Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the state environmental permit obligations of Torchlight Mining Corp. ("TMC") and its subsidiaries across Montana, Nevada, and West Virginia that operate in parallel to the federal consent decree currently being negotiated with the United States Environmental Protection Agency ("EPA"), the United States Department of Justice ("DOJ"), and the three stat

1. Ridgecrest Copper-Molybdenum Mine — Drummond, Granite County, Montana

2. Gallatin Chemical Works — Belgrade, Gallatin County, Montana

3. Bonanza Creek Gold Mine — Lander County, Nevada

4. Kanawha Bend Chemical Plant — Institute, Kanawha County, West Virginia Each of these sites is subject to a complex web of federal and state environmental permits, regulatory orders, and compliance obligations. The Consent Decree, while comprehensive in its federal regulatory scope, does not preempt, replace, or supersede the independently issued state environmental permits that govern operations, discharges, waste

II. Scope and Background A. The Federal Consent Decree Framework The Consent Decree was lodged with the Court on February 19, 2025, and is currently subject to a thirty-day public comment period that is expected to close on March 21, 2025. Under the terms negotiated by the parties, the target date for entry of the Consent Decree by the Court is May 15, 2025, with the "Effective Date" defined as thirty days after entr

III. Montana: State Permit Obligations (Ridgecrest Mine and Gallatin Chemical Works) Montana's environmental regulatory framework imposes multiple, independent permitting requirements on TMC's two Montana facilities. This Part addresses the Montana Pollutant Discharge Elimination System ("MPDES") permits, Hard Rock Mining reclamation permits under the Metal Mine Reclamation Act, and the Montana RCRA-authorized state

1. Ridgecrest Mine — MPDES Permit Requirements The Ridgecrest Copper-Molybdenum Mine holds an existing MPDES permit (Permit No. MT-0030201) for point-source discharges from the mine dewatering system and the tailings impoundment decant. The permit authorizes discharge to Flint Creek, a tributary of the Clark Fork River, and specifies effluent limits for a range of contaminant parameters including dissolved copper, to

2. Gallatin Chemical Works — MPDES Permit Requirements The Gallatin Chemical Works holds an existing MPDES permit (Permit No. MT-0045623) with effluent limits for carbon disulfide ("CS₂") and total suspended solids ("TSS"), among other parameters. The permit authorizes discharge of treated process wastewater and stormwater to an unnamed tributary of the East Gallatin River. The Gallatin facility manufactures specialt

1. Ridgecrest Mine — Operating/Reclamation Permit Montana's Metal Mine Reclamation Act ("MMRA"), codified at Title 82, Chapter 4, Part 3, MCA, requires operators of hard rock mines to obtain an operating permit from MT DEQ's Hard Rock Mining Bureau and to submit a reclamation plan that provides for the restoration of mined lands to a condition suitable for post-mining land use. The MMRA is administered separately fro

2. Gallatin Chemical Works — State Permits The Gallatin Chemical Works is a specialty chemical manufacturing facility and is not a mining operation. Accordingly, the MMRA reclamation permit requirements do not apply to the Gallatin facility. The primary state permit obligations at Gallatin, in addition to the MPDES permit discussed in Section III.A.2 above, arise under Montana's authorized RCRA program, which is addr

1. Gallatin Chemical Works — RCRA Corrective Action The Gallatin Chemical Works holds RCRA Permit No. MTD098712456 and is designated as a corrective action facility under both federal and state law. MT DEQ has identified three solid waste management units ("SWMUs") at the Gallatin facility that require investigation and corrective action. The principal contaminants of concern at these SWMUs include: • Carbon disulfid

2. Ridgecrest Mine — RCRA Issues The Consent Decree includes allegations of RCRA § 3004 violations at the Ridgecrest Mine arising from the mismanagement of hazardous waste generated by the solvent-extraction/electrowinning ("SX/EW") circuit that was operated during the final years of active mining. Specifically, the complaint alleges that spent organic solvent from the SX/EW process, which exhibits the hazardous wast

1. Meeting with State Regulators. HDW to schedule a meeting with Annika Hedstrom (Montana Attorney General's Office) and representatives from MT DEQ's Hard Rock Mining Bureau and Waste Management and Remediation Division within thirty (30) days of the entry of the Consent Decree. The purpose of the meeting is to establish the framework for state-federal coordination and to address the specific issues identified in th

2. State Permit Modification Requirements. HDW to identify whether MT DEQ considers the federal Consent Decree sufficient to satisfy state permit modification requirements at both the Ridgecrest Mine and the Gallatin Chemical Works, or whether separate state orders, permit modifications, or corrective action plans are needed.

3. Financial Assurance. HDW to confirm Montana's state financial assurance requirements for the Ridgecrest Mine under the MMRA and for the Gallatin Chemical Works under the state RCRA program, and to evaluate whether the federal financial assurance instruments (Ironbark surety bond and Larchfield remediation trust) can serve a dual purpose or whether separate state instruments are required.

4. State Penalties. HDW to confirm the state's position on separate state penalties for the fourteen MPDES violations documented at the Gallatin Chemical Works between January 2021 and June 2024.

5. Schedule Coordination. HDW to coordinate the timing of state permit modifications with the Consent Decree milestones, including the Ridgecrest Remedial Action Work Plan (final submission due December 14, 2025) and the Gallatin Corrective Measures Study (submission due June 14, 2026).

IV. Nevada: State Permit Obligations (Bonanza Creek Gold Mine) Nevada's regulatory framework for mining operations and environmental compliance differs in significant respects from Montana's, reflecting the unique characteristics of the state's mining industry and its arid environment. The Bonanza Creek Gold Mine, an active open-pit heap-leach gold mine in Lander County, is subject to multiple overlapping state permi

1. Meeting with State Regulators. sagebrush to schedule a meeting with Ricardo Fuentes (Nevada Attorney General's Office) and NV DEP within thirty (30) days of the entry of the Consent Decree. The meeting should include representatives from NV DEP's Bureau of Water Pollution Control, Bureau of Mining Regulation and Reclamation, and Bureau of Waste Management.

2. Liner Repair Plan Coordination. sagebrush to confirm whether NV DEP will accept the Consent Decree's liner repair and containment plan as satisfaction of state water pollution control permit modification requirements or whether a separate state permit modification application is needed.

3. Financial Assurance. sagebrush to confirm state reclamation financial assurance requirements and evaluate the potential for cross-crediting with the federal Consent Decree financial assurance instruments.

4. State Penalties. sagebrush to clarify NV DEP's position on separate state penalties for the three documented process solution releases in 2022 and 2023.

5. Schedule Coordination. sagebrush to coordinate timing of state permit modifications with the Consent Decree milestones, particularly the liner repair commencement deadline of June 14, 2026.

6. Hazardous Waste Permitting. sagebrush to confirm state hazardous waste permitting status for spent heap-leach ore at Bonanza Creek and determine whether a state hazardous waste permit or permit modification is required.

V. West Virginia: State Permit Obligations (Kanawha Bend Chemical Plant) The Kanawha Bend Chemical Plant, located in the Chemical Valley corridor of Kanawha County, West Virginia, presents a distinct set of state permit coordination challenges. As an active chemical manufacturing facility that experienced a significant environmental release in 2020, the plant is subject to multiple state permit programs administered