Contract analysis

I. EXECUTIVE SUMMARY AND PURPOSE A. Purpose This memorandum summarizes the results of the due diligence review of material contracts and mining rights of Torchlight Mining Corp. ("TMC" or the "Company") and its subsidiaries — Wolverine Lake Mining Ltd. ("WLML"), Torchlight Milling & Processing Inc. ("TMPI"), and Torchlight U.S. Holdings, Inc. ("TUSHI" and, together with WLML and TMPI, the "Guarantor Subsidiaries") —

1. Ridgeline Facility — Repayment and Termination Required at Closing. The Ridgeline Facility must be repaid in full (CAD $140,000,000 drawn amount plus accrued interest, commitment fees, and breakage costs) and terminated contemporaneously with or immediately prior to the issuance of the Notes. The negative pledge and additional indebtedness covenants in the Ridgeline Facility would otherwise be violated by the issu

2. Offtake Agreements — Anti-Assignment Provisions Require Further Analysis. Certain nickel and copper concentrate offtake agreements contain anti-assignment provisions that may require counterparty consent for the grant of a security interest in the related contract rights to the Collateral Agent. Under applicable UCC and PPSA provisions, the creation of a security interest in a contractual right may not constitute

3. Phase II Expansion — Offtake Coverage and Contracting Status. The existing offtake agreements do not fully cover the incremental production volumes contemplated by the Phase II expansion. New or amended offtake agreements will need to be negotiated for Phase II volumes. In addition, certain construction and development contracts for the Phase II expansion have not yet been awarded. (See Sections IV.D and V.B.)

4. Mining Claims — Title Confirmation Pending. Pendleton Ross LLP has commenced title searches for all 47 mining claims comprising the Wolverine Lake property. Preliminary results are consistent with WLML's registered ownership and good standing, but final title search reports have not yet been delivered. Assessment work filings appear current, but final confirmation is pending. (See Section VI.B.)

5. Phase II Permits — Regulatory Timeline. Certain permits and approvals required for the Phase II expansion (including an amendment to the mine closure plan under the Ontario Mining Act and additional environmental approvals) have not yet been obtained. The closing date of the Offering was extended from April 5, 2022 to April 19, 2022 in part due to timing considerations related to Canadian regulatory clearances. (S

6. First Nations Consultation — Impact Benefit Agreement Under Negotiation. TMC is in active negotiations with the Matachewan First Nation regarding an impact benefit agreement ("IBA") relating to the Phase II expansion. While an existing accommodation agreement is in place covering Phase I operations, the IBA for Phase II has not been finalized. Failure to complete this process could delay Phase II permits. (See Sec

7. Employment Agreements — Change of Control Provisions. Certain key executive employment agreements contain change of control provisions that could be triggered by a future Change of Control event under the Indenture (which would require TMC to offer to repurchase the Notes at 101% of principal amount plus accrued and unpaid interest). Potential severance and benefit acceleration costs are identified. (See Section V

II. CORPORATE STRUCTURE — CONTRACTUAL CONTEXT An understanding of the corporate structure of TMC and its subsidiaries is essential to the analysis of the material contracts and mining rights discussed in this memorandum. Each entity plays a distinct role in holding and performing material contracts, and the interrelationship among the entities has implications for the security interest and collateral analysis address

III. EXISTING INDEBTEDNESS — RIDGELINE BANK OF CANADA REVOLVING CREDIT FACILITY A. Summary of Facility Terms TMC is currently party to a revolving credit facility with Ridgeline Bank of Canada (the "Ridgeline Facility"), which is the Company's sole existing credit facility and the only material indebtedness of TMC and its subsidiaries as of the date of this memorandum. The principal terms of the Ridgeline Facility ar

Section 8.01(j) of the Ridgeline Credit Agreement defines "Change of Control" as (i) the acquisition by any person or group of persons acting in concert of beneficial ownership of more than 50% of the outstanding voting shares of TMC, or (ii) the failure of TMC to own, directly or indirectly, 100% of the equity interests in each of WLML and TMPI. An Event of Default occurs upon a Change of Control as so defined, whic

Section 7.01 of the Ridgeline Credit Agreement contains a negative pledge covenant that restricts TMC and its subsidiaries from creating, incurring, or permitting to exist any lien on any of their respective assets, other than certain specified permitted liens. The permitted liens do not include liens securing debt in the principal amount of the Notes. Section 7.02 contains a covenant restricting the incurrence of ad

IV. OFFTAKE AND MARKETING AGREEMENTS A. Nickel Concentrate Offtake Agreements WLML and TUSHI are parties to nickel concentrate offtake agreements with the following counterparties:

1. Sumitake Metals Trading AG (WLML) WLML is party to a Nickel Concentrate Offtake Agreement dated August 12, 2018, as amended on January 10, 2020 (the "Sumitake Agreement"), with Sumitake Metals Trading AG ("Sumitake"), a Swiss-based trading company. The material terms of the Sumitake Agreement are as follows: Term: Initial term of five years from first commercial shipment (September 2019), with automatic one-year r

2. Glenborough Resources Inc. (TUSHI) TUSHI is party to a Nickel Concentrate Purchase and Sale Agreement dated March 5, 2019 (the "Glenborough Agreement"), with Glenborough Resources Inc. ("Glenborough"), a Delaware corporation with offices in Stamford, Connecticut. The material terms of the Glenborough Agreement are as follows: Term: Initial term of four years from first delivery (October 2019), with automatic two-y

1. Pan Pacific Smelting Ltd. (WLML) WLML is party to a Copper Concentrate Supply Agreement dated September 22, 2018 (the "Pan Pacific Agreement"), with Pan Pacific Smelting Ltd. ("PPS"), a corporation organized under the laws of Japan with its principal office in Tokyo, Japan and a North American sales office in Vancouver, British Columbia. The material terms of the Pan Pacific Agreement are as follows: Term: Initial

V. MINING SERVICES CONTRACTS A. Overview of Key Mining Services Contracts WLML, as the operating entity for the Wolverine Lake mine, is party to the following material mining services contracts. All contracts are governed by the laws of the Province of Ontario unless otherwise noted:

1. Driftwood Underground Services Corp. — Underground Development and Production Drilling WLML is party to a Mine Services Agreement dated May 1, 2018, as amended on September 15, 2020 (the "Driftwood Agreement"), with Driftwood Underground Services Corp. ("Driftwood"), an Ontario corporation with its head office in Sudbury, Ontario. Driftwood provides underground development, production drilling, and blasting servic

2. Borealis Haulage Ltd. — Underground and Surface Haulage WLML is party to a Haulage Services Agreement dated June 15, 2018 (the "Borealis Agreement"), with Borealis Haulage Ltd. ("Borealis"), an Ontario corporation based in Thunder Bay, Ontario. Borealis provides underground-to-surface haulage of run-of-mine ore and waste rock, as well as surface haulage of ore from the mine portal to the TMPI concentrator facility

3. Northridge Ventilation Systems Inc. — Ventilation Maintenance WLML is party to a Ventilation Maintenance and Monitoring Agreement dated October 1, 2019 (the "Northridge Agreement"), with Northridge Ventilation Systems Inc. ("Northridge"), an Ontario corporation based in Timmins, Ontario. Northridge provides ongoing maintenance, monitoring, and calibration services for the primary and auxiliary ventilation systems

4. Other Mining Services Contracts C&H has also reviewed the following contracts, which are summarized briefly here and included in the Schedule of Material Contracts (Section XII): (a) Explosive Supply Agreement — between WLML and Dynacore Explosives Canada Inc., dated April 1, 2019; supply of bulk emulsion explosives and detonators; annual cost approximately CAD $6,500,000; standard anti-assignment; no change of co

VI. MINING RIGHTS AND MINERAL CLAIMS A. Wolverine Lake Property — Overview The Wolverine Lake mine is a producing underground nickel-copper mine located approximately 85 kilometres northeast of Thunder Bay, Ontario, Canada, in the Wolverine Lake area. The mine property encompasses approximately 12,400 hectares and is accessible by a paved highway and a 15-kilometre gravel access road. The mine was developed by TMC (t

1. Mining Claim Registration The Wolverine Lake property is comprised of 47 contiguous mining claims registered under the Ontario Mining Act, R.S.O. 1990, c. M.14, as follows: Mining Claim Numbers: WL-4492-01 through WL-4492-47 Registered Holder: Wolverine Lake Mining Ltd. Registration: All 47 claims are registered in the Mining Lands Administration System ("MLAS") maintained by the Ontario Ministry of Mines (now the

2. Title Searches Pendleton Ross LLP has been retained to conduct comprehensive title searches for all 47 mining claims comprising the Wolverine Lake property. Title searches include: (a) Confirmation of registered ownership in the name of Wolverine Lake Mining Ltd.; (b) Search for registered encumbrances, caveats, liens, and competing claims; (c) Review of assessment work filings and confirmation that all maintenanc

3. Encumbrances. Based on the preliminary MLAS search results, the following encumbrances are registered against the mining claims: (a) Security Interest — Ridgeline Bank of Canada. A registered security interest in favor of Ridgeline Bank of Canada pursuant to the General Security Agreement dated November 15, 2019, encumbering all present and after-acquired personal property of WLML, including its interest in the mi

4. Collateral. The mining claims form a core component of the Collateral under the Canadian General Security Agreement to be granted to Northern Dominion Trust Company as Collateral Agent at closing. The security interest in the mining claims will be registered under the Ontario PPSA upon discharge of the Ridgeline security interest. Pendleton Ross LLP will coordinate the PPSA registrations. We note that mining claim

1. Crown Land Leases WLML holds a Crown Land Lease dated March 15, 2016 (the "Crown Lease"), granted by the Ontario Ministry of Natural Resources and Forestry, covering approximately 2,800 hectares of Crown land within the Wolverine Lake property boundary. The Crown Lease provides WLML with the right to use and occupy the surface of the leased lands for purposes related to mining operations, including mine infrastruc

2. Fee Simple Surface Rights WLML also holds fee simple title to approximately 1,600 hectares of private land within and adjacent to the Wolverine Lake property boundary, acquired through a series of arm's-length purchases between 2014 and 2017. Title to these lands is registered in the Land Titles Division of the Land Registry Office for the District of Thunder Bay under PIN numbers 62418-0201 through 62418-0218. We

3. Access Agreements WLML is party to a Road Access and Maintenance Agreement dated June 1, 2016 (the "Access Agreement") with the Township of Wolverine Lake, pursuant to which the Township permits WLML to use and maintain a 15-kilometre gravel access road connecting the mine site to Highway 11/17. WLML is responsible for maintenance and repair of the access road at its own cost. The Access Agreement has a term of 25

4. Collateral. The surface rights — including the Crown Lease, the fee simple lands, and the Access Agreement — are included in the Collateral under the Canadian General Security Agreement. Perfection of the security interest in the fee simple lands will require registration of a charge or notice of security interest in the applicable Land Titles Office, which Pendleton Ross LLP will coordinate. E. Royalty Obligation

1. Net Smelter Return Royalties Based on our review of the Data Room materials and discussions with Deepak Rathore (General Counsel) during the management presentations, there are no contractual net smelter return ("NSR") royalties, gross overriding royalties, or production royalties applicable to the Wolverine Lake property. WLML acquired the mining claims from the original prospectors (prior to TMC's involvement) f

2. Ontario Mining Tax WLML is subject to the Ontario Mining Tax under the Mining Tax Act, R.S.O. 1990, c. M.15. The Ontario Mining Tax is levied on "profit" from mining operations in Ontario at a rate of 10% on the first $500,000 of annual profit and 10% on profit in excess of $500,000, subject to certain deductions and allowances, including the Processing Allowance (an additional deduction equal to 8% of the cost of

3. Federal and Provincial Income Tax TMC and its Canadian subsidiaries are subject to federal and provincial income tax on their taxable income. Federal corporate income tax is levied at a rate of 15% (net of the general rate reduction), and Ontario corporate income tax is levied at a rate of 11.5%, for a combined rate of 26.5%. TMC's consolidated effective tax rate for the fiscal year ended December 31, 2021 was app

4. Federal Mining Duties C&H notes for completeness that there is no separate federal mining royalty or duty applicable to nickel and copper production in Ontario. Federal involvement in mining taxation is limited to the corporate income tax regime administered by the Canada Revenue Agency.

VII. GOVERNMENT PERMITS AND LICENSES A. Mining Permits and Licenses

1. Mine Operating License WLML holds a mine operating license (Mine Identification No.: ON-2017-0482) issued under the Ontario Mining Act by the Chief Inspector of Mines, Ontario Ministry of Labour, Training and Skills Development (Mine Safety Inspection Branch). The mine operating license was originally issued on June 15, 2017 and has been renewed annually. The current renewal is valid through June 15, 2022. WLML ha

2. Mine Closure Plan WLML has an approved mine closure plan (Closure Plan Amendment No. 3, approved October 22, 2020) filed under Section 140 of the Ontario Mining Act. The mine closure plan addresses the planned closure, rehabilitation, and reclamation of the Wolverine Lake mine, including the tailings management facility, waste rock storage areas, processing plant, and mine openings. WLML is required to provide fin