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Tmc The Metals Company(TMC-Q)
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Why The Metals Company Stock Is Plummeting Today

Motley Fool - Wed Aug 2, 2023

What happened

After sinking yesterday, deep-sea mining stock The Metals Company(NASDAQ: TMC) is continuing to battle rough seas in today's trading session. Management provided an updated company outlook on Tuesday after the market closed, and it's clear that investors aren't happy.

As of 10:06 a.m. ET, shares of The Metals Company are down 14.7%.

So what

Providing insight into how it will proceed following the disappointing announcement from the International Seabed Authority (ISA), an international organization created by the U.N. to oversee deep-sea mining activities, in late July, management plans on submitting its deep-sea mining application after the ISA meets in July 2024. If the ISA approves the application -- a process that's expected to take about a year -- The Metals Company will begin deep-sea mining operations, presumably in the fourth quarter of 2025.

Prior to the ISA's July announcement that it hadn't established a regulatory framework for deep-sea mining, The Metals Company had expected to submit its application later this year and begin operations in late 2024.

Due to the delayed timeline, The Metals Company anticipates requiring an additional $60 million to $70 million in advance of submitting its application next year. At the end of Q2 2023, The Metals Company had $20 million in cash on hand.

Now what

With investors gaining clarity into how long it could be before The Metals Company starts deep-sea mining operations, it's no wonder shares are drowning today. With this delay, the company will have to raise a significant amount of capital, and investors are speculating that this will translate to a dilution of shareholder value if management chooses to issue equity.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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