- Deep Sea Minerals is advancing a U.S.-aligned deep sea mining strategy focused on critical minerals
- Institutional capital and government backing are accelerating momentum in the sector
- A recent US$1 billion peer transaction highlights growing validation and valuation upside
Deep sea mining gains traction as critical minerals demand rises
Deep sea mining is moving from concept to reality as demand for critical minerals continues to grow and supply chain security becomes a strategic priority.
Deep Sea Minerals Corp. (CSE:SEAS) (OTCQB:DSEAF) (FSE:X450) is positioning as a second mover in the space, targeting U.S.-aligned supply through projects in the Pacific and Cook Islands.
This article is disseminated in partnership with Deep Sea Minerals Corp. It is intended to inform investors and should not be taken as a recommendation or financial advice.
The sector is gaining momentum, with increasing government involvement and institutional capital entering the market. A recent US$1 billion merger between American Ocean Minerals and Odyssey Marine underscores growing investor confidence and provides a clear benchmark for valuation.
With regulatory applications underway and exploration plans advancing, Deep Sea Minerals is entering a phase where licensing, capital access and resource definition will be key drivers for the business.
Joining Ricki Lee in this episode of The Capital Compass to discuss is James Deckelman, CEO of Deep Sea Minerals Corp.
Watch the full video above or on YouTube, and get involved in the conversation by leaving your comments and engaging in the forums.
Deep Sea Minerals targets offshore critical metals supply
Ricki: So, James, for investors watching this very interesting space, is deep sea mining still a concept or are we now at the point where it becomes a real investible industry?
James: Ricki, I think we are very much at that point now. Let’s start with the broader critical mineral sector, including terrestrial mining, and look at some investment examples that already exist. The U.S. government, for example, is now taking direct equity stakes in critical minerals companies.
The Department of Waris taking a 15% stake in MP Materials, a 10% stake in Trilogy Metals, and is also employing some combined constructs where the US government is combining its capital with that of private equity.
The announcement of Project Vault, a $12 billion U.S. dollar critical mineral strategic reserve being created in the United States. Of that $12 billion, $10 billion is being provided by the EXIM Bank, the export-import bank in the U.S. The $2 billion balance is private equity from notable companies such as Google and Boeing.
Even at the retail level, Ricki, this has been a place for investment. Sprott Capital has an ETF, Van Eck also has a critical minerals ETF. So even at the retail level there is now investment now in the sector.
Moving to seabed minerals specifically, there has been investment historically in several ways. A more creative investment structure such as the service for equity model that TMC has used with AllSeas, but also private equity is now moving into the sector.
We’ll be talking about institutional capital now moving into the sector as well. Private equity, of course, has been a big part of TMC’s journey. We had a very, very successful private placement in January.
Oversubscribed, very pleased with the results of that. And it’s not only in North America, a company called Loke Marine Minerals, a Norwegian company, also had institutional backing.
Regarding institutional backing, however, I think the most important example is the very recently announced AOMC/Odyssey reverse merger, one that was announced just two weeks ago. What is important here is that the combined entity was just valued at $1 billion U.S. dollars, and importantly, $230 million of that was institutional capital.
The $230 million comprises about $150 million in private equity. There’s a bridge as well on the order of $75 million. And I think all of this, particularly the most recent AOMC/ Odyssey transaction is a clear indication that the industry is no longer conceptual. It’s not an industry of the future; it’s now very much an investible sector and a commercial reality.
Ricki: And as I mentioned at the start, they’re often described as having a second mover advantage, especially compared to companies like The Metals Company. What have you learned from the first movers in this space, and how does that shape your strategy today?
James: Very good question. The first mover, the true pioneer in the sector, has been The Metals Company. We’re very fortunate to have companies like The Metals Company paving the way, a pioneering, enterprising company that’s has accomplished so much for both its stakeholders and for industry in general.
Over a billion dollars of investment in the sector; $250 million in environmental studies alone. he first to have pilot production, the first to process polymetallic nodules through a bespoke process in Japan. So, a lot to learn from our predecessors. What we have learned three things.
One is corporate behavior. In a nascent sector like this, it’s imperative to be aggressive, to be nimble, and to be creative. The second thing is environmental responsibility. A social and environmental license to operate is core to any extractive business, and this certainly ours is no different.
And the third thing is access to U.S. institutional capital, U.S. markets, U.S. liquidity also is very, very important. Very important in capitalizing the company, providing funds for operations as well as growth.
Ricki: And you’ve recently submitted applications to NOAA and responses tied to the US defense industrial base. Can you walk us through what those steps mean in practical terms and how they move you closer to actually extracting these resources?
James: Quite correct. Very recently we launched an application for an exploration license with NOAA, the US regulator in jurisdictions outside the US 200 nautical mile exclusive economic zone. We launched that application quite recently. A very important first step in the process toward license award is what is called substantial compliance or priority-of-right.
We expect to hear from NOAA within 30 to 45 days regarding that. The next step in the award process is what is called full compliance, another 60 days typically. And after that, there are public reviews, then the application then circulates through various governmental agencies all on a path to license award that we would expect in late Q4,2026 or early Q1, 2027.
Once that license is awarded we will embark on exploration operations. Year one might include, for example, a seabed mapping and resource survey with the collection of environmental data. Year two, we’ll carry out a second cruise to further delineate those resources.
And then a third cruise that is environmentally focused. We will then move toward an application for a commercial recovery license. That includes a number of steps. One is a pre-feasibility study then an environmental impact statement. We then have to emplace processing and offtake agreements.
We have to select an appropriate mining system for the area in which we’re operating. All that, again, leading to an application for a commercial recovery permit. Once that is in place, we can progress to ramp up mining and then steady state harvesting of these polymetallic nodules.
Ricki: It sounds like you’ve got a busy future ahead. We’ve also seen a big move in the sector with the proposed merger between American Ocean Minerals and Odyssey Marine, creating a combined company valued at around $1 billion, as you mentioned at the top there and backed by Citigroup and Cantor.
Does that tell us that serious institutional capital is now moving into deep sea minerals, and what does that mean for the sector from this point on?
James: Absolutely Ricki. To back up and to introduce the transaction, two weeks ago today, in fact American Ocean Minerals Corp or AOMC, which is a private seabed minerals company, entered into a definitive agreement with Odyssey Marine Exploration trading on the NASDAQ as OMEX through a reverse merger.
AOMC will be the resulting entity. It will be the NASDAQ listed controlling entity and have about a 93% pro forma ownership in the combined resulting entity. The transaction, as I mentioned, was supported by about $230 million in capital, about $75 million in a bridge loan and about $150 million in private investment. They expect to have about $175 million at closing to fund future operations.
What’s very significant is that it was supported by Citigroup as well as Cantor Fitzgerald, two Wall Street heavyweights who served as placement agents and financial advisors.
So, a very strong indicator of institutional capital at this moment in the sector. And I think it did two things. One is it validates the sector. And two from our perspective, it establishes a $1 billion peer comp for our company. Regarding this, just a couple of remarks.
We are like companies in many respects, that is, Deep Sea Minerals Corp and the resulting combined company that will be AOMC post-merger. Both companies are, or will be, pure-play seabed minerals companies. Both are pre-production. We are both pre-revenue as well. We’re both in the same stage of the lifecycle. We’re at the front-end exploration stage.
We’re both working in the same jurisdictions, that is the Cook Islands in the South Pacific as well as the CCZ further to the northeast. As it relates to the CCZ we are in the application stage as is AOMC. One of the key differences is that Odyssey Marine Exploration is a NASDAQ-listed vehicle.
We, too, are a publicly traded company, listed on the Canadian Securities Exchange. We’re also listed on Frankfurt Exchange, and we trade over the counter. But the aspiration very, very soon is for ourselves to up-list to the NASDAQ as well.
And finally, the last thing I would like to comment on is the resource base that underpins much of the value. And you know, the combined AOMC/Odyssey does have resources, mineral resources in both the inferred as well as the indicated categories.
We, through our application that is in preparation for the Cook Islands, are applying for areas that also have existing mineral resources in the inferred category. So many, many, many similarities, but despite these similarities AOMC has a $1 billion market capitalization, two orders of magnitude greater than ours.
A very clear indicator to me that we are the next billion dollar market cap seabed minerals company. And again, great validation of the sector by institutional capital at a very, very important moment in the industry.
Ricki: Well, James, really appreciate you walking us through that. Thank you so much for your time. It’s a fascinating space and clearly one that’s gaining momentum. Thank you for joining us today.
James: Thank you, Ricki. Thanks so much.
For more information, you can visit deepseamineralscorp.com.
Join the discussion: Find out what the Bullboards are saying about Southern Energy and check out Stockhouse’s stock forums and message boards.