TMC's Deep-Sea Mining Model Remains Unproven Amid High Regulatory and Funding Risks

What happened

A recent investment article questions whether to invest in TMC, emphasizing its unproven deep-sea mining approach, which aligns with the DeepValue report's assessment of high speculative risk. TMC is pre-revenue with negative equity of -$40.6M as of Q3 2025, and its stock has surged 370% in the past year largely on policy optimism rather than fundamentals. The company faces significant dependencies on untested U.S. and ISA regulatory approvals for permits, with a base case probability of only 45% for favorable outcomes. Structural encumbrances include a $145M royalty liability, contingent payouts, and potential dilutive equity raises to fund ongoing cash burn and future capex. Without binding offtake agreements or revenue, the investment thesis hinges on uncertain milestones, reinforcing a cautious stance.

Implication

TMC's valuation at ~$3.1B market cap prices in optimistic permitting and financing scenarios, but any setbacks could trigger sharp declines given the lack of revenue and negative equity. The company's cash burn and project capex needs may force dilutive equity issuance, eroding per-share value, especially if milestones like NOAA permits slip. Regulatory approvals under the Deep Seabed Hard Mineral Resources Act are unprecedented and face legal and environmental opposition, increasing uncertainty. Without binding agreements from partners like Korea Zinc, the projected $23.6B NPV remains theoretical and vulnerable to metals price volatility. Therefore, investors should wait for concrete regulatory progress or a lower entry price below $4.50 before considering exposure, aligning with the report's potential sell rating.

Thesis delta

The new article reinforces the existing thesis without shifting it, as public skepticism mirrors the DeepValue report's concerns over TMC's unproven model and high risks. No new data changes the assessment; the call remains to avoid adding exposure and consider trimming into strength, given the 6-12 month re-assessment window and downside skew from permitting and funding uncertainties.