Contract analysis

I. Introduction and Purpose I write on behalf of Calderwood & Harkness LLP ("C&H") in my capacity as lead outside counsel to Torchlight Mining Corp. ("TMC") and its relevant U.S. subsidiaries in connection with the above-captioned enforcement action. The purpose of this letter is twofold: first, to provide the West Virginia Attorney General's Office and the West Virginia Department of Environmental Protection ("WV DE

II. Background on the Overall Enforcement Action The United States Environmental Protection Agency ("EPA"), acting through EPA Region 3 with respect to the Kanawha Bend Facility in West Virginia, together with the United States Department of Justice, Environment and Natural Resources Division ("DOJ ENRD"), initiated the above-captioned enforcement action against TMC and its U.S. subsidiaries. DOJ filed the complaint

1. Torchlight Mining Corp. ("TMC"), a corporation organized and existing under the Canada Business Corporations Act ("CBCA"), with its principal Canadian headquarters at 1800 Bayfield Tower, 401 Bay Street, Toronto, Ontario, Canada M5H 2Y4;

2. Torchlight Mining (U.S.) Inc., a Delaware corporation (EIN 83-2047156), serving as the U.S. holding company for TMC's American operations;

3. Torchlight Specialty Chemicals, Inc., a Delaware corporation (EIN 47-3819204), which is the direct operator of the Kanawha Bend Chemical Plant and is wholly owned by TMC through Torchlight Mining (U.S.) Inc.;

4. Ridgecrest Mine Holdings, LLC, a Montana limited liability company (Montana Secretary of State ID E1042738); and

5. Bonanza Creek Mining, LLC, a Nevada limited liability company (Nevada Secretary of State Entity No. E0518294731). The enforcement action encompasses four facilities across three states — Montana, Nevada, and West Virginia. The complaint alleges violations of the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901 et seq.; and the Comprehensive

III. Kanawha Bend Chemical Plant: Factual Background For the convenience of your office and to provide context for the Consent Decree terms discussed below, we set forth the following summary of the factual background relating to the Kanawha Bend Facility. Location and Physical Description. The Kanawha Bend Chemical Plant is situated on approximately 78 acres at 2200 Chemical Valley Road, Institute, Kanawha County, W

IV. Summary of Consent Decree Terms Relevant to the Kanawha Bend Facility The following summary sets forth the material terms of the Consent Decree as they relate to the Kanawha Bend Facility. This summary is intended to be informational and does not purport to be a comprehensive restatement of all terms and conditions of the Consent Decree. In all cases, the Consent Decree itself — a copy of which is enclosed — gove

I. Force Majeure The Consent Decree contains a standard EPA force majeure provision. In the event that force majeure prevents TMC from complying with any requirement of the Consent Decree, TMC must provide written notice to EPA within fifteen (15) days of the occurrence of the force majeure event. The notice must describe the anticipated duration of the noncompliance, the cause or causes of the noncompliance, the mea

1. Informal Negotiation (30 days): The disputing parties shall attempt to resolve any dispute through informal negotiation for a period of thirty (30) days following written notice of the dispute.

2. Formal EPA Decision (30 days): If the dispute is not resolved through informal negotiation, EPA shall issue a formal written decision within thirty (30) days.

3. Judicial Review (30 days to petition): Any party aggrieved by EPA's formal decision may petition the Court for judicial review within thirty (30) days of the issuance of EPA's decision. K. Termination. The Consent Decree provides for site-by-site termination upon certification of completion by both EPA and the independent environmental monitor. For each site, termination of the Consent Decree's requirements may no

V. Anticipated Timeline The following is our current best estimate of the anticipated timeline for the lodging, entry, and initial implementation of the Consent Decree as it pertains to the Kanawha Bend Facility and the Action generally: These dates are subject to change based on court scheduling, the public comment process, and other factors. We will keep your office apprised of any material changes to this timeline

VI. Aggregate Financial Summary For context, we provide below a summary of the aggregate financial obligations under the Consent Decree across all four sites: TMC has established an environmental remediation reserve of C$340.0 million (approximately US$251.4 million at the prevailing exchange rate of 0.7394 CAD/USD) as of Q3 2024. This reserve is reflected in TMC's most recent public financial filings. For further co

VII. Request for State Permit Coordination We respectfully request the opportunity to coordinate with the WV DEP regarding the parallel state environmental permit obligations applicable to the Kanawha Bend Facility. As your office is aware, the Consent Decree's remediation requirements will interact with and, in certain respects, be implemented in conjunction with the Facility's existing state-authorized RCRA correct

VIII. State Co-Plaintiff Joinder The signature pages and joinder agreement by which the State of West Virginia will formally join the Consent Decree as a co-plaintiff are currently being finalized. We anticipate that these documents will be ready for the State's review and execution by February 14, 2025. We respectfully request your coordination in reviewing and executing the joinder and signature pages on behalf of

IX. Key Contacts For your reference, we set forth below the key contacts for the matters discussed in this letter: Calderwood & Harkness LLP: Harrison Wexford — Responsible Partner Beatrice Holloway — Billing Partner Elliot Nguyen — Lead Associate Grace Nakamura — Working Associate 28 Liberty Street, 44th Floor New York, New York 10005 Telephone: (212) 558-4000 Torchlight Mining Corp.: Miriam Soo-Hwan Park — General

X. Confidentiality and Privilege Reservation We note that certain information contained in this letter is provided in the context of settlement discussions and is subject to the applicable confidentiality provisions of the Consent Decree and the parties' prior agreements. Nothing in this letter is intended to waive, and TMC expressly reserves, any and all applicable privileges, including without limitation the attorn