DeepGreen Metals Inc.(“DeepGreen”) was recently acquired by the SPAC Sustainable Opportunities Acquisition Corp. (“SOAC”) and rebranded as TMC the metal company Inc. (Nasdaq: TMC) (“TMC”) to mine the Clarion Clipperton Zone (“CCZ”) on the floor of the Pacific Ocean for “EV Batteries in a Rock.”
TMC is pre-revenue. TMC’s primary assets are three (3) exploration licenses issued by the International Seabed Authority (“ISA”) each with designated floor area of ~75,000 sq.km in the CCZ.
We believe TMC siphoned US$ 43 million in cash and stock to undisclosed insiders by overpaying for Tonga Offshore Mineral License (“TOML”).
TOML’s previous owner, Nautilus Minerals Inc. (formerly TSX: NMI) (“NMI”) valued the TOML exploration license in its historical annual reports at zero.
In 2019 PriceWaterhouseCoopers (“PwC”) was designated as the Monitor for NMI’s restructuring process and tried to find a buyer for NMI’s assets through a court-approved sale and investment solicitation plan (“SISP”).
PwC’s Monitor reports submitted to the Canadian Courts, available online via PwC, revealed that the TOML license was shopped around to ~300 prospective investors as part of NMI’s SISP and that no interest was found for the TOML license from independent parties.
The only interested party was NMI’s Senior Secured Creditor Deep Sea Mining Finance Limited (“DSMF”), the undisclosed related party beneficiary of TMC’s overpayment for TOML.
Affected NMI creditors received 10 cents on the dollar and NMI common shareholders received nil.
Lockheed Martin (NYSE: LMT) has two exploration licenses and holds them at zero at its UK subsidiary, UK Seabed Resources Limited.
We believe that the TOML exploration license should be valued similarly to the licenses of Nauru Ocean Resources Inc. (“NORI”) and Marawa Research and Exploration Limited (“Marawa”) at US$250,000 each.
In addition, we believe that TMC artificially inflated its 2019 reported NORI exploration expenditures by 124% giving investors a false scale of its operations.
ISA public records disclosed actual NORI exploration expenditures in 2019 were only US$ 15 million, significantly lower than the US$ 34 million disclosed to investors in TMC’s SEC filings.
Additional findings revealed that TMC insiders are connected with Panama Paper and ICIJ-flagged known money laundering conspirators and an ASIC-convicted insider trading felon.
Unfortunately to us it appears as though gatekeepers failed to protect United States investors with appropriate disclosure requirements and due diligence on the background of TMC’s assets.
With no revenues and a daily depleting cash balance of US$ 113 million (~$0.50 cash/share as of 9/30/2021), we are short TMC and believe that its stock is going significantly lower.
Table of Contents
1. OVERPAYMENT TO UNDISCLOSED INSIDERS FOR TOML LICENSE
2. ARTIFICIALLY INFLATED NORI EXPLORATION EXPENSES BY 124%
3. QUESTIONABLE LEGAL STATUS OF TOML LICENSE
4. HISTORY OF BAD ACTORS – RINSE & REPEAT