Contract analysis

I. Introduction This firm serves as counsel to Torchlight Mining Corp. ("TMC") in connection with the above-referenced matter. We write in reference to the Non-Prosecution Agreement between TMC and the United States Department of Justice, Antitrust Division (the "Division"), the principal terms of which were agreed in principle on April 8, 2024, with formal execution anticipated in early May 2024 (the "NPA"). As you

II. Background A. The Investigation This matter arises from a grand jury investigation initiated by the Division through Grand Jury No. GJ-22-0194, empaneled in the United States District Court for the Northern District of California, into suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The investigation has focused on suspected price-fixing, market allocation, and bid-rigging in the No

III. Proposed Monitor: Meridian Compliance Partners LLC A. Firm Overview Meridian Compliance Partners LLC ("Meridian") is a regulatory-compliance consulting firm headquartered at 1100 Connecticut Avenue NW, Suite 730, Washington, DC 20036. Founded in 2011, Meridian specializes in antitrust and competition compliance, with particular expertise in designing, implementing, and monitoring corporate compliance programs in

1. Reporting Obligations. Upon commencement of the monitorship, Meridian's reporting obligations will run directly to the Division — not to TMC, Calderwood & Harkness, or any other party. Meridian will submit all reports simultaneously to the Division and to TMC, unless the Division directs otherwise, but Meridian's primary duty of candor and loyalty will be owed to the Division and to the public interest.

2. Separate Engagement Agreement. Meridian will enter into a new, separate engagement agreement directly with TMC — at TMC's expense — under terms reviewed and approved by the Division. The engagement agreement will expressly provide that Meridian's obligations are owed to the Division and that TMC may not terminate or modify the engagement without the Division's prior written consent.

3. No Advocacy on Behalf of TMC. Meridian will not serve as TMC's advocate or consultant during the monitor term. Meridian will not advise TMC on how to respond to monitor findings or recommendations except to the extent that providing such guidance is necessary to enable TMC to remediate identified deficiencies.

4. Separate Billing and No Cross-Subsidization. All monitorship fees and expenses will be billed and accounted for separately from the prior compliance-design engagement. There will be no cross-subsidization of fees, and Meridian's monitorship compensation will not be contingent on any outcome favorable to TMC.

5. Duty of Candor. The engagement agreement will include an express duty of candor to the Division, requiring Meridian to report all material findings — including adverse findings — promptly and completely to the Division. We believe that these structural safeguards, combined with Meridian's strong track record of independent service and Ms. Ferraro's personal reputation for integrity and objectivity, are sufficient

IV. Proposed Scope of Work The proposed scope of work for the monitorship is designed to enable the monitor to carry out the specific oversight obligations set forth in Section 9 of the NPA and to provide the Division with comprehensive, reliable, and timely information regarding TMC's compliance performance throughout the monitor term. The scope of work is organized into four principal categories, as set forth below

1. Antitrust Compliance Policies and Procedures. A thorough review of all antitrust compliance policies and procedures adopted or revised by TMC in connection with the Enhanced Antitrust Compliance Program, including the TMC Antitrust Compliance Policy, the Competitor Contact Protocol, the Trade Association Interaction Guidelines, the Compliance Hotline and Internal Reporting Policy, and all related standard operatin

2. Chief Compliance Officer Mandate and Resources. An assessment of the mandate, authority, reporting lines, staffing, and resource allocation of TMC's newly appointed independent Chief Compliance Officer, including whether the Chief Compliance Officer has unfettered access to the Board of Directors and the Audit Committee, consistent with the requirements of the NPA.

3. Training Programs. A detailed assessment of the adequacy, content, and delivery methodology of TMC's antitrust compliance training programs, including the mandatory annual antitrust training required for all commercial, sales, and pricing personnel and for all personnel who attend industry trade-association events or who have material contact with competitor personnel. The monitor will review training curricula, a

4. Competitor-Contact Protocols and Trade-Association Interaction Guidelines. A review of TMC's protocols governing contacts and communications with competitors, including pre-approval and post-contact reporting requirements. The monitor will also review TMC's guidelines for participation in industry trade associations, including the North American Specialty Minerals Council ("NASMC") and any similar industry bodies,

5. Hotline and Internal-Reporting Mechanisms. A review of TMC's compliance hotline and other internal-reporting mechanisms, including the independence and confidentiality of the hotline, the procedures for receiving, documenting, escalating, and investigating reports, and the anti-retaliation protections afforded to reporting employees.

6. Internal Audit Function. An assessment of TMC's internal audit function as it relates to antitrust compliance, including the scope, frequency, methodology, and reporting of antitrust-specific audit activities.

7. Remediation of Identified Deficiencies. An evaluation of the corrective measures implemented to address the specific compliance deficiencies identified during the internal investigation that preceded the NPA negotiations and that were detailed in Meridian's September 15, 2023 compliance program proposal. These deficiencies included, but were not limited to: (a) the absence of mandatory annual antitrust compliance

1. Periodic Compliance Reviews. At least quarterly, the monitor will conduct a structured review of TMC's adherence to each component of the Enhanced Antitrust Compliance Program, including policies, procedures, training, reporting, and audit activities. The monitor will employ a standardized assessment framework to ensure consistency and comparability across review periods.

2. Training Monitoring. The monitor will review employee training completion records on at least a quarterly basis to confirm that all personnel in covered categories have completed mandatory training within the required timeframes. The monitor will also periodically review and evaluate training content to ensure it remains current, relevant, and consistent with the NPA requirements.

3. Communications Sampling and Review. The monitor will conduct periodic sampling and review of communications by TMC commercial, sales, and pricing personnel for compliance with competitor-contact protocols. This review will encompass email communications, instant messages, and — importantly — usage of encrypted messaging applications (such as Meridian Services Inc., Signal, and similar platforms), which the interna

4. Industry Event Monitoring. The monitor will attend, or review detailed records from, relevant industry events attended by TMC personnel, including NASMC quarterly conferences, regional trade-association meetings, and any other industry gatherings at which TMC personnel are likely to interact with competitor personnel. The monitor will review pre-event briefings, post-event reports, and any contemporaneous notes or

5. Personnel Interviews. The monitor will conduct periodic interviews with TMC personnel at all levels of the U.S. Specialty Minerals Division and other business units with material exposure to antitrust risk. Interviews will be conducted on a rotating basis, with priority given to personnel in senior commercial, sales, pricing, and business-development roles, as well as to personnel who have direct contact with comp

6. Internal Investigations and Disciplinary Actions. The monitor will review all internal investigations and disciplinary actions initiated or completed by TMC during the monitor term that relate to antitrust compliance. The monitor will assess the thoroughness, timeliness, and independence of such investigations and the proportionality and consistency of any disciplinary measures imposed.

7. Compliance Hotline Reports. The monitor will review all new allegations, complaints, or reports received through TMC's compliance hotline during the monitor term that are relevant to antitrust conduct. The monitor will assess TMC's handling of such reports, including the timeliness of investigation, the adequacy of follow-up, and the outcomes. C. Annual Compliance Certification Review Under the terms of the NPA, T

V. Proposed Reporting Schedule A. Reports to the DOJ The monitor proposes to deliver the following reports to the Division on the schedule set forth below. All report dates are calculated from the assumed NPA execution date of May 6, 2024, and will be adjusted pro rata if the actual execution date differs. Each report will be submitted to the Division in writing and will be accompanied by a cover letter from the Enga

VI. Proposed Fee Structure A. Hourly Rates Meridian proposes the following hourly rate schedule for the monitorship engagement: These rates are consistent with Meridian's standard rate schedule for government-mandated monitorship engagements and are in line with rates approved by the Division in comparable matters. We note that Meridian's rates reflect the specialized expertise required for this type of engagement an

VII. Proposed Term Consistent with the terms of the NPA, the proposed term of the monitorship is two (2) years from the date of NPA execution. Assuming NPA execution on or about May 6, 2024, the monitorship would commence on May 6, 2024, and conclude on May 6, 2026. We note that TMC's cooperation obligations under the NPA extend for a full three (3) years from the date of NPA execution — that is, through approximatel

VIII. Proposed Process for DOJ Approval We respectfully request that the Division confirm its approval of Meridian Compliance Partners LLC, with Claudia Ferraro serving as Engagement Lead, as the independent compliance monitor for the Torchlight Mining Corp. NPA. In order to ensure that the monitorship can commence promptly upon NPA execution, we propose the following timeline:

1. Division Review of This Proposal. The Division will review the proposal set forth in this letter, together with the enclosed supporting materials, and will communicate any questions, comments, or requested modifications to Calderwood & Harkness.

2. DOJ Approval. The Division will confirm its written approval of Meridian as the independent compliance monitor by the date of NPA execution (approximately May 6, 2024), or as soon thereafter as practicable.

3. Finalization of Monitor Engagement Agreement. Upon receipt of the Division's approval, Calderwood & Harkness will work with the Division and with Meridian to finalize the monitor engagement agreement, incorporating the specific scope, reporting, fee, and independence terms outlined in this letter and any modifications required by the Division. A draft of the proposed engagement agreement is enclosed herewith as En

4. Commencement of Monitorship. The monitorship will commence immediately upon execution of the NPA and the finalization of the monitor engagement agreement, whichever occurs later. We are prepared to accommodate any modifications to this timeline that the Division deems appropriate, and we are available to meet with the Division at any time to discuss the proposal in further detail.

IX. Conclusion TMC is committed to full and good-faith compliance with the NPA and to the success of the Enhanced Antitrust Compliance Program. TMC takes seriously the compliance failures that gave rise to this matter and has invested substantial resources in designing and implementing a comprehensive remediation program that will ensure that such failures do not recur. TMC believes that Meridian Compliance Partners