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What changed in TMC the metals Co Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TMC the metals Co Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+693 added−603 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-27)

Top changes in TMC the metals Co Inc.'s 2023 10-K

693 paragraphs added · 603 removed · 469 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

163 edited+102 added−47 removed118 unchanged
Biggest changeOur resource is 1,500 miles from San Diego and we believe we can eventually process and refine our polymetallic nodules in the U.S. which could potentially decrease the supply chain in the U.S. to 1,500 miles. ● Opportunity to reuse existing assets and skills: We believe there is an opportunity for us to partner with offshore service providers with deep operational experience in subsea environments gained in the oil and gas industry and with existing assets that can be repurposed for our offshore operations. ● Demonstrated offshore technology: In November 2022, NORI and Allseas completed the Pilot Mining Test where approximately 4,500 tonnes of wet nodules were collected and more than 3,000 tonnes of wet nodules were lifted 4.3km to the surface after traversing over 80km of the seafloor in the NORI Area D, achieving a production rate of 86.4 tonnes per hour with a scaled-down prototype seafloor nodule collector vehicle. ● Demonstrated onshore technology: In 2021, we successfully completed calcining and smelting of nodules into a manganese silicate product and nickel-copper-cobalt alloy intermediate, followed by conversion and sulfidation of the alloy into matte.
Biggest changeIn 2020, Allseas acquired a drillship that was repurposed and classified as the world’s first deep-sea mining vessel. ● Demonstrated offshore nodule collection technology: In November 2022, NORI and Allseas completed the Pilot Mining Test where approximately 4,500 tonnes of wet nodules were collected and more than 3,000 tonnes of wet nodules were lifted 4.3 kilometers to the surface after traversing over 80 kilometers of the seafloor in the NORI Area D, achieving a sustained production rate of 86.4 tonnes per hour with a scaled-down prototype seafloor nodule collector vehicle. ● Demonstrated onshore nodule processing technology: In 2021, we successfully completed the calcining and smelting of nodules into a manganese silicate product and nickel-copper-cobalt alloy intermediate product, followed by conversion and sulfidation of the alloy into matte.
The ISA requires that a contractor obtain and maintain sponsorship by a host nation that is a member of the ISA and signatory to UNCLOS, and such nation maintains effective supervision and regulatory control over such sponsored contractor.
The ISA requires that a contractor obtain and maintain sponsorship by a host nation that is a member of the ISA and signatory to UNCLOS, and that such nation maintains effective supervision and regulatory control over such sponsored contractor.
There can be no assurance that we will enter into a binding MoU or definitive strategic alliance with PAMCO in a particular time period, or at all, or on terms similar to those set forth in the MoU, or that if a binding MoU or definitive strategic alliance are entered into by us or that the existing facility will be able to successfully process nodules in a particular time period, or at all.
There can be no assurance that we will enter into a definitive strategic alliance with PAMCO in a particular time period, or at all, or on terms similar to those set forth in the binding MoU, or that if a definitive strategic alliance are entered into by us or that the existing facility will be able to successfully process nodules in a particular time period, or at all.
We may be unable to compete successfully with these and other competitors, including other land-based mining operations. In addition to three contracts held by our subsidiaries and partners, 16 other entities (ISA Member States and private companies sponsored by ISA Member States) currently hold ISA Exploration Contracts for polymetallic nodules in the CCZ, Western Pacific and Indian Ocean Basin.
We may be unable to compete successfully with these and other competitors, including other land-based mining operations. In addition to the three contracts held by our subsidiaries and partners, 16 other entities (ISA Member States and private companies sponsored by ISA Member States) currently hold ISA Exploration Contracts for polymetallic nodules in the CCZ, Western Pacific and Indian Ocean Basin.
Such preference or priority may be withdrawn by the Council if the contractor has failed to comply with the requirements of its approved plan of work for exploration within the time period specified in a written notice or notices from the Council to the contractor indicating which requirements have not been complied with by the contractor.
Such preference or priority may be withdrawn by the Council if the contractor has failed to comply with the requirements of its approved plan of work for exploration within the time period specified in a written notice or notices from the Council to the contractor indicating which requirements have not been complied with by the contractor.
An LCA white paper examining a comprehensive set of impacts was commissioned by us and co-authored by certain of our executive officers in 2018 and reviewed by subject matter specialists and published on our website in April 2020; an LCA research paper focusing on climate change impacts was peer-reviewed and published in the Elsevier Journal of Cleaner Production in December 2020, an LCA research paper focusing on solid waste streams was peer-reviewed and published in the Yale Journal of Industrial Ecology in January 2022 and an LCA compliant with the International Organization for Standardization Standard 14040 on our NORI Area D project was conducted by Benchmark and released in March 2023.
An LCA white paper examining a comprehensive set of impacts was commissioned by us and co-authored by certain of our executive officers in 2018 and reviewed by subject matter specialists and published on our website in April 2020; an LCA research paper focusing on climate change impacts was peer-reviewed and published in the Elsevier Journal of Cleaner Production in December 2020, an LCA research paper focusing on solid waste streams was peer-reviewed and published in the Yale Journal of Industrial Ecology in January 2022 and an independent LCA compliant with the International Organization for Standardization Standard 14040 on our NORI Area D project was conducted by Benchmark and released in March 2023.
Baselining the impacted marine environment by characterizing the ecosystem and then developing measures to avoid and mitigate these impacts is the central focus of our ESIA program currently being undertaken in partnership with some of the world’s leading deep-sea research institutions. Nodule removal will impact species that depend on the hard nodule substrate for attachment.
Baselining the impacted marine environment by characterizing the ecosystem and then developing measures to avoid and mitigate these impacts is the central focus of our offshore ESIA program currently being undertaken in partnership with some of the world’s leading deep-sea research institutions. Nodule removal will impact species that depend on the hard nodule substrate for attachment.
The March 2023 LCA by Benchmark shows that the NORI Area D project performed better in each impact category analyzed than all the land-based processing routes chosen for comparison, except for the global warming potential (“GWP”) and water consumption of producing cobalt sulfate, in which one land-based route performed better.
The March 2023 LCA by Benchmark shows that the NORI Area D project model performed better in each impact category analyzed than all the land-based processing routes chosen for comparison, except for the global warming potential (“GWP”) and water consumption of producing cobalt sulfate, in which one land-based route performed better.
(“NORI”) and Tonga Offshore Mining Limited (“TOML”), sponsored by the Republic of Nauru (“Nauru”) and the Kingdom of Tonga (“Tonga”), respectively, and exclusive commercial rights through our subsidiary, DeepGreen Engineering Pte. Ltd.’s (“DGE”), arrangement with Marawa Research and Exploration Limited (“Marawa”), a company owned and sponsored by the Republic of Kiribati (“Kiribati”).
(“NORI”) and Tonga Offshore Mining Limited (“TOML”), sponsored by the Republic of Nauru (“Nauru”) and the Kingdom of Tonga (“Tonga”), respectively, and exclusive commercial rights through our wholly-owned subsidiary, DeepGreen Engineering Pte. Ltd.’s (“DGE”), arrangement with Marawa Research and Exploration Limited (“Marawa”), a company owned and sponsored by the Republic of Kiribati (“Kiribati”).
The ISA has issued Regulations on Prospecting and Exploration for Polymetallic Nodules (adopted on July 13, 2000, updated on July 25, 2013). The regulations are complemented by the LTC’s recommendations for the guidance of contractors on assessing the environmental impacts of exploration. The exploitation regulations on deep-seabed collection will be complemented by various standards and guidelines.
The ISA has issued Regulations on Prospecting and Exploration for Polymetallic Nodules (adopted on July 13, 2000, updated on July 25, 2013). The regulations are complemented by the LTC’s recommendations for the guidance of contractors on assessing the environmental impacts of exploration. The exploitation regulations on deep-seabed collection will be complemented by various standards and guidelines, and thresholds.
Toxic levels of heavy elements often found in land orebodies typically need to be removed, stored, and maintained indefinitely — a real challenge on seismically active and wet tropical islands in countries like Indonesia that accounts for most of the growth in nickel supply. 9 Table of Contents As a result of a vigorous campaign by several non-governmental organizations, some participants in the EV supply chain have called for a general moratorium on all forms of deep seabed mining until there is more knowledge about marine impacts of nodule collection operations.
Toxic levels of heavy elements often found in land orebodies typically need to be removed, stored, and maintained indefinitely; a real challenge on seismically active and wet tropical islands in countries like Indonesia that accounts for most of the growth in nickel supply. 13 Table of Contents As a result of a vigorous campaign by several non-governmental organizations, some participants in the EV supply chain have called for a general moratorium on all forms of deep seabed mining until there is more knowledge about marine impacts of nodule collection operations.
(ii) Offshore nodule collection system development: We are working with our strategic partner and investor, Allseas, to develop a system to collect, lift and transport nodules from the seafloor to shore. The offshore collection system consists of nodule collector vehicles on the seafloor, a riser and lift system, and a surface production support vessel.
(ii) Commercial offshore nodule collection system development: We are working with our strategic partner and investor, Allseas, to develop a system to collect, lift and transport nodules from the seafloor to shore. The offshore collection system consists of nodule collector vehicles on the seafloor, a riser and lift system, and a surface production support vessel.
To date, the ISA has approved 17 contracts in the CCZ for exploration of nodules, one in the Indian Ocean and one in the Western Pacific Ocean covering more than 1.35 million square kilometers of the seabed. This represents only 0.3 percent of the world’s oceans seafloor.
To date, the ISA has approved 17 contracts in the CCZ for exploration of nodules, one in the Indian Ocean and one in the Western Pacific Ocean covering more than 1.35 million square kilometers of the seabed. This represents 0.3 percent of the world’s oceans seafloor.
The CCZ is a geological submarine fracture zone of abyssal plains and other formations in the Eastern Pacific Ocean, with a length of around 7,240 km (4,500 miles) that spans approximately 4,500,000 square kilometers (1,700,000 square miles).
The CCZ is a geological submarine fracture zone of abyssal plains and other formations in the Eastern Pacific Ocean, with a length of around 7,240 kilometers (4,500 miles) that spans approximately 4,500,000 square kilometers (1,700,000 square miles).
The EMS will provide the overall framework for the environmental management and monitoring plans that will be required. NORI’s EMMP will specify the objectives and purpose of all monitoring requirements, the components to be monitored, frequency of monitoring, methods of monitoring, analysis required in each monitoring component, monitoring data management and reporting.
The EMS will provide the overall framework for the environmental management and monitoring plans that are required. NORI’s EMMP will specify the objectives and purpose of all monitoring requirements, the components to be monitored, frequency of monitoring, methods of monitoring, analysis required in each monitoring component, monitoring data management and reporting.
The ISA Council may suspend or terminate the TOML Exploration Contract, without prejudice to any other rights that the ISA may have, if any of the following events occur: ● if, in spite of written warnings by the ISA, TOML has conducted its activities in such a way that results in serious persistent and willful violations of the fundamental terms of this contract, Part XI of UNCLOS, the 1994 Agreement and the rules, regulations and procedures of the ISA; ● if TOML has failed to comply with a final binding decision of the dispute settlement body applicable to it; ● if TOML becomes insolvent or commits an act of bankruptcy or enters into any agreement for composition with its creditors or goes into liquidation or receivership, whether compulsory or voluntary; or 33 Table of Contents ● petitions or applies to any tribunal for the appointment of a receiver or a trustee for itself or commences any proceedings relating to bankruptcy, insolvency or readjustment of debt law, whether now or hereafter in effect, other than for the purpose of reconstruction.
The ISA Council may suspend or terminate the TOML Exploration Contract, without prejudice to any other rights that the ISA may have, if any of the following events occur: ● if, in spite of written warnings by the ISA, TOML has conducted its activities in such a way that results in serious persistent and willful violations of the fundamental terms of this contract, Part XI of UNCLOS, the 1994 Agreement and the rules, regulations and procedures of the ISA; ● if TOML has failed to comply with a final binding decision of the dispute settlement body applicable to it; ● if TOML becomes insolvent or commits an act of bankruptcy or enters into any agreement for composition with its creditors or goes into liquidation or receivership, whether compulsory or voluntary; or ● petitions or applies to any tribunal for the appointment of a receiver or a trustee for itself or commences any proceedings relating to bankruptcy, insolvency or readjustment of debt law, whether now or hereafter in effect, other than for the purpose of reconstruction.
While most of these reductions are attributable to the unique characteristics of the polymetallic nodule resource as described above, the elimination of solid processing waste streams onshore is due to our investment in a near-zero-waste flowsheet design and low carbon emissions are due to our commitment to locate onshore processing facilities in places with access to renewable power. ​ ​ Benchmark modeled the land-based processing routes with background ecoinvent data and foreground data from two expert chemical engineers in the nickel and cobalt industry.
While most of these reductions are attributable to the unique characteristics of the polymetallic nodule resource as described above, the elimination of solid processing waste streams onshore is due to our investment in a near-zero-waste flowsheet design and part of the low carbon emissions are due to our commitment to locate onshore processing facilities in places with access to low carbon power. ​ ​ Benchmark modeled the land-based processing routes with background ecoinvent data and foreground data from two expert chemical engineers in the nickel and cobalt industry.
The CCZ abyssal plains are one of the most common and least populated habitats on the planet, akin to barren deserts on land. The CCZ abyssal seafloor is plant-free, food-poor and dominated by bacterial life forms.
The CCZ abyssal plains are one of the most common and least populated habitats on the planet, akin to deserts on land. The CCZ abyssal seafloor is plant-free, food-poor and dominated by bacterial life forms.
In addition to working on key engineering aspects of the project such as designing the final nodule collector and the dewatering facility, NORI is also continuing the following tasks: ● delineating nodule mineralization; ● characterizing the nature of the seabed, water column and biology; ● conducting environmental baseline studies and impact assessments; ● characterizing the nature of any materials returned to the environment; ● developing oceanographic and physical information to inform models (e.g., sediment plume models); and ● developing other plans, including the EMMP and the various subordinate plans.
In addition to working on key engineering aspects of the project such as designing the final nodule collector and the dewatering facility, NORI is also continuing the following tasks: ● delineating nodule mineralization; ● characterizing the nature of the seabed, water column and biology; ● finalizing environmental baseline studies and impact assessments; ● characterizing the nature of any materials returned to the environment; ● developing oceanographic and physical information to inform models (e.g., sediment plume models); and ● developing other plans, including the EMMP and the various subordinate plans.
The ISA was targeting to finalize these regulations by July 2020, but the COVID-19 pandemic disrupted ISA meetings and discussions. 29 Table of Contents The current proposed application process in the draft exploitation regulations consists of the following: ​ ​ We are still in the exploration phase of the project and have not yet obtained an exploitation contract from the ISA (“ISA Exploitation Contract”) to commence commercial-scale polymetallic nodule collection in the CCZ.
The ISA was targeting to finalize these regulations by July 2020, but the COVID-19 pandemic disrupted ISA meetings and discussions. 36 Table of Contents The current proposed application process in the draft exploitation regulations consists of the following: ​ ​ We are still in the exploration phase of the project and have not yet obtained an exploitation contract from the ISA (“ISA Exploitation Contract”) to commence commercial-scale polymetallic nodule collection in the CCZ.
These nodules contain significant amounts of metals, and their unique characteristic compared to terrestrial deposits is the presence of four critical metals in one deposit. ​ Source: TMC inaugural Impact Report 2021, filed May 2022 ​ 5 Table of Contents Additionally, polymetallic nodules in the CCZ possess the following characteristics: ​ Characteristic ​ What it means Far removed from human communities ​ No need for social displacement No vegetation or other obstructions covering access to nodules ​ No need to remove overburden, no rock cutting or blasting Unbound to the seafloor, 90% of nodule mass in the top 5 cm of seafloor ​ No need for destructive rock cutting and excavation High grades of four critical metals in a single ore ​ Less mass to process compared to land ores Low head-grade variability ​ Potentially easy to process 2-10 cm diameter ​ Potentially easy to handle Microporous ​ Potentially easy to smelt Very low concentrations of hazardous elements like arsenic, antimony and mercury ​ Potential to productize 100% of nodule mass and design a metallurgical flowsheet that generates no tailings and leaves almost no solid waste streams behind ​ The above characteristics of polymetallic nodules may provide an opportunity to compress lifecycle environmental and social impacts of producing critical metals as compared to land ores.
These nodules contain significant amounts of metals, and their unique characteristic compared to terrestrial deposits is the presence of the four critical metals, nickel, copper, cobalt and manganese, in one deposit. ​ Source: TMC inaugural Impact Report 2021, filed May 2022 ​ 5 Table of Contents Additionally, polymetallic nodules in the CCZ possess the following characteristics: ​ Characteristic ​ What it means Far removed from human communities ​ No need for social displacement No vegetation or other obstructions covering access to nodules ​ No need to remove overburden, no rock cutting or blasting Unbound to the seafloor, 90% of nodule mass in the top 5 cm of seafloor ​ No need for destructive rock cutting and excavation High grades of four critical metals in a single ore ​ Less mass to process compared to land ores Low head-grade variability ​ Potentially easy to process 2-10 cm diameter ​ Potentially easy to handle Microporous ​ Potentially easy to smelt Very low concentrations of certain hazardous elements like arsenic, antimony and mercury ​ Potential to productize almost 100% of nodule mass and design a metallurgical flowsheet that generates no tailings and leaves almost no solid waste streams behind ​ The above characteristics of polymetallic nodules may provide an opportunity to compress lifecycle environmental and social impacts of producing critical metals as compared to land ores.
These estimates are presented on an undiluted basis without adjustment for resource recovery. ​ 18 Table of Contents TOML Area 2020 Mineral Resource Estimate, in situ, for the TOML Areas within the CCZ at 4kg/m 2 nodule abundance cut-off. ​ ​ Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
These estimates are presented on an undiluted basis without adjustment for resource recovery. ​ 23 Table of Contents TOML Area 2020 Mineral Resource Estimate, in situ, for the TOML Areas within the CCZ at 4kg/m 2 nodule abundance cut-off. ​ ​ Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
Pursuant to an engineering and consulting services agreement, Hatch is assisting and advising us during the development of the pilot test program and is analyzing and interpreting the testing results through reports provided by such test facilities. 24 Table of Contents We expect that the processing of the polymetallic nodules from the NORI Contract Area would also be ramped up in phases.
Pursuant to an engineering and consulting services agreement, Hatch is assisting and advising us during the development of the pilot test program and is analyzing and interpreting the testing results through reports provided by such test facilities. 30 Table of Contents We expect that the processing of the polymetallic nodules from the NORI Contract Area would also be ramped up in phases.
It has been studied extensively since the 1960s with over 150,000 papers published on polymetallic nodules in general and over 40,000 on CCZ nodules in particular. 11 Table of Contents The largest driver of uncertainty in assessing the potential future impact of nodule collection operations on marine biodiversity is our ability to measure biodiversity itself.
It has been studied extensively since the 1960s with over 150,000 papers published on polymetallic nodules in general and over 40,000 on CCZ nodules in particular. 15 Table of Contents The largest driver of uncertainty in assessing the potential future impact of nodule collection operations on marine biodiversity is our ability to measure biodiversity itself.
In so doing, the ISA has the mandate to regulate all mineral related activities in the Area for the benefit of humankind and ensure the effective protection of the marine environment from harmful effects that may arise from deep-seabed related activities. The ISA is comprised of UNCLOS signatories, 167 Member States, and the European Union.
In so doing, the ISA has the mandate to regulate all mineral related activities in the Area for the benefit of humankind and ensure the effective protection of the marine environment from harmful effects that may arise from deep-seabed related activities. The ISA is comprised of UNCLOS signatories, 168 Member States, and the European Union.
The ISA is currently developing these Standards and Guidelines which are expected to be finalized by the LTC and adopted by the Council.
The ISA is currently developing these standards and guidelines, and thresholds which are expected to be finalized by the LTC and adopted by the Council.
The ISA has divided the required standards and guidelines in three phases. ● Phase 1: Standards and guidelines deemed necessary to be in place by the time of adoption of the draft regulations on exploitation. ● Phase 2: Standards and guidelines deemed necessary to be in place prior to the receipt of an application of a plan of work for exploitation. 35 Table of Contents ● Phase 3: Standards and guidelines deemed necessary to be in place before commercial mining activities commence in the Area. ​ ​ Ten standards and guidelines have been prepared in Phase 1, provided to stakeholders for comment, reviewed and amended by the LTC and provided to Council for consideration and approval.
The ISA has divided the required standards and guidelines in three phases. ● Phase 1: Standards and guidelines deemed necessary to be in place by the time of adoption of the draft regulations on exploitation. ● Phase 2: Standards and guidelines deemed necessary to be in place prior to the receipt of an application of a plan of work for exploitation. ● Phase 3: Standards and guidelines deemed necessary to be in place before commercial mining activities commence in the Area. ​ Ten standards and guidelines have been prepared in Phase 1, provided to stakeholders for comment, reviewed and amended by the LTC and provided to Council for consideration and approval.
The surface production support vessel, the Hidden Gem , was acquired by Allseas in March 2020 and has strategic importance to us, since it supported the pilot trial and is expected to be upgraded to a small-scale, low-capital early production system.
The surface production support vessel, the Hidden Gem , was acquired by Allseas in March 2020 and has strategic importance to us, since it supported the pilot trial and is expected to be upgraded to a low-capital early production system.
The ISA is mandated through UNCLOS to “preserve and protect the marine environment” while developing the resources within the Area. Given the location of the NORI Contract Area, the ISA is responsible for assessing any ESIA prepared by NORI and for granting the relevant permits.
Environmental Regulation The ISA is mandated through UNCLOS to “preserve and protect the marine environment” while developing the resources within the Area. Given the location of the NORI Contract Area, the ISA is responsible for assessing any ESIA prepared by NORI and for granting the relevant permits.
Both of these contract areas are in the exploration stage. ​ 20 Table of Contents Summary Mineral Resources, In-Situ, at End of the Fiscal Year Ended December 31, 2022 at 4kg/m 2 abundance cut-off and based on nickel metal $16,472/t; nickel in nickel sulfate $18,807/t Ni; copper metal $6,872/t; cobalt metal $46,333/t; cobalt in cobalt sulfate $56,920/t Co; manganese in manganese silicate $4.50/dmtu Mn. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Measured mineral ​ Indicated mineral ​ Measured + indicated ​ Inferred mineral ​ resources ​ resources ​ mineral resources ​ resources ​ Million ​ Million ​ Million ​ Million ​ ​ ​ tonnes ​ Grades ​ tonnes ​ Grades ​ tonnes ​ Grades ​ tonnes ​ Grades ​ ​ (wet) ​ (%) ​ (wet) ​ (%) ​ (wet) ​ (%) ​ (wet) ​ (%) Ni ​ ​ ​ ​ ​ ​ ​ ​ NORI ​ ​ ​ ​ ​ ​ ​ ​ NORI Area A ​ — ​ — — — — — 72 1.35 NORI Area B ​ — ​ — — — — — 36 1.43 NORI Area C ​ — ​ — — — — — 402 1.26 NORI Area D 4 1.42 341 1.40 345 1.40 11 1.38 TOML (Areas A to F) 2.6 1.33 69.6 1.35 72.2 1.35 696 1.29 Total 6.6 1.38 410.6 1.39 417.2 1.39 1,217 1.29 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cu NORI NORI Area A ​ — ​ — — — — — 72 1.06 NORI Area B ​ — ​ — — — — — 36 1.13 NORI Area C ​ — ​ — — — — — 402 1.03 NORI Area D 4 1.16 341 1.14 345 1.14 11 1.14 TOML (Areas A to F) 2.6 1.05 69.6 1.18 72.2 1.18 696 1.14 Total 6.6 1.12 410.6 1.15 417.2 1.15 1,217 1.10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Co NORI NORI Area A ​ — ​ — — — — — 72 0.22 NORI Area B ​ — ​ — — — — — 36 0.25 NORI Area C ​ — ​ — — — — — 402 0.21 NORI Area D 4 0.13 341 0.14 345 0.14 11 0.12 TOML (Areas A to F) 2.6 0.23 69.6 0.21 72.2 0.21 696 0.20 Total 6.6 0.17 410.6 0.15 417.2 0.15 1,217 0.21 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mn NORI NORI Area A ​ — ​ — — — — — 72 28.0 NORI Area B ​ — ​ — — — — — 36 28.9 NORI Area C ​ — ​ — — — — — 402 28.3 NORI Area D 4 32.2 341 31.2 345 31.2 11 31.0 TOML (Areas A to F) 2.6 27.6 69.6 30.3 72.2 30.2 402 29.0 Total 6.6 30.4 410.6 31.0 417.2 31.0 923 28.6 Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
Both of these contract areas are in the exploration stage. ​ 26 Table of Contents Summary Mineral Resources, In-Situ, at end of the fiscal year ended December 31, 2023 at 4kg/m2 abundance cut-off and based on nickel metal $16,472/t; copper metal $6,872/t; cobalt metal $46,333/t; manganese in manganese silicate $4.50/dmtu Mn. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Measured + ​ ​ ​ ​ ​ ​ Measured mineral ​ Indicated mineral ​ indicated mineral ​ Inferred mineral ​ resources ​ resources ​ resources ​ resources ​ Million ​ Million ​ Million ​ Million ​ ​ ​ tonnes ​ Grades ​ tonnes ​ Grades ​ tonnes ​ Grades ​ tonnes ​ Grades ​ ​ (wet) ​ (%) ​ (wet) ​ (%) ​ (wet) ​ (%) ​ (wet) ​ (%) Ni ​ ​ ​ ​ ​ ​ ​ ​ NORI ​ ​ ​ ​ ​ ​ ​ ​ NORI Area A ​ — ​ — — — — — 72 1.35 NORI Area B ​ — ​ — — — — — 36 1.43 NORI Area C ​ — ​ — — — — — 402 1.26 NORI Area D 4 1.42 341 1.40 345 1.40 11 1.38 TOML (Areas A to F) 2.6 1.33 69.6 1.35 72.2 1.35 696 1.29 Total 6.6 1.38 410.6 1.39 417.2 1.39 1,217 1.29 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cu NORI NORI Area A ​ — ​ — — — — — 72 1.06 NORI Area B ​ — ​ — — — — — 36 1.13 NORI Area C ​ — ​ — — — — — 402 1.03 NORI Area D 4 1.16 341 1.14 345 1.14 11 1.14 TOML (Areas A to F) 2.6 1.05 69.6 1.18 72.2 1.18 696 1.14 Total 6.6 1.12 410.6 1.15 417.2 1.15 1,217 1.10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Co NORI NORI Area A ​ — ​ — — — — — 72 0.22 NORI Area B ​ — ​ — — — — — 36 0.25 NORI Area C ​ — ​ — — — — — 402 0.21 NORI Area D 4 0.13 341 0.14 345 0.14 11 0.12 TOML (Areas A to F) 2.6 0.23 69.6 0.21 72.2 0.21 696 0.20 Total 6.6 0.17 410.6 0.15 417.2 0.15 1,217 0.21 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mn NORI NORI Area A ​ — ​ — — — — — 72 28.0 NORI Area B ​ — ​ — — — — — 36 28.9 NORI Area C ​ — ​ — — — — — 402 28.3 NORI Area D 4 32.2 341 31.2 345 31.2 11 31.0 TOML (Areas A to F) 2.6 27.6 69.6 30.3 72.2 30.2 402 29.0 Total 6.6 30.4 410.6 31.0 417.2 31.0 923 28.6 Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
DGE and Marawa have considered the potential to amend the current contractual arrangements to provide additional mutual benefits in the conduct of operations, though no assurances may be given that any changes will be agreed. 34 Table of Contents Royalties and taxes Royalties and taxes payable on any future production from the CCZ will be stipulated in the ISA’s exploitation regulations.
DGE and Marawa have considered the potential to amend the current contractual arrangements to provide additional mutual benefits in the conduct of operations, though no assurances may be given that any changes will be agreed. Royalties and taxes Royalties and taxes payable on any future production from the CCZ will be stipulated in the ISA’s exploitation regulations.
All parties to UNCLOS are members of the ISA. Two principal entities establish the policies and govern the work of the ISA: the Assembly, where all 168 members are represented (the “Assembly”), and a 36-member council elected by the Assembly (the “Council”).
All parties to UNCLOS are members of the ISA. Two principal entities establish the policies and govern the work of the ISA: the Assembly, where all 169 members are represented (the “Assembly”), and a 36-member council elected by the Assembly (the “Council”).
If we are able to collect polymetallic nodules from the seafloor on a commercial scale, we plan to use such nodules to produce three types of metal products: (i) feedstock for battery cathode precursors (nickel and cobalt sulfates) for electric vehicles (“EV”) and renewable energy storage markets, (ii) copper cathode for EV wiring, clean energy transmission and other applications, and (iii) manganese silicate for manganese alloy production required for steel production.
If we are able to collect polymetallic nodules from the seafloor on a commercial scale, we plan to use such nodules to produce three types of metal products: (i) feedstock for battery cathode precursors (nickel and cobalt sulfates, or intermediary nickel-copper-cobalt matte, or nickel-copper-cobalt alloy) for electric vehicles (“EV”) and renewable energy storage markets, (ii) copper cathode for EV wiring, energy transmission and other applications, and (iii) manganese silicate for manganese alloy production required for steel production.
These estimates are presented on an undiluted basis without adjustment for resource recovery. 21 Table of Contents As reflected in the initial economic analysis of NORI Area D contained in the NORI Technical Report Summary, a discounted cash flow analysis considering the intended pre-development work in 2024, discounting at 9% per annum, and assuming metal prices for nickel metal $16,472/t; nickel in nickel sulfate $18,807/t Ni; copper metal $6,872/t; cobalt metal $46,333/t; cobalt in cobalt sulfate $56,920/t Co; manganese in manganese silicate $4.50/dmtu Mn, indicates a NORI Area D project net present value (as of January 1, 2021) of $6.8 billion.
These estimates are presented on an undiluted basis without adjustment for resource recovery. 27 Table of Contents As reflected in the Initial Economic Assessment of NORI Area D contained in the NORI Technical Report Summary, a discounted cash flow analysis considering the intended pre-development work up to the end of 2024, discounting at 9% per annum, and assuming metal prices for nickel metal $16,472/t; nickel in nickel sulfate $18,807/t Ni; copper metal $6,872/t; cobalt metal $46,333/t; cobalt in cobalt sulfate $56,920/t Co; manganese in manganese silicate $4.50/dmtu Mn, indicates a NORI Area D project net present value (as of January 1, 2021) of $6.8 billion.
To reach our objective and initiate commercial production, we are: (i) defining our resource and project economics, (ii) developing an offshore nodule collection system, (iii) assessing the ESG impacts of offshore nodule collection, and (iv) developing onshore technology to process collected polymetallic nodules into a manganese silicate product, and an intermediate nickel-copper-cobalt matte product and/or end-products like nickel and cobalt sulfates, and copper cathode.
To reach our objective and initiate commercial production, we are: (i) defining our resource and project economics, (ii) developing a commercial offshore nodule collection system, (iii) assessing the environmental and social impacts of offshore nodule collection, and (iv) developing onshore technology to process collected polymetallic nodules into a manganese silicate product, and an intermediate nickel-copper-cobalt matte or nickel-copper-cobalt alloy product and/or end-products like nickel and cobalt sulfates, and copper cathode.
Similarly in the U.S., 22 states, plus the District of Columbia and Puerto Rico, have set 100% decarbonized energy goals by 2050 or sooner, with the Biden administration seeking to make half of all new vehicles sold in the U.S. zero-emissions vehicles by 2030.
In the U.S., 23 states, plus the District of Columbia and Puerto Rico, have set 100% decarbonized energy goals by 2050 or sooner, with the Biden administration seeking to make half of all new vehicles sold in the U.S. zero-emissions vehicles by 2030.
The NORI Exploration Contract, which was granted pursuant to the ISA’s Regulations on Prospecting and Exploration for Polymetallic Nodules in the CCZ (the “Regulations”), formalized a 74,830 km 2 exploration area, has an initial term of 15 years (subject to renewal for successive five-year periods), and provides for certain obligations with respect to exploration, training, and other programs of activities for an initial five-year period.
The NORI Exploration Contract, which was granted pursuant to the ISA’s Regulations on Prospecting and Exploration for Polymetallic Nodules in the CCZ (the “Regulations”), formalized a 74,830 square kilometers exploration area, has an initial term of 15 years (subject to renewal for successive five-year periods), and provides for certain obligations with respect to exploration, training, and other programs of activities for an initial five-year period.
Impact severity will depend on the depth of sediment disturbance (expected to be approximately 5 cm based on modelling, lab tests, and recent collector tests completed in the CCZ by our subsidiary NORI and two other nodule contract-holders, Belgium’s Global Sea Mineral Resources NV (GSR) and the German’s BGR) and the impact this disturbance has on benthic ecosystem function.
Impact severity will depend on the depth of sediment disturbance (expected to be approximately 5 centimeters based on modelling, laboratory tests, and recent collector tests completed in the CCZ by our subsidiary NORI and two other nodule contract-holders, Belgium’s Global Sea Mineral Resources NV (GSR) and the German’s BGR) and the impact this disturbance has on benthic ecosystem function.
Hatch has developed a near-zero solid waste flowsheet and has overseen a pyrometallurgical pilot plant program consisting of several phases: the pyrometallurgical processing phase has been completed at FLSmidth’s and XPS Solutions’ (Glencore subsidiary) facilities, the hydrometallurgical refining phase is in progress at SGS facilities.
Hatch has developed a near-zero solid waste flowsheet and has overseen a pyrometallurgical pilot plant program consisting of several phases: the pyrometallurgical processing phase has been completed at FLSmidth’s and XPS facilities, the hydrometallurgical refining phase is in progress at SGS facilities.
NORI our wholly-owned subsidiary, holds exploration rights to four blocks (NORI Area A, B, C, and D, the “NORI Contract Area”) covering 74,830 km 2 in the CCZ that were granted by the ISA in July 2011. NORI is sponsored by Nauru pursuant to a certificate of sponsorship signed by the Government of Nauru on April 11, 2011.
NORI our wholly-owned subsidiary, holds exploration rights to four blocks (NORI Area A, B, C, and D, the “NORI Contract Area”) covering 74,830 square kilometers in the CCZ that were granted by the ISA in July 2011. NORI is sponsored by Nauru pursuant to a certificate of sponsorship signed by the Government of Nauru on April 11, 2011.
The ISA has issued a total of 19 polymetallic nodule exploration contracts covering approximately 1.28 million km 2 , or 0.4% of the global seafloor, 17 of which are in the CCZ. We hold exclusive exploration and commercial rights to three of the 17 polymetallic nodule contract areas in the CCZ through our subsidiaries Nauru Ocean Resources Inc.
The ISA has issued a total of 19 polymetallic nodule exploration contracts covering approximately 1.28 million square kilometers, or 0.4% of the global seafloor, 17 of which are in the CCZ. We hold exclusive exploration and commercial rights to three of the 17 polymetallic nodule contract areas in the CCZ through our subsidiaries Nauru Ocean Resources Inc.
Under the NORI Sponsorship Agreement between Nauru and NORI and under the TOML Sponsorship Agreement between Tonga and TOML, upon reaching a minimum recovery level within the tenement areas, NORI and TOML have agreed to pay Nauru and Tonga a seabed mineral recovery payment for polymetallic nodules recovered from the tenement area, annually adjusted (from year 5) on a compounding basis based on the official inflation rate in the United States.
Under the NORI Sponsorship Agreement between Nauru and NORI and under the TOML Sponsorship Agreement between Tonga and TOML, upon reaching a minimum recovery level within the tenement areas, NORI and TOML have agreed to pay Nauru and Tonga a seabed mineral recovery payment for polymetallic nodules recovered from the tenement area, annually adjusted (from year 5) on a compounding basis based on the official inflation rate in the U.S.
This is less than 1% of the estimated 4,900,000 km 2 of the seafloor currently impacted every year by trawling operations that take place primarily in highly productive coastal waters. ​ ​ Potential future commercial-scale nodule collection operations in the CCZ are likely to disturb marine wildlife in the operating area.
This is less than 1% of the estimated 4,900,000 square kilometers of the seafloor currently impacted every year by trawling operations that take place primarily in highly productive coastal waters. ​ ​ Potential future commercial-scale nodule collection operations in the CCZ are likely to disturb marine wildlife in the operating area.
If the Council does not take a decision on the Commission’s recommendation within 60 days, the recommendation shall be deemed to have been approved by the Council. 36 Table of Contents In addition, the sponsoring State has a responsibility to put in place legislation to ensure the entity it has sponsored complies with UNCLOS and ISA rules and regulations.
If the Council does not take a decision on the Commission’s recommendation within 60 days, the recommendation shall be deemed to have been approved by the Council. In addition, the sponsoring State has a responsibility to put in place legislation to ensure the entity it has sponsored complies with UNCLOS and ISA rules and regulations.
The exploration contract between Marawa and the ISA (the “Marawa Exploration Contract”) was signed on January 19, 2015. To date, limited offshore marine resource definition activities in the Marawa Contract Area have occurred. We expect to collaborate with Marawa to assess the viability of any potential project in the Marawa Contract Area, although the timing of such assessment is uncertain.
The exploration contract between Marawa and the ISA (the “Marawa Exploration Contract”) was signed on January 19, 2015. To date, limited offshore marine resource definition activities in the Marawa Contract Area have occurred. We are collaborating with Marawa to assess the viability of any potential project in the Marawa Contract Area, although the timing of such assessment is uncertain.
It is anticipated that the additional facility would be constructed once commercial processing of polymetallic nodules to alloy has been demonstrated.
It is expected that the additional facility would be constructed once commercial processing of polymetallic nodules to alloy has been demonstrated.
In 2022, we have relied on the EHS programs of our partners Allseas and a new offshore support service provider to conduct our operations in a safe manner and in compliance with applicable safety laws, rules and regulations.
In 2023, we relied on the EHS programs of our partners Allseas and a new offshore support service provider to conduct our operations in a safe manner and in compliance with applicable safety laws, rules and regulations.
While our Environmental & Social Impact Assessment (ESIA) for offshore nodule collection segment of the NORI Area D Nodule Project is still ongoing, based on already completed research into lifecycle impacts of battery metal production specifically from deep-sea polymetallic nodules, we believe that nodules provide an opportunity to significantly compress most lifecycle environmental, social and governance (ESG) impacts associated with conventional metal production from land-based ores. ​ ​ 10 Table of Contents To quantify comparative ESG footprints of metal production from nodules as compared to conventional land ores, we commissioned several lifecycle assessments (“LCAs”) looking at the cradle-to-gate impacts of producing nickel, copper, cobalt and manganese products from polymetallic nodules and how it compares to land-based routes.
While our Environmental & Social Impact Assessment (ESIA) for offshore nodule collection segment of the NORI Area D Nodule Project is still ongoing, based on already completed research into lifecycle impacts of battery metal production specifically from deep-sea polymetallic nodules, we identified how nodules can potentially provide an opportunity to significantly compress most lifecycle environmental, social and governance (ESG) impacts associated with conventional metal production from land-based ores. ​ ​ 14 Table of Contents To quantify environmental footprints of metal production from nodules as compared to conventional land ores, we commissioned several lifecycle assessments (“LCAs”) looking at the cradle-to-gate impacts of producing nickel, copper, cobalt and manganese products from polymetallic nodules and how it compares to land-based routes.
AMC subsequently compiled the NORI Technical Report Summary, dated March 2021, which included an initial assessment and an economic analysis of NORI Area D prepared in accordance with the SEC Mining Rules. The NORI Technical Report Summary is filed as Exhibit 96.1 to this Annual Report on Form 10-K. TOML.
AMC subsequently compiled the NORI Technical Report Summary, dated March 2021, which included an initial assessment and an economic analysis of NORI Area D prepared in accordance with the SEC Mining Rules. The NORI Technical Report Summary is filed as Exhibit 96.1 to this Annual Report. TOML.
In November 2022, we signed a non-binding MoU with PAMCO to evaluate the toll treatment of an initial quantity of 1.3 million tonnes of wet polymetallic nodules per year at PAMCO’s Hachinohe smelting facility starting in 2025. Potential progression to a NiCuCo matte product along with potentially higher throughputs are also included in the evaluation study.
Binding MoU with PAMCO In November 2022, we signed a non-binding MoU with PAMCO to evaluate the toll treatment of an initial quantity of 1.3 million tonnes of wet polymetallic nodules per year at PAMCO’s Hachinohe, Japan smelting facility. Potential progression to a NiCuCo matte product along with potentially higher throughputs were also included in the evaluation study.
If we obtain an exploitation contract, the first phase of commercial production (“Project Zero”) would then be expected to commence after the Hidden Gem has been upgraded to become a production support vessel that can produce at least 1.3 Mtpa (wet) of nodules.
If we obtain an exploitation contract, the first phase of commercial production (“Project Zero”) would then be expected to commence after the Hidden Gem has been upgraded to become a production support vessel that can produce up to 3 Mtpa (wet) of nodules.
The NORI Area D” is the seafloor parcel where we have performed the most resource definition and environmental work to date.
The NORI Area D is the seafloor parcel where we have performed the most resource definition and environmental work to date.
Summary of Mineral Resources Below is a summary table of estimated mineral resources in NORI and TOML contract areas as of December 31, 2022.
Summary of Mineral Resources Below is a summary table of estimated mineral resources in NORI and TOML contract areas as of December 31, 2023.
For comparison, only approximately 7% of global oceans are protected today and the global target agreed in the High Seas Treaty in March 2023 is to protect 30% of the oceans by 2030.
For comparison, only approximately 8.2% of global oceans are protected today and the global target agreed in the High Seas Treaty in March 2023 is to protect 30% of the oceans by 2030.
We believe this 7 Table of Contents transition to low carbon energy and EVs will test the limits of the current supply of certain metals, as EVs require several times more of these metals (such as nickel, cobalt and copper) than cars with internal combustion engines.
We believe the transition to low carbon energy and EVs will test the limits of the current supply of certain metals, as EVs require several times more of these metals (such as nickel, cobalt and copper) than cars with internal combustion engines.
On June 25, 2021, Nauru submitted its notice to the ISA requesting that it complete the adoption, by July 9, 2023, of rules, regulations and procedures necessary to facilitate the approval of plans of work for exploitation in the Area.
On June 25, 2021, Nauru submitted its notice to the ISA requesting that it complete the adoption, by July 9, 2023, of rules, regulations and procedures necessary to facilitate the approval of plans of work for exploitation in the Area. The ISA did not complete the adoption of the rules, regulations and procedures by July 9, 2023, as required.
TOML our wholly-owned subsidiary which we acquired in March 2020, holds exploration rights to an area covering 74,713 km 2 in the CCZ that were granted by the ISA in January 2012 (the “TOML Contract Area”).
TOML our wholly-owned subsidiary which we acquired in March 2020, holds exploration rights to an area covering 74,713 square kilometers in the CCZ that were granted by the ISA in January 2012 (the “TOML Contract Area”).
In the next phase of development (“Project One”), as outlined in the NORI – D Initial Assessment Technical Report Summary, production is expected to be expanded with an additional converted drillship ( Drill Ship 2 ), a subsequent upgrade to the Hidden Gem , and the construction of a bespoke production support vessel ( Collector Ship 1 ). ​ ​ Illustration of a polymetallic nodule production system operated at 4km depth (picture not to scale) 23 Table of Contents In order to test the collection system, we entered into a contract with Allseas to undertake a pre-production collector test, which was successfully completed in the second half of 2022.
In the next phase of development (“Project One”), as outlined in the NORI – D Initial Assessment Technical Report Summary, production is expected to be expanded with an additional converted drillship ( Drill Ship 2 ), a subsequent upgrade to the Hidden Gem , and the construction of a bespoke production support vessel ( Collector Ship 1 ). 28 Table of Contents ​ ​ Illustration of a polymetallic nodule production system operated at 4 kilometers depth 29 Table of Contents In order to test the collection system, we entered into a contract with Allseas to undertake a pre-production collector test, which was successfully completed in the second half of 2022.
To date, limited offshore marine resource definition activities in the Marawa Contract Area have occurred. We expect to collaborate with Marawa to assess the viability of any potential project in the Marawa Contract Area, although the timing of such assessment is uncertain.
To date, limited offshore marine resource definition activities in the Marawa Contract Area have occurred. We are collaborating with Marawa to assess the viability of any potential project in the Marawa Contract Area, although the timing of such assessment is uncertain.
Nodule collection is no exception and will impact the deep-sea marine environment through nodule removal, disturbance of seafloor sediment (“seafloor plumes”) and return of seawater used for nodule transport that is expected to contain residual sediment and nodule fines back in the water column (“midwater plumes”).
All extractive industries result in impacts to the receiving environment. Nodule collection is no exception and will impact the deep-sea marine environment through nodule removal, disturbance of seafloor sediment (“seafloor plumes”) and return of seawater used for nodule transport that is expected to contain residual sediment and nodule fines back in the water column (“midwater plumes”).
The NORI Technical Report Summary is filed as Exhibit 96.1 to this Annual Report on Form 10-K. The Benchmark LCA is currently assessing the impacts of the NORI Area D Project on marine biodiversity and ecosystem function as part of the ESIA conducted by NORI in partnership with world leading deep sea research institutions and contractors.
The NORI Technical Report Summary is filed as Exhibit 96.1 to this Annual Report. As part of the ESIA conducted by NORI in partnership with world leading deep-sea research institutions and contractors, we are currently assessing the impacts of the NORI Area D Project on marine biodiversity and ecosystem function.
The toll treatment is intended to take place on a dedicated rotary kiln-electric arc furnace (RKEF) processing line and produce two products: nickel-copper-cobalt alloy — an intermediate product used as feedstock to produce Li-ion battery cathodes — and a manganese silicate product used to make silico-manganese alloy, a critical input into steel manufacturing.
The toll treatment is expected to take place on a dedicated RKEF processing line and produce two products: nickel-copper-cobalt alloy, an intermediate product used as feedstock to produce Li-ion battery cathodes, and a manganese silicate product used to make silico-manganese alloy, a critical input into steel manufacturing.
The toll treatment is intended to take place on a dedicated rotary kiln-electric arc furnace (RKEF) processing line and produce two products: nickel-copper-cobalt alloy — an intermediate product used as feedstock to produce Li-ion battery cathodes — and a manganese silicate product used to make silico-manganese alloy, a critical input into steel manufacturing.
The toll treatment is expected to take place on a dedicated RKEF processing line and produce two products: nickel-copper-cobalt alloy, an intermediate product used as feedstock to produce Li-ion battery cathodes, and a manganese silicate product used to make silico-manganese alloy, a critical input into steel manufacturing.
UNCLOS deals with, among other things, navigational rights, territorial sea limits, exclusive economic zone jurisdiction, the continental shelf, freedom of the high seas, legal status of resources on the seabed beyond the limits of national jurisdiction, passage of ships through narrow straits, conservation and management of living marine resources in the high seas, protection of the marine environment, marine scientific research, and settlement of disputes. ​ ​ Part XI of UNCLOS and the 1994 Implementation Agreement deal with mineral exploration and collection in the international seabed, known as the Area, providing a framework for entities to obtain legal title to areas of the seafloor from the ISA for the purpose of exploration and eventually collection of resources.
The principal policy documents governing the Area, including the CCZ, include: ● the UNCLOS, of 10 December 1982; and ● the 1994 Implementation Agreement. 34 Table of Contents UNCLOS deals with, among other things, navigational rights, territorial sea limits, exclusive economic zone jurisdiction, the continental shelf, freedom of the high seas, legal status of resources on the seabed beyond the limits of national jurisdiction, passage of ships through narrow straits, conservation and management of living marine resources in the high seas, protection of the marine environment, marine scientific research, and settlement of disputes. ​ ​ Part XI of UNCLOS and the 1994 Implementation Agreement deal with mineral exploration and collection in the international seabed, known as the Area, providing a framework for entities to obtain legal title to areas of the seafloor from the ISA for the purpose of exploration and eventually collection of resources.
There can be no assurance that we will enter into such binding MoU or definitive strategic alliance in a particular time period, or at all, or on terms similar to those set forth in the MoU, or that if such binding MoU or definitive strategic alliance are entered into by us or that the existing facility will be able to successfully process nodules in a particular time period, or at all.
There can be no assurance that we will enter into a definitive tolling agreement in a particular time period, or at all, or on terms similar to those set forth in the binding MoU, or that if a definitive tolling agreement is entered into by us or that the existing facility will be able to successfully process nodules in a particular time period, or at all.
Unless otherwise terminated by the parties, the term for the TOML Sponsorship Agreement is for the duration of TOML’s ISA Exploration Contract and will automatically extend for a further 25 years upon TOML being granted an ISA Exploitation Contract.
TOML updated the sponsorship agreement with Tonga in September 2021. Unless otherwise terminated by the parties, the term for the TOML Sponsorship Agreement is for the duration of TOML’s ISA Exploration Contract and will automatically extend for a further 25 years upon TOML being granted an ISA Exploitation Contract.
Most notably, nodules contain metals that can be employed as: (i) feedstock for battery cathode precursors (nickel and cobalt sulfates) for EV and renewable energy storage markets, (ii) copper cathode for EV wiring, clean energy transmission and other applications, and (iii) manganese silicate for manganese alloy production required for steel production.
Nodules contain metals that can be employed as: (i) feedstock for battery cathode precursors (nickel, cobalt and manganese sulfates) for EV and renewable energy storage markets, (ii) copper cathode for EV wiring, energy transmission and other applications, and (iii) manganese silicate for manganese alloy production required for steel production. See Section – Competitive Strengths .
The SEC maintains an internet site ( http://www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission. We include our website address in this Annual Report on Form 10-K only as an inactive textual reference.
The SEC maintains an internet site ( http://www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We include our website address in this Annual Report only as an inactive textual reference.
Exploration Contracts We currently hold exclusive exploration rights through our subsidiaries in NORI and TOML and exclusive commercial rights through agreement with Marawa, to certain polymetallic nodule areas in the CCZ. 15 Table of Contents NORI.
Exploration Contracts We currently hold exclusive exploration rights through our subsidiaries NORI and TOML and exclusive commercial rights through an agreement with Marawa, to certain polymetallic nodule areas in the CCZ. NORI.
NORI and TOML, two of our subsidiaries, intend to operate in the CCZ under the effective supervision, regulation and sponsorship of the government of Nauru and the Kingdom of Tonga, respectively. We intend to engage in processing operations in locations that are yet to be determined.
NORI and TOML, two of our subsidiaries, intend to operate in the CCZ under the effective supervision, regulation and sponsorship of the Republic of Nauru and the Kingdom of Tonga, respectively. We intend to utilize processing operations in locations that are yet to be finalized.
As the global supply of high-grade ore remains limited and metal demand increases, we can expect a larger environmental and social footprint, potential supply shortages and sustained increases in metal prices should land-based ores remain the only viable source of critical metals. ​ 6 Table of Contents Industries which represent an end-use segment that may require all four critical metals contained in nodules are of particular interest to us and represent potential market opportunities.
As the global supply of high-grade ore remains limited and metal demand increases, we can expect a larger environmental and social footprint, potential supply shortages and volatility in metal prices should land-based ores remain the only viable source of critical metals. ​ 6 Table of Contents Industries which represent an end-use segment that may require all four critical metals contained in nodules (e.g.
In 2022, the number of signatories to the Zero Emission Vehicle declaration announced at the UN Climate Change Conference (COP26) in October 2021 increased to 214; the declaration is aimed at accelerating the transition to zero emission vehicles with a goal to reach 100% new EV car and van sales by 2040, and by 2035 in leading markets.
In 2023, the number of signatories to the Zero Emission Vehicle declaration announced at the UN Climate Change Conference (COP28) increased to 228; the declaration is aimed at accelerating the transition to zero emission vehicles with a goal to reach 100% new EV car and van sales by 2040, and by 2035 in leading markets.
The ISA Council may suspend or terminate the NORI Exploration Contract, without prejudice to any other rights that the ISA may have, if any of the following events should occur: ● if, in spite of written warnings by the ISA, NORI has conducted its activities in such a way as to result in serious persistent and willful violations of the fundamental terms of the NORI Exploration Contract, Part XI of UNCLOS, the 1994 Agreement and the rules, regulations and procedures of the ISA; ● if NORI has failed to comply with a final binding decision of the dispute settlement body applicable to it; or 31 Table of Contents ● if NORI becomes insolvent or commits an act of bankruptcy or enters into any agreement for composition with its creditors or goes into liquidation or receivership, whether compulsory or voluntary, or petitions or applies to any tribunal for the appointment of a receiver or a trustee or receiver for itself or commences any proceedings relating to itself under any bankruptcy, insolvency or readjustment of debt law, whether now or hereafter in effect, other than for the purpose of reconstruction.
The ISA Council may suspend or terminate the NORI Exploration Contract, without prejudice to any other rights that the ISA may have, if any of the following events should occur: ● if, in spite of written warnings by the ISA, NORI has conducted its activities in such a way as to result in serious persistent and willful violations of the fundamental terms of the NORI Exploration Contract, Part XI of UNCLOS, the 1994 Agreement and the rules, regulations and procedures of the ISA; ● if NORI has failed to comply with a final binding decision of the dispute settlement body applicable to it; or ● if NORI becomes insolvent or commits an act of bankruptcy or enters into any agreement for composition with its creditors or goes into liquidation or receivership, whether compulsory or voluntary, or petitions or applies to any tribunal for the appointment of a receiver or a trustee or receiver for itself or commences any proceedings relating to itself under any bankruptcy, insolvency or readjustment of debt law, whether now or hereafter in effect, other than for the purpose of reconstruction. 38 Table of Contents Additionally, if the nationality or control of NORI changes or NORI’s sponsoring State, as defined in the Regulations, terminates its sponsorship and NORI does not obtain another sponsor meeting the requirements prescribed in the Regulations, then the NORI Exploration Contract will terminate.
The monitoring was undertaken using the Island Pride , a vessel contracted from Ocean Infinity Group Limited, deploying 2 ROVs, 3 AUVs and an array of more than 50 seafloor sensors, supervised by multiple teams of scientists and sediment plume expert consultants, DHI Water and Environment Inc. and HR Wallingford.
The monitoring was undertaken using the Island Pride, a vessel contracted from Ocean Infinity Group Limited, deploying 2 remotely operated vehicles (“ROVs”), 3 autonomous underwater vehicles (“AUVs”) and an array of more than 50 seafloor sensors, supervised by multiple teams of scientists and sediment plume expert consultants, DHI Water and Environment Inc. and HR Wallingford.
While the rates of payments are yet to be set by the ISA, the 1994 Implementation Agreement (Section 8(1)(b)) prescribes that the rates of payments “shall be within the range of those prevailing in respect of land-based mining of the same or similar minerals in order to avoid giving deep seabed miners an artificial competitive advantage or imposing on them a competitive disadvantage.” An open-ended working group has met several times including most recently in October / November 2022 to discuss potential royalty and taxation regimes supported by modelling conducted by the Massachusetts Institute of Technology.
While the rates of payments are yet to be set by the ISA, the 1994 Implementation Agreement (Section 8(1)(b)) prescribes that the rates of payments “shall be within the range of those prevailing in respect of land-based mining of the same or similar minerals in order to avoid giving deep seabed miners an artificial competitive advantage or imposing on them a competitive disadvantage.” 41 Table of Contents An open-ended working group has been formed and has met numerous times to discuss potential ISA royalty and sponsoring State taxation regimes supported by modelling conducted by the Massachusetts Institute of Technology.
Additionally, Chinese resources firms have historically been able to produce minerals and/or process metals from land-based operations in developing countries across the globe (e.g., cobalt in the Democratic Republic of the Congo, nickel in Indonesia and Philippines) at relatively low costs due to economic and regulatory factors, including less stringent environmental and governmental regulations and lower labor and benefit costs.
Additionally, Chinese resources firms have historically been able to produce minerals and/or process metals from land-based operations in developing countries across the globe (e.g., cobalt in the DRC, nickel in Indonesia and the Philippines) at relatively low costs due to scale, efficiency and regulatory factors, including less stringent environmental and social regulations and lower labor and benefit costs.
We are committed to attracting, developing and retaining diverse talent that is inclusive of every age, gender, gender identity, race, sexual orientation, physical capability, neurological difference, ethnicity, belief and perspective. Our goal is to develop cultural competency by seeking knowledge, increasing awareness, modeling respect and promoting inclusion.
We are committed to attracting, developing and retaining world-class talent that is inclusive of a diverse range of perspectives, age, gender, gender identity, race, sexual orientation, physical capability, neurological difference, ethnicity and belief. Our goal is to develop cultural competency by seeking knowledge, increasing awareness, modeling respect and promoting inclusion. People Engagement .
TOML commissioned a Technical Report Summary by AMC, dated March 2021, which is filed as Exhibit 96.2 to this Annual Report on Form 10-K. Marawa. DGE, our wholly-owned subsidiary, entered into agreements with Marawa and Kiribati which provide DGE with exclusive exploration rights to an area covering 74,990 km 2 in the CCZ (the “Marawa Contract Area”).
TOML commissioned a Technical Report Summary by AMC, dated March 2021, which is filed as Exhibit 96.2 to this Annual Report. 20 Table of Contents Marawa. DGE, our wholly-owned subsidiary, entered into agreements with Marawa and Kiribati which provide DGE with exclusive exploration rights to an area covering 74,990 square kilometers in the CCZ (the “Marawa Contract Area”).
Our Competitive Advantages With the potential that our resources hold and the project advancements we have made to date, we believe we are better positioned than other suppliers to provide a solution to the growing need for critical battery metals: ● Availability of abundant and high-grade resource off the U.S. western seaboard: There are four critical battery metals (nickel, copper, cobalt and manganese) in relatively high concentrations in polymetallic nodules and we believe our contract areas have estimated in situ quantities of these metals in quantities equivalent to the requirement for 280 million EVs, roughly the size of the entire U.S. passenger vehicle fleet on the road today. ● Opportunity for battery metal production in the U.S.: The current supply chain of battery materials to the U.S. is approximately 50,000 miles long and is predominantly controlled by nations and companies outside of the U.S., which is leading to increasing concerns about supply chain security in the U.S. and interest in breaking the U.S. mineral dependence by re-shoring battery material supply chain in the U.S.
Our Competitive Advantages With the potential that our resources hold and the project advancements we have made to date, we believe we are better positioned than other suppliers to provide a solution to the growing need for critical battery metals: ● Availability of abundant and high-grade resource off the U.S. western seaboard: There are four critical battery metals (nickel, copper, cobalt and manganese) in relatively high concentrations in polymetallic nodules and we believe our contract areas have estimated in situ quantities of these metals equivalent to the requirement for 280 million EVs, roughly the size of the entire U.S. passenger vehicle fleet on the road today. ● Opportunity for battery metal production in the U.S.: The current supply chain of battery materials to the U.S. is approximately 50,000 miles long and is predominantly controlled by nations and companies outside of the U.S., which is leading to increasing concerns about supply chain security in the U.S. and interest in breaking the U.S. mineral dependence by re-shoring battery material supply chain in the U.S. ● Opportunity to reuse existing offshore assets and skills: We believe there is an opportunity for us to partner with offshore service providers with deep operational experience in subsea environments gained in the oil and gas industry and with existing assets that can be repurposed for our offshore nodule collection operations.
We are still in the exploration phase of the project and do not have the exploitation contracts necessary to commence commercial-scale nodule collection operations in the CCZ nor have we obtained the applicable environmental and other permits required to build and operate commercial scale polymetallic nodule processing and refining plants on land. 13 Table of Contents All extractive industries result in impacts to the receiving environment.
We are still in the exploration phase of the project and do not have the exploitation contracts necessary to commence commercial-scale nodule collection operations in the CCZ nor have we obtained the applicable environmental and other permits required to build and operate commercial scale polymetallic nodule processing and refining plants on land.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results and the value of our common shares. ● We may face litigation and other risks as a result of the material weaknesses in our internal control over financial reporting. ● We are involved in class action litigation that may adversely affect us, and we may not be successful in our litigation related to non-performing Private Investment in Public Equity (“PIPE”) investors. ● Our business is capital intensive, and we will be required to raise additional funds in the future in order to accomplish our objectives. ● We may incur debt in the future, and our ability to satisfy our obligations thereunder remains subject to a variety of factors, many of which are not within our control. ● An active trading market for our common shares and warrants may not be sustained, which would adversely affect the liquidity and price of our securities. ● There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq. ● We are exposed to risks in our international operations, which could adversely affect our business. ● We may be classified as a PFIC in any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders. ​ I.
Biggest changeIf we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results and the value of our common shares and we may face litigation as a result thereof. ● We are exposed to risks in our international operations, which could adversely affect our business. ● We may be classified as a PFIC in any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders. ​ 46 Table of Contents I.
As such, there is a risk that an ISA Exploitation Contract may not be granted by the ISA, may not be granted on a timely basis, thereby delaying our potential timeline for commercial exploitation, or may be granted on uneconomic terms.
As such, there is a risk that an exploitation contract may not be granted by the ISA, may not be granted on a timely basis, thereby delaying our potential timeline for commercial exploitation, or may be granted on uneconomic terms.
If these new relationships are not a timely entered into or not entered into on commercially reasonable terms, or at all, of if any such relationship is not successful, this would likely have a material adverse effect on our business, financial condition, liquidity, and results of operations.
If these new relationships are not timely entered into or not entered into on commercially reasonable terms, or at all, or if any such relationship is not successful, this would likely have a material adverse effect on our business, financial condition, liquidity, and results of operations.
The polymetallic nodules that we may recover will require specialized onshore processing and refining, and there is no certainty that such processes will result in a recovery of metals that is consistent with our expectations, or that we will be able to develop or otherwise access processing plants that are suitable for our purposes.
The polymetallic nodules that we may recover may require specialized onshore processing and refining, and there is no certainty that such processes will result in a recovery of metals that is consistent with our expectations, or that we will be able to develop or otherwise access processing plants that are suitable for our purposes.
We have a limited operating history, and there can be no assurance that we will be able to commercially develop our resource areas or achieve profitability in the future. We have a limited operating history, and we expect that our losses will continue until we achieve profitable commercial production.
We have limited operating history, and there can be no assurance that we will be able to commercially develop our resource areas or achieve profitability in the future. We have a limited operating history, and we expect that our losses will continue until we achieve profitable commercial production.
The equipment and technology that we intend to utilize has not been fully proven in such subsea conditions and for this specific material and application, and failure to adapt existing equipment or to develop suitable equipment or recovery and development techniques for the prevailing material and seafloor conditions would have a material adverse effect on the business of our subsidiaries, and the results of their operations and financial condition.
The equipment and technology that we intend to utilize has not been fully proven in such subsea conditions and for this specific material and application, and failure to adapt existing equipment or to develop suitable equipment or recovery, transportation and development techniques for the prevailing material and seafloor conditions would have a material adverse effect on the business of our subsidiaries, and the results of their operations and financial condition.
There is a risk that the demands and actions of such non-governmental organizations may cause significant disruption to our business, which could have a material adverse effect on our operations and financial condition. It is possible that direct action from non-governmental environmental groups could physically impact ongoing operation during exploration, project development and commercial operations. IV.
There is a risk that the demands and actions of such non-governmental organizations may cause significant disruption to our business, which could have a material adverse effect on our operations and financial condition. It is possible that direct action from non-governmental environmental groups could physically impact ongoing operation during exploration, project development and commercial operations.
If in the future Nasdaq delists our common shares from trading on its exchange for failure to meet the listing standards, we and our securityholders could face significant material adverse consequences including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; ● a determination that our common shares are “penny stock” which will require brokers trading in our common shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future. 62 Table of Contents The closing bid price of our common shares has been below the Nasdaq’s minimum $1.00 per share for extended periods of time in 2022 and into 2023.
If in the future Nasdaq delists our Common Shares from trading on its exchange for failure to meet the listing standards, we and our securityholders could face significant material adverse consequences including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; ● a determination that our Common Shares are “penny stock” which will require brokers trading in our Common Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future. 68 Table of Contents The closing bid price of our Common Shares has been below the Nasdaq’s minimum $1.00 per share for extended periods of time in 2022 and into 2023.
In addition, we have not obtained definitive global trademark protection for the name “The Metals Company” and we may not be able to secure such protection over time. If we are unable to secure such protection, we may need to rebrand or otherwise modify our name, which could result in costs, delays and loss of market recognition.
In addition, we have not obtained definitive global trademark protection for the name “The Metals Company” and we may not be able to secure such protection over time. If we are unable to secure such protection, we may need to rebrand or otherwise modify our name, which could result in costs, delays and loss of market recognition. VI.
Summary of the Material Risks Associated with Our Business These risks include, but are not limited to, the following: ● Our business is subject to numerous regulatory uncertainties which, if not resolved in our favor, would have a material adverse impact on our business. ● Our resource development activities are subject to changes in government regulation and political instability. ● Changes to any of the laws, rules, regulations or policies to which we are subject could have a significant impact on our business. 38 Table of Contents ● Our exploration, collecting, shipping, processing and refining activities are subject to extensive and costly environmental requirements, and current and future laws, regulations, and permits may impose significant costs, liabilities, or obligations, or could limit or prevent our ability to continue our operations as currently contemplated or to undertake new operations. ● We may become subject to environmental liabilities as a result of noncompliance or newly imposed regulations. ● The grade and quality of the polymetallic nodule deposits that we intend to develop are estimates, and there are no guarantees that such deposits will be suitable for collecting or commercialization. ● No seafloor polymetallic nodule deposit has ever been commercially collected, and our offshore collection technology and development plans and processes may not be sufficient to accomplish our objectives. ● Mineral resource estimates from the contract areas of NORI and TOML are only estimates. ● Our business is subject to significant risks, and we may never develop minerals in sufficient grade or quantities to justify commercial operations. ● Uncertainty in our estimates of polymetallic nodule deposits could result in lower-than-expected revenues and higher costs. ● We operate in a highly competitive industry, and there are no assurances that our efforts will be successful. ● The prevailing market prices of nickel, manganese, copper, cobalt, and other commodities will have a material impact on our ability to achieve commercial success. ● We may be adversely affected by fluctuations in demand for nickel, manganese, copper, cobalt, and other commodities. ● We may experience difficulty in creating market acceptance for a novel manganese product. ● Negative perceptions related to the collection of polymetallic nodules could have a material adverse effect on our business. ● Offshore nodule collection, shipping and onshore processing and refining operations pose inherent risks and costs that may negatively impact our business. ● Our business is contingent on our ability to successfully identify, collect, ship and process polymetallic nodules, and in doing so, we will need to rely on certain existing and future strategic relationships, some of which we may be unable to maintain and/or develop. ● Some of the offshore equipment that we will need to accomplish our objectives has not been manufactured and/or tested. ● Our business is substantially dependent on our strategic relationship with Allseas. ● The polymetallic nodules that we may recover will require specialized treatment and processing, and there is no certainty that such processes will result in a recovery of metals that is consistent with our expectations, or that we will be able to develop or otherwise access processing plants that are suitable for our purposes. ● Our exploration and polymetallic nodule collecting activities may be affected by natural hazards, which could have a material adverse effect on our business. ● Actual capital costs, financing strategies, operating costs, production and economic returns may differ significantly from those we have anticipated and there can be no assurance that any future development activities will result in profitable metal production operations. ● We have a limited operating history, and there can be no assurance that we will be able to commercially develop our resource areas or achieve profitability in the future. ● We depend on key personnel for the success of our business.
Summary of the Material Risks Associated with Our Business These risks include, but are not limited to, the following: ● Our business is subject to numerous regulatory uncertainties which, if not resolved in our favor, would have a material adverse impact on our business. ● Our resource development activities are subject to changes in government regulation and political instability. ● Changes to any of the laws, rules, regulations or policies to which we are subject could have a significant impact on our business. ● Our exploration, collecting, shipping, processing and refining activities are subject to extensive and costly environmental requirements, and current and future laws, regulations, and permits may impose significant costs, liabilities, or obligations, or could limit or prevent our ability to continue our operations as currently contemplated or to undertake new operations. ● There can be no assurance that the Environmental Impact Assessment Post Collector Test will be successful. ● We may become subject to environmental liabilities as a result of noncompliance or newly imposed regulations. ● The grade and quality of the polymetallic nodule deposits that we intend to develop are estimates, and there are no guarantees that such deposits will be suitable for collecting or commercialization. ● No seafloor polymetallic nodule deposit has ever been commercially collected, and our offshore collection technology and development plans and processes may not be sufficient to accomplish our objectives. ● Mineral resource estimates from the contract areas of NORI and TOML are only estimates. ● Our business is subject to significant risks, and we may never develop minerals in sufficient grade or quantities to justify commercial operations. ● Uncertainty in our estimates of polymetallic nodule deposits could result in lower-than-expected revenues and higher costs. ● We operate in a highly competitive industry, and there are no assurances that our efforts will be successful. ● The prevailing market prices of nickel, manganese, copper, cobalt, and other commodities will have a material impact on our ability to achieve commercial success. ● We may be adversely affected by fluctuations in demand for nickel, manganese, copper, cobalt, and other commodities. ● We may experience difficulty in creating market acceptance for a novel manganese product. ● Negative perceptions related to the collection of polymetallic nodules could have a material adverse effect on our business. 45 Table of Contents ● Offshore nodule collection, shipping and onshore processing and refining operations pose inherent risks and costs that may negatively impact our business. ● Our business is contingent on our ability to successfully identify, collect, ship and process polymetallic nodules, and in doing so, we will need to rely on certain existing and future strategic relationships, some of which we may be unable to maintain and/or develop. ● Some of the offshore equipment that we will need to accomplish our objectives has not been manufactured and/or tested. ● Our business is substantially dependent on our strategic relationship with Allseas. ● The polymetallic nodules that we may recover will require specialized treatment and processing, and there is no certainty that such processes will result in a recovery of metals that is consistent with our expectations, or that we will be able to develop or otherwise access processing plants that are suitable for our purposes. ● Our exploration and polymetallic nodule collecting activities may be affected by natural hazards, which could have a material adverse effect on our business. ● Actual capital costs, financing strategies, operating costs, production and economic returns may differ significantly from those we have anticipated and there can be no assurance that any future development activities will result in profitable metal production operations. ● We have a limited operating history, and there can be no assurance that we will be able to commercially develop our resource areas or achieve profitability in the future. ● We depend on key personnel for the success of our business.
A prolonged or significant economic contraction in the U.S. or worldwide could put downward pressure on market prices of minerals. Protracted periods of low prices for minerals could significantly reduce revenues and the availability of required development funds in the future.
A prolonged or significant economic contraction in the U.S., China or worldwide could put downward pressure on market prices of minerals. Protracted periods of low prices for minerals could significantly reduce revenues and the availability of required development funds in the future.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our common shares equals or exceeds $18.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met.
We have the ability to redeem outstanding Public Warrants and Private Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our Common Shares equals or exceeds $18.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met.
To date, no commercial collection (also referred to as “mining,” “exploitation” or “harvesting”) of nodules has occurred on the seafloor in the area of the high seas beyond national jurisdiction (the “Area”), which includes the CCZ.
To date, no commercial collection (also referred to as “mining,” “exploitation” or “harvesting”) of nodules has occurred on the seafloor in the area of the high seas beyond the limits of national jurisdiction (the “Area”), which includes the CCZ.
While this agenda does not appear to have directly impacted the development of proposed Final Regulations and Standards and Guidelines by the ISA, any such moratorium would have a material adverse effect on our business. 43 Table of Contents The environmental permitting process, which includes considerations of the impacts of our activities on the biodiversity of the CCZ, is expected to involve a series of checks and balances with reviews being conducted by the ISA, including technical evaluations by the ISA Secretariat and the Legal and Technical Commission (the “LTC”).
While this agenda does not appear to have directly impacted the development of proposed Final Regulations and Standards and Guidelines by the ISA, any such moratorium would have a material adverse effect on our business. 50 Table of Contents The environmental permitting process, which includes considerations of the impacts of our activities on the biodiversity of the CCZ, is expected to involve a series of checks and balances with reviews being conducted by the ISA, including technical evaluations by the ISA Secretariat and the Legal and Technical Commission (the “LTC”).
There is a risk that competitors may find more promising resources, identify or develop more economic technologies, enter into strategic partnerships that constrain our optionality, or may develop novel methods to collect nodules from the seafloor or process nodules into metals that are more economic than we currently contemplate. 47 Table of Contents The prevailing market prices of nickel, manganese, copper, cobalt, and other commodities will have a material impact on our ability to achieve commercial success.
There is a risk that competitors may find more promising resources, identify or develop more economic technologies, enter into strategic partnerships that constrain our optionality, or may develop novel methods to collect nodules from the seafloor or process nodules into metals that are more economic than we currently contemplate. 54 Table of Contents The prevailing market prices of nickel, manganese, copper, cobalt, and other commodities will have a material impact on our ability to achieve commercial success.
Moreover, the projections or classifications based on such sampling could result in inaccurate environmental, geological or metallurgical assumptions (including with respect to the size, grade, abundance, and/or recoverability of minerals) or incorrect assumptions concerning economic recoverability. 44 Table of Contents No seafloor polymetallic nodule deposit has ever been commercially collected, and our offshore collection technology and development plans and processes may not be sufficient to accomplish our objectives.
Moreover, the projections or classifications based on such sampling could result in inaccurate environmental, geological or metallurgical assumptions (including with respect to the size, grade, abundance, and/or recoverability of minerals) or incorrect assumptions concerning economic recoverability. 51 Table of Contents No seafloor polymetallic nodule deposit has ever been commercially collected, and our offshore collection technology and development plans and processes may not be sufficient to accomplish our objectives.
Based on our initial assessment, we do not believe that we were classified as a PFIC for U.S. federal income tax purposes for the taxable year ending December 31, 2022. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you the U.S. Internal Revenue Service will not take a contrary position.
Based on our initial assessment, we do not believe that we were classified as a PFIC for U.S. federal income tax purposes for the taxable year ending December 31, 2023. However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you the U.S. Internal Revenue Service will not take a contrary position.
A work stoppage by any of the third parties providing services in connection with our operations or those of our strategic partners (such as for onshore or offshore operations) could significantly disrupt our activities, reduce our future revenues and materially adversely affect our results of operations. 53 Table of Contents A shortage of skilled technicians and engineers may further increase operating costs, which could materially adversely affect our results of operations.
A work stoppage by any of the third parties providing services in connection with our operations or those of our strategic partners (such as for onshore or offshore operations) could significantly disrupt our activities, reduce our future revenues and materially adversely affect our results of operations. 61 Table of Contents A shortage of skilled technicians and engineers may further increase operating costs, which could materially adversely affect our results of operations.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. 61 Table of Contents We may incur debt in the future, and our ability to satisfy our obligations thereunder remains subject to a variety of factors, many of which are not within our control.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. 67 Table of Contents We may incur debt in the future, and our ability to satisfy our obligations thereunder remains subject to a variety of factors, many of which are not within our control.
Additionally, manganese silicate is not a conventional mineral product and may require additional approvals for export and import from our processing facilities to our future customers. 48 Table of Contents Our ability to generate revenue will be diminished if we are unable to compete with substitutions for the minerals that we intend to process.
Additionally, manganese silicate is not a conventional mineral product and may require additional approvals for export and import from our processing facilities to our future customers. 55 Table of Contents Our ability to generate revenue will be diminished if we are unable to compete with substitutions for the minerals that we intend to process.
Although we have since regained compliance with the Nasdaq’s minimum closing bid price, we may not be able to continue to meet this Nasdaq listing requirement. If the closing bid price of our common shares falls below $1.00 per share for another consecutive 30 trading days, we expect to receive another notification from the Nasdaq to that effect.
Although we regained compliance with the Nasdaq’s minimum closing bid price, we may not be able to continue to meet this Nasdaq listing requirement. If the closing bid price of our Common Shares falls below $1.00 per share for another consecutive 30 trading days, we expect to receive another notification from the Nasdaq to that effect.
In addition, our products and processes may infringe existing patents. 55 Table of Contents Defending ourselves against third-party claims, including litigation in particular, would be costly and time consuming and would divert management’s attention from our business, which could lead to delays in our exploration, collecting, processing, and commercialization efforts.
In addition, our products and processes may infringe existing patents. 63 Table of Contents Defending ourselves against third-party claims, including litigation in particular, would be costly and time consuming and would divert management’s attention from our business, which could lead to delays in our exploration, collecting, processing, and commercialization efforts.
Valid estimates made at a given time may significantly change when new information becomes available. 45 Table of Contents Estimated mineral reserves and mineral resources may have to be recalculated based on changes in metal prices, further exploration or development activity or actual production experience.
Valid estimates made at a given time may significantly change when new information becomes available. 52 Table of Contents Estimated mineral reserves and mineral resources may have to be recalculated based on changes in metal prices, further exploration or development activity or actual production experience.
In light of the significant deficit in expected funding following the closing of the Business Combination in September 2021, we adopted what we call a “capital-light” strategy whereby we removed any allocation of funds to capital expenditures that were not deemed necessary to support the submission of an application for an exploitation contract for the NORI Area D, and by negotiating the settlement of program expenditures with our equity whenever possible in order to preserve our cash.
In light of the significant deficit in expected funding following the closing of the Business Combination in September 2021, we adopted what we call a “capital-light” strategy whereby we removed any allocation of funds to capital expenditures that were not deemed necessary to support the submission of an application for a plan of work for exploitation for NORI Area D, and by negotiating the settlement of program expenditures with our equity whenever possible in order to preserve our cash.
Further, our operations depend on the continuation of the Sponsorship Agreements between our subsidiaries NORI and TOML and each of their host Sponsoring nations, Tonga and Nauru, respectively. Each subsidiary has been registered and incorporated within such host nation and each nation has maintained effective control, supervision, regulation, and sponsorship over the conduct of such subsidiary.
Further, our operations depend on the continuation of the sponsorship agreements between our subsidiaries NORI and TOML and each of their host Sponsoring States, Tonga and Nauru, respectively. Each subsidiary has been registered and incorporated within such host nation and each host nation has maintained effective control, supervision, regulation, and sponsorship over the conduct of such subsidiary.
We, our partners and our shareholders may be adversely impacted by pressure and lobbying from non-governmental organizations. Like other businesses that operate in the resources industry, our company, our partners, and our shareholders are subject to pressure and lobbying from non-governmental organizations, particularly with respect to impacts on the deep-sea environment.
We, our partners and our shareholders may be adversely impacted by pressure and lobbying from non-governmental organizations. Like other businesses that operate in the resources industry, we along with our partners, and our shareholders are subject to pressure and lobbying from non-governmental organizations, particularly with respect to impacts on the deep-sea environment.
Offshore collection and onshore processing and refining operations involve many hazards and uncertainties, including, among others: ● technical and operational challenges in the offshore collection operations and scaling up of such operations; ● challenges in transferring nodules to transport vessels and delivering nodules to port; ● industrial accidents; ● unusual and unexpected maritime conditions; 49 Table of Contents ● unexpected seafloor conditions; ● onshore metallurgical or other processing problems; ● unexpected environmental conditions, including contamination or leakage; ● periodic interruptions due to inclement or hazardous weather conditions or other acts of nature; ● fire; ● piracy and disruptive action by non-governmental actors opposed to deep-sea mineral extraction; ● organized labor disputes or work slowdowns; ● mechanical equipment failure and facility performance problems; ● the availability of financing, market demand, critical technology and equipment, and skilled labor; and ● the inability of suppliers to provide key process inputs like electricity, gas, coal and processing reagents on a timely basis at the prices that have been forecast. ​ These occurrences could result in damage to, or destruction of, production facilities, personal injury or death, environmental damage, delays in processing, increased production costs, asset write downs, monetary losses and legal liability, any of which could have an adverse effect on our results of operations and financial condition and adversely affect our projected development and production estimates.
Offshore collection and onshore processing and refining operations involve many hazards and uncertainties, including, among others: ● technical and operational challenges in the offshore collection operations and scaling up of such operations; 56 Table of Contents ● challenges in and delays caused by transferring nodules to transport vessels and delivering nodules to port (including limited availability of and cost to secure the equipment to allow the activity); ● industrial accidents; ● unusual and unexpected maritime conditions; ● unexpected seafloor conditions; ● onshore metallurgical or other processing problems; ● unexpected environmental conditions, including contamination or leakage; ● periodic interruptions due to inclement or hazardous weather conditions or other acts of nature; ● fire; ● piracy and disruptive action by non-governmental actors opposed to deep-sea mineral extraction; ● organized labor disputes or work slowdowns; ● mechanical equipment failure and facility performance problems; ● the availability of financing, market demand, critical technology and equipment, and skilled labor; and ● the inability of suppliers to provide key process inputs like electricity, gas, coal and processing reagents on a timely basis at the prices that have been forecast. ​ These occurrences could result in damage to, or destruction of, production facilities, personal injury or death, environmental damage, delays in processing, increased production costs, asset write downs, monetary losses and legal liability, any of which could have an adverse effect on our results of operations and financial condition and adversely affect our projected development and production estimates.
There can be no assurance that the ISA will put in place Final Regulations in a timely manner or at all. Such regulations may also impose burdensome obligations or restrictions on us, and/or may contain terms that do not enable us to develop our projects. Our resource development activities are subject to changes in government regulation and political instability.
There can be no assurance that the ISA will put in place a Mining Code in a timely manner or at all. Such regulations may also impose burdensome obligations or restrictions on us, and/or may contain terms that do not enable us to develop our projects. Our resource development activities are subject to changes in government regulation and political instability.
Such restrictions may have a material adverse effect on our business and results of operation. 46 Table of Contents Uncertainty in our estimates of polymetallic nodule deposits could result in lower than expected revenues and higher costs.
Such restrictions may have a material adverse effect on our business and results of operation. 53 Table of Contents Uncertainty in our estimates of polymetallic nodule deposits could result in lower-than-expected revenues and higher costs.
While we expect research analyst coverage, if no analysts commence coverage of us, the market price and volume for our common shares could be adversely affected. As we are not a reporting issuer in Canada, our common shares and Special Shares may be subject to restrictions on resale in Canada.
While we expect research analyst coverage, if no analysts commence coverage of us, the market price and volume for our Common Shares could be adversely affected. 70 Table of Contents As we are not a reporting issuer in Canada, our Common Shares and Special Shares may be subject to restrictions on resale in Canada.
On March 16, 2022, NORI and Allseas entered into a non-binding term sheet for the development and operation of the Project Zero System. NORI and Allseas intend to equally finance all costs related to developing and getting Project Zero System into production currently.
On March 16, 2022, NORI and Allseas entered into a non-binding term sheet for the development and operation of the Project Zero Offshore Nodule Collection System. NORI and Allseas intend to equally finance all costs related to developing and getting Project Zero Offshore Nodule Collection System into production currently.
Parties engaged in collection operations may be required to compensate those suffering loss or damage by reason of the collection activities and may have civil or criminal fines or penalties imposed for violations of applicable laws and regulations. We may become subject to environmental liabilities as a result of noncompliance or newly imposed regulations.
Parties engaged in collection operations may be required to compensate those suffering loss or damage by reason of the collection activities and may have civil or criminal fines or penalties imposed for violations of applicable laws and regulations. We may become subject to environmental liabilities as a result of noncompliance with existing or future regulations.
While we have beneficial ownership over such subsidiaries, we operate under the regulation and sponsorship of Nauru and Tonga. If such arrangement is challenged, or sponsorship is terminated, we may have to restructure the ownership or operations of such subsidiary to ensure continued state sponsorship.
While we have beneficial ownership over such subsidiaries, each subsidiary operates under the regulation and sponsorship of Nauru and Tonga. If such arrangement is challenged, or sponsorship is terminated, we may have to restructure the ownership or operations of such subsidiary to ensure continued State sponsorship.
Fluctuations in transportation costs or disruptions in transportation services or damage or loss during transport could decrease our competitiveness or impair our ability to supply polymetallic nodules, processed minerals or products to our customers, which could adversely affect our results of operations.
Fluctuations in transportation costs or disruptions in transportation, processes or services, or damage or loss during transport could decrease our profitability or impair our ability to supply polymetallic nodules, processed minerals or products to our customers, which could adversely affect our results of operations.
Due to any of these or other factors, our capital and operating costs may be significantly higher than those set forth in the NORI Initial Assessment and TOML Mineral Resource Statement prepared by AMC and filed as exhibits to this Annual Report on Form 10-K.
Due to any of these or other factors, our capital and operating costs may be significantly higher than those set forth in the NORI Initial Assessment and TOML Mineral Resource Statement prepared by AMC and filed as exhibits to this Annual Report.
Labor disputes, embargos, sanctions, government restrictions, work stoppages, pandemics, derailments, damage or loss events, adverse weather conditions, vessel groundings inhibiting access to key navigation routes, other environmental events, changes to rail or ocean freight systems or other events and activities beyond our control could interrupt or limit available transport services, which could result in customer dissatisfaction and loss of sales potential and could materially adversely affect our results of operations. 52 Table of Contents Actual capital costs, financing strategies, operating costs, production and economic returns may differ significantly from those we have anticipated and there can be no assurance that any future development activities will result in profitable metal production operations.
Labor disputes, embargos, sanctions, government restrictions, work stoppages, pandemics, derailments, damage or loss events, adverse weather conditions, vessel groundings inhibiting access to key navigation routes, other environmental events, changes to rail or ocean freight systems, availability of appropriate equipment or processes for transfer of nodules to transport vessels or other events and activities beyond our control could interrupt or limit available transport services, which could result in customer dissatisfaction and loss of sales potential and could materially adversely affect our results of operations. 60 Table of Contents Actual capital costs, financing strategies, operating costs, production and economic returns may differ significantly from those we have anticipated and there can be no assurance that any future development activities will result in profitable metal production operations.
The Draft Regulations and several supporting standards and guidelines are at an advanced stage, but there remains uncertainty regarding the final form that these will take, as well as the impact that such regulations, standards and guidelines will have on our ability to meet our objectives.
In addition, although the Draft Regulations and several supporting standards and guidelines are at an advanced stage, there remains uncertainty regarding the final form that these will take, as well as the impact that such regulations, standards and guidelines will have on our ability to meet our objectives.
You will likely experience further dilution if we issue common shares in future financing transactions. ​ We have 15,000,000 outstanding Public Warrants to purchase 15,000,000 common shares at an exercise price of $11.50 per share, which warrants became exercisable beginning on October 9, 2021.
You will likely experience further dilution if we issue common shares in future financing transactions. ​ We have 15,000,000 outstanding Public Warrants to purchase 15,000,000 Common Shares and 9,500,000 Private Warrants outstanding exercisable for 9,500,000 shares of our Common Shares at an exercise price of $11.50 per share, which warrants became exercisable beginning on October 9, 2021.
We cannot provide any assurance with respect to the success of our continued relationship with Allseas, that we will be able to enter into additional binding agreements with Allseas on commercially reasonable terms, or at all, that Allseas will continue to devote its resources to its relationship with us or otherwise perform its obligations under its current and future arrangements with us as expected, the result of any of which would have a material adverse effect on our business, financial condition, liquidity, and results of operations.
We cannot provide any assurance with respect to the success of our continued relationship with Allseas, that we will be able to enter into additional binding agreements with Allseas on commercially reasonable terms, or at all, that Allseas will continue to devote its resources to its relationship with us or otherwise perform its obligations under its current and future arrangements with us as expected, as a result of its limited experience in the collection and transportation of seafloor polymetallic nodules or otherwise, the result of any of which would have a material adverse effect on our business, financial condition, liquidity, and results of operations.
We will not initially have any producing properties and will have no source of significant operating cash flow until 2024 at the earliest. There is no precedent for projects like ours, and therefore, financing may not be available on acceptable terms or at all.
We will not initially have any producing properties and will have no source of significant operating cash flow until the end of the first half of 2026 at the earliest. There is no precedent for projects like ours, and therefore, financing may not be available on acceptable terms or at all.
In order to move our exploration projects into commercial production, our wholly-owned subsidiaries, NORI and TOML will each need to obtain an ISA Exploitation Contract, as will our partner, Marawa, in addition to related permits that may be required by our commercial partners.
In order to move our exploration projects into commercial production, our wholly-owned subsidiaries, NORI and TOML will each need to conclude an exploitation contract with the ISA, as will our partner, Marawa, in addition to obtaining related permits that may be required by our commercial partners.
Seafloor polymetallic nodules have never been commercially mined, and there is a risk that our offshore collection and recovery methods and the equipment that we intend to utilize during this process may not be adequate for the economic development of seafloor polymetallic nodule deposits.
Seafloor polymetallic nodules have never been commercially mined, and there is a risk that our offshore collection and recovery methods and the equipment that we intend to utilize during this process, including transferring nodules to transport vessels and delivering of nodules to port, may not be adequate for the economic development of seafloor polymetallic nodule deposits.
Additionally, as we launch exploration, collection, and development initiatives, our subsidiaries may need to compete for the availability of suitable vessels and equipment, even though we have a close commercial relationship with our partners, there is a risk that certain vessels and equipment will be under long-term charter and will thus not be available to them when needed, if at all.
Additionally, as we launch exploration, collection, and development initiatives, our subsidiaries may need to compete for the availability of suitable vessels and equipment, even though we have a close commercial relationship with our partners, there is a risk that certain vessels and equipment will be under long-term charter and will thus not be available to them when needed, if at all. 58 Table of Contents Our business is substantially dependent on our strategic relationship with Allseas.
If we fail to adequately enforce or defend our intellectual property rights, our business may be harmed.
We may not be able to adequately protect our intellectual property rights. If we fail to adequately enforce or defend our intellectual property rights, our business may be harmed.
On November 15, 2021, a second complaint containing substantially the same allegations was filed, captioned Tran v. TMC the Metals Company, Inc. These cases have been consolidated. On March 6, 2022, a lead plaintiff was selected. An amended complaint was filed on May 12, 2022, reflecting substantially similar allegations.
On November 15, 2021, a second complaint containing substantially the same allegations was filed, captioned Tran v. TMC the Metals Company, Inc. These cases have been consolidated. On March 6, 2022, a lead plaintiff was selected.
Additionally, United States and global economic uncertainty, higher interest rates and diminished credit availability may limit our ability to incur indebtedness on favorable terms.
Additionally, U.S. and global economic uncertainty, higher interest rates and diminished credit availability may limit our ability to incur indebtedness on favorable terms.
Accordingly, impacts on CCZ biodiversity may never be, completely and definitively known. For the same reasons, it may also not be possible to definitively say whether the impact of nodule collection on global biodiversity will be less significant than those estimated for land-based mining for a similar amount of produced metal.
For the same reasons, it may also not be possible to definitively say whether the impact of nodule collection on global biodiversity will be less significant than those estimated for land-based mining for a similar amount of produced metal.
We cannot be certain that insurance for some or all of these risks will be available on acceptable terms or conditions, if at all, and in some cases, coverage may not be acceptable or may be considered too expensive relative to the perceived risk. 54 Table of Contents We may not be able to adequately protect our intellectual property rights.
We cannot be certain that insurance for some or all of these risks will be available on acceptable terms or conditions, if at all, and in some cases, coverage may not be acceptable or may be considered too expensive relative to the perceived risk. 62 Table of Contents V. Intellectual Property Risks.
In addition, on January 23, 2023, an investor in the 2021 PIPE from the Business Combination filed a lawsuit against us in New York Supreme Court, New York County, captioned Atalaya Special Purpose Investment Fund II LP et al. v. Sustainable Opportunities Acquisition Corp. n/k/a TMC The Metals Company Inc ., Index No. 650449/2023 (N.Y. Sup. Ct.).
On January 23, 2023, investors in the 2021 private placement from the Business Combination filed a lawsuit against us in the Commercial Division of New York Supreme Court, New York County, captioned Atalaya Special Purpose Investment Fund II LP et al. v. Sustainable Opportunities Acquisition Corp. n/k/a TMC The Metals Company Inc., Index No. 650449/2023 (N.Y. Sup. Ct.).
Nodule collection activities may be subject to interruptions resulting from weather and related marine conditions that adversely affect our collection operations or the ports of delivery, and any such delays could have a material adverse effect on our business.
Nodule collection activities, including, without limitation, the transfer of nodules to transport vessels and delivery to port, may be subject to interruptions resulting from weather and related marine conditions that adversely affect our collection operations or the ports of delivery, and any such delays could have a material adverse effect on our business.
Allseas is contractually required to develop a test system to demonstrate this capability, but it is not certain that Allseas will convert, or will be able to convert such system into a full-scale commercial operation or that we will reach contractual terms with Allseas for such commercial arrangements.
Allseas developed a test system and demonstrated this capability, but it is not certain that Allseas will convert, or will be able to convert such system into a full-scale commercial operation or that we will reach contractual terms with Allseas for such commercial arrangements.
The EMMP is expected to specify the objectives and purpose of all monitoring requirements, the components to be monitored, frequency of monitoring, methods of monitoring, analysis required in each monitoring component, monitoring data management and reporting.
The EIS would be accompanied by an EMMP which is expected to specify the objectives and purpose of all monitoring requirements, the components to be monitored, frequency of monitoring, methods of monitoring, analysis required in each monitoring component, monitoring data management and reporting.
In the event that we are unable to secure one or more of the sites we have identified, or if construction delays impact our ability to develop one or more of such sites, our ability to process polymetallic nodules would be detrimentally impacted.
In the event that we are unable to secure one or more of the sites we have identified, or if modification scope identification, development and associated construction delays of this scope implementation impact our ability to develop one or more of such sites, our ability to process polymetallic nodules would be detrimentally impacted.
The market price of our securities may be volatile, which could cause the value of your investment to decline. The market price of our securities may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our common shares and Public Warrants may fluctuate and cause significant price variations to occur.
The market price of our securities may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our Common Shares and Public Warrants may fluctuate and cause significant price variations to occur. Securities markets worldwide experience significant price and volume fluctuations.
As part of the application for an ISA Exploitation Contract, all contractors are required to complete baseline studies and an ESIA, culminating in an EIS, prior to collecting nodules at a commercial scale. The EIS would be accompanied by an Environmental Management and Monitoring Plan (“EMMP”).
As part of the application for an ISA Exploitation Contract, all contractors are required to complete baseline studies and an ESIA, culminating in an EIS, prior to collecting nodules at a commercial scale.
Since the closing of the Business Combination through March 24, 2023, the price of our common shares has ranged from a high of $10.38 to a low of $0.55 and as of March 24, 2023, the closing price of our common shares was $0.8063.
Since the closing of the Business Combination through March 11, 2024, the price of our Common Shares has ranged from a high of $10.38 to a low of $0.55 and as of March 15, 2024, the closing price of our Common Shares was $1.67.
For example, we have been working with Hatch, a global engineering, project management, and professional services firm, to develop onshore processing technology for the production of readily saleable copper and manganese products, as well as products such as high-grade nickel and cobalt sulfates for the electric vehicle battery markets. In connection therewith, Hatch has developed a near-zero solid waste flowsheet.
For example, we have been working with Hatch, a global engineering, project management, and professional services firm, to support the development of onshore processing technology for the production of readily saleable copper and manganese products, as well as products such as high-grade nickel and cobalt sulfates for the electric vehicle battery markets.
There are currently outstanding an aggregate of 24,500,000 warrants to acquire our common shares (not including the Allseas Warrant), which comprise 9,500,000 Private Warrants initially issued in connection with SOAC’s initial public offering, which were transferred to permitted transferees of the initial holders thereof, and 15,000,000 Public Warrants.
There are currently outstanding an aggregate of 28,480,770 warrants to acquire our Common Shares, which comprise 9,500,000 Private Warrants initially issued in connection with SOAC’s initial public offering, which were transferred to permitted transferees of the initial holders thereof, 15,000,000 Public Warrants and 3,980,770 Class A Warrants.
Our business is substantially dependent on our strategic relationship with Allseas. If we and Allseas are unable to successfully maintain and expand this relationship, our business may be materially harmed.
If we and Allseas are unable to successfully maintain and expand this relationship, our business may be materially harmed.
Provisions in our Notice of Articles and Articles, as well as certain provisions under the BCBCA and applicable Canadian laws, may discourage, delay or prevent a merger, acquisition or other change in control of TMC that shareholders may consider favorable, including transactions in which they might otherwise receive a premium for their common shares.
Provisions in our Notice of Articles and Articles, as well as certain provisions under the BCBCA and applicable Canadian laws, may discourage, delay or prevent a merger, acquisition or other change in control of TMC that shareholders may consider favorable, including transactions in which they might otherwise receive a premium for their Common Shares. 71 Table of Contents For instance, our Notice of Articles and Articles contain provisions that establish certain advance notice procedures for nomination of candidates for election as directors at shareholders’ meetings.
While the rates of payments are yet to be set by the ISA, the 1994 Agreement relating to the Implementation of Part XI of the UNCLOS of 10 December 1982 (the “1994 Implementation Agreement”) prescribes a relevant framework that the rates of payments “shall be within the range of those prevailing in respect of land-based mining of the same or similar minerals in order to avoid giving deep seabed miners an artificial competitive advantage or imposing on them a competitive disadvantage.” The ISA has held workshops with stakeholders to discuss and seek comments on the potential financial regime for the collecting of polymetallic nodules in the CCZ.
Failure to maintain sponsorship, or secure new state sponsorship, will have a material impact on such subsidiary and on our overall business and operations. 48 Table of Contents While the rates of payments are yet to be set by the ISA, the 1994 Agreement relating to the Implementation of Part XI of the UNCLOS prescribes a relevant framework that the rates of payments “shall be within the range of those prevailing in respect of land-based mining of the same or similar minerals in order to avoid giving deep seabed miners an artificial competitive advantage or imposing on them a competitive disadvantage.” The ISA has held workshops with stakeholders to discuss and seek comments on the potential financial regime for the collecting of polymetallic nodules in the CCZ.
Therefore, as of December 31, 2022, if we assume that each outstanding whole warrant is exercised and one common share is issued as a result of such exercise, with payment of the exercise price of $11.50 per share, our fully-diluted share capital would increase by a total of 24,500,000 shares, with approximately $281.8 million paid to us to exercise the warrants.
Therefore, as of December 31, 2023, if we assume that each outstanding whole warrant is exercised and one common share is issued as a result of such exercise, with payment of the exercise price ranging from $3.00 to $11.50 per share, our fully-diluted share capital would increase by a total of 28,480,770 shares, with approximately $293.7 million paid to us to exercise the warrants.
Alternatively, if a court were to find the choice of forum provision contained in our Notice and Articles to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our Notice and Articles to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition. 72 Table of Contents Our Notice and Articles permit us to issue an unlimited number of Common Shares and preferred shares without seeking approval of the holders of our Common Shares.
We have partnered with Allseas, a leading global offshore contractor and significant shareholder in our company, to undertake the development of many of the offshore systems we expect to utilize in our potential commercialization efforts.
We have partnered with Allseas, a leading global offshore contractor and significant shareholder in our Company, to undertake the development of many of the offshore systems we expect to utilize in our potential commercialization efforts [(including equipment required for the transfer of nodules to transport vessels and delivery to port)].
For example, having faced significant issues in securing process engineering capacity in 2022, we moved away from collaborating with Epsilon Carbon for the development of a new Project Zero Plant in India and instead are now reviewing the feasibility of utilizing existing facilities as an alternative.
For example, having faced significant issues in securing technical service provider capacity with scenario-based capability in 2022, we moved away from developing a new Project Zero Plant in India and instead are now reviewing the feasibility of utilizing existing facilities as an alternative.
As a result, on December 5, 2022, we received a written notice from the Nasdaq notifying us that the closing bid price of the common shares over the 30 consecutive trading days from October 21, 2022 through December 2, 2022 had fallen below the minimum $1.00 per share.
As a result, we received written notices from the Nasdaq in 2022 and 2023 notifying us that the closing bid price of the Common Shares over 30 consecutive trading days had fallen below the minimum $1.00 per share.
To date, no nodules have been processed and refined into metal products commercially, and there is a risk that such processing and refining may not be economically viable and/or that the nodules will contain elements or compounds that would render them unsuitable for selected processing and refining flowsheet.
To date, no nodules have been processed and refined into metal products commercially, and there is a risk that such processing and refining may not be economically viable and/or that there are presently unknown technical aspects that render the selected flowsheet unsuitable for processing to the products as described.
If any of these countries cease such sponsorship, our subsidiaries or their partners (as applicable) would need to seek sponsorship elsewhere, which could impact our operations as a group. 41 Table of Contents There is a risk that a State sponsoring activities in a project area ceases to be a sponsor, or is not permitted to be a sponsor, or that NORI and TOML cease to remain as sponsored contractors by such State; and if an agreement cannot be reached with a substitute sponsoring State, or if we are unable to transfer our sponsorship to another State, such subsidiary could be forced to cease activities in the CCZ.
There is a risk that a State sponsoring activities in a project area ceases to be a sponsor, or is not permitted to be a sponsor, or that NORI and TOML cease to remain as sponsored contractors by such State; and if an agreement cannot be reached with a substitute sponsoring State, or if we are unable to transfer our sponsorship to another State, such subsidiary could be forced to cease activities in the CCZ.
In addition, Allseas has invested $5 million in our August 2022 private placement of common shares and recently entered into an unsecured credit facility with us under an affiliate of Allseas agreed to lend us up to $25 million through May 2024.
In addition, Allseas has invested $5 million in our August 2022 private placement of Common Shares, $7 million in our August 2023 registered direct offer of our Common Shares and Class A Warrants and entered into an unsecured credit facility with us under an affiliate of Allseas agreed to lend us up to $25 million through August 31, 2025.
There can be no assurance that the Public Warrants and Private Warrants will be in the money at the time they become exercisable, and they may expire worthless. The exercise price for the outstanding Public Warrants and Private Warrants is $11.50 per common share.
The exercise price for the outstanding Public Warrants and Private Warrants is $11.50 per Common Share. There can be no assurance that such warrants will be in the money prior to their expiration, and as such, such warrants may expire worthless.
Any common shares issued, including in connection with the private placement financing, upon exercise of warrants, upon conversion of the Special Shares or under the TMC Incentive Equity Plan, the ESPP or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by you. 57 Table of Contents Our issuance of additional common shares or other equity securities of equal or senior rank would have the following effects: ● our existing shareholders’ proportionate ownership interest in the Company will decrease; ● the amount of cash available per share, including for payment of dividends in the future, may decrease; ● the relative voting strength of each previously outstanding common share may be diminished; and ● the market price of our common shares may decline. ​ In addition, the contractual lock-up agreements on certain of our securities entered into in connection with the Business Combination have all expired.
Our issuance of additional Common Shares or other equity securities of equal or senior rank would have the following effects: ● our existing shareholders’ proportionate ownership interest in the Company will decrease; ● the amount of cash available per share, including for payment of dividends in the future, may decrease; ● the relative voting strength of each previously outstanding common share may be diminished; and ● the market price of our Common Shares may decline. ​ In addition, the contractual lock-up agreements on certain of our securities entered into in connection with the Business Combination have all expired.
On June 25, 2021, Nauru submitted its notice to the ISA requesting that it complete the adoption, by July 9, 2023, of rules, regulations and procedures necessary to facilitate the approval of plans of work for exploitation in the Area.
On June 25, 2021, Nauru submitted such a notice, with an effective date of July 9, 2021, to the ISA requesting that it complete the adoption of rules, regulations and procedures (“RRPs” or the “Mining Code”) necessary to facilitate the approval of plans of work for exploitation in the Area.
The continuing exploration and development of the NORI, TOML and Marawa contract areas, however, will depend upon our ability to obtain dilutive and/or non-dilutive financing through stake sales in our assets, offtakes with prepayments, debt financing, equity financing, joint ventures, or other means. Additionally, the actual amount of capital raised for our projects may vary materially from our current estimates.
The continuing exploration and development of the NORI, TOML and Marawa contract areas, however, will depend upon our ability to obtain dilutive and/or non-dilutive financing through stake sales in our assets, offtakes with prepayments, debt financing, equity financing, joint ventures, project-based or asset-based financing or other means.
Furthermore, even if the warrants are in the money following the time they become exercisable, the holders of the warrants are not obligated to exercise their warrants, and we cannot predict whether holders of the warrants will choose to exercise all or any of their warrants. 58 Table of Contents We have identified material weaknesses in our internal control over financial reporting.
Furthermore, even if the warrants are in the money following the time they become exercisable, the holders of the warrants are not obligated to exercise their warrants, and we cannot predict whether holders of the warrants will choose to exercise all or any of their warrants.
We are also party to certain agreements with Allseas, pursuant to which, among other things, Allseas has agreed to design, engineer and construct an integrated offshore collection system to collect nodules from NORI Areas, and to assist with shipping efforts thereafter.
In connection therewith, Hatch has supported us with the development of a near-zero solid waste flowsheet. We are also party to certain agreements with Allseas, pursuant to which, among other things, Allseas has agreed to design, engineer and construct an integrated offshore collection system to collect nodules from NORI Areas, and to assist with shipping efforts thereafter.
While we believe that we have identified specific sites for the potential construction of nodule processing plants (based on factors such as proximity to deep-water ports, cost access to renewable electric power and natural gas, and proximity to customers), there is a risk that we will be unable to secure one or more of these sites on suitable terms.
Additionally, even if we are able to secure appropriate processing facilities (through tolling arrangements), there is no guarantee that we will be able to provide them with the required nodule feedstocks at the required times. 59 Table of Contents While we believe that we have identified specific sites for the potential construction of nodule processing plants (based on factors such as proximity to deep-water ports, cost access to renewable electric power and natural gas, and proximity to customers), there is a risk that we will be unable to secure one or more of these sites on suitable terms.
The Allseas Warrant is also exercisable for up to 11,600,000 common shares subject to the terms and conditions thereof. To the extent such warrants are exercised, additional shares of our common shares will be issued, which will result in dilution to the holders of our common shares and increase the number of shares eligible for resale in the public market.
To the extent such warrants are exercised, additional shares of our Common Shares will be issued, which will result in dilution to the holders of our Common Shares and increase the number of shares eligible for resale in the public market.
Furthermore, we may seek to expand our production capabilities in the future, which would require additional regulatory approvals that may not be provided in a timely manner or at all. Furthermore, such additional approvals could require changes to environmental offset areas and related environmental protections which, if overly burdensome, could impact our operations.
Furthermore, we may seek to expand our production capabilities in the future, which would require additional regulatory approvals that may not be provided in a timely manner or at all.
The parties intend to detail and revise these cost estimates in binding Heads of Terms which the parties expect to enter into in the second half of 2023, and three definitive agreements for the engineering, build and operations phases.
The parties intend to detail and revise these cost estimates in three definitive agreements for the engineering, build and operations phases which the parties expect to enter into before the submission of our exploitation application in 2024.
Our exploration, collecting, processing and refining activities are subject to extensive and costly environmental requirements, and current and future laws, regulations, and permits may impose significant costs, liabilities, or obligations, or could limit or prevent our ability to continue our operations as currently contemplated or to undertake new operations.
Furthermore, such additional approvals could require changes to environmental offset areas and related environmental protections which, if overly burdensome, could impact our operations. 49 Table of Contents Our exploration, collecting, processing and refining activities are subject to extensive and costly environmental requirements, and current and future laws, regulations, and permits may impose significant costs, liabilities, or obligations, or could limit or prevent our ability to continue our operations as currently contemplated or to undertake new operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePart of its mandate is the receipt and storage of seafloor sampling data suitable for the estimation of nodule resources and the legally binding award of licenses. It is reasonable to assume that a reasonable level of care was applied by the ISA. Data collected by NORI is well-documented and was subject to satisfactory quality assurance/quality control processes.
Biggest changeIt is also reasonable to infer that the pioneer investor data are of sufficient quality for resource estimation because the ISA is an independent agency with significant accountability under the UNCLOS. Part of its mandate is the receipt and storage of seafloor sampling data suitable for the estimation of nodule resources and the legally binding award of licenses.
Under SEC standards, mineralization, such as mineral resources, may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination.
Under SEC standards, mineralization, such as mineral resources, may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time of the reserve determination.
You are specifically cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves, as defined by the SEC. You are cautioned that mineral resources do not have demonstrated economic value.
You are specifically cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves, as defined by the SEC. You are cautioned that mineral resources do not have demonstrated economic value.
Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category.
Therefore, you are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally mined, or that it will ever be upgraded to a higher category.
The commonality between the polymetallic nodule deposits in NORI Area D and the TOML Contract Area indicates that the methods proposed for the development of NORI Area D can reasonably be assumed to be equally relevant for future development in the TOML Contract Area.
The commonality between the polymetallic nodule deposits in NORI Area D and the TOML Contract Area indicates that the methods proposed for the development of NORI Area D can reasonably be assumed to be equally relevant for future development in the TOML Contract Area.
Onshore processing is the most significant operating cost. 80 Table of Contents Average operating cost estimates during steady state operation (from 2030 onwards) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ Operating Cost ​ Average Unit ​ Average Unit ​ over Life of Cost (/t – wet Cost (/t – dry ​ ​ Mine ​ tonne nodules ​ tonne Section ​ ($ million pa) ​ recovered) ​ processed) Offshore ​ $ 240.74 ​ $ 19.31 ​ $ 25.40 Shipping ​ $ 254.37 ​ $ 20.40 ​ $ 26.84 Onshore ​ $ 1,286.19 ​ $ 103.14 ​ $ 135.71 Other ​ $ 25.00 ​ $ 2.00 ​ $ 2.64 Total ​ $ 1,806.30 ​ $ 144.85 ​ $ 190.59 ​ For more information on capital and operating costs, see Section 18 of the NORI Technical Report Summary.
Onshore processing is the most significant operating cost. 88 Table of Contents Average operating cost estimates during steady state operation (from 2030 onwards) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ Operating Cost ​ Average Unit ​ Average Unit ​ over Life of Cost (/t – wet Cost (/t – dry ​ ​ Mine ​ tonne nodules ​ tonne Section ​ ($ million pa) ​ recovered) ​ processed) Offshore ​ $ 240.74 ​ $ 19.31 ​ $ 25.40 Shipping ​ $ 254.37 ​ $ 20.40 ​ $ 26.84 Onshore ​ $ 1,286.19 ​ $ 103.14 ​ $ 135.71 Other ​ $ 25.00 ​ $ 2.00 ​ $ 2.64 Total ​ $ 1,806.30 ​ $ 144.85 ​ $ 190.59 ​ For more information on capital and operating costs, see Section 18 of the NORI Technical Report Summary.
The NORI Contract Area comprises four separate blocks (A, B, C and D) in the CCZ with a combined area of 74,830 km 2 . ​ ​ NORI Contract Area extents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum ​ Maximum ​ Minimum ​ Maximum ​ Minimum ​ Maximum ​ Minimum ​ Maximum ​ ​ ​ ​ Latitude ​ Latitude ​ Longitude ​ Longitude ​ UTM X ​ UTM X ​ UTM Y ​ UTM Y ​ UTM Area (DD) (DD) (DD) (DD) (m) (m) (m) (m) Zone A ​ 11.5000 ​ 13.00000 ​ (134.5830) ​ (133.8330) ​ 545220.4 ​ 627276.0 ​ 1271339 ​ 1437255 ​ 8 B ​ 13.5801 ​ 14.00000 ​ (134.0000) ​ (133.2000) ​ 607995.7 ​ 694759.8 ​ 1501590 ​ 1548425 ​ 8 C 12.0000 14.93500 (123.0000) (120.5000) 500000.0 769458.3 1326941 1652649 10 D 9.8950 11.08333 (117.8167) (116.0667) 410465.2 602326.1 1093913 1225353 11 DD — Decimal degrees, UTM — Universal Transverse Mercator map projection As the CCZ deposit does not include any habitable land and is not near coastal waters, there is no requirement to negotiate access rights from landowners for seafloor collection operations.
The NORI Contract Area comprises four separate blocks (A, B, C and D) in the CCZ with a combined area of 74,830 square kilometers. ​ ​ NORI Contract Area extents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum ​ Maximum ​ Minimum ​ Maximum ​ Minimum ​ Maximum ​ Minimum ​ Maximum ​ ​ ​ ​ Latitude ​ Latitude ​ Longitude ​ Longitude ​ UTM X ​ UTM X ​ UTM Y ​ UTM Y ​ UTM Area (DD) (DD) (DD) (DD) (m) (m) (m) (m) Zone A ​ 11.5000 ​ 13.00000 ​ (134.5830) ​ (133.8330) ​ 545220.4 ​ 627276.0 ​ 1271339 ​ 1437255 ​ 8 B ​ 13.5801 ​ 14.00000 ​ (134.0000) ​ (133.2000) ​ 607995.7 ​ 694759.8 ​ 1501590 ​ 1548425 ​ 8 C 12.0000 14.93500 (123.0000) (120.5000) 500000.0 769458.3 1326941 1652649 10 D 9.8950 11.08333 (117.8167) (116.0667) 410465.2 602326.1 1093913 1225353 11 DD — Decimal degrees, UTM — Universal Transverse Mercator map projection As the CCZ deposit does not include any habitable land and is not near coastal waters, there is no requirement to negotiate access rights from landowners for seafloor collection operations.
Royalties and taxes See Business-Government Regulations-Royalties and taxes above for information with respect to our obligations for royalties and taxes in the TOML Contract Area. History of previous exploration activities in the TOML Area Prior to the implementation of UNCLOS, many offshore exploration campaigns were completed by international organizations and consortia.
Royalties and taxes See Business Regulations-Royalties and taxes above for information with respect to our obligations for royalties and taxes in the TOML Contract Area. History of previous exploration activities in the TOML Area Prior to the implementation of UNCLOS, many offshore exploration campaigns were completed by international organizations and consortia.
The Qualified Person considered that the combination of the TOML historical nodule sample data (physical samples and photo based long axis estimates) combined with detailed backscatter, photo profiling and geological interpretation is sufficient to estimate polymetallic nodule indicated mineral resources and, in one small especially data rich area, measured mineral resources. 93 Table of Contents The primary characteristic of the polymetallic nodule deposit that separates this deposit from typical terrestrial manganese, nickel and copper deposits is that the nodules themselves can be accurately mapped through photo-profiles and backscatter acoustic response.
The Qualified Person considered that the combination of the TOML historical nodule sample data (physical samples and photo based long axis estimates) combined with detailed backscatter, photo profiling and geological interpretation is sufficient to estimate polymetallic nodule indicated mineral resources and, in one small especially data rich area, measured mineral resources. 101 Table of Contents The primary characteristic of the polymetallic nodule deposit that separates this deposit from typical terrestrial manganese, nickel and copper deposits is that the nodules themselves can be accurately mapped through photo-profiles and backscatter acoustic response.
NORI Area A, B and C December 31, 2022 In-Situ Mineral Resource estimate at 4 kg/m 2 abundance cut-off ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nodule tonnage ​ Abundance ​ Ni ​ Cu ​ Co ​ Mn NORI Area Category (Mt (wet)) (wet kg/m 2 ) (%) (%) (%) (%) A Inferred 72 9.4 1.35 1.06 0.22 28.0 B Inferred 36 11 1.43 1.13 0.25 28.9 C Inferred 402 11 1.26 1.03 0.21 28.3 Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
NORI Area A, B and C December 31, 2023 In-Situ Mineral Resource estimate at 4 kg/m 2 abundance cut-off ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nodule tonnage ​ Abundance ​ Ni ​ Cu ​ Co ​ Mn NORI Area Category (Mt (wet)) (wet kg/m 2 ) (%) (%) (%) (%) A Inferred 72 9.4 1.35 1.06 0.22 28.0 B Inferred 36 11 1.43 1.13 0.25 28.9 C Inferred 402 11 1.26 1.03 0.21 28.3 Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
Lockheed’s design efforts resulted in over 80 patents, a seafloor production system that consisted of a remote-controlled collector and crusher, a seafloor to surface slurry riser system, the first industrial-scale dynamic positioning system for a vessel, and a metallurgical processing plant. 69 Table of Contents Upon making an application, the pioneer investors were required to submit sufficient data and information to enable designation of a reserved area based on the estimated commercial value.
Lockheed’s design efforts resulted in over 80 patents, a seafloor production system that consisted of a remote-controlled collector and crusher, a seafloor to surface slurry riser system, the first industrial-scale dynamic positioning system for a vessel, and a metallurgical processing plant. 77 Table of Contents Upon making an application, the pioneer investors were required to submit sufficient data and information to enable designation of a reserved area based on the estimated commercial value.
Battery grade nickel and cobalt sulfate are expected to then be crystallized from the purified solutions. 91 Table of Contents The pyrometallurgical process is expected to form two byproducts as well as the matte for the hydrometallurgical refinery: ● an electric furnace slag containing silica and 53% MnO that is intended to be sold as feed to the Si-Mn industry; and ● a converter aisle slag that could be used for aggregate in road construction or other applications.
Battery grade nickel and cobalt sulfate are expected to then be crystallized from the purified solutions. 99 Table of Contents The pyrometallurgical process is expected to form two byproducts as well as the matte for the hydrometallurgical refinery: ● an electric furnace slag containing silica and 53% MnO that is intended to be sold as feed to the Si-Mn industry; and ● a converter aisle slag that could be used for aggregate in road construction or other applications.
A cut-off of 4 kg/m 2 abundance was chosen for the TOML Contract Area, based on the estimates of costs and revenues presented in the initial assessment contained in the NORI Technical Report Summary, generalized as follows: 1.7 Mt minimum annual tonnage mined; $0.25 Million/km 2 for offshore operating costs; 1,036 km 2 collected area processed; $95/dry tonne for transport costs; $119/dry tonne for processing costs; $15/dry tonne for corporate, general and administrative costs; $33/dry tonne for ISA and state royalties; 95% recovery of nickel at an assumed price of nickel metal $16,472/t; 86% recovery of copper at an assumed price of $6,872/t copper metal; 77% recovery of cobalt at an assumed price of $46,333/t cobalt metal; and 99% recovery of manganese at an assumed price of $4.50/dmtu manganese in manganese silicate.
A cut-off of 4 kg/m 2 abundance was chosen for the TOML Contract Area, based on the estimates of costs and revenues presented in the initial assessment contained in the NORI Technical Report Summary, generalized as follows: 1.7 Mt minimum annual tonnage mined; $0.25 million/square kilometers for offshore operating costs; 1,036 square kilometers collected area processed; $95/dry tonne for transport costs; $119/dry tonne for processing costs; $15/dry tonne for corporate, general and administrative costs; $33/dry tonne for ISA and state royalties; 95% recovery of nickel at an assumed price of nickel metal $16,472/t; 86% recovery of copper at an assumed price of $6,872/t copper metal; 77% recovery of cobalt at an assumed price of $46,333/t cobalt metal; and 99% recovery of manganese at an assumed price of $4.50/dmtu manganese in manganese silicate.
Measured mineral resource was based on box core sampling by TOML on a nominal spacing of approximately 7 km by 7 km plus photo-profiling on a nominal spacing of 3.5 km by 3.0 km, supplemented by sampling by pioneer contractors.
Measured mineral resource was based on box core sampling by TOML on a nominal spacing of approximately 7 km by 7 kilometers plus photo-profiling on a nominal spacing of 3.5 kilometers by 3.0 kilometers, supplemented by sampling by pioneer contractors.
NORI obligations and sponsorship See Business-Government Regulations-The NORI Exploration Contract, Business-Government Regulations-The NORI Sponsorship Agreement above for information related to this agreement in the NORI Contract Area. Royalties and taxes See Business -Government Regulations-Royalties and taxes above for information with respect to our obligations for royalties and taxes in the NORI Contract Area.
NORI obligations and sponsorship See Business Regulations-The NORI Exploration Contract, Business Regulations-The NORI Sponsorship Agreement above for information related to this agreement in the NORI Contract Area. Royalties and taxes See Business Regulations-Royalties and taxes above for information with respect to our obligations for royalties and taxes in the NORI Contract Area.
Tenements and permits See Business-Government Regulations-The TOML Exploration Contract, Business-Government Regulations-The TOML Sponsorship Agreement and Business-Government Regulations- International Seabed Authority above for information related to tenements and permits in the TOML Contract Area TOML obligations and sponsorship See Business-Government Regulations-The TOML Exploration Contract, Business-Government Regulations-The TOML Sponsorship Agreement above for information related to this agreement in the TOML Contract Area.
Tenements and permits See Business Regulations-The TOML Exploration Contract, Business Regulations-The TOML Sponsorship Agreement and Business Regulations- International Seabed Authority above for information related to tenements and permits in the TOML Contract Area TOML obligations and sponsorship See Business Regulations-The TOML Exploration Contract, Business Regulations-The TOML Sponsorship Agreement above for information related to this agreement in the TOML Contract Area.
The OMI consortium comprised Inco Ltd (Canada), AMR (Federal Republic of Germany), SEDCO Inc. (US), and Deep Ocean Mining Co. Ltd (Japan). OMI completed a successful trial collection operation in 1978. Hydraulic pumps, an air lift system, and towed collectors were tested in approximately 4,500 m of water. Approximately 800 tonnes of nodules were recovered.
The OMI consortium comprised Inco Ltd (Canada), AMR (Federal Republic of Germany), SEDCO Inc. (US), and Deep Ocean Mining Co. Ltd (Japan). OMI completed a successful trial collection operation in 1978. Hydraulic pumps, an air lift system, and towed collectors were tested in approximately 4,500 meters of water. Approximately 800 tonnes of nodules were recovered.
TOML also present the results of field, submitted and laboratory duplicates of nodule samples. 87 Table of Contents Analysis of the data revealed that, as a consequence of their origin, nodule grades vary only slightly across the CCZ, with spatial continuity of the abundance, Mn, Ni, Co, and Cu grades often ranging from the order of several kilometers up to several tens of kilometers.
TOML also present the results of field, submitted and laboratory duplicates of nodule samples. 95 Table of Contents Analysis of the data revealed that, as a consequence of their origin, nodule grades vary only slightly across the CCZ, with spatial continuity of the abundance, Mn, Ni, Co, and Cu grades often ranging from the order of several kilometers up to several tens of kilometers.
This is discussed further in Section 11.9.4 of the TOML Technical Report Summary, which assessed the collection methods. The main items of offshore infrastructure are the nodule collector vehicles, the riser, and three production support vessels (PSV). 90 Table of Contents The nodules are expected to be collected from the seafloor by self-propelled, tracked, collector vehicles.
This is discussed further in Section 11.9.4 of the TOML Technical Report Summary, which assessed the collection methods. The main items of offshore infrastructure are the nodule collector vehicles, the riser, and three production support vessels (PSV). 98 Table of Contents The nodules are expected to be collected from the seafloor by self-propelled, tracked, collector vehicles.
The estimated mineral resources were determined in 2021, as of December 31, 2020, and also reflect the estimated mineral resources as of December 31, 2022, as none of the mineral resources in these areas were depleted by mining or any other activities. 88 Table of Contents Mineral Resource Estimate December 31, 2022, In-Situ, for the TOML Contract Area within the CCZ at a 4 kg/m 2 nodule abundance cut-off ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tonnes Abundance Ni Cu Co Mn Mineral Resource Classification ​ (x10 6 wet t)* ​ (wet kg/m 2 ) ​ (%) ​ (%) ​ (%) ​ (%) Measured ​ 2.6 ​ 11.8 ​ 1.33 ​ 1.05 ​ 0.23 ​ 27.6 Indicated 69.6 11.8 1.35 1.18 0.21 30.3 Measured + Indicated 72.2 11.8 1.35 1.18 0.21 30.2 Inferred 696 11.3 1.29 1.14 0.20 29.0 Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
The estimated mineral resources were determined in 2021, as of December 31, 2020, and also reflect the estimated mineral resources as of December 31, 2023, as none of the mineral resources in these areas were depleted by mining or any other activities. 96 Table of Contents Mineral Resource Estimate December 31, 2023, In-Situ, for the TOML Contract Area within the CCZ at a 4 kg/m 2 nodule abundance cut-off ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tonnes Abundance Ni Cu Co Mn Mineral Resource Classification ​ (x10 6 wet t)* ​ (wet kg/m 2 ) ​ (%) ​ (%) ​ (%) ​ (%) Measured ​ 2.6 ​ 11.8 ​ 1.33 ​ 1.05 ​ 0.23 ​ 27.6 Indicated 69.6 11.8 1.35 1.18 0.21 30.3 Measured + Indicated 72.2 11.8 1.35 1.18 0.21 30.2 Inferred 696 11.3 1.29 1.14 0.20 29.0 Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
Six block models were constructed using the geostatistical modelling programs Gstat 1.1-3 and R 3.2.5, one for each TOML Exploration Area (A to F), in three passes. The first pass used a parent block dimension of 1.75 km by 1.75 km and filled the areas defined as measured mineral resource.
Six block models were constructed using the geostatistical modelling programs Gstat 1.1-3 and R 3.2.5, one for each TOML Exploration Area (A to F), in three passes. The first pass used a parent block dimension of 1.75 kilometers by 1.75 kilometers and filled the areas defined as measured mineral resource.
Geology and sampling Seafloor polymetallic nodules occur in all oceans, but the CCZ hosts a relatively high abundance of high Ni and Cu grade nodules. The CCZ seafloor forms part of the Abyssal Plains, which are the largest physiographic province on Earth. The average depth of the seafloor in the Project Area is 3,800 to 4,200 m.
Geology and sampling Seafloor polymetallic nodules occur in all oceans, but the CCZ hosts a relatively high abundance of high Ni and Cu grade nodules. The CCZ seafloor forms part of the Abyssal Plains, which are the largest physiographic province on Earth. The average depth of the seafloor in the Project Area is 3,800 to 4,200 meters.
The CCZ seafloor forms part of the Abyssal Plains, which are the largest physiographic province on Earth. This mineral field is essentially a single mineral deposit almost 5,000 km in length and up to 600 km wide. The size and level of uniformity of mineralization is unmatched by any mineral deposit of similar value on land.
The CCZ seafloor forms part of the Abyssal Plains, which are the largest physiographic province on Earth. This mineral field is essentially a single mineral deposit almost 5,000 kilometers in length and up to 600 kilometers wide. The size and level of uniformity of mineralization is unmatched by any mineral deposit of similar value on land.
The Qualified Person considered that this timeframe is reasonable in view of the likely time required to bring the majority of the NORI mineral resources into production. Sampling of NORI Area D at a spacing of 10 km by 10 km during the 2019 campaign confirmed that the nodules have low variability and high continuity.
The Qualified Person considered that this timeframe is reasonable in view of the likely time required to bring the majority of the NORI mineral resources into production. Sampling of NORI Area D at a spacing of 10 kilometers by 10 kilometers during the 2019 campaign confirmed that the nodules have low variability and high continuity.
The pyrometallurgical process is expected to be similar to that successfully used to process some nickel laterite ores. 75 Table of Contents The hydrometallurgical refinery concept is based on a sulfuric acid leach flowsheet. A two-stage leach would be used to produce copper cathode and a pregnant leach solution rich in nickel and cobalt, while low in copper.
The pyrometallurgical process is expected to be similar to that successfully used to process some nickel laterite ores. 83 Table of Contents The hydrometallurgical refinery concept is based on a sulfuric acid leach flowsheet. A two-stage leach would be used to produce copper cathode and a pregnant leach solution rich in nickel and cobalt, while low in copper.
This plan will involve an ecosystem approach incorporating an adaptive management system. 76 Table of Contents The social impacts of the offshore operation are expected to be positive. The CCZ is uninhabited by people, and there are no landowners associated with the CCZ. No significant commercial fishing is carried out in the area.
This plan will involve an ecosystem approach incorporating an adaptive management system. 84 Table of Contents The social impacts of the offshore operation are expected to be positive. The CCZ is uninhabited by people, and there are no landowners associated with the CCZ. No significant commercial fishing is carried out in the area.
The estimates are based on the historical box-core and free fall-grab nodule sampling (262 samples) supplemented with recently acquired TOML nodule box core (113 samples) and photo-profile data (20,857 frames over 587 line km). Only sample data within the TOML Contract Area was used to inform the estimates.
The estimates are based on the historical box-core and free fall-grab nodule sampling (262 samples) supplemented with recently acquired TOML nodule box core (113 samples) and photo-profile data (20,857 frames over 587 line kilometers). Only sample data within the TOML Contract Area was used to inform the estimates.
The project is expected to provide a source of revenue to the sponsor country, Tonga, and to the ISA. 92 Table of Contents The onshore environmental and social impacts have not yet been assessed because the process plant has not been designed in detail, and the location and host country (and hence regulatory regime) not confirmed.
The project is expected to provide a source of revenue to the sponsor country, Tonga, and to the ISA. 100 Table of Contents The onshore environmental and social impacts have not yet been assessed because the process plant has not been designed in detail, and the location and host country (and hence regulatory regime) not confirmed.
From here, the CCZ extends almost 5,000 km east-northeast, in an approximately 600 km wide trend, with the eastern limits approximately 2,000 km west of southern Mexico. The region is well-located to ship nodules to the American continent or across the Pacific to Asian markets.
From here, the CCZ extends almost 5,000 kilometers east-northeast, in an approximately 600 kilometers wide trend, with the eastern limits approximately 2,000 kilometers west of southern Mexico. The region is well-located to ship nodules to the American continent or across the Pacific to Asian markets.
This cut-off is derived from the estimates of costs and revenues presented in the NORI Technical Report Summary, generalized as follows: 1.7 Mt minimum annual tonnage mined; $0.25 million/km 2 for offshore operating costs; 1,036 km 2 collected area processed; $95/dry tonne for transport costs; $119/dry tonne for processing costs; $15/dry tonne for corporate, general and administrative costs; $33/dry tonne for ISA and state royalties; 95% recovery of nickel at an assumed price of nickel metal $16,472/t; 86% recovery of copper at an assumed price of $6,872/t copper metal; 77% recovery of cobalt at an assumed price of $46,333/t cobalt metal; and 99% recovery of manganese at an assumed price of $4.50/dmtu manganese in manganese silicate.
This cut-off is derived from the estimates of costs and revenues presented in the NORI Technical Report Summary, generalized as follows: 1.7 Mt minimum annual tonnage mined; $0.25 million/square kilometers for offshore operating costs; 1,036 square kilometers collected area processed; $95/dry tonne for transport costs; $119/dry tonne for processing costs; $15/dry tonne for corporate, general and administrative costs; $33/dry tonne for ISA and state royalties; 95% recovery of nickel at an assumed price of nickel metal $16,472/t; 86% recovery of copper at an assumed price of $6,872/t copper metal; 77% recovery of cobalt at an assumed price of $46,333/t cobalt metal; and 99% recovery of manganese at an assumed price of $4.50/dmtu manganese in manganese silicate.
See Section 5 of the TOML Technical Report Summary for further specific information of the history of previous exploration of the TOML Contract Area. 86 Table of Contents Geology and sampling Seafloor polymetallic nodules occur in all oceans but the CCZ hosts a relatively high abundance of nodules.
See Section 5 of the TOML Technical Report Summary for further specific information of the history of previous exploration of the TOML Contract Area. 94 Table of Contents Geology and sampling Seafloor polymetallic nodules occur in all oceans but the CCZ hosts a relatively high abundance of nodules.
The measured mineral resource was assigned to the area within NORI Area D where box-core sampling was conducted on a nominal 7 km by 7 km spacing and infilled with estimates of nodule abundance from seafloor photography to a spacing of 3.5 km by 3.5 km.
The measured mineral resource was assigned to the area within NORI Area D where box-core sampling was conducted on a nominal 7 kilometers by 7 kilometers spacing and infilled with estimates of nodule abundance from seafloor photography to a spacing of 3.5 kilometers by 3.5 kilometers.
The function of the collector support vessel will be to facilitate collector maintenance and repair. 74 Table of Contents The NORI Technical Report Summary assumes that transportation of nodules will be by chartered vessels, with deadweight capacities of 35,000 to 100,000 tonnes.
The function of the collector support vessel will be to facilitate collector maintenance and repair. 82 Table of Contents The NORI Technical Report Summary assumes that transportation of nodules will be by chartered vessels, with deadweight capacities of 35,000 to 100,000 tonnes.
The indicated mineral resource was assigned to the area within NORI Area D where box-core sampling was conducted on a nominal spacing of 7 km by 7 km or 10 km by 10 km but without additional photo-estimates of nodule abundance.
The indicated mineral resource was assigned to the area within NORI Area D where box-core sampling was conducted on a nominal spacing of 7 kilometers by 7 kilometers or 10 kilometers by 10 kilometers but without additional photo-estimates of nodule abundance.
The Collector Ship 1 PSV is expected to be similar in size to an Aframax or New Panamax class of tanker, displacing approximately 103,000 t, and housing a crew of around 120 personnel.
The Collector Ship 1 PSV is expected to be similar in size to an Aframax or New Panamax class of tanker, displacing approximately 103,000 tonnes, and housing a crew of around 120 personnel.
Inferred mineral resource classification was based on sampling by pioneer contractors on a nominal spacing of 20 km, the variation and uncertainty in the sample quality, and the likely presence of short-range variation to nodule abundance.
Inferred mineral resource classification was based on sampling by pioneer contractors on a nominal spacing of 20 kilometers, the variation and uncertainty in the sample quality, and the likely presence of short-range variation to nodule abundance.
Indicated mineral resource classification was based on box core sampling by TOML on a nominal spacing of approximately 7 km by 7 km (including photo profiling in some cases at 7 km by 3 km), supplemented by sampling by pioneer contractors.
Indicated mineral resource classification was based on box core sampling by TOML on a nominal spacing of approximately 7 kilometers by 7 kilometers (including photo profiling in some cases at 7 kilometers by 3 kilometers), supplemented by sampling by pioneer contractors.
From here, the CCZ extends over 4,500 km east-northeast, in an approximately 600 km wide trend, with the eastern limits approximately 2,000 km west of southern Mexico. The region is well-located to ship nodules to the American continent or across the Pacific to Asian markets.
From here, the CCZ extends over 4,500 kilometers east-northeast, in an approximately 600 kilomeers wide trend, with the eastern limits approximately 2,000 kilometers west of southern Mexico. The region is well-located to ship nodules to the American continent or across the Pacific to Asian markets.
The TOML Contract Area comprises six separate blocks (A through F) in the CCZ with a combined area of 74,713 km 2 . ​ ​ TOML Contract Area extents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Maximum Minimum Maximum Minimum Maximum Minimum Maximum ​ ​ ​ Latitude ​ Latitude ​ Longitude ​ Longitude ​ UTM X ​ UTM X ​ UTM Y ​ UTM Y ​ UTM Area ​ (DD) ​ (DD) ​ (DD) ​ (DD) ​ (m) ​ (m) ​ (m) ​ (m) ​ Zone A ​ 7.167 N ​ 8.167 N ​ 151.667 W ​ 152.510 W ​ 553972 ​ 647187 ​ 792205 ​ 902968 ​ 05N B ​ 13.580 N ​ 14.667 N ​ 132.000 W ​ 133.200 W ​ 694518 ​ 824685 ​ 1502009 ​ 1623605 ​ 08P C 15.000 N 15.800 N 128.583 W 131.000 W 284947 544791 1658371 1747847 09P D 13.125 N 14.083 N 123.583 W 125.333 W 247293 437022 1451031 1557860 10P E 12.750 N 13.083 N 123.583 W 125.333 W 246693 436796 1409563 1447513 10P F 9.895 N 11.083 N 117.817 W 118.917 W 289835 410804 1093917 1225828 11P ​ DD — Decimal degrees, UTM — Universal Transverse Mercator map projection 85 Table of Contents The CCZ lies between Hawaii and Mexico and is accessible by ship from various ports in the United States and South America.
The TOML Contract Area comprises six separate blocks (A through F) in the CCZ with a combined area of 74,713 square kilometers. ​ ​ TOML Contract Area extents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Maximum Minimum Maximum Minimum Maximum Minimum Maximum ​ ​ ​ Latitude ​ Latitude ​ Longitude ​ Longitude ​ UTM X ​ UTM X ​ UTM Y ​ UTM Y ​ UTM Area ​ (DD) ​ (DD) ​ (DD) ​ (DD) ​ (m) ​ (m) ​ (m) ​ (m) ​ Zone A ​ 7.167 N ​ 8.167 N ​ 151.667 W ​ 152.510 W ​ 553972 ​ 647187 ​ 792205 ​ 902968 ​ 05N B ​ 13.580 N ​ 14.667 N ​ 132.000 W ​ 133.200 W ​ 694518 ​ 824685 ​ 1502009 ​ 1623605 ​ 08P C 15.000 N 15.800 N 128.583 W 131.000 W 284947 544791 1658371 1747847 09P D 13.125 N 14.083 N 123.583 W 125.333 W 247293 437022 1451031 1557860 10P E 12.750 N 13.083 N 123.583 W 125.333 W 246693 436796 1409563 1447513 10P F 9.895 N 11.083 N 117.817 W 118.917 W 289835 410804 1093917 1225828 11P ​ DD — Decimal degrees, UTM — Universal Transverse Mercator map projection 93 Table of Contents The CCZ lies between Hawaii and Mexico and is accessible by ship from various ports in the U.S. and South America.
The discounted cash flows and progressive NPVs are shown below: ​ ​ 82 Table of Contents The date of the investment decision, as outlined in the initial assessment contained in the NORI Technical Report Summary was expected to be on or around June 30, 2023.
The discounted cash flows and progressive NPVs are shown below: ​ ​ The date of the investment decision, as outlined in the initial assessment contained in the NORI Technical Report Summary was expected to be on or around June 30, 2023.
See Section 3 of the NORI Technical Report Summary for further specific information of the location of the NORI Contract Area. 68 Table of Contents Tenements and permits See Business-Government Regulations-The NORI Exploration Contract, Business-Government Regulations-The NORI Sponsorship Agreement and Business-Government Regulations- International Seabed Authority above for information related to tenements and permits in the NORI Contract Area.
See Section 3 of the NORI Technical Report Summary for further specific information of the location of the NORI Contract Area. 76 Table of Contents Tenements and permits See Business Regulations-The NORI Exploration Contract, Business Regulations-The NORI Sponsorship Agreement and Business Regulations- International Seabed Authority above for information related to tenements and permits in the NORI Contract Area.
Undiscounted payback period is 6.6 years after commencement of production. 81 Table of Contents The total cash flows are summarized below: ​ ​ ​ ​ ​ Value ​ ($ million) Cash flow item ​ ​ ​ Ni revenue $ 44,106 Mn revenue $ 26,785 Cu revenue $ 12,685 Co revenue $ 11,075 Ammonium sulfate revenue $ 439 Total revenue $ 95,090 Pre-project capital $ 237 Offshore construction $ 2,448 Onshore construction $ 4,786 Offshore sustaining capital $ 1,418 Onshore sustaining capital $ 1,219 Closure costs $ 500 Total capital $ 10,608 Offshore operating costs $ 5,154 Shipping costs $ 5,266 Onshore operating costs $ 26,544 Corporate costs $ 560 Total operating costs $ 37,524 Royalties $ 7,195 Onshore tax $ 9,123 Taxes and royalties $ 16,318 Net undiscounted cash flow $ 30,640 ​ Project revenues are expected to come from the following sources: (a) a nickel sulfate product; (b) a copper cathode product; (c) a cobalt sulfate product; (d) a manganese silicate product; (e) an ammonium sulfate product; (f) a nickel alloy product containing copper and cobalt; and (g) a matte product from the NORI pyrometallurgical plants containing nickel, copper and cobalt which would be sold to the matte market.
The total cash flows are summarized below: ​ ​ ​ ​ ​ Value ​ ($ million) Cash flow item ​ ​ ​ Ni revenue $ 44,106 Mn revenue $ 26,785 Cu revenue $ 12,685 Co revenue $ 11,075 Ammonium sulfate revenue $ 439 Total revenue $ 95,090 Pre-project capital $ 237 Offshore construction $ 2,448 Onshore construction $ 4,786 Offshore sustaining capital $ 1,418 Onshore sustaining capital $ 1,219 Closure costs $ 500 Total capital $ 10,608 Offshore operating costs $ 5,154 Shipping costs $ 5,266 Onshore operating costs $ 26,544 Corporate costs $ 560 Total operating costs $ 37,524 Royalties $ 7,195 Onshore tax $ 9,123 Taxes and royalties $ 16,318 Net undiscounted cash flow $ 30,640 89 Table of Contents Project revenues are expected to come from the following sources: (a) a nickel sulfate product; (b) a copper cathode product; (c) a cobalt sulfate product; (d) a manganese silicate product; (e) an ammonium sulfate product; (f) a nickel alloy product containing copper and cobalt; and (g) a matte product from the NORI pyrometallurgical plants containing nickel, copper and cobalt which would be sold to the matte market.
These changes show that it is reasonable to expect that the majority of inferred mineral resources could be upgraded to indicated or measured resources with further exploration. 89 Table of Contents Information concerning our mineral properties in the TOML Technical Report Summary and in this Annual Report on Form 10-K includes information that has been prepared in accordance with the requirements of the SEC Mining Rules set forth in subpart 1300 of Regulation S-K.
These changes show that it is reasonable to expect that the majority of inferred mineral resources could be upgraded to indicated or measured resources with further exploration. 97 Table of Contents Information concerning our mineral properties in the TOML Technical Report Summary and in this Annual Report includes information that has been prepared in accordance with the requirements of the SEC Mining Rules set forth in subpart 1300 of Regulation S-K.
As used in this Annual Report on Form 10-K, the terms “mineral resource,” “measured mineral resource,” “indicated mineral resource” and “inferred mineral resource” are defined and used in accordance with the SEC Mining Rules set forth in subpart 1300 of Regulation S-K.
As used in this Annual Report, the terms “mineral resource,” “measured mineral resource,” “indicated mineral resource” and “inferred mineral resource” are defined and used in accordance with the SEC Mining Rules set forth in subpart 1300 of Regulation S-K.
The second pass for indicated mineral resource used a parent block size of 3.5 km by 3.5 km while the third pass for inferred mineral resource used a parent block size of 7.0 km by 7.0 km.
The second pass for indicated mineral resource used a parent block size of 3.5 kilometers by 3.5 kilometers while the third pass for inferred mineral resource used a parent block size of 7.0 kilometers by 7.0 kilometers.
Whenever these facilities are at maximum capacity (particularly during the ramp-up phase), the surplus nodules are expected to be sent for toll treatment. NORI expects that it will ensure that its own hydrometallurgical refineries are filled up to maximum capacity, as this is expected to produce the highest value products.
Whenever these facilities are at maximum capacity (particularly during the ramp-up phase), the surplus nodules are expected to be sent for toll treatment. 85 Table of Contents NORI expects that it will ensure that its own hydrometallurgical refineries are filled up to maximum capacity, as this is expected to produce the highest value products.
This system also provided backscatter data with which seafloor characteristics could be interpreted; ● detailed seafloor survey work with an autonomous underwater vehicle (AUV), utilizing an MBES, Side Scan Sonar (SSS), Sub-Bottom Profiler (SBP), and camera payload; and ● a total of 252 box core samples collected using a 0.75 m 2 box corer, mainly on a 10 km by 10 km square grid were used for resource evaluation. 70 Table of Contents The nodules in the box cores were collected, and their characteristics measured and recorded in detail.
This system also provided backscatter data with which seafloor characteristics could be interpreted; ● detailed seafloor survey work with an autonomous underwater vehicle (AUV), utilizing an MBES, Side Scan Sonar (SSS), Sub-Bottom Profiler (SBP), and camera payload; and ● a total of 252 box core samples collected using a 0.75 square meters box corer, mainly on a 10 kilometers by 10 kilometers square grid were used for resource evaluation. 78 Table of Contents The nodules in the box cores were collected, and their characteristics measured and recorded in detail.
These estimates are presented on an undiluted basis without adjustment for resource recovery. ​ Information concerning our mineral properties in the NORI Technical Report Summary and in this Annual Report on Form 10-K includes information that has been prepared in accordance with the requirements of the SEC Mining Rules set forth in subpart 1300 of Regulation S-K.
These estimates are presented on an undiluted basis without adjustment for resource recovery. 80 Table of Contents Information concerning our mineral properties in the NORI Technical Report Summary and in this Annual Report includes information that has been prepared in accordance with the requirements of the SEC Mining Rules set forth in subpart 1300 of Regulation S-K.
The NORI Contract Area is an exploration stage property. 67 Table of Contents Location of the NORI Area and access The NORI Contract Area is located within the CCZ of the northeast Pacific Ocean. The CCZ is located in international waters between Hawaii and Mexico. The western-end of the CCZ is approximately 1,000 km south of the Hawaiian island group.
The NORI Contract Area is an exploration stage property. 75 Table of Contents Location of the NORI Area and access The NORI Contract Area is located within the CCZ of the northeast Pacific Ocean. The CCZ is located in international waters between Hawaii and Mexico. The western-end of the CCZ is approximately 1,000 kilometers south of the Hawaiian island group.
The TOML Contract Area is an exploration stage property. 84 Table of Contents Location of the TOML Contract Area and access The TOML Area is located within the CCZ of the northeast Pacific Ocean. The CCZ is located in international waters between Hawaii and Mexico. The western-end of the CCZ is approximately 1,000 km south of the Hawaiian island group.
The TOML Contract Area is an exploration stage property. 92 Table of Contents Location of the TOML Contract Area and access The TOML Area is located within the CCZ of the northeast Pacific Ocean. The CCZ is located in international waters between Hawaii and Mexico. The western-end of the CCZ is approximately 1,000 kilometers south of the Hawaiian island group.
These RKEF plants were originally built to convert nickel laterite to nickel pig iron and could be converted to smelt polymetallic nodules. ● In Project One, a purpose-built process plant would be constructed, including pyrometallurgical (~50% of Project One production, with the other ~50% tolled through existing RKEF facilities) and hydrometallurgical circuits (100% of Project One production).
These RKEF plants were originally built to convert nickel laterite to nickel pig iron and could be converted to smelt polymetallic nodules with minor modifications. 81 Table of Contents ● In Project One, a purpose-built process plant would be constructed, including pyrometallurgical (~50% of Project One production, with the other ~50% tolled through existing RKEF facilities) and hydrometallurgical circuits (100% of Project One production).
Assumed Economic Inputs ​ ​ ​ ​ ​ ​ Parameters Units Values Hydrometallurgical plant Ni recovery ​ % ​ 94.6 % Mn recovery % ​ 98.9 % Hydrometallurgical plant Cu recovery % ​ 86.2 % Hydrometallurgical plant Co recovery % ​ 77.2 % Pyrometallurgical plant Ni recovery % ​ 96.8 % Pyrometallurgical plant Cu recovery % ​ 93.3 % Pyrometallurgical plant Co recovery % ​ 92.7 % Mn silicate grade % ​ 40.0 % Cu cathode grade % ​ 99.9 % Payability of Cu content in cathode % ​ 100 % Nodule moisture content % ​ 24 % Onshore tax rate % of taxable income 20 % Average offshore tax (to ISA) % of taxable income 6.7 % ​ Commodity Prices Project revenues will come from the following sources: ● a nickel sulfate product; ● a copper cathode product; ● a cobalt sulfate product; ● a manganese silicate product; ● an ammonium sulfate product; ● a nickel alloy product containing copper and cobalt; and ● a matte product from the NORI pyrometallurgical plants containing nickel, copper and cobalt, which would be sold to the matte market.
Assumed Economic Inputs ​ ​ ​ ​ ​ ​ Parameters Units Values Hydrometallurgical plant Ni recovery ​ % ​ 94.6 % Mn recovery % ​ 98.9 % Hydrometallurgical plant Cu recovery % ​ 86.2 % Hydrometallurgical plant Co recovery % ​ 77.2 % Pyrometallurgical plant Ni recovery % ​ 96.8 % Pyrometallurgical plant Cu recovery % ​ 93.3 % Pyrometallurgical plant Co recovery % ​ 92.7 % Mn silicate grade % ​ 40.0 % Cu cathode grade % ​ 99.9 % Payability of Cu content in cathode % ​ 100 % Nodule moisture content % ​ 24 % Onshore tax rate % of taxable income 20 % Average offshore tax (to ISA) % of taxable income 6.7 % ​ Commodity Prices Project revenues will come from the following sources: ● a nickel sulfate product; ● a copper cathode product; ● a cobalt sulfate product; ● a manganese silicate product; ● an ammonium sulfate product; ● a nickel alloy product containing copper and cobalt; and ● a matte product from the NORI pyrometallurgical plants containing nickel, copper and cobalt, which would be sold to the matte market. 86 Table of Contents NORI has used the following payable percentages for the alloy: ● Nickel: 80% of in-situ value in the alloy; ● Copper: 40% of in-situ value in the alloy; and ● Cobalt: 80% of in-situ value in the alloy.
The proposed seafloor development phases are as follows: ● The Collector Test is designed to perform proof of concept for the methods of collecting and lifting the nodules while acquiring sufficient data to design a commercial system. The Collector Test would use a converted sixth generation drillship, the Hidden Gem .
The proposed seafloor development phases are as follows: ● The Collector Test was designed to perform proof of concept for the methods of collecting and lifting the nodules while acquiring sufficient data to design a commercial system. The Collector Test used a converted sixth generation drillship, the Hidden Gem .
Nodules collected during the test would be stored on the Hidden Gem and brought to shore for use in large scale process pilot testing.
Nodules collected during the test were stored on the Hidden Gem and brought to shore for use in large scale process pilot testing.
The production schedule assumes staged operation initially of the Hidden Gem , then Drill Ship 2 and finally Collector Vessel 1, as outlined in Section 16.1 of the NORI Technical Report Summary. 79 Table of Contents The nodule metal grades and nodule abundance varying annually according to the LOM schedule.
This is approximately 2% of the total LOM production. 87 Table of Contents The production schedule assumes staged operation initially of the Hidden Gem , then Drill Ship 2 and finally Collector Vessel 1, as outlined in Section 16.1 of the NORI Technical Report Summary. The nodule metal grades and nodule abundance varying annually according to the LOM schedule.
Excluding the inferred mineral resources from the economic analysis, the post-tax project NPV is estimated at $6.7 billion, which is not a significant difference from the economic analysis that includes the inferred mineral resources. The project reaches its lowest cumulative undiscounted cash flow figure of $4.0 billion in 2026.
Excluding the inferred mineral resources from the economic analysis, the post-tax project NPV is estimated at $6.7 billion, which is not a significant difference from the economic analysis that includes the inferred mineral resources. The project reaches its lowest cumulative undiscounted cash flow figure of $4.0 billion in 2026. Undiscounted payback period is 6.6 years after commencement of production.
The metal prices assumed in the calculation of the cut-off were: nickel metal $16,472/t; nickel in nickel sulfate $18,807/t Ni; copper metal $6,872/t; cobalt metal $46,333/t; cobalt in cobalt sulfate $56,920/t Co; manganese in manganese silicate $4.50/dmtu. The price estimates are long term (2034 – 2046) forecasts provided in a report by CRU International Limited (CRU, October 23, 2020).
The metal prices assumed in the calculation of the cut-off were: nickel metal $16,472/t; copper metal $6,872/t; cobalt metal $46,333/t; cobalt in manganese in manganese silicate $4.50/dmtu. The price estimates are long term (2034 – 2046) forecasts provided in a report by CRU International Limited (CRU, October 23, 2020).
Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the TOML Technical Report Summary, which has been filed as exhibit 96.2 to this Annual Report on Form 10-K.
Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the TOML Technical Report Summary, which has been incorporated by reference as exhibit 96.2 to this Annual Report.
The metal prices assumed in the calculation of the cut-off were: nickel metal $16,472/t; nickel in nickel sulfate $18,807/t Ni; copper metal $6,872/t; cobalt metal $46,333/t; cobalt in cobalt sulfate $56,920/t Co; manganese in manganese silicate $4.50/dmtu. The price estimates are long term (2034 – 2046) forecasts provided in a report by CRU International Limited (CRU, 2020).
The metal prices assumed in the calculation of the cut-off were: nickel metal $16,472/t; copper metal $6,872/t; cobalt metal $46,333/t; manganese in manganese silicate $4.50/dmtu. The price estimates are long term (2034 – 2046) forecasts provided in a report by CRU International Limited (CRU, 2020).
Overall, the seafloor slopes at approximately 0.57˚ (1 m per km) but the Abyssal Plains are traversed by ridges, with amplitude of 50 to 300 m (maximum 1,000 m) and wavelength of 1 to 10 km. The Abyssal Plains are punctuated by extinct volcanoes rising 500 to 2,000 m above the seafloor.
Overall, the seafloor slopes at approximately 0.57˚ (1 meter per kilometer) but the Abyssal Plains are traversed by ridges, with amplitude of 50 to 300 meters (maximum 1,000 meters) and wavelength of 1 to 10 kilometers. The Abyssal Plains are punctuated by extinct volcanoes rising 500 to 2,000 meters above the seafloor.
NORI advises there is significant interest from many parties in China and Japan to utilize RKEF plants which may become stranded as a result of the Indonesian government nickel laterite ore export ban restricting supply of the nickel laterite feedstock that they currently utilize.
NORI advises there is significant interest from many parties in China, Indonesia and Japan to utilize RKEF plants which may become stranded as a result of the Indonesian government nickel laterite ore export ban restricting supply of the nickel laterite feedstock that they currently utilize and the significant recent build-out of capacity in Indonesia which may have resulted in processing capacity oversupply.
Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the NORI Technical Report Summary, which has been filed as Exhibit 96.1 to this Annual Report on Form 10-K.
Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the NORI Technical Report Summary, which has been incorporated by reference as Exhibit 96.1 to this Annual Report. The NORI Technical Report Summary is incorporated herein by reference and made a part hereof.
The phased approach will facilitate de-risking of the project for relatively low initial capital investment. Additionally, this phased development will allow for an adaptive approach to environmental management providing learning at small-scale which would be applied as the development increases in scale.
The phased approach will facilitate de-risking of the project for relatively low initial capital investment. Additionally, this phased development will allow for an adaptive approach to environmental management providing learning at small-scale which would be applied as the development increases in scale. The development plan has been refined since the creation of the NORI Technical Report Summary.
The test would not demonstrate the transshipment of nodules to a shore-based facility. ● Project Zero would be an extension of the Collector Test using an upgrade of the Hidden Gem to produce a sufficient and continuous quantity of nodules to support a relatively small commercial operation of at least 1.3 Mtpa (wet) nodules delivered to a shore-based facility.
The test did not demonstrate the transshipment of nodules to a shore-based facility. ● Project Zero System would be an extension of the Collector Test using an upgrade of the Hidden Gem to produce a sufficient and continuous quantity of nodules to support commercial operation commencing at 1.3 Mtpa increasing in staged increments to 3.0 Mtpa of wet nodules delivered to a shore-based facility.
The life of mine (“LOM”) production sequence includes 6 Mt (wet) of nodules that are classified as inferred mineral resources. This is approximately 2% of the total LOM production.
The life of mine (“LOM”) production sequence includes 6 Mt (wet) of nodules that are classified as inferred mineral resources.
The mineral resource estimate for the TOML Contract Area, and at a 4 kg/m 2 abundance cut-off is set forth below.
The mineral resource estimate for the TOML Contract Area, and at a 4 kilogram/square meters abundance cut-off is set forth below.
The mineral resource estimate for NORI Area D at a 4 kg/m 2 abundance cut-off is set forth below.
The mineral resource estimate for NORI Area D at a 4 kilogram/square meters abundance cut-off is set forth below.
Some of the alloy production from toll treatment of NORI nodules are expected to be shipped to the NORI hydrometallurgical plants to make use of spare capacity.
Some of the alloy production from toll treatment of NORI nodules are expected to be shipped to the NORI hydrometallurgical plants to make use of spare capacity. This will require the alloy from the third-party RKEF to be sulphidized prior to hydrometallurgical treatment.
NORI December 31, 2022 In-Situ Mineral Resource estimate for NORI Area D at 4 kg/m 2 abundance cut-off ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tonnes ​ Abundance ​ Nickel ​ Copper ​ Cobalt ​ Manganese ​ Silicon NORI Area Category (Mt (wet)) (wet kg/m 2 ) (%) (%) (%) (%) (%) D Measured 4 18.6 1.42 1.16 0.13 32.2 5.13 D Indicated 341 17.1 1.40 1.14 0.14 31.2 5.46 D Measured + Indicated 345 17.1 1.40 1.14 0.14 31.2 5.46 D Inferred 11 15.6 1.38 1.14 0.12 31.0 5.50 Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
The estimated mineral resources were determined in 2021 as of December 31, 2020 and also reflect the estimated mineral resources as of December 31, 2023, as none of the mineral resources in these areas were depleted by mining or any other activities. 79 Table of Contents NORI December 31, 2023 In-Situ Mineral Resource estimate for NORI Area D at 4 kg/m 2 abundance cut-off ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tonnes ​ Abundance ​ Nickel ​ Copper ​ Cobalt ​ Manganese ​ Silicon NORI Area Category (Mt (wet)) (wet kg/m 2 ) (%) (%) (%) (%) (%) D Measured 4 18.6 1.42 1.16 0.13 32.2 5.13 D Indicated 341 17.1 1.40 1.14 0.14 31.2 5.46 D Measured + Indicated 345 17.1 1.40 1.14 0.14 31.2 5.46 D Inferred 11 15.6 1.38 1.14 0.12 31.0 5.50 Note: Tonnes are quoted on a wet basis and grades are quoted on a dry basis, which is common practice for bulk commodities.
The NORI Technical Report Summary is incorporated herein by reference and made a part hereof. In the event that we determine that any modifying factors, estimates and other scientific and technical information in the report materially change, we may update or file a new technical report in the future.
In the event that we determine that any modifying factors, estimates and other scientific and technical information in the report materially change, we may update or file a new technical report in the future.
The method of calculation for the cut-off determines the minimum average nodule abundance needed during steady state operations such that the revenue minus costs (excluding capital) is greater than zero.
The method of calculation for the cut-off determines the minimum average nodule abundance needed during steady state operations such that the revenue minus costs (excluding capital) is greater than zero. Revenue includes metal pricing and metallurgical processing recoveries, and the costs include the collection, transport, processing, corporate costs and royalties.
NORI has used the following payable percentages for the alloy: ● Nickel: 80% of in-situ value in the alloy; ● Copper: 40% of in-situ value in the alloy; and ● Cobalt: 80% of in-situ value in the alloy. 78 Table of Contents The following estimates for treatment charges and refining charges for the alloy product were used in the NORI financial model: ● a refining charge of $1,697/tonne of contained nickel in the alloy; ● a refining charge of $800/tonne of contained nickel in the alloy; ● a refining charge of $6,700/tonne of contained nickel in the alloy; and ● a treatment charge $300/tonne of alloy.
The following estimates for treatment charges and refining charges for the alloy product were used in the NORI financial model: ● a refining charge of $1,697/tonne of contained nickel in the alloy; ● a refining charge of $800/tonne of contained nickel in the alloy; ● a refining charge of $6,700/tonne of contained nickel in the alloy; and ● a treatment charge $300/tonne of alloy.
The polymetallic nodule mineralization in NORI Areas A, B and C has similar characteristics to NORI Area D and it is reasonable to assume that the technology proposed in the NORI Technical Report Summary would be suitable for development of these additional areas. 72 Table of Contents The estimated mineral resources were determined in 2021 as of December 31, 2020 and also reflect the estimated mineral resources as of December 31, 2022, as none of the mineral resources in these areas were depleted by mining or any other activities.
The polymetallic nodule mineralization in NORI Areas A, B and C has similar characteristics to NORI Area D and it is reasonable to assume that the technology proposed in the NORI Technical Report Summary would be suitable for development of these additional areas.
Revenue includes metal pricing and metallurgical processing recoveries, and the costs include the collection, transport, processing, corporate costs and royalties. 71 Table of Contents The estimated mineral resources were determined in 2021 as of December 31, 2020 and also reflect the estimated mineral resources as of December 31, 2022, as none of the mineral resources in these areas were depleted by mining or any other activities.
The estimated mineral resources were determined in 2021 as of December 31, 2020 and also reflect the estimated mineral resources as of December 31, 2023, as none of the mineral resources in these areas were depleted by mining or any other activities.
Documentation verified by the Qualified Person includes photographs, daily exploration reports, digital logging sheets and original assay reports. In the opinion of the Qualified Person, the NORI data was of high quality and suitable for estimation of measured mineral resources.
In the opinion of the Qualified Person, the NORI data was of high quality and suitable for estimation of measured mineral resources.
The project is expected to provide a source of revenue to our sponsor country, Nauru, and the ISA. The onshore environmental and social impacts have not yet been assessed because the process plant has not been designed in detail, and the location and host country (and hence regulatory regime) not confirmed.
The onshore environmental and social impacts of these facilities have not been assessed because the tolling facilities have not been identified or a new-build process plant has not been designed in detail, and the location and host country (and hence regulatory regime) not confirmed.
The analysis was performed on a 100% ownership basis and excludes consideration of financing costs and forward metal sales. The analysis assumes the economic parameters listed in the table below.
Based on preliminary discussions with potential buyers, NORI believes that there is sufficient demand for the alloy and matte over the life of the project. The analysis was performed on a 100% ownership basis and excludes consideration of financing costs and forward metal sales. The analysis assumes the economic parameters listed in the table below.
However, the consistency between the abundance and grade data collected by the pioneer investors, as presented in Section 9.1 of the NORI Technical Report Summary, supports the contention that the quality of the pioneer investor data is satisfactory. 83 Table of Contents It is also reasonable to infer that the pioneer investor data are of sufficient quality for resource estimation because the ISA is an independent agency with significant accountability under the UNCLOS.
However, the consistency between the abundance and grade data collected by the pioneer investors, as presented in Section 9.1 of the NORI Technical Report Summary, supports the contention that the quality of the pioneer investor data is satisfactory.
The sensitivity of project economics to changes in the main variables was tested by selecting high and low values that represent a likely range of potential operating conditions. The variables with the biggest negative impact on NPV are all metal prices, total OPEX, collector speed, nickel sulfate price and development capex.
The variables with the biggest negative impact on NPV are all metal prices, total OPEX, collector speed, nickel sulfate price and development capex.
The analysis assumes NORI spending of $237 million on pre-project activities between 2021 (which were progressed in 2021) and 2024. The future value of the project on June 30, 2023 (after the pre-project expenditure is sunk and time has elapsed) is expected to be $8.6 billion and the initial rate of return from that point is expected to be 29%.
The future value of the project on June 30, 2023 (after the pre-project expenditure is sunk and time has elapsed) is expected to be $8.6 billion and the initial rate of return from that point is expected to be 29%. 90 Table of Contents The sensitivity of project economics to changes in the main variables was tested by selecting high and low values that represent a likely range of potential operating conditions.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSustainable Opportunities Acquisition Corp. n/k/a TMC The Metals Company Inc ., Index No. 650449/2023 (N.Y. Sup. Ct.). The complaint alleges that we breached the representations and warranties in the plaintiff’s PIPE Subscription Agreement and breached the covenant of good faith and fair dealing. The Plaintiffs are seeking to recover compensable damages caused by the alleged wrongdoings.
Biggest changeThe amended complaint alleges that we breached the representations and warranties in the plaintiffs’ private placement Subscription Agreements and breached the covenant of good faith and fair dealing. The Plaintiffs are seeking to recover compensable damages caused by the alleged wrongdoings. We deny any allegations of wrongdoing and filed a motion to dismiss the amended complaint on July 28, 2023.
A resolution of this lawsuit adverse to us or the other defendants, however, could have a material effect on our financial position and results of operations in the period in which the lawsuit is resolved. 94 Table of Contents In February 2022, we received letters from the SEC notifying us of an investigation and requesting the voluntary production of documents and information regarding our 2020 acquisition of Tonga Offshore Mining Limited from Deep Sea Mining Finance Ltd. and our Business Combination with SOAC.
A resolution of this lawsuit adverse to us or the other defendants, however, could have a material effect on our financial position and results of operations in the period in which the lawsuit is resolved. 102 Table of Contents In February 2022, we received letters from the SEC notifying us of an investigation and requesting the voluntary production of documents and information regarding our 2020 acquisition of Tonga Offshore Mining Limited from Deep Sea Mining Finance Ltd. and our Business Combination with SOAC.
Item 3. LEGAL PROCEEDINGS Except as set forth below, we are not currently a party to any material legal proceedings. On September 20, 2021, we commenced litigation in the New York Supreme Court, New York County against two investors who failed to fund their PIPE commitments in connection with the closing of the Business Combination.
Item 3. LEGAL PROCEEDINGS Except as set forth below, we are not currently a party to any material legal proceedings. On September 20, 2021, we commenced litigation in the New York Supreme Court, New York County against two investors who failed to fund their investment commitments in connection with the closing of the Business Combination.
On November 15, 2021, a second complaint containing substantially the same allegations was filed, captioned Tran v. TMC the Metals Company, Inc. These cases have been consolidated. On March 6, 2022, a lead plaintiff was selected. An amended complaint was filed on May 12, 2022, reflecting substantially similar allegations.
On November 15, 2021, a second complaint containing substantially the same allegations was filed, captioned Tran v. TMC the Metals Company, Inc. These cases have been consolidated. On March 6, 2022, a lead plaintiff was selected.
The Company is continuing to cooperate with the investigation and respond voluntarily to the SEC’s requests. On January 23, 2023, an investor in the 2021 PIPE from the Business Combination filed a lawsuit against us in New York Supreme Court, New York County, captioned Atalaya Special Purpose Investment Fund II LP et al. v.
The Company is continuing to cooperate with the investigation and respond voluntarily to the SEC’s requests. On January 23, 2023, investors in the 2021 private placement from the Business Combination filed a lawsuit against us in the Commercial Division of New York Supreme Court, New York County, captioned Atalaya Special Purpose Investment Fund II LP et al. v.
The Plaintiff is seeking to recover compensable damages caused by the alleged wrongdoings. We deny any allegations of wrongdoing and have filed and served the plaintiff a motion to dismiss on July 12, 2022 and intend to defend against this lawsuit. On September 26, 2022, the motion to dismiss was fully briefed and the parties are awaiting a ruling.
An amended complaint was filed on May 12, 2022, reflecting substantially similar allegations, with the Plaintiff seeking to recover compensable damages caused by the alleged wrongdoings. We deny any allegations of wrongdoing and filed and served the plaintiff a motion to dismiss on July 12, 2022 and intend to defend against this lawsuit.
There is no assurance, however, that we will be successful in our defense of this lawsuit or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of this action. If the motion to dismiss is unsuccessful, there is a possibility that we may incur a loss in this matter.
There is no assurance that we will be successful in our defense of this lawsuit or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of this action. Such losses or range of possible losses cannot be reliably estimated. Item 4.
Such losses or range of possible losses cannot be reliably estimated. Item 4. MINE SAFETY DISCLOSURES Not applicable. ​ 95 Table of Contents PART II ​
MINE SAFETY DISCLOSURES Not applicable. ​ 103 Table of Contents PART II ​
Removed
There have been no substantive developments in this case. We deny any allegations of wrongdoing and are preparing to file a motion to dismiss.
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On July 12, 2023, an oral hearing on the motion to dismiss was held. The parties are currently awaiting a ruling.
Added
Sustainable Opportunities Acquisition Corp. n/k/a TMC The Metals Company Inc., Index No. 650449/2023 (N.Y. Sup. Ct.). We filed a motion to dismiss on March 31, 2023, after which the plaintiffs filed an amended complaint on June 5, 2023.
Added
On December 7, 2023, the Court granted our motion to dismiss the claim for breach of the covenant of good faith and fair dealing and denied our motion to dismiss the breach of the Subscription Agreement claim. We filed a notice of appeal regarding the Court’s denial of our motion to dismiss the breach of the Subscription Agreement claim.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShareholders As of March 24, 2023, there were approximately 277,878,995 common shares issued and outstanding held of record by 106 holders, approximately 15,000,000 Public Warrants held of record by one holder and 9,500,000 private placement warrants issued in connection with SOAC’s initial public offering held of record by 22 holders, each exercisable for one Common Share at a price of $11.50 per share.
Biggest changeShareholders and Holders of Public Warrants As of March 22, 2024, there were approximately 318,249,878 Common Shares issued and outstanding held of record by 106 holders, approximately 15,000,000 Public Warrants held of record by one holder exercisable for one Common Share at a price of $11.50 per share.
Such numbers do not include beneficial owners holding our securities through nominee names. Unregistered Sales of Securities None Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the years ended December 31, 2022. Item 6. [RESERVED] ​
Such numbers do not include beneficial owners holding our securities through nominee names. Unregistered Sales of Securities None Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the quarter ended December 31, 2023. Item 6. [RESERVED] ​
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common shares and Public Warrants began trading on The Nasdaq Global Select Market on September 10, 2021 under the symbols “TMC” and “TMCWW,” respectively.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Shares and Public Warrants trade on The Nasdaq Global Select Market under the symbols “TMC” and “TMCWW,” respectively.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeComparison of the periods ended December 31, 2022 and 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Year Ended (Dollar amounts in thousands, ​ December 31, ​ December 31, ​ except as noted) 2022 2021 % Change 2022 2021 % Change ​ Exploration and evaluation expenses ​ $ 104,259 $ 12,825 712 % $ 144,599 $ 93,006 55 % General and administrative expenses ​ 7,016 ​ 15,445 (56) % ​ 29,518 ​ 56,583 (48) % Change in fair value of warrants liability ​ (1,251) ​ (8,497) 853 % ​ (2,143) ​ (9,375) 77 % Foreign exchange loss ​ 35 ​ 25 40 % ​ 24 ​ 82 (71) % Interest expense (income) ​ (567) ​ — N/A ​ (1,111) ​ 1,003 211 % Tax expense ​ ​ 77 ​ ​ — ​ N/A ​ ​ 77 ​ ​ — ​ N/A ​ Loss for the year, after tax ​ $ 109,569 ​ $ 19,798 452 % $ 170,964 ​ $ 141,299 21 % ​ Full Year 2022 compared to Full Year 2021 Exploration and Evaluation Expenses Exploration and evaluation expenses for the year ended December 31, 2022 were $144.6 million, compared to $93.0 million for the year ended December 31, 2021.
Biggest changeResults of Operations Comparison of the periods ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ For the Year Ended (Dollar amounts in thousands, ​ December 31, ​ December 31, ​ except as noted) 2023 2022 % Change 2023 2022 % Change ​ Exploration and evaluation expenses ​ $ 26,677 $ 104,259 (74) % $ 49,849 $ 144,599 (66) % General and administrative expenses ​ 6,582 ​ 7,016 (6) % ​ 22,540 ​ 29,518 (24) % Equity-accounted investment loss ​ ​ 96 ​ ​ — ​ N/A ​ ​ 571 ​ ​ — ​ N/A ​ Change in fair value of warrants liability ​ (228) ​ (1,251) 82 % ​ 986 ​ (2,143) 146 % Foreign exchange loss ​ 244 ​ 35 597 % ​ 310 ​ 24 1,192 % Interest income ​ ​ (205) ​ ​ (567) ​ (64) % ​ (1,297) ​ ​ (1,111) ​ 17 % Fees and interest on credit facility ​ 252 ​ — N/A ​ 781 ​ — N/A ​ Tax expense ​ ​ 41 ​ ​ 77 ​ (47) % ​ 41 ​ ​ 77 ​ (47) % Loss for the period, after tax ​ $ 33,459 ​ $ 109,569 (69) % $ 73,781 ​ $ 170,964 (57) % ​ Full Year 2023 compared to Full Year 2022 Exploration and Evaluation Expenses Exploration and evaluation expenses for the year ended December 31, 2023 were $49.8 million, compared to $144.6 million for the same period in 2022.
Accordingly, actual results could differ from these estimates and resulting variances may result in our need for additional funding in amount greater or earlier than expected, due to changes in business conditions or other developments, including, but not limited to, deferral of approvals, capital and operating cost escalation, currently unrecognized technical and development challenges, our ability to pay certain vendors or suppliers in our common shares or changes in external business environment.
Accordingly, actual results could differ from these estimates and resulting variances may result in our need for additional funding in an amount greater or earlier than expected, due to changes in business conditions or other developments, including, but not limited to, deferral of approvals, capital and operating cost escalation, currently unrecognized technical and development challenges, our ability to pay certain vendors or suppliers in our Common Shares or changes in external business environment.
If we are able to collect polymetallic nodules from the seafloor on a commercial scale, we plan to use such nodules to produce three types of metal products: (i) feedstock for battery cathode precursors (nickel and cobalt sulfates, or intermediate nickel-copper-cobalt matte) for EV and renewable energy storage markets, (ii) copper cathode for EV wiring, clean energy transmission and other applications and (iii) manganese silicate for manganese alloy production required for steel production.
If we are able to collect polymetallic nodules from the seafloor on a commercial scale, we plan to use such nodules to produce three types of metal products: (i) feedstock for battery cathode precursors (nickel, and cobalt sulfates, or intermediate nickel-copper-cobalt matte or nickel-copper-cobalt alloy) for EV and renewable energy storage markets, (ii) copper cathode for EV wiring, energy transmission and other applications and (iii) manganese silicate for manganese alloy production required for steel production.
All amounts drawn under the Credit Facility will bear interest at the 6-month Secured Overnight Funding Rate (SOFR), 180-day average plus 4.0% per annum payable in cash semi-annually (or plus 5% if paid-in-kind at maturity, at our election) on the first business day of each of June and January.
All amounts drawn under the 2024 Credit Facility will bear interest at the 6-month Secured Overnight Funding Rate (SOFR), 180-day average plus 4.0% per annum payable in cash semi-annually (or plus 5% if paid-in-kind at maturity, at our election) on the first business day of each of June and January.
Some of the information contained in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.
Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.
We have key strategic alliances with (i) Allseas, a leading global offshore contractor, which developed and tested a pilot collection system, which is expected to be modified into an initial smaller scale commercial production system and serve as the basis for the design of a full-scale commercial production system and (ii) Glencore International AG (Glencore) which holds offtake rights to 50% of the NORI nickel and copper production.
We have key strategic alliances with (i) Allseas, a leading global offshore contractor, which developed and tested a pilot collection system, which is expected to be modified into an initial smaller scale commercial production system and serve as the basis for the design of a full-scale commercial production system and (ii) Glencore which holds offtake rights to 50% of the NORI nickel and copper production.
There can be no assurance that we will enter into such binding MoU or definitive strategic alliance in a particular time period, or at all, or on terms similar to those set forth in the MoU, or that if such binding MoU or definitive strategic alliance are entered into by us or that the existing facility will be able to successfully process nodules in a particular time period, or at all.
There can be no assurance that we will enter into such definitive strategic alliance in a particular time period, or at all, or on terms similar to those set forth in the binding MoU, or that if such definitive strategic alliance is entered into by us or that the existing facility will be able to successfully process nodules in a particular time period, or at all.
Following the closing of the Business Combination, we expect to remain an emerging growth company at least through the end of the 2023 fiscal year and we expect to continue to take advantage of the benefits of the extended transition period at least through the end of the 2023 fiscal year, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards.
Following the closing of the Business Combination, we expect to remain an emerging growth company at least through the end of the 2024 fiscal year and we expect to continue to take advantage of the benefits of the extended transition period at least through the end of the 2024 fiscal year, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards.
We do not expect to generate revenue until at least 2025 and only if NORI receives an exploitation contract from the ISA and we are able to successfully collect and process polymetallic nodules into saleable products on a commercial scale. Any revenue from initial production is difficult to predict.
We do not expect to generate revenue until at least 2026 and only if NORI receives an exploitation contract from the ISA and we are able to successfully collect and process polymetallic nodules into saleable products on a commercial scale. Any revenue from initial production is difficult to predict.
We are an exploration-stage company and the recovery of our investment in mineral exploration contracts and attainment of profitable operations is dependent upon many factors including, among other things, the development of commercial production system for collecting polymetallic nodules from the seafloor as well as the development of our processing technology for the metallurgical treatment of such nodules, the establishment of mineable reserves, the demonstration of commercial and technical feasibility of seafloor polymetallic nodule collection and processing systems, metal prices, and securing ISA exploitation contracts.
We are an exploration-stage company and the recovery of our investment in mineral exploration contracts and attainment of profitable operations is dependent upon many factors including, among other things, the development of commercial production system for collecting polymetallic nodules from the seafloor as well as the development of our processing technology for the metallurgical treatment of such nodules, the establishment of mineable reserves, the demonstration of commercial and technical feasibility of seafloor polymetallic nodule collection and processing systems, metal prices, and securing ISA exploitation contracts or provisional approvals.
General and Administrative Expenses General and administrative (“G&A”) expenses consist primarily of compensation for employees, consultants and directors, including share-based compensation, consulting fees, investor relations expenses, expenses related to advertising and marketing functions, insurance costs, office and sundry expenses, professional fees (including legal, audit and tax fees), travel expenses and transfer and filing fees.
General and Administrative Expenses General and administrative (“G&A”) expenses consist primarily of compensation for employees, consultants and directors, including wages and salaries, share-based compensation, consulting fees, investor relations expenses, expenses related to advertising and marketing functions, insurance costs, office and sundry expenses, professional fees (including legal, audit and tax fees), travel expenses and transfer and filing fees.
Exploration and exploitation of seabed minerals in international waters is regulated by the ISA, an intergovernmental organization established pursuant to the 1994 Agreement Relating to the Implementation of the UNCLOS. The ISA grants contracts to sovereign states or to private contractors who are sponsored by a sovereign state.
Exploration and exploitation of seafloor minerals in international waters is regulated by the ISA, an intergovernmental organization established pursuant to the 1994 Agreement Relating to the Implementation of the UNCLOS. The ISA grants contracts to sovereign states or to private contractors who are sponsored by a sovereign state.
Overview We are a deep-sea minerals exploration company focused on the collection and processing of polymetallic nodules found on the seafloor in international waters of the CCZ, about 1,500 miles south-west of San Diego, California. 96 Table of Contents The CCZ is a geological submarine fracture zone of abyssal plains and other formations in the Eastern Pacific Ocean, with a length of around 7,240 km (4,500 miles) that spans approximately 4,500,000 square kilometers (1,700,000 square miles).
Overview We are a deep-sea minerals exploration company focused on the collection, processing and refining of polymetallic nodules found on the seafloor in international waters of the CCZ, about 1,500 miles south-west of San Diego, California. 104 Table of Contents The CCZ is a geological submarine fracture zone of abyssal plains and other formations in the Eastern Pacific Ocean, with a length of around 7,240 kilometers (4,500 miles) that spans approximately 4,500,000 square kilometers (1,700,000 square miles).
On December 22, 2022, we entered into an At-the-Market Equity Distribution Agreement with Stifel, Nicolaus & Company, Incorporated and Wedbush Securities Inc., as sales agents, allowing us, from time to time, to issue and sell common shares with an aggregate offering price of up to $30 million.
On December 22, 2022, we entered into an At-the-Market Equity Distribution Agreement (the “Sales Agreement”) with Stifel, Nicolaus & Company, Incorporated (“Stifel”) and Wedbush Securities Inc., as sales agents, allowing us, from time to time, to issue and sell Common Shares with an aggregate offering price of up to $30 million.
(“Low Carbon Royalties”), a private corporation formed under the laws of British Columbia, Canada to finance low carbon emitting energy production and technologies (natural gas, nuclear, renewables), transition metals and minerals required for energy storage and electrification (Cu, Li, Ni, Co, Mn), and the evolving environmental markets (the “Partnership”).
(“LCR”), a private corporation formed under the laws of British Columbia, Canada to finance low carbon emitting energy production and technologies (natural gas, nuclear, renewables), transition metals and minerals required for energy storage and electrification (Cu, Li, Ni, Co, Mn), and the evolving environmental markets (the “Partnership”).
In instances where an award is issued for financing related services, the costs are included within equity as part of the financing costs. We recognize forfeiture of any awards as they occur. Interest Income/Expense Interest income consists primarily of interest income earned on our cash and cash equivalents.
In instances where an award is issued for financing related services, the costs are included within equity as part of the financing costs. We recognize forfeiture of any awards as they occur. 112 Table of Contents Interest Income/Expense Interest income consists primarily of interest income earned on our cash and cash equivalents.
In addition, we will need and are seeking additional financing to fund our continued operations. These financings could include additional public or private equity, debt financings, equity-linked financings or other sources of financing, including through non-dilutive asset, royalty or project-based financings.
In addition, we will however need and are seeking additional financing to fund our continued operations over time. These financings could include additional public or private equity, debt financings, equity-linked financings or other sources of financing, including through non-dilutive asset, royalty or project-based and/or asset-based financings.
NORI. NORI our wholly-owned subsidiary, holds exploration rights to four blocks (NORI Area A, B, C, and D, the “NORI Contract Area”) covering 74,830 km 2 in the CCZ that were granted by the ISA in July 2011. NORI is sponsored by Nauru pursuant to a certificate of sponsorship signed by the Government of Nauru on April 11, 2011.
NORI our wholly-owned subsidiary, holds exploration rights to four blocks (NORI Area A, B, C, and D, the “NORI Contract Area”) covering 74,830 square kilometers in the CCZ that were granted by the ISA in July 2011. NORI is sponsored by Nauru pursuant to a certificate of sponsorship signed by the Government of Nauru on April 11, 2011.
The exploration contract between Marawa and the ISA (the “Marawa Exploration Contract”) was signed on January 19, 2015. To date, limited offshore marine resource definition activities in the Marawa Contract Area have occurred. We expect to collaborate with Marawa to assess the viability of any potential project in the Marawa Contract Area, although the timing of such assessment is uncertain.
The exploration contract between Marawa and the ISA (the “Marawa Exploration Contract”) was signed on January 19, 2015. To date, limited offshore marine resource definition activities in the Marawa Contract Area have occurred. We are collaborating with Marawa to assess the viability of any potential project in the Marawa Contract Area, although the timing of such assessment is uncertain.
You should read the Risk Factors set forth in Item 1A of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
You should read the risk factors set forth in Item 1A of this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
The ISA has issued a total of 19 polymetallic nodule exploration contracts covering approximately 1.28 million km2, or 0.4% of the global seafloor, 17 of which are in the CCZ.
The ISA has issued a total of 19 polymetallic nodule exploration contracts covering approximately 1.28 million square kilometers, or 0.4% of the global seafloor, 17 of which are in the CCZ.
The toll treatment is intended to take place on a dedicated rotary kiln-electric arc furnace (RKEF) processing line and produce two products: nickel-copper-cobalt alloy — an intermediate product used as feedstock to produce Li-ion battery cathodes — and a manganese silicate product used to make silico-manganese alloy, a critical input into steel manufacturing.
The toll treatment is intended to take place on a dedicated RKEF processing line and produce two products: nickel-copper-cobalt alloy, an intermediate product used as feedstock to produce Li-ion battery cathodes, and a manganese silicate product used to make silico-manganese alloy, a critical input into steel manufacturing.
The five-year estimated expenditure is indicative and subject to change, TOML will review the program regularly and TOML will inform the ISA of any changes through its annual reports. Regulatory Obligations Relating to Exploration Contracts Each of TOML and NORI require sponsorship from their host sponsoring nations, Tonga and Nauru, respectively.
The five-year estimated expenditure is indicative and subject to change, TOML will review the program regularly and TOML will inform the ISA of any changes through its annual reports. 117 Table of Contents Regulatory Obligations Relating to Exploration Contracts Both TOML and NORI require sponsorship from their host sponsoring nations, Tonga and Nauru, respectively.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the financial condition and results of our operations should be read in conjunction with the financial statements and the notes to those statements appearing elsewhere in this Annual Report on Form 10-K.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of the financial condition and results of our operations should be read in conjunction with the financial statements and the notes to those statements appearing elsewhere in this Annual Report.
We will pay an underutilization fee equal to 4.0% per annum payable semi-annually for any amounts that remain undrawn under the Credit Facility. We have the right to pre-pay the entire amount outstanding under the Credit Facility at any time, before the Credit Facility’s maturity of May 21, 2024. The Credit Facility also contains customary events of default.
We will pay an underutilization fee equal to 4.0% per annum payable semi-annually for any amounts that remain undrawn under the Credit Facility. We have the right to pre-pay the entire amount outstanding under the Credit Facility at any time, before the Credit Facility’s maturity of August 31, 2025. The Credit Facility also contains customary events of default.
TOML commissioned a Technical Report Summary by AMC, dated March 2021, which is filed as Exhibit 96.2 to this Annual Report on Form 10-K. Marawa. DGE, our wholly-owned subsidiary, entered into agreements with Marawa and Kiribati which provide DGE with exclusive exploration rights to an area covering 74,990 km 2 in the CCZ (the “Marawa Contract Area”).
TOML commissioned a Technical Report Summary by AMC, dated March 2021, which is filed as Exhibit 96.2 to this Annual Report. Marawa. DGE, our wholly-owned subsidiary, entered into agreements with Marawa and Kiribati which provide DGE with exclusive exploration rights to an area covering 74,990 square kilometers in the CCZ (the “Marawa Contract Area”).
These risks, as well as other risks, are discussed in Item 7A entitled “ Quantitative and Qualitative Disclosures About Market Risk ” and Item 1A entitled “ Risk Factors ” included in this Annual Report on Form 10-K. Impact of Climate Change We are committed to adopting the Task Force on Climate-Related Financial Disclosures recommendations.
These risks, as well as other risks, are discussed in Item 7A entitled “ Quantitative and Qualitative Disclosures About Market Risk ” and Item 1A entitled “ Risk Factors ” included in this Annual Report. 110 Table of Contents Impact of Climate Change We are committed to adopting the Task Force on Climate-Related Financial Disclosures recommendations.
Our estimates used in reaching this conclusion are based on information available as at the date of filing this Annual Report on Form 10-K.
Our estimates used in reaching this conclusion are based on information available as at the date of filing this Annual Report.
The NORI Technical Report Summary is filed as Exhibit 96.1 to this Annual Report on Form 10-K. TOML. TOML our wholly-owned subsidiary which we acquired in March 2020, holds exploration rights to an area covering 74,713 km 2 in the CCZ that were granted by the ISA in January 2012 (the “TOML Contract Area”).
The NORI Technical Report Summary is filed as Exhibit 96.1 to this Annual Report. TOML. TOML our wholly-owned subsidiary which we acquired in March 2020, holds exploration rights to an area covering 74,713 square kilometers in the CCZ that were granted by the ISA in January 2012 (the “TOML Contract Area”).
On March 22, 2023, we entered into a Credit Facility with Argentum Credit Virtuti GCV, the parent of Allseas Investments S.A. and an affiliate of Allseas, pursuant to which, we may borrow from the Lender up to $25,000,000 in the aggregate, from time to time, subject to certain conditions.
On March 22, 2023, we entered into a Credit Facility with Argentum Credit Virtuti GCV, the parent of Allseas Investments S.A. and an affiliate of Allseas, which was amended on July 31, 2023 and March 22, 2024, pursuant to which, we may borrow from the Lender up to $25 million in the aggregate, from time to time, subject to certain conditions.
Based on our cash balance and availability of borrowing under our recently signed credit facility with Allseas, when compared with our forecasted cash expenditures, we believe we will have sufficient funds to meet our obligations that become due within the next twelve months.
Based on our cash balance and availability of borrowing under our credit facility with Allseas and credit facility with ERAS Capital LLC and Gerard Barron, when compared with our forecasted cash expenditures, we believe we will have sufficient funds to meet our obligations that become due within the next twelve months.
Key Trends, Opportunities and Uncertainties We are currently a pre-revenue company and we do not anticipate earning revenues until such time as NORI receives an exploitation contract from the ISA and we are able to successfully collect and process polymetallic nodules into saleable products on a commercial scale.
Key Trends, Opportunities and Uncertainties We are currently a pre-revenue company and we do not anticipate earning revenues until at least 2026 and only if NORI receives an exploitation contract from the ISA and we are able to successfully collect and process polymetallic nodules into saleable products on a commercial scale.
We determine the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the following assumptions: ● Fair Value of Common Shares on the Date of the Grant — We used the price of the most recent private placements to assess the value of our shares on the date of the grant of incentive stock options. ● Expected Term — We used the term of the award when calculating the expected term due to insufficient historical exercise data. ● Expected Volatility — As our common shares were not actively traded, the volatility is based on a benchmark of comparable companies within the mining industry. ● Expected Dividend Yield — The dividend rate used is zero as we have never paid any cash dividends on our common shares and do not anticipate doing so in the foreseeable future. ● Risk-Free Interest Rate — The interest rates used are based on the implied yield available on Canadian Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award. 110 Table of Contents This valuation approach involves the use of estimates, judgments and assumptions that are subjective, such as those regarding the probability of future events.
We determine the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the following assumptions: ● Fair Value of Common Shares on the Date of the Grant — We used the price of the most recent offerings of our Common Shares to assess the value of our shares on the date of the grant of incentive stock options. ● Expected Term — We used the term of the award when calculating the expected term due to insufficient historical exercise data. ● Expected Volatility — As our Common Shares were not actively traded, the volatility is based on a benchmark of comparable companies within the mining industry. ● Expected Dividend Yield — The dividend rate used is zero as we have never paid any cash dividends on our Common Shares and do not anticipate doing so in the foreseeable future. ● Risk-Free Interest Rate — The interest rates used are based on the implied yield available on Canadian Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.
We have an accumulated deficit of approximately $475.1 million from inception through December 31, 2022. Our historical results may not be indicative of our future results for reasons that may be difficult to anticipate.
We have an accumulated deficit of approximately $548.9 million from inception through December 31, 2023. Our historical results may not be indicative of our future results for reasons that may be difficult to anticipate.
Subject to the necessary regulatory approvals, Allseas and NORI also intend to investigate acquiring a second production vessel similar to the Hidden Gem , a further Samsung 10000, with the potential for it to be engineered to support a higher production rate of three million tonnes of wet nodules per year and lower associated per tonne production cost.
Subject to the necessary regulatory approvals, Allseas and NORI also intend to investigate acquiring a second production vessel similar to the Hidden Gem , another Samsung 10000, with the potential for an additional production rate of three million tonnes of wet nodules per year and lower associated per tonne production cost.
We will pay an underutilization fee equal to 4.0% per annum payable semi-annually for any amounts that remain undrawn under the Credit Facility. We have the right to pre-pay the entire amount outstanding under the Credit Facility at any time, before the Credit Facility’s maturity of May 21, 2024. The Credit Facility also contains customary events of default.
We will pay an underutilization fee equal to 4.0% per annum payable semi-annually for any amounts that remain undrawn under the 2024 Credit Facility. We have the right to pre-pay the entire amount outstanding under the 2024 Credit Facility at any time, before the 2024 Credit Facility’s maturity of September 22, 2025.
In addition, we have worked with an engineering firm Hatch and consultants KPM to develop a near-zero solid waste flowsheet. The primary processing stages of the flowsheet from nodule to NiCuCo matte intermediate were demonstrated as part of our pilot plant program at FLSmidth and Xpert Process Solutions’ (XPS, a Glencore company) facilities.
In addition, we have worked with an engineering firm Hatch and consultants KPM to develop a near-zero solid waste flowsheet. The primary processing stages of the flowsheet from nodule to NiCuCo matte intermediate were demonstrated as part of our pilot plant program at FLSmidth and XPS’ facilities. The matte refining stages are being tested at SGS Lakefield.
Securities that may be sold include common shares, preferred shares, debt securities, warrants and units. Any such offering, if it does occur, may happen in one or more transactions. Specific terms of any securities to be sold will be described in supplemental filings with the SEC.
Any such offering, if it does occur, may happen in one or more transactions. Specific terms of any securities to be sold will be described in supplemental filings with the SEC.
Following the successful completion of the NORI Area D pilot collection system trials in November 2022 and subsequent analysis of pilot data, the parties are reviewing Project Zero System production targets (up to 3 Mtpa of wet nodules), system design and cost estimates and intend to enter into a binding Heads of Terms in the second half of 2023.
Following the successful completion of the NORI Area D pilot collection system trials in November 2022 and subsequent analysis of pilot data, the parties are reviewing Project Zero Offshore Nodule Collection System production targets, system design and cost estimates and intend to enter into a binding Heads of Terms by the end of 2024.
To reach our objective and initiate commercial production, we are: (i) defining our resource and project economics, (ii) developing and testing an offshore nodule collection system, (iii) assessing the ESG impacts of offshore nodule collection, and (iv) developing and testing onshore technology and systems to process collected polymetallic nodules into a manganese silicate product, and an intermediate nickel-copper-cobalt matte product and/or end-products like nickel and cobalt sulfates, and copper cathode. 97 Table of Contents We are still in the exploration phase and have not yet declared mineral reserves.
To reach our objective and initiate commercial production, we are: (i) defining our resource and project economics, (ii) developing a commercial offshore nodule collection system, (iii) assessing the environmental and social impacts of offshore nodule collection, and (iv) developing onshore technology to process collected polymetallic nodules into a manganese silicate product, and an intermediate nickel-copper-cobalt alloy or matte product and/or end-products like nickel and cobalt sulfates, and copper cathode.
The pilot nodule collection system developed and tested by Allseas is expected to be upgraded to a commercial system with a targeted production capacity of 1.3 million tonnes of wet nodules per year with expected production readiness by the fourth quarter of 2024.
The pilot nodule collection system developed and tested by Allseas is expected to be upgraded to a commercial system with an expanded targeted production capacity of up to an estimated 3.0 million tonnes of wet nodules per year, to be delivered in stepped increments, with expected production readiness in the first quarter of 2026.
The fair value of the Private Warrants is estimated using a Black-Scholes option pricing model whereby the expected volatility is estimated using a binomial model based on consideration of the implied volatility from the Company’s Public Warrants adjusted to account for the call feature of the Public Warrants at prices above $18.00 during 20 trading days within any 30-trading day period.
The expected volatility was estimated using a binomial model based on consideration of the implied volatility from the Company’s Public Warrants, adjusted to account for the call feature of the Public Warrants at prices above $18.00 during 20 trading days within any 30-trading-day period and historical volatility of the share price of our Common Shares.
On November 11, 2022, the Board approved the successful completion and testing of the PMTS in the NORI Area D and payment of the third milestone amounting to $10 million by issuing 10 million shares to Allseas on February 23, 2023.
On November 11, 2022, our board of directors approved the successful completion and testing of the PMTS in the NORI Area D and payment of the third milestone amounting to $10 million and additional costs owed to Allseas under the PMTA by issuing 10.85 million Common Shares to Allseas priced at $1.00 per share on February 23, 2023.
We are also identifying the best approach for decarbonizing our offshore operations. To date, we have not experienced any material impact to our business related to potential regulations but will continue to evaluate and monitor future developments.
In addition, we are seeking to replace metallurgical coal used as reductant during calcining of nodules and have tested potential renewable alternatives. We are also identifying the best approach for decarbonizing our offshore operations. To date, we have not experienced any material impact to our business related to potential regulations but will continue to evaluate and monitor future developments.
Critical Accounting Policies and Significant Judgments and Estimates Our financial statements have been prepared in accordance with U.S. GAAP.
Off-balance sheet arrangements We are not party to any off-balance sheet arrangements. Critical Accounting Policies and Significant Judgments and Estimates Our financial statements have been prepared in accordance with U.S. GAAP.
Value of Common Share-Based Payments We recognize the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards.
We have the critical accounting policies and estimates which are described below. 119 Table of Contents Value of Common Share-Based Payments We recognize the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards.
Although the stated program objectives from 2017-2021 were not achieved by the contractors, the ISA accepted TOML’s submission and explanations, and agreed on the path forward. On December 23, 2022, the ISA accepted TOML’s proposed program of activities for the 2022-2026 five-year period, which included an estimated five-year expenditure of up to $44 million.
On December 23, 2022, the ISA accepted TOML’s proposed program of activities for the 2022-2026 five-year period, which included an estimated five-year expenditure of up to $44 million.
The periodic review report included a summary of work completed over the five-year period and a program of activities and estimated budget for the next five-year period. The five-year period ending in 2021 included activities of both TOML (from its acquisition in 2020) and its predecessor.
TOML Exploration Contract As part of the TOML Exploration Contract, TOML submitted a periodic review report to the ISA in 2021, covering the 2017-2021 period. The periodic review report included a summary of work completed over the five-year period and a program of activities and estimated budget for the next five-year period.
Our significant accounting policies are described in Note 2 to our audited consolidated financial statements included in this Annual Report on Form 10-K. We have the critical accounting policies and estimates which are described below.
Our significant accounting policies are described in Note 2 to our audited consolidated financial statements included in this Annual Report.
We have yet to obtain any exploitation contracts from the ISA to commence commercial scale polymetallic nodule collection in the CCZ nor have we obtained the applicable environmental and other permits required to build and operate commercial scale polymetallic nodule processing and refining plants on land. 2022 Highlights Below are a few of the developments that occurred in 2022.
We are still in the exploration phase and have not yet declared mineral reserves. In addition, we do not have the applicable environmental and other permits required to build and/or operate commercial scale polymetallic nodule processing and refining plants on land. 2023 Highlights Below are a few of the developments that occurred in 2023.
In consideration of the NORI Royalty, we received a 35.0% common ownership interest in Low Carbon Royalties on a fully-diluted basis as of closing and $5.0 million in cash ​ Engagement with Bechtel Australia Pty Ltd: On March 9, 2023, we announced that we entered into an agreement with Bechtel Australia Pty Ltd (Bechtel), a global leader in engineering, procurement and construction, to collect and compile the techno-economic studies prepared by various consultants required for NORI to lodge its application for an exploitation contract for its NORI Area D Project with the ISA.
Ltd. had entered into an agreement with Bechtel Australia Pty Ltd. (“Bechtel”), a global leader in engineering, procurement and construction, to collect and compile the techno-economic studies prepared by various consultants required for NORI to lodge its application for an exploitation contract for its NORI Area D project with the ISA.
Changes in these estimates and assumptions impact our valuation as of the valuation date and may have a material impact on the valuation of the Company’s common shares.
This valuation approach involves the use of estimates, judgments and assumptions that are subjective, such as those regarding the probability of future events. Changes in these estimates and assumptions impact our valuation as of the valuation date and may have a material impact on the valuation of our Common Shares.
The offer and sales of the shares are made under our effective “shelf” registration statement on Form S-3 filed with the SEC on September 16, 2022, which the SEC declared effective on October 14, 2022. As of the date of this Annual Report on Form 10-K, no sales of common shares have been made under this offering.
On December 21, 2023, we amended the Sales Agreement to remove Stifel as a sales agent. The offer and sales of the shares are made under our effective “shelf” registration statement on Form S-3 filed with the SEC on September 16, 2022, which the SEC declared effective on October 14, 2022.
The credit recorded in both years reflects the decrease in the market price of our warrants.
Change in Fair Value of Warrants Liability The change in fair value of warrants liability primarily consists of the change in the fair value of the 9,500,000 Private Warrants. The credit recorded in both years reflects the decrease in the market price of our warrants.
Our climate related transition risks and opportunities are likely to be driven by changes in regulation, public policy, and technology as well as risk of business disruptions due to climate related events. 101 Table of Contents Regulatory risks Regulations related to emissions limits, such as cap and trade schemes and carbon taxes, would likely increase our future cost of operations, energy purchase, and equipment selection in addition to costs associated with potential carbon tax and/or purchase of carbon offsets.
Regulatory risks Regulations related to emissions limits, such as cap and trade schemes and carbon taxes, would likely increase our future cost of operations, energy purchase, and equipment selection in addition to costs associated with potential carbon tax and/or purchase of carbon offsets. It is difficult to estimate the impact of potential future regulations on future operations.
Recent Accounting Pronouncements See Note 3 to the audited consolidated financial statements included in this Annual Report on Form 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations and cash flows.
Recent Accounting Pronouncements See Note 3 to the audited consolidated financial statements included in this Annual Report for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and our results of operations and cash flows. 120 Table of Contents Emerging Growth Company Status Section 102(b)(1) of the Jumpstart Our Business Startups (“JOBS”) Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards.
Foreign Exchange Loss The foreign exchange income or loss for the periods primarily relates to our cash held in Canadian dollars and to the settlement of costs incurred in foreign currencies, depending on either the strengthening or weakening of the U.S. dollar. 103 Table of Contents Change in Fair Value of Warrants Liabilities Change in fair value of warrants liabilities primarily consists of the change in the fair value of the 9,500,000 warrants issued to Sustainable Opportunities Holdings LLC concurrently with SOAC’s initial public offering (the “Private Warrants”).
Foreign Exchange Loss The foreign exchange income or loss for the periods primarily relates to our cash held in Canadian dollars and to the settlement of costs incurred in foreign currencies, depending on either the strengthening or weakening of the U.S. dollar.
We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, additional internal and external accounting, legal and administrative resources, including increased personnel costs, audit and other professional service fees. 100 Table of Contents Exploration Contracts We currently hold exclusive exploration rights to certain polymetallic nodule areas in the CCZ through our subsidiaries NORI and TOML, sponsored by the Republic of Nauru and the Kingdom of Tonga, respectively, and exclusive commercial rights through our subsidiary’s (DGE), arrangement with Marawa, a company owned and sponsored by the Republic of Kiribati.
Exploration Contracts We currently hold exclusive exploration rights to certain polymetallic nodule areas in the CCZ through our subsidiaries NORI and TOML, sponsored by the Republic of Nauru and the Kingdom of Tonga, respectively, and exclusive commercial rights through our subsidiary’s (DGE), arrangement with Marawa, a company owned and sponsored by the Republic of Kiribati. NORI.
There can be no assurances, however, that we will enter into definitive agreements with Allseas contemplated by the non-binding term sheet in a particular time period, or at all, or on terms similar to those set forth in the non-binding term sheet, or that if such definitive agreements are entered into by us that the proposed commercial systems and second production vessel will be successfully developed or operated in a particular time period, or at all.
There can be no assurances, however, that we will enter into a definitive agreement(s) with Allseas in a particular time period, or at all, or on terms similar to those currently expected, or that if such definitive agreement(s) is entered into that the Project Zero Offshore Nodule Collection System will be successfully developed or operated.
On September 23, 2021, Tonga updated the TOML Sponsorship Agreement harmonizing the terms of its engagement with TOML with those held by NORI with Nauru. TOML expects to renegotiate the existing sponsorship agreement with Tonga prior to entering into operations in the TOML area and has committed to paying corporate income tax within Tonga.
TOML expects to renegotiate the existing sponsorship agreement with Tonga prior to entering into operations in the TOML Area and has committed to paying corporate income tax within Tonga, assuming our future operations are ultimately profitable.
The cost of the estimated work plan for 2024 onwards is contingent on the ISA’s approval of the NORI Area D exploitation application. Should the approval of NORI’s exploitation application for NORI Area D be delayed or rejected, NORI intends to revise its estimated future work plan in respect of its NORI Area.
Should the approval of NORI’s exploitation application for NORI Area D be delayed or rejected, NORI intends to revise its estimated future work plan in respect of its NORI Area. Work plans are reviewed annually by us, agreed with the ISA and may be subject to change depending on our progress to date.
When selecting the location of our onshore plant, one of our requirements is access to renewable energy as our metallurgical process will be the most energy intensive step in our operations. In addition, we are seeking to replace metallurgical coal used as reductant during calcining of nodules and have tested potential renewable alternatives.
We are working on a plan for continuous reduction of emissions and aiming to develop operations with near zero emissions. When selecting the location of our onshore plant, one of our requirements is access to renewable energy as our metallurgical process will be the most energy intensive step in our operations.
The periodic review report, which included a proposed work plan and estimated budget for 2022 to 2026, has been reviewed by and agreed with the ISA, and we are implementing the next five-year plan. NORI has estimated its work plan for 2023 to be approximately $25 million, which may be settled in cash or equity.
The periodic review report, which included a proposed work plan and estimated budget for 2022 to 2026, has been reviewed by and agreed with the ISA, and we are implementing this five-year plan. The cost of NORI’s estimated work plan for 2024 onwards is contingent on the ISA’s approval of the NORI Area D exploitation application.
Once in production, NORI expected to pay Allseas a nodule collection and transshipment fee estimated at approximately EUR 150 per wet tonne in the first year of operations and expected to be reduced by more than 20% in the following years as Allseas scaled up production to at least 1.3 million wet tonnes of nodules per year.
Once in production, NORI is expected to pay Allseas a nodule collection and transshipment fee and, as Allseas scales up production to up to an estimated 3.0 million wet tonnes of nodules per year, it is expected that unit costs will be reduced.
Basis of Presentation We currently conduct our business through one operating segment. As a pre-revenue company with no commercial operations, our activities to date have been limited. Our historical results are reported under U.S. GAAP and in U.S. dollars.
Additionally, we are experiencing higher offshore labor costs through our contractors. As a pre-revenue company, persistent inflation may affect our ultimate cash requirements prior to our ability to begin commercial production. Basis of Presentation We currently conduct our business through one operating segment. As a pre-revenue company with no commercial operations, our activities to date have been limited.
Cash flows provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2022 was $29.7 million, primarily related to proceeds of $30.4 million from a private placement financing, less financing expenses.
Cash flows provided by Financing Activities Net cash provided by financing activities in the year ended December 31, 2023 was $20.1 million, compared to $29.7 million in 2022.
NORI has begun discussions with the Government of Nauru to renegotiate the existing sponsorship agreement and has also committed to ensuring NORI pays corporate income tax within Nauru. 108 Table of Contents On March 8, 2008, Tonga and TOML entered into the TOML Sponsorship Agreement formalizing certain obligations of the parties in relation to TOML’s exploration and potential exploitation of the TOML Area.
On March 8, 2008, Tonga and TOML entered into the TOML Sponsorship Agreement formalizing certain obligations of the parties in relation to TOML’s exploration and potential exploitation of the TOML Area. On September 23, 2021, Tonga updated the TOML Sponsorship Agreement harmonizing the terms of its engagement with TOML with those held by NORI with Nauru.
Through December 31, 2022, we have made the following payments to Allseas under the PMTA: (a) $10 million in cash in February 2020, (b) $10 million through the issuance of 3.2 million common shares valued at $3.11 per share in February 2020, (c) issued Allseas a warrant to purchase 11.6 million common shares at a nominal exercise price per share in March 2021 and (d) $10 million in cash in October 2021, following the closing of the Business Combination and meeting certain progress targets on the PMTS.
There can be no assurances, however, that we will enter into definitive agreements with Allseas contemplated by the non-binding term sheet in a particular time period, or at all, or on terms similar to those set forth in the non-binding term sheet, or that if such definitive agreements are entered into by us that the proposed commercial systems and second production vessel will be successfully developed or operated in a particular time period, or at all. 118 Table of Contents Through December 31, 2023, we have made the following payments to Allseas under the PMTA: (a) $10 million in cash in February 2020, (b) $10 million through the issuance of 3.2 million Common Shares valued at $3.11 per share in February 2020, (c) issued Allseas a warrant to purchase 11.6 million Common Shares at a nominal exercise price per share in March 2021, (d) $10 million in cash in October 2021, following the closing of the Business Combination and meeting certain progress targets on the PMTS and (e) on February 23, 2023 issued 10.85 million Common Shares to Allseas, as described below.
The change in our net operating assets and liabilities was primarily due to a $22.0 million increase in accounts payable and accrued liabilities due to the timing of payments. Cash flows used in Investing Activities Net cash used in investing activities for the year ended December 31, 2022 was $1.2 million for the purchase of equipment.
Cash flows used in/provided by Investing Activities Net cash used in investing activities in the year ended December 31, 2023 was $0.6 million, representing the purchase of equipment. In the comparative year ended December 31, 2022, cash used in investing activities was $1.2 million for the purchase of equipment.
All share and per share amounts have been adjusted to reflect the impact of the Business Combination. 102 Table of Contents Components of Results of Operations We are an exploration-stage company with no revenue to date and a net loss of $171 million for the year ended December 31, 2022, compared to a net loss of $141.3 million in the prior year.
Our results are reported under Generally Accepted Accounting Principles in the United States (“U.S. GAAP”) and in U.S. dollars. Components of Results of Operations We are an exploration-stage company with no revenue to date and a net loss of $73.8 million for the year ended December 31, 2023, compared to a net loss of $171 million in the prior year.
(Epsilon Carbon) under our March 2022 business collaboration MoU, we decided to pause this work on a new build plant in India until Project Zero has started commercial production using an existing processing facility requiring lower capital expenditures and which we believe may offer a lower risk solution to get Project Zero into production.
After several months of pre-feasibility work in 2022 on the possibility of building a processing facility in India for Project Zero, we decided to adopt a capital-light approach and focus on sourcing an existing processing facility requiring lower capital expenditures and which we believe may offer a lower risk solution to get Project Zero into production.
Physical risks Our main activity currently consists of offshore exploration campaigns for research and testing purposes, and technology development at partner facilities. However, once a location is selected for our onshore metallurgical plant, we will assess the risks associated with hurricanes, floods, and extreme weather. Impact of Global Inflation In 2022, the global inflation rate rose sharply.
However, once a location is selected for our onshore metallurgical plant, we will assess the risks associated with hurricanes, floods, and extreme weather. 111 Table of Contents Impact of Global Inflation The global inflation rate rose sharply in 2021 and 2022, and though inflation softened in 2023, marine fuel prices and vessel day rates remained high and have increased our exploration expenses beyond what was originally expected.
If these financing or other financing sources are not available, or if the terms of financing are less desirable than we expect, or if in insufficient amounts, we may be forced to delay our exploration and/or exploitation activities or further scale back our operations, which could have a material adverse impact on our business and financial prospects. 105 Table of Contents On September 16, 2022, we filed a registration statement on Form S-3 with the Securities and Exchange Commission, which the SEC declared effective on October 14, 2022, to sell up to $100 million of securities, before any fees or expenses of the offering, which includes the $30 million that may be sold under the At-the-Market Equity Distribution Agreement discussed below.
On September 16, 2022, we filed a registration statement on Form S-3 with the SEC, which the SEC declared effective on October 14, 2022, to sell up to $100 million of securities, which includes the $30 million that may be sold under the At-the-Market Equity Distribution Agreement discussed below and the Common Shares and shares underlying the Class A Warrants issued in the Registered Direct Offering.
Marawa has delayed certain of its efforts in the Marawa Contract Area while it determines how it will move forward with additional assessment work. TOML Exploration Contract As part of the TOML Exploration Contract, TOML submitted a periodic review report to the ISA in 2021, covering the 2017-2021 period.
We are collaborating with Marawa to assess the viability of any potential project in the Marawa Contract Area, although the timing of such assessment is unclear. Marawa has delayed certain of its efforts in the Marawa Contract Area while it determines how it will move forward with additional assessment work.
Glencore may also terminate the agreement by giving twelve months’ notice. As described above, on March 22, 2023 we entered into the Credit Facility under which we may borrow up to $25 million pursuant to the terms and conditions of the Credit Facility. Off-balance sheet arrangements We are not party to any off-balance sheet arrangements.
Credit Facility with Allseas Affiliate As described above, on March 22, 2023 we entered into the Credit Facility with Argentum Credit Virtuti GCV, an affiliate of Allseas, under which we may borrow up to $25 million pursuant to the terms and conditions of the Credit Facility, which as amended has a maturity date of August 31, 2025.
The matte refining stages are being tested at SGS Lakefield. The near-zero solid waste flowsheet provides a design that is expected to serve as the basis for our onshore processing facilities. After several months of joint pre-feasibility work in 2022 and in consultation with Epsilon Carbon Pvt, LTD.
The near-zero solid waste flowsheet provides a design that is expected to serve as the basis for our onshore processing facilities.
In November 2022, we entered into a non-binding MoU with Pacific Metals Co Ltd (PAMCO) of Japan, to evaluate the toll treatment of an initial quantity of 1.3 million tonnes of wet polymetallic nodules per year at PAMCO’s Hachinohe smelting facility starting in 2025.
This announcement was followed with the signing of a binding MoU with PAMCO in November 2023 for a feasibility study to process 1.3 million tonnes of wet polymetallic nodules per year at their existing smelting facility in Hachinohe, Japan.
The ESG handbook will provide guidance to addresses material topics related to marine mineral projects in the deep-sea environment using a standardized approach. ​ 99 Table of Contents Strategic Partnership on Low-Carbon Royalties: On February 21, 2023, we and our wholly-owned subsidiary, NORI, entered into a strategic partnership with Low Carbon Royalties Inc.
Investment in Low Carbon Royalties In February 2023, we and our wholly-owned subsidiary, NORI, entered into a strategic partnership with Low Carbon Royalties Inc.
NORI and Allseas intended to equally finance all costs related to developing and getting the first commercial system into production that were estimated at less than EUR100 million. It was anticipated that NORI will not have to make any payments related to the commercial system to Allseas until March 31, 2023.
NORI and Allseas intend to equally finance all costs related to developing and getting the first commercial system into production.
For accounting purposes, the Company was considered to have issued the Private Warrants as part of the Business Combination. Results of Operations DeepGreen was determined to be the accounting acquirer and therefore, all information prior to the Business Combination, including the prior period financial information, represent the financial condition and operating results of DeepGreen.
For accounting purposes, the Company was considered to have issued the Private Warrants as part of the Business Combination, and we are required to re-measure the fair value of our Private Warrants at the end of each reporting period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rate Risk and Credit Risk Interest rate risk is the risk that the fair value of our future cash flows and our financial instruments will fluctuate because of changes in market interest rates. 111 Table of Contents Our current practice is to invest excess cash in investment-grade short-term deposit certificates issued by reputable Canadian financial institutions with which we keep our bank accounts and management believes the risk of loss to be remote.
Biggest changeOur current practice is to invest excess cash in investment-grade short-term deposit certificates issued by reputable Canadian financial institutions with which we keep our bank accounts and management believes the risk of loss to be remote. We periodically monitor the investments we make and are satisfied with the credit ratings of our banks.
Our exposure to the risk of changes in foreign exchange rates relates our transactions in foreign currencies, primarily in the Canadian dollar, the Australian dollar, and the Great British Pound. We primarily hold our cash in U.S. dollars and settle our foreign currency payables soon after the receipt of invoices thereby minimizing the foreign currency exposure.
Our exposure to the risk of changes in foreign exchange rates relates our transactions in foreign currencies, primarily in the Canadian dollar, the Australian dollar, the Great British Pound and the Euro. We primarily hold our cash in U.S. dollars and settle our foreign currency payables soon after the receipt of invoices thereby minimizing the foreign currency exposure.
A significant and sustained decrease in the price of these metals from current levels could have a material and negative impact on our business, financial condition and results of operations. ​ 112 Table of Contents
A significant and sustained decrease in the price of these metals from current levels could have a material and negative impact on our business, financial condition and results of operations. 121 Table of Contents
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of markets and other risks including the effects of change in interest rates, inflation and foreign currency translation and transaction risks as well as risks to the availability of funding sources, hazard events and specific asset risks.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to a variety of markets and other risks including the effects of change in interest rates, inflation and foreign currency translation and transaction risks as well as risks to the availability of funding sources, hazard events specific asset risks, regulatory risks, public policy risks and technology risks.
Once we commence commercial production, we expect our credit risk to rise with our increased customer base. Foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.
Foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.
Credit risk is a risk of loss that may arise on outstanding financial instruments should a counter party default on its obligation. Our receivables consist primarily of general sales tax due from the Federal Government of Canada and as a result, the risk of default is considered to be low.
Our receivables consist primarily of general sales tax due from the Federal Government of Canada and as a result, the risk of default is considered to be low. Once we commence commercial production, we expect our credit risk to rise with our increased customer base.
We periodically monitor the investments we make and are satisfied with the credit ratings of our banks. Due to the current high cash need of our operating plan, we have kept our funds readily available, placed in secure, highly liquid interest-bearing investments, as at December 31, 2022.
Due to the current high cash need of our operating plan, we have kept our funds readily available, placed in secure, highly liquid interest-bearing investments, as at December 31, 2023. Credit risk is a risk of loss that may arise on outstanding financial instruments should a counter party default on its obligation.
We also expect to be exposed to commodity risks if and when we commence commercial production.
We also expect to be exposed to commodity risks if and when we commence commercial production. Interest Rate Risk and Credit Risk Interest rate risk is the risk that the fair value of our future cash flows and our financial instruments will fluctuate because of changes in market interest rates.

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