Contract analysis

I. Purpose This memorandum confirms that formal notice letters have been dispatched to the two excess-layer carriers in Torchlight Mining Corp.'s ("TMC") directors-and-officers ("D&O") liability insurance tower in connection with the investigation initiated by the Antitrust Division of the United States Department of Justice ("DOJ") through Grand Jury No. GJ-22-0194, empaneled in the United States District Court for

II. Background A. The Investigation On February 10, 2022, the Antitrust Division of the United States Department of Justice formally opened a federal grand jury investigation into suspected antitrust violations in the North American specialty-minerals sector. The investigation, proceeding before Grand Jury No. GJ-22-0194, empaneled in the Northern District of California, San Francisco Division, is focused on suspecte

III. Excess-Layer Notification Details A. Notice to Greystone Specialty Insurance Ltd. (Layer 2) On March 7, 2022, Calderwood & Harkness LLP, on behalf of TMC, dispatched a formal notice letter to Greystone Specialty Insurance Ltd. in connection with the DOJ grand jury investigation. The particulars of the notice are as follows: Date of Notice Letter: March 7, 2022 Carrier: Greystone Specialty Insurance Ltd. Carrier

IV. Rationale for Prompt Notification of Excess Layers Although the excess layers will not be triggered unless and until the underlying limits are exhausted—the Greystone Layer 2 will not attach until the Northland Mutual primary-layer aggregate limit of USD 50,000,000 has been exhausted, and the Sentinel Re Layer 3 will not attach until the combined primary and Layer 2 limits of USD 75,000,000 have been exhausted—pr

V. Copies of Notice Letters Copies of both excess-layer notice letters—the March 7, 2022 letter to Greystone Specialty Insurance Ltd. and the March 7, 2022 letter to Sentinel Re Ltd.—are maintained in the firm's matter file under Matter No. 1039-00001. The original letters, together with courier tracking information and email transmission receipts, are preserved in the "Insurance — Carrier Notices" subfolder of the e

VI. Next Steps The following action items remain outstanding and should be monitored in the near term:

1. Monitor for Acknowledgment of Receipt. We are awaiting acknowledgment of receipt from both Greystone Specialty Insurance Ltd. and Sentinel Re Ltd. Upon receipt of confirmation from each carrier (whether via courier delivery confirmation, email acknowledgment, or written correspondence), we will docket any response deadlines specified in the respective policies or in the carrier's acknowledgment. If we do not recei

2. Assess Impact of Primary Carrier's Reservation of Rights. Upon receipt of Northland Mutual's anticipated reservation-of-rights letter, we will assess whether the specific coverage defenses or exclusions raised by the primary carrier affect the excess layers. Because both the Greystone and Sentinel Re policies follow form to the Northland Mutual primary policy, any reservation of rights by the primary carrier—parti

3. Coordinate with Broader D&O Coverage Analysis. A comprehensive D&O coverage analysis memorandum is currently being prepared by the firm's insurance coverage team. That memorandum, which is targeted for completion by March 20, 2022, will assess in detail the applicability of the regulatory/criminal-act exclusion across all three layers of the tower, the scope of entity-versus-individual coverage, the allocation of

4. Update This Memorandum. This memorandum will be updated if and when any carrier in the D&O tower responds with a formal coverage determination, a reservation-of-rights letter, a denial of coverage, or any other material communication relating to TMC's notice.

VII. Conclusion Formal notice has been timely provided to both excess-layer carriers in Torchlight Mining Corp.'s directors-and-officers liability insurance tower—Greystone Specialty Insurance Ltd. (Layer 2) and Sentinel Re Ltd. (Layer 3)—in connection with the DOJ Antitrust Division grand jury investigation (Grand Jury No. GJ-22-0194, N.D. Cal.). Both notice letters were dispatched on March 7, 2022, three days after