With the commencement of President Donald Trump’s second term, certain sectors are poised to benefit from shifts in policy and regulatory focus. One such sector is deep-sea mining, a field that has long been overlooked but may now find itself at the forefront of strategic national interests. Amid this landscape, one under-the-radar penny stock could be uniquely positioned to benefit: The Metals Company (TMC).
By tapping into the vast mineral resources of the ocean floor, companies like TMC promise to deliver minerals such as nickel, cobalt, and copper - essential components for technologies like electric vehicle batteries and renewable energy storage. These efforts are gaining momentum at a time when Trump’s presidency is expected to strengthen support for domestic mineral exploration and reduce reliance on foreign resources.
In this article, we’ll take a closer look at TMC, explore the challenges and opportunities it faces, and consider how Trump’s policies might act as a tailwind for its growth. Could this penny stock be the hidden gem that unlocks massive potential in the Trump 2.0 era? Let’s dive in.
About The Metals Company Stock
The Metals Company (TMC) is a deep-sea minerals exploration company focused on mining critical battery metals from the Clarion Clipperton Zone (CCZ) in the Pacific Ocean. More precisely, TMC aims to extract polymetallic nodules from the ocean that are rich in manganese, nickel, copper, and cobalt. These nodules are highly sought after as the world shifts toward electrification and moves away from fossil fuels. The company was founded in 2011 and went public through a SPAC merger in September 2021. Its market capitalization currently stands at $505 million.
Shares of the deep-sea minerals exploration company have climbed 11% over the past 52 weeks.
TMC Surges as Trump Presidency Can Spur Deep-Sea Mining Boom
On Jan. 15, TMC stock soared over 23% following a Wall Street Journal report that Trump is likely to enhance the prospects of deep-sea mining. The stock added another 20.8% in the subsequent trading session. The report indicated growing support for harvesting critical minerals from the ocean floors from Congress and Trump’s cabinet.
The U.S. House of Representatives recently passed its annual defense funding bill, which contains a provision directing the Secretary of Defense to conduct a feasibility study on processing deep-sea minerals within the U.S. This comes after Trump made several cabinet appointments that are perceived as favorable to deep-sea mining. Elise Stefanik, Marco Rubio, Howard Lutnick, and William McGinley, all of whom have previously expressed support for ocean mining, have been nominated for positions on Trump’s team.
Meanwhile, last year TMC appointed former Tesla (TSLA) executive Steve Jurvetson, who is a friend of Trump confidant Elon Musk, to its board of directors, a move that could prove fortuitous. Musk has been appointed to lead Trump’s new Department of Government Efficiency. “This Trump administration is the shot in the arm this industry has been waiting for,” said Gerard Barron, CEO of TMC.
The Metals Company plans to submit its first application to mine the sea floor this year. Notably, TMC must present an application to representatives of the International Seabed Authority (ISA), which is scheduled to convene in March to finalize rules and regulations for deep-sea mining. The company has announced plans to launch its application in partnership with the Republic of Nauru, an island nation in Micronesia and a member of the ISA. With that, TMC and Nauru plan to submit their application on June 27, before the organization’s second meeting in July this year, compelling representatives from other member countries to decide whether to approve it.
It’s also worth mentioning that deep-sea mining remains contentious, with environmental activists and several countries, including Canada, France, and the U.K., advocating for bans or a moratorium on the practice. They argue that it could inflict irreversible damage on an environment that has remained largely undisturbed by human activity. According to environmental charity Greenpeace, the number of ISA members against deep-sea mining has increased to 32 in the past year. Conversely, supporters contend that deep-sea mining could provide a novel source of cobalt, nickel, copper, and other minerals essential for the energy transition, defense technologies, and various other needs.
TMC Initiated with Bullish View at Alliance Global Partners
On Jan. 15, Alliance Global Partners initiated coverage of The Metals Company with a “Buy” rating and a $3.75 price target. An analyst from Alliance Global Partners noted that the company controls rights to “one of the largest undeveloped nickel projects in the world,” which also contains a substantial amount of copper, cobalt, and manganese. The firm believes that TMC holds a “first-mover advantage in the nodule collection segment of the battery materials market” and anticipates that 2025 will be “a pivotal year” for transitioning to commercial operations.
The brokerage said that government support for seafloor resource development is “accelerating,” which is anticipated to streamline permitting processes and benefit companies such as TMC. It added that the expected adoption of the ISA’s Mining Code within a year could pave the way for TMC’s commercial operations.
TMC Milestones and Market Opportunity
It’s important to review the key milestones the company has achieved before the potential start of its commercial operations. In March 2024, TMC announced the successful production of the world’s first nickel sulfate derived exclusively from seafloor polymetallic nodules. In June 2024, TMC announced the successful production of the world’s first cobalt sulfate sourced exclusively from seafloor polymetallic nodules. In September 2024, TMC and PAMCO announced the successful production of 500 tonnes of calcine, which PAMCO plans to smelt into a high-grade nickel-copper-cobalt alloy and manganese silicate.
Meanwhile, TMC has been assigned various sectors within the Clarion-Clipperton Fracture Zone. Its contract areas contain an estimated 15.9 million tons of nickel, 2.2 million tons of cobalt, 355 million tons of manganese, and 13.3 million tons of copper.
It’s also worth mentioning that TMC has a major customer awaiting the start of commercial operations. Glencore (GLNCY) has signed an offtake agreement with TMC, granting it the right to buy up to 50% of the annual production from the contract area for the duration of its exploitation.
TMC Financials
TMC’s success will depend on its ability to secure financing until it obtains its exploitation permit and begins its commercial operations. The company released its most recent quarterly report on Nov. 14.
Obviously, TMC has not yet generated any revenues. Its net loss stood at about $20.5 million in the third quarter, equating to $0.06 per share, compared to a net loss of $12.5 million, or $0.04 per share, in the same quarter the previous year. Now, let’s take a look at the company’s balance sheet.
TMC used $5.7 million of cash, a significant reduction from the $12.5 million used in the same quarter a year ago. However, this cash burn rate is still considerable given that the company ended the quarter with only $0.4 million in cash. Notably, it raised approximately $17.5 million in the fourth quarter through an equity sale offering. Management stated that the company’s total liquidity, comprising cash, the committed proceeds from its recent financing, and available credit, will be sufficient to cover working capital and capital expenditure needs for at least the next 12 months from the date of the Q3 report release.
TMC Valuation and Analysts’ Estimates
Analysts tracking the company expect its net loss to narrow by 25.24% year-over-year to $0.23 per share for fiscal 2024. Notably, one Wall Street analyst predicts that the company will generate its first revenue of $1.03 billion in fiscal 2027. This gives us a Price-FY27 Sales ratio of 0.54x, which is quite cheap compared to the sector median of 1.39x. However, this method of valuing the company is highly speculative given that it still must confront environmental regulatory risks and risks related to capital and operating costs. With that, it’s too early to draw any conclusions based on its valuation.
What Do Analysts Expect for TMC Stock?
Analysts have a consensus rating of “Moderate Buy” on TMC stock. Among the three analysts providing recommendations for the stock, two rate it as a “Strong Buy,” and one analyst assigns a “Hold” rating. The mean price target for TMC stock is $4.26, implying substantial upside potential of 173.1% from current levels.
The Bottom Line on TMC Stock
In summary, The Metals Company has significant potential as a deep-sea mining company, but I believe investors should hold off on buying at current levels, as much of the optimism is already reflected in the stock price. The Trump administration’s potential interest in deep-sea mining is noteworthy, but it is not game-changing. TMC continues to face regulatory and financial uncertainty. It remains unclear whether the ISA will grant approval. Liquidity also worries me, as it is uncertain whether the company will be able to finance its operations until the commercial phase begins. With that in mind, I currently rate TMC as a “Hold.”
