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| PART I | | 5 |
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| Item 1. | Business | 5 |
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| Item 1A. | Risk Factors | 42 |
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| Item 1B. | Unresolved Staff Comments | 72 |
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| Item 1C. | Cybersecurity | 72 |
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| Item 2. | Properties | 75 |
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| Item 3. | Legal Proceedings | 96 |
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| Item 4. | Mine Safety Disclosures | 97 |
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| | | |
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| PART II | | 98 |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 98 |
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| Item 6. | [Reserved] | 98 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 99 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 117 |
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| Item 8. | Financial Statements and Supplementary Data | 118 |
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| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 157 |
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| Item 9A. | Controls and Procedures | 157 |
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| Item 9B. | Other Information | 158 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 159 |
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| | | |
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| PART III | | 159 |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 159 |
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| Item 11. | Executive Compensation | 159 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 159 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 159 |
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| Item 14. | Principal Accounting Fees and Services | 159 |
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| | | |
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| PART IV | | 160 |
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| Item 15. | Exhibits and Financial Statement Schedules | 160 |
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| | Signatures | 165 |
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In this Annual Report on form 10-K (“Annual Report”), the terms “we,” “us,” “our,” “Company” and “TMC” mean TMC the metals company Inc. and our subsidiaries (“TMC”). Our common shares and warrants to purchase common shares are traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbols “TMC” and “TMCWW,” respectively.
As used in this Annual Report, “Mtpa” refers to millions of tonnes per year, “dmtu” refers to dry metric tonne unit, “TWh” refers to trillion-watt hours, “CO 2 e” refers to metric tonnes of carbon dioxide emissions equivalents and “w/w” refers to weight for weight.
Unless otherwise indicated or required by the context, as used in this Annual Report, “critical metals” refers to the four metals contained in polymetallic nodules, nickel, copper, cobalt and manganese.
Market and Industry Data
Market and other statistical data included in this Annual Report were obtained from industry publications, market research and publicly available information as well as publications and research conducted by or on behalf of TMC. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Similarly, market research and publicly available information, while believed to be reliable, have not been independently verified, and we do not make any representation as to the accuracy of such information.
Trademarks, Service marks and Trade Names
All service marks, trademarks and trade names appearing in this Annual Report are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies. Solely for convenience, trademarks and tradenames referred to in this Annual Report may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that relate to future events, our future operations or financial performance, or our plans, strategies and prospects. These statements are based on the beliefs and assumptions of our management team. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or performance, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes”, “estimates”, “expects”, “projects”, “forecasts”, “may”, “will”, “should”, “seeks”, “plans”, “scheduled”, “anticipates” or “intends”, the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these identifying words. The forward-looking statements are based on projections prepared by, and are the responsibility of, our management. Forward-looking statements contained in this Annual Report include, but are not limited to, statements about:
| ● | the commercial and technical feasibility of seafloor polymetallic nodule collection and processing; |
| ● | our and our partners’ development and operational plans, including with respect to the planned uses of polymetallic nodules, where and how nodules will be obtained and processed, the expected environmental, social and governance (“ESG”) impacts thereof and our plans to assess these impacts and the timing and scope of these plans, including the timing and expectations with respect to our receipt of exploitation contracts and our commercialization plans; |
| ● | the supply and demand for nickel and cobalt (including critical metals and battery cathode feedstocks), steel-making feedstocks, copper cathode and manganese ores; |
| ● | the future prices of nickel and cobalt (including critical metals and battery cathode feedstocks), steel-making feedstocks, copper cathode and manganese ores; |
| ● | the timing and content of the final exploitation regulations of the International Seabed Authority’s (“ISA”) that will create the legal and technical framework for exploitation of polymetallic nodules in the Clarion Clipperton Zone of the Pacific Ocean (“CCZ”) under the United Nations Convention on the Law of the Sea (“UNCLOS”); |
| ● | government regulation of mineral extraction from the deep seafloor and changes in mining laws and regulations; |
| ● | technical, operational, environmental, social and governance risks of developing and deploying equipment to collect and ship polymetallic nodules at sea, and to process such nodules on land; |
| ● | the sources and timing of potential revenue as well as the timing and amount of estimated future production, costs of production, other expenses, capital expenditures and requirements for additional capital; |
| ● | cash flow provided by operating activities; |
| ● | the expected activities of our partners under our key strategic relationships; |
| ● | the sufficiency of our cash on hand to meet our working capital and capital expenditure requirements, the need for additional financing and our ability to continue as a going concern; |
| ● | our ability to raise financing in the future, the nature of any such financing and our plans with respect thereto; |
| ● | any litigation to which we are a party; |
| ● | claims and limitations on insurance coverage; |
| ● | our plans to mitigate our material weakness in our internal control over financial reporting; |
| ● | geological, metallurgical and geotechnical studies and opinions; |
| ● | mineral resource estimates, and our ability to define and declare reserve estimates; |
| ● | our status as an emerging growth company, non-reporting Canadian issuer and passive foreign investment company (“PFIC”); and |
| ● | our expected financial performance. |
These forward-looking statements are based on information available as of the date of this Annual Report, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Important factors could cause actual results, performance or achievements to differ materially from those indicated or implied by forward-looking statements such as those described under the caption “Risk Factors” in Item 1A of Part I of this Annual Report and in other filings that we make with the Securities and Exchange Commission (“SEC”). The risks described under the heading “Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
