Contract analysis

I. EXECUTIVE SUMMARY The purpose of this memorandum is to provide Torchlight Mining Corp. ("TMC") — through its Chief Executive Officer, Søren Dalmqvist, and its General Counsel, Priya Anand — with a comprehensive initial assessment of the grand jury investigation commenced by the Antitrust Division of the United States Department of Justice ("DOJ"), the scope of the grand jury subpoena served on TMC, a preliminary r

II. BACKGROUND AND INVESTIGATION TIMELINE A. Origin of the Investigation Based on information available to us at this time — including details gleaned from the face of the grand jury subpoena, our initial conversations with DOJ counsel, and publicly available information — the investigation originated with the cooperation of Cascade Chemical Supply Co., a Washington state corporation headquartered in Spokane, Washing

III. SCOPE OF GRAND JURY SUBPOENA NO. GJ-22-0194-SD-003 A. Document Categories Requested Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 is a comprehensive and broadly drafted subpoena that requests the production of documents across a wide range of categories. The principal categories of documents and information requested are as follows:

1. Product-Related Documents. All documents relating to the pricing, sale, marketing, production, and distribution of high-purity feldspar, industrial talc, and rare-earth concentrates in the United States and North America, including but not limited to contracts, invoices, purchase orders, shipping records, production schedules, inventory records, and sales reports, for the period from January 1, 2015, through the d

2. Competitor Communications. All communications between any TMC employee, officer, director, or agent and any employee, officer, director, or agent of Ridgecrest Minerals Inc. and Pinnacle Earth Resources Ltd. (or any of their respective subsidiaries or affiliates), relating to pricing, pricing strategies, price lists, price increases or decreases, customer allocation, geographic market allocation, bid proposals, bi

3. Internal Pricing Documents. All internal pricing analyses, price lists, price matrices, price-change notifications, price-change authorizations, pricing-committee meeting records, pricing-approval workflows, and any other documents reflecting TMC's process for setting, adjusting, or approving prices for the three product categories.

4. Trade Association Documents. All documents related to TMC's membership in, attendance at, or participation in trade associations, industry groups, and industry conferences, with specific reference to the North American Specialty Minerals Council (NASMC) and its quarterly conferences and events, including but not limited to attendance records, registration confirmations, meeting agendas, meeting minutes, presentati

5. Customer Contracts and Bids. All customer contracts, customer proposals, bid submissions, requests for proposals (RFPs), requests for quotations (RFQs), and related communications for the three product categories, including documents reflecting the award or non-award of customer accounts or supply contracts.

6. Personnel Records. Personnel files, employment agreements, separation agreements, non-competition agreements, non-disclosure agreements, and organizational charts for TMC's U.S. Specialty Minerals Division, including but not limited to the files of any individual who held a position involving pricing, sales, business development, or competitor relations during the relevant period.

7. Electronic Communications — All Platforms. All communications via any medium or platform, including but not limited to corporate email, personal email used for company business, instant messaging platforms, text messages, and encrypted messaging applications, with specific reference to the VaultChat application. The subpoena expressly identifies VaultChat by name and requests all communications transmitted or rece

IV. KEY INDIVIDUALS — PERSONS OF INTEREST The following individuals have been identified, through our preliminary review of available documents and information, as persons of particular interest in connection with the DOJ investigation. This section provides background on each individual and our preliminary assessment of their relevance and potential exposure. A. Gavin Holt — Former Vice President, U.S. Specialty Min

V. PRELIMINARY LEGAL FRAMEWORK AND EXPOSURE ASSESSMENT A. Applicable Legal Framework The alleged conduct at the center of the DOJ investigation — price-fixing, market allocation, and bid-rigging among horizontal competitors — constitutes a criminal violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. Section 1 prohibits "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in

1. No C-Suite or Board Involvement. Based on our review to date, there is no evidence that TMC's senior leadership — including CEO Søren Dalmqvist, General Counsel Priya Anand, CFO Richard Fong, or any member of the Board of Directors — had knowledge of, authorized, or participated in the alleged anticompetitive conduct. The conduct appears to have been confined to a small number of individuals within the U.S. Specia

2. Departure of Principal Wrongdoer. Gavin Holt, the individual most directly implicated in the alleged conduct, departed TMC effective September 30, 2021 — prior to the commencement of the grand jury investigation. His departure reduces the ongoing risk of continued anticompetitive conduct and demonstrates that TMC is not continuing to employ or protect the individual responsible.

3. Existing Compliance Program. TMC adopted an antitrust compliance policy in approximately 2014, which reflects an institutional commitment to lawful competitive practices. However, we note candidly that C&H's preliminary assessment of the compliance program reveals significant gaps: annual antitrust compliance training was not conducted after approximately 2018; the program did not include monitoring of trade-assoc

4. Early Engagement of Counsel and Cooperative Posture. TMC engaged C&H promptly upon receipt of the subpoena and has demonstrated a willingness to cooperate fully with the DOJ. Early engagement of experienced antitrust counsel, prompt issuance of litigation holds, and a forthcoming approach to document production are all factors that the DOJ considers favorably in assessing cooperation credit.

VI. DOCUMENT PRESERVATION AND COLLECTION STATUS A. Litigation Hold Upon C&H's engagement, we worked with General Counsel Priya Anand to implement a comprehensive litigation hold designed to ensure the preservation of all documents and electronically stored information potentially relevant to the DOJ investigation. The following steps have been taken: • Company-Wide Litigation Hold (March 1, 2022): A company-wide liti

VII. INSURANCE AND FINANCIAL CONSIDERATIONS A. Directors & Officers Liability Insurance TMC maintains a Directors & Officers Liability Insurance policy with Northland Mutual Insurance Co. ("Northland"), Policy No. NMI-DO-2021-5547. The policy period is July 1, 2021, through July 1, 2022, subject to annual renewal. C&H tendered notice of the DOJ investigation to Northland on March 4, 2022, in accordance with the polic

VIII. RECOMMENDED IMMEDIATE NEXT STEPS Based on the foregoing analysis, C&H recommends that TMC take the following immediate actions. Each recommendation is explained in further detail below. A. Internal Investigation C&H recommends that TMC authorize the launch of a comprehensive internal investigation to determine the scope and nature of the alleged anticompetitive conduct, identify all individuals who participated

1. Sandra Chu — Director, Pricing Analytics: As discussed in Section IV.B, Ms. Chu is a critical fact witness regarding TMC's internal pricing processes and the instructions she received from Gavin Holt. Her interview should be conducted at the earliest practicable date.

2. Thomas Eriksen — Regional Sales Manager (Western Region): As discussed in Section IV.C, Mr. Eriksen attended multiple NASMC conferences during the alleged conspiracy period and may have direct knowledge of interactions between TMC personnel and competitor representatives at those events.

3. Additional U.S. Specialty Minerals Division Personnel: Other individuals within the Division who may have knowledge of pricing practices, competitor interactions, or trade-association activities will be identified and prioritized as the investigation progresses.

4. Gavin Holt — Former VP, U.S. Specialty Minerals Sales: C&H will attempt to arrange a voluntary interview with Mr. Holt through any available channels, including direct outreach and, if he retains counsel, through his counsel. We recognize, however, that Mr. Holt is under no obligation to cooperate and may decline.

5. Priya Anand — General Counsel: Ms. Anand's interview will focus on the history of TMC's antitrust compliance program, the steps taken to preserve documents upon receipt of the subpoena, and any knowledge she may have regarding the pricing practices of the U.S. Specialty Minerals Division.

6. Richard Fong — Chief Financial Officer: Mr. Fong's interview will address the delegation of pricing authority within TMC, the financial controls applicable to the U.S. Specialty Minerals Division, and the financial data necessary for the affected-commerce analysis. B. Forensic Economics Expert C&H recommends that TMC retain a forensic accounting and economics expert to conduct a rigorous analysis of pricing patter