Contract analysis

I. PURPOSE AND BACKGROUND The purpose of this memorandum is to provide TMC's General Counsel with a comprehensive, practical catalog of all ongoing obligations arising under the Non-Prosecution Agreement ("NPA") executed on May 6, 2024, by Søren Dalmqvist, Chief Executive Officer of Torchlight Mining Corp. ("TMC" or the "Company"), and Julia Stafford-Hayes, Deputy Assistant Attorney General, Antitrust Division, Unite

II. SUMMARY OF KEY NPA TERMS Before turning to the detailed obligation-by-obligation analysis, we set forth below a summary of the key terms of the NPA for ease of reference. Monetary Payment. TMC is obligated to pay USD 48.5 million to the United States Treasury within sixty (60) calendar days of the NPA's execution date, establishing a hard payment deadline of July 5, 2024. The calculation basis for this amount is

III. OBLIGATION NO. 1 — MONETARY PAYMENT A. Amount and Payment Details Under Section 4 of the NPA, TMC is obligated to make a payment of USD 48,500,000.00 (forty-eight million five hundred thousand dollars) to the United States Treasury. This payment is due within sixty (60) calendar days of the NPA's execution date of May 6, 2024, establishing a hard deadline of July 5, 2024. Payment must be made by wire transfer to

1. Arrange Wire Transfer. TMC's Chief Financial Officer, Richard Fong, and the TMC Treasury department should arrange for the wire transfer well in advance of the July 5, 2024, deadline. We strongly recommend initiating the wire transfer no later than July 1, 2024, to allow for any processing delays and to provide a buffer against the hard deadline. TMC should confirm the payment instructions directly with the DOJ co

2. Obtain Written Confirmation. Upon completion of the wire transfer, TMC should obtain written confirmation from the DOJ that the payment has been received and properly credited. C&H will coordinate with the DOJ's San Francisco Field Office to obtain this confirmation and will provide a copy to TMC's General Counsel and CFO for the Company's records.

3. Accounting Treatment and Disclosure. TMC should coordinate with its external auditors at Calvert & Associates LLP (Daniel Moreau, engagement partner) and with Ironbridge Capital Markets Inc. (Alan Kirkwood) regarding the appropriate accounting treatment of the USD 48.5 million payment and any necessary disclosures in TMC's periodic filings. The payment should be charged against TMC's existing litigation reserve, w

4. Reserve Adequacy. TMC's CFO and in-house legal team should confirm the adequacy of the litigation reserve to cover the NPA payment and any remaining costs. If the remaining balance of approximately USD 1.5 million is determined to be insufficient to cover projected ongoing costs, TMC should consider adjusting the reserve in consultation with Calvert & Associates LLP. C. Deadline Hard Deadline: July 5, 2024. Failur

IV. OBLIGATION NO. 2 — COOPERATION OBLIGATIONS A. Scope of Cooperation Under Sections 5 and 6 of the NPA, TMC is required to continue to cooperate fully with the DOJ in any ongoing or future investigations or prosecutions related to the conduct described in the NPA. This cooperation obligation is broad in scope and extends for the full three-year cooperation period, from May 6, 2024, through May 6, 2027. The cooperat

1. Single Point of Contact. Designate Priya Anand, General Counsel, as the single point of contact for all DOJ cooperation requests directed to TMC. All such requests should be immediately forwarded to C&H for review and coordination before any substantive response is provided.

2. Outside Counsel Coordination. All cooperation requests from the DOJ should be routed through Calderwood & Harkness (Elaine Forsythe and Aaron Liu) before any substantive response is provided by TMC. C&H will assess the scope and nature of each request, coordinate witness preparation as necessary, and ensure that TMC's responses are consistent with its NPA obligations while preserving all applicable privileges.

3. Separation-of-Function Protocols. Employees who are identified as potential witnesses — including Sandra Chu, Thomas Eriksen, and others — should not be involved in managing the cooperation process or making decisions about TMC's response to specific DOJ requests. This separation of functions is important both to protect the integrity of witness testimony and to minimize the risk of any appearance of improper infl

4. Quarterly Internal Check-Ins. TMC should conduct quarterly internal check-ins to confirm ongoing compliance with all cooperation obligations. These check-ins should be coordinated by the General Counsel's office and should include a review of (i) any outstanding or anticipated DOJ requests, (ii) the employment status of all identified witnesses, (iii) any potential issues or concerns regarding cooperation, and (iv

V. OBLIGATION NO. 3 — ENHANCED ANTITRUST COMPLIANCE PROGRAM A. Program Requirements (NPA Appendix A) Under Section 7 of the NPA and the detailed specifications set forth in NPA Appendix A, TMC is obligated to implement and maintain an Enhanced Antitrust Compliance Program (the "Program") throughout the full three-year NPA term. The Program was jointly developed by Calderwood & Harkness and Meridian Compliance Partner

1. Mandatory Annual Antitrust Training TMC must provide mandatory annual antitrust training to all employees involved in pricing, sales, marketing, and business development activities. The training must include, at a minimum, instruction on the basic principles of U.S. antitrust law (including the Sherman Act, the Clayton Act, and the Federal Trade Commission Act), the specific types of conduct prohibited by Section

2. Appointment of Independent Chief Compliance Officer TMC must appoint an independent Chief Compliance Officer ("CCO") within ninety (90) days of the NPA's execution date, establishing a deadline of August 4, 2024. The CCO must possess appropriate qualifications and experience in corporate compliance, preferably with specific expertise in antitrust or competition law. Critically, the CCO must have a direct reporting

3. Annual Compliance Certifications As discussed in greater detail in Section VII below, the CEO (Søren Dalmqvist) and General Counsel (Priya Anand) must each execute annual compliance certifications attesting that TMC has maintained and adhered to the Enhanced Antitrust Compliance Program during the preceding twelve-month period. These certifications are due annually on or before the anniversary of the NPA's executi

4. Competitor-Contact Protocols TMC must adopt and enforce written policies governing all contacts between TMC employees and competitors or their representatives. These policies must include pre-approval requirements for any interactions with competitors, whether in the context of industry associations, trade shows, conferences, or any other forum. The policies must clearly delineate permissible and impermissible top

5. Trade-Association Interaction Policies In light of the fact that certain of the conduct under investigation occurred in connection with industry-association events and communications, the Program requires TMC to adopt specific protocols governing participation in trade-association activities. These protocols apply to all trade associations but are particularly focused on the North American Specialty Minerals Counc

6. Confidential Reporting Hotline TMC must maintain a confidential reporting hotline (or equivalent mechanism) through which employees and other stakeholders can anonymously report potential antitrust violations or concerns. The hotline must be operated by an independent third-party provider, must be available in all languages spoken by TMC employees, and must ensure the anonymity and non-retaliation protections requ

7. Periodic Auditing and Monitoring The Program requires annual audits of TMC's compliance with its antitrust policies. These audits are to be conducted by the CCO and, during the two-year monitor term, in coordination with the independent compliance monitor. The audits must assess the effectiveness of the compliance program as a whole, identify any gaps or deficiencies, and recommend corrective actions. Audit result

VI. OBLIGATION NO. 4 — INDEPENDENT COMPLIANCE MONITOR A. Monitor Identity and Engagement Meridian Compliance Partners LLC ("Meridian") has been pre-approved by the DOJ to serve as the independent compliance monitor under the NPA. Claudia Ferraro, a principal of Meridian, serves as the engagement lead. Meridian's offices are located at 1100 Connecticut Avenue NW, Suite 730, Washington, DC 20036. The terms of the monit

1. Full Cooperation. TMC must cooperate fully and in good faith with the monitor at all times. This includes responding promptly and completely to information requests, making employees available for interviews on reasonable notice, and providing access to all relevant documents and systems.

2. Internal Compliance Liaison. TMC must designate an internal compliance liaison to serve as the primary point of contact for the monitor. We recommend that the newly appointed CCO serve in this role once the CCO position is filled (by August 4, 2024). Pending the CCO's appointment, the General Counsel should serve as the interim compliance liaison.

3. Funding. TMC is responsible for funding the monitor's fees and expenses in accordance with the vendor engagement letter dated August 1, 2023. The total fees incurred by Meridian through the date of NPA execution were approximately USD 1.1 million. Projected additional fees during the two-year monitor term will be substantial and should be separately budgeted by TMC's finance department. We recommend that TMC reque

4. Implementation of Corrective Actions. TMC must implement corrective actions recommended by the monitor within the timeframes specified in the monitor's reports. If TMC disagrees with a specific recommendation or believes that a recommended timeframe is impracticable, TMC should raise its concerns with the monitor promptly and, if necessary, seek guidance from C&H regarding the appropriate course of action. TMC sho

VII. OBLIGATION NO. 5 — ANNUAL COMPLIANCE CERTIFICATIONS A. Requirement Under Section 7(f) of the NPA, the CEO (Søren Dalmqvist) and General Counsel (Priya Anand) must each execute annual compliance certifications certifying that TMC has maintained and adhered to the Enhanced Antitrust Compliance Program during the preceding twelve-month period. Each certification must be signed individually by the CEO and the Genera

1. Internal Compliance Review. TMC's in-house legal team, in coordination with the CCO, should conduct a comprehensive internal review of the Company's adherence to the Enhanced Antitrust Compliance Program during the preceding twelve-month period. This review should encompass, at a minimum, an assessment of (i) completion of mandatory training, (ii) adherence to competitor-contact and trade-association protocols, (i

2. Coordination with Monitor. During the two-year monitor term (through May 6, 2026), TMC should coordinate with Meridian to confirm that there are no unresolved deficiencies or pending corrective actions that would preclude the issuance of a compliance certification. Any outstanding issues should be resolved prior to the certification deadline, or, if resolution is not feasible, should be disclosed in the certificat

3. Outside Counsel Review. All compliance certifications should be reviewed by outside counsel (Calderwood & Harkness or successor counsel) before execution. C&H will review the supporting documentation, confirm that the certifications are factually accurate and legally sufficient, and advise on any qualifications or caveats that may be appropriate.

4. Execution and Submission. Following outside counsel review, the certifications should be executed by the CEO and General Counsel and submitted to the DOJ in advance of the applicable deadline. C&H will coordinate the submission process with the DOJ.

VIII. OBLIGATION NO. 6 — DOCUMENT RETENTION A. NPA Document-Retention Requirements Under Section 8 of the NPA, TMC is required to retain all documents related to the conduct described in the NPA — specifically, the alleged price-fixing, market-allocation, and bid-rigging conspiracy during the period from approximately January 2017 through August 2021, involving high-purity feldspar, industrial talc, and rare-earth co

IX. OBLIGATION NO. 7 — NO OBSTRUCTION / GOOD FAITH A. General Obligation Under Section 9 of the NPA, TMC is subject to a broad no-obstruction and good-faith obligation throughout the three-year NPA term. This obligation encompasses the following requirements: (a) TMC must not engage in any conduct, directly or indirectly, that obstructs, impedes, delays, or interferes with the DOJ's investigation of any other persons

1. No Communications with Co-Subjects. No TMC personnel — including officers, directors, employees, and agents — should communicate with employees, officers, directors, or counsel of Ridgecrest Minerals Inc., Pinnacle Earth Resources Ltd., or Cascade Chemical Supply Co. regarding the DOJ investigation, the NPA, or any related matter without prior express authorization from Calderwood & Harkness. This prohibition appl

2. Media and Third-Party Inquiries. Any inquiries from the media, regulators, investors, industry participants, or other third parties regarding the DOJ investigation, the NPA, or any related matter should be directed to TMC's General Counsel and outside counsel. TMC employees should not provide substantive responses to such inquiries without prior authorization from the General Counsel.

3. Witness Communications. TMC should exercise caution in any communications with individuals who are or may become witnesses in related proceedings. While TMC is not prohibited from communicating with its own current employees in the ordinary course of business, TMC should avoid any communications that could be perceived as attempting to influence, discourage, or coordinate witness testimony. Any concerns about the

X. MATERIAL BREACH CONSEQUENCES The consequences of a material breach of the NPA are severe and warrant careful attention by all TMC personnel involved in the compliance process. Under Section 10 of the NPA, if the DOJ determines, in its sole discretion, that TMC has committed a material breach of any term of the NPA, the DOJ may prosecute TMC criminally based on the Agreed Statement of Facts set forth in NPA Appendi

XI. D&O INSURANCE CONSIDERATIONS TMC tendered notice of the DOJ investigation to its primary directors' and officers' liability insurance carrier, Northland Mutual Insurance Co., on March 4, 2022. The relevant policy details are as follows: • Primary Layer: Northland Mutual Insurance Co., Policy No. NMI-DO-2021-5547, with an aggregate limit of USD 50 million and a retention (deductible) of USD 2.5 million. • Excess L

1. Additional Defense Costs. TMC's ongoing cooperation obligations under the NPA, which require TMC to make employees available for interviews and testimony, may generate additional defense costs for individual directors and officers who are called upon by the DOJ. To the extent that individual TMC directors or officers require independent counsel in connection with such proceedings, these defense costs may be covere

2. NPA Monetary Payment. The USD 48.5 million NPA payment to the U.S. Treasury is likely not covered under the D&O policy. D&O policies typically contain exclusions for penalties, fines, and amounts paid to government entities pursuant to settlement agreements or non-prosecution agreements. TMC should confirm this analysis with its insurance counsel to ensure that the payment is properly classified and that no covera

3. Ongoing Tower Maintenance. TMC should ensure that its D&O insurance tower is maintained throughout the NPA term and should consider the NPA's compliance obligations and potential exposure when evaluating renewal terms and coverage limits.

XII. PUBLIC DISCLOSURE CONSIDERATIONS TMC is a reporting issuer in Canada and files reports with the U.S. Securities and Exchange Commission. The Company's public disclosure obligations require careful attention in light of the NPA's execution and ongoing compliance requirements. TMC previously disclosed the existence of the DOJ investigation in its fiscal year 2021 annual report, filed on March 28, 2022, on SEDAR+ a

1. NPA Disclosure. TMC will need to disclose the NPA's execution and its material terms in its next periodic filing. Depending on timing, this disclosure may appear in TMC's Q2 2024 10-Q filing or in an earlier Form 8-K equivalent filing. The disclosure should describe the material terms of the NPA, including the monetary payment amount, the cooperation period, the compliance-monitor requirement, and the enhanced com

2. Accounting Treatment. TMC should coordinate with Calvert & Associates LLP (Daniel Moreau, audit engagement partner) regarding the appropriate accounting treatment of the USD 48.5 million payment, including whether the payment should be classified as a settlement expense, a fine, or another category, and whether the payment should be recorded in Q2 2024 or an earlier period. TMC should also confirm the adequacy of

3. Investor Communications. TMC should coordinate with Ironbridge Capital Markets Inc. (Alan Kirkwood) regarding any investor-communications strategy in connection with the NPA disclosure. This may include preparation of talking points for investor inquiries, coordination with TMC's investor-relations team, and consideration of whether a proactive investor communication (such as a press release or investor call) is a

XIII. MASTER CALENDAR OF DEADLINES AND MILESTONES The following table sets forth all key deadlines and milestones arising under the NPA, together with the responsible parties for each obligation. This calendar should be incorporated into TMC's internal compliance-management systems and should be reviewed at each quarterly compliance check-in.

XIV. RECOMMENDED INTERNAL GOVERNANCE To ensure sustained and effective compliance with all NPA obligations over the three-year term, we recommend that TMC establish the following internal governance structures and processes:

1. NPA Compliance Committee. TMC should establish a standing NPA Compliance Committee, chaired by the General Counsel (Priya Anand), with participation from the CCO (to be appointed by August 4, 2024), the CFO (Richard Fong), and a designated Board member. We recommend that Janet Moreau-Shaw, Chair of the TMC Audit Committee, serve as the Board designee on the NPA Compliance Committee. The Committee should have a for

2. Quarterly Internal Compliance Check-Ins. The NPA Compliance Committee should convene on a quarterly basis to review the status of all NPA obligations, assess upcoming deadlines, address any issues or concerns, and confirm that all required activities are on track. We recommend the following quarterly check-in schedule for the first year of the NPA term: • Q3 2024 (August 2024): Review of monetary payment completio

3. Semi-Annual Board Briefings. The NPA Compliance Committee should provide semi-annual briefings to the full TMC Board of Directors on the status of NPA compliance. These briefings should cover all material aspects of TMC's NPA obligations, including cooperation activities, compliance program implementation, monitor reports and recommendations, and any issues or risks identified during the quarter.

4. Outside Counsel Retention. TMC should retain Calderwood & Harkness LLP (or designate successor outside counsel with appropriate antitrust expertise) as ongoing NPA compliance counsel for the duration of the NPA term. C&H's continued involvement will ensure continuity of knowledge and experience, facilitate efficient responses to DOJ cooperation requests, support TMC's interactions with the compliance monitor, and

XV. CALDERWOOD & HARKNESS CONTACT INFORMATION The following C&H attorneys are available to TMC for all matters related to the NPA and NPA compliance: Elaine Forsythe, Responsible Partner Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, CA 94104 Direct Line: (415) 555-7200 Email: eforsythe@calderwoodharkness.com Aaron Liu, Lead Associate Calderwood & Harkness LLP 555 California Street, 40th F

XVI. CONCLUSION This memorandum is intended to serve as a living compliance reference document for TMC throughout the three-year NPA term. We have endeavored to provide a comprehensive and actionable catalog of all NPA obligations, together with practical guidance for their implementation. This memorandum should be updated as circumstances evolve, deadlines are met, and new issues arise. We recommend that TMC circula