Prediction: TMC The Metals Company Will Soar Over the Next Year -- 2 Key Catalysts to Watch

TMC The Metals Company (NASDAQ: TMC) is a Vancouver-based deep-sea minerals exploration company that collects and processes small nodules found on the seafloor. They contain nickel, cobalt, copper, and manganese -- metals essential for electric vehicle (EV) batteries, energy storage, and the global transition to clean energy.

The mining stock is up more than 23% so far this year. The company said its U.S. subsidiary, The Metals Royalty Company (NASDAQ: TMCR), which began public trading in April and whose shares are up 80%, will apply for a U.S. mining permit to harvest rare metals at the bottom of the Pacific Ocean in the Clarion-Clipperton zone. The company received certification from the National Oceanic and Atmospheric Administration (NOAA) for its exploration license application on May 28.

The stock remains a speculative bet because it has no revenue. In the first quarter, it reported a net loss of $20.6 million and cash of $119 million. Also, getting approval for the license application means jumping through a series of regulatory hurdles. However, there are two major catalysts that may drive the stock this year.

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Catalyst No. 1: It could bypass international regulations

One way the stock could soar over the next year is if it can bypass the International Seabed Authority, a United Nations-run intergovernmental body that regulates the international seabed. More than 35 countries have called for a moratorium on deep-sea mining, including Canada. However, the United States has not ratified the UN Convention on the Law of the Sea (UNCLOS), so there is a path forward for The Metals Company, through its subsidiary, to obtain domestic approval for seabed mining.

NOAA certified that the application submitted by The Metals Company is in substantial compliance with legal requirements, granting it threshold eligibility. NOAA is moving forward with a substantive, fast-tracked environmental and technical review of The Metals Company's 122,000-square-kilometer project area in the Clarion-Clipperton Zone.

This shows that the company does not need 168 UN member nations to reach a consensus to move forward and establishes the U.S. government as the sovereign backer of the project.

Catalyst No. 2: The U.S. Department of Defense is helping

The U.S. Department of Defense is seeking ways to break China's monopoly over critical minerals. A domestic NOAA license opens the floodgates for heavy multi-year procurement paths, federal grants, and Title III Defense Production Act funding.

While vacuuming nodules off the ocean floor is half the battle, processing them on land is where the true commercial value is unlocked. The Metals Company has been heavily advancing feasibility studies to establish a domestic processing and refining facility -- specifically targeting a hub in Brownsville, Texas.

A formalized domestic plant would make The Metals Company a prime candidate for multi-million-dollar federal grants or for Title III of the Defense Production Act, which would inject non-dilutive capital directly into the company.

A classic risk-reward opportunity

There's so much that has to go right for an investment in The Metals Company to pay off. The company must obtain approval for all its permits, avoid international objections, and the domestic plant project will need U.S. government support to move forward. Then, the company has to profitably extract rare-earth metals from the sea floor, which is hardly a given.

This stock is best for investors who are not risk-averse and willing to stick with the company for the long term, but for most investors, there's too much uncertainty to take a leap.

James Halley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.