DeepGreen to Combine with Sustainable Opportunities Acquisition Corporation (SOAC)

March 4, 2021 7:08 AM EST

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DeepGreen Metals Inc., a developer of lower-impact battery metals from unattached seafloor polymetallic nodules, today announced that it has entered into a definitive business combination agreement with Sustainable Opportunities Acquisition Corporation (NYSE: SOAC), a special purpose acquisition company with a dedicated ESG focus and deep operational and capital market capabilities in the energy and resource sectors. The transaction represents a pro forma equity value of US$2.9 billion (assuming no redemptions) for the combined company, which will be renamed “TMC the metals company Inc.” and operate as The Metals Company upon closing.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210304005510/en/

Responsibly Sourcing Battery Metals to Address Looming Critical Shortage for EV Supply Chain

DeepGreen is developing a new, scalable source of EV battery metals in the form of polymetallic nodules found unattached on the seafloor in the Pacific Ocean. The estimated resource on the seafloor in the exploration contract areas held by the company’s subsidiaries is sufficient for 280 million EVs – a quarter of the global passenger car fleet. The development of this resource offers an abundant, low-cost supply of critical raw materials for EV batteries and wiring including nickel, cobalt, copper and manganese, with a lower lifecycle ESG impact than conventional mining. Ensuring this critical supply of battery metals is essential to the transition from internal combustion engines to EVs, which faces the following risks:

  • A slump in discovery of new metal deposits is widely expected to lead to shortages in key metals such as nickel and copper from 2024-2025 onwards;
  • Rising raw materials prices risk undermining EV manufacturers’ efforts to drive down the cost of EV batteries necessary for mass adoption;
  • Like fossil fuel extraction, conventional metals extraction comes at a steep cost to people and the planet, leading to vast deforestation in some of the most biodiverse areas on the planet. This is generating the world’s largest industrial waste stream and gigatons of emissions, poisoning ecosystems and people’s health, and driving potential labor exploitation including child labor.

The combined company’s ambition is to become the world’s largest developer and producer of EV battery metals through a responsible approach with the lowest lifecycle ESG impact and low production cost.

“Sourcing battery metals is the biggest hurdle facing the clean energy transition, and the pipeline of new mining projects on land is insufficient to meet rising demand,” said Scott Leonard, CEO of SOAC. “We looked at over 100 companies, many of them in the EV and renewable energy space. DeepGreen stands above the rest. It offers a real, scalable solution to the raw materials problem, at a low production cost and with a significant reduction in the ESG footprint of metals. Assuming full-scale production, we expect The Metals Company to be among the lowest cost nickel producers in the world.

“We are convinced that The Metals Company is the ultimate answer to our thorough search for meaningful ESG impacts combined with tremendous financial upside.”

Gerard Barron, DeepGreen Chairman and CEO, said: "We are excited to partner with SOAC, an ESG-driven team that does not shy away from tough problems. The reality is that the clean energy transition is not possible without taking billions of tons of metal from the planet. Seafloor nodules offer a way to dramatically reduce the environmental bill of this extraction. We are getting into this industry with a deep commitment to ocean health and a clear stop date in mind. The plan is simple: produce better metals to supply the EV transition, while building up enough metal stock to stop extracting from the planet and enable society to live off recycled metals."

Transaction Overview

Sustainable Opportunities Acquisition Corporation, which currently holds over US$300 million in trust, will combine with DeepGreen Metals Inc. Upon closing, DeepGreen will be renamed to operate as The Metals Company and is expected to begin trading under the ticker symbol TMC.

  • The transaction reflects a pro forma equity value for TMC of approximately US$2.9 billion (assuming no redemptions) and enterprise value of US$2.4 billion, representing an enterprise value to EBITDA of 1.2x as measured on the company’s estimated 2027 EBITDA of approximately US$2 billion, and a price to net asset value (“NAV”) of 0.35x as measured on the exploration area of the company’s subsidiary, NORI-D, with potential substantial upside as the full resource is developed.
  • The transaction includes an upsized US$330 million fully committed common stock Private Investment in Public Equity (“PIPE”) at US$10.00 per share, anchored by an international consortium of strategic and institutional investors, including Allseas, adding to the list of existing strategic investors such as Maersk Supply Service and Glencore.
  • The transaction, which has been unanimously approved by the Boards of Directors of both DeepGreen and SOAC, is expected to be completed in the second quarter of 2021 and is subject to the approval of SOAC’s and DeepGreen’s shareholders and other customary closing conditions, including a registration statement being declared effective by the SEC.
  • The transaction will be implemented by a Plan of Arrangement under the British Columbia Business Corporations Act and is subject to Court approval.
  • The combined company will continue to be led by Gerard Barron, DeepGreen Chairman and CEO. Scott Leonard, CEO of SOAC, will join the board of The Metals Company.

DeepGreen through its subsidiaries has exploration rights to the world’s largest private resource of unattached polymetallic nodules and has made significant progress on project development, including: attracting world-class strategic partners and investors; completing 10 resource definition and environmental campaigns to its exploration areas in the Pacific Ocean; the expected piloting of the offshore nodule collector system together with Allseas next year; and completing a zero-solid-waste pilot processing plant program with Hatch, FLSmidth and Glencore this year. DeepGreen is also participating in a multi-year environmental and social impact assessment, in partnership with some of the world’s top ocean scientists, to minimize risks for all stakeholders and comprehensively assess the impact of collecting nodules from the ocean floor. This business combination will provide the new entity, The Metals Company, with the capital required to get through a feasibility study and into potential revenue as early as 2024, when many analysts anticipate nickel and copper shortages from current sources.

Additional information about the proposed transaction, including a copy of the Business Combination Agreement and an investor presentation, will be provided in a Current Report on Form 8-K to be filed by Sustainable Opportunities Acquisition Corporation with the SEC and available at www.sec.gov and on DeepGreen’s website at www.deep.green. Sustainable Opportunities Acquisition Corporation intends to file a registration statement (that will contain a proxy statement/prospectus) with the SEC in connection with this transaction.

Advisors

Citi is serving as exclusive financial advisor and capital markets advisor to SOAC. Citigroup Global Markets Inc., Nomura Securities International, Inc. and Fearnley Securities Inc. are serving as placement agents on the PIPE offering. Kirkland & Ellis LLP and Stikeman Elliott LLP are serving as legal advisors to SOAC. Nomura Greentech is serving as exclusive financial advisor to DeepGreen. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. and Fasken Martineau DuMoulin LLP are serving as legal advisors to DeepGreen. Mayer Brown is acting as legal counsel to the placement agents.

Investor Conference Call

DeepGreen and SOAC will host a joint investor conference call to discuss the proposed transaction on Thursday, March 4, 2021 at 9:00am ET. All interested parties may listen by selecting the webcast link:

https://event.on24.com/wcc/r/3050299/0844776736ED2419B88B6F1F528597A9. Parties who wish to participate in the webcast via teleconference may dial (866) 547-1509, or parties outside of the U.S. may dial (920) 663-6208. The conference ID number is 6474782. An audio-only replay will be available for replay two hours after the call's completion. To access the recording, please dial (404) 537-3406 or, within the U.S. only, (855) 859-2056, and when prompted for the conference ID, enter 6474782.

About DeepGreen

DeepGreen Metals Inc. is a Canadian developer of lower-impact battery metals from seafloor polymetallic nodules, on a dual mission: (1) supply metals for the clean energy transition with the least possible negative environmental and social impact and (2) accelerate the transition to a circular metal economy. The company through its subsidiaries holds exploration and commercial rights to three polymetallic nodule contract areas in the Clarion Clipperton Zone of the Pacific Ocean sponsored by the governments of Nauru, Kiribati and the Kingdom of Tonga, which are regulated by the International Seabed Authority. DeepGreen has developed a process for producing metals from polymetallic nodules with near-zero solid waste, eliminating the need for tailings dams on land. More information is available at www.deep.green.

About Sustainable Opportunities Acquisition Corporation

Sustainable Opportunities Acquisition Corporation is a SPAC formed for the purpose of entering into a business combination with one or more businesses. While the Company may pursue a business combination in any industry, the Company intends to focus its search for a business that exists within industries that benefit from strong Environmental, Social and Governance (“ESG”) profiles. While investing in ESG covers a broad range of themes, the Company is focused on evaluating suitable targets that have existing environmental sustainability practices or that may benefit, both operationally and economically, from the founders’ and management team’s commitment and expertise in executing such practices. For more information, visit greenspac.com.



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