Good day, and thank you for standing by. Welcome to The Metals Company Fourth 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 Craig Shesky, Chief Financial Officer of The Metals Company. Please go ahead.

Thank you, Liz. Please note that during this call, certain statements made by the company will be forward-looking and 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 statement. 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 you're welcome to follow along with our slide deck or, if joining by phone, you can access it at any time at investors.metals.co. And I will now turn the call over to our Chairman and CEO, Gerard Barron. Gerard, please go ahead.

Thank you, Craig. Well, before we announce a material and very exciting change in our way forward, I want to revisit the premise behind our company. So in the next 30 years, we expect to need to mine more base metals than have been mined in all of our human history. So where can we get these critical metals with the least cost to humans and nature? 70% of our planet is covered by the oceans, but they are home to only 3% of living biomass. And the abyssal zone accounts for more than half of the ocean area. And according to GROC, the abyssal zone hosts sparse but resilient life that thrives on sinking organic matter in a vast otherworldly expanse. Limited leftover food means limited life. So limited life to begin with means less life to impact. And vast self-similar abyssal zone means ample opportunities for smart conservation. And that's just the beginning of why nodules could be a great source of critical metals. And once you get this far offshore and this deep, there are no human communities to impact, metal grades are high, and there are four metals in one resource here. While it would take three separate mines on land. And crucially, we can process this resource onshore with near zero solid waste. And this means we will not need to manage lakes of toxic sludge. And what's the alternative? Well, keep cutting down biodiverse rainforests, displace people, poison air and water, and generate massive, often toxic, waste streams, much of which ends up in the ocean, sometimes in smothering beautiful reefs. And as a company, we reasoned from first principles and believed that we have a better shot at responsible extraction where we have fewer impacts and fewer impact receptors. So these first principles…

Thanks, Gerard. Certainly, a very exciting moment. But first let's assess where things stand right now with the ISA. So the ISA has missed two code adoption targets and is currently on its third. So it's worth looking at why exactly this part of the mining code is so hard. Well, four years is about the average time that it takes to negotiate an international instrument, and it took around four years for the ISA to adopt the first exploration regulations. It took around four years to negotiate the Convention on Biological Diversity, the Paris Agreement, and The Arms Trade Treaty. COVID disruption certainly did not help, yet the High Seas Treaty was also impacted by COVID, took eight years. So depending on when you start counting, if the ISA adopts the mining code in 2025, it would be 14 years, or 11 years if you count from when the work started in earnest in 2014, and it's still much longer than other instruments. So while coming up with regulations for the exploitation of deep sea minerals in the area may sound like a daunting task, consider the fact that most coastal states already regulate offshore extractive activities, like offshore oil and gas, and all countries with land mining have mining codes. There is plenty of expertise and precedent to draw on. Now the ISA Council is currently sitting for part one of its 30th session in Kingston, Jamaica, and as with every session, we're simply looking for progress. Contrary to the legitimate expectations of contractors and of our sponsoring states, which are set out in the Convention, the ISA has persistently missed the deadlines that it itself has set, first in 2020 and then in 2023, and we're already three months into the third targeted year for adoption of…

[Operator Instructions] Our first question comes from a line of Matthew O'Keefe with Cantor Fitzgerald.

Hi. Thanks, operator. That was a lot. So, just to help me through the DSHMRA thing here a little bit, if you may. So, this is a different -- it's a sort of a different regulatory body as you've described. Your licenses were issued to you under UNCLOS with your supporting sponsor states. Will the application to DSHMRA be for these license areas or different license areas that are currently? I think they have four license areas under DSHMRA. Are these overlapping or are they separate? How are we supposed to think about this?

I'll have first crack at that. So, there's an important concept just for everyone to get their mind around, and that is the freedom of the high seas. And so, of course, what happened when they were agreeing UNCLOS was that the United Nations member countries wanted to join a treaty when it came to the extraction or development of metals in the high seas. However, while 168 countries plus the European Union have now joined that treaty, the U.S. stood fast and said, we are not going to join that treaty. And so essentially, the freedom of the high seas covers minerals, it covers freedom of passage, it covers cable lane and so on. And so America will argue that they will have access to those waters under the Freedom of the Seas Treaty that any member country of the International Seabed Authority would have over those areas as well. We haven't announced today exactly which areas. We're still in dialogue both internally and we will, in the pre-consultation process that is underway with NOAA, we will also be seeking some advice there. However, what we want to do is to take advantage of all of the work we've done for the last 14 years. And so this will not be a, let's start again. This is about what pathway can get us into commercial production the fastest way. And as we went at length in the presentation to talk about, there's no easy path here on the environmental oversight either. In fact, we think the environmental regulations as laid out under DSHMRA are sensible, are workable, and very, very thorough. And so stay tuned on us to announce once we formally launch those applications and you won't have to wait long for that.

And Matt too, we also recognize just how much of our evaluation is pinned on the work that's been done with NOAA and TAMO. And we've got a defined resource, we've done test mining, we've done test processing, we've done environmental work in those areas. So yeah, for us, that is obviously the key question and we look forward to sharing more with you. But this is not something where we're just saying, okay, let's go out and cobble something together. This has been well thought out and we feel this is going to take advantage of the work that we've already done in consultation with our sponsoring states.

Okay. Some more to come there. And can I ask too, from a, maybe this is getting a little too ahead of where we are, but if you were to decide to, if you do get approval through a different path, your partner Allseas owns the vessel, they're not, I mean, the vessel is in the U.S., it's not a U.S.-based company, or maybe it is, I don't know if they have a U.S. arm or not, but I mean, could they legally participate as a partner in this situation?

Yeah, absolutely. Yeah, there's some nuances with DSHMRA and one of them is that the production vessel needs to be U.S. flagged. And so, we have, with Allseas, already looked into that and that is a pretty straightforward process. And so, and of course, the applicant that has kicked this off is our U.S. subsidiary that we established in 2013.

And maybe I'll ask this one more while I've got you, is this -- is the first of course investors are hearing of it, has this idea been raised with the ISA as they're meeting right now, or is this, they're going to be, are they just hearing about this now as well?

Yeah, they're hearing about this now.

Okay. So, we'll wait for the minutes from meetings tomorrow to see some reaction.

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

Just to confirm, building on the last question a bit, is the NOAA process a complete shift in the permitting pathway from the ISA pathway or more of a secondary avenue or primary avenue alongside the ISA process?

Yeah, Jake, it's definitely, it's a new path and we view it as advantageous and the best chance of success. But this is not one door closing, another opening. This is, in our view, it's an incremental path forward and we view a better path forward. It just so happens we built on 45 years of work and a bunch of environmental work from NOAA. It's just been sitting relatively idle for some time. But the legal precedent is there. It's always been there. And what has been missing is the political appetite in the United States to take advantage of it. And that's the main change that has come with this administration. So there's no new legislation that has to come. There might be some adjustments, I would say, to aspects of the regulations, perhaps as you've seen for critical minerals projects throughout the U.S., views about permitting perhaps being accelerated in some circumstances. But this is something where it's been on the books for a long time. What's been missing is the political appetite. And that's what's changed. That's what's changed with the new election. So this frankly, has been a door that opened to us. And after the November election, we engaged in the diligence required to make this decision. And we think very strongly we're making the right decision.

In building off that, are you able to provide any color on what this new process looks like, key milestones or even a high-level timeline? Or is it a bit too early at this stage?

That will become -- we have a very strong sense of it already. But in respect to the dialogue that's underway with the permitting agency now, we'll come back to you with more on that. But it's a -- as we mentioned in the presentation, the first thing is it's a two-way consultation. And that's a really important step forward when you're trying to permit a project. And so, that's refreshing from our perspective, the fact that we can sit with the regulator and that there is a formal process, which they outline in the regulations that applicants can follow. And of course, the very unique thing about our application, and hence why we talk about a recovery permit as well, is that we have all this amazing data. We have an application that is coming to completion. And so, it's a -- and the work is very consistent as follow-on work to what was done under NOAA sponsorship back in the ‘70s and ‘80s. And so, it's an alignment of stars.

And then just lastly, with all that being said, and I think, Craig, you touched on this, how does it impact the timeline of the upcoming economic study? Is this still something we should expect in the first half of the year? Do you think it'll spill into later in the year?

No, we are still expecting it to be wrapped up and certainly in advance of our applications to the U.S. So, nothing's changed on that front. And as we've reiterated, you're going to see the applications in June. It's just now that we have in our view, some very interesting paths forward there. But that obviously, that economic analysis is important for the U.S. as well not just important for the ISA application. So, while the new path obviously brings up additional points that we're discussing with our QPs, it's still on the front burner for us.

Our next question comes from Dmitry Silversteyn with Water Tower Research.

So I just want to follow-up on a couple of things. So first of all, on the environmental impact study, you said you're working on that now. I'm assuming that's going to be completed around or before the time you complete the economic feasibility study and the application submission in June, or is this something that's going to happen in the next few weeks?

Well, the -- one of the things on our economic study is that a lot of the work has been done. And, but of course, we were just going through getting expert sign-off as is necessary under SK-1300 requirements and with any PFS when it became obvious some of the other options in front of us. And so it was deemed that we should just be a little bit cautious around that. But the environmental writing is going at full speed. And the environmental data has been flooding in. We held our last key environmental conference back in January in Brisbane, Australia. And the team are popping the stay awake pills, working very long hours and very motivated by what they're doing because obviously it's -- all of this data that we've been gathering for so many years is now coming together as a comprehensive picture. And so, yeah, happening side-by-side to be sure.

And I just want to make sure I got some clarity on the application to the U.S. government. So assuming that that goes through and you're given an exploitation license, what area are you going to be given the license to? It's not the TAMO and the NORI area, right? It'll be some other area of the CCZ?

As we said, Dmitry, we are going to make that clear alongside the consultations that are ongoing with our sponsoring states. But based on DSHMRA laws, there is a potential for overlap.

And then you mentioned the press release that you've terminated your contract with a third sponsor state. What was the thinking in that? I know you haven't talked about it a lot in your presentations. It was always sort of a bad burner. We'll get to it at some point type of a deal, but what has changed and why the termination now?

Yeah, so look, we put that, we announced, we'll put that into our filing back in November. And we didn't get a lot of inquiry about it, actually, until recently it was reported that Kiribati were talking with China about stepping into our shoes there. Look, it came down to priorities. It came down to the fact that we have two very prospective blocks in NORI and TAMO. And we had to decide where to focus our resources. And those blocks require money to be spent on them. They require to lodge five-year plans and to do work programs. And we had also done some exploration work and some of the results weren't the most encouraging on those blocks. And I think that's one of the things that one needs to remember what the metals company has. We have a defined resource on the NORI and TAMO ground. And not all license areas are equal. The grades may be very consistent, but the abundances are not. And so it is generally regarded that NORI and TAMO are some of the very best ground out there. We know of more. And hence, Craig's answer to your question about overlap. There certainly is the prospect of some overlap in that. And so our thinking with Marawa was, we knew that there were other parties interested to work closely with Kiribati. Obviously, Kiribati, they're a great partner to have. They're a great developing country. They do recognize one China. And it didn't surprise me when I learned that some of the interested parties were from China. And I heard the ambassador mention that in some media reports in recent weeks.

And then last question. You mentioned in your comments about your service business getting some inbound inquiries and seems to be well received. Is this something that we can expect some results from in terms of revenue and profits in the next, I don't know, one to two years? Or is this still sort of in the development stage and just see how it goes kind of stage?

Look, no, we're excited about it. And we have built so much expertise around this industry. And our people are approached all the time with job offers to go and work elsewhere. But they like working at the metals company. And they know we do high-quality science. I think a lot of the services are focused around the environmental work programs. We also know a lot about defining these resources, that part of the business. Led by Anthony O'Sullivan, we've done more resource definition work than any other contractor, very, very successfully. We also, during the middle of COVID, ran nine offshore campaigns without losing a single day to illness. And that's nine campaigns across two years. And so these are really challenging tasks, which we have been able to complete very successfully. So it makes sense that we stick our team together, keep our team together. We do think that there will be a lot of services opportunities in the coming years. And we want to take advantage of that. And we have some very, very interesting conversations, which can range from pilot mining using the hidden gem, which would obviously be something that we would have to collaborate with Allseas on very, very closely. But of course, putting the hidden gem out to pick up nodules involves a lot of environmental planning as well. And so there's some very interesting work scopes available to us. But of course, today, those people are very busy on our own application. And so we have had to turn away some opportunities simply because we need to get this application completed.

So it sounds like maybe second half of the year when you have a little bit more free time with your people and equipment. Some of these may actually turn into contracts.

Yeah, that's right. Yeah, yeah, yeah. The business development function inside the business is chomping at the bit, whereas the scientists and other people just slow down. We can't take anything more until we get this application out the door.

[Operator Instructions]

In the meantime, Liz, I think we're going to take a question from the webcast. Eric Goldstein asks a question. Can we discuss our current finances? Where do we expect liquidity to be at the end of Q1? Did note roughly $43 million of liquidity at the time of this filing? So, look, the overall point here is that the element that, in our view, has been holding back the valuation of our stock has been the lack of regulatory certainty. Our view is that DSHMRA and along with NOAA and, frankly, the support of this administration and Congress, in our view, it should be pretty clear to everybody that this is an industry that the U.S. wants to get into. And the good news is they already have the legislation to do it. So, for us, what we want to do is continue to be very cautious stewards of capital. And if we get to the point where regulatory uncertainty is no longer there and things are moving along at a very fast clip, let's say, through the U.S. process, well, that may put us in a different financial position. But what remains is what we told the market late last year, that we are not going to be raising a lot of money for pre-production capital spending until such time as we have that regulatory certainty. And that doesn't have to be through the ISA. We've heard from many investors, look, if the U.S. administration took real action here, that could be something to get people off the sidelines. We think after months of consultations, as you've seen, certainly on social media. Gerard and I have spent a lot of time, and the rest of our team, Erika Ilves and Kristin Hengstebeck and everybody heading down to Washington,…

No phone questions at this time.

One more question, actually, from the webcast. Somebody asked, they're not clear whether or not we're going to submit an application contract on June 27th with the ISA. Gerard, do you want to reiterate what we said on that?

Well, we have what I'll say is what we said earlier in the call and that is we will keep our standing with the ISA and we will preserve our rights there. We will have an application ready on June 27, but we are undecided where that application will land. But the decisions that will drive that are permitting certainty.

Okay, well I think that's it for the conference call today. Perhaps we'll turn it back over to Gerard for any closing remarks.

No, I'd like to thank everyone for attending today. I'd like to thank my team and my Board for the support, our partners who work with us, and our shareholders who have been amazing supporters on this journey as a public company and before that as a private company. And we're greatly encouraged by all of the stars aligning right now and the environmental results coming through are offering us tremendous encouragement. And I hope this news will be able to see this industry in production and supplying metals with the lightest planetary and human touch as quickly as humanly possible. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.