TMC The Metals Co Inc (TMC) Q2 2025 Earnings Call Highlights: Strategic Investments and Future ...

Net Loss: $74.3 million or $0.20 per share for Q2 2025, compared to $20.2 million or $0.06 per share for Q2 2024. Exploration and Evaluation Expenses: $10.5 million in Q2 2025, down from $12.4 million in Q2 2024. General and Administrative Expenses: $11.5 million in Q2 2025, up from $7.9 million in Q2 2024. Free Cash Flow: Negative $10.7 million for Q2 2025, compared to negative $12.2 million in Q2 2024. Pro Forma Cash: Approximately $120 million as of June 30, 2025. Strategic Investment: $85 million from Korea Zinc. Project Net Present Value (NPV): Combined project NPV of more than $23 billion. Recoverable Nodules: Estimated 164 million wet tons for the prefeasibility study. Production Start Date: Expected Q4 2027. EBITDA Margin: Expected 43% or $254 per ton during steady-state years (2031-2043).

Warning! GuruFocus has detected 3 Warning Signs with TMC.

Release Date: August 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

TMC The Metals Co Inc (NASDAQ:TMC) announced a strategic investment of $85 million from Korea Zinc, enhancing its financial position and strategic partnerships. The company released a prefeasibility study (PFS) and initial assessment showing a combined project net present value of more than $23 billion, indicating strong future potential. TMC has renewed and strengthened agreements with the Republic of Nauru and the Kingdom of Tonga, ensuring stable partnerships and economic opportunities for these nations. The company is progressing through a transparent US regulatory process with NOAA, achieving full compliance for exploration license applications, which derisks the project. TMC's cost structure positions it in the first quartile of the cost curve, suggesting profitability in nearly any nickel price environment.

Negative Points

TMC reported a net loss of $74.3 million for the second quarter of 2025, a significant increase from the $20.2 million loss in the same period of 2024. General and administrative expenses increased by $3.6 million compared to the previous year, mainly due to higher share-based compensation and consulting costs. The anticipated production start date is Q4 2027, which may be later than some investors hoped, indicating a long wait before revenue generation. The company faces potential regulatory and legal challenges, as the permitting process is complex and subject to changes in administration and policy. Free cash flow for the second quarter of 2025 was negative $10.7 million, indicating ongoing cash burn and the need for careful financial management.

Story Continues

Q & A Highlights

Q: Now that the PFS is out, can you comment on what work needs to be done to reach the feasibility level and the timeline for it? A: Craig Shesky, CFO: The focus is on finalizing agreements with Allseas and preparing for the Final Investment Decision (FID) to order long-lead items for the Q4 2027 production target. The regulatory path is clearer, and we are exploring financing opportunities with the US government and partners like Allseas and Korea Zinc.

Q: What are the next major steps or milestones in the permitting process under NOAA as we head into the second half of 2026? A: Gerard Barron, CEO: The closing of the comment period is crucial. NOAA has been proactive, and we expect regulatory changes to expedite permitting. We are in regular contact with NOAA, and the administration is supportive of seabed mineral production.

Q: What factors could accelerate or slow down the progress towards the Q4 2027 production target? A: Gerard Barron, CEO: Regulatory support is strong, and the Board is committed to careful capital allocation. Supply chain issues are a normal business risk, but we are well-equipped to handle them with our partners. The administration is motivated to advance the project.

Q: Can you elaborate on the potential funding from US institutions for critical metals and its applicability to the project? A: Craig Shesky, CFO: We are pursuing funding opportunities from various US departments, which could support both offshore and onshore components. The process is more coordinated now, and we are actively engaging with relevant agencies.

Q: What is the difference between provisional and final approval, and how does it impact decision-making on capital expenditures? A: Gerard Barron, CEO: Provisional approval would provide confidence, but the Board is already encouraged by signals from the administration. The timeline for final approval remains on track, and provisional approval would be a confidence booster.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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