Contract analysis

I. EXECUTIVE SUMMARY This memorandum analyzes the required updates to the annual report on Form 20-F filed by Torchlight Mining Corp. ("TMC" or the "Company") with the U.S. Securities and Exchange Commission (the "SEC"), arising from the consent decree (the "Consent Decree") lodged on February 19, 2025, in United States of America and State of Montana v. Torchlight Mining Corp. et al., Civil Action No. 9:24-cv-00087-

II. BACKGROUND A. Torchlight Mining Corp. — Corporate Overview Torchlight Mining Corp. is a corporation organized under the CBCA with its principal executive offices located at 1800 Bayfield Tower, 401 Bay Street, Toronto, Ontario M5H 2Y4, Canada. The Company maintains U.S. headquarters at 750 Copper Ridge Boulevard, Suite 200, Helena, Montana 59601. TMC is dual-listed on the TSX and the NYSE, trading under the symbo

1. Torchlight Mining Corp. — the parent company, organized under the CBCA.

2. Torchlight Mining (U.S.) Inc. — a corporation organized under the laws of the State of Delaware; EIN: 83-2047156; the principal U.S. operating subsidiary of TMC.

3. Torchlight Specialty Chemicals, Inc. — a corporation organized under the laws of the State of Delaware; EIN: 47-3819204; the specialty chemicals operating subsidiary.

4. Ridgecrest Mine Holdings, LLC — a limited liability company organized under the laws of the State of Montana; Montana Secretary of State ID: E1042738; the entity that owns and has historically operated the Ridgecrest Copper-Molybdenum Mine.

5. Bonanza Creek Mining, LLC — a limited liability company organized under the laws of the State of Nevada; Nevada Secretary of State Entity No.: E0518294731; the entity that owns and operates the Bonanza Creek Gold Mine. The plaintiffs are the United States of America, acting through the EPA and the DOJ, and, as co-plaintiffs, the State of Montana (through the Montana Department of Environmental Quality), the State

1. Ridgecrest Copper-Molybdenum Mine The Ridgecrest Copper-Molybdenum Mine (the "Ridgecrest Mine" or "Ridgecrest") is located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832. The mine footprint covers approximately 3,200 acres within a total controlled area of approximately 8,700 acres. Ridgecrest is an open-pit copper and molybdenum mine that was operated from 1978 through 2019 and is currentl

2. Gallatin Chemical Works The Gallatin Chemical Works (the "Gallatin Facility" or "Gallatin") is located at 8800 Industrial Park Lane, Belgrade, Gallatin County, Montana 59714. The facility occupies approximately 145 acres and has been engaged in specialty chemical manufacturing since 1993. The facility is currently active and operates under RCRA Permit No. MTD098712456 issued by the Montana Department of Environmen

3. Bonanza Creek Gold Mine The Bonanza Creek Gold Mine (the "Bonanza Creek Mine" or "Bonanza Creek") is located on County Road 447 at Mile Marker 12, Lander County, Nevada 89820. The mine footprint covers approximately 5,600 acres within a total controlled area of approximately 12,400 acres. Bonanza Creek is an open-pit heap-leach gold mine that has been in operation since 2001 and is currently active. The mine produ

4. Kanawha Bend Chemical Plant The Kanawha Bend Chemical Plant (the "Kanawha Bend Facility" or "Kanawha Bend") is located at 2200 Chemical Valley Road, Institute, Kanawha County, West Virginia 25112. The facility occupies approximately 78 acres and has been engaged in chemical manufacturing since 1985. The facility is currently active and operates under RCRA Permit No. WVD048823915 issued by the West Virginia Departm

1. Clean Water Act Section 301 — Unpermitted Discharges Ridgecrest Mine: The complaint alleges that acid mine drainage ("AMD") from the Ridgecrest Mine has been discharged to Flint Creek without authorization under a National Pollutant Discharge Elimination System ("NPDES") permit. The Bramwell Group elevated concentrations of copper, with an average measured concentration of 47 mg/L compared to the applicable aquati

2. RCRA Sections 3004 and 3005 — Hazardous Waste Mismanagement Ridgecrest Mine: Mismanagement of hazardous waste generated from the solvent extraction-electrowinning ("SX-EW") circuit at the mine, including failure to properly characterize, label, and store spent solvent and circuit bleed solutions. Gallatin Facility: Unpermitted storage of hazardous waste at three solid waste management units ("SWMUs") at the facili

3. CERCLA Section 107 — Cost Recovery The United States seeks reimbursement of EPA response costs totaling $18.1 million, consisting of $14.3 million for removal actions conducted at the Ridgecrest Mine between 2021 and 2023, and $3.8 million for emergency response costs incurred in connection with a June 14, 2020 sulfuric acid release at the Kanawha Bend Facility.

4. Migratory Bird Treaty Act The complaint alleges 17 avian mortalities at the Bonanza Creek Mine solution ponds during the period from 2021 through 2023, in violation of the MBTA. The mortalities involved migratory birds that came into contact with cyanide-bearing process solutions in the mine's heap-leach solution collection ponds.

III. APPLICABLE SEC DISCLOSURE REQUIREMENTS A. Form 20-F Disclosure Framework for Foreign Private Issuers TMC files its annual report on Form 20-F with the SEC pursuant to Section 13(a) of the Exchange Act and the rules and regulations promulgated thereunder. Form 20-F is the annual reporting form prescribed for foreign private issuers, and its disclosure requirements are, in many respects, analogous to — though not

IV. MATERIALITY ASSESSMENT A. Quantitative Materiality Analysis The following table summarizes the quantitative materiality analysis for the Consent Decree obligations relative to TMC's key financial metrics: Each of these ratios substantially exceeds commonly applied quantitative materiality thresholds. A charge equal to 48.6% of EBITDA is extraordinary by any standard. Similarly, an obligation representing 11.5% of

V. RECOMMENDED RISK FACTOR DISCLOSURE UPDATES Based on our analysis, we recommend that TMC add or update the following risk factors in Item 3.D of its FY2024 Form 20-F. Draft disclosure language for each risk factor is provided in Section VIII below. A. New or Updated Risk Factor: Environmental Remediation Obligations We recommend that TMC include a new risk factor — or substantially update the existing environmental

VI. RECOMMENDED LEGAL PROCEEDINGS DISCLOSURE (ITEM 8.A.7) A. Case Description The Item 8.A.7 legal proceedings disclosure should begin with a description of the Enforcement Action, including the full case caption, the court, the filing date, and the nature of the proceeding. The recommended approach is as follows: The disclosure should identify the case as United States of America and State of Montana v. Torchlight M

VII. MD&A DISCLOSURE CONSIDERATIONS A. Known Trends and Commitments The Consent Decree creates a defined schedule of financial commitments extending up to 30 years, which must be discussed in the MD&A section of the Form 20-F as known commitments under Item 5. The discussion should address both near-term and long-term cash outflows. Near-Term Cash Outflows (2025). The following significant cash outflows are expected

VIII. FINANCIAL STATEMENT FOOTNOTE CROSS-REFERENCES This section addresses the coordination between the narrative disclosures in the Form 20-F and the financial statement footnotes. As noted above, a separate draft financial statement footnote was prepared on February 28, 2025, and has been provided to Ridgeline Accounting Partners LLP for review. The following summarizes the key coordination issues. Nature and Scope

IX. TIMING AND FILING CONSIDERATIONS A. Form 20-F Filing Deadline TMC's fiscal year ends on December 31. As a foreign private issuer, TMC is required to file its annual report on Form 20-F within four months after the end of the fiscal year, or such earlier date as may be applicable to accelerated filers. Accordingly, the filing deadline for the FY2024 Form 20-F is April 30, 2025. The Consent Decree was lodged with t