Contract analysis

I. EXECUTIVE SUMMARY The purpose of this memorandum is to present to Torchlight Mining Corp. ("TMC" or the "Company") the proposed design of TMC's Enhanced Antitrust Compliance Program (the "Program"). The Program has been developed jointly by Calderwood & Harkness LLP ("C&H") and Meridian Compliance Partners LLC ("Meridian"), which was retained by TMC on August 1, 2023, with Claudia Ferraro serving as engagement lea

II. BACKGROUND AND NEED FOR ENHANCED COMPLIANCE PROGRAM A. The Existing Compliance Framework and Its Deficiencies TMC adopted its initial antitrust compliance policy in approximately 2014, shortly after the Company's listing on the NYSE. At the time of adoption, the policy consisted of a general statement of the Company's commitment to compliance with applicable competition laws, a brief summary of prohibited conduct

1. No Annual Antitrust Training Since 2018. The last antitrust compliance training conducted by TMC occurred in approximately the first quarter of 2018 — roughly five years before the commencement of the DOJ investigation. No training was conducted in 2019, 2020, 2021, or 2022. The 2018 training was a single one-hour webinar made available to commercial personnel in the U.S. Specialty Minerals Division; attendance wa

2. No Monitoring Protocols for Trade-Association Interactions. Despite the fact that TMC personnel regularly attended quarterly conferences hosted by the North American Specialty Minerals Council ("NASMC"), headquartered in Arlington, Virginia, TMC had no policies, protocols, or monitoring mechanisms governing employee participation in trade-association events. There were no pre-event briefings, no limitations on the

3. No Audit or Monitoring of Competitor Contacts. TMC had no system in place for tracking, logging, reviewing, or auditing contacts between TMC employees and personnel of competing companies. There was no requirement that employees report competitor contacts, no pre-approval mechanism for competitor interactions, and no centralized record of such interactions.

4. No Centralized Reporting or Tracking Mechanism. Relatedly, TMC lacked any centralized mechanism for the reporting or tracking of interactions between TMC commercial personnel and employees of competitor firms. Individual employees were left to exercise their own judgment as to the propriety of competitor interactions, without guidance, oversight, or documentation requirements.

5. No Designated Compliance Officer with Independent Reporting Authority. TMC did not have a dedicated compliance officer responsible for antitrust compliance. Responsibility for antitrust matters was nominally housed within the General Counsel's office, but no individual was specifically tasked with antitrust compliance oversight, monitoring, or enforcement. There was no individual with independent reporting authori

6. No Whistleblower Hotline Specific to Antitrust Concerns. While TMC maintained a general ethics hotline, there was no reporting mechanism specifically designed for antitrust compliance concerns. The general ethics hotline was not widely publicized, and no antitrust-specific guidance was provided to employees regarding when or how to report potential competition-law violations. These deficiencies, taken together, le

III. PROGRAM GOVERNANCE AND ORGANIZATIONAL STRUCTURE An effective antitrust compliance program requires a governance structure that ensures the Program has sufficient independence, authority, resources, and senior-level support to function effectively. The governance structure proposed below is designed to establish clear lines of accountability, to provide the Chief Compliance Officer with the independence and acces

IV. RISK ASSESSMENT A rigorous, data-driven antitrust risk assessment is the foundation upon which the Program's policies, training, and monitoring activities are built. The risk assessment must identify the specific antitrust risks facing TMC, prioritize those risks based on likelihood and potential impact, and inform the allocation of compliance resources to the areas of greatest vulnerability. A. Methodology A com

V. ANTITRUST COMPLIANCE POLICIES The Program establishes a comprehensive suite of antitrust compliance policies designed to address the specific vulnerabilities and risks identified in the internal investigation and the risk assessment. These policies replace TMC's 2014 antitrust compliance policy in its entirety and shall be binding on all TMC employees, officers, directors, and, where applicable, contractors and ag

VI. TRAINING PROGRAM Training is a critical component of any effective compliance program. The DOJ evaluates the quality, frequency, and reach of compliance training in assessing a program's effectiveness. TMC's failure to conduct any antitrust training since 2018 was one of the most significant deficiencies identified in the internal investigation, and the Program's training component is designed to be comprehensive

VII. REPORTING MECHANISMS AND WHISTLEBLOWER PROTECTIONS The absence of effective reporting mechanisms was a significant factor in the failure to detect the anticompetitive conduct at issue. The Program establishes multiple reporting channels designed to encourage and facilitate the prompt reporting of potential antitrust violations, and provides robust protections against retaliation for reporters. A. Antitrust-Speci

VIII. MONITORING AND AUDITING A compliance program is only as effective as its monitoring and enforcement mechanisms. The DOJ evaluates the robustness and regularity of a company's compliance monitoring as a key indicator of program sincerity and effectiveness. The Program establishes a multi-layered monitoring and auditing framework designed to detect potential violations and program weaknesses on a continuous and s