Contract analysis

I. Purpose and Executive Summary This memorandum outlines the legal obligations of Torchlight Mining Corp. ("TMC" or the "Company") to preserve documents and electronically stored information ("ESI") in connection with the investigation being conducted by the Antitrust Division of the United States Department of Justice ("DOJ") through a grand jury empaneled in the United States District Court for the Northern Distri

II. Legal Framework for Document Preservation A. Duty to Preserve Under Federal Law The duty to preserve documents and ESI arises when an entity reasonably anticipates litigation or a government investigation. The duty is not contingent upon the formal commencement of proceedings; rather, it attaches at the point when the entity knew or should have known that relevant materials might be sought in connection with pend

III. Spoliation Risks and Consequences The consequences of a failure to preserve documents and ESI in the context of a federal grand jury investigation are severe and multifaceted. This section summarizes the principal categories of risk. A. Criminal Sanctions The intentional or reckless destruction of documents relevant to a federal grand jury investigation constitutes a separate and independent criminal offense. Un

IV. Identification of Custodians and Data Sources A. Custodians Calderwood & Harkness, in consultation with TMC's in-house legal team, has identified thirty-four (34) custodians whose documents and ESI are subject to the preservation obligation. The complete list of custodians, together with their respective roles, reporting relationships, and known data sources, is set forth in the Data Collection Protocol and Custo

V. Best Practices for Custodian Compliance A. Communication and Acknowledgment The effectiveness of any litigation hold depends upon the communication of clear, comprehensive instructions to each custodian and the confirmation that those instructions have been received and understood. Every custodian identified in the litigation hold must receive and acknowledge receipt of the hold notice. TMC should maintain a detai

VI. Recommendations for IT Coordination The effective implementation of TMC's preservation obligations requires close coordination between TMC's IT department, TMC's in-house legal team, Calderwood & Harkness, and the e-discovery and forensic collection vendor retained for this matter. This section sets forth specific recommendations for IT coordination. A. Immediate IT Actions TMC's IT department — encompassing both

VII. Coordination with Calvert & Associates LLP (Independent Auditor) TMC's independent auditor, Calvert & Associates LLP (Montreal, Quebec; engagement partner: Daniel Moreau), may require access to certain documents and information relating to the DOJ investigation for purposes of assessing litigation contingencies and determining the adequacy of TMC's litigation reserves under applicable accounting standards, inclu

VIII. Coordination with D&O Insurance Counsel TMC tendered notice of the DOJ investigation to Northland Mutual Insurance Co. on March 4, 2022, under Directors & Officers Liability Policy No. NMI-DO-2021-5547. The primary-layer D&O policy provides an aggregate limit of USD 50 million, subject to a retention (self-insured amount) of USD 2.5 million. Excess coverage is provided by Greystone Specialty Insurance Ltd. (fir

IX. Summary of Recommended Immediate Actions Based on the foregoing analysis, Calderwood & Harkness recommends the following immediate actions. These actions should be treated as urgent priorities and should be completed within the timeframes indicated:

1. Confirm Custodian Acknowledgments. Confirm that all thirty-four (34) identified custodians have acknowledged receipt of the March 1, 2022 litigation hold notices (both the company-wide notice and, where applicable, the supplemental targeted notice to U.S. Specialty Minerals Division personnel). Collect and retain signed acknowledgment forms from each custodian. Target completion: March 10, 2022.

2. Designate IT Point of Contact. Designate a single IT point of contact within TMC (with authority spanning both Canadian and U.S. IT operations) to serve as the primary liaison for all preservation and collection activities with Calderwood & Harkness and Redstone Digital Forensics. Communicate the identity and contact information of the designated individual to Calderwood & Harkness. Target completion: immediate.

3. Suspend Auto-Deletion and Records-Recycling Schedules. Immediately suspend all auto-deletion, auto-purge, recycling, overwriting, and routine destruction schedules across all relevant systems, including corporate email, shared drives, backup tapes, VaultChat, voicemail, and all other data repositories that may contain relevant materials. Document the suspension in writing and provide confirmation to Calderwood & H

4. Provide IT System Inventory. Provide Calderwood & Harkness and Redstone Digital Forensics with a complete inventory of all data systems, servers, backup infrastructure, cloud platforms, and archival media used by the U.S. Specialty Minerals Division and by identified custodians. Target completion: March 10, 2022.

5. Verify Preservation of Gavin Holt's Data. Confirm the preservation status of all data associated with former VP Gavin Holt, including corporate email, shared-drive files, VaultChat data, and any returned company-issued devices. Provide a written certification to Calderwood & Harkness confirming the status of Holt's data and disclosing any deletions or purges that may have occurred since his departure on September

6. Coordinate Personal-Device Collection. Initiate outreach to custodians regarding the voluntary submission of personal devices for forensic imaging, with particular emphasis on devices that may contain VaultChat messages or other business-related data. Coordinate the collection process with Redstone Digital Forensics. Target completion: ongoing, with initial outreach by March 15, 2022.

7. Implement Monitoring. Implement monitoring tools or audit-log review procedures to detect custodian non-compliance with the hold, including bulk deletions, unauthorized modifications, and device resets. Target completion: March 31, 2022.

8. Schedule Quarterly Hold Reminders. Establish a schedule for quarterly hold reminder notices to all custodians. The first quarterly reminder should be issued on or about June 1, 2022. Calderwood & Harkness will assist in drafting the reminder notices. Target completion: calendar reminders set by March 15, 2022.

9. Freeze Planned IT Projects. Identify and freeze any planned data-migration projects, server decommissioning activities, system upgrades, or hardware replacements that could affect preserved data. No such projects should proceed without prior written coordination with Calderwood & Harkness. Target completion: immediate.

X. Continuing Obligations and Contact Information The preservation obligations described in this memorandum will remain in effect until Calderwood & Harkness provides written notice that the litigation hold has been modified or lifted. No modification or lifting of the hold will occur without a careful assessment of the status of the investigation and the legal requirements for continued preservation. TMC should not