Investing.com -- Iceberg Research has taken a short position on TMC The Metals Company Inc (NASDAQ: TMC ), a deep-sea mining company with a market capitalization of $1.73 billion. TMC plans to mine polymetallic nodules containing manganese, nickel, cobalt, and copper from the seabed at depths of 4,000 to 6,000 meters. The company’s stock price has risen 285% since the start of the year, following an executive order from President Trump encouraging deep-sea exploration.

The research firm noted parallels between TMC and its predecessor, Nautilus Minerals, where TMC’s CEO Gerard Barron was an investor. Nautilus filed for creditor protection after operating expenses rose from $70 to $192 per tonne. The Prime Minister of Papua New Guinea described the Nautilus project as a "total failure."

TMC has yet to publish a pre-feasibility study (PFS), a document that estimates a mining company’s reserves. The company claimed in November 2024 that its PFS was completed, but later admitted it was still awaiting expert sign-off.

Iceberg Research criticized TMC’s projections, which are based on a preliminary "initial assessment" (IA) published in 2021. The IA was written by small consulting firms and includes assumptions that Iceberg Research deems unrealistic. After revising these assumptions, the research firm estimates TMC’s net present value (NPV) to be negative $721 million, 111% lower than TMC’s projected NPV of $6.8 billion.

The research firm also found inconsistencies in TMC’s financial assumptions. TMC estimated total offshore costs, including capital expenditure (CAPEX), operating expenses (OPEX), and sustaining capital, to be $36 per wet tonne. However, supplier Allseas plans to charge 3.8 to 4.8 times more at $136-170 per wet tonne. Similarly, TMC projected third-party processing costs at $76 per wet tonne, but supplier PAMCO intends to charge 57% more, at $120 per wet tonne.

Furthermore, the research firm pointed out that prices for nickel and cobalt, two of the metals TMC plans to mine, have declined more than 64% from their peaks on average. These metals are being replaced in lithium iron phosphate (LFP) batteries, and many nickel mines have closed due to weak market conditions. Only copper has seen a price increase since TMC went public.

Iceberg Research also questioned TMC’s recovery rate assumptions. TMC assumed it could recover 95% of the nickel contained in the nodules using conventional processing methods, but comparable nickel projects typically achieve recovery rates of around 83%.

The research firm also criticized TMC’s 2021 IA for using a discount rate of 9%, just 1% higher than prospective land-based nickel projects, despite the unprecedented nature of TMC’s proposed deep-sea mining operations. Risks include operational challenges, potential equipment breakdowns, unproven onshore processing economics, and the possibility of a policy reversal by a future administration.

Iceberg Research also raised concerns about TMC’s relationship with its offshore partner, Allseas. Allseas holds its own deep-sea exploration license and could potentially pursue operations independently.

Finally, the research firm criticized TMC’s management, noting that CEO Barron’s compensation is more than 8 times higher than the median for executives at comparable companies. Barron and other insiders also established a high-interest credit facility with TMC.

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