Contract analysis

I. Executive Summary This memorandum provides Torchlight Mining Corp. ("TMC" or the "Company") with a comprehensive quarterly status report covering developments in the above-referenced matter during the period from approximately April 1, 2022 through June 30, 2022 (the "Reporting Period" or "Q2 2022"). This report is provided pursuant to the quarterly reporting protocol established in the engagement letter dated Feb

II. Background and Matter Overview For the benefit of providing a complete record and context for the Q2 developments discussed herein, we briefly summarize the background of this matter. A more detailed background was provided in the Q1 2022 status report dated April 12, 2022. A. The Investigation The DOJ Antitrust Division, through its San Francisco Field Office, is conducting a federal grand jury investigation, de

III. Target Letter — Receipt and Analysis A. Receipt of Target Letter (May 20, 2022) On May 20, 2022, TMC received a target letter from the DOJ Antitrust Division, signed by Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves. The letter was addressed to Elaine Forsythe as counsel for TMC and was delivered via email and overnight courier simultaneously. The target letter identifies TMC as a "target

1. Timing. The target letter was issued approximately three months after TMC's first document production (April 4, 2022), suggesting that the DOJ's review of TMC's produced documents — or, potentially, documents produced by other parties or the cooperating witness — yielded evidence that strengthened the government's case against TMC during this period.

2. Scope. The target letter references all three product categories (feldspar, talc, and rare-earth concentrates) and the full alleged conspiracy period (January 2017 through August 2021). This is consistent with a broad theory of TMC's involvement, rather than a narrow focus on isolated conduct.

3. Entity-Level Targeting. The target letter is addressed to TMC as an entity, not to any individual employee. This is consistent with the DOJ's standard practice in antitrust investigations of targeting both the corporate entity and responsible individuals. We anticipate that individual target letters may be issued to Gavin Holt and potentially other TMC employees as the investigation progresses. C&H provided a deta

IV. Grand Jury Subpoena Compliance and Document Production A. First Rolling Production (Completed April 4, 2022) As reported in the Q1 status report, TMC completed its first rolling document production to the DOJ on April 4, 2022. This production consisted of approximately 42,000 documents and was accompanied by a cover letter from C&H to Trial Attorney Kowalski and a privilege log identifying documents withheld on t

V. Internal Investigation — Progress Update A. Scope and Methodology C&H's internal investigation of the alleged conduct was initiated concurrently with the commencement of the engagement, and a formal internal investigation plan was established on March 5, 2022. The internal investigation is being conducted for the purpose of (a) understanding the facts and circumstances underlying the DOJ's investigation, (b) asses

1. Document Review. A comprehensive review of all responsive documents collected from TMC custodians, with a particular focus on inter-competitor communications, pricing-related documents, and trade-association materials.

2. Witness Interviews. A systematic program of interviews of current and former TMC employees with knowledge relevant to the investigation, including individuals in the U.S. Specialty Minerals Division, the finance function, and the legal and compliance function.

3. Pricing Data Analysis. A forensic analysis of TMC's pricing data for high-purity feldspar, industrial talc, and rare-earth concentrates for the period from 2015 through 2022, with the objective of identifying patterns of price movements that are consistent or inconsistent with coordinated pricing behavior.

4. Compliance Program Assessment. An assessment of the adequacy and effectiveness of TMC's existing antitrust compliance program, with recommendations for remediation. In connection with the pricing data analysis workstream, C&H has retained Hargrove Forensic Advisory LLC ("Hargrove") to provide forensic accounting and economic analysis services. Dr. Vanessa Tremblay, a partner at Hargrove with extensive experience i

VI. Defense Strategy and Cooperation Posture A. Cooperation Framework The defense strategy that C&H has recommended since the commencement of this engagement is built on a foundation of full and genuine cooperation with the DOJ Antitrust Division. Following receipt of the target letter on May 20, 2022, C&H formally communicated TMC's willingness to cooperate with the investigation in a letter dated June 8, 2022, addr

VII. D&O Insurance Update C&H continues to manage the D&O insurance coverage aspects of this matter. The following is a summary of the current status: Policy Details. TMC maintains a directors and officers liability insurance program with the following structure: The primary policy with Northland has a policy period of July 1, 2021 through July 1, 2022, and a retention (self-insured retention) of USD 2.5 million. Not

VIII. Fees and Budget Status Pursuant to the engagement letter dated February 18, 2022, C&H is providing the following update on fees and budget status for the matter. Billing Rates. The applicable billing rates for this engagement are as follows: All rates are subject to annual adjustment in accordance with the terms of the engagement letter. Disbursements (including travel, copying, courier services, and research d

IX. Staffing The following individuals constitute the core C&H team and third-party vendor team assigned to this matter: Calderwood & Harkness LLP Elaine Forsythe — Responsible Partner (C&H San Francisco). Ms. Forsythe leads the engagement and is responsible for all strategic decisions, government communications, witness interview planning and oversight, and reporting to TMC. Howard Bellamy — Billing Partner (C&H New

X. Key Actions and Next Steps for Q3 2022 The following key actions and deliverables are planned for Q3 2022:

1. Document Production. Continue rolling document productions to the DOJ through year-end 2022, in accordance with the agreed production schedule. Target cumulative production of approximately 487,000 documents by December 15, 2022. Continue privilege review in accordance with the established Privilege Review Protocol.

2. Internal Investigation — Witness Interviews. Complete the interviews of Sandra Chu, Thomas Eriksen, Priya Anand, Richard Fong, and additional U.S. Specialty Minerals Division personnel. Continue to seek an interview of Gavin Holt through his personal counsel, Patrick Dunleavy of Briarcliff Law Group PLLC, though we note that the likelihood of securing this interview is diminishing.

3. VaultChat Analysis. Complete the detailed analysis of all recovered VaultChat messages involving Gavin Holt. Categorize all Holt communications by subject matter (pricing, customer allocation, bid coordination, other), counterpart (Edgerton, Tsang, other), date, and product category. Prepare a comprehensive analytical memorandum summarizing findings and assessing the evidentiary significance of the VaultChat evide

4. Hargrove Economic Analysis. Commence Hargrove's pricing-data analysis comparing TMC price movements to competitor price movements for high-purity feldspar, industrial talc, and rare-earth concentrates for the period from 2015 through 2022. Begin the affected-commerce volume assessment to refine the estimate of TMC's share of total affected commerce.

5. Trade Association Meeting Analysis. Identify and analyze all NASMC conferences attended by TMC personnel from 2017 through 2021. Obtain and review attendance records, agendas, minutes, and any available documentation of side meetings or informal gatherings. Correlate TMC attendance records with the alleged coordination events at NASMC conferences held in Arlington, Virginia; Scottsdale, Arizona; and Orlando, Flori

6. Joint Defense Agreement Analysis. Complete the analysis of whether it is in TMC's interest to enter into joint defense agreements with counsel for Ridgecrest (Davenport, Kline & Archer LLP, Helen Marchetti) or Pinnacle (Ashford Whitmore LLP, George Nakamura). Prepare a memorandum setting forth the benefits, risks, and C&H's recommendation.

7. D&O Insurance. Continue engagement with Northland Mutual Insurance Co. regarding the resolution of the reservation-of-rights dispute. Monitor the status of the D&O policy renewal, including any changes to terms, conditions, premiums, or exclusions resulting from the investigation.

8. Litigation Reserve Reassessment. Reassess the adequacy of the USD 30 million litigation reserve in light of the receipt of the target letter and the developing evidence, in coordination with Calvert & Associates LLP and TMC's finance team. Prepare a revised reserve recommendation under ASC 450 / IAS 37.

9. Audit Committee Briefing. Schedule a comprehensive briefing for the TMC Audit Committee (chaired by Janet Moreau-Shaw) for Q4 2022. A tentative target date of October 2022 has been identified. C&H will prepare presentation materials summarizing the investigation status, key findings, risk assessment, and defense strategy.