Contract analysis

I. Executive Summary This quarterly report provides an update on developments during Q4 2022 in the DOJ Antitrust Division grand jury investigation into suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, specifically involving high-purity feldspar, industrial talc, and rare-earth concentrates. The period covered is October 1 through December 31, 2022. We are pl

II. Case Background — Summary Recap For reference and completeness, we provide the following summary of the case background, which was set forth in greater detail in our Q2 2022 report. A. The Investigation The investigation is being conducted by the Antitrust Division of the United States Department of Justice, operating through the San Francisco Field Office. The investigation is under the general supervision of De

1. In-person meetings at North American Specialty Minerals Council ("NASMC") quarterly conferences. The conferences identified as venues for alleged side meetings include events held in Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida during the 2017–2021 period.

2. Encrypted messaging via the VaultChat messaging platform. VaultChat is an encrypted communications application that was used by Holt and his counterparts to exchange messages regarding pricing, customer allocation, and bid coordination. The forensic recovery and analysis of these messages is discussed at length in Section IV.B below.

3. Occasional telephone calls between the alleged participants, the substance of which has been inferred from circumstantial evidence, including calendar entries, phone records, and contemporaneous notes. D. Origin of the Investigation The investigation originated from a cooperation agreement entered into by Cascade Chemical Supply Co. ("Cascade") with the DOJ in approximately September 2021. Cascade is represented b

III. Document Production — Status and Completion of First Subpoena Response A. Rolling Productions During Q4 2022 Throughout Q4 2022, Calderwood & Harkness continued the rolling document productions to the DOJ that commenced on April 4, 2022. The Q4 2022 productions represented the final tranches of documents responsive to Subpoena GJ-22-0194-SD-003. The final production was delivered to the DOJ on December 15, 2022.

IV. Internal Investigation — Progress During Q4 2022 A. Overview of Investigation Scope The internal investigation being conducted by Calderwood & Harkness on behalf of TMC encompasses a comprehensive review of all relevant documents and communications, as well as interviews of current and former TMC employees with potential knowledge of the alleged conduct. The documentary review encompasses the approximately 487,00

1. Forensic Recovery The VaultChat encrypted-messaging platform was used by Gavin Holt (former VP, U.S. Specialty Minerals Sales, who resigned effective September 30, 2021) to communicate with his counterparts at Ridgecrest and Pinnacle. VaultChat is designed to provide end-to-end encryption and, in certain configurations, automatic message deletion after a specified period. However, forensic recovery efforts by Reds

2. Documented Exchanges The analysis identified at least 37 documented exchanges between Holt and Carl Edgerton (Ridgecrest) and Kevin Tsang (Pinnacle) during the period from March 2017 through July 2021. The first documented VaultChat exchange is dated March 14, 2017, consisting of a message from Holt to Edgerton. The exchanges span the full duration of the alleged conspiracy period and include communications with b

3. Categorization by Subject Matter The 37 documented exchanges have been categorized by subject matter as follows: • Pricing Discussions: Approximately 18 exchanges involve specific discussions of pricing levels, pricing strategies, or anticipated price movements for high-purity feldspar and industrial talc. These messages include references to specific price points, effective dates for price increases, and discussi

4. Substantive Content The substantive content of the VaultChat messages is highly incriminating. The messages include, among other things: • Specific references to pricing levels for high-purity feldspar (including per-ton pricing for various grades) and industrial talc; • Identification of specific customers to be allocated among the participants, including several of TMC's largest industrial customers; • Coordinat

5. Assessment. The VaultChat messages represent the most significant category of direct evidence of inter-competitor coordination involving TMC personnel. They constitute direct, documentary proof of agreements to fix prices, allocate customers, and rig bids — all of which are per se violations of Section 1 of the Sherman Antitrust Act. The messages are contemporaneous, substantive, and specific in their content, and

1. Methodology. The analysis examined TMC's pricing data for the three product categories at issue — high-purity feldspar, industrial talc, and rare-earth concentrates — over an eight-year period from 2015 through 2022. TMC's price movements were compared against publicly available and subpoenaed pricing data for Ridgecrest and Pinnacle over the same period. The analysis employed econometric methods to identify patte

2. Key Findings The analysis identified statistically significant price correlations during the alleged conspiracy period that are materially different from the correlations observed during the pre-conspiracy and post-conspiracy periods. Specifically: • During the conspiracy period, TMC's price movements for high-purity feldspar and industrial talc exhibited a degree of correlation with Ridgecrest's and Pinnacle's pr

3. Limitations and Alternative Explanations Dr. Tremblay's economic analysis indicates that the pricing patterns during the conspiracy period are consistent with coordinated behavior. However, as with any econometric analysis, the results do not by themselves establish causation, and certain independent explanations for the observed pricing patterns — including common cost inputs (e.g., energy prices, transportation

4. Significance for Affected-Commerce Analysis The pricing data analysis will form the foundation for the affected-commerce volume assessment and penalty analysis that will be required in connection with any future NPA negotiations with the DOJ. The affected-commerce calculation — the total volume of commerce affected by the alleged conspiracy — is a critical input into the DOJ's penalty guidelines and will be a cent

1. Attendance Records The analysis identified the NASMC quarterly conferences attended by TMC personnel, specifically Gavin Holt and Thomas Eriksen (Regional Sales Manager, Western Region), during the 2017–2021 period. Attendance records were obtained from TMC's travel and expense records, NASMC's membership and registration databases, and third-party sources.

2. Correlation with Alleged Coordination Events The attendance records were correlated with the alleged coordination events — i.e., the side meetings between Holt, Edgerton, and Tsang that are reflected in the VaultChat messages and other evidence. The conferences identified as venues for alleged coordination include events held in Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida. Holt's attendance at N

3. Thomas Eriksen's Attendance Thomas Eriksen attended four NASMC conferences during the conspiracy period at which side meetings between Holt, Edgerton, and Tsang allegedly occurred. This overlap raises the question of Eriksen's potential involvement in or knowledge of the alleged coordination. However, the evidence of Eriksen's direct participation in the coordination remains ambiguous. Eriksen is not a party to an

1. Sandra Chu — Director, Pricing Analytics Sandra Chu was interviewed on July 18, 2022. Chu stated that she received pricing-adjustment instructions from Gavin Holt on at least 12 occasions that, when cross-referenced with the VaultChat messages and competitor pricing data, correlate temporally with competitor price movements. Specifically, Holt would direct Chu to adjust published price lists for high-purity feldsp

2. Thomas Eriksen — Regional Sales Manager, Western Region Thomas Eriksen was interviewed on July 22, 2022. Eriksen attended four NASMC conferences during the conspiracy period where side meetings allegedly occurred. Eriksen denied knowledge of any pricing agreements or coordination with competitors. As noted in Section IV.D above, the evidence of Eriksen's direct participation is ambiguous. Eriksen's credibility as

3. Gavin Holt — Former VP, U.S. Specialty Minerals Sales (Attempted) Gavin Holt, who is separately represented by Patrick Dunleavy of Briarcliff Law Group PLLC (San Francisco), declined to participate in TMC's internal investigation. Calderwood & Harkness made a formal request for Holt's cooperation on August 1, 2022, and Holt, through Mr. Dunleavy, declined on August 5, 2022. This declination was not unexpected. Hol

4. Priya Anand — General Counsel Priya Anand was interviewed on August 12, 2022. Priya confirmed that she had no prior knowledge of the alleged conduct and was not aware of any inter-competitor communications involving TMC personnel until the investigation became known in early 2022. Priya oversaw the initial document-preservation efforts following receipt of the grand jury subpoena and provided historical context re

5. Richard Fong — Chief Financial Officer Richard Fong was interviewed on August 19, 2022. Fong stated that he had no knowledge of the alleged conduct and reported no financial irregularities or anomalies that would suggest awareness of pricing coordination at the corporate level. Fong confirmed that pricing authority for the U.S. Specialty Minerals Division was delegated to the divisional Vice President level — i.e.

6. Q4 2022 Final Round Interviews The final round of interviews conducted during Q4 2022 covered mid-level personnel in the U.S. Specialty Minerals Division, including sales representatives, account managers, and logistics personnel. These interviews were designed to determine whether the alleged coordination was known to or visible to personnel below the VP level. No interviewee in this round provided evidence of C-

1. Gavin Holt engaged in pricing communications with competitors — specifically Carl Edgerton of Ridgecrest and Kevin Tsang of Pinnacle — on at least 37 documented occasions between March 2017 and July 2021. These communications encompassed price-fixing, customer allocation, and bid-rigging, and they constitute direct evidence of per se violations of Section 1 of the Sherman Act.

2. Sandra Chu received instructions from Holt to adjust published price lists on at least 12 occasions that correlate temporally with competitor price movements. However, Chu lacks direct knowledge of the inter-competitor communications that preceded these instructions, and there is no evidence that Chu was aware of or participated in any anticompetitive agreement.

3. Thomas Eriksen's direct participation in the alleged coordination is ambiguous. While Eriksen attended NASMC conferences at which side meetings allegedly occurred, there is no direct documentary evidence of his participation in anticompetitive discussions, and Eriksen has denied knowledge of any agreements.

4. There is no evidence that CEO Søren Dalmqvist, General Counsel Priya Anand, Board Chair Margaret Caldwell, or any other C-suite or Board member had knowledge of or authorized the alleged conduct. The coordination appears to have been confined to the divisional VP level and below.

5. TMC's existing antitrust compliance program, adopted in approximately 2014, was inadequate in several material respects: no annual antitrust training had been conducted since 2018; there was no monitoring of trade-association interactions or NASMC conference activities; there was no audit or logging protocol for competitor contacts; and there was no dedicated compliance officer for antitrust matters. These conclus

V. Audit Committee Briefing — October 18, 2022 On October 18, 2022, Calderwood & Harkness provided a comprehensive briefing to the TMC Audit Committee, which is chaired by Janet Moreau-Shaw. The briefing was conducted by the undersigned and was attended by all members of the Audit Committee. The topics covered during the briefing included the following: • Investigation Status: An overview of the DOJ investigation, in

VI. Grand Jury Proceedings and DOJ Activity A. Grand Jury Status The grand jury empaneled in the Northern District of California, San Francisco Division (GJ-22-0194), remains active as of the date of this report. The grand jury has been investigating the alleged conspiracy since its empanelment in February 2022, and it continues to receive evidence and hear witness testimony. No new subpoenas were issued to TMC durin

VII. Cooperation Strategy and Upcoming Proffer TMC's cooperation strategy remains the central pillar of our approach to this matter. TMC communicated its willingness to cooperate with the DOJ via a formal letter dated June 8, 2022, and has since demonstrated that commitment through the extensive document production (approximately 487,000 documents) and the ongoing internal investigation. The DOJ has been receptive to

1. TMC's cooperation to date, including the completion of the document production (approximately 487,000 documents, 3.2 million pages) and the conduct of the internal investigation;

2. Internal investigation findings, including the VaultChat message analysis, the pricing data analysis, and the assessment of individual roles (Holt, Chu, Eriksen);

3. Remediation efforts undertaken and planned, including the planned redesign of TMC's antitrust compliance program to address the deficiencies identified in the internal investigation;

4. Mitigating factors supporting resolution short of prosecution, including the absence of C-suite or Board involvement, TMC's prompt engagement of outside counsel and initiation of the internal investigation, the voluntary and comprehensive nature of TMC's cooperation, and TMC's commitment to implementing robust compliance enhancements; and

5. A proposed resolution framework, including TMC's request that the DOJ enter into a non-prosecution agreement with TMC in recognition of its cooperation and remediation. In addition to the written proffer, Calderwood & Harkness is preparing for voluntary proffer sessions for Sandra Chu and Thomas Eriksen, which are anticipated to take place in Q1 or Q2 2023. These sessions will be conducted subject to negotiated pr

VIII. Upcoming Board Presentation — January 20, 2023 Calderwood & Harkness is preparing a comprehensive presentation of the internal investigation findings for the TMC Board of Directors, scheduled for January 20, 2023. This presentation will be a critical milestone in the matter, as it will provide the Board with the information necessary to make informed decisions regarding TMC's cooperation strategy and compliance

1. Internal Investigation — Final Findings Memorandum: A privileged memorandum from Elaine Forsythe to the TMC Board of Directors setting forth the complete findings of the internal investigation, including the VaultChat message analysis, the pricing data analysis, the trade-association meeting analysis, and the witness interview summaries. This memorandum will be the definitive record of the internal investigation's

2. Internal Investigation — Board Presentation Slides: A presentation deck summarizing the key findings and recommendations in a format suitable for Board discussion. The slides will cover the same substantive topics as the memorandum but in a more accessible format designed to facilitate Board deliberation and decision-making. B. Key Topics The Board presentation will cover the following key topics: • Scope and Meth

1. Cooperation Proffer: Authorization to submit the written cooperation proffer to the DOJ in mid-February 2023 and to proceed with the voluntary proffer sessions for Chu and Eriksen.

2. Compliance Remediation: Authorization to commence the design and implementation of an enhanced antitrust compliance program, including the engagement of an external compliance consultant.

IX. Compliance Program Assessment (Preliminary) The internal investigation has revealed significant deficiencies in TMC's existing antitrust compliance program. These deficiencies are relevant not only to TMC's potential liability but also to the remediation narrative that will be central to the cooperation proffer and NPA negotiations. A. Identified Deficiencies The specific deficiencies identified are as follows:

1. Outdated Program: TMC's antitrust compliance program was initially adopted in approximately 2014. While the program was adequate in its original design, it has not been updated or refreshed in the intervening years to reflect changes in the regulatory landscape, industry practices, or TMC's own business operations.

2. Lapse in Training: No annual antitrust training has been conducted since 2018. The antitrust compliance program contemplated annual training for all commercial personnel, but this requirement was not enforced or monitored following the departure of the compliance officer who had championed the program.

3. No Monitoring of Trade-Association Interactions: TMC had no protocol for monitoring or overseeing the activities of TMC personnel at trade-association meetings, including NASMC conferences. There were no pre-meeting briefings, no post-meeting reports, and no restrictions on one-on-one interactions with competitors at such events.

4. No Audit or Logging Protocol for Competitor Contacts: TMC had no system for logging, auditing, or reviewing contacts between TMC personnel and competitors. There was no requirement that employees report interactions with competitor personnel, and there was no mechanism for compliance oversight of such interactions.

5. No Dedicated Compliance Officer for Antitrust Matters: TMC did not have a dedicated compliance officer responsible for antitrust compliance. General oversight of compliance matters was subsumed within the General Counsel's office, but no individual was specifically tasked with monitoring antitrust-related risks or implementing the antitrust compliance program. B. Remediation Narrative These deficiencies will be a

X. Financial and Budget Summary A. Legal Fees — Calderwood & Harkness Matter No.: 1039-00001 Initial Budget Estimate: USD 12,000,000 (per engagement letter dated February 18, 2022) Fees Invoiced Through December 31, 2022: Approximately USD 8,400,000 Billing Rates: • Partners: USD 1,450/hour • Senior Associates: USD 950/hour • Associates: USD 725/hour The scope of the engagement is trending above the initial budget es

XI. Public Disclosure and Securities Law Considerations TMC disclosed the existence of the DOJ investigation in its FY 2021 annual report filed on March 28, 2022 on SEDAR+ (Canada) and with the U.S. Securities and Exchange Commission on Form 40-F. TMC is listed on the Toronto Stock Exchange (TSX: TRCL) and on the New York Stock Exchange (NYSE: TMC), subjecting it to the continuous disclosure obligations of both Canad

XII. Key Milestones and Anticipated Next Steps (Q1–Q2 2023) The following table summarizes the key milestones and action items anticipated for Q1 and Q2 2023: Calderwood & Harkness will provide regular updates to the General Counsel's office as these milestones are approached and achieved. In the event of any material development requiring immediate attention — such as the issuance of a new subpoena, an indictment, o

XIII. Conclusion and Recommendation Overall, the matter is progressing in a direction that we consider favorable for TMC. The internal investigation has not revealed C-suite or Board involvement in the alleged conduct, and the evidence developed to date indicates that the coordination was confine