TMC the metals Co Inc. Fair Value Disclosure
22. Fair Value Accounting
The following tables set forth the Company’s assets and liabilities measured at fair value (Note 3):
Fair Value at December 31, 2024 | ||||||||||||
| Total |
| Level 1 |
| Level 2 |
| Level 3 | |||||
Assets: |
|
|
|
|
|
|
|
| ||||
Cash | $ | 3,480 | $ | 3,480 | $ | — | $ | — | ||||
Receivables and prepayments |
| 1,851 |
| — |
| 1,851 |
| — | ||||
Exploration contracts |
| 42,951 |
| — |
| — |
| 42,951 | ||||
Right of use asset |
| 3,814 |
| — |
| — |
| 3,814 | ||||
Equipment |
| 771 |
| — |
| — |
| 771 | ||||
Software |
| 1,928 |
| — |
| — |
| 1,928 | ||||
Investment |
| 8,203 |
| — |
| — |
| 8,203 | ||||
$ | 62,998 | $ | 3,480 | $ | 1,851 | $ | 57,667 | |||||
Liabilities: |
|
|
|
|
|
| ||||||
Accounts payable and accrued liabilities | $ | 42,754 | $ | — | $ | 42,754 | $ | — | ||||
Short-term debt |
| 11,775 |
| — |
| 11,775 |
| — | ||||
Deferred tax liability |
| 10,675 |
| — |
| 10,675 |
| — | ||||
Royalty liability |
| 14,000 |
| — |
| — |
| 14,000 | ||||
Warrants liability |
| 912 |
| — |
| — |
| 912 | ||||
$ | 80,116 | $ | — | $ | 65,204 | $ | 14,912 |
Fair Value at December 31, 2023 | ||||||||||||
| Total |
| Level 1 |
| Level 2 |
| Level 3 | |||||
Assets: |
|
|
|
|
|
|
|
| ||||
Cash | $ | 6,842 | $ | 6,842 | $ | — | $ | — | ||||
Receivables and prepayments |
| 1,978 |
| — |
| 1,978 |
| — | ||||
Exploration contracts |
| 43,150 |
| — |
| — |
| 43,150 | ||||
Right of use asset |
| 5,721 |
| — |
| — |
| 5,721 | ||||
Equipment |
| 1,133 |
| — |
| — |
| 1,133 | ||||
Software |
| 1,643 |
| — |
| — |
| 1,643 | ||||
Investment |
| 8,429 |
| — |
| — |
| 8,429 | ||||
$ | 68,896 | $ | 6,842 | $ | 1,978 | $ | 60,076 | |||||
Liabilities: |
|
|
|
|
|
| ||||||
Accounts payable and accrued liabilities | $ | 31,334 | $ | — | $ | 31,334 | $ | — | ||||
Deferred tax liability |
| 10,675 |
| — |
| 10,675 |
| — | ||||
Royalty liability |
| 14,000 |
| — |
| — |
| 14,000 | ||||
Warrants liability |
| 1,969 |
| — |
| — |
| 1,969 | ||||
$ | 57,978 | $ | — | $ | 42,009 | $ | 15,969 | |||||
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About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.