Executive Summary / Key Takeaways

• Regulatory Inflection Point: TMC's strategic pivot from the stalled International Seabed Authority (ISA) process to the U.S. regulatory pathway under DSHMRA represents the clearest catalyst in the company's history, with NOAA applications submitted in April 2025 and full compliance confirmed for exploration licenses in August 2025, potentially enabling commercial production by Q4 2027.

• Massive Resource Value vs. Pre-Revenue Reality: The company declared the world's first Probable Mineral Reserves for deep-sea nodules with a combined project NPV of $23.6 billion, yet remains pre-revenue with a $279.3 million net loss for the nine months ended September 2025 and an accumulated deficit of $910.9 million since inception.

• Liquidity Runway Through Critical Milestones: Despite burning $11.5 million in operating cash flow per quarter, TMC holds $115.6 million in cash and claims approximately $165 million in total liquidity including recent warrant exercises, with a pathway to over $400 million from additional warrant proceeds that could fund operations through the 2027 production target.

• Strategic Partnerships Validate Technology: The $85.2 million investment from Korea Zinc and the exclusive vessel agreement with Allseas provide both technical validation and financial backing, while the successful production of battery-grade manganese sulfate demonstrates commercial processing viability.

• High-Stakes Execution Risk: The investment thesis hinges on securing a commercial recovery permit by 2027 while navigating two active lawsuits, environmental compliance uncertainties, and a material weakness in internal controls, any of which could derail the timeline or require dilutive financing.

Setting the Scene: The Deep-Sea Mining Race for Critical Minerals

TMC the metals company traces its origins to DeepGreen Metals, founded in 2011, and now operates under British Columbia, Canada law as the most advanced pure-play deep-sea polymetallic nodule developer. The company controls exploration and commercial rights over a billion-tonne resource in the Clarion Clipperton Zone (CCZ), a 4.5 million square kilometer area in international waters between Hawaii and Mexico where potato-sized nodules containing nickel, copper, cobalt, and manganese lie on the seafloor at depths of 4,000-6,000 meters.

The world faces a critical minerals supply crisis. The U.S. imports roughly 100% of its manganese, cobalt, and nickel, while copper joined the critical mineral list in November 2025. A single billion-tonne nodule resource could supply America with 300 years of manganese, 200 years of cobalt, and nearly a century of nickel at current consumption rates. With EV manufacturers shifting to manganese-rich cathodes and AI data centers driving copper demand, the geopolitical imperative to secure these metals has never been greater.

TMC's place in the industry structure is unique. While competitors like Global Sea Mineral Resources (GSR, a DEME Group (DEME.BR) subsidiary) and Impossible Metals hold or seek ISA exploration contracts, TMC alone has pivoted aggressively to the U.S. regulatory pathway after the ISA's persistent delays created what management calls an "unacceptable level of risk" for shareholders. This strategic move positions TMC as the potential first-mover in commercial deep-sea mining, but also concentrates execution risk on a novel regulatory process that hasn't issued a commercial permit in over four decades.

The company's value chain spans resource definition, nodule collection, offshore processing, and refining into battery-grade metals. Unlike land-based miners facing declining ore grades and increasing environmental opposition, deep-sea nodules offer high grades with no overburden, no deforestation, and no tailings. However, the technical challenge of operating 5,000 meters below sea level while meeting stringent environmental standards creates barriers that only well-capitalized, technologically sophisticated players can overcome.

Technology, Products, and Strategic Differentiation

TMC's core technological advantage rests on three pillars: proprietary collection systems, proven processing flow sheets, and an unprecedented environmental dataset. The strategic alliance with Allseas, formed in March 2019, provides exclusive use of the Hidden Gem vessel through December 2026 and access to deep-sea engineering expertise that competitors cannot easily replicate. The Pilot Mining Test System successfully tested in NORI Area D in November 2022 demonstrated that TMC's Coanda nozzle-based collectors disturb only the top 3 centimeters of seafloor sediment, compared to 20-80 centimeters by 1970s-era machines, with over 95% of sediment settling within 1 kilometer of the test area.

Environmental opposition represents the single greatest obstacle to deep-sea mining commercialization. While GSR's Patania II collector has conducted tests, TMC's dataset from 23 offshore research campaigns provides what management calls "the most comprehensive deep-sea dataset ever compiled." Making this data available to NOAA enables updates to the programmatic environmental impact statement that hasn't been refreshed since 1980, potentially streamlining approvals not just for TMC but for future U.S. operators. This creates a regulatory moat: by helping establish the environmental framework, TMC positions itself as the default standard against which others will be measured.

The processing advantage is equally significant. Through partnerships with PAMCO and Korea Zinc, TMC has demonstrated a complete flow sheet from nodule to battery-grade metals. The November 2025 production of high-purity manganese sulfate from nodule-derived intermediate manganese silicate proves the company can produce every feedstock required for precursor cathode active materials (PCAM) . This provides offtake optionality and a pathway to higher-value refined products in the United States, shifting from lower-margin matte sales to premium nickel sulfate, cobalt sulfate, and copper cathode.

Competitively, this processing capability distinguishes TMC from peers. Impossible Metals, still seeking its first ISA contract, has no demonstrated processing path. Odyssey Marine Exploration , with just $5.8 million in cash and $331,000 in nine-month revenue, lacks the financial depth to develop comparable capabilities. GSR benefits from DEME's engineering scale but remains tethered to the slower ISA process. TMC's ability to produce battery-grade materials now, before commercial mining begins, creates customer relationships and offtake agreements that will be difficult for latecomers to secure.

Financial Performance: Pre-Revenue Cash Burn in the Race to Production

TMC's financials tell a story of a company in the final sprint toward commercialization, but with a finite cash runway. The company reported a net loss before tax of $184.4 million in Q3 2025 versus $20.5 million in Q3 2024, driven primarily by non-cash items: $131 million increase in royalty liability fair value, $35 million in share-based compensation from retention grants, and $5 million in Tonga warrant costs. For the nine months ended September 2025, the net loss reached $279.3 million compared to $65.9 million in the prior year period.

While losses are expected for a pre-revenue developer, the cash burn rate determines survival. Exploration and evaluation expenses decreased to $9.6 million in Q3 2025 from $11.8 million in Q3 2024, reflecting completion of environmental studies and reduced mining technology development costs. However, general and administrative expenses exploded to $45.7 million from $8.1 million year-over-year, with $38 million attributable to share-based compensation. The company used $11.5 million in operating cash flow during Q3 2025, implying a runway of approximately 10 quarters at current burn rates.

Management's liquidity claims require scrutiny. While the balance sheet shows $115.6 million in cash as of September 30, 2025, management states "approximately $165 million of liquidity today, inclusive of our recent warrant exercises." More importantly, they see a pathway for over $400 million from warrant exercises, including $48 million from Korea Zinc warrants at $7 strike price and additional proceeds from other in-the-money warrants. This potential inflow could extend the runway through the 2027 production target, but depends on warrant holders exercising and the stock price remaining above strike prices.

The capital-light strategy is critical to this equation. By removing capital expenditures not necessary for permit applications and negotiating equity settlements for program expenditures, TMC minimizes cash outflows. The cancellation of the $25 million Allseas credit facility and repayment of the $7.5 million working capital loan in Q2 2025 demonstrate this discipline. However, the $32.9 million owed to Allseas as of September 2025, with the majority expected to be settled in equity, shows how TMC is using its stock as currency to preserve cash.

Outlook: The Fragile Path to Q4 2027 Production

Management's guidance for commercial production starting in Q4 2027 represents a "right around the corner" timeline for a multi-decade mining project, but the fragility of this assumption defines the investment risk. The company states it "continues to feel confident that our US pivot will lead to a commercial recovery permit in 2027," contingent on NOAA completing its 100-day certification process that began in late July 2025, followed by environmental review and final permit issuance.

Any slippage in the regulatory timeline could force a dilutive equity raise or strategic retreat. The proposed amendments to DSHMRA regulations, issued by NOAA in July 2025, aim to "massively shrink the permitting time frame" through a consolidated application procedure. However, the company acknowledges that "actual timelines for certification, environmental review, and potential issuance of licenses or permits may differ materially from management's expectations." With the ISA process stalled indefinitely, TMC has no viable fallback if the U.S. pathway extends beyond 2027.

The revenue model assumes almost $600 per dry ton of nodules during steady-state production (2031-2043) with a 43% EBITDA margin, generating $254 per ton. The revenue mix projects 45% from nickel products, 28% from manganese, 17% from copper, and 9% from cobalt. This pricing power depends on deep-sea nodules remaining cost-competitive with land-based supply. TMC expects to be in the "first quartile of the cost curve" for nickel production with C1 cash costs just over $1,000 per ton, lower than nearly all producers outside Russia. If achieved, this cost advantage would create a durable competitive moat, but the estimate remains unproven at commercial scale.

Strategic partnerships provide execution confidence. The Korea Zinc investment includes a right to participate in future financings to maintain ownership, ensuring alignment through the development phase. Allseas' agreement to equally finance the first commercial system and its participation in Japanese nodule collection trials in January 2027 provides a commercial opportunity to test technical readiness while awaiting NOAA permits. This dual-track approach mitigates some execution risk but adds operational complexity.

Risks: Theses That Could Break the Investment Case

Four material risks threaten TMC's investment thesis, each with direct implications for the 2027 production timeline and equity value.

Regulatory Uncertainty: While the U.S. pathway appears clearer than the ISA process, it remains unproven. NOAA has never issued a commercial recovery permit under DSHMRA, and environmental groups are likely to challenge any approval. The company acknowledges "no assurance that we will be able to comply with, or obtain a waiver of, the requirement under DSHMRA that minerals be processed in the United States." If this requirement cannot be met, TMC may need to build U.S. processing facilities sooner than planned, requiring hundreds of millions in additional capital.

Litigation Overhang: Two active lawsuits create binary outcomes. The Atalaya lawsuit, filed in January 2023 regarding breach of a subscription agreement, survived TMC's motion to dismiss and is now in discovery after an appeal upheld the decision in December 2024. A putative class action filed in November 2024 alleging securities law violations was dismissed in June 2025 but plaintiffs filed an amended complaint in July 2025. While TMC has filed another motion to dismiss, an adverse ruling could result in substantial damages and distract management during the critical permitting period.

Environmental Compliance: Despite TMC's extensive dataset, the deep-sea mining industry faces coordinated opposition. The requirement to process minerals in the U.S. may conflict with the company's plan to use existing Asian facilities for initial production. Any environmental impact statement challenge could delay permits by years. Competitors like GSR face similar scrutiny, but TMC's first-mover status makes it the primary target for environmental groups.

Internal Control Weakness: A material weakness identified in the 2024 Form 10-K related to accounting for significant non-routine transactions remains partially remediated. While new policies and training were implemented in 2024 and Q1-Q3 2025, management states the effectiveness "needs longer-term operation and testing to be considered fully remediated." In a pre-revenue company burning cash, any accounting restatement or control failure could trigger covenant violations or loss of investor confidence.

Valuation Context: $4 Billion Enterprise Value vs. $23.6 Billion Resource NPV

At $7.80 per share, TMC trades at a $4.17 billion market capitalization and $4.06 billion enterprise value, representing approximately 17% of the $23.6 billion combined project NPV declared in August 2025. This valuation gap reflects the market's assessment of execution risk, regulatory uncertainty, and the time value of money for a project not expected to generate revenue until 2027 at the earliest.

The valuation implies either significant upside if permits are granted or substantial downside if the timeline slips. For pre-revenue companies, traditional metrics like P/E are meaningless; instead, investors must focus on cash runway and resource value per share. With $115.6 million in cash and quarterly operating cash burn of $11.5 million, TMC has roughly 10 quarters of runway before requiring additional capital. Management's claim of $165 million in current liquidity and potential for $400 million in warrant proceeds extends this timeline through the 2027 production target, but these inflows are not guaranteed.

Comparing TMC to peers highlights its premium valuation and higher risk profile. Odyssey Marine Exploration (OMEX) trades at an enterprise value of $118 million with $5.8 million in cash, reflecting its weaker technology and financial position. DEME Group, GSR's parent, trades at a €7.5 billion order book valuation with €464 million in H1 2025 EBITDA, demonstrating how diversified marine infrastructure players command higher multiples than pure-play deep-sea miners. TMC's $4 billion valuation implies the market is pricing it as the sector leader, leaving little room for execution missteps.

The resource NPV calculation assumes a 7% discount rate and includes $18.1 billion for the Initial Assessment and $5.5 billion for the NORI-D PFS. On an undiscounted basis, total revenue potential exceeds $369 billion with EBITDA above $200 billion. However, these figures assume full resource extraction over multiple decades, stable metal prices, and successful construction of processing facilities. Any delay beyond 2027 or cost overrun would reduce NPV materially.

Conclusion: A High-Conviction Bet on Regulatory Execution

TMC The Metals Company represents a binary investment proposition centered on whether the U.S. regulatory pathway can deliver a commercial recovery permit by 2027. The company's $23.6 billion resource NPV, first-mover advantage, and strategic partnerships with Korea Zinc and Allseas create a compelling upside scenario if deep-sea mining achieves commercial viability. However, the pre-revenue status, $279 million nine-month loss, and dependence on warrant exercises for funding create a fragile financial position that execution missteps could shatter.

The central thesis hinges on two variables: NOAA's ability to issue the first commercial permit on schedule and TMC's capacity to maintain its liquidity runway without dilutive equity issuance. The confirmed compliance for exploration applications and proposed regulatory amendments suggest the U.S. pathway is accelerating, but the unproven nature of DSHMRA permitting and active litigation create downside scenarios that could delay production by years.

For investors, TMC offers exposure to a potential new supply source for critical minerals at a time of geopolitical urgency, but at a valuation that assumes successful navigation of regulatory, technical, and financial challenges that have never been simultaneously overcome in the deep-sea mining industry. The $4 billion enterprise value represents a significant discount to resource NPV, but only if the company can execute its 2027 production timeline. Any slippage transforms the valuation from discounted cash flow story to option value on unproven technology and regulatory frameworks.