Contract analysis

1. Recital A. The United States of America ("United States"), on behalf of the U.S. Environmental Protection Agency ("EPA"), filed a complaint on January 18, 2024, in this action against Torchlight Mining Corp. ("TMC"), Torchlight Mining (U.S.) Inc. ("TM(US)"), Torchlight Specialty Chemicals, Inc. ("TSC"), Ridgecrest Mine Holdings, LLC ("RMH"), and Bonanza Creek Mining, LLC ("BCM") (collectively, "Defendants" or "Set

2. Recital B. The State of Montana, through its Department of Environmental Quality ("MT DEQ"), is a co-plaintiff and intervenor in this action with respect to the Ridgecrest Mine and Gallatin Chemical Works facilities located in the State of Montana. The State of Nevada, through its Division of Environmental Protection ("NV DEP"), is a co-plaintiff and intervenor in this action with respect to the Bonanza Creek Mine

3. Recital C. Defendant TMC is a corporation incorporated under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, dual-listed on the Toronto Stock Exchange (TSX: TRC) and the New York Stock Exchange (NYSE: TRC), with its principal corporate offices located at 1800 Bayfield Tower, 401 Bay Street, Toronto, Ontario M5H 2Y4, Canada, and with its U.S. operational headquarters located at 750 Copper Ridge Boulevar

4. Recital D. The complaint alleges violations of the CWA, RCRA, and CERCLA at four facilities owned, operated, or formerly operated by one or more of the Defendants in the States of Montana, Nevada, and West Virginia, specifically: (1) the Ridgecrest Copper-Molybdenum Mine, located at 14200 Ridgecrest Mine Road, Drummond, Granite County, Montana 59832 (the "Ridgecrest Site"); (2) the Gallatin Chemical Works, located

5. Recital E. Defendants TMC and TM(US) are identified in the complaint as the operators of and/or arrangers for the disposal or treatment of hazardous substances at the Ridgecrest Site and the Bonanza Creek Site. Defendant TSC is identified in the complaint as the owner and operator of the Gallatin Site and the Kanawha Bend Site. Defendant RMH holds real property and mineral rights at the Ridgecrest Site and is iden

6. Recital F. On September 12, 2023, EPA issued a consolidated Notice of Violation to TMC covering all four Sites, identifying alleged violations of the CWA, RCRA, and CERCLA. The complaint in this action was filed on January 18, 2024. Defendants filed their answer to the complaint on March 5, 2024. On April 22, 2024, the parties entered into a Tolling Agreement, filed with the Court on April 23, 2024, tolling the ap

7. Recital G. Defendants do not admit any liability to the United States or to any State arising out of the transactions or occurrences alleged in the complaint, and nothing in this Consent Decree shall be construed as an admission of any fact or liability by any Defendant. Defendants consent to the entry of this Consent Decree for the purpose of resolving the claims alleged in the complaint and to avoid the expense,

8. Recital H. The Parties agree, and the United States and the States have determined, that this Consent Decree is fair, reasonable, and in the public interest, and that the terms and conditions set forth herein are consistent with and will further the objectives of the CWA, RCRA, and CERCLA, including the protection of human health and the environment.

9. Recital I. This Consent Decree has been lodged with this Court for a public comment period of not less than thirty (30) days, in accordance with 28 U.S.C. § 7003(d) and applicable policies of the United States Department of Justice. The United States has reviewed and considered all timely comments received during the public comment period and has determined that entry of this Consent Decree without modification is

10. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§ 1331 and 1345; Section 309(b) of the Clean Water Act, 33 U.S.C. § 1319(b); Section 3008(a) of the Resource Conservation and Recovery Act, 42 U.S.C. § 6928(a); and Sections 106 and 107 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9606 and 9607. This Court also has jurisdiction t

11. This Court has personal jurisdiction over each Defendant named herein. Defendants TMC and TM(US) are subject to general and specific personal jurisdiction in this District. Defendants TSC, RMH, and BCM are subject to specific personal jurisdiction in this District by virtue of their contacts with and activities in the State of Montana relating to the claims alleged in the complaint.

12. Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) and (c); Section 309(b) of the CWA, 33 U.S.C. § 1319(b); and Section 3008(a) of RCRA, 42 U.S.C. § 6928(a). A substantial part of the events or omissions giving rise to the claims alleged in the complaint occurred in this District, and Defendants TM(US), RMH, and TMC maintain offices and conduct business in this District.

13. Solely for the purposes of this Consent Decree and the underlying complaint, Defendants waive all objections and defenses that they may have to the Court's jurisdiction over the subject matter of this action and over their persons, and to the propriety of venue in this District. Defendants further consent to entry of this Consent Decree without further notice.

14. The complaint states claims upon which relief can be granted against each Defendant under the CWA, RCRA, and CERCLA. For purposes of this Consent Decree, the Parties stipulate that the complaint states valid claims for relief under each of these statutes.

15. This Consent Decree applies to and is binding upon the United States of America; the States of Montana, Nevada, and West Virginia; and the Defendants: Torchlight Mining Corp., Torchlight Mining (U.S.) Inc., Torchlight Specialty Chemicals, Inc., Ridgecrest Mine Holdings, LLC, and Bonanza Creek Mining, LLC, together with their respective successors, assigns, officers, directors, employees, agents, contractors, subc

16. The obligations of the Defendants under this Consent Decree are joint and several. Any performance required of Defendants may be performed by any one or more of the Defendants, and failure of any Defendant to perform any obligation shall not excuse any other Defendant from its obligation to ensure that such performance is completed. The joint and several liability of Defendants under this Paragraph shall not be c

17. Any change in the ownership or corporate status, form, or structure of any Defendant, including but not limited to any sale, merger, acquisition, dissolution, reorganization, or restructuring, shall not in any way alter the responsibilities or obligations of such Defendant under this Consent Decree. No later than sixty (60) days prior to any proposed transfer of operations or ownership of any Facility, or of any

18. Each undersigned representative of each Party to this Consent Decree certifies that he or she is fully authorized to enter into the terms and conditions of this Consent Decree and to execute and legally bind the Party he or she represents to this document.

19. Unless otherwise expressly provided herein, terms used in this Consent Decree that are defined in the CWA, RCRA, or CERCLA, or in regulations promulgated under those statutes, shall have the meanings assigned to them in those statutes or regulations. The following additional definitions shall apply to this Consent Decree: a. "Bonanza Creek Site" or "Bonanza Creek Facility" shall mean the Bonanza Creek Gold Mine l

20. The express purpose of this Consent Decree is to resolve the civil claims of the United States of America and the States of Montana, Nevada, and West Virginia against the Defendants, as set forth in the complaint filed in this action. This Decree is intended to: a. Ensure that Defendants perform comprehensive remediation and corrective action at all four Facilities — the Ridgecrest Site, the Gallatin Site, the Bo

21. The Parties intend this Consent Decree to constitute a comprehensive resolution of the civil claims alleged in the complaint. Nothing in this Decree, however, is intended to limit the authority of the United States or any State to take action to protect public health and the environment, or to exercise any authority reserved under applicable law, as set forth in Section XXII.

22. Within the time frames specified in Paragraph 24, Defendants shall pay a total civil penalty of $31,500,000 (thirty-one million five hundred thousand dollars) to resolve the civil penalty claims alleged in the complaint for violations of the CWA and RCRA at the Facilities.

23. The civil penalty shall be allocated among the four Facilities as follows:

24. The total civil penalty of $31,500,000 shall be paid in four (4) equal installments of $7,875,000 each, according to the following schedule: a. First Installment: $7,875,000, due and payable within thirty (30) days of the Effective Date (i.e., on or before July 14, 2025); b. Second Installment: $7,875,000, due and payable on the date that is twelve (12) months after the Effective Date (i.e., on or before June 14,

25. All payments of the civil penalty shall be made by electronic funds transfer ("EFT") to the United States Department of Justice account, in accordance with current DOJ and EPA wire-transfer instructions provided to Defendants at least ten (10) days prior to each payment date. Each payment shall reference Civil Action No. 9:24-cv-00087-DWM and DOJ Case Number 90-5-2-1-12387. At the time of each payment, Defendants

26. The allocation of any share of the civil penalty among the Plaintiffs, Co-Plaintiffs, and the United States, including any amounts to be paid to the States of Montana, Nevada, or West Virginia, shall be as separately agreed among those parties and the DOJ, and the responsibility for any such allocation shall not rest with the Defendants. Defendants' sole obligation is to pay the total civil penalty of $31,500,000

27. In the event that any installment of the civil penalty is not paid when due, Interest shall accrue on the unpaid balance from the date payment was due at the rate established by 28 U.S.C. § 1961, as calculated on the date of this Decree. Such Interest shall be in addition to any stipulated penalties that may accrue under Section XVII.

VII. EPA PAST RESPONSE COSTS REIMBURSEMENT (CERCLA § 107)

28. In addition to the civil penalty set forth in Section VI, Defendants shall reimburse the United States for past response costs incurred by EPA in connection with response actions at the Ridgecrest Site and the Kanawha Bend Site in the total amount of $18,100,000 (eighteen million one hundred thousand dollars).

29. The past response costs reimbursement of $18,100,000 consists of the following components: a. Ridgecrest Site: $14,300,000 for EPA removal actions conducted at the Ridgecrest Site between January 15, 2021 and May 30, 2023, pursuant to the Administrative Order on Consent, Docket No. CERCLA-08-2022-0039, executed September 15, 2022 (the "Ridgecrest AOC"). These removal actions included emergency measures to address

30. The total past response costs reimbursement of $18,100,000 shall be paid within sixty (60) days of the Effective Date (i.e., on or before August 13, 2025) by electronic funds transfer to the EPA Hazardous Substance Superfund, in accordance with current EPA wire-transfer instructions. Defendants shall transmit written notice of payment, including EFT confirmation, to the DOJ, EPA, and all counsel of record simulta

31. Interest on the past response costs reimbursement shall accrue from the date of entry of this Consent Decree at the rate established by 26 U.S.C. § 9507(a) or 28 U.S.C. § 1961, as applicable, until the date of payment. In the event that Defendants fail to make timely payment, Interest shall continue to accrue on the unpaid balance, and stipulated penalties shall apply as set forth in Section XVII.

32. By agreeing to reimburse the United States for the past response costs identified in this Section, Defendants expressly reserve no claims for contribution, cost recovery, or indemnification against the United States or any State arising out of or related to these past response costs. This waiver is limited to the specific costs identified in Paragraph 29 and does not extend to claims that Defendants may have agai

VIII. COMPLIANCE REQUIREMENTS — RIDGECREST SITE A. Site Description and Violations

33. The Ridgecrest Copper-Molybdenum Mine is an open-pit copper and molybdenum mining operation that has been operational since 1978. Active mining operations at the Ridgecrest Site ceased on December 31, 2019, and the Site is currently in its closure and reclamation phase. The Site has been proposed for listing on the National Priorities List ("NPL") and is currently being addressed under Administrative Order on Con

34. The Ridgecrest Site encompasses approximately 3,200 acres of mine footprint, including the main open pit, three waste-rock dumps totaling approximately 180 million tons of material, a 425-acre tailings impoundment containing approximately 210 million tons of tailings, a mill and concentrator complex, and the solvent extraction/electrowinning ("SX/EW") process area. The total controlled property encompasses approx

35. The 425-acre tailings impoundment has documented seepage to Flint Creek through the embankment and underlying alluvial materials. The principal contaminants of concern at the Ridgecrest Site include acid mine drainage containing the following dissolved constituents at the concentrations indicated: • Dissolved copper: average concentration of 47 mg/L, compared to the Montana chronic aquatic life standard of 0.0087

36. The complaint alleges the following violations at the Ridgecrest Site: a. CWA § 301, 33 U.S.C. § 1311 — Unpermitted discharges of pollutants, including acid mine drainage and tailings seepage, from point sources at the Ridgecrest Site to Flint Creek and its tributaries, which are waters of the United States, without authorization under a National Pollutant Discharge Elimination System ("NPDES") permit or Montana

37. Within one hundred eighty (180) days of the Effective Date (deadline: December 14, 2025), Defendants shall submit a comprehensive Ridgecrest Remedial Action Work Plan ("Ridgecrest Work Plan") to EPA Region 8 and MT DEQ for review and approval. The Ridgecrest Work Plan shall be prepared by qualified environmental engineers and hydrogeologists and shall be consistent with the National Contingency Plan, 40 C.F.R. Pa

38. The Ridgecrest Work Plan shall address the following remedial components in sufficient detail to enable EPA to evaluate the proposed remedial approach, including engineering design criteria, performance specifications, construction schedules, and cost estimates for each component: a. Acid Mine Drainage Collection and Treatment: Design and construction of a comprehensive acid mine drainage collection and treatment

39. EPA Region 8, in coordination with MT DEQ, shall review the Ridgecrest Work Plan and, within ninety (90) days of receipt of a complete submission, shall approve the Work Plan, approve the Work Plan with modifications, or disapprove the Work Plan with a written explanation of deficiencies. If EPA disapproves the Work Plan, Defendants shall resubmit a revised Work Plan within forty-five (45) days of receipt of EPA'

40. Remedy Construction Commencement: Defendants shall commence construction of the approved remedy at the Ridgecrest Site within twenty-four (24) months of the Effective Date (i.e., on or before June 14, 2027). For purposes of this Paragraph, "commencement of construction" means the mobilization of construction equipment and personnel to the Site and the initiation of physical construction activities consistent with

41. Remediation Duration: The remediation program at the Ridgecrest Site shall extend for a period of thirty (30) years from the date of commencement of remedy construction, through June 14, 2055, or such later date as may be required to achieve all applicable performance standards, whichever is later. During this period, Defendants shall operate and maintain all remedial systems, conduct required monitoring, and per

42. Negotiated Remediation Cost: The parties have negotiated an estimated total remediation cost for the Ridgecrest Site of $198,600,000 in nominal dollars over the thirty-year remediation period, which represents a net present value of approximately $134,900,000 calculated at a three percent (3%) discount rate. This negotiated figure represents a compromise between Defendants' cost estimate of $187,500,000 and EPA's

43. EPA Region 8 has designated Dr. Samuel Tesfaye as the EPA Project Coordinator for the Ridgecrest Site. Dr. Tesfaye shall serve as the primary EPA point of contact for all technical matters relating to the Ridgecrest remediation.

44. The remediation milestones and schedule for the Ridgecrest Site are set forth in Appendix A (Ridgecrest Remediation Milestones). The sampling and monitoring requirements for the Ridgecrest Site are set forth in Appendix B (Ridgecrest Sampling and Monitoring Plan). Both Appendix A and Appendix B are incorporated into this Consent Decree by reference and are enforceable as terms of this Decree. C. Performance Stand

45. Defendants shall achieve and maintain compliance with the following performance standards at the Ridgecrest Site, within the timeframes specified in the approved Ridgecrest Work Plan and Appendix A: a. Surface water discharges from the Ridgecrest Site to Flint Creek and its tributaries shall meet Montana surface water quality standards for dissolved copper, molybdenum, selenium, and sulfate, as set forth in the A

IX. COMPLIANCE REQUIREMENTS — GALLATIN SITE A. Site Description and Violations

46. The Gallatin Chemical Works is a specialty chemical manufacturing facility that produces flotation reagents, including sodium xanthate, potassium amyl xanthate, dithiophosphate collectors, and related mining chemicals. The facility has been operational since 1993 and is currently active. The Gallatin Site is a RCRA Corrective Action facility operating under RCRA Permit No. MTD098712456, issued by EPA Region 8 in

47. The Gallatin Site encompasses approximately 145 acres and includes three manufacturing buildings, raw material storage areas, finished product warehousing, a wastewater treatment system, and associated infrastructure. Three solid waste management units ("SWMUs") have been identified at the facility during prior RCRA facility assessments: (i) SWMU-1, the former reagent tank farm area; (ii) SWMU-2, the carbon disul

48. The principal contaminants of concern at the Gallatin Site include: • Carbon disulfide (CS₂) in groundwater, with a maximum detected concentration of 890 µg/L, compared to the federal maximum contaminant level ("MCL") of 10 µg/L, indicating contamination levels approximately 89 times the applicable standard; • Xanthate decomposition products, including carbon disulfide, carbonyl sulfide, and various sulfur-contai

49. The complaint alleges the following violations at the Gallatin Site: a. RCRA §§ 3004 and 3005, 42 U.S.C. §§ 6924 and 6925 — Unpermitted storage of hazardous waste in an area not authorized under the facility's RCRA permit, specifically the storage of approximately 45 drums of spent xanthate residues and carbon disulfide still bottoms in the former drum storage area (SWMU-3) without a RCRA permit or interim status

50. Within twelve (12) months of the Effective Date (deadline: June 14, 2026), Defendants shall submit a comprehensive Corrective Measures Study ("CMS") for the Gallatin Site to EPA Region 8 and MT DEQ for review and approval. The CMS shall be prepared in accordance with EPA's RCRA Corrective Action guidance and shall evaluate remedial alternatives for the following areas and media: a. Each of the three SWMUs (SWMU-1

51. EPA Region 8 shall review the CMS and, within one hundred twenty (120) days of receipt of a complete submission, shall select the corrective measure or combination of corrective measures and issue a Statement of Basis describing the selected remedy, including the rationale for selection and applicable performance standards. The Statement of Basis shall be subject to public comment as required by applicable regula