Contract analysis

I. Executive Summary This memorandum summarizes the results of our environmental and regulatory due diligence review conducted in connection with the proposed issuance by Torchlight Mining Corp. ("Torchlight" or the "Company") of $300,000,000 aggregate principal amount of 8.750% Senior Secured Notes due 2029 (the "Notes") pursuant to a Rule 144A / Regulation S offering (the "Offering"). The purpose of this memorandum

II. Scope and Methodology A. Scope of Review The scope of this environmental and regulatory due diligence review encompasses the following subject areas:

1. Environmental Permits, Licenses, and Approvals. Review of all material environmental permits, licenses, and regulatory approvals applicable to both Phase I (existing operations) and Phase II (expansion) at the Wolverine Lake Mine, including permits issued by provincial and federal authorities in Canada.

2. Compliance History. Assessment of the compliance history of Torchlight, WLML, and TMPI with applicable provincial and federal environmental legislation over the review period, with a focus on the past five years (2017–2022).

3. Regulatory Approvals for Phase II. Identification and status assessment of all regulatory approvals required for the Phase II Expansion, including any approvals that may constitute conditions precedent to the closing of the Offering or to the commencement of Phase II construction activities.

4. Environmental Liabilities, Remediation Obligations, and Closure/Reclamation Provisions. Evaluation of any outstanding or contingent environmental liabilities, remediation obligations, or cleanup orders, as well as the Company's obligations under the approved Closure Plan and associated financial assurance requirements.

5. Environmental Risk Factors for Offering Memorandum Disclosure. Assessment of environmental and regulatory risk factors that should be disclosed in the risk factors section of the Final Offering Memorandum, and review of the adequacy of existing disclosure.

6. Security Interest Considerations. Review of the interaction between environmental liabilities, regulatory liens, and the security interests granted in the mining claims, surface rights, and other assets of WLML and TMPI under the Canadian General Security Agreement dated April 19, 2022, with Northern Dominion Trust Company as Collateral Agent, in connection with the collateral securing the Notes. B. Materials Revi

III. Applicable Environmental and Regulatory Framework This section provides an overview of the principal environmental and regulatory legislation applicable to the operations of WLML and TMPI at the Wolverine Lake Mine. The regulatory framework is multi-layered, involving both provincial (Ontario) and federal (Canadian) legislation. Our review has been conducted with the assistance of Pendleton Ross LLP with respect

1. Mining Act (Ontario) The Mining Act, R.S.O. 1990, c. M.14, as amended, is the primary provincial statute governing mining activity in Ontario. It establishes the legal framework for the acquisition and maintenance of mining claims, the grant of surface rights, the issuance of exploration permits and mine production licenses, and the regulation of mine development and closure. The Wolverine Lake Mine is held under

2. Environmental Protection Act (Ontario) The Environmental Protection Act, R.S.O. 1990, c. E.19, as amended (the "EPA"), is the principal provincial statute governing the protection of the natural environment in Ontario. Under the EPA, industrial operations, including mining and mineral processing, are required to obtain Environmental Compliance Approvals ("ECAs") for activities that may result in the discharge of c

3. Ontario Water Resources Act The Ontario Water Resources Act, R.S.O. 1990, c. O.40, as amended (the "OWRA"), governs the taking of water and the discharge of effluent in Ontario. Under the OWRA, a Permit to Take Water ("PTTW") is required for any taking of water in excess of 50,000 litres per day, which is applicable to both the mine dewatering operations at the Wolverine Lake Mine and the process water requirement

4. Environmental Assessment Act (Ontario) The Environmental Assessment Act, R.S.O. 1990, c. E.18, as amended, requires environmental assessment of certain public and private sector undertakings in Ontario. Mining projects are subject to a screening-level assessment process under Ontario Regulation 101/07, which establishes a streamlined review process for undertakings at existing mine sites. The Phase II Expansion wa

5. Endangered Species Act (Ontario) The Endangered Species Act, 2007, S.O. 2007, c. 6 (the "ESA"), protects species at risk and their habitats in Ontario. Under the ESA, it is prohibited to kill, harm, harass, capture, or take a living member of a species listed on the Species at Risk in Ontario List, or to damage or destroy the habitat of such species, except under an authorization from the MECP. Where activities ma

1. Impact Assessment Act (Canada) The Impact Assessment Act, S.C. 2019, c. 28, s. 1 (the "IAA"), replaced the former Canadian Environmental Assessment Act, 2012 and establishes the federal process for assessing the environmental, health, social, and economic effects of designated projects. Physical activities that are described in the Physical Activities Regulations, SOR/2019-285, may trigger a requirement for a fede

2. Fisheries Act (Canada) The Fisheries Act, R.S.C. 1985, c. F-14, as amended, prohibits the harmful alteration, disruption, or destruction ("HADD") of fish habitat and the deposit of deleterious substances in waters frequented by fish, except as authorized. An authorization under the Fisheries Act is required for any work, undertaking, or activity that results in HADD of fish habitat. This statute is of particular r

3. Species at Risk Act (Canada) The Species at Risk Act, S.C. 2002, c. 29 ("SARA"), provides additional protections for species listed on the federal List of Wildlife Species at Risk, particularly on federal lands and in relation to aquatic species and migratory birds. SARA imposes prohibitions against killing, harming, or harassing listed species and against the destruction of their critical habitat. Where projects

4. Canadian Environmental Protection Act, 1999 The Canadian Environmental Protection Act, 1999, S.C. 1999, c. 33 ("CEPA"), establishes a framework for the federal management of toxic substances and pollutant releases. Under CEPA, facilities meeting certain reporting thresholds are required to report annual releases, disposals, and transfers of specified substances to the National Pollutant Release Inventory ("NPRI").

IV. Environmental Permits and Approvals — Phase I (Existing Operations) This section summarizes the status of environmental permits and approvals applicable to the existing Phase I operations at the Wolverine Lake Mine, including both underground mining operations conducted by WLML and concentrator and processing operations conducted by TMPI. A. Mining Claims and Surface Rights Torchlight's principal operating asset

V. Environmental Permits and Approvals — Phase II Expansion A. Overview of Phase II Regulatory Requirements The Phase II Expansion involves a number of activities that trigger additional regulatory review and approval requirements beyond those applicable to the existing Phase I operations. Specifically, the Phase II Expansion encompasses: • Construction of a new decline ramp providing access from the existing undergr

VI. Closing Date Extension — Canadian Regulatory Clearance This section provides a detailed account of the circumstances surrounding the extension of the closing date for the Offering from April 5, 2022 to April 19, 2022. Original Expected Closing Date. The Purchase Agreement for the Notes was executed on March 29, 2022, between Torchlight Mining Corp. (as issuer), WLML and TMPI (as guarantors), and Kelvantis Capital

VII. Environmental Liabilities and Remediation Obligations A. Current Remediation Obligations Based on our review of the materials described in Section II.B and our discussions with management and Canadian counsel, we have not identified any outstanding remediation orders, directions, or cleanup obligations applicable to the Wolverine Lake Mine or to any property owned or operated by WLML, TMPI, or Torchlight. WLML i

VIII. Environmental Risk Factors — Offering Memorandum Disclosure Considerations Based on our review, the following environmental and regulatory risk factors are relevant to the Offering and should be (and have been) disclosed in the risk factors section of the Final Offering Memorandum dated March 14, 2022. The C&H deal team reviewed the environmental risk factor disclosure in the Final Offering Memorandum for accur

1. Permitting Delays. The risk that delays in obtaining environmental permits and approvals for the Phase II Expansion could delay the construction timeline and the expected increase in production capacity. This risk has already manifested in the form of the Closure Plan amendment timing issue, which resulted in the closing date extension described in Section VI. While the Closure Plan amendment has now been approved

2. Regulatory Changes. Changes to provincial (Ontario) or federal (Canadian) environmental legislation, regulations, or policy could impose additional compliance costs or restrictions on mining operations at the Wolverine Lake Mine. The regulatory environment for mining in Ontario is subject to periodic revision, and there can be no assurance that current regulatory standards will remain unchanged over the life of th

3. Climate Change Regulation. Climate change-related regulatory developments, including carbon pricing under the federal Output-Based Pricing System and Ontario emissions standards, may increase operating costs for the mine and concentrator operations. The mining industry is a significant contributor to greenhouse gas emissions, and increasingly stringent regulation is expected.

4. Water Management Risks. The proximity of the Wolverine Lake Mine to the Wolverine Lake watershed and associated watercourses presents water management risks. Increased mine dewatering under Phase II and the potential expansion of the TSF will require careful management to ensure ongoing compliance with effluent quality standards and to avoid impacts on the aquatic environment.

5. Tailings Storage Facility Integrity. The integrity and management of the tailings storage facility is an area of heightened regulatory and public scrutiny. Any failure or incident at the TSF could result in environmental contamination, regulatory enforcement, and significant financial liability.

6. Species at Risk and Indigenous Consultation. Ongoing engagement with Indigenous communities and the monitoring of species at risk are important elements of the Company's environmental and social management practices. While no material unresolved issues have been identified, the potential identification of new species at risk or the emergence of Indigenous consultation requirements could impose operational constrai

7. Financial Assurance Requirements. Financial assurance requirements for mine closure may increase as a result of the Phase II Expansion, changes in regulatory requirements, or increases in estimated closure costs. Such increases would reduce available capital and could affect the Company's financial flexibility. All of the foregoing material environmental risks are disclosed in the risk factors section of the Final

IX. Interaction with Collateral and Security Interests The Notes are secured by a first-priority lien on substantially all of the assets of WLML and TMPI, including the mining claims (Ontario Mining Claim Nos. WL-4492-01 through WL-4492-47), surface rights, and all tangible and intangible assets of WLML and TMPI, pursuant to the Canadian General Security Agreement dated April 19, 2022 (the "GSA"), with Northern Domin

X. Coordination with Other Due Diligence Workstreams This memorandum should be read in conjunction with the following additional due diligence memoranda and workstreams being prepared by the C&H deal team in connection with the Offering: • Due Diligence Memorandum — Material Contracts & Mining Rights. This memorandum provides a detailed analysis of the mining claim status, surface rights, offtake agreements, and othe

XI. Conclusions and Recommendations A. Summary Findings Based on our review of the materials, management interviews, independent engineer's report, and consultations with Canadian counsel, we summarize our findings as follows:

1. Phase I Permits in Good Standing. All material environmental permits and approvals for Phase I operations at the Wolverine Lake Mine are in good standing. No material compliance deficiencies, enforcement actions, penalties, or remediation orders have been identified. The minor administrative issues (late filing of quarterly monitoring data in Q3 2020 and Q1 2021) were resolved without penalty and are immaterial.

2. Phase II Permitting Substantially Advanced. Environmental permitting for the Phase II Expansion is substantially advanced. The primary outstanding regulatory item at the time of the original expected closing date — the amended Closure Plan under the Mining