Contract analysis

I. Executive Summary This memorandum analyzes whether our client, Torchlight Mining Corp. ("TMC"), should enter into a joint defense agreement ("JDA") with counsel for either or both of its co-subjects in the ongoing Department of Justice Antitrust Division grand jury investigation captioned Grand Jury No. GJ-22-0194, pending before the U.S. District Court for the Northern District of California, San Francisco Divisi

1. Divergent Strategic Interests Arising from TMC's Cooperation Posture. TMC has already communicated its willingness to cooperate with the DOJ Antitrust Division, and the firm's recommended strategy — pursuit of a non-prosecution agreement ("NPA") — is fundamentally different from a joint defense posture. A JDA is inherently oriented toward coordinated defense, which is inconsistent with TMC's emerging role as a coo

2. Risk to TMC's Cooperation Credit. The DOJ Antitrust Division evaluates cooperation credit based on the timeliness, completeness, and genuineness of a subject's cooperation. Participation in a JDA with co-targets could be perceived by the DOJ as an effort to coordinate defense positions or align narratives, which could diminish or negate the cooperation credit that TMC must maximize to achieve an acceptable resolut

3. Conflicting Exposure Profiles. The three target companies occupy different positions in the alleged conspiracy, have different levels of culpability as evidenced by the timing of their respective target letters, and are subject to different financial and governance considerations that drive divergent risk calculi. Ridgecrest is a portfolio company of a private equity fund with a potentially different tolerance for

4. Cascade Chemical Supply Co. Cooperation and Information Flow Complications. The investigation was precipitated by the cooperation agreement of Cascade Chemical Supply Co. ("Cascade"), a former industry participant whose cooperation predated the formal opening of the grand jury. The presence of an established government cooperator creates asymmetric information dynamics that a JDA cannot remedy and may exacerbate.

5. Gavin Holt's Separate Representation and Fifth Amendment Assertion. Gavin Holt, TMC's former Vice President of U.S. Specialty Minerals Sales, is the individual most directly implicated in the alleged anticompetitive conduct. Holt has retained separate personal counsel (Patrick Dunleavy of Briarcliff Law Group PLLC), has asserted his Fifth Amendment privilege before the grand jury, and has refused to cooperate with

II. Background A. The Investigation On February 10, 2022, the Antitrust Division of the United States Department of Justice formally opened a grand jury investigation (Grand Jury No. GJ-22-0194) in the U.S. District Court for the Northern District of California, San Francisco Division. The investigation targets suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, involving price-fixing, mark

III. Legal Framework Governing Joint Defense Agreements A. Common Interest Doctrine The joint defense agreement is rooted in the common interest doctrine (also variously referred to as the "allied lawyer" doctrine, the "community of interest" doctrine, or the "joint defense privilege"). The common interest doctrine is an extension of the attorney-client privilege that permits parties who share a common legal interest

IV. Analysis of JDA with Ridgecrest Minerals Inc. A. Divergent Strategic Interests The most fundamental concern with entering into a JDA with Ridgecrest is that the two companies' strategic interests are divergent in material respects. This divergence arises from several factors: Earlier Target Letter and Potentially Greater Exposure. Ridgecrest received its DOJ target letter on or about January 12, 2022 — approximat

V. Analysis of JDA with Pinnacle Earth Resources Ltd. A. Divergent Strategic Interests The analysis regarding Pinnacle shares many of the same foundational concerns identified with respect to Ridgecrest, with several additional complications: Kevin Tsang's Posture and Departure. Pinnacle's former Senior Vice President of Commercial Operations, Kevin Tsang, is identified as a key individual in the DOJ's investigation.

VI. Analysis of JDA Including Gavin Holt / Briarcliff Law Group PLLC Any analysis of a JDA structure necessarily raises the question of whether Gavin Holt, through his personal counsel Patrick Dunleavy of Briarcliff Law Group PLLC, would be included in the arrangement. In many cartel investigations, joint defense agreements encompass both the corporate targets and the individual employees or former employees who are

VII. Alternative Approaches to Information Sharing While Calderwood & Harkness recommends against a formal JDA, it is prudent to consider alternative approaches to monitoring the activities of co-subjects and maintaining professional relationships with opposing defense counsel that may serve TMC's interests without the risks associated with a JDA. A. Informal Monitoring Without JDA Calderwood & Harkness can maintain

VIII. Risk Assessment Summary The following table summarizes the principal risks associated with entering into a JDA with Ridgecrest, Pinnacle, or both, as assessed by Calderwood & Harkness:

IX. Recommendation Based on the foregoing analysis, Calderwood & Harkness recommends that Torchlight Mining Corp. decline to enter into joint defense agreements with counsel for either Ridgecrest Minerals Inc. or Pinnacle Earth Resources Ltd. at this time. This recommendation extends to any joint defense or common interest arrangement, whether styled as a formal JDA, a limited information-sharing protocol, or any oth

1. TMC's cooperation posture with the DOJ Antitrust Division, including the June 8, 2022 cooperation letter and the ongoing cooperation proffer preparation, is fundamentally inconsistent with participation in a coordinated defense arrangement with co-targets.

2. The risk that JDA participation could compromise TMC's cooperation credit in NPA negotiations is substantial and, given the magnitude of the potential financial exposure (an estimated starting fine of approximately USD 95.6 million), the stakes are too high to accept this risk.

3. The strategic interests of TMC, Ridgecrest, and Pinnacle are divergent in material respects. The evidence of direct communications between their respective personnel — Holt-Edgerton and Holt-Tsang — means that TMC's cooperation will necessarily involve providing evidence that implicates the co-targets and their key individuals. A JDA cannot reconcile this fundamental conflict of interest.

4. The information-flow risks associated with sharing TMC's internal investigation findings with co-targets' counsel are unacceptable, given the sensitivity of the evidence uncovered and the potential for that evidence to be used against TMC's interests.

5. The inclusion of Gavin Holt in any JDA structure is untenable, and a JDA that excludes Holt would be incomplete and potentially ineffective while still carrying the signaling and cooperation-credit risks described above. Elaine Forsythe will communicate the declination to Helen Marchetti (DKA) and George Nakamura (AW) in a diplomatic manner that preserves professional relationships and does not reveal TMC's cooper

X. Next Steps The following action items should be taken in connection with this memorandum:

1. Response to Davenport, Kline & Archer LLP. Elaine Forsythe will respond to Helen Marchetti of DKA, declining the JDA proposal in general terms. The response should cite the early stage of TMC's own review and the need to preserve flexibility as TMC evaluates its options, without disclosing TMC's cooperation strategy, NPA pursuit, or internal investigation findings. The response should be cordial and should leave o

2. Response to Ashford Whitmore LLP. Elaine Forsythe will respond similarly to George Nakamura of AW, declining the informal inquiry regarding coordination. The same general framing should be used, and the same precautions regarding disclosure should apply.

3. Ongoing Monitoring. Calderwood & Harkness will continue monitoring co-subject activities through public filings, court records, DOJ communications, and professional channels, as described in Section VII.C above. Any material developments regarding the cooperation posture, legal status, or strategic direction of Ridgecrest, Pinnacle, or Gavin Holt will be reported to Elaine Forsythe and the TMC engagement team prom

4. Periodic Reassessment. This analysis will be revisited if material changes occur in the investigation posture, TMC's strategic direction, or the cooperation positions of the co-subjects. A formal reassessment should be conducted at each significant milestone in the investigation, including the completion of TMC's cooperation proffer, the commencement of NPA negotiations, and the disposition of any co-subject's cas

5. File Maintenance. This memorandum is to be maintained in Calderwood & Harkness's privileged work-product file for Matter No. 1039-00001. Access to this memorandum is restricted to authorized personnel as set forth in the distribution list below. The memorandum should not be uploaded to any shared document platform, external file-sharing service, or system accessible to TMC personnel without prior authorization fro