The Exchanges

Q Which has become a bit of a point of contention, the part about, um, operating outside of U.S. exclusive economic zones. Maybe that's a good opportunity to step back for a second. Can you walk through the, the different regions where there is deep sea mining exploration or potential production to be had and where the Authority and control over themselves?

A Yeah, essentially there are two areas. You have the exclusive economic zone, which is the, um, the territorial waters of any, um, country. So it's the, it's that country's sovereign waters and the country's sovereign right to do whatever they decide to do within that region. And then we have what is known as beyond national boundaries, uh, which is international waters. So those are all the areas outside of the, um, Uh, the, the exclusive economic zones, and the key difference between the two is during, in an exclusive economic zone, uh, it's, uh, the work that anybody does is subject to the rules and the law of that country. When you go into international waters, uh, back in 1984, uh, UNCLOS, which is the United Nations, um, law of the sea, uh, was ratified, um, and that is, It's now under the auspices of the United Nation, and I think there are about a 136 countries that have signed up to it. Um, however, the U.S. has not signed up. They have not ratified that. And in the international waters, it has been deemed since the signing of UNCLOS that that would be regulated by the United Nations, and specifically the ISA, which is the International Seabed Authority.

AI assessment note: “essentially there are two areas. You have the exclusive economic zone... And then... international waters”

Q going on in the rest of the world, apart from sort of A less than ideal regulatory environment. Are there other things that are going to be bottlenecks in the evolution of deep sea mining within the United States? I mean, are we going to see Significant exploration activity during the Trump administration before a new administration takes hold and could make a bunch of changes if they so desired?

A Well, I think the, you know, the key bottleneck with, uh, with the US, um, exclusive economic zone is the manner in which, um, the US approaches mineral resource development. Uh, they've modeled the, the deep sea mining, uh, of minerals and minerals in the ocean, uh, on the oil and gas model, uh, where The, uh, the exploration work, uh, and a lot of the geophysical work that is, that underpins this, uh, is done by the US government, and then based on that interpretation, they determine areas of interest that they put out on a public lease for companies to bid and tender on. Now, the issue is with the, um, with the deep sea mineral space, is that means the likes of Boehm and Noah have to go and do all of this work throughout this massive body of water And they need to determine where exactly these mineral deposits are. Pull all the information together that would make it attractive for a company like us to bid on a, on a lease. And the issue that you have is, is that this is going to take, you know, multiple years of just, um, Exploration. You know, sending ships out there and covering tens of thousands of square kilometers of the ocean. Um, and I think this is going to be the, the, the problem. You know, NOAA's boats are already booked out for the next, um, two to three years, possibly even the next four years. So before you can repurpose those vessels to specifically go and ad…

AI assessment note: “the key bottleneck with, uh, with the US, um, exclusive economic zone”

Q Who has got licenses to do what? How far along are they? Just orient me in terms of, given that Cook Islands is the leader, where, where are we?

A Yeah, so the Cook Islands back in twenty-twenty-two awarded three exploration licenses, uh, to three different companies. Uh, so there's, um, the first company is a company called Mahana Minerals, uh, which is, um, uh, owned and operated, um, by a, um, U.S.-based, um, You have, um, CIC is the second license holder, um, and then the third license holder is a joint venture between a Belgian company, uh, and the Cook Islands Investment Corporation, which is a, a, um, a government, um, company that is focused on developing businesses within the Cook Islands. So those three companies have been awarded exploration licenses. Those licenses are five years in duration, The companies are currently in year four. Um, and the, the intention and the plan of these organizations and, and, you know, Mahana Munro's is the company that I work for. Uh, the intention is in, in the next, um, uh, two years or so to apply for our mining licenses. So we are currently all embarked on the environmental data campaigns, uh, collecting all the information so we can make the case for, um, Minimal environmental impact. Um, but we also have our mining systems developed. We, in, in our case, and as well as the, um, the processing of the nodules. So it's, you know, putting, putting it a different way. We probably, uh, two to four years away from first production is, is where we are in the cooks.

AI assessment note: “Cook Islands back in twenty-twenty-two awarded three exploration licenses, uh, to three different companies.”

Q um, on, on the ground, or under the ground, rather. And so, what we have right now is, is a big refining industry set up to basically extract a single mineral. Generally speaking. So does this mean that you are going to end up having to, or having to find somebody set up some new refining infrastructure? Is that new technology? Like what does that look like downstream of extraction?

A So I think there are a couple of things to unpack there. I think the first one is that, uh, we've recently started hearing a lot of noise about, um, you know, that, that the, the processing technology doesn't exist. Um, and, and that's an interesting, ah, shift, um, in the arguments against why DSM should not go ahead, ah, because the reality is quite different. Yes, we have a polymetallic resource, so we have, as you mentioned, nickel, copper, cobalt, manganese, and in the case of the Cook Islands nodules, rare earths as well, which is another thing everybody's hot about. Um, but the only part that we've had to crack and unlock is not the separation or the refining, because the separation or refining that exists with all these other mining industries is exactly the same technology that we're going to use to, to pull out those specific metals out of the nodules. So, it's actually a benefit for us that all this knowledge and technology exists for selecting all those different metals. What is different for us is two things. The first one is the nodule, um, is in the form of a, of a golf ball sized rock, and what we have to do is we have to get all those metals, um, into, we refer to it as into solution. Best way to explain it is if you take table salt and you pour it into, um, into water and you dissolve it, uh, it goes from, uh, sodium chloride, which is salt, and when you disso…

AI assessment note: “separation or refining that exists with all these other mining industries is exactly the same”

Q Okay, you mentioned the Cook Islands, so moving on from the U.S., my sense is that the Cook Islands is sort of furthest along here, is that in terms of general exploration and sort of moving toward actual deep sea mining, do you agree with that? Is there anywhere else that you would put on the same level as the Cook Islands?

A No, I think that would be a reasonably accurate statement. I think the, the country that is coming up Close second to that would be Japan. Um, you know, Japan last year announced a fairly, fairly significant nodule field in their territorial waters, and they're now moving forward with, with that development and, and that program under the, under the guidance of the University of Tokyo. I think the Cook Islands are ahead of Japan in the fact that the Cook Islands have the regulatory frameworks in place to go from Uh, prospecting exploration and, um, and exploitation, uh, with a great environmental, um, requirement and plan in place to make sure that there's no significant harm as a result of that. Uh, the Japanese still need to play some catch up there. So, I would say between Japanese territorial waters, Cook Islands, um, they, they certainly are, uh, as far as polymetallic nodules are concerned, certainly leading the way as far as, uh, deep sea minerals are concerned.

AI assessment note: “I think the, the country that is coming up Close second to that would be Japan.”

Q essentially saying beyond, for, beyond U.S. exclusive economic zone, Uh, this is the Trump administration saying, we are interested in deep sea mining exploration and production, and we have not signed on. To the treaty that would make us a part of the International Seabed Authority, and so we're sort of competing with the rest of the world for those resources? Is that the right way to think about it?

A Um, I think there are two parts to that question. Um, firstly, the EO says, uh, exclusive economic zones not of the U, not only of the U.S., but in any country. Um, you know, there are other countries, Japan, Cook Islands, Papua New Guinea, um, who currently are actively working in the exclusive economic zones, developing these resources. In the US, um, there hasn't been, um, very much, if any, work in the exclusive economic zone of the US, um, but that is due to a regulatory issue, um, rather than, than anything else. And then with the EO saying, um, in international waters as well, this is where Things start becoming a little, um, a little more vague and a little more challenging. Um, as you would note in the press, um, since that has been announced and the metals company have indicated that they want to use the EO and apply for licenses through the U.S. laws to mine in international waters, there's, um, there's been some surprise and there's also been some resistance to that, and I think, you know, this is something for the lawyers to get into and figure out how Um, you know, the metals company and the, the US with the EO are going to go and work in, in international waters, uh, without, you know, taking into consideration the, the precedent and the, and the regulatory authority of the International Seabed Authority. So I think there's still a lot of stuff to be worked throu…

AI assessment note: “I think there are two parts to that question. Um, firstly, the EO says”

Q If not a technical question, it is certainly a capital question. So maybe I guess final Topic for us is to talk about capital formation here, and not just for refining, but also for extraction. Orient me on CapEx, um, or, and OpEx, I suppose, um, just on the extraction portion, relative to a terrestrial mine, what should we be thinking about?

A Well, I think, um, the first misperception that we hear often is that, um, it can't make money because it's complicated and very expensive. Um, and I think there are two parts to that. The, the complicated and expensive, uh, is all relative because at the end of the day, uh, profitability of a mine is the difference between operating costs and revenue. Uh, and in our case, yes, we have got these ships that are going to sea and they are operating in the ocean. Um, and it is deemed to be expensive because we work in it at great depths. However, we don't have all the big capital costs of infrastructure, power lines, roads, rails, Dams, et cetera, which means the cost of capital for us is going to be lower. You know, we are going to spend less money building a ship to go mining than what you will do perhaps building a brand new infrastructure in some outback area. So that's one aspect of it. The other thing to consider is that we are bringing up one ton of material, and in that one ton of material, we are producing the same amount of metal As you would need to have anywhere between three and five land-based mines. So for them to get the same amount of metal that we're getting because of our high grade and, and the fact that they multi-metal, you could end up moving anywhere between four and eight times the tonnage of raw rock to get the same metal. So those are the aspects that peo…

AI assessment note: “we don't have all the big capital costs of infrastructure, power lines, roads”

Q where, I mean, a lot of the You could tell me if I'm wrong on this, but a lot of the early activity in deep sea mining world has been in, in international waters, particularly in this area called the Clarion-Clipperton zone. Is that because the understanding is that the resource is especially attractive there, or is that just because international waters ISA regulation has been attractive to go after?

A Yeah, look, I, I think It, it's been done there, um, because countries wanted to be sure that they did not miss out. So, you know, in a sense, ah, there was a fear of missing out. So when that got ratified, ah, all the, ah, major nations throughout the world made sure that they staked their claim, um, and they were participating in what was being released under the ISA. What happened when you stake your claim, ah, and you now take responsibility for that area, the onus is on you to execute a certain amount of work on that area. You know, you, you cannot just sit and squat in the land. You need to, you know, show that you're making progress. So I think that, um, was why there was a lot of work done in the Clarion Clipton Zone. Also, a lot of that work was funded by governments. So there was, ah, there was a source of funding that was available to make sure that that work happened. Ah, and that work has been invaluable. You know, since 1984, ah, there's been a lot of exploration work there. There's been a lot of, ah, money spent there. The European Union has spent a lot of money developing technology and equipment, so have the Chinese. So I think in, in general, it has been incredibly positive and incredibly useful for underwater mining, um, specifically in that region, um, and, you know, giving us a good understanding and, and serving as a great Uh, foundation for developing gui…

AI assessment note: “It, it's been done there, um, because countries wanted to be sure that they did not miss out.”

Q environmental data collection and trying to minimize environmental impact. Obviously, that's been a area of contention historically, as you mentioned, with, with, uh, activists pushing for moratoria and so on. From your perspective, is there a technical, is there a technological challenge in how do we actually extract resources while minimizing environmental footprint, or is the technology known and proven already today, and it's just a matter of implementing it?

A The technology is known and proven, um, and it has been proven. And incidentally, the first time it was proven was back in the 19 seventies. So the tech for this has been, uh, has been around for, for multiple decades. Um, as far as the environmental side is concerned, you know, that's where the ISA comes into the, the picture. The, the work that the ISA has done over the past, um, 2030, 40 years, um, has been massive because it's really helped us, uh, focus on the specific areas, um, where the impact would be. Uh, and the technologies have obviously been modernized and updated to, uh, to further reduce those impacts. So I think as a whole, um, the technology is there. How we apply it is well understood. Uh, what we are doing is establishing all the baseline data. You know, to give you an idea, when you, um, build a home, one of the things you have to do is look at the environmental impact of building your home. But the benefit you have is all the environmental data that exists. So you are very easily and quickly able to look at what the impacts of building your home would have. In the deep ocean where we are operating, we don't have that, that baseline data. And that is why we spend three, four years collecting that baseline data so that when we make, ah, the statements in our environmental impact statement talking about what the impacts would look like, ah, we are doing it fr…

AI assessment note: “The technology is known and proven, um, and it has been proven.”

Q Right? If it's a nickel mine or a nickel refining operation, you're just Trying to pull out the nickel. You're going to do that, but then you also have to pull out the manganese and the copper and the cobalt.

A Correct. So now what that does is it starts creating some interesting, um, possibilities for us. Uh, so nickel mines and copper mines are nickel cobalt or nickel, uh, or copper cobalt. So they bring up both those products. So one of the things we can do, uh, is create a, uh, a nickel cobalt or a nickel copper. Ah, cobalt, um, hydroxide, and we can send it to one of those existing facilities, and they can pull them out. Or, as you said, what we do is we build our own facility, but instead of having to invent a new process, we build an existing facility, and we go to these different industries, and we just go and take that building block that they've used, and we put it into our plant. And this is all chemistry. So, you know, what you're talking about is, is big tanks, Ah, with pumps and circulatory circuits, and what you do is you either use electrolysis, or you use, ah, chemistry to cause the metals to sink or to float, and it's easy to separate them out, or you, you just, um, have them precipitate. In other words, you dry them out. So there's nothing unique, strange, or different about what we're doing. It's just, again, like we did with the mining system, we're using different technologies that exist And we are just putting them together in a different sequence. And yes, we'll have to build a new processing facility. Um, but that is no different to any mine. If you go to any …

AI assessment note: “Correct. So now what that does is it starts creating some interesting, um, possibilities”

Q have to talk exclusively about the US because it is where the minority of activity is going, but just because there is this recent EO, is it going to do anything? Right? Like, are there other factors that are stopping the US from doing serious exploration for deep sea mining that this doesn't change? And so as a result, it's just going to be sort of a piece of paper.

A I don't think it's going to be a piece of paper. I think the EO, um, has got incredible value and has got incredible merit. Um, but I don't think it's necessarily going to be the silver bullet that certain people think it's going to be. You know, there's this perception that the EO has been signed, and this is a, you know, it's like flipping a light switch. All of a sudden, it's going to go from nothing to everything. It's very rare that that is the occurrence of this type of action. What this action has done, um, is that it's taken DSM, And put it into the spotlight. It has brought the world's attention to a, a nascent industry that up until the, the EO has been in existence, but has kind of been on the sidelines, been in the shadows, so to say. Uh, and this has really brought it into the, um, you know, into focus. Uh, and that has been, you know, very clear from my side, for example, um, over the past three weeks, um, once the EO had been Um, you know, been published and, um, people had time to work through it. I've been getting a lot of, uh, people phoning, wanting to speak about, um, DSM, wanting to better understand what's going on, wanting to see what the prospects are, wanting to understand, you know, what is the real story? Because everything that they've seen prior to this has been predominantly, uh, dominated by the anti, um, uh, Uh, contingent who have been out tryin…

AI assessment note: “I don't think it's going to be a piece of paper.”