The Metals Company (TMC) Q3 2026 earnings review
The Metals Company scales back its ship plan, but cash falls
The Metals Company, a developer planning to vacuum critical metals from the Pacific seafloor, is redesigning its launch to save cash as project spending rises. Cash used in operations stayed high at $19.4 million, cutting total liquidity by $20 million to $123 million. Chief executive Gerard Barron announced a scaled-back initial ship setup with partner Allseas to reduce upfront costs, while federal ocean regulators pushed the next permitting step back six weeks to mid-December.
| Cash used in operations | $19.4M $11.5M a year ago by our math |
|---|---|
| Available liquidity | $123M down from $143M last quarter |
| Exploration and evaluation spending | $23.5M +144% from a year ago |
| NOAA certification target | Delayed moved to mid-December from late October |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because a cheaper starting ship plan and active US government funding talks merely offset faster cash burn and another regulatory delay. Having two federal agencies jointly review funding for the Texas refinery helps the bull case, and the smaller initial ship design lowers the immediate cash hurdle. The bad news: engineering and vessel expenses more than doubled from a year ago, and Barron admitted the Texas plant will not be ready for the first seafloor rocks.
The question now is whether the company can lock in US government funding before its $79 million cash pile runs low next year. Either federal grants arrive in time to fund the scaled-back build, or management must lift its freeze on selling stock and dilute shareholders again. The mid-December permit certification and the next update on federal agency talks will tell.
🐂 Bull Case
Allseas Plan Scales Back Initial Build
The Metals Company is preparing its production ship, Hidden Gem, with Swiss offshore contractor Allseas to vacuum metal-rich rocks called polymetallic nodules from the Pacific seafloor. Until now, the partners planned a full ship conversion before starting commercial recovery in late 2027, which required a heavy upfront cash bill.
This quarter, the partners redesigned the launch around "a simplified offshore system designed to meet the first two years’ production targets". "Rather than targeting maximum production capacity from day one, we’re prioritizing speed to first production and a lower upfront investment," chief executive Gerard Barron said. They will add a second ship later so Hidden Gem can finish its full upgrade in year three.
This shift matters because the deep-sea miner ended September with $79.3 million in cash, which was not enough to fund its half of a full-scale ship build. "Even at these lower initial volumes, we expect the operation to be EBITDA-positive in its first years," Barron added, though the release gave no new cost budget or initial tonnage target.
What to watch: the exact dollar budget and starting volume for this simplified system in the annual report. A small upfront bill would let the company start building equipment without selling new shares first.
Two US Agencies Review Refinery Funding
The seabed miner wants to build a processing plant in Brownsville, Texas, to turn seafloor rocks into battery and defense metals, and it is counting on Washington to pay for most of it. In July, the firm hired engineering partner Mariana Minerals to design the first smelting stage.
Barron said due diligence is moving quickly, with two US government agencies "considering financial support for our Brownsville plant" and working together on the review. Meanwhile, Mariana Minerals raised $310 million from prominent venture investors in August, bringing its total capital to about $400 million to fund its automated plant design software.
Joint review by two federal agencies shows the funding talks are active, and Mariana's fundraising removes the risk that the engineering partner runs out of money. However, no agency has signed a check yet, and the company has frozen other capital raises while it waits.
What to watch: a binding funding award from a named US agency with a specific dollar amount. An award that also covers offshore ship equipment would solve the company's biggest cash hurdle.
Positives this quarter didn't test
Two other parts of the growth case moved forward in the background without changing this quarter's financial numbers.
- Offshore services partnership: TMC signed an exclusive marine survey agreement with fellow developer Eco Minerals in July, but the release gave no start date for their joint mapping campaign.
- Royalty company value: Mesabi Metallics confirmed an $18 billion steel and iron ore build in the US, backing the 2% iron ore royalty held by The Metals Royalty Co., where TMC owns a stake.
🐻 Bear Case
US Permit Review Slips Another Six Weeks
To mine the seafloor under US law, the company needs a commercial recovery permit from the National Oceanic and Atmospheric Administration (NOAA), the federal ocean regulator. Management has already pushed back its target for winning that permit several times over the past year, leaving less breathing room before the late 2027 ship launch.
On November 3, NOAA told the company it expects to decide on certifying the USA-A application by mid-December 2026 rather than the end of October. The agency needed more time to read over 1,600 public comments submitted before the October 19 deadline, though its letter "does not identify any issue or deficiency with the application".
A six-week delay is minor on its own, because certification only confirms the application is complete and that the firm has the technical capacity to mine. The real test is that the full environmental impact statement and another round of public comments still lie ahead, and US law sets no hard deadline for the agency's final approval.
What to watch: NOAA's certification decision in mid-December and the publication date for the draft environmental impact statement. Any further delay in early 2027 would make it hard to win the final permit before Q4 2027.
Project Spending Jumps While Fundraising Stalls
Management says its $79.3 million in cash and $123 million in total liquidity will cover its bills for at least the next twelve months. At the same time, the company refuses to raise money in public markets until its confidential US government funding talks finish.
- Exploration and evaluation expenses: $23.5 million in Q3, up 144% from $9.6 million a year ago
- Cash used in operations: $19.4 million in Q3, nearly matching Q2's $20.1 million outflow by our math
- Cash on hand: $79.3 million at September 30, down from $98.7 million in June and $117.6 million in December
This spending pace cuts against the calm liquidity reassurance because project bills are rising before ship fabrication even starts. Engineering expenses more than doubled "to recognize the full charge of ongoing development, operating, and vessel costs", as well as feasibility and legal bills. At nearly $20 million of cash burn a quarter, cash on hand covers only four quarters before tapping insider credit lines.
What to watch: quarterly operating cash outflow in Q4. A third straight quarter near $20 million without a government grant would force the company to draw on credit lines or lift its freeze on selling shares.
Texas Plant Will Miss First Production
The company has pitched its planned Brownsville, Texas facility as the domestic refining hub for nodules recovered under its US permit. Building a brand-new smelter takes years, while offshore ship commissioning is targeted for late next year.
Barron admitted this quarter that building the Texas plant is still the goal, but "having it up and running in time to receive the first nodules from our offshore operations is a challenge". Instead, the company plans to rely on its five-year partnership with Pacific Metals Co. (PAMCO) in Japan, where engineers were working this week on plant modifications.
Using PAMCO's existing Japanese smelter avoids paying for a US plant before starting offshore recovery. However, the company has not yet signed a final commercial processing contract with PAMCO, and US seabed mining law generally requires domestic processing unless the regulator grants a waiver.
What to watch: a signed, binding commercial tolling agreement with PAMCO and clarity from NOAA on foreign processing rules. Without both, the company cannot process its first rocks even if the ship is ready.
Risks this quarter didn't answer
Several standing financial, operational and legal risks received little or no update in the third-quarter press release.
- Offshore fabrication start: management previously scheduled Hidden Gem equipment fabrication to begin in Q4 2026, and the next update will show if the redesign delayed that start.
- Ongoing share dilution: the company issued 7.3 million shares to settle bills with Allseas in Q3 and logged $12.1 million in stock-based pay, pushing weighted share count up 8.8% from a year ago.
- International Seabed Authority disputes: the release gave no update on compliance inquiries by the UN seabed body or the January 2027 expiration of its Tongan subsidiary's exploration contract.
- Related-party credit fees: the company paid $0.7 million in facility fees and interest in Q3 to keep its undrawn credit lines open, and the quarterly filing will show the exact insider terms.
👓 Other Themes
ExxonMobil Veteran Joins The Board
On September 29, the company appointed Liam Mallon, the former head of ExxonMobil's global upstream oil and gas business, to its board of directors. Mallon brings 40 years of offshore and deepwater project experience, having overseen $20–30 billion in yearly capital spending and major offshore builds in Guyana, which adds heavy-industry oversight as TMC plans its offshore launch.
💲 Other KPIs
Operating loss narrowed by 40.3% from $55.4 million a year ago, and fell from $71.7 million last quarter. General and administrative overhead dropped 79.2% from last year to $9.5 million because stock-based pay fell by $32.7 million. Headline net loss dropped 84.6% to $28.4 million because last year included a one-time $131 million non-cash royalty charge.
Unpaid bills and accrued expenses rose 14.2% from $46.0 million at the end of 2025, though they ticked down slightly from $53.9 million in the first quarter. The $7.6 million rise in payables over the first nine months helped hold down reported operating cash burn while project engineering and legal activity picked up.
Average share count rose 8.8% from 405.5 million a year ago and 1.8% from 433.2 million last quarter. Total shares issued reached 441.3 million at the end of September after the deep-sea miner handed 7.3 million shares worth $43.2 million to partner Allseas in July to settle past vessel and engineering obligations without spending cash.
🔮 Guidance
Unchanged. The seabed developer still plans to start commissioning its Hidden Gem offshore collection system in the fourth quarter of 2027, ahead of starting commercial production. To keep that date achievable on a smaller cash budget, the firm and partner Allseas shifted this quarter to a simplified two-year starter system, pushing the ship's full-capacity upgrade to year three.
Delayed. In a November 3 letter, the ocean regulator moved its expected certification decision back by about six weeks from late October to mid-December 2026 so staff can review more than 1,600 public comments. It is the latest in a string of small timeline slips over the past year, though the company still expects the final permit before late 2027.
Unchanged. Management reiterated that its $79.3 million in cash and $123 million in total liquidity will cover working capital and capital spending commitments for at least the next year. By our math, repeating this quarter's $19.4 million operating cash outflow for four quarters would use nearly all cash on hand, leaving the company reliant on its credit lines or government grants.
❓ Key Questions
What does the simplified Allseas starter system cost?
Management said the phased approach lowers upfront investment and stays profitable in its first years, but gave no dollar budget or starting tonnage below the 3 million tonne nameplate.
Will US government grants cover the offshore ship build?
Barron noted that two US agencies are reviewing support for the Brownsville refinery, leaving unclear whether federal money can also fund TMC's cash share of the Hidden Gem vessel.
When will PAMCO sign a binding processing contract?
With the Texas plant unlikely to be ready for first nodules, the company needs a definitive commercial tolling contract and modification budget with its Japanese partner before late 2027.
What is NOAA's schedule for the environmental impact statement?
Once certification arrives in mid-December, investors need the target dates for the draft environmental impact statement and public comment periods to judge whether a permit before Q4 2027 is realistic.