Company Overview: TMC the metals company Inc. (NASDAQ: TMC) is a deep-sea minerals exploration company focused on the collection, processing and refining of polymetallic nodules found on the seafloor of the Clarion Clipperton Zone of the Pacific Ocean (CCZ). The CCZ is a zone of abyssal plains and other formations in the Eastern Pacific Ocean, with a length of approximately 4,500 miles. The Company operates only one segment, which is engaged in exploration of seafloor polymetallic nodules, which includes the development of a metallurgical process to treat such seafloor polymetallic nodules.

Key Business and Financial Highlights

• Q2 2023 Financial Highlights:
  • Net Loss in Q2 2023: During the quarter ending on June 30, 2023, the company incurred a net loss of USD 14.1 million, which translates to a loss of USD 0.05 per share.
  • Strong Cash Position: As of June 30, 2023, the company maintained a robust cash position, with total cash on hand amounting to approximately USD 20.0 million.

• Registered Direct Offering:
  • Pricing Details: A Registered Direct Offering was executed at a price of USD 2.00 per share, reflecting a substantial 82% premium over the closing share price of TMC on August 11, 2023.
  • Gross Proceeds: This offering is expected to generate gross proceeds of approximately USD 27 million, based on existing commitments.
  • Key Participants: The Registered Direct Offering, which incorporates highly favorable terms surpassing market standards, is spearheaded by significant stakeholders, including ERAS Capital, a major TMC shareholder, strategic partner Allseas, and various institutional investors. Additionally, key individuals such as Chairman and CEO Gerard Barron, CFO Craig Shesky, and several members of TMC's board actively participated in this transaction.
  • Warrant Coverage: As part of this transaction, a warrant coverage of 50% was included. This entails the issuance of one warrant for every two common shares acquired, with a warrant strike price set at USD 3.00 per share.
  • Call Provision and Anti-Dilution Mechanism: The warrants come with a call provision, which mandates their exercise if the 30-day volume-weighted average price ("VWAP") of TMC shares exceeds USD 6.50. Additionally, these warrants incorporate an anti-dilution mechanism that lowers the exercise price in the event that the Company issues equity at a price below USD 2.00 per share.
  • Option for Increased Commitments: Two institutional investors and their designees have the option to enhance their commitments in this transaction under the same terms. This option can be exercised by providing written notice to the Company on or before September 15, with an aggregate additional amount of USD 11 million available for commitment if, on the trading day immediately preceding such notice, the closing TMC share price is USD 3.00 per share or less.

Technical Observation (on the Daily Chart)

The leading indicator RSI (14-period) is currently recovering from oversold levels with a value of 43.67. The current price is below the trend following indicator 50-period SMAs, but at 21-period SMAs indicating a recovery of momentum in the stock in the short to medium-term. These SMAs can act as dynamic medium term resistances incase the prices shows some momentum in the upside. An important support for the stock is USD 0.80, while a crucial resistance level is USD 1.05.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to TMC the metals company Inc. (NASDAQ: TMC) at the closing market price of USD 0.87 as of November 02, 2023.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from high-risk perspective and recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

How to Read the Charts?

SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Red colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Red and Green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is November 02, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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