What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-13 · 245 added, 154 removed, 289 unchanged (58% of the section changed)

5 unchanged sentences

Exploration contracts

Software development costs

Right of use asset

Accounts payable and accrued liabilities

Short-term debt

Deferred tax liability

4 unchanged sentences

322,241,883 (December 31, 2023 – 306,558,710 ))

Class A - J Special Shares

Additional paid in capital

3 unchanged sentences

Contingent Liabilities (Note 15)

Subsequent Event (Note 17)

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

3 unchanged sentences

Three months ended

Six months ended

Operating expenses

3 unchanged sentences

Equity-accounted investment loss

Change in fair value of private warrants liability

Foreign exchange (gain) loss

Change in fair value of warrant liability

Foreign exchange loss (gain)

Interest income

Fees and interest on credit facility

Loss and comprehensive loss for the period

Loss per share - basic and diluted

Fees and interest on borrowings and credit facilities

Net Loss and comprehensive loss for the period

Net Loss per share - Basic and diluted

Weighted average number of common shares outstanding – basic and diluted

5 unchanged sentences

Comprehensive

Three months ended March 31, 2024

January 1, 2024

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

Three months ended June 30, 2024

April 1, 2024

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

Shares issued from ATM (Note 12)

Exercise of stock options (Note 11)

Share purchase under Employee Share Purchase Plan (Note 11)

Share-based compensation and expenses settled with equity (Note 11)

Loss for the period

June 30, 2024

Common Shares

Comprehensive

Three months ended June 30, 2023

April 1, 2023

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

Share purchase under Employee Share Purchase Plan

Share-based compensation and expenses settled with equity

Loss for the period

June 30, 2023

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

Six months ended June 30, 2024

January 1, 2024

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

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

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

Shares issued as per At-the-Market Equity Distribution Agreement (Note 12)

Exercise of stock options (Note 11)

Share purchase under Employee Share Purchase Plan (Note 11)

Share-based compensation and expenses settled with equity (Note 11)

Loss for the period

March 31, 2024

June 30, 2024

Common Shares

Comprehensive

Three months ended March 31, 2023

Six months ended June 30, 2023

January 1, 2023

Shares issued to Allseas

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

Share purchase under Employee Share Purchase Plan

Shares issued to Allseas

Share-based compensation and expenses settled with equity

Loss for the period

March 31, 2023

June 30, 2023

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

2 unchanged sentences

(in thousands of US Dollars)

Three months ended

Six months ended

Cash provided by (used in)

3 unchanged sentences

Lease Expense

Accrued interest on credit facilities

Share-based compensation and expenses settled with equity

1 unchanged sentence

Change in fair value of warrants liability

Unrealized foreign exchange movement

Unrealized foreign exchange

Changes in working capital:

8 unchanged sentences

Expenses paid for registered direct offering

Proceeds from exercise of stock options

Proceeds from Shares issued from ATM

Proceeds from Drawdown of Credit Facilities

Proceeds from Drawdown of Allseas Debt Agreement

Interest paid on amounts drawn from credit facilities

Proceeds from Low Carbon Royalties Investment

Proceeds from employee stock plans

Proceeds from exercise of stock options

Proceeds from issuance of shares

Net cash provided by financing activities

39 unchanged sentences

(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.

Comparative figures reported in the Condensed Consolidated Balance Sheet, for 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

14 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 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.

There were no transfers between fair value measurement levels during the three and six months ended June 30, 2024, and 2023.

As at June 30, 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.

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

Recent Accounting Pronouncements Issued and Adopted

6 unchanged sentences

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).

For the three and six months ended June 30, 2024, Allseas provided the Company with engineering, project management and vessel use services consisting of lay-up and transit costs totaling $ 3.2 million and $ 6.9 million respectively which were recorded as mining, technological and process development within exploration and evaluation expenses (three months and six months ended June 30, 2023 - $ 1.9 million and $ 2.9 million respectively) (Note 8).

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:

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

For the three and six months ended June 30, 2024, the Company has recognized $ 0.5 million and $ 1 million, respectively as lease expense recorded as mining, technological and process development within exploration and evaluation expenses.

As at June 30, 2024, the net amount of the right-of-use asset is as follows:

Right-of-use Asset

Balance as on December 31, 2023

Balance as at 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.

Balance as at June 30, 2024

Credit Facility and Loan Agreement with Company Related to Allseas

On March 22, 2023, the Company entered into an Unsecured Credit Facility Agreement, which was amended on July 31, 2023 (“Credit Facility”), with Argentum Cedit 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.

4 unchanged sentences

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.

On March 22, 2024, the Company entered into the Second Amendment to the Unsecured Credit Facility with the Lender, 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.

During the three months and six months ended June 30, 2024, the Company has not drawn any amount from the Credit Facility and has incurred $ 0.3 million and $ 0.5 million, respectively (three months ended and six months ended June 30, 2023:

$ 0.3 million) as underutilization fees.

TMC the metals company Inc.

1 unchanged sentence

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

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:

On May 27, 2024, the Company entered into a short-term loan agreement with the Lender.

In accordance with the agreement, the Lender provided a short-term loan to the Company amounting to $ 2 million (the “Loan”) on May 30, 2024.

The Loan has priority over the 2024 Credit Facility with Gerard Barron and ERAS Capital LLC (Note 14).

The Loan and accrued interest are payable to the Lender on or before the earlier of (i) the Company’s next financing and (ii) September 10, 2024 (maturity date).

The Loan accrues interest at a rate of 8 % per annum.

During the three and six months ended June 30, 2024, the Company has incurred $ 14 thousand as interest expense.

As at June 30, 2024, the total amount payable to Allseas and its affiliates was $ 22.8 million (December 31, 2023:

$ 13.8 million).

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

As at June 30, 2024, Allseas and its affiliates owned 53.8 million TMC common shares (2023:

53.8 million TMC common shares) which constituted 16.7 % (December 31, 2023:

1 unchanged sentence

Investment in Low Carbon Royalties

On February 21, 2023 (the “Closing Date”), the Company and its wholly-owned subsidiary, NORI, entered into an investment agreement (the “Royalty Agreement”) with Low Carbon Royalties, a private corporation formed under the laws of British Columbia, Canada, to finance low carbon emitting energy production and technologies (natural gas, nuclear, renewables), transition metals and minerals required for energy storage and electrification (Cu, Li, Ni, Co, Mn), and the evolving environmental markets (the “Partnership”).

In connection with the Royalty Agreement, NORI contributed a 2 % gross overriding royalty (the “NORI Royalty”) on the Company’s NORI project area in the CCZ in which NORI currently holds exclusive exploration rights for polymetallic nodules from the ISA to Low Carbon Royalties.

The Company retained the right to repurchase up to 75 % of the NORI Royalty at an agreed capped return, exercisable in two transactions, between the second and the tenth anniversaries of the Partnership.

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 (the “LCR – owned Royalty”).

On February 21, 2023 (the “Closing Date”), the Company and its wholly-owned subsidiary, NORI, entered into an investment agreement (the “Royalty Agreement”) with Low Carbon Royalties.

In connection with the Royalty Agreement, NORI contributed a 2 % gross overriding royalty (the “NORI Royalty”) on the Company’s NORI project area in the CCZ to Low Carbon Royalties.

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 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.

On March 21, 2023, Low Carbon Royalties acquired additional gross overriding royalties on natural gas fields in Latin America.

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.

Notes to Condensed Consolidated Financial Statements

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

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).

For the three and six months ended June 30, 2024, the Company’s share of the net loss generated by the Low Carbon Royalties was $ 62 thousand and $ 139 thousand, respectively (share of net loss for three months and six months ended June 30, 2023:

$ 0.1 million and $ 0.4 million respectively).

Fair value of NORI Royalty

3 unchanged sentences

Investment as at December 31, 2023

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

Investment as at March 31, 2024

Equity-accounted investment loss for the period ended June 30, 2024

Investment as at June 30, 2024

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

2 unchanged sentences

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:

The fair value of the royalty liability as at June 30, 2024, remained unchanged at $ 14 million.

Financial results of Low Carbon Royalties as at and for the three and six months ended June 30, 2024 and 2023 are summarized below:

As at June 30,

Current Assets

1 unchanged sentence

Current Liabilities

Royalty Income

Total Revenue

Comprehensive Loss for 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)

ended June 30,

Royalty Income

Total Revenue

Comprehensive Loss for the period

Exploration and Evaluation Expenses

The detail of exploration and evaluation expenses is as follows:

For the three months ended March 31, 2024

Three months endedJune 30, 2024

Environmental Studies

4 unchanged sentences

Sponsorship, Training and Stakeholder Engagement

For the three months ended March 31, 2023

Permit Application Activities

Three months ended June 30, 2023

Environmental Studies

4 unchanged sentences

Sponsorship, Training and Stakeholder Engagement

Six months ended June 30, 2024

Environmental Studies

Exploration Labor

Share-Based Compensation (Note 11)

Mining, Technological and Process Development

Prefeasibility Studies

Sponsorship, Training and Stakeholder Engagement

Permit Application Activities

TMC the metals company Inc.

1 unchanged sentence

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

Six months ended June 30, 2023

Environmental Studies

Exploration Labor

Share-Based Compensation

Mining, Technological and Process Development

Prefeasibility Studies

Sponsorship, Training and Stakeholder Engagement

Registered Direct Offering

2 unchanged sentences

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.

As at June 30, 2024, all common shares and Class A Warrants to purchase common shares under the Registered Direct Offering 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.

2 unchanged sentences

Public Warrants

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

As at June 30, 2024, 15,000,000 (June 30, 2023 - 15,000,000 ) Public Warrants were outstanding.

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

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

As at June 30, 2024, the value of outstanding Public Warrants of $ 19.5 million was recorded in additional paid in capital.

Private Warrants

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

As at June 30, 2024, 9,500,000 (June 30, 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.

1 unchanged sentence

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 -day trading period and historical volatility of the share price of the common shares.

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:

Warrants liability as at December 31, 2023

Increase in fair value of warrants liability

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)

As at June 30, 2024, the fair value of outstanding Private Warrants of $ 1.9 million is recorded as warrants liability.

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

Warrants liability as at December 31, 2023

Increase in fair value of warrants liability

Warrants liability as at June 30, 2024

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

2 unchanged sentences

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

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:

Exercise price

Call price threshold

Risk-free rate

Dividend yield

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).

As at June 30, 2024, 6,230,770 (June 30, 2023 – nil ) Class A warrants were outstanding, and the total fair value of the outstanding Class Warrants recorded in additional paid in capital was $ 4.7 million (December 31, 2023 - $ 3.2 million).

There were no exercises or redemptions of the Public Warrants, Private Warrants and Class A warrants during the three-month and six-month period ended June 30, 2024.

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 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.

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 June 30, 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.

Share-based awards consisting of Restricted Share Units (STIP and LTIP) and options granted by TMC have been issued under the 2021 Incentive Equity Plan.

Stock options

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.

On April 9, 2024, the Company entered into a consulting agreement with Mr.

Jurvetson, a director of the Company (the “Agreement”).

The Agreement provides, among other things, that Mr.

Jurvetson would serve as a special advisor to the Company’s Chief Executive Officer for a term of five years .

As the sole compensation for his advisory services, Mr.

Jurvetson was granted stock options to purchase 3,440,000 of the Company’s common shares, with an exercise price equal to $ 1.71 , under the Company’s 2021 Incentive Plan (“Incentive Plan”).

The options vest in thirds on each anniversary of the grant date of the options provided that Mr.

Jurvetson is still providing services to the Company at such time and expire on April 9, 2031.

On April 9, 2024, the Company also granted stock options to purchase 500,000 shares to a consultant in exchange for advisory services over a 5-year period ending April 9, 2029.

TMC the metals company Inc.

1 unchanged sentence

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

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

The Company determined the fair value of the options to be $ 1.36 per unit using the Black-Scholes valuation method.

The fair value was estimated using the following assumptions:

Exercise price

Risk-free rate

Dividend yield

The expected term is estimated using the simplified method which is calculated as the average of the time to vest for each tranche from the grant date and the 7-year contractual term.

During the three and six months ended June 30, 2024, the Company recognized $ 0.4 million of share-based compensation expense reported as general and administrative expenses in the statement of loss and comprehensive loss.

As at June 30, 2024, there were 14,443,188 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 has not granted any options under the STIP and LTIP since September 9, 2021 (date of the Business Combination) and has fully recognized the fair value of the options issued in prior periods under the STIP and LTIP.

During the six months ended June 30, 2024, the Company recorded the forfeiture of unvested stock options (issued under LTIP plans) thereby reversing $ 0.6 million previously recorded as share-based compensation expense in the statement of loss and comprehensive loss (six months ended June 30, 2023:

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

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

Incentive Plan

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.

Outstanding – June 30, 2024

Restricted Share Units (“RSU”)

1 unchanged sentence

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.

1 unchanged sentence

(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,

A summary of the RSU activity during the six-month period ended June 30, 2024 is presented in the table below:

Number of RSUs

Outstanding – December 31, 2023

( 8,890,139 )

Outstanding – June 30, 2024

The details of RSUs granted by the Company during the three months and six months ended June 30, 2024 are as follows:

ended June 30,

Vesting Period

3 unchanged sentences

Vesting in fourths on each anniversary of the grant date

Vesting based on market conditions (5)

Total Units Granted

Of the 4,006,695 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:

Of the 206,260 RSUs vesting immediately on the grant date issued during the three months ended June 30, 2024, the Company granted 140,260 RSUs, to consultants (three months ended June 30, 2023:

nil ) resulting in $ 0.2 million, charged as general and administrative expenses for the three months ended June 30, 2024 (three ended June 30, 2023:

Of the 4,006,695 RSUs vesting immediately on the grant date issued during the six months ended June 30, 2024, the Company granted 186,593 RSUs, to consultants (six months ended June 30, 2023:

23,438 RSUs) resulting in $ 0.3 million, charged as general and administrative expenses for the six months ended June 30, 2024 (six months ended June 30, 2023:

$ 23 thousand charged as general and administrative expenses).

During the three and six months ended June 30, 2024, the Company also granted 39,174 RSUs and 66,497 RSUs, respectively, to consultants as a prepayment for their services (three and six months ended June 30, 2023:

During the three and six months ended June 30, 2024, an aggregate of 476,189 RSUs were granted to the Company’s non-employee directors under the Company’s Non-employee Director Compensation Policy, which will vest at the Company’s 2025 annual shareholders meeting.

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

During the six months ended June 30, 2024, the Company granted 7,144,348 RSUs, as payment for the 2023 LTIP awards (six months ended June 30, 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.

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)

On April 16, 2024, the Company entered into a new employment agreement with Gerard Barron, the Company’s Chief Executive Officer and Chairman (the “Employment Agreement”) that replaced and superseded Mr.

Barron’s existing employment agreement.

Under the Employment Agreement, the Company granted Mr.

Barron a one-time signing bonus award of market-based restricted stock units (the “Signing RSUs”) amounting to 20,000,000 of the Company’s common shares.

The Signing RSUs will vest upon the common shares achieving the following closing prices per common share, based on the trailing 30 -day average price (the “Closing Price”), on or prior to April 16, 2029 (maturity date), subject to Mr.

Barron’s continued service with the Company on the applicable vesting date:

one -third of the Signing RSUs vest on achievement of a Closing Price of $ 7.50 ;

one -third of the Signing RSUs vest on achievement of a Closing Price of $ 10.00 ;

and one -third of the Signing RSUs vest on achievement of a Closing Price of $ 12.50 (each subject to equitable adjustment for any stock splits, combinations, reclassifications, stock dividends and the like).

Pursuant to the Employment Agreement, Mr.

Barron has agreed not to sell any of the common shares issuable upon vesting of the Signing RSUs until after the fifth anniversary of entering into the Employment Agreement.

The Company determined the fair value of the options using the Monte-Carlo valuation method.

The fair value of each tranche and the derived service period are as follows:

Fair Value per RSU

Derived Service Period

Achievement of a Closing Price of $ 7.50

1.58 years from the grant date

Achievement of a Closing Price of $ 10

1.87 years from the grant date

Achievement of a Closing Price of $ 12.50

2.10 years from the grant date

The fair value of the Signing RSUs was estimated using the following assumptions:

April 16, 2024

Performance period

April 16, 2024 – April 16, 2029

Risk-free rate

Cost of Equity

Dividend yield

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

During the three and six months ended June 30, 2024, a total of $ 5.3 million and $ 8.5 million, respectively, was charged to the statement of loss and comprehensive loss as share-based compensation expense for RSUs (three and six months ended June 30, 2023:

$ 2.4 million and $ 4 million, respectively).

For the three and six months ended June 30, 2024, a total of $ 3.1 million and $ 4.4 million, respectively, was recognized as share-based compensation expense and related to exploration and evaluation activities (three and six months ended June 30, 2023 - $ 1.4 million and $ 2.3 million, respectively).

The amount of share-based compensation expense related to general and administration matters for three and six months ended June 30, 2024 was $ 2.2 million and $ 4.1 million, respectively (three and six months ended June 30, 2023 - $ 1 million and $ 1.7 million, respectively).

As at June 30, 2024, total unrecognized share-based compensation expense for RSUs was $ 31.7 million (December 31, 2023 - $ 6.9 million).

As at June 30, 2024, an aggregate of 72,318 vested RSUs were being processed and due to be converted into common shares.

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)

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.

As of June 30, 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.

Notes to Condensed Consolidated Financial Statements

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

During the three and six months ended June 30, 2024, a total of $ 13 thousand and $ 31 thousand, respectively, was charged to the condensed consolidated statement of loss and comprehensive loss (for three and six months ended June 30, 2023:

$ 28 thousand and $ 47 thousand, respectively) as share-based compensation expense for ESPP issuances.

For the three and six months ended June 30, 2024, a total of $ 6 thousand and $ 15 thousand, respectively, of this recognized share-based compensation expense was related to exploration and evaluation activities (three and six months ended June 30, 2023 - $ 19 thousand and $ 26 thousand, respectively).

The amount of this share-based compensation expense related to general and administration matters for three and six months ended June 30, 2024 was $ 7 thousand and $ 16 thousand, respectively (three and six months ended June 30, 2023 - $ 9 thousand and $ 21 thousand, respectively).

On May 31, 2024, the Company issued 27,394 common shares to its employees, thereby converting employee payroll contributions over the previous six months into shares, as prescribed in its ESPP program (in the three and six months ended June 30, 2023, 83,572 common shares were issued).

Shares issued as per At-the-Market Equity Distribution Agreement (“ATM”)

In December 2022, the Company filed a prospectus supplement with the Securities and Exchange Commission to sell up to $ 30 million of the Company’s common shares from time to time through an ATM.

During the three months and six months ended, the Company issued 1,634,588 common shares at an average share price of $ 1.61 resulting in net proceeds amounting to $ 2.6 million after incurring $ 42 thousand as commission and fees.

Loss per Share

3 unchanged sentences

Anti-dilutive equivalent common shares were as follows:

For the three

Six months ended

Outstanding options to purchase common shares

4 unchanged sentences

Total anti-dilutive common equivalent shares

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)

Related Party Transactions

3 unchanged sentences

A director of DGE is employed through SSCS.

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 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).

Consulting services during the three and six months ended June 30, 2024 totaled $ 25 thousand and $ 50 thousand, respectively (three and six months ended June 30, 2023 - $ 69 thousand and $ 138 thousand, respectively), out of which for three and six months ended June 30, 2024 a total of $ 18 thousand $ 35 thousand, respectively (three and six months ended June 30, 2023 - $ 55 thousand and $ 110 thousand, respectively), is disclosed as exploration labor within exploration and evaluation expenses (Note 8) and $ 7 thousand and $ 15 thousand, respectively, for three and six months ended June 30, 2024 is disclosed as general and administration expenses (three and six months ended June 30, 2023 - $ 14 thousand and $ 28 thousand, respectively).

As at June 30, 2024, the amount payable to SSCS was $ nil (December 31, 2023 - $ 17 thousand).

One of the Company’s directors who was appointed in the Company’s annual general meeting held on May 31, 2024 is the Chairman of Stonehaven Campaigns Limited and Robertsbridge Consultants Limited, which provide the Company with consulting services.

During the three and six months ended June 30, 2024, Stonehaven Campaigns Limited provided consulting services amounting to nil and $ 12 thousand recorded in general and administrative expenses.

During the three and six months ended June 30, 2024, Robertsbridge Consultants Limited provided consulting services amounting to $ 5 thousand and $ 36 thousand recorded in general and administrative expenses.

As at June 30, 2024, the amount payable to both Stonehaven Campaigns Limited and Robertsbridge Consultants Limited was nil .

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.

Notes to Condensed Consolidated Financial Statements

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

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.

4 unchanged sentences

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

During the three and six months ended June 30, 2024, the Company has drawn $ 3.9 million from the 2024 Credit Facility and incurred $ 50 thousand as interest expense.

During the three and six months ended June 30, 2024, the Company incurred $ 0.2 million 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.

In the second quarter of 2024, the Company repaid interest amounting to $ 25 thousand and underutilization fees amounting to $ 0.1 million to the 2024 Lenders.

The borrowing limit of the 2024 Credit Facility was increased to $ 25 million ($ 12.5 million from each of the 2024 Lenders) subsequent to June 30, 2024 (Note 17).

Apart from the above-mentioned transactions, the Company had transactions with Allseas which are detailed in Note 6 and issued share-based grants to Company’s directors which are detailed in Note 11.

Commitments and Contingent Liabilities

On June 15, 2024, the Company signed a retainership agreement pursuant to which a non-refundable retainer fee of $ 0.4 million is 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)

Contingent Liability

16 unchanged sentences

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.

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)

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.

12 unchanged sentences

The Company’s business consists of only one operating segment, namely exploration of seafloor polymetallic nodules, which includes the development of a metallurgical process to treat such seafloor polymetallic nodules.

Subsequent Event

On August 13, 2024, the Company entered into the First Amendment to the 2024 Credit Facility with the 2024 Lenders, Gerard Barron and ERAS Capital LLC, to increase the borrowing limit of the 2024 Credit Facility to $ 25 million in the aggregate ($ 12.5 million from each of the 2024 Lenders).

Under the terms of the First Amendment, the borrowing limit will return to $ 20 million in the aggregate ($ 10 million from each of the 2024 Lenders) upon certain financing events.

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