Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze Torchlight Mining Corp.'s ("TMC" or "Torchlight") potential criminal and civil exposure under the Migratory Bird Treaty Act ("MBTA"), 16 U.S.C. §§ 703–712, arising from seventeen (17) documented avian mortalities at the Bonanza Creek Gold Mine solution ponds between 2021 and 2023. This analysis has been prepared at the request of the General Counsel's

II. Factual Background A. The Bonanza Creek Solution Ponds The Bonanza Creek Gold Mine employs a conventional heap-leach gold extraction process in which a dilute cyanide-bearing process solution is applied to crushed ore that has been placed on engineered, lined heap-leach pads. As the cyanide solution percolates through the ore, it dissolves gold and silver from the rock. The resulting gold-bearing solution—referre

III. Legal Framework — The Migratory Bird Treaty Act A. Statutory Prohibitions The MBTA, enacted in 1918 and codified at 16 U.S.C. §§ 703–712, is the primary federal statute governing the protection of migratory birds in the United States. The Act's central prohibition is found at 16 U.S.C. § 703(a), which provides: "Unless and except as permitted by regulations made as hereinafter provided in this subchapter, it sha

IV. Risk Assessment — Torchlight's Specific Exposure A. Criminal Exposure Probability assessment: Moderate. While DOJ has historically been reluctant to bring criminal MBTA misdemeanor charges against mining companies with established bird deterrence programs—particularly where the company is cooperating in a broader environmental settlement—the factual record at Bonanza Creek presents a more compelling case for pros

1. Number of mortalities. Seventeen (17) documented avian mortalities at a single facility is a significant number by historical enforcement standards. DOJ's MBTA enforcement docket includes cases involving comparable or even smaller mortality counts that have resulted in criminal prosecution. For example, in United States v. Moon Lake Electric Ass'n, Inc., 45 F. Supp. 2d 1070 (D. Colo. 1999), a rural electric cooper

2. Temporal pattern. The mortalities span a three-year period (2021–2023) and demonstrate a continuing pattern rather than an isolated incident. This temporal distribution suggests ongoing non-compliance with basic bird protection obligations and undermines any argument that the mortalities were unforeseeable or that TMC responded adequately to the initial incidents.

3. Heap-leach solution releases. The three documented heap-leach solution releases (March 17, 2022; August 9, 2022; and January 22, 2023)—each involving a torn liner that released cyanide-bearing process solution to an ephemeral tributary of the Reese River—demonstrate operational negligence that compounded the bird mortality hazard. These releases created additional open-water surfaces containing lethal concentratio

4. Elevated contaminant levels. The WAD cyanide concentration of 0.62 mg/L (approximately twenty-eight times the discharge limit of 0.022 mg/L) and the mercury concentration of 12.4 µg/L (approximately sixteen times the water-quality criterion of 0.77 µg/L) are substantially above regulatory thresholds. These concentrations demonstrate that the solution ponds are not merely marginally hazardous but are lethal to any

5. Inadequacy of deterrence measures. As documented by Pinnacle Creek Environmental's assessment, the existing bird deterrence infrastructure at Bonanza Creek is materially deficient. Partial netting coverage, non-functional hazing devices, and reliance on ineffective visual deterrents indicate that TMC did not make reasonable efforts to prevent bird deaths, a factor that DOJ's prosecutorial guidelines specifically i

1. Existing deterrence measures. Although inadequate, TMC does have bird deterrence measures in place at Bonanza Creek. The existence of some deterrence infrastructure—however imperfect—distinguishes this case from situations in which a company took no steps whatsoever to protect birds, and provides a basis for arguing that TMC's conduct, while deficient, does not rise to the level warranting criminal prosecution.

2. Cooperation with EPA/DOJ. TMC is actively cooperating in the broader consent decree negotiation and has engaged constructively with the government on all aspects of the enforcement action, including the MBTA component. DOJ's prosecutorial discretion guidelines identify cooperation as a significant mitigating factor in charging decisions.

3. DOJ policy preference for civil resolution. As discussed in Section III.E, DOJ has historically favored civil resolution of incidental take cases at cooperating industrial facilities. The current DOJ/ENRD leadership has not signaled an intent to deviate from this preference in the TMC matter.

4. No evidence of intentional harm. There is no evidence that any TMC employee or officer intentionally killed or directed the killing of migratory birds. The mortalities are the incidental byproduct of mining operations, not the result of purposeful conduct directed at birds.

5. Regulatory gap. The absence of an MBTA incidental take permitting mechanism means that TMC could not have obtained advance authorization for incidental bird mortality even if it had sought to do so. While this does not excuse the failure to maintain adequate deterrence, it provides context that a court or DOJ decision-maker may consider relevant. Responsible individuals: As noted in Section III.B, individual offic

V. Integration with Consent Decree Negotiation A. Government's Position on MBTA Resolution Based on our communications with Philip Orenstein (DOJ, Environment and Natural Resources Division) and Margaret Coulson (EPA, Office of Enforcement and Compliance Assurance), the government has indicated a willingness to resolve the MBTA claims at Bonanza Creek civilly within the consent decree framework rather than pursuing s

1. Implementation of enhanced bird deterrence measures at the Bonanza Creek solution ponds, as specified in an Avian Protection Plan to be incorporated into the consent decree;

2. Payment of the negotiated civil penalty for Bonanza Creek ($7.9 million), which, as noted above, already reflects an upward adjustment for the MBTA violations; and

3. Ongoing compliance monitoring and reporting to demonstrate the effectiveness of the enhanced deterrence measures. The government's willingness to pursue civil resolution rather than criminal prosecution is consistent with DOJ's general prosecutorial discretion policies for incidental take cases, as discussed in Section III.E. However, the government has not provided a formal commitment or written assurance that cr

1. Avian Protection Plan. The consent decree should include, as an appendix or exhibit, a comprehensive Avian Protection Plan ("APP") for the Bonanza Creek solution ponds. The APP should specify the following elements: (a) Upgraded physical deterrence systems. The APP should require TMC to install and maintain bird exclusion netting over all solution ponds containing WAD cyanide concentrations above 50 mg/L (the USFW

2. Release of MBTA criminal claims. In exchange for TMC's compliance with the Avian Protection Plan and payment of the negotiated civil penalty, the consent decree should include a release of MBTA criminal claims arising from the documented avian mortalities at Bonanza Creek during the 2021–2023 period. The release should be structured as a covenant not to sue rather than a formal dismissal with prejudice, to preserv

3. Stipulated penalties for APP non-compliance. The consent decree should include stipulated penalties for non-compliance with the Avian Protection Plan, consistent with the decree's general stipulated penalty framework. We recommend the following graduated penalty structure: • $1,500 per day for each day of non-compliance during the first thirty (30) days following notice of non-compliance; • $3,000 per day for each

VI. Recommended Mitigation Strategies A. Immediate Operational Measures (Pre-Consent Decree Entry) We strongly recommend that TMC take the following immediate steps to enhance bird deterrence at Bonanza Creek, even before the consent decree is finalized and entered. Taking prompt action will serve multiple purposes: it will reduce the ongoing risk of additional avian mortalities (which would expand TMC's MBTA exposur

1. Engage Pinnacle Creek Environmental for immediate assessment. TMC should direct Pinnacle Creek Environmental, LLC (Dr. Astrid Bergmann, P.E.) to conduct an immediate, focused assessment of the existing bird deterrence systems at Bonanza Creek and to recommend specific upgrades. Dr. Bergmann's team has already conducted a preliminary assessment as part of the broader site evaluation; the immediate assessment should

2. Install supplemental netting and hazing devices. Based on the preliminary assessment, TMC should install supplemental bird exclusion netting and automated hazing devices over the highest-risk solution ponds within sixty (60) days. Priority should be given to the pregnant solution ponds, which have the highest WAD cyanide concentrations and the greatest documented mortality rates. Automated hazing devices—including

3. Implement daily monitoring and mortality reporting protocols. TMC should immediately implement a protocol requiring daily visual inspections of all solution ponds by trained environmental personnel, with same-day documentation of any avian mortality or distressed bird observations. Mortality events should be reported to the USFWS and EPA within 24 hours of discovery. This protocol should be documented in a written

4. Train site personnel. TMC should conduct training sessions for all Bonanza Creek site personnel on bird deterrence best practices, mortality reporting requirements, and the legal significance of MBTA compliance. Training should be documented and records maintained.

5. Document all mitigation efforts meticulously. Every step taken to improve bird deterrence at Bonanza Creek—from equipment purchases to personnel training to monitoring logs—should be documented with dates, descriptions, photographs, and responsible personnel. This documentation will serve as TMC's primary evidence of good faith in any future interaction with DOJ, EPA, USFWS, or a court. B. Long-Term Measures (Post

1. Full implementation of the Avian Protection Plan. TMC should comply with all requirements of the APP as incorporated into the consent decree, including upgraded deterrence systems, monitoring and reporting protocols, annual third-party audits, and adaptive management.

2. Engineering controls to reduce solution-pond hazard. TMC should evaluate engineering controls that would reduce the overall bird mortality hazard at the source, rather than relying solely on deterrence measures to prevent bird contact with contaminated water. Potential engineering controls include: (a) reduction of open solution-pond surface area through consolidation of ponds or conversion from open ponds to cove

3. Coordination with broader remediation. TMC should ensure that the Bonanza Creek liner repair and containment plan—which is required to commence by June 14, 2026, under the consent decree's scope-of-work provisions—is designed and implemented in a manner that also reduces t