Contract analysis

From: "Conrad Ashby" To: "Patricia Sung" Cc: "Victoria Chambers" Subject: PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION — Investigation Status Update — April 2025

**─────────────────────────────────────────────────────────────────────** **PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT**

This email and any attachments are protected by the attorney-client privilege and the work product doctrine. This communication is intended solely for the addressee(s) named above and should not be forwarded, disclosed, or shared with any third party without the express prior consent of Calderwood & Harkness LLP. If you have received this communication in error, please notify the sender immediately and delete all cop

I am writing to provide you with a privileged status update on the internal investigation into potential violations of the Foreign Corrupt Practices Act in connection with Torchlight Mining Corp.'s West African operations. Since we formalized the engagement on March 5, 2025, and following our call on April 1, the team has made substantial progress. We remain on track with the investigation work plan set forth in our

This update covers the following topics: (a) first-wave witness interviews, (b) forensic accounting progress, (c) SEC document production status, (d) DOJ coordination, (e) upcoming second-wave interviews and the status of key subject interviews, (f) coordination with other counsel, (g) the interim report timeline, and (h) D&O insurance notice status.

**A. First-Wave Witness Interviews (Toronto, April 7–11, 2025)**

The team completed the first wave of witness interviews in Toronto during the week of April 7–11, 2025. Three interviews were conducted, each under Upjohn warnings administered in accordance with our standard witness interview protocol.

**1. Nadia Berenson, VP, Compliance and Ethics — April 7, 2025** (interviewed by Conrad Ashby and Steven Hollander). Ms. Berenson provided a detailed account of the receipt and escalation of the anonymous whistleblower complaint dated August 19, 2024 (Report ID SCH-2024-08-4417), which was received through the Sentinel Compliance Solutions hotline. She described escalating the complaint to Audit Committee Chair Dr. E

**2. Diane Fournier, VP, Finance — April 8, 2025** (interviewed by Steven Hollander and Jasmine Thornton). Ms. Fournier addressed her oversight of TGH and TGM financial consolidation. She acknowledged familiarity with Crestfield invoices at a consolidated reporting level but stated she did not review individual invoices or the approval chain. She confirmed that total payments to Crestfield reached $3,210,000 — exceed

**3. Patricia Sung, General Counsel — April 9, 2025** (interviewed by Conrad Ashby and Steven Hollander). Patricia, thank you again for your cooperation and the considerable time you made available during your interview last Wednesday. The memorandum from your interview has been prepared and is currently being finalized. Per our interview protocol, we will circulate it to you for your review.

Each of the three interviews has been memorialized in a detailed privileged memorandum, which Steven Hollander and Jasmine Thornton are finalizing.

As a summary observation, the first-wave interviews confirm several of the red flags previously identified in our March 28, 2025 red-flag summary memorandum. In particular, they corroborate the absence of any competitive selection process for Crestfield, single-approval violations on invoices exceeding $50,000 (14 of 24 invoices lacked the required dual approval), and Mr. Delacroix's personal introduction of Jean-Pie

**B. Forensic Accounting Progress (Pinnacle Forensic Advisory LLC)**

Dr. Leonard Strauss and the Pinnacle Forensic Advisory team have been actively conducting the forensic review since their retention on March 12, 2025. Key preliminary findings to date include the following:

- **Invoice mapping complete.** Pinnacle has completed the initial mapping of all 24 Crestfield invoices across the six-year period (2019–2024), totaling $3,210,000. The year-by-year breakdown is confirmed as follows: 2019 ($420,000, 3 invoices); 2020 ($575,000, 4 invoices); 2021 ($680,000, 5 invoices); 2022 ($610,000, 4 invoices); 2023 ($590,000, 5 invoices); and 2024 through October ($335,000, 3 invoices, with the

- **Contractual excess confirmed.** Pinnacle has confirmed the $1,170,000 excess over the contractual maximum of $2,040,000. The contractual maximum is calculated as retainers of $990,000 ($15,000/month over 66 months), plus success fees of $500,000 (five permits at $100,000 each), plus maximum expense reimbursements of $550,000 ($25,000/quarter over approximately 22 quarters).

- **Wire transfer analysis.** Wire transfer records obtained from Meridian Commercial Bank (TGH Account No. 7740-2281-0056) are under analysis. Pinnacle has identified and is tracing the routing of all Crestfield payments through this account.

- **TGM local account review.** Pinnacle is reviewing TGM's Regency International Bank records (Account No. GAN-4419-8837) for the $890,000 in cash withdrawals booked under GL 7450 ("Community Relations Expenses") and the $630,000 in in-kind benefits (vehicles, travel) booked across GL 7200 and GL 7310.

- **Timing correlation.** Pinnacle has flagged a notable timing correlation: Crestfield invoices spiked in the 30–60 day window preceding each of the five permit issuance dates — namely, the Kousseri Mining License (September 14, 2019), the Kousseri Environmental Approval (March 27, 2020), the Dembélé Exploration License (July 8, 2021), the Dembélé Mining License Upgrade (February 14, 2023), and the Kousseri Expansio

- **Budget.** Pinnacle's estimated fees remain within the $1.8–$2.4 million range. They expect to complete the core forensic analysis by mid-May in order to support the interim report.

I would also note that a detailed memorandum on payment flows was prepared by Steven Hollander and Jasmine Thornton on April 3, 2025, coordinating with Pinnacle's work. That memorandum will be included in the interim report package.

**C. SEC Document Production Status (File No. HO-14892)**

Calderwood & Harkness made the first rolling production of documents to the SEC Division of Enforcement today, April 14, 2025, responsive to the formal document subpoena served on February 3, 2025, in connection with File No. HO-14892. A cover letter accompanied the production, describing the production format, the Bates numbering convention, and indicating that a privilege log will follow in a subsequent production.

Marlowe Asset Management Digital Forensics Inc. (Rachel Hartley, engagement lead) has processed and hosted the document data — approximately 1.625 TB across 23 custodians (12 current employees, 4 former employees, and 7 shared/departmental mailboxes). The first production covers non-privileged corporate records, the Crestfield Advisory Agreement and related documents, board and Audit Committee minutes, and financial

The privilege log is being prepared by Jasmine Thornton and will be produced in a subsequent rolling production. Additional rolling productions are anticipated on a bi-weekly basis going forward. Our production approach continues to be guided by the response strategy memorandum prepared by Steven Hollander on March 11, 2025.

Calderwood & Harkness sent the acknowledgment letter to Assistant Chief Margaret Calloway of the DOJ Fraud Section FCPA Unit on March 18, 2025, confirming receipt of the February 14, 2025 voluntary document preservation request and confirming that Torchlight's litigation hold was issued on March 17, 2025, covering all documents from January 1, 2018 to the present.

No subpoena has been issued by the DOJ to date, and the DOJ inquiry remains at the preliminary inquiry stage.

The voluntary self-disclosure analysis memorandum (dated March 24, 2025) remains under active consideration and will be a central topic of discussion in the interim report to the Audit Committee. I want to remind you that our target decision deadline for voluntary self-disclosure is June 30, 2025, and the Audit Committee — Dr. Eleanor Fiske, Warren Ogilvy, and Marguerite Chen — will need to weigh in after receiving t

As previously discussed, the total government exposure range remains estimated at $14.19 million to $19.63 million (DOJ criminal fine of up to $9.46 million; SEC disgorgement of $4.73 million; potential prejudgment interest of approximately $709,500; and an SEC civil penalty of up to $4.73 million). These figures and the underlying analysis will be addressed in detail in the Audit Committee presentation.

**E. Upcoming Second-Wave Witness Interviews (Ganara, via Video) and Key Subject Interview Status**

The second-wave witness interviews are scheduled for April 28 – May 2, 2025, and will be conducted via videoconference with Ganara-based personnel. The planned interviews are:

- **Thomas Achebe**, Finance Director, TGM — focus areas include Crestfield invoice processing, cash withdrawal procedures at Regency International Bank, and any directions received from Raymond Osei-Bonsu regarding GL coding.

- **Kwame Mensah**, Procurement Manager, TGM — focus areas include vehicle purchases and in-kind benefits provided to government officials (including Col. Ibrahim Konaté), procurement procedures, and his interactions with Osei-Bonsu.

Maître Salif Ndong of Ndong & Keïta Cabinet Juridique has been consulted regarding Ganaran legal considerations for interviewing locally based employees and has confirmed that there is no impediment under Ganaran law, provided that Upjohn warnings are administered and the interviews are voluntary. Both interviews will follow our standard witness interview protocol and will be conducted by Steven Hollander and Jasmine

*Key Subject Interview Status — Delacroix and Osei-Bonsu*

**Marcus Delacroix** (former VP, Africa Operations; resigned November 15, 2024; currently residing in Lyon, France): I wrote to his counsel, Helen Whitmore of Whitmore & Sharpe LLP, on March 25, 2025, requesting a voluntary interview. On April 2, 2025, Ms. Whitmore declined on Mr. Delacroix's behalf, citing potential criminal exposure and Fifth Amendment concerns. Mr. Delacroix reserves all rights. This is not unexpe

**Raymond Osei-Bonsu** (former Country Manager, TGM; terminated January 8, 2025): Steven Hollander wrote to his counsel, Barrister Emeka Okoro of Okoro Law Chambers, on March 26, 2025, requesting a voluntary interview. As of today, we have not yet received a definitive response. We will follow up this week.

I wanted to briefly update you on coordination with the following outside counsel:

- **Bartlett Keene & Ostrander LLP** (Richard Bartlett III, Canadian counsel): The common interest agreement was executed on March 10, 2025, and the sharing of privileged materials regarding FCPA and CFPOA exposure is proceeding under that framework. BKO continues to advise on Canadian securities disclosure obligations.

- **Hargrove Whitfield LLP** (Catherine Whitfield, BVI counsel): Review of TGH corporate records is underway. A memorandum on the BVI corporate records review was prepared by Jasmine Thornton on April 10, 2025. A key finding to date: the team has identified TGH board resolutions authorizing the Crestfield engagement, account opening documents at Meridian Commercial Bank, and signatory authorities.

- **Ndong & Keïta Cabinet Juridique** (Maître Salif Ndong, Ganaran local counsel): Ndong & Keïta is advising on potential in-country regulatory consequences, including the risk of mining license revocation under Ganaran law.

**G. Interim Report to the Audit Committee — May 15, 2025 Target**

The team remains on track to deliver the draft interim investigation report to the Audit Committee by May 15, 2025. The report will be addressed to Dr. Eleanor Fiske (Chair), Warren Ogilvy, and Marguerite Chen.

The report will cover: investigation findings to date, including the $4.73 million in total suspected improper payments; the Crestfield channel analysis; identified government official recipients (Hon. Boubacar Diallo — approximately $1.85 million; Amadou Traoré — approximately $620,000; Col. Ibrahim Konaté — approximately $340,000; other/unidentified — approximately $1.92 million); witness interview summaries; foren

I would ask that you confirm the Audit Committee's availability for a presentation during the week of May 19, 2025 — or, if scheduling permits, at the May 15 target date itself. A separate remediation recommendations memorandum is also being prepared for the Committee's consideration.

For completeness, I note that the formal notice of claim was submitted to Dalton & Mercer Inc. (Robert Dalton Jr., Claims Counsel) on March 8, 2025, under D&O Policy No. DM-0092-FCPA-2024 ($50 million per occurrence / $100 million aggregate; $2.5 million retention). We are awaiting the formal reservation-of-rights response from Dalton & Mercer and will update you upon receipt.

Patricia, I am happy to schedule a call later this week to discuss any questions arising from this update — please let me know your availability.

For your planning purposes, Calderwood & Harkness's estimated fees for the investigation remain in the $4.5–$6.2 million range. We will provide a more refined estimate alongside the interim report.

Finally, I want to reiterate the privileged and confidential nature of this communication. I would ask that you not forward it beyond those with a need to know — specifically, the Audit Committee members and Gerald Vandermeer as CEO, as you deem appropriate.

Thank you, and I look forward to speaking with you soon.

**Conrad Ashby** Partner Calderwood & Harkness LLP 825 Eighth Avenue, 42nd Floor New York, New York 10019 Tel: (212) 555-0194 Email: cashby@calderwoodharkness.com