Treasury Management 101: Beware investors who don't hand over promised cash

Will the deep sea miner survive? Permjit Singh Treasury Consultant finds out

TMC (a deep sea miner of commodities useful in manufacturing) did not get the cash it was promised by investors so now its strategy of getting a licence to mine is in doubt (Financial Times).  TMC says it would prefer the missing $200m cash in its bank account but says it has enough cash to get the licence to mine by 2023. 

It is suing the investors in default, but there is no certainty the promised cash will be received or when.  It also has to contend with potential buyers of its metals who've refused to buy (except Glencore) because the environmental impact of its mining is not yet certain. 

Companies survive on cash to fund operations and they work on the expectation they will receive cash from sales.  TMC has no certainty of sales and no certainty of funds.

TMC faces many cash and operational risks.  Will buyers buy its output? Will it have sufficient cash to get it through the months and years ahead and get the licence in 2023?  Will its application be approved in 2023?

A short seller claims TMC overpaid for an asset and that it inflated costs to give a false impression that its scale of operations was large – both denied but the raft of bad news has not helped its share price, down from £10 to around £4.

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