What changed in this filing

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Item 1. Financial Statements

2024-05-13 compared with 2023-11-09 · 224 added, 293 removed, 219 unchanged (70% of the section changed)

3 unchanged sentences

(in thousands of US Dollars, except share amounts)

September 30,

Receivables and prepayments

Exploration contracts

Software development costs

Right-of-use asset

1 unchanged sentence

Deferred tax liability

Royalty liability

Warrants liability

2 unchanged sentences

318,291,383 (December 31, 2023 – 306,558,710 ))

Special Shares

Additional paid in capital

2 unchanged sentences

Nature of Operations (Note 1)

Commitments and Contingent Liabilities (Note 15)

Contingent Liabilities (Note 14)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

Three months ended

Nine months ended

September 30,

Three months ended

Operating expenses

3 unchanged sentences

Equity-accounted investment loss

Gain on disposition of asset

Change in fair value of warrants liability

Foreign exchange loss (gain)

Change in fair value of private warrants liability

Foreign exchange (gain) loss

Interest income

Fees and interest on credit facility

Net loss and comprehensive loss for the period

Net loss per share - basic and diluted

Loss and comprehensive loss for the period

Loss per share - basic and diluted

Weighted average number of Common Shares outstanding – basic and diluted

5 unchanged sentences

Comprehensive

Three months ended September 30, 2023

June 30, 2023

Exercise of stock options (Note 10)

Exercise of warrant by Allseas (Note 9)

Shares issued to Allseas (Note 13)

Conversion of restricted share units, net of shares withheld for taxes (Note 10)

Issuance of shares and warrants under Registered Direct Offering, net of expenses (Note 8)

Share-based compensation (Note 10)

Net loss for the period

September 30, 2023

Common Shares

Comprehensive

Three months ended September 30, 2022

June 30, 2022

Exercise of stock options

Conversion of restricted share units, net of shares withheld for taxes

Issuance of shares under PIPE financing - net of expenses

Share-based compensation

Net loss for the period

September 30, 2022

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

TMC the metals company Inc.

Condensed Consolidated Statements of Changes in Equity

(in thousands of US Dollars, except share amounts)

Common Shares

Comprehensive

Nine months ended September 30, 2023

December 31, 2022

Three months ended March 31, 2024

January 1, 2024

Issuance of shares and warrants under Registered Direct Offering, net of expenses (Notes 9, 10)

Exercise of stock options (Note 11)

Exercise of warrant by Allseas (Note 9)

Shares issued to Allseas (Notes 6 and 13)

Conversion of restricted share units, net of shares withheld for taxes (Note 11)

Issuance of shares and warrants under Registered Direct Offering, net of expenses (Note 8)

Share purchase under Employee Share Purchase Plan (Note 10)

Expenses settled with share-based payments (Note 10)

Share-based compensation (Note 10)

Net loss for the period

September 30, 2023

Share-based compensation and expenses settled with equity (Notes 10, 11)

Loss for the period

March 31, 2024

Common Shares

Comprehensive

Nine months ended September 30, 2022

December 31, 2021

Exercise of stock options

Three months ended March 31, 2023

January 1, 2023

Shares issued to Allseas

Conversion of restricted share units, net of shares withheld for taxes

Issuance of shares under PIPE financing - net of expenses

Share purchase under Employee Share Purchase Plan

Share-based compensation

Net loss for the period

September 30, 2022

Share-based compensation and Expenses settled with equity

Loss for the period

March 31, 2023

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands of US Dollars)

Nine months ended

September 30,

Three months ended

Cash provided by (used in)

Operating activities

Net loss for the period

Loss for the period

Items not affecting cash:

Lease expense

Expenses settled with share-based payments

Share-based compensation and expenses settled with equity

Equity-accounted investment loss

Change in fair value of warrants liability

Gain on disposition of asset

Unrealized foreign exchange movement

4 unchanged sentences

Investing activities

Cash received from investment in Low Carbon Royalties

Acquisition of equipment

Net cash provided by (used in) investing activities

Acquisition of equipment and software

Net cash used in investing activities

Financing activities

Proceeds from employee share purchase plan

Proceeds from exercise of stock options

Proceeds from exercise of warrants by Allseas

Proceeds from Registered Direct Offering

Expenses paid for Registered Direct Offering

Proceeds from PIPE financing

Expenses paid for PIPE financing

Proceeds from issuance of shares

Taxes withheld and paid on share-based compensation

Proceeds from exercise of stock options

Proceeds from Low Carbon Royalties investment

Net cash provided by financing activities

10 unchanged sentences

(“TMC” or the “Company”) was incorporated as a Cayman Islands exempted company limited by shares on December 18, 2019 and continued as a corporation under the laws of the province of British Columbia, Canada on September 9, 2021.

On September 9, 2021, the Company completed its business combination (the “Business Combination”) with DeepGreen Metals Inc.

(“DeepGreen”).

The Company’s corporate office, registered address and records office is located at 10th floor, 595 Howe Street, Vancouver, British Columbia, Canada, V6C 2T5.

The Company’s common shares and warrants to purchase common shares are listed for trading on the Nasdaq Global Select Market (“Nasdaq”) under tickers “TMC” and “TMCWW”, respectively.

The Company is a deep-sea minerals exploration company focused on the collection, processing and refining of polymetallic nodules found on the seafloor in international waters of the Clarion Clipperton Zone in the Pacific Ocean (“CCZ”), located approximately 1,300 nautical miles (1,500 miles or 2,400 kilometers) southwest of San Diego, California.

These nodules contain high grades of four metals (nickel, copper, cobalt, manganese) which can be used as (i) feedstock for battery cathode precursors (nickel and cobalt sulfates, or intermediate nickel-copper-cobalt matte, or nickel-copper-cobalt alloy) for electric vehicles (“EV”) and renewable energy storage markets, (ii) copper cathode for EV wiring, clean energy transmission and other applications and (iii) manganese silicate for manganese alloy production required for steel production.

The Company is a deep-sea minerals exploration company focused on the collection and processing of polymetallic nodules found on the seafloor in international waters of the Clarion Clipperton Zone in the Pacific Ocean (“CCZ”), located approximately 1,300 nautical miles southwest of San Diego, California.

These nodules contain high grades of four metals (nickel, copper, cobalt, manganese) which can be used as (i) feedstock for battery cathode precursors (nickel, cobalt and manganese sulfates, or intermediate nickel-copper-cobalt matte) for electric vehicles (“EV”) and renewable energy storage markets, (ii) copper cathode for EV wiring, energy transmission and other applications and (iii) manganese silicate for manganese alloy production required for steel production.

Exploration and exploitation of seabed minerals in international waters is regulated by the International Seabed Authority (“ISA”), an intergovernmental organization established pursuant to the 1994 Agreement Relating to the Implementation of the United Nations Convention on the Law of the Sea.

The ISA grants contracts to sovereign states or to private contractors who are sponsored by a sovereign state.

The ISA requires that a contractor obtain and maintain sponsorship by a host nation that is a member of the ISA and signatory to UNCLOS, and that such nation maintains effective supervision and regulatory control over such sponsored contractor.

The Company’s wholly owned subsidiary, Nauru Ocean Resources Inc.

(“NORI”), was granted an exploration contract (the “NORI Exploration Contract”) by the ISA in July 2011 under the sponsorship of the Republic of Nauru (“Nauru”) giving NORI exclusive rights to explore for polymetallic nodules in an area covering 74,830 km 2 in the CCZ (“NORI Area”).

On March 31, 2020, the Company acquired Tonga Offshore Mining Limited (“TOML”), which was granted an exploration contract (the “TOML Exploration Contract”) by the ISA in January 2012 under the sponsorship of the Kingdom of Tonga (“Tonga”) and has exclusive rights to explore for polymetallic nodules covering an area of 74,713 km 2 in the CCZ (“TOML Area”).

Marawa Research and Exploration Limited (“Marawa”), an entity owned and sponsored by the Republic of Kiribati (“Kiribati”), was granted rights by the ISA to polymetallic nodules exploration in an area of 74,990 km 2 in the CCZ (“Marawa Area”).

In 2013, the Company through its subsidiary DeepGreen Engineering Pte.

1 unchanged sentence

The Company is working with its strategic partner and investor, Allseas Group S.A.

(“Allseas”), to develop a system to collect, lift and transport nodules from the seafloor to shore and to subsequently convert that system into an early commercial production system (Note 6).

(“Allseas”), to deliver a system to collect, lift and transport nodules from the seafloor to shore that meets the requirements of an early commercial production system (Note 6).

The realization of the Company’s assets and attainment of profitable operations is dependent upon many factors including, among other things:

financing being arranged by the Company to continue operations, development of a nodule collection system for the recovery of polymetallic nodules from the seafloor as well as development of processing technology for the treatment of polymetallic nodules, the establishment of mineable reserves, the commercial and technical feasibility of seafloor polymetallic nodule collection and processing, metal prices, and regulatory approvals and environmental permitting for commercial operations.

financing being arranged by the Company to continue operations, development of a nodule collection system for the recovery of polymetallic nodules from the seafloor as well as development of processing technology for the treatment of polymetallic nodules at commercial scale, the establishment of mineable reserves, the commercial and technical feasibility of seafloor polymetallic nodule collection and processing, metal prices, and regulatory approvals and environmental permitting for commercial operations.

The outcome of these matters cannot presently be determined because they are contingent on future events and may not be fully under the Company’s control.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Basis of Presentation

7 unchanged sentences

The Company has applied the same accounting policies as in the prior year, except as disclosed below.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Comparative figures reported in the Condensed Consolidated Balance Sheet, for cash, receivables and prepayments, software development costs and equipment, and figures reported in the Condensed Consolidated Statements of Cash Flows, for expenses settled with equity and changes in working capital have been reclassified to conform to the current period’s presentation.

Use of Estimates

1 unchanged sentence

GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and the notes thereto.

Significant estimates and assumptions reflected in these condensed consolidated interim financial statements include, but are not limited to, the evaluation of going concern, the valuation of share-based payments, including valuation of incentive stock options (Note 10), as well as the valuation of warrants liability (Note 9), the valuation of the investment in Low Carbon Royalties Inc.

(“Low Carbon Royalties”) (Note 6) and the valuation of leases (Note 5).

Significant estimates and assumptions reflected in these condensed consolidated interim financial statements include, but are not limited to, the evaluation of going concern, the valuation of share-based payments, including valuation of incentive stock options (Note 11), valuation of Class A warrants (Note 9) as well as the valuation of private warrants (Note 10), the valuation of the Royalty liability (Note 7) and the valuation of leases (Note 6).

Actual results could differ materially from those estimates.

10 unchanged sentences

In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2023, and 2022.

There were no transfers between fair value measurement levels during the three months ended March 31, 2024, and 2023.

As at March 31, 2024, and December 31, 2023, the carrying values of cash, receivables, and accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

The financial instruments also include royalty liability, and warrants issued by the Company.

These warrants are valued at fair value, which is disclosed in Note 10.

Recent Accounting Pronouncements Issued and Adopted

There were no recent accounting pronouncements issued and adopted by the Company during the period.

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

As at September 30, 2023, and December 31, 2022, the carrying values of cash, receivables, and accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

The financial instruments also include public and private warrants issued by the Company.

These warrants are valued at fair value, which is disclosed in Note 9.

Significant Accounting Policies Adopted During the Period

The Company consolidates investments over which it has control in accordance with Accounting Standards Codification (“ASC”) 810, Consolidation (“ASC 810”).

Where the Company does not have control over the investment, but has significant influence, the Company records the investment in accordance with ASC 323, Investments-Equity Method and Joint Ventures (“ASC 323”) whereby, after recording the initial investment, the Company recognizes its proportional share of results of operations of the affiliate in its consolidated financial statements.

The value of the equity method investments is impaired if it is determined that there is an other-than-temporary decline in value.

Investments over which the Company does not have control nor significant influence are recorded at cost.

The Company records leases in accordance with ASC 842, Leases, and determines if an arrangement contains a lease at inception.

If an arrangement contains a lease, the Company performs a lease classification test to determine if the lease is an operating lease or a finance lease.

Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Lease payments consist of i) fixed payments, less any lease incentives, ii) variable payments, that depend on an index or a rate, iii) exercise price of an option to purchase the underlying asset, iv) payment for penalties for terminating the lease, v) fees disbursed to the owners of special-purpose entities for structuring the transaction, and vi) amounts that are highly probable to be owed under residual value guarantees

Operating lease liabilities are recognized on the commencement date of the lease based on the present value of the future lease payments over the lease term.

Operating lease liabilities due within the subsequent 12 months of the reporting date are classified as current lease liabilities and are included in accounts payable and accrued liabilities on the Company’s condensed consolidated balance sheet.

Operating lease liabilities payable after the subsequent 12 months of the reporting date are classified as non-current lease liabilities and are presented as non-current lease liability in the condensed consolidated balance sheet.

ROU assets are valued at the initial measurement of the lease liability, plus any indirect costs or rent prepayments, and reduced by any lease incentives and any deferred lease payments.

Operating ROU assets are recorded as right-of-use assets, net of any amortization on the condensed consolidated balance sheet and are amortized over the lease term.

Lease expense is recognized on a straight-line basis over the life of the lease and, depending on the nature of the ROU asset, is either included in exploration and evaluation expenses or in general and administrative expenses.

The Company subsequently measures the right-of-use asset for an operating lease at the amount of the remeasured lease liability (i.e.

the present value of the remaining lease payments), adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term and any unamortized initial direct costs.

Strategic Alliance with Allseas and Affiliates

Development of Project Zero Offshore Nodule Collection System

On March 16, 2022, NORI and Allseas entered into a non-binding term sheet for the development and operation of a commercial nodule collection system.

During the three months ended March 31, 2024, in relation to the development of the commercial nodule collection system, Allseas provided the Company with engineering, project management and vessel use services consisting of lay-up and transit costs totaling $ 3.7 million, recorded as mining, technological and process development within exploration and evaluation expenses (three months ended March 31, 2023 - $ 1.0 million).

Exclusive Vessel Use Agreement with Allseas

On August 1, 2023, the Company entered into an Exclusive Vessel Use Agreement with Allseas pursuant to which Allseas will give exclusive use of the vessel (“ Hidden Gem ”) to the Company in support of the development of the Project Zero Offshore Nodule Collection System until the system is completed or December 31, 2026, whichever is earlier.

In consideration of the exclusivity term, the Company, on August 14, 2023, issued 4.15 million common shares to Allseas.

Allseas can terminate the agreement if the Company ceases normal operations, assigns assets to creditors, initiates bankruptcy proceedings, or faces unresolved bankruptcy-related actions.

The Company has determined that the Exclusive Vessel Use Agreement with Allseas is a lease agreement, classified as an operating lease.

On August 1, 2023, the Company recorded a lease liability amounting to $ 6.5 million, which represents the fair value of 4.15 million common shares issued to Allseas on August 14, 2023, as consideration.

The entire lease liability was settled within 14 days of the commencement of lease.

On the date of the agreement, the Company recognized $ 6.5 million as a right-of-use asset, which represented the present value of the lease payments.

For the three months ended March 31, 2024, the Company has recognized $ 0.5 million as lease expense recorded as exploration and evaluation expense.

As at March 31, 2024, the net amount of the right-of-use asset is as follows:

Right-of-use Asset

Balance as on December 31, 2023

Lease expense during the period

Balance as at March 31, 2024

Credit Facility with Allseas Affiliate

On March 22, 2023, the Company entered into an Unsecured Credit Facility Agreement, which was amended on July 31, 2023 (“Credit Facility”), with Argentum Credit Virtuti GCV (the “Lender”), the parent of Allseas Investments S.A.

and an affiliate of Allseas, pursuant to which, the Company may borrow from the Lender up to $ 25 million in the aggregate, from time to time, subject to certain conditions.

All amounts drawn under the Credit Facility will bear interest based on the 6-month Secured Overnight Financing Rate, 180 -day average plus a margin of 4.0 % per annum payable in cash semi-annually (or plus 5 % if paid-in-kind at maturity, at the Company’s election) on the first business day of each of June and January.

The Company will pay an underutilization fee equal to 4.0 % per annum payable semi-annually for any amounts that remain undrawn under the Credit Facility.

The Company has the right to pre-pay the entire amount outstanding under the Credit Facility at any time before the Credit Facility’s maturity.

The Company has the ability to settle certain charges under this Credit Facility in cash or in equity at the discretion of the Company.

The Credit Facility also contains customary events of default.

On March 22, 2024, the Company entered into the Second Amendment to the Unsecured Credit Facility with the Lender, the parent of Allseas Investments S.A.

and an affiliate of Allseas, to extend the Credit Facility to August 31, 2025 and to provide that the underutilization fee thereunder shall cease to be payable after the date on which the Company or the Lender gives notice of termination of the agreement.

Under the amended Credit Facility, the Company may borrow from the Lender up to $ 25,000,000 in the aggregate through August 31, 2025.

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Strategic Partnerships

Strategic Alliance with Allseas

On February 13, 2023, the Company entered into a Fifth Amendment to the Pilot Mining Test Agreement (the “PMTA”) and Third Amendment to Strategic Alliance Agreement (together with the PMTA, the “Amendments”), which was effective as of February 8, 2023, with DGE, DeepGreen Metals Inc.

The Amendments relate to the Company’s settlement of the third and final payment of $ 10 million due to Allseas upon successful completion of the trial of the pilot mining test system (the “PMTS”) in NORI Area D and certain other costs due to Allseas under the PMTA through the issuance of 10,850,000 common shares to Allseas, priced at $ 1.00 per share.

On February 23, 2023, the Company settled the third milestone payment of $ 10 million and additional PMTS overage charges amounting to $ 0.9 million by issuing 10.9 million of its common shares to Allseas.

On August 1, 2023, the Company entered into an Exclusive Vessel Use Agreement with Allseas pursuant to which Allseas will give exclusive use of the vessel ( “Hidden Gem” ) to the Company in support of the development of the Project Zero Offshore System until the system is completed or December 31, 2026, whichever is earlier (Note 13).

In consideration of the exclusivity term, the Company, on August 14, 2023, issued 4.15 million common shares to Allseas and recorded a right-of-use asset of $ 6.2 million.

On August 9, 2023, 11,578,620 common shares were issued to Allseas upon the exercise of the warrant that were granted to Allseas in March 2021, and receipt of the exercise fee of $ 115.8 thousand.

The warrant vested and became exercisable on successful completion of the PMTS in November 2022 (refer “Allseas Warrant”, Note 9).

As a part of the Registered Direct Offering in August 2023 (Note 8), Allseas purchased 3,500,000 common shares and accompanying Class A Warrants to purchase 1,750,000 Common Shares (Note 9) for a total purchase price of $ 7 million.

As at September 30, 2023, Allseas owned 52.8 million TMC common shares (2022:

During the three months ended March 31, 2024, the Company has not drawn any amount from the Credit Facility and has incurred $ 0.2 million (three months ended March 31, 2023:

$ 27 thousand) as underutilization fees.

As at March 31, 2024, the total amount payable to Allseas and its affiliates was $ 17.5 million (December 31, 2023:

$ 13.8 million).

As at March 31, 2024, Allseas and its affiliates owned 53.8 million TMC common shares (2023:

53.8 million TMC common shares) which constituted 16.9 % (December 31, 2023:

5 unchanged sentences

If both repurchase transactions are executed, the NORI Royalty will be reduced to 0.5 %.

At the Closing Date, Low Carbon Royalties also owned a 1.56 % gross overriding royalty on a producing natural gas field in Latin America.

At the Closing Date, Low Carbon Royalties also owned a 1.56 % gross overriding royalty on a producing natural gas field in Latin America (the “LCR – owned Royalty”).

In consideration of the NORI Royalty, TMC received 35.0 % of the common shares issued by Low Carbon Royalties and $ 5 million in cash, as of the Closing Date.

In connection with the Royalty Agreement the Company entered into an Investor Rights Agreement with Low Carbon Royalties and a shareholder of Low Carbon Royalties, pursuant to which the Company and this shareholder each has a right, subject to certain percentage maintenance, to nominate a director to Low Carbon Royalties’ board of directors, along with registration and information rights.

The Company has accounted for the investment in Low Carbon Royalties in accordance with ASC 323-10 and has thus applied the equity method of accounting to this investment.

When considering the royalty liability instrument as well as the embedded repurchase features, management has elected to account for the royalty liability under the fair value option in accordance with ASC 825-10.

In connection with the Royalty Agreement the Company entered into an Investor Rights Agreement with Low Carbon Royalties and a shareholder of Low Carbon Royalties, pursuant to which the Company and this shareholder each have a right, subject to certain percentage maintenance, to nominate a director to Low Carbon Royalties’ board of directors, along with registration and information rights.

As a condition of closing the Royalty Agreement, the parties entered into an agreement with Low Carbon Royalties to mitigate risks associated with the potential termination of the exploitation license granted for one of the royalty-producing natural gas fields in Latin America (the “Exploitation License”).

As per the agreement, 5 million contingent value rights (“CVR”) were issued to NORI.

The CVR would convert into 5 million additional shares of Low Carbon Royalties being issued to NORI, in the event the Exploitation License is found, in a final decision, to be invalid by the Colombian National Agency of Hydrocarbons prior to the earlier of (1) five years from the issuance of the CVR and (2) the date Low Carbon Royalties becomes a publicly listed entity.

Although the Company does not control Low Carbon Royalties (as per ASC 810), it does however exercise significant influence and therefore the equity method of accounting is applied (as per ASC 323).

On March 21, 2023, Low Carbon Royalties acquired additional gross overriding royalties on natural gas fields in Latin America, increasing its total gross overriding royalty on the existing first license block from 1.56 % to 3.13 % and acquiring a new gross overriding royalty of 1.44 % on a second license block.

The royalty acquisitions were financed through the issuance of Low Carbon Royalties common shares to the third-party vendor of such royalties, thereby reducing the Company’s ownership in the Partnership to 32 % from 35 %.

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Based on the fair value of the NORI Royalty and the cash received on the Closing Date, the Company recorded $ 9 million as investment in Low Carbon Royalties.

For the three and nine months ended September 30, 2023, the Company’s share of the net loss generated by the Low Carbon Royalties was $ 0.1 million and $ 0.5 million, respectively.

Based on the fair value of the NORI Royalty granted and the cash received, the Company recorded $ 9 million as investment in Low Carbon Royalties on the Closing Date.

For the three months ended March 31, 2024, the Company’s share of the net loss generated by the Low Carbon Royalties was $ 78 thousand (share of net loss for three months ended March 31, 2023:

$ 0.2 million).

Fair value of NORI Royalty

1 unchanged sentence

Cost of Investment on Closing Date

Equity-accounted investment loss for the nine months ended September 30, 2023

Investment as at September 30, 2023

The net consideration received of $ 14 million exceeded the NORI Exploration Contract’s carrying value of $ 0.25 million, resulting in a gain on disposition of asset of $ 13.75 million recorded in the Company’s first quarter of 2023 statements of loss and comprehensive loss.

NORI is in the exploration phase of the project and under the Company’s policy, exploration spending is expensed.

Equity-accounted investment loss for the year ended 2023

Investment as at December 31, 2023

Equity-accounted investment loss for the period ended March 31, 2024

Investment as at March 31, 2024

The NORI Royalty was recorded as a royalty liability in the consolidated Balance Sheet in accordance with ASC 470, Debt (“ASC 470”).

The Company elected to account for the royalty liability at fair value through profit and loss.

The fair value was determined using a market approach which entails examining recent royalty transactions prior to the reporting date, focusing on those transactions that involve similar metals as contained in NORI’s polymetallic nodules.

The Company compares the specific characteristics of these transactions to estimate the fair value.

The fair value of the royalty liability as at March 31, 2024, remained unchanged at $ 14 million.

Financial results of Low Carbon Royalties for the three months ended March 31, 2024 and March 31, 2023 are summarized below:

Current Assets

Non-Current Assets

Current Liabilities

Royalty Income

Total Revenue

Comprehensive Loss for the period

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Exploration and Evaluation Expenses

The detail of exploration and evaluation expenses is as follows:

For the three months ended September 30, 2023

For the three months ended March 31, 2024

Environmental Studies

4 unchanged sentences

Sponsorship, Training and Stakeholder Engagement

For the three months ended September 30, 2022

For the three months ended March 31, 2023

Environmental Studies

Exploration Labor

Share-Based Compensation (Note 10)

Share-Based Compensation

Mining, Technological and Process Development

Prefeasibility Studies

Sponsorship, Training and Stakeholder Engagement

2 unchanged sentences

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

For the nine months ended September 30, 2023

Environmental Studies

Exploration Labor

Share-Based Compensation (Note 10)

Mining, Technological and Process Development

Prefeasibility Studies

Sponsorship, Training and Stakeholder Engagement

For the nine months ended September 30, 2022

Environmental Studies

Exploration Labor

Share-Based Compensation (Note 10)

Mining, Technological and Process Development

Sponsorship, Training and Stakeholder Engagement

Registered Direct Offering

On August 14, 2023, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering (the “Registered Direct Offering”) 12,461,540 common shares and issue Class A Warrants to purchase 6,230,770 common shares (Note 9).

The common share and accompanying Class A Warrant to purchase 0.5 of a common share were sold at a price of $ 2.00 .

The exercise price of the Class A warrants is $ 3.00 , subject to adjustment as provided in the warrant agreement.

The aggregate gross proceeds to the Company from the Registered Direct Offering are now expected to be approximately $ 24.9 million, before deducting fees payable to financial advisors and other estimated offering expenses payable by the Company ( $ 23.5 million net of fees).

As at September 30, 2023, 7,961,540 common shares and Class A Warrants to purchase 3,980,770 common shares had been issued and the Company received gross proceeds amounting to $ 15.7 million.

Each common share and accompanying Class A Warrant were sold at a price of $ 2.00 per unit.

The exercise price to purchase one common share under the Class A warrants is $ 3.00 , subject to adjustment as provided in the warrant agreement.

On January 30, 2024, the Company received the remaining committed funding of $ 9 million (representing 4,500,000 common shares and 2,250,000 warrants) from an investor affiliated with the Company.

The common shares and warrants were issued on January 31, 2024.

As at March 31, 2024, 12,461,540 common shares and Class A Warrants to purchase 6,230,770 common shares had been issued and the Company received gross proceeds amounting to $ 24.9 million.

The Company incurred $ 1.3 million as offering expenses, resulting in net proceeds received of $ 23.6 million.

The remaining committed funding of $ 9 million (representing 4,500,000 common shares and 2,250,000 warrants) from an investor affiliated with the Company is to be received in two installments, $ 2.5 million ( 1,250,000 common shares and 625,000 warrants) on November 30, 2023 and $ 6.5 million ( 3,250,000 common shares and 1,625,000 warrants) on January 31, 2024.

For accounting purposes, the Company was considered to have issued the 15,000,000 common share warrants issued by SOAC as part of the units offered in its initial public offering (“Public Warrants”) and the 9,500,000 private placement common share warrants issued by SOAC in a private placement simultaneously with the closing of the initial public offering (“Private Warrants”) as part of the Business Combination.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Out of the total net proceeds received of $ 23.6 million, the net proceeds attributable to common shares were $ 18.9 million and the net proceeds attributable to Class A Warrants were $ 4.7 million.

The Company issued 15,000,000 common share warrants as part of its predecessor’s initial public offering in May 2020 (“Public Warrants”) and 9,500,000 private placement common share warrants in a private placement simultaneously with the closing of its predecessor’s initial public offering (“Private Warrants”).

Public Warrants

As at September 30, 2023, 15,000,000 Public Warrants were outstanding (December 31, 2022 - 15,000,000 ).

As at March 31, 2024, 15,000,000 (March 31, 2023 - 15,000,000 ) Public Warrants were outstanding.

Public Warrants may only be exercised for a whole number of shares.

As at September 30, 2023, the value of outstanding Public Warrants of $ 19.5 million was recorded in additional paid in capital.

As at March 31, 2024, the value of outstanding Public Warrants of $ 19.5 million was recorded in additional paid in capital.

Private Warrants

As at September 30, 2023, 9,500,000 Private Warrants were outstanding (December 31, 2022 - 9,500,000 ).

The Company re-measures the fair value of the Private Warrants at the end of each reporting period.

As at March 31, 2024, 9,500,000 (March 31, 2023 - 9,500,000 ) Private Warrants were outstanding.

The Private Warrants were valued using a Black-Scholes model, which resulted in a Level 3 fair value measurement.

The primary unobservable input utilized in determining the fair value of the Private Warrants was the expected volatility of the Company’s common shares.

The volatility for the private warrants is based 50 % on expected volatility from the public warrants and 50 % based on historical volatility of the common shares.

The expected volatility was estimated using a binomial model based on consideration of the implied volatility from the Company’s Public Warrants adjusted to account for the call feature of the Public Warrants at prices above $ 18.00 during 20 trading days within any 30 -trading day period.

As at September 30, 2023, the fair value of outstanding Private Warrants of $ 2.2 million is recorded as warrants liability.

As at March 31, 2024, the fair value of outstanding Private Warrants of $ 2.5 million is recorded as warrants liability.

The following table presents the changes in the fair value of warrants liability:

1 unchanged sentence

Increase in fair value of warrants liability

Warrants liability as at September 30, 2023

As at September 30, 2023 and December 31, 2022, the fair value of the Private Warrants was estimated using the following assumptions:

September 30,

Exercise price

Risk-free rate

Dividend yield

There were no exercises or redemptions of the Public Warrants or Private Warrants during the three and nine months ended September 30, 2023.

Allseas Warrant

The Allseas warrant vested and became exercisable upon the successful completion of the PMTS in November 2022.

On July 26, 2023, the Allseas warrant was exercised resulting in the issuance of 11,578,620 common shares of the Company on August 9, 2023, once the exercise amount of $ 115.8 thousand warrant fee was received from Allseas.

Warrants liability as at March 31, 2024

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

The fair value of the Private Warrants was estimated using the following assumptions:

Exercise price

Risk-free rate

Dividend yield

There were no exercises or redemptions of the Public Warrants or Private Warrants during the three-month period ended March 31, 2024.

Class A Warrants

As a part of the Registered Direct Offering (Note 8), the Company issued 3,980,770 Class A Warrants for the purchase of common shares at an exercise price of $ 3.00 per share.

The Class A Warrants expire on December 31, 2027.

The valuation of these Class A Warrants was determined using a Monte Carlo simulation.

The Class A Warrants were valued on August 14, 2023, at a fair value of $ 0.80 per warrant.

On January 31, 2024, the Company issued the remaining 2,250,000 Class A Warrants, after receiving the remaining committed funding from the Registered Direct Offering of $ 9 million (Notes 9 and 13).

These Class A Warrants were valued on January 31, 2024 using a Monte Carlo simulation, at a fair value of $ 0.69 per warrant.

The fair value of the Class A Warrants was estimated using the following assumptions:

3 unchanged sentences

Dividend yield

In accordance with ASC 815 – Derivatives and Hedging, the Company has classified the Class A Warrants as equity and as at September 30, 2023 recorded $ 3.2 million as additional paid in capital.

On January 31, 2024, the Company recorded the fair value of the remaining 2,250,000 Class A warrants amounting to $ 1.6 million as additional paid in capital.

As at March 31, 2024, the value recorded in additional paid in capital of all outstanding Class A Warrants was $ 4.8 million (December 31, 2023 - $ 3.2 million).

Share-Based Compensation

The Company’s 2021 Incentive Equity Plan (the “Plan”) provides that the aggregate number of common shares reserved for future issuance under the Plan as of September 30, 2023, is 44,372,170 common shares, including 10,672,485 shares added to the Plan in January 2023 pursuant to the Plan’s automatic annual increase provision, provided that 2,243,853 of the outstanding common shares shall only be available for awards made to non-employee directors of the Company.

On the first day of each fiscal year beginning in 2022 to the tenth anniversary of the closing of the Business Combination, the number of common shares that may be issued pursuant to the Plan is automatically increased by an amount equal to the lesser of 4 % of the number of outstanding common shares or an amount determined by the board of directors.

The Company’s 2021 Incentive Equity Plan (the “Plan”) provides that the aggregate number of common shares reserved for future issuance under the Plan as of March 31, 2024, is 56,634,518 common shares, including 12,262,348 shares added to the Plan in January 2024 pursuant to the Plan’s automatic annual increase provision, provided that 2,243,853 of the outstanding common shares shall only be available for awards made to non-employee directors of the Company.

On the first day of each fiscal year from 2022 to 2031, the number of common shares that may be issued pursuant to the Plan is automatically increased by an amount equal to the lesser of 4 % of the number of outstanding common shares or an amount determined by the board of directors.

Stock options

As at September 30, 2023, there were 15,236,340 stock options outstanding under the Company’s Short-Term Incentive Plan (“STIP”) and 9,783,922 stock options outstanding under the Company’s Long-Term Incentive Plan (“LTIP”).

During the three and nine months ended September 30, 2023, 120,000 STIP stock options were exercised.

During the three and nine months ended September 30, 2023, the Company recognized $ 0.1 million and $ 0.4 million, respectively (three and nine months ended September 30, 2022 - $ 1.7 million and $ 9.2 million, respectively), of share-based compensation expense for stock options in the statement of loss and comprehensive loss.

For the three and nine months ended September 30, 2023, a total of $ 57 thousand and $ 195 thousand, respectively, of this share-based compensation expense recognized was related to exploration and evaluation activities (three and nine months ended September 30, 2022 - $ 0.7 million and $ 4.6 million, respectively).

The amount of this share-based compensation expense recognized related to general and administrative matters for three and nine months ended September 30, 2023 was $ 60 thousand and $ 236 thousand, respectively (three and nine months ended September 30, 2022 - $ 1 million and $ 4.6 million, respectively).

As at March 31, 2024, there were 14,954,240 stock options outstanding under the Company’s Short-Term Incentive Plan (“STIP”) and 9,644,874 stock options outstanding under the Company’s Long-Term Incentive Plan (“LTIP”).

The Company makes awards under the STIP and LTIP under its equity incentive plans in effect at the time of the award, which is currently the Plan.

TMC the metals company Inc.

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(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Restricted Share Units

The details of restricted share units (“RSUs”) granted during the three and nine months ended September 30, 2023 are described below.

ended September 30,

A continuity schedule summarizing the movements in the Company’s stock options under the STIP and LTIP plans is as follows:

Outstanding – December 31, 2022

Outstanding – December 31, 2023

Outstanding – March 31, 2024

During the three months ended March 31, 2024, the Company recognized $ 47 thousand of share-based compensation expense for stock options (issued under STIP plans) in the statement of loss and comprehensive loss (three months ended March 31, 2023:

$ 0.2 million).

For the three months ended March 31, 2024, a total of $ 14 thousand of this share-based compensation expense was related to exploration and evaluation activities (three months ended March 31, 2023 - $ 0.1 million).

The amount of this share-based compensation expense recognized related to general and administrative matters for three months ended March 31, 2024, was $ 33 thousand (three months ended March 31, 2023 - $ 0.1 million).

During the three months ended March 31, 2024, the Company reversed $ 0.6 million of previously recognized share-based compensation expense to record the forfeiture of unvested stock options (issued under LTIP plans) in the statement of loss and comprehensive loss (three months ended March 31, 2023:

$ nil ) evenly apportioned between exploration and evaluation expenses (Note 8) and general and administration expenses.

Restricted Share Units (“RSU”)

The Company may, from time to time, grant RSUs to directors, officers, employees, and consultants of the Company and its subsidiaries under the Plan.

On each vesting date, RSU holders are issued common shares equivalent to the number of RSUs held provided the holder is providing service to the Company on such vesting date.

A summary of the RSU activity during the three months ended March 31, 2024 is presented in the table below:

Number of RSUs

Outstanding – December 31, 2023

( 7,112,673 )

Outstanding – December 31, 2024

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

The details of RSUs granted by the Company during the three months ended March 31, 2024 are as follows:

ended March 31,

Vesting Period

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Vesting in fourths on each anniversary of the grant date

(1) Of the 3,237,710 units vesting immediately granted during the first quarter of 2023, 3,222,086 units were issued to settle liabilities with a carrying amount of $ 2.9 million, at a weighted average grant date fair value of $ 0.89 per RSU.

(2) During the three and nine months ended September 30, 2023 the Company granted nil and 23,438 units to consultants, (three and nine months ended September 30, 2022:

8,576 units and 649,157 units, respectively) resulting in $ nil and $ 23 thousand, respectively, charged to professional and consulting fees under general and administrative expenses for three and nine months ended September 30, 2023 (three and nine months ended September 30, 2022:

$ 7.5 thousand and $ 1.2 million, respectively).

During the three and nine months ended September 30, 2023 the Company also granted nil and 15,625 units to consultants as a prepayment for the services (three and nine months ended September 30, 2022:

The amortization of the prepayment amounting to $ nil and $ 15 thousand, respectively, was charged to professional and consulting fees under general and administrative expenses for three and nine months ended September 30, 2023 (three and nine months ended Sept 30, 2022:

(3) During the three and nine months ended September 30, 2023, nil and 1,014,349 RSUs respectively, were granted to the Company’s non-employee directors under the Company’s Non-employee Director Compensation Policy, which vest upon the Company’s 2024 annual shareholders meeting.

The total fair value of units granted as annual grants to the non-employee directors amounted to $ 700,000 .

(4) During the three and nine months ended September 30, 2023, the Company granted nil and 8,645,465 units, respectively, as payment for the 2022 LTIP awards and 38,021 units as a sign-on grant.

The 2021 LTIP awards were granted in the fourth quarter of 2021 and totaled 3,500,000 units.

During the three and nine months ended September 30, 2023, a total of $ 2.4 million and $ 6.4 million, respectively (three and nine months ended September 30, 2022 - $ 1.8 million and $ 5.7 million, respectively), was charged to the statement of loss and comprehensive loss as share-based compensation expense for RSUs.

For the three and nine months ended September 30, 2023, a total of $ 1.4 million and $ 3.6 million, respectively, of this share-based compensation expense recognized was related to exploration and evaluation activities (three and nine months ended September 30, 2022 - $ 0.9 million and $ 2.8 million respectively).

The amount of this share-based compensation expense recognized related to general and administrative matters for three and nine months ended September 30, 2023 was $ 1 million and $ 2.8 million, respectively (three and nine months ended September 30, 2022 - $ 0.9 million and $ 3.0 million, respectively).

As at September 30, 2023, total unrecognized share-based compensation expense for RSUs was $ 9.1 million (December 31, 2022 - $ 6.1 million).

As at September 30, 2023, an aggregate of 498,863 vested units were outstanding and due to be converted into common shares.

Total Units Granted

Of the 3,800,435 RSUs vesting immediately on grant date, 2,812,802 RSUs were issued to settle liabilities with a carrying amount of $ 4.1 million, at a weighted average grant date fair value of $ 1.44 per RSU.

During the three months ended March 31, 2024, the Company granted 46,333 RSUs to consultants (three months ended March 31, 2023:

23,438 RSUs) resulting in $ 84 thousand, charged as general and administrative expenses for the three months ended March 31, 2024 (three months ended March 31, 2023:

$ 23 thousand of general and administrative expenses).

During the three months ended March 31, 2024, the Company also granted 27,323 RSUs to consultants as a prepayment for their services (three months ended March 31, 2023:

During the three months ended March 31, 2024, the Company granted 7,144,348 RSUs, as payment for the 2023 LTIP awards (three months ended March 31, 2023:

8,645,465 RSUs were issued as payment for the 2022 LTIP awards).

The grant date fair value of RSUs is equivalent to the closing share price of the Company’s common shares on the date of grant.

During the three months ended March 31, 2024, a total of $ 3.2 million was charged to the statement of loss and comprehensive loss as share-based compensation expense for RSUs (three months ended March 31, 2023:

$ 1.6 million).

Share-based compensation expense for RSUs totaling $ 2 million related to general and administration matters was charged to the statement of loss and comprehensive loss for the three months ended March 31, 2024 (three months ended March 31, 2023:

$ 0.7 million).

The Company recorded a total of $ 1.2 million of share-based compensation expense for RSUs related to exploration and evaluation activities for the three months ended March 31, 2024 (three months ended March 31, 2023:

$ 0.9 million).

As at March 31, 2024, total unrecognized share-based compensation expense for RSUs was $ 14.8 million (December 31, 2023 - $ 6.9 million).

As at March 31, 2024, an aggregate of 402,922 vested RSUs were being processed and due to be converted into common shares.

Employee Stock Purchase Plan

On May 31, 2022, TMC’s 2021 Employee Stock Purchase Plan (“ESPP”) was approved at the Company’s 2022 annual shareholders meeting.

As of March 31, 2024, there were 10,998,032 common shares reserved for issuance under the ESPP.

This included 3,065,587 shares added to the ESPP in January 2024 pursuant to the ESPP’s automatic annual increase provision.

Under the ESPP, the number of shares reserved for issuance is subject to an annual increase provision which provides that on the first day of each of the Company’s fiscal years starting in 2022, common shares equal to the lesser of (i) 1 % percent of the common shares outstanding on the last day of the immediately preceding fiscal year, or (ii) such lesser number of shares as is determined by the board of directors will be added to the ESPP.

During the first quarter of 2024, a total of $ 18 thousand (three months ended March 31, 2023:

$ 19 thousand) was charged to the statement of loss and comprehensive loss as share-based compensation expense, representing the share price purchase discount offered by the Company.

From the amount charged during the three months ended March 31, 2024, $ 9 thousand was recorded in exploration and evaluation expenses (three months ended March 31,2023:

$ 7 thousand) and $ 9 thousand was recorded in general and administrative expenses (three months ended March 31,2023:

$ 12 thousand).

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Employee Share Purchase Plan

As of September 30, 2023, there were 7,922,445 common shares reserved for issuance under the Employee Share Purchase Plan (the “ESPP”), including 2,668,121 shares added to the ESPP in January 2023 pursuant to the ESPP’s automatic annual increase provision.

An aggregate of 201,501 of the reserved common shares have been issued under the ESPP.

During the three and nine months ended September 30, 2023, the Company issued nil and 83,572 common shares respectively to its employees, thereby converting employee payroll contributions received over the previous six months into shares, as prescribed in its ESPP program (in the three and nine months ended September 30, 2022, nil and 42,426 common shares respectively).

Loss per Share

Basic loss per share is computed by dividing the loss by the weighted-average number of common shares of the Company outstanding during the period.

Diluted loss per share is computed by giving effect to all common share equivalents of the Company, including outstanding stock options, RSUs, warrants, Special Shares and options to purchase Special Shares, to the extent these are dilutive.

Basic and diluted loss per share was the same for each period presented as the inclusion of all common share equivalents would have been anti-dilutive.

Anti-dilutive equivalent common shares were as follows:

Nine months ended

September 30,

For the three

Outstanding options to purchase common shares

4 unchanged sentences

Total anti-dilutive common equivalent shares

Credit Facility with Allseas Affiliate

and an affiliate of Allseas, pursuant to which, the Company may borrow from the Lender up to $ 25 million in the aggregate, from time to time, subject to certain conditions.

The Company will pay an underutilization fee equal to 4.0 % per annum payable semi-annually for any amounts that remain undrawn under the Credit Facility.

The Company has the right to pre-pay the entire amount outstanding under the Credit Facility at any time before the Credit Facility’s maturity.

On July 31, 2023, the maturity date of this Credit Facility was extended to November 30, 2024 .

The Credit Facility also contains customary events of default.

During the three and nine months ended September 30, 2023, the Company had not drawn any amount from the Credit Facility and has incurred $ 0.3 million and $ 0.5 million respectively as underutilization fees, which would be payable only in the event the Credit Facility is not drawn down upon at the time such fees are payable.

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Exclusive Vessel Use Agreement with Allseas

The Company has determined that the Exclusive Vessel Use Agreement with Allseas (described in Note 6) is a lease agreement, classified as an operating lease.

On August 1, 2023, the Company had recorded lease liability amounting to $ 6.5 million, which represents the fair value of 4.15 million common shares issued to Allseas on August 14, 2023, as consideration.

As the entire lease liability was settled within 14 days of the commencement of lease, the discount rate for calculating the present value of lease payments was determined to be nil.

On the date of the agreement, the Company recognized $ 6.5 million as a right-of-use asset, which represented the present value of the lease payments.

For the three and nine months ended September 30, 2023, the Company has recognized $ 0.3 million as lease expense recorded as exploration and evaluation expense.

As at September 30, 2023, the net amount of lease liability and right-of-use asset is presented below:

Lease Liability

Balance as on August 1, 2023

Payments made during the quarter by issuing 4.15 million common shares

Balance as at September 30, 2023

Right-of-use Asset

Balance as on August 1, 2023

Lease expense during the quarter

Balance as at September 30, 2023

Related Party Transactions

Transactions with Allseas and its Affiliates:

On August 1, 2023, the Company entered into an Exclusive Vessel Use Agreement with Allseas, as described in Notes 6 and 13.

On August 9, 2023, Allseas exercised the Allseas Warrant, as described in Notes 6 and 9.

Allseas participated in the Registered Direct Offering in August 2023, as described in Notes 6 and 8.

During the three and nine months ended September 30, 2023, the Company had not drawn from the Credit Facility with an affiliate of Allseas and has incurred $ 0.5 million as underutilization fees which would be payable only in the event the Credit Facility is not drawn down at the time such fees are payable (Note 12).

During the three and nine months ended September 30, 2023, Allseas provided the Company with engineering and project management services totaling $ 1.9 million and $ 4.8 million respectively, recorded as mining, technological and process development within exploration and evaluation expenses (Note 7).

For the three and nine months ended September 30, 2022, Allseas managed and delivered the PMTS project, with services totaling $ 1.3 million and $ 3.9 million, respectively, recorded as PMTS within exploration and evaluation expenses (Note 7).

As at September 30, 2023, the amount payable to Allseas and its affiliates was $ 6.1 million (September 30, 2022 – prepaid amount of $ 1.8 million).

TMC the metals company Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Transactions with Other Related Parties:

The Company’s subsidiary, DeepGreen Engineering Pte.

2 unchanged sentences

A director of DGE is employed through SSCS.

Consulting services during the three and nine months ended September 30, 2023 totaled $ 40 thousand and $ 177 thousand, respectively (three and nine months ended September 30, 2022 - $ 69 thousand and $ 206 thousand, respectively), out of which for three and nine months ended September 30, 2023 a total of $ 32 thousand and $ 141 thousand, respectively (three and nine months ended September 30, 2022 - $ 55 thousand and $ 165 thousand, respectively), is disclosed as exploration labor within exploration and evaluation expenses (Note 7) and $ 8 thousand and $ 36 thousand, respectively, for three and nine months ended September 30, 2023 is disclosed as general and administrative expenses (three and nine months ended September 30, 2022 - $ 14 thousand and $ 41 thousand, respectively).

As at September 30, 2023, the amount payable to SSCS was $ 17 thousand (December 31, 2022 - $ 23 thousand).

Consulting services during the three months ended March 31, 2024 totaled $ 25 thousand, (three months ended March 31, 2023:

$ 69 thousand), out of which a total $ 18 thousand (2023:

$ 55 thousand), is disclosed as exploration labor within exploration and evaluation expenses (Note 8) and $ 7 thousand is disclosed as general and administrative expenses (2023:

$ 14 thousand).

As at March 31, 2024, the amount payable to SSCS was $ 8 thousand (December 31, 2023 - $ 17 thousand).

The Company’s Chief Ocean Scientist provides consulting services to the Company through Ocean Renaissance LLC (“Ocean Renaissance”) where he is a principal.

Consulting services during the three and nine months ended September 30, 2023 amounted to $ 94 thousand and $ 281 thousand, respectively (three and nine months ended September 30, 2022 -$ 94 thousand and $ 281 thousand, respectively), out of which for three and nine months ended September 30, 2023 a total of $ 42 thousand and $ 127 thousand, respectively (three and nine months ended September 30, 2022 - $ 47 thousand and $ 140 thousand, respectively), is disclosed as exploration labor within exploration and evaluation expenses (Note 7) and $ 52 thousand and $ 154 thousand, respectively, for three and nine months ended September 30, 2023 is disclosed as general and administrative expenses (three and nine months ended September 30, 2022 - $ 47 thousand and $ 141 thousand, respectively).

As at September 30, 2023, the amount payable to Ocean Renaissance was $ nil (December 31, 2022- $ nil ).

The Registered Direct Offering announced on August 14, 2023, included approximately $ 0.3 million from the participation of several of the Company’s Directors and Officers, of which $ 0.2 million is receivable as at September 30, 2023, and subsequently received.

In addition, the committed funding included $ 10 million from ERAS Capital LLC the investment fund of one of the Company’s Directors, $ 9 million of which is to be received in two installments, $ 2.5 million on November 30, 2023 and $ 6.5 million on January 31, 2024 (Note 8).

The Company advanced $ 30 thousand to one of its officers on September 7, 2023.

As at September 30, 2023, $ 15 thousand of this amount was outstanding, which was fully repaid on October 31, 2023.

Commitments and Contingent Liabilities

NORI Exploration Contract

As part of the NORI Exploration Contract with the ISA, NORI submitted a periodic review report to the ISA in 2021, covering the 2017-2021 period.

The periodic review report, which included a proposed work plan and estimated budget for 2022 to 2026, has been reviewed by and agreed with the ISA, and the Company is implementing the five-year plan.

NORI has estimated its work plan for 2023 to be approximately $ 25 million, which may be settled in cash or equity with its various vendors.

The cost of the estimated work plan for 2024 onwards is dependent on the ISA’s approval of the NORI Area D exploitation application.

Should the approval of NORI’s exploitation application for NORI Area D be delayed or rejected, NORI intends to revise its estimated future work plan in respect of its NORI Area.

Work plans are reviewed annually by the Company, agreed with the ISA and may be subject to change depending on the Company’s progress to date.

Consulting services during the three months ended March 31, 2024 amounted to $ 50 thousand (2023:

$ 94 thousand), out of which $ 23 thousand (2023:

$ 42 thousand:), is disclosed as exploration labor within exploration and evaluation expenses (Note 8) and $ 27 thousand is disclosed as general and administrative expenses (2023:

$ 52 thousand).

As at March 31, 2024, the amount payable to Ocean Renaissance was $ 25 thousand (December 31, 2023- $ 25 thousand).

On January 30, 2024, as part of the Registered Direct Offering (Note 9), the Company received the remaining committed funding of $ 9 million from ERAS Capital LLC, the investment fund of one of the Company’s Directors.

TMC the metals company Inc.

1 unchanged sentence

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

Marawa Option Agreement and Services Agreement

Through DGE’s Marawa Option Agreement and separate Services Agreement with Marawa with respect to the Marawa Area, Marawa and DGE committed to spend a defined amount of funds on exploration activities on an annual basis.

The commitment for fiscal 2023 and 2024 is Australian dollar (“AUD”) $ 3 million and AUD $ 2 million, respectively.

Such commitment is negotiated with the ISA for a five-year plan and is subject to regular periodic reviews.

To date, limited offshore marine resource definition activities in the Marawa Contract Area have occurred.

The Company expects 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.

Marawa has delayed certain activities in the Marawa Contract Area while it determines how it will move forward with additional assessment work.

TOML Exploration Contract

As part of the TOML Exploration Contract, TOML submitted a periodic review report to the ISA in 2021, covering the 2017-2021 period.

The periodic review report included a summary of work completed over the five-year period and a program of activities and estimated budget for the next five-year period.

On December 23, 2022, the ISA accepted TOML’s proposed program of activities for the 2022-2026 five-year period, which included an estimated five-year expenditure of up to $ 44 million.

The five-year estimated expenditure is indicative and subject to change, TOML will review the program regularly and TOML will inform the ISA of any changes through its annual reports.

Other Commitments

On September 6, 2023, the Company’s wholly owned subsidiary NORI issued a Letter of Intent (“LOI”) to a third party to contract a survey vessel for the NORI-D Collector test monitoring program scheduled in the fourth quarter of the year.

Under the LOI, NORI confirmed that in the event that the parties to the LOI not proceed with the formal contact execution or if NORI terminates performance of the designated works, NORI will reimburse the contractor with the actual direct costs and expenditures it has reasonably incurred in performance of the scope of LOI up to a maximum of $ 3.75 million.

The Company’s wholly owned subsidiary NORI has issued purchase orders to various vendors totaling $ 0.3 million for the purchase of equipment for upcoming campaigns.

These purchase orders are legally binding, resulting in a firm commitment on the part of the Company.

On March 22, 2024, the Company entered into an Unsecured Credit Facility (the “2024 Credit Facility”) with Gerard Barron, the Company’s Chief Executive Officer and Chairman, and ERAS Capital LLC, the family fund of one of the Company’s director, (collectively, the “2024 Lenders”), pursuant to which, the Company may borrow from the 2024 Lenders up to $ 20,000,000 in the aggregate ( $ 10,000,000 from each of the 2024 Lenders), from time to time, subject to certain conditions.

All amounts drawn under the 2024 Credit Facility will bear interest at the 6-month Secured Overnight Funding Rate (SOFR), 180 -day average plus 4.0 % per annum payable in cash semi - annually (or plus 5 % if paid - in - kind at maturity, at our election) on the first business day of each of June and January.

The Company will pay an underutilization fee equal to 4.0 % per annum payable semi-annually for any amounts that remain undrawn under the 2024 Credit Facility.

The Company has the right to pre-pay the entire amount outstanding under the 2024 Credit Facility at any time, before the 2024 Credit Facility’s maturity of September 22, 2025.

The 2024 Credit Facility also contains customary events of default.

The 2024 Credit Facility will terminate automatically if the Company or any of its subsidiaries raise at least $ 50,000,000 in the aggregate (i) through the issuance of any of the Company’s or its subsidiaries’ debt or equity securities, or (ii) in prepayments under an off-take agreement or similar commercial agreement.

During the three months ended March 31, 2024, the Company had not drawn any amount from the 2024 Credit Facility and had incurred $ 22 thousand as underutilization fees, which would be payable only in the event the 2024 Credit Facility is not drawn down upon at the time such fees are payable.

As of May 13, 2024, the Company drew $ 2.9 million from the 2024 Credit Facility.

Apart from the above-mentioned transactions, the Company had transactions with Allseas which are detailed in Note 6.

Contingent Liabilities

Contingent Liability

12 unchanged sentences

The parties are currently awaiting a ruling.

There is no assurance, however, that the Company or the other defendants will be successful in the Company’s 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.

There is no assurance, however, that the Company or the other defendants will be successful in its defense of this lawsuit or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of this action.

If the motion to dismiss is unsuccessful, there is a possibility that the Company may incur a loss in this matter.

Such losses or range of possible losses cannot be reliably estimated.

Such losses or range of possible losses either cannot be reliably estimated.

A resolution of this lawsuit adverse to the Company or the other defendants, however, could have a material effect on the Company’s financial position and results of operations in the period in which the lawsuit is resolved.

2 unchanged sentences

(in thousands of US Dollars, except share and per share amounts and unless otherwise stated)

On January 23, 2023, an investor in the 2021 private placement from the Business Combination filed a lawsuit against the Company in New York Supreme Court, New York County, captioned Atalaya Special Purpose Investment Fund II LP et al.

On January 23, 2023, certain investors in the 2021 private placement from the Business Combination filed a lawsuit against the Company 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.

2 unchanged sentences

The Company filed a motion to dismiss on March 31, 2023, after which the plaintiffs filed an amended complaint on June 5, 2023.

The amended complaint alleges that the Company breached the representations and warranties in the plaintiff’s private placement Subscription Agreement and breached the covenant of good faith and fair dealing.

The amended complaint alleges that the Company 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.

The Company denies any allegations of wrongdoing and filed a motion to dismiss the amended complaint on July 28, 2023.

An Oral Hearing on the Motion to Dismiss has been scheduled for December 7, 2023.

There is no assurance, however, that the Company will be successful in its defense of this lawsuit or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of this action.

If the motion to dismiss is unsuccessful, there is a possibility that the Company may incur a loss in this matter.

On December 7, 2023, the Court granted the Company’s motion to dismiss the claim for breach of the covenant of good faith and fair dealing and denied the Company’s motion to dismiss the breach of the Subscription Agreement claim.

The Company filed a notice of appeal regarding the Court’s denial of its motion to dismiss the breach of the Subscription Agreement claim.

There is no assurance that the Company will be successful in its defense of this lawsuit or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of this action.

Such losses or range of possible losses cannot be reliably estimated.

2 unchanged sentences

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.

What changed 10-Q

Item 1. Financial Statements