Contract analysis

I. EXECUTIVE SUMMARY Calderwood & Harkness LLP ("Calderwood & Harkness" or "C&H") was retained by Torchlight Mining Corp. ("TMC" or the "Company") on February 18, 2022, to represent TMC in connection with a United States Department of Justice ("DOJ") Antitrust Division grand jury investigation (Grand Jury No. GJ-22-0194, United States District Court for the Northern District of California, San Francisco Division) int

1. Gavin Holt (Former VP, U.S. Specialty Minerals Sales). The investigation identified substantial documentary evidence that Gavin Holt, who served as Vice President of U.S. Specialty Minerals Sales from 2016 until his resignation effective September 30, 2021, engaged in direct pricing communications with counterparts at the two other companies under DOJ scrutiny — Carl Edgerton, Vice President of Sales at Ridgecrest

2. Sandra Chu (Director, Pricing Analytics). The investigation found that Sandra Chu, Director of Pricing Analytics in the U.S. Specialty Minerals Division, received instructions from Holt to adjust TMC's published price lists on at least 12 occasions during the conspiracy period that correlated with competitor price movements. However, the investigation identified no direct evidence that Chu was aware of the inter-c

3. Thomas Eriksen (Regional Sales Manager, Western Region). Eriksen attended four NASMC quarterly conferences during the conspiracy period at which DOJ suspects anticompetitive "side meetings" occurred. The evidence of Eriksen's direct participation in anticompetitive conduct is ambiguous. The document review did not identify any VaultChat messages or other direct communications implicating Eriksen, and Eriksen denie

4. C-Suite and Board of Directors. The internal investigation found no evidence that TMC's senior executive management — including Chief Executive Officer Søren Dalmqvist, General Counsel Priya Anand, and Chief Financial Officer 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 the U

5. Compliance Program Deficiencies. TMC's existing antitrust compliance program, originally adopted in approximately 2014, was found to be materially inadequate. No annual antitrust training had been conducted since 2018 — meaning that no training occurred during a substantial portion of the alleged conspiracy period. The program included no mechanism for monitoring trade-association interactions, no system for audit

II. SCOPE AND METHODOLOGY OF THE INTERNAL INVESTIGATION A. Engagement and Investigation Framework Calderwood & Harkness was engaged by TMC on February 18, 2022, pursuant to an engagement letter executed by Priya Anand, General Counsel, on behalf of TMC, and by Howard Bellamy, Partner, Calderwood & Harkness (New York office), as billing partner for the engagement. The engagement letter provides for hourly billing at t

1. Litigation Hold On March 1, 2022, at Calderwood & Harkness's direction, TMC's General Counsel issued a company-wide litigation hold notice to all TMC personnel, instructing employees to preserve all documents — whether in electronic or hard-copy form — potentially relevant to the DOJ investigation, including but not limited to communications with competitors, pricing data, trade-association records, and customer c

2. Forensic Data Collection Redstone Digital Forensics Inc. ("Redstone") was retained on March 15, 2022, to perform forensic data collection, processing, hosting, and managed document review. The Redstone engagement was managed by Project Director Neil Ashworth, with day-to-day coordination by Senior Project Manager Laura Chin. Redstone's scope of work included the following: • Forensic imaging and collection of data

3. Document Review Statistics The total document universe collected, processed, and available for review comprised approximately 555,000 documents, representing over 3.2 million pages of material. Of this total: • Approximately 487,000 documents were ultimately produced to the DOJ in response to Grand Jury Subpoena No. GJ-22-0194-SD-003. The first rolling production of approximately 42,000 documents was made on April

4. Privilege Review Protocol A privilege review protocol was established on March 10, 2022, and shared with the DOJ by agreement of the parties. The protocol set forth the standards for asserting attorney-client privilege and work-product protection, the procedures for escalating privilege determinations to senior attorneys, and the mechanism for clawback of inadvertently produced privileged materials pursuant to Fed

III. BACKGROUND: THE DOJ INVESTIGATION A. Overview of the Investigation The Antitrust Division of the United States Department of Justice, operating through its San Francisco Field Office, is conducting a grand jury investigation into suspected price-fixing, customer allocation, and bid-rigging in the North American specialty-minerals sector. The investigation is focused on the commercial practices of the three large

1. Ridgecrest Minerals Inc. Ridgecrest Minerals Inc. ("Ridgecrest") is a Delaware corporation headquartered in Denver, Colorado. Ridgecrest is the second-largest North American producer of high-purity feldspar and industrial talc, with fiscal year 2021 revenue of approximately USD 1.92 billion. Ridgecrest is a portfolio company of Marlowe Asset Management Peak Capital Partners LP, a Denver-based private equity firm t

2. Pinnacle Earth Resources Ltd. Pinnacle Earth Resources Ltd. ("Pinnacle") is a corporation organized under the laws of the Province of Ontario, Canada, headquartered in Sudbury, Ontario, with U.S. operations based in Salt Lake City, Utah. Pinnacle ranks among the top five North American producers of rare-earth concentrates and specialty industrial minerals, with fiscal year 2021 revenue of approximately CAD 1.45 bi

IV. THE ALLEGED CONDUCT A. Nature of the Allegations 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 TMC, Ridgecrest, and Pinnacle engaged in agreements to: (i) fix the prices of high-purity feldspar, industrial talc, and rare-earth concentrates sold to U.S. industrial and chemical-manufacturing

1. High-Purity Feldspar — A mineral used in ceramics, glass manufacturing, and specialty coatings. TMC, Ridgecrest, and Pinnacle are among the largest North American producers of high-purity feldspar.

2. Industrial Talc — A mineral used in paints, plastics, paper, and ceramics. TMC and Ridgecrest are the two largest North American producers of industrial talc.

3. Rare-Earth Concentrates — Mineral concentrates containing rare-earth elements used in electronics, magnets, and specialty alloys. Pinnacle is a leading North American producer, with TMC and Ridgecrest maintaining meaningful market positions. The customers affected by the alleged conspiracy are U.S. industrial and chemical-manufacturing companies that purchase these minerals for use in downstream production process

V. FINDINGS REGARDING KEY INDIVIDUALS A. Gavin Holt — Former VP, U.S. Specialty Minerals Sales

1. Background. Gavin Holt joined TMC in 2012 as a Senior Sales Manager in the U.S. Specialty Minerals Division and was promoted to Vice President of U.S. Specialty Minerals Sales in 2016. In that capacity, Holt was responsible for leading TMC's commercial pricing function for the U.S. Specialty Minerals Division, including setting pricing strategy, directing the preparation of published price lists, overseeing custom

2. Retention of Personal Counsel and Fifth Amendment Assertion Upon learning of the DOJ investigation, Holt retained personal counsel — Patrick Dunleavy of Briarcliff Law Group PLLC, San Francisco — on or about June 10, 2022. On June 14, 2022, Holt appeared before the grand jury in the Northern District of California and asserted his privilege against self-incrimination under the Fifth Amendment to the United States

3. Documentary Evidence The documentary evidence implicating Holt is the strongest of any individual examined during the internal investigation. The evidence is principally derived from the VaultChat messaging archives, supplemented by email records, pricing data, and calendar entries. The key findings are as follows: (a) VaultChat Message Analysis. Calderwood & Harkness's analysis of the VaultChat messaging archives

4. Assessment. Gavin Holt is the individual most directly and significantly implicated in the alleged anticompetitive conduct. The documentary evidence — comprising at least 37 VaultChat exchanges spanning more than four years — is substantial and covers all three categories of alleged violations (price-fixing, customer allocation, and bid-rigging). The pricing correlation analysis provides strong econometric corrobo

1. Background. Sandra Chu joined TMC in 2013 as a Pricing Analyst in the U.S. Specialty Minerals Division and was promoted to Director of Pricing Analytics in 2017. In that capacity, Chu reported directly to Gavin Holt and was responsible for maintaining and adjusting TMC's published price lists for the U.S. Specialty Minerals Division, including the preparation of periodic price-list updates, the calculation of cust

2. Interview Findings Chu was interviewed by Calderwood & Harkness on July 18, 2022, at Calderwood & Harkness's San Francisco office. The interview lasted approximately three hours. The following summarizes the key testimony provided by Chu during the interview: • Chu confirmed that she received instructions from Holt to adjust TMC's published price lists on at least 12 occasions during the period from approximately

3. Correlation with Competitor Actions Calderwood & Harkness's analysis of the 12 pricing adjustments identified by Chu confirmed that each of these adjustments correlated with similar or near-simultaneous price movements by Ridgecrest and/or Pinnacle. Specifically, in 10 of the 12 instances, the competitor price movement occurred within 30 days of TMC's adjustment — in some cases within days. This correlation is con

4. Knowledge of Inter-Competitor Communications Despite the correlation between Chu's pricing adjustments and competitor behavior, the internal investigation identified no direct evidence that Chu knew of or suspected the inter-competitor communications that underlay Holt's instructions. Chu was not included in any VaultChat messaging group, did not receive copies of any communications between Holt and Edgerton or Ts

5. Assessment. Based on the evidence reviewed, Sandra Chu appears to be a fact witness who executed pricing instructions from her supervisor without knowledge of their anticompetitive origin. There is no evidence of independent wrongdoing by Chu. While she was an unwitting instrument of the pricing coordination, her actions were consistent with normal execution of management directives in the ordinary course of busin

1. Background. Thomas Eriksen has served as Regional Sales Manager for the Western Region of TMC's U.S. Specialty Minerals Division since 2015. In that capacity, Eriksen is responsible for managing customer relationships and sales activities in the Western United States, including California, Oregon, Washington, Arizona, Nevada, and Utah. Eriksen reports to the Vice President of U.S. Specialty Minerals Sales (the pos

2. Conference Attendance Calderwood & Harkness's analysis of NASMC conference attendance records confirmed that Eriksen attended four NASMC quarterly conferences during the alleged conspiracy period (2017–2021). These conferences were among those identified by the DOJ as events at which anticompetitive side meetings allegedly occurred. Eriksen's attendance at these conferences was documented in TMC's internal travel

3. Interview Findings Eriksen was interviewed by Calderwood & Harkness on July 22, 2022, at Calderwood & Harkness's San Francisco office. The interview lasted approximately two and a half hours. The following summarizes the key testimony provided by Eriksen: • Eriksen stated that he attended NASMC conferences for legitimate business purposes, including networking with customers, staying current on industry trends and

4. Documentary Evidence The document review did not identify any VaultChat messages to or from Eriksen. No emails or other documents directly implicate Eriksen in pricing coordination or any of the three categories of alleged conduct (price-fixing, customer allocation, or bid-rigging). However, certain NASMC conference attendance records and scheduling documents place Eriksen in proximity to — and contemporaneous wit

5. Assessment. The evidence of Eriksen's direct participation in anticompetitive conduct is ambiguous. On one hand, his presence at four NASMC conferences where alleged coordination occurred raises questions, particularly given that Holt — the central figure in the alleged conspiracy — was also present at those events. On the other hand, the absence of any direct communications evidence (no VaultChat messages, no inc

VI. FINDINGS REGARDING C-SUITE AND BOARD KNOWLEDGE A critical question in any corporate antitrust investigation is whether senior management or the board of directors had knowledge of, authorized, or participated in the alleged conduct. The degree of C-suite involvement affects both the severity of potential sanctions and the viability of a cooperation-based resolution with the DOJ. The following sets forth the inter