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Mining For Minerals Underwater: What Investors Should Know About DeepGreen SPAC Deal

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Mining For Minerals Underwater: What Investors Should Know About DeepGreen SPAC Deal

A new method of mining for metals used in electric vehicles is hitting the public markets with a SPAC deal.

The SPAC Deal: DeepGreen, the developer of the world’s largest estimated resource of battery metals for electric vehicles, is going public in a SPAC deal.

Sustainable Opportunities Acquisition Corporation (NYSE: SOAC), which was the first ESG focused SPAC, is taking DeepGreen public valuing the company at a pro forma equity value of $2.9 billion.

DeepGreen will change its name to The Metals Company and trade with the ticker "TMC" on the NYSE.

Current Sustainable Opportunities Acquisition Corporation shareholders will own 12% of the new company.

Related Link: 7 Current And Former SPACs That Could Be 2020 Election Plays

About DeepGreen: Targeting a new method to mine for metals, DeepGreen has the largest and highest grade estimated source of electric vehicle battery metals, according to the company.

The method to mine for metals on the seafloor is expected to lower the production cost and reduce the social and environmental impact.

The company’s project will mine on the Pacific Ocean floor. Minerals mined include nickel, cobalt, copper and manganese.

Partners on the project include Glencore and Maersk.

Growth Ahead: DeepGreen estimates that it has resources in its contract areas sufficient to power 280 million electric vehicles. This represents a quarter of the global passenger car fleet.

The company expects to be the second-lowest-cost nickel producer.

The electric vehicle market is expected to see significant growth. In 2020, 1.4 million electric vehicles were sold. That figure is expected to rise to 21.8 million in 2030 and 55.5 million in 2040, according to DeepGreen’s presentation.

Financials: DeepGreen does not expect to have material revenue until 2024.

The company’s presentation estimates revenue of $251 million in fiscal 2024 and $1.2 billion in fiscal 2025. DeepGreen estimates revenue of $4.8 billion in 2034.

Price Action: Shares of Sustainable Opportunities Acquisition are up 1% to $10.30.

Disclosure: The author is long shares SOAC.

 

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