Contract analysis

I. Purpose and Scope of Memorandum The purpose of this memorandum is to provide the responsible partner and the defense team with a comprehensive summary of all known facts, the applicable legal framework, and preliminary defense strategy considerations in connection with the newly opened U.S. Department of Justice ("DOJ") Antitrust Division grand jury investigation affecting our client, Torchlight Mining Corp. ("TMC

II. Client Background A. Torchlight Mining Corp. — Corporate Overview Torchlight Mining Corp. ("TMC" or "Torchlight") is a diversified mining and specialty-minerals company incorporated under the Canada Business Corporations Act ("CBCA"), bearing CBCA Corporation No. 7841526-1. TMC's registered office is located at 200 Bay Street, Suite 3400, Toronto, Ontario M5J 2J2, Canada. The company is publicly listed on the Tor

III. The Investigation — Procedural History to Date A. Cascade Chemical Supply Co. — Triggering Event The DOJ investigation appears to have been triggered by the cooperation of Cascade Chemical Supply Co. ("Cascade"), a Washington state corporation headquartered at 901 West Riverside Avenue, Suite 300, Spokane, Washington 99201. Cascade operates as a downstream distributor and processor of specialty minerals, purchas

IV. Parties to the Investigation A. U.S. Department of Justice — Antitrust Division The investigation is being conducted by the Criminal Enforcement Section of the DOJ Antitrust Division. The lead prosecutors assigned to the matter are: Denise Kowalski, Trial Attorney, Antitrust Division, San Francisco Field Office. Ms. Kowalski is the primary day-to-day contact for defense counsel and is expected to lead the grand j

V. The Alleged Conduct A. Overview of the Suspected Conspiracy Based on the grand jury subpoena, preliminary information from TMC's General Counsel, and our analysis of the available facts, the DOJ alleges that from approximately January 2017 through at least August 2021 — a period of approximately four years and eight months — senior commercial personnel at three companies engaged in a conspiracy to restrain trade i

1. Price-Fixing. The participants are alleged to have agreed to fix, raise, stabilize, or maintain prices for high-purity feldspar, industrial talc, and rare-earth concentrates sold to U.S. industrial and chemical-manufacturing customers. The alleged price-fixing is believed to have involved coordinated price increases, agreed-upon minimum prices, and the exchange of competitively sensitive pricing information.

2. Customer Allocation. The participants are alleged to have agreed to allocate customers among the three producers, dividing the U.S. market for the affected products so as to reduce competition for individual customer accounts.

3. Bid-Rigging. The participants are alleged to have agreed to rig bids for supply contracts, including agreements regarding which producer would submit the winning bid and at what price, with other producers submitting complementary (intentionally non-competitive) bids or refraining from bidding altogether. If established, each of these categories of conduct constitutes a per se violation of Section 1 of the Sherman

VI. Legal Framework A. Section 1 of the Sherman Antitrust Act (15 U.S.C. § 1) The cornerstone of the DOJ's investigation is Section 1 of the Sherman Antitrust Act, which provides: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

Section 1 criminalizes agreements, combinations, or conspiracies in restraint of trade. The statute requires proof of (1) an agreement (2) among two or more parties (3) that unreasonably restrains trade (4) in or affecting interstate or foreign commerce. Critically, the three categories of conduct alleged in this investigation — price-fixing, customer allocation, and bid-rigging — are treated as per se violations of

VII. TMC's Existing Antitrust Compliance Program Based on preliminary information obtained from General Counsel Priya Anand, TMC adopted an antitrust compliance policy in approximately 2014. The policy was intended to educate TMC personnel on antitrust law, prohibit anticompetitive conduct, and establish protocols for competitor contacts and trade-association interactions. However, our preliminary assessment indicate

VIII. Preliminary Defense Strategy Considerations A. Cooperation as the Primary Strategic Pathway As discussed above, full leniency under the DOJ's Corporate Leniency Policy is unavailable to TMC because Cascade Chemical Supply Co. has already secured a cooperation agreement. However, TMC has a meaningful opportunity to achieve a favorable outcome through proactive cooperation aimed at securing a non-prosecution agre