with our strategy and detailed rationale for the selection of this date. And just a few minutes ago, we announced a registered direct offering led by our largest non-affiliated institutional shareholder to help ensure that we will have the financial resiliency to see this work through. As you have heard from me many times before, protecting the equity is something that I care deeply about. And this is also a key consideration for our 2 largest shareholders, Allseas and our Director Andrei Karkar. And…

Thanks, Gerard. And I believe the slides that have been working on our webcast, I believe there's a -- frozen a moment but they are available on our website as well. So when TMC did less on the NASDAQ, we published an SEC standard compliant initial assessment of the NORI-D project, or more familiar terms, a PEA. The purpose of the PEA is to offer an early stage conceptual assessment of the potential economic viability of mineral resources in NORI-D. Now PEA showed how much development capital would be needed to get NORI-D to produce 12 million wet tonnes of nodules per year. And importantly, it was based on a 100% new build scenario. It assume that we build all the production assets like the nodule collection vehicles and nodule processing and refinery plants and do all of that ourselves. I think as everybody is now aware, it's not our plan to do that. We've obviously shown that we don't have to do that. With our partner, Allseas, providing our first production vessel and our partner PAMCO providing a turnkey solution for processing. And we're pleased to announce that we have now completed a pre-feasibility study, or PFS, for this capital-light strategy. Now we're finalizing approvals and sign-ups on this SEC compliant document and we look forward to providing more information, including summary project economic data in our upcoming Strategy Day in December. Unfortunately, as I said, TMC doesn't have to be spending anything on preproduction CapEx for the onshore component of our operations, thanks to the availability of existing processing facilities likely the one owned by our partner PAMCO in Japan. And a world's first commercial-scale nodule processing trial on a 2,000-tonne sample of nodules has been underway at PAMCO's Hachinohe facility since April. During the first phase of…

[Operator Instructions] And our first question comes from the line of Matthew O'Keefe of Cantor Fitzgerald.

Yes, just -- I'm very interested in the services business potential. I mean, as you pointed out in your presentation, we've seen a lot of interest from -- in deep ocean from governments like China, India, you mentioned Norway, I guess, Japan as well. What kind of -- like with respect to the services business, how big will this be? Like what's the revenue model going to look like? And is it a big stretch to step it up? Are there a lot of costs to set up this business?

Yes. Thanks, Matt. Look, we're super excited about this part of our go forward because we have this amazing expertise that we've gathered over the last decade. And when we look at how we operate our offshore campaigns and resource definition and the success of those campaigns that is now going to be all demonstrated in our application to the regulator, we realized that we've got something very special. And we know that other contractors spend about $100 million a year at the moment. But we -- there are forecasts in the market that estimate that could increase 10x once the mining code is in place. And that's just in the international waters. If you add to that territorial waters, then that number could be much higher. So we see a great opportunity of being able to keep that talent that we've mastered over the last decade and make it available to other operators. And there's no real investment. It's really about looking at that talent that is going to start becoming more available once our application is lodged and how we can help other contractors increase that spend. Because there are some contractors who aren't spending as much money as they should because they're waiting on the mining code to be adopted. That's their excuse. But with the advent of the mining code, then all of that excuse goes away and contract holders will be obliged to move their blocks forwards towards permitting. Now we know how to do that better than anyone else. And so we've already been talking to many contractors. I don't think the Chinese contractors are likely to use that service but I am confident many others will, particularly because we can offer a similar service to several contractors at once, particularly when it comes to offshore deployments and there are tremendous economic advantages for all of those contractors if they collaborate on some of that work.

And is this -- would this just be focused around Clarion and Clipperton or do you see not just -- not -- areas for nodules in other parts of the ocean and also other types of deep-sea mining? Or would you really just focus in your "backyard"?

Look, our backyard is certainly the CCZ for sure. But the services apply beyond into regional waters as well. And we have had conversations already with regards to territorial waters.

We would also know, Matt, in terms of the potential elsewhere from the Clarion and Clipperton zone, all of the strategy is incorporated within the capital-light approach. So this is not something where to say, hey, let's get some shifts to help do this. The services business is really built on expertise that our team has gathered in sort of environmental impact assessments, resource definition. Other technical matters that, frankly, our team of roughly 50 people are some of the best in the world. But it's not something where you can expect that TMC is going to get out over our skis with respect to additional capital. We certainly would love the opportunity not only in the services business, thinking about future revenue but thinking about increased the size of the -- increasing the size of the resource portfolio. So you can think of us as being very nimble and very good stewards of capital and evaluating every opportunity based on the return on equity and the IRR and thinking of shareholders every step of the way.

Okay, thanks. And that sounds good. I will look forward for more updates on that. That will do it for me. Thanks very much.

Thanks, Matt.

Thank you. We will move to our next question.

While we're waiting, I see a question from Ryan Bullock [ph]. Elon Musk guaranteed cobalt and child labor who's in production. How can this be a reality sooner rather than later? Well, look, I think in terms, Ryan, of thinking where the mix of metals within batteries is ending up, there is a, I guess, always changing equation between how much nickel, how much cobalt, maybe LFP or other forms. I think what we've seen certainly over the past few quarters is that while we do focus on electric vehicles and that source of demand is going to be very big, for TMC, thinking about some of the metals we produce, such as industrial metals for manganese and nickel used in stainless steel, there are scenarios we could talk about over half of revenue down the road, perhaps coming from some of those sources outside of batteries. It all depends on what the nature of some of our future contracts look like. But the underlying demand for these metals is not only driven by EV batteries. And I think that's one of the reasons, too, when you talk about cobalt or you talk about nickel, it's evolving past the situation of the EV industry struggling with these difficult decisions. And that's why it was so important to see Marco Rubio, the incoming Secretary of State, if he's confirmed calling out Volkswagen and other brands for their hypocrisy and what some of their sourcing methods are. But I think we can expect over the course of the next year, to see this pivoting away from an EV industry equation and something where it's NGOs versus contractors and really taking the form of the West versus China. And TMC certainly was a feature and then had a lot of our video in the Washington Post article on this topic late last year as well as a few pieces in 60 Minutes. So it is definitely evolving into national security. And certainly, with the Republican administration coming in and the majority in both houses of Congress, that sets up very well. And I think we're positioned better than anybody to take advantage of that.

And our next question comes from the line of Dmitry Silversteyn of Water Tower Research.

I just wanted to follow up on your service business potential. Are you -- I think, Gerard, you mentioned that you're talking to some contractors now. Are you in discussions that are a little bit more serious than talking at this point? Or is this something that's still in the very early stages?

No, it's quite advanced. Dmitry, thanks for the question. No, it's quite advanced. We have RFPs out of the market and we are certainly hoping by the time we have our next conference call that we'll have contracts under our belt.

Wonderful. Did I understand you correctly that you would be able to really sort of dedicate your energy and attention to this business once you're done submitting the application to the ISA? So mid-2025 is when we should think about as the timing of the underway?

Well, there is a bit of a lead time and I would think of it as 2025 calendar year. There'll certainly be more of our team available after that application is lodged. And of course, for us, we see it as an economic opportunity but we also see it as a great way of keeping the gang together because our team applied -- or approached, regularly to go and join other operators. But everyone likes working as part of a coherent team and we've really amassed some talent. And for us, it's about how do we -- how can we economically keep that team together? And the easiest way is to make them available and sell those services into other operators. And there's tremendous synergies if we can encourage other contractors to work together but someone needs to bring it together. And of course, it's worth reminding that we have conducted 22 successful offshore campaigns over the last decade. We've had no wipe-outs and that's really unusual. Look at the amazing collector trial that we ran in 2022 with our partner Allseas. It was amazingly successful. And that's -- we didn't lose a single day of operation through COVID, yet we ran 9 offshore campaigns. And so we've had some amazing successes in this area. And so our credentials are very strong and that provides a good base to go and build a business around, particularly because it doesn't require any investment.

Sounds good. Gerard. And then one final question and I think it was just -- I lost connection in my end. But when you're talking about the deep dive date that you're planning to hold, is that -- can you repeat the dates for that?

Yes, we haven't announced the date but it will be before the end of the year. And we can't wait.

Our next question comes from the line of Jake Sekelsky of Alliance Global Partners.

Just a quick one here. Are you able to provide any additional color on that $9 million in government funding that Craig had mentioned earlier related to domestic refining capacity? Domestic supply chains are obviously becoming very topical after the election. I'm just curious how advanced you are in that process. And have you identified any potential sites at this point?

Yes. Definitely. Appreciate that, Jake. Always good to speak with you and the answer is yes, we have identified potential sites. The quality of our application, I think, is underpinned by the fact that we have been thinking and planning on this for a very long time in consultation with our project team as well as our business development team. So I think because we are so far along and because we do feel we have growing support and that's only going to multiply exponentially when you see some of the people who are getting into positions of influence within the incoming White House. We feel it's in a very good place. Now look these applications do take time. We think on average, they've taken over a year for most applicants. And there's always a question of at any point of time, what funding is available from the Department of Defense's Defense Production Act Title III grant program. But it's now been close to 9 months since we launched that application. So it's conceivable in the next couple of quarters that we will know more on that information going forward. Now in the context of this project, in the context of this resource, $9 million may not sound like a lot. We would say it's more about that explicit support from the government, that's going to be very helpful, not just with eventually building out some capacity in the United States. But that's the type of thing that really does give confidence and cover for other people to kind of put their head above the parapet and not be so afraid of the NGO noise because a lot of people get it. A lot of people understand that this resource is transformational and one extra push where sort of you have explicit support from the U.S., is the type of thing that can make it easier for investors of all shapes and sizes to come on board. So we're going to view that as a very key moment. But at the same time, it's certainly not a must-have. We view this as being very opportunistic and I think what you've seen in the cadence of news on nodules over the last year shows that this has been an investment well spent and time well spent on our team.

Makes sense. Okay. Thanks, again.

Thank you, Jacob. I do see a question in the online queue from Tyler McNeil [ph]. Can we ensure investors the application date is not going to be pushed back beyond June 2025? And then something on the side of potential services contracts? Well, Gerard did mention on the services business. The addressable market in terms of other contractor spending in a ballpark of $100 million per year. Now we do expect that's a number that will increase substantially as the mining code is getting closer. And there will be requirements from contractors to effectively play catch up on work that perhaps hadn't been pushed forward in the past. Beyond that, again, the addressable markets beyond just what we're looking at narrowly within the area of the Clarion and Clipperton zone or high seeds but a lot of other areas in national jurisdictions that we'll see quite a bit of increased spending. In terms of the application date not being pushed back. Look, we are full bore on this and we have our cadence and our schedule lined up and the team is all in agreement on what needs to be delivered. There is a rationale, too, to say getting that over the line on that June date, we didn't just pick it out of a hat. That's a date that allows us to put forth the best application. But importantly, to ensure that in the March 2025 ISA session, we get additional clarity from the ISA on what the application review process looks like very specifically, such that once the application is in towards the end of June, they can start dealing with it at their July session. So there's a natural reason why we picked that date and certainly, every incentive in the world to ensure that there is no delay beyond that. Gerard, I'm not sure if you have any other comments on that?

No other than we -- it's all roads lead to that date. And as we alluded to, there were many stakeholders we consulted on that. We also are aware the UN Ocean Council is meeting which we'll be attending in June of next year as well. We wanted to give that some clean air. So it's -- I would say that the amount of dialogue between sponsoring states is certainly on the increase or between member states of the International Seabed Authority. And we're very encouraged by that dialogue and we think it all leads to adoption of the mining code in the very near future.

This concludes the question-and-answer session from the phone line. I would now like to turn it back to Craig Shesky.

Thank you very much. Thanks to everybody for attending this call. Usually, we say we look forward to seeing you on our next quarterly update call but hopefully, we can see many of you even before that when we announce news and the date for our strategy day before year-end. So stay tuned on that and thank you all very much.

Thank you, everyone.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.