TMC the metals (TMC) risk factors, FY2024 10-K

Other

1. 01Summary of the Material Risks Associated with Our Business
2. 02On March 4, 2023, the United Nations finalized the UN High Seas Treaty. The treaty does not replace or amend UNCLOS, or the authority of the ISA, and must be interpreted consistently with the rights granted by the Convention
3. 03Our resource development activities are subject to changes in government regulation and political instability
4. 04Our efforts to explore a regulatory pathway for deep-sea nodule production under the U.S. Deep Seabed Hard Mineral Resources Act may subject us to conflicting regulatory requirements and other operational risks
5. 05Changes to any of the laws, rules, regulations or policies to which we are subject could have a significant impact on our business
6. 06definitively known. For the same reasons, it may also not be possible to definitively say whether the impact of nodule collection on global biodiversity will be less significant than those estimated for land-based mining for a similar amount of produced metal
7. 07We may become subject to environmental liabilities as a result of noncompliance with existing or future regulations
8. 08The grade and quality of the polymetallic nodule deposits that we intend to develop are estimates, and there are no guarantees that such deposits will be suitable for collecting or commercialization
9. 09No seafloor polymetallic nodule deposit has ever been commercially collected, and our offshore collection technology and development plans and processes may not be sufficient to accomplish our objectives
10. 10We are reliant on third parties to conduct independent analyses with respect to our business, and any inaccuracies in such analyses could have a material adverse effect on our offshore collection and onshore processing and refining objectives
11. 11Mineral resource estimates from the contract areas of NORI and TOML are only estimates
12. 12Our business is subject to significant risks, and we may never develop minerals in sufficient grade or quantities to justify commercial operations
13. 13Uncertainty in our estimates of polymetallic nodule deposits could result in lower-than-expected revenues and higher costs
14. 14We operate in a competitive industry, and there are no assurances that our efforts will be successful
15. 15The prevailing market prices of nickel, manganese, copper, cobalt, and other commodities will have a material impact on our ability to achieve commercial success
16. 16We may be adversely affected by fluctuations in demand for nickel, manganese, copper, cobalt, and other commodities
17. 17We may experience difficulty in creating market acceptance for a novel manganese product
18. 18Our ability to generate revenue will be diminished if we are unable to compete with substitutions for the minerals that we intend to process or adapt to shifts in end-market demand
19. 19Negative perceptions related to the offshore collection of polymetallic nodules could have a material adverse effect on our business
20. 20Reduced growth in the adoption of electric vehicles by consumers may change our strategy and our business and operating results may be impacted
21. 21We, our partners and our shareholders may be adversely impacted by pressure and lobbying from non-governmental organizations
22. 22Offshore collection and onshore processing and refining operations pose inherent risks and costs that may negatively impact our business
23. 23The polymetallic nodules that we may recover may require specialized transfer and delivery equipment and processes, and there is no certainty that we will be able to develop or otherwise access such transfer and delivery equipment or processes that are suitable for our purposes
24. 24Our business is contingent on our ability to successfully identify, collect, ship and process polymetallic nodules profitably, and in doing so, we will need to rely on certain existing and future strategic relationships, some of which we may be unable to maintain and/or develop
25. 25Some of the offshore equipment that we will need to accomplish our objectives has not been manufactured and/or tested
26. 26Our business is substantially dependent on our strategic relationship with Allseas. If we and Allseas are unable to successfully maintain and expand this relationship, our business may be materially harmed
27. 27While the metallurgical recovery estimates have been derived from commercial operation benchmarking, benchscale and pilot scale testwork, the commercial metal recoveries to products could vary significantly from these estimates
28. 28Our exploration and polymetallic nodule collecting activities may be affected by natural hazards, which could have a material adverse effect on our business
29. 29Fluctuations in transportation costs or disruptions in transportation, processes or services, or damage or loss during transport could decrease our profitability or impair our ability to supply polymetallic nodules, processed minerals or products to our customers, which could adversely affect our results of operations
30. 30Actual capital costs, financing strategies, operating costs, production and economic returns may differ significantly from those we have anticipated and there can be no assurance that any future development activities will result in profitable metal production operations
31. 31We have limited operating history, and there can be no assurance that we will be able to commercially develop our resource areas or achieve profitability in the future
32. 32Work stoppages or similar difficulties could significantly disrupt our operations, reduce our revenues and materially adversely affect our results of operations
33. 33A shortage of skilled technicians and engineers may further increase operating costs, which could materially adversely affect our results of operations
34. 34We depend on key personnel for the success of our business. The loss of key personnel or the hiring of ineffective personnel could negatively impact our operations and profitability
35. 35Our growth will depend on our ability to execute on our plans and expand our operations and controls while maintaining effective cost controls
36. 36We are dependent upon information technology systems, which are subject to cyber threats, disruption, damage and failure
37. 37Our business is subject to a variety of risks, some of which may not be covered by our future or existing insurance policies
38. 38We may not be able to adequately protect our intellectual property rights. If we fail to adequately enforce or defend our intellectual property rights, our business may be harmed
39. 39We or our partners may not be able to obtain necessary patents and the legal protection afforded by any patents may not adequately protect our or our partners’ rights or permit us to gain or keep any competitive advantage
40. 40If we infringe, or are accused of infringing, on the intellectual property rights of third parties, it may increase our costs or prevent us from being able to commercialize new products
41. 41If we are unable to resolve claims that may be brought against us by third parties related to their intellectual property rights on terms acceptable to us, we may be precluded from offering some of our products or using some of our processes
42. 42VI. Public Company Risks and Risks Related to our Securities
43. 43We may issue additional Common Shares or other equity securities without shareholder approval, which would dilute your ownership interests and may depress the market price of our common shares and sales of a substantial amount of our Common Shares may cause the price of our Common Shares to fall
44. 44If our outstanding warrants are exercised, the number of shares eligible for future resale in the public market will increase and result in dilution to our shareholders. You will likely experience further dilution if we issue common shares in future financing transactions
45. 45There can be no assurance that the Public Warrants, Private Warrants, Class A Warrants and Class B Warrants will be in the money, and they may expire worthless
46. 46We are involved in litigation that may adversely affect us and may not be successful in our litigation related to non-performing Private Investment in Public Equity (“PIPE”) investors
47. 47In addition, although we commenced litigation against two investors who failed to fund their commitment to purchase approximately $220 million in connection with the financing at the close of the Business Combination, we may not recover any amounts from these investors
48. 48We may seek to incur debt in the future to fund our exploration and operational programs, which would reduce our financial flexibility and could have a material adverse effect on our business, financial condition or results of operation
49. 49An active trading market for our Common Shares and warrants may not be sustained, which would adversely affect the liquidity and price of our securities
50. 50There can be no assurance that we will be able to comply with the continued listing standards of Nasdaq
51. 51As a public company, we are required to implement and maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. There is no guarantee we will maintain effective internal controls in the future
52. 52The market price of our securities may be volatile, which could cause the value of your investment to decline
53. 53We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous, thereby making the warrants worthless
54. 54Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Common Shares
55. 55As we are not a reporting issuer in Canada, our Common Shares and Special Shares may be subject to restrictions on resale in Canada
56. 56We are exposed to risks vis-à-vis our multi-national operations, which could adversely affect our business
57. 57Canadian law and our Notice and Articles contain certain provisions, including anti-takeover provisions that limit the ability of shareholders to take certain actions and could delay or discourage takeover attempts that shareholders may consider favorable
58. 58For instance, our Notice of Articles and Articles contain provisions that establish certain advance notice procedures for nomination of candidates for election as directors at shareholders’ meetings
59. 59Further, changes to critical minerals policies and regulations in Canada and the U.S. and elsewhere may impact our ability to conduct our businesses internationally, including processing and sales of minerals and metals, and the ability to negotiate or agree any merger, acquisition or change of control
60. 60Our Notice and Articles permit us to issue an unlimited number of Common Shares and preferred shares without seeking approval of the holders of our Common Shares
61. 61As a company incorporated in British Columbia with some of our directors and officers residing outside of the U.S., it may be difficult for investors in the U.S. to enforce civil liabilities against us based solely upon the federal securities laws of the U.S