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● 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.
+Added: ● 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.
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● If we infringe, or are accused of infringing, on the intellectual property rights of third parties, it may increase our costs or prevent us from being able to commercialize new products.
−Removed: ● Pandemics, including COVID-19, could have an adverse effect on our business.
● We may issue additional Common Shares or other equity securities without shareholder approval, which would dilute your ownership interests and may depress the market price of our Common Shares and sales of a substantial amount of our Common Shares may cause the price of our Common Shares to fall.
● If our outstanding warrants are exercised, the number of shares eligible for future resale in the public market will increase and result in dilution to our shareholders.
−Removed: ● We have identified material weaknesses in our internal control over financial reporting.
−Removed: If 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.
−Removed: ● We may face litigation and other risks as a result of the material weaknesses in our internal control over financial reporting.
−Removed: ● 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.
+Added: ● We are involved in class action and securities 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.
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● There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.
+Added: ● We have identified material weaknesses in our internal control over financial reporting.
+Added: If 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.
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The treaty does not replace or amend UNCLOS, or the authority of the ISA, and must be interpreted consistently with the rights granted by the Convention.
−Removed: 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.
+Added: 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.
Moreover, despite the release by the ISA of the Draft Regulations on Exploitation of Mineral Resources (the “Draft Regulations”), finalization of such regulations remains subject to approval and adoption by the ISA.
−Removed: The ISA was intending to have these regulations finalized by July 2020, but the COVID-19 pandemic disrupted ISA meetings and discussions.
−Removed: Once adopted, these regulations will create the legal and technical framework for exploitation of the polymetallic nodules in the NORI, TOML and Marawa contract areas.
+Added: Once adopted, these regulations will add to the legal and technical framework for exploitation of the polymetallic nodules in the NORI, TOML and Marawa contract areas.
Section 1, paragraph 15 of the 1994 Agreement relating to the Implementation of Part XI of UNCLOS allows a member state whose national intends to apply for approval of a plan of work for exploitation to notify the ISA of such intention.
This notice obliges the ISA to complete the adoption of exploitation regulations within two years of the request made by the member state.
−Removed: 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.
−Removed: In June 2022, a member State submitted a position paper to the ISA urging that the deadline to adopt the exploitation regulations be extended for a period of 15 years.
−Removed: Although we believe that the notice submitted by Nauru to the ISA has increased the likelihood that exploitation regulations and any necessary rules, regulations and procedures to facilitate the approval of a plan of work for exploitation will be adopted by mid-2023, there can be no assurances that the adoption of these regulations will not be delayed or halted paused as a result of the actions of ISA member States.
−Removed: If the ISA Council has not completed the adoption of such regulations within the prescribed time and an application for approval of a plan of work for exploitation is pending, the ISA shall nonetheless consider and provisionally approve such a plan of work for exploitation based on:
+Added: 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.
+Added: As a result of that notice the ISA was required to adopt the relevant RRPs for exploitation by July 9, 2023.
+Added: The ISA, however, did not adopt the RRPs for exploitation by the July 9, 2023 deadline.
+Added: At its July 2023 session, the ISA released a road map for the finalization of the Mining Code, with a view to its adoption during the 30th session of the ISA in 2025, with the potential for earlier adoption during the 29th session of the ISA in 2024 if the Mining Code is ready for adoption by that time.
+Added: The road map includes three scheduled ISA Council meetings through July 2024 to elaborate the Mining Code.
+Added: Although we believe the ISA will adopt the Mining Code, there can be no assurances that the Mining Code will be adopted within these timelines, or at all, as a result of actions of ISA member States or otherwise.
+Added: For example, 21 ISA member States out of the 169 ISA members have expressed reservations about the commercialization of seafloor mineral resources and have called for a ban, moratorium, or precautionary pause on the commercialization of these resources.
+Added: 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.
+Added: As the ISA Council did not complete the adoption and elaboration of the Mining Code by the prescribed deadline of July 9, 2023, pursuant to Section 1, Paragraph 15(c) of the Annex to the 1994 Agreement relating to the implementation of Part XI of UNCLOS, if an application for a plan of work for exploitation is now submitted to the ISA, the ISA is nonetheless required to consider and provisionally approve such a plan of work based on:
(i) the provisions of the UNCLOS;
(ii) any rules, regulations and procedures that the ISA may have adopted provisionally, (iii) the basis of the norms contained in the UNCLOS and (iv) the terms and principles contained in the 1994 Agreement relating to the Implementation of Part XI, including the principle of non-discrimination among contractors.
−Removed: There can be no assurance that the ISA will provisionally approve our plan or that such provisional approval would lead to the issuance of an exploitation contract by the ISA.
−Removed: We expect the final regulations (“Final Regulations”) to be approved in the second half of 2023, but there can be no assurance that such regulations will be approved then, or at all.
−Removed: 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.
+Added: NORI intends to submit an application to the ISA for an exploitation contract, which will include a plan of work for exploitation for NORI Area D following the conclusion of the July 2024 meeting of the ISA’s 29th session.
+Added: If the ISA has not adopted the final Mining Code by the time NORI submits this application, we believe that the ISA will review and provisionally approve the plan of work for exploitation included therein pursuant to Section 1, Paragraph 15(c) of the Annex to the 1994 Agreement relating to the implementation of Part XI of UNCLOS discussed above.
+Added: The ISA released its road map to finalize the Mining Code at its July 2023 session, however, it also stated that the commercial exploitation of mineral resources in the ISA’s jurisdictional area should not be carried out in the absence of RRPs relating to exploitation.
+Added: In addition, there can be no assurances that the ISA will come to a consensus as to the interpretation of Section 1, Paragraph 15(c) of the Annex to the 1994 Agreement relating to the implementation of Part XI of UNCLOS.
+Added: Although we believe the ISA will accept and consider an application for a plan of work for exploitation in the absence of the final Mining Code, there is no consensus within the ISA as to the process to be followed for its consideration of such an application, including the involvement of the ISA’s Legal and Technical Commission and whether and how long the ISA could delay its consideration of an application past the proscribed 60-day period.
+Added: As a result, and in light of some ISA members States calling for a ban, moratorium or precautionary pause on the commercialization of seafloor mineral resources, there can be no assurance that the ISA will provisionally approve our plan of work for exploitation, within one year from submission thereof, or at all, or that such provisional approval would lead to the issuance of an exploitation contract with the ISA.
The collection of polymetallic nodules within the CCZ, where our exploration areas are located, will require approval of an ISA Exploitation Contract (which will authorize commercial collection activities).
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.
−Removed: The EIS would be accompanied by an Environmental Management and Monitoring Plan (“EMMP”).
−Removed: 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.
−Removed: 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.
−Removed: There can be no assurance that the ISA will evaluate any Exploitation Contract application by our subsidiaries in a timely manner or at all.
+Added: 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.
+Added: 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.
+Added: There can be no assurance that the ISA will approve our application for a plan of work for exploitation and issue an exploitation contract to our subsidiaries in a timely manner or at all.
Even if the ISA timely evaluates such applications(s), our subsidiaries may be required to submit a supplementary EIS or perform additional studies or campaigns before obtaining approval.
−Removed: 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.
+Added: 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.
Similarly, with respect to sponsoring State regulation, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner that would limit or curtail production or development by our subsidiaries.
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There can be no certainty that actions by governmental and regulatory authorities, including changes in regulation, taxation and other fiscal regimes, will not adversely impact our projects or our business.
−Removed: 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.
−Removed: 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.
−Removed: While we have beneficial ownership over such subsidiaries, we operate under the regulation and sponsorship of Nauru and Tonga.
+Added: 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.
+Added: 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.
+Added: 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.
Failure to maintain sponsorship, or secure new state sponsorship, will have a material impact on such subsidiary and on our overall business and operations.
−Removed: 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.
−Removed: There can be no assurance that the ISA will put in place Final Regulations in a timely manner or at all.
+Added: 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.
+Added: 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.
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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.
−Removed: We may become subject to environmental liabilities as a result of noncompliance or newly imposed regulations.
+Added: We may become subject to environmental liabilities as a result of noncompliance with existing or future regulations.
All of the exploration and development operations of our subsidiaries will be subject to environmental permitting and regulations, which can make operations expensive or prohibit them altogether.
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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.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
+Added: As a result, even if the ISA timely reviews and approves our expected application for an exploitation contract, which will include a plan of work for exploitation, for NORI Area D, there are no assurances that we will have successfully completed all development and pre-production work necessary to start commercial production at the end of the first quarter of 2026.
We have partnered with Allseas, a leading global offshore contractor, to undertake a pre-production pilot collection system test in which a collector vehicle, a riser and lift system and surface production vessel have been tested.
Although the pilot collection system test was successful, there can be no assurance that their technology will eventually be adequate for full scale commercial production.
−Removed: On March 16, 2022, NORI and Allseas entered into a non-binding term sheet for the development and operation of the Project Zero System.
−Removed: NORI and Allseas intend to equally finance all costs related to developing and getting Project Zero System into production currently.
−Removed: 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.
+Added: 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.
+Added: NORI and Allseas intend to equally finance all costs related to developing and getting Project Zero Offshore Nodule Collection System into production currently.
+Added: 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.
There can be no assurances, however, that we will enter into the binding Heads of Terms and definitive agreements with Allseas 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 and hence, we may be delayed in obtaining offshore collection equipment in the event we do not reach agreement with Allseas and have to develop such equipment on our own or through new third-party contractual relationships.
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Some of these contract holders may possess greater financial and/or technical resources.
−Removed: Furthermore, several nation states are working on developing polymetallic nodule resources inside their EEZs, with the Cook Islands granting three exploration contracts for polymetallic nodules in February 2022.
There is increasing competition from new and existing marine mineral players for the availability of marine exploration and support vessels, related marine equipment and specialized personnel, desirable exploration areas, suitable offshore collection and onshore processing equipment, and available capital.
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Because our revenue is expected to be from the collection and processing of minerals, changes in demand for, and taxes and other tariffs and fees imposed upon, such minerals and derived mineral products (most notably, nickel, manganese, copper, and cobalt) could significantly affect our profitability.
−Removed: A prolonged or significant economic contraction in the U.S.
−Removed: or worldwide could put downward pressure on market prices of minerals.
+Added: 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.
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Technology changes rapidly in the industries and end markets that utilize our materials.
−Removed: If these industries shift to new technologies or products such as lithium iron phosphate (LFP) batteries that no longer require or use less of the metals that we intend to collect and process, or if suitable substitutes become available, it could result in a decline in demand for our metal products.
+Added: If these industries shift to new technologies or products (e.g., nickel-rich battery chemistries could be replaced by other battery chemistries that do not use nickel or cobalt such as lithium iron phosphate (LFP), or copper could be increasingly substituted by aluminum) or use less of the metals that we intend to collect and process, or if suitable substitutes become available, it could result in a decline in demand for our metal products.
If the demand for our metal products decreases, it will have a material adverse effect on our business and the results of our operations and financial condition.
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We, our partners and our shareholders may be adversely impacted by pressure and lobbying from non-governmental organizations.
−Removed: 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.
+Added: 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.
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.
+Added: As seen during the coordinated and disruptive activities by Greenpeace International during Campaign 8a, designed to prevent and obstruct the campaign, such activities can have significant impacts from a timing, financial and safety perspective.
+Added: There can be no assurances that such activities by Greenpeace and other stakeholder will not materially impact our ongoing operations.
Offshore and Onshore Technology Risks and Operational Risks.
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● technical and operational challenges in the offshore collection operations and scaling up of such operations;
−Removed: ● challenges in transferring nodules to transport vessels and delivering nodules to port;
+Added: ● 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;
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In addition, our operations could be interrupted by or negatively influenced by non-governmental actors which could negatively impact our or our subsidiaries’ ability to operate in the CCZ and international markets, obtain capital, collect, transport, process or sell metals, or otherwise conduct business.
−Removed: 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.
+Added: The polymetallic nodules that we may recover may require specialized transfer and delivery equipment and processes, and there is no certainty that we will be able to develop or otherwise access such transfer and delivery equipment or processes that are suitable for our purposes.
+Added: The polymetallic nodules that we may collect may require specialized equipment and processes in connection with the transfer of such nodules to transport vessels and delivery of the nodules to port.
+Added: To date, we have not transferred significant quantities of nodules to transport vessels nor delivered significant quantities of nodules to port.
+Added: The anticipated cost to develop this equipment and processes is significant.
+Added: There is a risk that the equipment and/or processes necessary to transfer commercial quantities of nodules to transport vessels and deliver them to port may be economically prohibitive.
+Added: Although we are currently negotiating with third-party shipping companies to transfer nodules to transport vessels and to deliver nodules to port, our future needs with respect to the required equipment and processes have yet to be fully determined, and as such, the capital costs, performance, reliability, and maintenance of such equipment and processes is currently uncertain and may be more expensive and take longer to develop than we currently estimate.
+Added: In addition, the required equipment and processes may not be developed or become available at commercial scale in the time frame we require, which could have a material negative impact on our short-term operations and financial results.
+Added: Our business is contingent on our ability to successfully identify, collect, ship and process polymetallic nodules profitably, 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.
In conducting our business, we will rely on continuing existing strategic relationships as well as new relationships in a variety of disciplines, including the offshore equipment and services industries, the onshore mineral processing industry, and others involved in the mineral exploration industry.
We will also need to continue to develop new relationships with third-party contractors, as well as with certain regulatory and governmental departments.
−Removed: 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.
−Removed: In connection therewith, Hatch has developed a near-zero solid waste flowsheet.
+Added: 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.
+Added: 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.
−Removed: 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.
+Added: 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.
If we are unable to enter into definitive agreements with Allseas for the use of its technology for the collection, transport and commercial production of polymetallic nodules, it will have a material adverse effect on our business.
+Added: We are also in discussions with third party shipping companies to develop a system and method to transfer nodules to transport vessels and deliver nodules to port.
There can be no assurance that we will be able to continue to maintain and develop our existing relationships, or that we will be able to form the new relationships that are required for our business to be successful.
−Removed: For example, our agreement with Maersk Supply Services A/S to provide marine cruises and management services expired in January 2022, following the completion of the NORI Area D baseline campaigns.
−Removed: The next phase of our offshore campaigns required a different set of capabilities, and we contracted with a new service provider to provide a survey vessel and specialized services required to support the implementation of the recently conducted collector test monitoring survey.
There can be no assurances that we will be able to find additional partners with the correct capabilities to support our development efforts or whether we will be able to engage these partners on acceptable terms or at all.
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Notwithstanding the successful collector test completed in 2022, much of the commercial-scale equipment, particularly as it pertains to subsea engineering and recovery systems, has yet to have completion of engineering, and has not been constructed and fully tested, and may not be suitable or may prove unreliable, and may not be delivered to us on a timely basis, thereby delaying our contemplated timetable.
+Added: We have not yet identified a third-party shipping company with the necessary equipment to transfer nodules to transport vessels and deliver nodules to port.
Moreover, our future needs with respect to commercial-scale subsea engineering and recovery systems have yet to be fully determined, and as such, the capital costs, performance, reliability, and maintenance associated with the necessary equipment is currently unknown.
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If we and Allseas are unable to successfully maintain and expand this relationship, our business may be materially harmed.
−Removed: 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.
−Removed: We are also in discussions with Allseas to enter into binding agreements with them for the future development and operation of the Project Zero System and other services.
−Removed: Allseas also provides us with access to the Hidden Gem, the converted drillship expected to be converted into a production vessel by Allseas for our commercial use.
−Removed: 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.
−Removed: 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.
+Added: 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)].
+Added: We are also in discussions with Allseas to enter into binding agreements with them for the future development and operation of the Project Zero Offshore Nodule Collection System and other services.
+Added: Allseas also provides us with exclusive access to the earlier of the development of the Project Zero Offshore Nodule Collection System and December 31, 2026 to the Hidden Gem , the converted drillship expected to be converted into a production vessel by Allseas for our commercial use.
+Added: 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.
+Added: 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.
As a result, we may need to engage and depend on other third parties for the services and funding Allseas currently and is expected to provide us.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
The polymetallic nodules that our subsidiaries may collect, contain several base metals in varying concentrations, which will require processing and refining in metallurgical plants.
−Removed: 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.
−Removed: While Hatch, a global engineering, project management, and professional services firm, has helped us to develop a processing flowsheet with near-zero solid waste and is working with us on a pilot plant program, the actual percentage recovery of metals may vary significantly from that forecast, and we are in the process of conducting a pilot scale metallurgical test-work program to determine our ability to expand such program into a full operational system.
+Added: 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.
+Added: While the metallurgical recovery estimates have been derived from commercial operation benchmarking, benchscale and pilot scale testwork, the commercial metal recoveries to products could vary significantly from these estimates.
Should our offshore nodule collection plans become successful, we intend to partner with existing onshore processing partners to produce and develop new build onshore processing plants as we scale up production.
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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.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
Additionally, there can be no guarantees that such plants can be developed, or if developed, that such plants will perform in an economically viable manner or provide the projected metal recovery rates at the estimated project capital and operating costs, which could impact projections for our future revenues, cash flows, royalties, and development and operating expenditures.
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In addition, even though sea conditions in a particular location may be somewhat predictable, the possibility exists that unexpected conditions may occur that adversely affect our operations.
−Removed: 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.
−Removed: 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.
−Removed: Once our subsidiaries have been able to successfully collect the polymetallic nodules, they will be required to transport them to onshore facilities for processing.
+Added: 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.
+Added: 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.
+Added: Once our subsidiaries have been able to successfully collect the polymetallic nodules, they will be required to transport them to onshore facilities for processing, including the transfer of nodules to transport vessels and delivery to port.
Furthermore, once they have reached a point of commercialization, we will need to transport our products to our future customers, wherever they may be located.
Finding affordable and dependable transportation is important because it allows us to supply customers around the world.
−Removed: 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.
+Added: 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.
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 actual operating costs of our subsidiaries to collect polymetallic nodules, transport, process and refine such nodules commercially will depend upon changes in the availability of financing or partners who undertake capital developments in partnership with us, and prices of labor, equipment and infrastructure, shipping costs, variances in ore recovery from those currently assumed, operational risks, changes in governmental regulation, including taxation, environmental, permitting and other regulations and other factors, many of which are beyond our control.
−Removed: 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.
+Added: 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.
As a result of higher capital and operating costs, our financing ability may be impacted, and this may be further affected by lower commodity prices in the international markets that could impact production or economic returns which may differ significantly from those set forth in the NORI Initial Assessment and TOML Mineral Resource Statement and there can be no assurance that any of our development activities will result in profitable operations.
−Removed: 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.
+Added: 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.
NORI currently intends to explore and collect mineral resources in the NORI areas identified in the exploration contract executed by NORI with the ISA, and we hope to expand such operations if viable in certain other parts of the CCZ, including by TOML in the TOML areas identified in the exploration contract executed between TOML and the ISA and DGE in the Marawa areas identified in the exploration contract executed by Marawa with the ISA.
−Removed: Although NORI expects to achieve early-stage commercial production for the NORI Area D end of 2024 / start of 2025, there can be no assurance that it will be able to commercially develop these properties or that it will be able to generate profits in the future.
−Removed: In addition, as part of DGE’s Marawa Option Agreement and Services Agreement with Marawa with respect to the Marawa Contract Area, Marawa committed to spend Australian dollar (“AUD”) $3 million and AUD $2 million in fiscal 2023 and 2024, respectively.
+Added: Although NORI anticipates that its first production of nodules from NORI Area D could be in the first quarter of 2026 (assuming submission of an application for an exploitation contract, that includes a plan of work for exploitation, for NORI Area D following the July 2024 ISA meeting and the ISA’s timely one-year review and approval thereof), there can be no assurance that it will be able to commercially develop these properties or that it will be able to generate profits in the future.
Limited offshore marine resource definition activities in the Marawa Contract Area, however, have occurred to date and 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 unclear.
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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.
+Added: Intellectual Property Risks.
We may not be able to adequately protect our intellectual property rights.
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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.
−Removed: Pandemics, including COVID-19, could have an adverse effect on our business.
−Removed: Any outbreak of contagious diseases, such as COVID-19, or other adverse public health developments, could have a material and adverse effect on our business operations.
−Removed: The continued evolution of COVID-19 and its variants, as well as periodic spikes in infection rates and local outbreaks, in spite of safety measures or vaccinations, could cause disruptions to our operations or those of third parties with whom we engage.
−Removed: The COVID-19 pandemic has led to global supply chain challenges, which could adversely impact our ability to conduct business in the manner and timelines presently planned.
−Removed: As new variants of the virus appear, especially variants that are more easily spread, cause more serious outcomes, or are resistant to existing vaccines, new health orders and safety protocols could further impact our operations.
−Removed: We will continue to monitor developments of the pandemic and continuously assess its potential further impact on our operations to prevent any disruptions to the conduct of our business.
−Removed: In the event of a prolonged continuation of the pandemic, it is not clear what the potential impact may be on our business, financial position and financial performance.
Public Company Risks and Risks Related to our Securities
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Failure to obtain this necessary capital when needed may force us to reduce or terminate our operations.
−Removed: 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.
−Removed: 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.
−Removed: Additionally, the actual amount of capital raised for our projects may vary materially from our current estimates.
+Added: 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.
+Added: 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.
+Added: The actual amount of capital needed or that we raise for our projects, however, may vary materially from our current estimates.
We currently expect that we will raise additional funds to finance our operations.
−Removed: There is no assurance that we will be successful in obtaining the required financing for these or other purposes, including for general working capital, or that any funds raised will be sufficient for the purposes contemplated.
−Removed: We will not initially have any producing properties and will have no source of significant operating cash flow until 2024 at the earliest.
+Added: There is no assurance that we will be successful in obtaining the required financing for these or other purposes, including for general working capital, or that any funds raised will be sufficient for the purposes contemplated, which could negatively impact our operating plans, financial results and ability to continue as a going concern.
+Added: 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.
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If additional funds are raised through further issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution, and any new equity securities issued could have rights, preferences and privileges superior to those they possess prior to such issuances.
−Removed: Additionally, United States and global economic uncertainty, higher interest rates and diminished credit availability may limit our ability to incur indebtedness on favorable terms.
+Added: Additionally, U.S.
+Added: and global economic uncertainty, higher interest rates and diminished credit availability may limit our ability to incur indebtedness on favorable terms.
Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
−Removed: Furthermore, the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the United States and China or an escalation in conflict between Russia and Ukraine, including any resulting sanctions, export controls or other restrictive actions, could also lead to disruption, instability and volatility in the global markets, which may have an impact on our ability to obtain additional funding.
+Added: Furthermore, the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the U.S.
+Added: and China or an escalation in conflict between Russia and Ukraine, or the ongoing conflict in Israel and Gaza, including any resulting sanctions, export controls or other restrictive actions, could also lead to disruption, instability and volatility in the global markets, which may have an impact on our ability to obtain additional funding.
We may issue additional Common Shares or other equity securities without shareholder approval, which would dilute your ownership interests and may depress the market price of our common shares and sales of a substantial amount of our Common Shares may cause the price of our Common Shares to fall.
−Removed: As at December 31, 2022, we had 266,812,131 common shares and 24,500,000 warrants to acquire common shares issued and outstanding, which does not include the 37,978,680 common shares issuable in the private placement financing we announced in August 2022.
−Removed: In addition, the Allseas Warrant is exercisable for up to 11,600,000 common shares subject to the terms and conditions thereof.
+Added: As at December 31, 2023, we had 306,558,710 Common Shares, 15,074,240 Short-Term Incentive Plan (“STIP”) options, 9,783,922 Long-Term Incentive Plan (“LTIP”) options and 24,500,000 warrants to acquire Common Shares issued and outstanding, which does not include the 4,500,000 Common Shares and 2,250,000 Class A warrants issuable in the private placement financing we announced in August 2023.
Subject to the requirements of the Business Corporations Act (British Columbia) (“BCBCA”), our Articles authorize us to issue Common Shares and rights relating to our Common Shares for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise.
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In addition, up to 136,239,964 Common Shares, subject to adjustment in certain events, may be issued to the holders of special shares and holders of options underlying special shares upon conversion of special shares if certain common share price thresholds are met (“Special Shares”).
−Removed: 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.
+Added: Any Common Shares issued, including in connection with the August 2023 registered direct 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.
Our issuance of additional Common Shares or other equity securities of equal or senior rank would have the following effects:
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You will likely experience further dilution if we issue common shares in future financing transactions.
−Removed: 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.
−Removed: In addition, there are 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.
−Removed: In certain circumstances, the Public Warrants and Private Warrants may be exercised on a cashless basis and the proceeds from the exercise of such warrants will decrease.
−Removed: The Allseas Warrant is also exercisable for up to 11,600,000 common shares subject to the terms and conditions thereof.
+Added: 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.
+Added: In addition, there are 3,980,770 Class A Warrants outstanding to purchase 3,980,770 Common Shares at an exercise price of $3.00 per share, that were issued as part of the August 2023 registered direct offering.
+Added: In certain circumstances, the Public Warrants, Private Warrants and Class A Warrants may be exercised on a cashless basis and the proceeds from the exercise of such warrants will decrease.
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.
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Furthermore, if we raise additional funds by issuing additional Common Shares, or securities convertible into or exchangeable or exercisable for common stock, our shareholders will experience additional dilution, and new investors could have rights superior to existing stockholders.
−Removed: 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.
+Added: There can be no assurance that the Public Warrants, Private Warrants and Class A Warrants will be in the money, and they may expire worthless.
The exercise price for the outstanding Public Warrants and Private Warrants is $11.50 per Common Share.
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Based on the current trading price of our common shares we do not expect to receive any proceeds from exercise of the Public Warrants and Private Warrants unless there is a significant increase in the price of our Common Shares.
−Removed: 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.
−Removed: Each of our outstanding whole warrants is exercisable commencing on October 9, 2021, for one common share in accordance with its terms.
−Removed: 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.
+Added: 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.
+Added: All of our warrants are currently exercisable for one common share in accordance with their terms.
+Added: 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.
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.
−Removed: We have identified material weaknesses in our internal control over financial reporting.
−Removed: If 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.
−Removed: In the process of preparing the Company’s third quarter 2021 financial statements, management discovered misstatements related to the understatement of exploration expense and overstatement of stock option expenses related to the three-month period ended March 31, 2021 and six-month period ended June 30, 2021.
−Removed: For further detail regarding the restatement, see Part II, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Restatement of Previously Issued Quarterly Financial Statements” and Part II, Item 4 “Controls and Procedures” included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed with the SEC on November 15, 2021.
−Removed: These misstatements resulted in the Company having to restate its unaudited condensed consolidated financial statements for the three months ended March 31, 2021 and six months ended June 30, 2021.
−Removed: Our management has concluded that this material weakness was due to the fact that, prior to the Business Combination, we were a private company with limited resources.
−Removed: The Company presented its plan for remediation of the material weaknesses in internal control over financial reporting that existed as of the end of 2021 in its Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 25, 2022 and has updated its progress in implementing such plan in its subsequent Quarterly Reports on Form 10-Q for the first three quarters of 2022.
−Removed: Management has implemented the identified remediation steps over the course of 2022.
−Removed: More specifically, the following action items were implemented by the end of 2022:
−Removed: ● appointed a Chief Financial Officer to oversee the finance and accounting function;
−Removed: ● hired individuals for the core accounting function with the requisite education, designation, and technical accounting and public company experience;
−Removed: ● completed the transition from our outsourced accounting service provider to our in-house finance and accounting function;
−Removed: ● hired external experts to work with our internal team to assist with the design and implementation of robust controls over all our key processes and address all key company risks:
−Removed: the external experts completed their evaluation of our key controls as of end of 2022 and provided their report to management with recommendations for improvements to non-key controls;
−Removed: ● added formality and rigor to our financial reporting process by continuously developing structured roles, policies, processes, procedures and controls.
−Removed: As of December 31, 2022, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: Based on this assessment, our management concluded that, as of December 31, 2022, our internal controls over financial reporting, including changes thereto as a result of the material weaknesses discussed above, newly implemented policies and procedures over key functional areas had not been in operation long enough over the 2022 year to be deemed effective.
−Removed: The material weaknesses will not be considered fully remediated until sufficient time has elapsed to provide sufficient sample evidence that the newly designed and implemented controls are operating effectively.
−Removed: We will continue to review the effectiveness of our newly implemented controls and make improvements as warranted.
−Removed: There are no assurances that these control modifications will ultimately have the intended effects.
−Removed: If the material weaknesses are not remediated in a timely manner, this could result in material misstatements to our annual or interim financial statements that would not be prevented or detected on a timely basis, or in the delayed filing of required periodic reports.
−Removed: If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of the internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our securities could be adversely affected and we could become subject to litigation or investigations by Nasdaq, the SEC, or other regulatory authorities, which could require additional financial and management resources.
−Removed: We may face litigation and other risks as a result of the material weaknesses in our internal control over financial reporting.
−Removed: We have restated our financial statements as of and for the three-month period ended March 31, 2021, and as of and for the six-month period ended June 30, 2021 in the unaudited condensed financial statements included in our Quarterly Report on Form 10-Q filed on November 15, 2021 as a result of deficiencies in the design and operation of the financial statement close and reporting controls, including maintaining sufficient written policies and procedures and the need to use appropriate technical expertise when accounting for complex or non-routine transactions.
−Removed: As a result of the material weaknesses, the restatements, the adjustments relating to the accrual of exploration expenses and stock option accounting, and other matters raised or that may in the future be raised by the SEC, we may be subject to potential litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the Restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements.
−Removed: We can provide no assurance that such litigation or dispute will not arise in the future.
−Removed: Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition.
We are involved in litigation that may adversely affect us and may not be successful in our litigation related to non-performing Private Investment in Public Equity (“PIPE”) investors.
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On March 6, 2022, a lead plaintiff was selected.
−Removed: An amended complaint was filed on May 12, 2022, reflecting substantially similar allegations.
−Removed: We deny any allegations of wrongdoing and we filed a motion to dismiss on July 12, 2022 and intend to defend against this lawsuit.
−Removed: On September 26, 2022, the motion to dismiss was fully briefed and the parties are awaiting a ruling.
−Removed: 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.
+Added: 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.
+Added: 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.
+Added: On July 12, 2023, an oral hearing on the motion to dismiss was held.
+Added: The parties are currently awaiting a ruling.
+Added: 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.
Sustainable Opportunities Acquisition Corp.
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650449/2023 (N.Y.
−Removed: 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.
+Added: We filed a motion to dismiss on March 31, 2023, after which the plaintiffs filed an amended complaint on June 5, 2023.
+Added: The 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.
−Removed: There have been no substantive developments in this case.
−Removed: We deny any allegations of wrongdoing and are preparing to file a motion to dismiss.
−Removed: There is no assurance, however, that we or the other defendants will be successful in defense of these lawsuits or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of these actions.
−Removed: If either of the motions to dismiss is unsuccessful, there is a possibility that we may incur a loss in one of these matters.
−Removed: Such losses or range of possible losses either cannot be reliably estimated.
−Removed: A resolution of either of these lawsuits 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.
−Removed: Additionally, this and other litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
+Added: We deny any allegations of wrongdoing and filed a motion to dismiss the amended complaint on July 28, 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.
+Added: We filed a notice of appeal regarding the Court’s denial of our motion to dismiss the breach of the Subscription Agreement claim.
+Added: 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.
+Added: Such losses or range of possible losses cannot be reliably estimated.
We expected to receive approximately $330 million of proceeds in the private placement that closed on September 9, 2021 in connection with the Closing but only received $110.3 million (net of transactions costs).
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We may seek to incur debt in the future to fund our exploration and operational programs, which would reduce our financial flexibility and could have a material adverse effect on our business, financial condition or results of operation.
−Removed: Should we incur debt, our ability to satisfy any resulting debt obligations and to reduce our level of indebtedness will depend on future performance.
+Added: Should we incur debt, including through the drawdown of our credit facility with Allseas and/or our credit facility with ERAS Capital LLC and Gerard Barron, our ability to satisfy any resulting debt obligations and to reduce our level of indebtedness will depend on future performance.
General economic conditions, mineral prices, and financial, business and other factors will have an impact on our operations and future performance, and many of these factors are beyond our control.
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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.
−Removed: 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.
−Removed: 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.
+Added: 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.
+Added: 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.
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In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our Common Shares and Public Warrants, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our Common Shares and Public Warrants to decline further.
+Added: If we are unable to implement and maintain effective internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and we may face litigation.
+Added: As a public company, we are required to implement and maintain internal controls over financial reporting and to report any material weaknesses in such internal controls.
+Added: There is no guarantee we will maintain effective internal controls in the future.
+Added: If during the evaluation and testing process, we identify one or more material weaknesses in the design or effectiveness of our internal control over financial reporting or determine that existing material weaknesses have not been remediated, our management will be unable to assert that our internal control over financial reporting is effective.
+Added: Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed, implemented, or reviewed.
+Added: If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the valuation of our common stock could be adversely affected.
+Added: As a result of the material weaknesses and the associated restatements to our previously issued financial statements for the three months ended March 31, 2023, the six months ended June 30, 2023 and the nine months ended September 30, 2023 contained in its Quarterly Reports on Form 10-Q for the quarter ended March 31, 2023, June 30, 2023 and September 30, 2023, respectively, filed with the SEC and other matters that may be raised by the SEC, we may be subject to potential litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from these matters and the preparation of our financial statements.
+Added: We can provide no assurance that such litigation or dispute will not arise in the future.
+Added: Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition.
The market price of our securities may be volatile, which could cause the value of your investment to decline.
2 unchanged sentences
Securities markets worldwide experience significant price and volume fluctuations.
−Removed: This market volatility, as well as general economic, market and political conditions (including as a result of the COVID-19 pandemic and the conflict between Russia and Ukraine), could reduce the market price of our securities in spite of our operating performance.
+Added: This market volatility, as well as general economic, market and political conditions (including as a result of regional conflicts, geopolitical events and natural disasters), could reduce the market price of our securities in spite of our operating performance.
If we are unable to operate as profitably as investors expect, the market price of our Common Shares will likely decline when it becomes apparent that the market expectations may not be realized.
4 unchanged sentences
Such litigation, if instituted against us, could result in substantial costs, a material negative impact on our liquidity and a diversion of our management’s attention and resources.
−Removed: We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
−Removed: 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.
+Added: We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous, thereby making the warrants worthless.
+Added: 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.
+Added: Our Class A Warrants have a similar call provision if the price of our Common Shares is over $6.50 per share (subject to adjustments) for 30 consecutive trading days at a price per warrant share of $0.0001.
If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
89 unchanged sentences
federal securities laws or any such state securities or blue-sky laws.
−Removed: UNRESOLVED STAFF COMMENTS
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.