The Metals Company Thematic Report
SEQH Capital Partners Research
TMC Thematic Report | 12 October 2025
The Metals Company (NASDAQ: TMC)
“The Oceanic Option on U.S. Critical-Metal Security”
Price Objective: US$21.00 (135 % upside to US$8.90 close)
Rating: SPECULATIVE BUY – High-conviction satellite
Time Horizon: 18-month base case | Risk-adjusted NAV triangulation
Executive Summary – 90-second elevator
TMC is a pre-revenue, governance-arbitrage play on Washington’s willingness to on-shore Class-1 nickel & cobalt outside the ISA moratorium log-jam.
The Aug-25 declaration of 51 Mt probable reserves (SEC S-K 1300) and a US$5.5 bn NPV de-risk the technical story; NOAA’s Aug-25 “full-compliance” letter de-risks the regulatory story; Korea Zinc’s US$85 m strategic injection de-risks the market story.
We value the first-quartile, 18-year, 10.8 Mtpa NORI-D project at US$21/sh (0.30× gross NAV) after weighting a 65 % permit probability, 28 % warrant dilution and a 15 % technical haircut.
Downside US$6 (ISA moratorium + Pacific sponsor withdrawal); upside US$26 if DPA loan guarantees materialise.
Best expressed as 2-4 % satellite position with nickel futures short to strip beta.
1. Resource & Technology – Scarcity with IP Moat
NORI-D PFS (Aug-25) – world’s first deep-sea mineral reserve
51 Mt @ 4.0 % Ni-Eq → 1.9 Mt Ni, 0.16 Mt Co, 2.3 Mt Cu, 51 Mt Mn.
C1 cash cost US$1,065 /t Ni (incl. credits) – 1st-quartile vs. US$1,800-2,200 for HPAL laterites.
All-In Sustaining Cost US$2,569 /t Ni – 43 % steady-state EBITDA margin at long-run Ni US$18k, Co US$55k.
Hidden Gem Collector – proven pilot efficiency
2024 pilot: 97.3 % nodule pickup vs. 92 % PFS assumption; 27 % sediment reduction via variable-throttle suction heads (patent pending).
Dual 1.2 MW slurry pumps give 60 % output on single-pump fail – key to 43 % margin vs. terrestrial 28-32 %.
4.2 m ID steel catenary riser ( repurposed from Solitaire) – >10× fatigue safety factor; 18 % higher cap-ex but 24 % power saving.
Broader inventory torque
IA (Aug-25): 73 Mt measured & indicated + 1,206 Mt inferred in NORI & TOML blocks – US$18.1 bn additional NPV.
Only 6 % conversion of inferred → reserve triples corporate NAV – asymmetric 20:1 upside.
2. Off-take & Processing – Korea-Zinc Micro-Plant Locked
Flow-sheet validated (8 t pilot, Aug-24)
96 % Ni, 94 % Co, 98 % Mn extraction; Mn raffinate re-used in Korea Zinc’s Zn circuit, zero standalone Mn cap-ex.
Binding term-sheet (Oct-25): K-Z takes 100 % Phase-1 output at LME cash Ni minus US$1,200/t fee (floor US$800/t if Ni <US$14k) – 2-way margin safeguard.
Carbon arbitrage
Life-cycle CO₂: 1.2 t CO₂-e / t Ni vs. 14.8 t for Indonesian NPI.
EU CBAM proposal (2028) at US$110/t CO₂ = US$1,400/t Ni cost advantage – not yet priced.
3. Capital Structure – Dilution & Liquidity Mapped
