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01/10 19:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a positive outlook, with a clear regulatory pathway, strengthened cash position, and strategic partnerships. Despite increased G&A expenses, exploration costs have decreased, and free cash flow has improved. The Q&A session reveals strong government support, minimal regulatory risks, and potential U.S. funding, enhancing future prospects. The company's focus on critical minerals and positive geopolitical surprises further bolster sentiment. However, some uncertainties remain regarding CapEx details and funding timelines, slightly tempering the outlook. Overall, the stock price is likely to experience a positive movement in the short term.
Net Loss $74.3 million in Q2 2025, compared to $20.2 million in Q2 2024, representing a significant increase. The increase was primarily due to other items totaling $52.3 million, including Nauru warrant costs, changes in the fair value of warrant liability, and foreign exchange movements.
Exploration and Evaluation Expenses $10.5 million in Q2 2025, down from $12.4 million in Q2 2024, a decrease of $1.9 million. This was primarily due to a decrease in mining, technological, and process development activities, partially offset by an increase in share-based compensation.
General and Administrative (G&A) Expenses $11.5 million in Q2 2025, up from $7.9 million in Q2 2024, an increase of $3.6 million. This was mainly due to an increase in share-based compensation and consulting costs related to the U.S. regulatory path and other financing activities.
Free Cash Flow Negative $10.7 million in Q2 2025, compared to negative $12.2 million in Q2 2024, an improvement of $1.5 million. This was primarily due to higher payments to campaign eight vendors in the comparative period, partially offset by an increase in environmental payments.
PFS and Initial Assessment Release: The company released a Pre-Feasibility Study (PFS) and an Initial Assessment (IA) showing a combined project net present value (NPV) of over $23 billion. The PFS included the first-ever reserves for a nodule project.
Production Timeline: Commercial production is expected to start in Q4 2027, with a ramp-up period anticipated post-permitting.
Strategic Investment from Korea Zinc: Secured an $85 million investment from Korea Zinc, the world's largest smelter of nonferrous metals, to support production and supply chain development.
Renewed Partnerships: Renewed agreements with Nauru and Tonga to ensure long-term economic benefits and critical mineral supply chains for Pacific nations.
Regulatory Progress: Achieved full compliance for exploration license applications under the U.S. Deep Seabed Hard Mineral Resources Act, with NOAA certifying applications.
Cost Efficiency: Reduced offshore pre-production CapEx to under $500 million, down from $2.2 billion in earlier estimates.
Board Appointments: Added Michael Hess and Alex Spiro to the Board, bringing expertise in energy, finance, law, and strategic partnerships.
U.S. Refinery Development: Plans to build refining capacity in the U.S. to support domestic mineral independence and higher-value product production.
Regulatory Uncertainty: The company faces risks related to regulatory uncertainty, particularly with the International Seabed Authority (ISA) not delivering promised regulations. This could delay or complicate the company's operations and strategic plans.
Production Timeline: The expected production start date of Q4 2027 may be seen as a delay by some stakeholders, and the ramp-up period post-permitting could impact financial performance and investor confidence.
Capital Requirements: Significant capital expenditures are required for offshore and onshore operations, including $4.4 billion for refining capacity. Delays or challenges in securing this capital could impact project timelines and profitability.
Market Valuation: The company believes it is undervalued compared to peers, which could affect its ability to attract investment and strategic partnerships.
Environmental and Community Commitments: The company has committed to high standards of environmental stewardship and community benefits, which could increase operational costs and regulatory scrutiny.
Dependence on Strategic Partners: The company relies heavily on strategic partners like Korea Zinc and Allseas. Any disruptions or changes in these partnerships could adversely affect operations and financials.
Economic Viability: The project's economic viability is tied to commodity prices, particularly nickel, cobalt, and manganese. Fluctuations in these markets could impact revenue and profitability.
Operational Risks: The company plans to use multiple production vessels and complex offshore and onshore operations, which could face technical or logistical challenges.
Production Start Date: Expected to begin in Q4 2027, with a ramp-up period post-permitting and modifications to the Hidden Gem vessel.
Production Capacity: Steady-state production modeled at 10.8 million tons of wet nodules annually from 2031 to 2043, requiring four converted drillships.
Revenue Projections: Expected revenue per dry ton of nodules during steady-state production is approximately $600, with variations depending on the stage of production and refinery construction.
Cost Projections: C1 nickel cash costs are projected at just over $1,000 per ton, with all-in sustaining costs at just over $2,500 per ton, placing the company in the first quartile of the cost curve.
Capital Expenditures: Development CapEx for offshore preproduction is less than $500 million, with an additional $4.4 billion onshore for refining capacity, mostly spent in the 2030s after production begins.
Market Valuation Potential: Illustrative market value based on peer comparisons is approximately $10 billion, or over $20 per share, with potential for multiple expansion as production approaches.
Regulatory Progress: NOAA has confirmed full compliance for exploration license applications, with a 100-day certification process initiated in late July 2025.
Strategic Partnerships: Korea Zinc's $85 million investment positions the company to use TMC's materials for refined metals production, with potential new facilities in the U.S.
The selected topic was not discussed during the call.
The earnings call reveals operational and financial challenges, including a significant net loss and increased expenses, which are concerning. The Q&A session highlighted regulatory uncertainties and vague management responses, contributing to a negative sentiment. Although there is potential for funding and partnerships, the lack of clear timelines and the competitive market pressures further weigh down the outlook.
The earnings call presents a positive outlook, with a clear regulatory pathway, strengthened cash position, and strategic partnerships. Despite increased G&A expenses, exploration costs have decreased, and free cash flow has improved. The Q&A session reveals strong government support, minimal regulatory risks, and potential U.S. funding, enhancing future prospects. The company's focus on critical minerals and positive geopolitical surprises further bolster sentiment. However, some uncertainties remain regarding CapEx details and funding timelines, slightly tempering the outlook. Overall, the stock price is likely to experience a positive movement in the short term.
The earnings call reveals concerns about environmental impacts and operational risks, which could affect regulatory support and public perception. Despite some financial improvements, the registered direct offering and ATM facility indicate potential cash flow issues. The Q&A section highlights management's vague responses, raising concerns about transparency and execution risks. These factors, along with the lack of a clear roadmap for commercialization and regulatory progress, suggest a negative sentiment, likely resulting in a stock price decline.
The earnings call reveals potential delays in regulatory processes, impacting operations and investor confidence. Share issuance indicates potential dilution, while the Q&A highlights management's lack of clarity on regulatory timelines and specific project areas, raising uncertainty. Despite improved financial metrics, the overall sentiment is negative due to regulatory uncertainties and potential dilution.
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