Contract analysis

I. Introduction and Reference to Prior Correspondence We write on behalf of our client, Torchlight Mining Corp. ("TMC"), a corporation organized under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, with its registered office at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2, Canada, and its wholly owned subsidiary, Torchlight Mining (U.S.) Inc. ("TMC US"), a Nevada corporation with its principal office

II. Background — The Investigation For the convenience of the Claims Department and to ensure a complete record, we briefly recite the relevant factual background. On February 10, 2022, the Antitrust Division of the United States Department of Justice ("DOJ") formally opened a grand jury investigation into suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, with

III. The Policy and Coverage Obligations A. Policy Identification The Policy at issue is Directors' and Officers' Liability Insurance Policy No. NMI-DO-2021-5547, issued by Northland Mutual Insurance Co. to TMC, with a policy period of July 1, 2021 through July 1, 2022. The Policy has been renewed annually and is the lead layer in a directors' and officers' liability insurance tower. B. Policy Terms The following key

IV. Northland's Reservation-of-Rights Positions — Summary and Contest We turn now to the specific positions articulated in the ROR Letter and address each in turn. A. Individual Coverage (Side A) — Accepted but Incomplete TMC acknowledges and appreciates that the ROR Letter confirmed Northland's acceptance of coverage for defense costs of individual directors and officers under Side A of the Policy. This acknowledgme

V. The Criminal-Act Exclusion Does Not Apply at the Pre-Adjudication Stage A. No Charges Have Been Filed As of the date of this letter, April 28, 2022, no criminal charges of any kind have been filed against TMC, TMC US, or any current or former TMC director, officer, or employee. The Company has received only a grand jury subpoena duces tecum, which is an investigative tool used by federal prosecutors to gather evid

VI. Demand for Coverage and Specific Actions Requested In light of the foregoing, TMC demands that Northland take the following actions:

1. Withdraw or Limit the Reservation of Rights Regarding the Criminal-Act Exclusion. Northland must withdraw its reservation of rights with respect to the criminal-act exclusion, or, at a minimum, acknowledge in writing that the criminal-act exclusion cannot be applied to deny, delay, or reduce defense-cost coverage at the pre-adjudication stage. The exclusion, by its express terms, is not triggered until a final adj

2. Confirm Defense-Cost Advancement for Individual and Entity Insureds. Northland must confirm in writing that it will advance defense costs for both individual insured persons (including, without limitation, Gavin Holt, Sandra Chu, and Thomas Eriksen) and the entity (TMC and TMC US) in connection with the Investigation, subject only to the Policy's USD 2,500,000 retention.

3. Process and Pay Defense-Cost Invoices. Northland must process and pay defense-cost invoices submitted by Calderwood & Harkness LLP, Redstone Digital Forensics Inc., Hargrove Forensic Advisory LLC, and any other approved vendors in a timely manner and in accordance with the Policy's terms, including any applicable claims-handling guidelines.

4. Refrain from Applying the Criminal-Act Exclusion Prematurely. Northland must refrain from asserting the criminal-act exclusion, or any other conduct exclusion, to deny, delay, or reduce defense-cost payments pending a final adjudication of the underlying matter. TMC emphasizes that it has already incurred, and continues to incur, substantial defense costs in connection with the Investigation. The Investigation is

VII. Reservation of TMC's Rights TMC expressly reserves all of its rights under the Policy and at law, including but not limited to the following: • The right to seek a judicial declaration, in a court of competent jurisdiction in Canada or the United States, that Northland is obligated to provide defense-cost coverage under the Policy in connection with the Investigation; • The right to claim breach of Northland's d

VIII. Request for Prompt Response TMC requests that Northland respond in writing to this letter within fourteen (14) calendar days — that is, on or before May 12, 2022 — confirming Northland's coverage position with respect to each of the matters raised herein. Specifically, TMC requests that Northland confirm (a) its acceptance of the obligation to advance defense costs for both individual insured persons and the en

IX. Closing TMC appreciates Northland's attention to this matter and sincerely hopes that this dispute can be resolved promptly and amicably, without the need for litigation. The Policy was purchased to provide protection to the Company and its directors and officers in precisely the circumstances now presented. TMC expects Northland to honor its contractual obligations and to act in good faith in the administration

1. Copy of Calderwood & Harkness LLP notice letter to Northland Mutual Insurance Co. dated March 4, 2022

2. Copy of Northland Mutual Insurance Co. reservation-of-rights letter dated April 14, 2022 (for reference) cc: Priya Anand, General Counsel Torchlight Mining Corp. 200 Bay Street, Suite 3400 Toronto, ON M5J 2J2, Canada Howard Bellamy, Esq. Calderwood & Harkness LLP One Liberty Plaza, 50th Floor New York, NY 10006 C&H Matter No. 1039-00001