Contract analysis

I. PURPOSE AND SCOPE OF THIS MEMORANDUM This privileged memorandum is submitted to the Audit Committee of the Board of Directors of Torchlight Mining Corp. ("TMC" or the "Company") for the purpose of providing a comprehensive status update on the pending United States Department of Justice ("DOJ") Antitrust Division grand jury investigation captioned Grand Jury No. GJ-22-0194, pending in the United States District Co

II. EXECUTIVE SUMMARY On February 10, 2022, the Antitrust Division of the United States Department of Justice formally opened a grand jury investigation — Grand Jury No. GJ-22-0194, empaneled in the United States District Court for the Northern District of California, San Francisco Division — into suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector. The investiga

III. PROCEDURAL HISTORY AND CURRENT POSTURE A. Timeline of Key Events The following timeline sets forth the principal events in the investigation from its inception through the date of this memorandum. C&H has verified these dates through its own records, correspondence with the DOJ, and the Company's internal records. Approximately September 15, 2021 — Cascade Chemical Supply Co. Cooperation Agreement. Cascade Chemi

IV. DOCUMENT PRODUCTION PROGRESS A. First Subpoena (GJ-22-0194-SD-003) Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 was served on TMC on February 14, 2022. As noted above, C&H acknowledged receipt of the subpoena and obtained from the DOJ a 60-day extension of the initial return date to permit the Company to implement appropriate data-collection and review protocols. The subpoena calls for the production of

V. INTERNAL INVESTIGATION UPDATE A. Scope and Methodology C&H's internal investigation plan was established on March 5, 2022, in consultation with TMC's General Counsel, and approved by the Audit Committee. The investigation encompasses four principal workstreams: (i) a comprehensive review of documents collected in connection with the grand jury subpoena, with a particular focus on communications and records that be

VI. FINANCIAL-RESERVE ANALYSIS A. Current Reserve TMC established a litigation reserve of USD 30 million in connection with the DOJ investigation. The reserve was first established and publicly disclosed in TMC's fiscal year 2021 annual report, filed on March 28, 2022 on SEDAR+ and with the SEC on Form 40-F. The reserve was established under the applicable accounting standards, specifically ASC 450 (Contingencies) un

VII. D&O INSURANCE COVERAGE STATUS A. Policy Details and Notice TMC maintains directors-and-officers liability insurance through the following carriers: Lead Policy. The lead D&O policy is written by Northland Mutual Insurance Co. (Toronto), Policy No. NMI-DO-2021-5547. The policy period is July 1, 2021 through July 1, 2022, and the policy is renewed annually. The policy provides an aggregate limit of liability of US