Contract analysis

I. Purpose and Executive Summary The purpose of this memorandum is to catalog and summarize the principal red flags identified to date during the preliminary phase of the internal investigation into potential violations of the Foreign Corrupt Practices Act ("FCPA") arising from Torchlight Mining Corp.'s ("Torchlight" or "TMC") West African operations in the Republic of Ganara. This memorandum is intended to provide t

II. Background A. The Parties and Relevant Entities Torchlight Mining Corp. ("Torchlight" or "TMC"). Torchlight Mining Corp. is a Canadian corporation organized under the Canada Business Corporations Act ("CBCA"), with its principal offices located at 200 King Street West, Suite 3400, Toronto, Ontario M5H 3T4, Canada. Torchlight's common shares are dual-listed on the Toronto Stock Exchange (ticker: TMC) and the New Y

1. Kousseri Copper-Cobalt Complex Mining License (License No. KCC-2019-0047), issued by the Ministry of Mines and Natural Resources of the Republic of Ganara on September 14, 2019. This license is a 25-year mining concession covering 14,200 hectares in the Kousseri region.

2. Kousseri Environmental Impact Approval (Approval No. ENV-KCC-2020-113), issued by the Ministry of Environment of the Republic of Ganara on March 27, 2020. This approval authorized the commencement of mining activities at the Kousseri Complex, following the submission of an environmental impact assessment.

3. Dembélé Rare Earths Exploration License (License No. DRE-2021-0092), issued by the Ministry of Mines and Natural Resources on July 8, 2021. This license is a 5-year exploration license covering 8,750 hectares in the Dembélé region.

4. Dembélé Mining License Upgrade (License No. DRE-M-2023-0018), issued by the Ministry of Mines and Natural Resources on February 14, 2023. This upgrade converted the Dembélé exploration license into a full mining license authorizing extraction activities.

5. Kousseri Expansion Permit (Permit No. KCC-2019-0047-A1), issued by the Ministry of Mines and Natural Resources on April 3, 2024. This permit expanded the Kousseri concession by 3,200 hectares, bringing the total licensed area to 17,400 hectares. F. Scope of Suspected Payments Based on the preliminary review, the total suspected improper payments are estimated at approximately $4,730,000, comprising three categorie

III. Summary of Red Flags Identified The following nine red flags have been identified through the preliminary review of documents, financial records, and available corporate governance materials. They are presented in order of perceived investigative significance, with Red Flag No. 1 representing the finding that the engagement team currently considers most probative of potential FCPA violations. Each red flag is di

Clause 9.2 of the Government Relations Advisory Agreement between TGH and Crestfield contains a general warranty by Crestfield to comply with "all applicable anti-corruption laws" in the performance of services under the agreement. While this language facially addresses anti-corruption compliance, it is deficient in several critical respects. First, the agreement does not specifically reference the U.S. Foreign Corru

IV. Cross-Cutting Observations The nine red flags identified above, while each independently significant, also give rise to several cross-cutting observations that inform the overall assessment of the investigation and the likely direction of further analysis. A. Convergence of Red Flags Around Key Subjects The red flags identified in this memorandum cluster prominently around two key subjects: Marcus Delacroix and R

V. Recommended Next Steps Based on the red flags identified in this memorandum, the engagement team recommends the following next steps to advance the investigation:

1. Priority Witness Interviews. The following witnesses have been identified as the highest-priority interview subjects to address the red flags described above. Interviews are scheduled as follows: (a) Nadia Berenson, VP Compliance and Ethics, Torchlight Mining Corp. — Scheduled for April 7, 2025. Ms. Berenson will be questioned regarding compliance program gaps, the absence of due diligence on Crestfield, the whist

2. Marcus Delacroix. The engagement team will continue efforts to obtain a voluntary interview with Delacroix notwithstanding the initial declination received from his counsel, Helen Whitmore of Whitmore & Sharpe LLP. Alternative approaches, including a proffer discussion or limited-scope interview, will be explored. In parallel, the team will evaluate alternative means of obtaining Delacroix's personal email communi

3. Raymond Osei-Bonsu. A request for voluntary cooperation from Osei-Bonsu, including a request for an interview, was transmitted via email to his counsel, Barrister Emeka Okoro of Okoro Law Chambers in Ganara, on March 26, 2025. A response is pending as of the date of this memorandum. The engagement team will follow up and evaluate the feasibility of an interview given Osei-Bonsu's location in Ganara and the applica

4. Forensic Accounting Analysis. Pinnacle Forensic Advisory LLC will be directed to complete the following workstreams as priorities: (a) Detailed invoice-to-permit timing correlation analysis, to be presented in graphical and tabular format as part of the Payment Flow Analysis Workbook. (b) Comprehensive tracing of wire transfers from TGH's account at Meridian Commercial Bank (BVI), Account No. 7740-2281-0056, throu

5. Coordination with Foreign Counsel. The engagement team will coordinate with the following firms regarding jurisdictional and regulatory matters: (a) Bartlett Keene & Ostrander LLP (Richard Bartlett III, Toronto) — regarding CFPOA parallel exposure and Canadian securities disclosure obligations arising under the Ontario Securities Act and TSX listing requirements. (b) Hargrove Whitfield LLP (Catherine Whitfield, Ro

6. Interim Audit Committee Report. The engagement team will prepare an interim investigation report for presentation to the Audit Committee, targeted for May 15, 2025. The interim report will summarize the investigative findings to date, including the red flags described herein, the results of initial witness interviews, and Pinnacle's preliminary forensic analysis.

7. Voluntary Self-Disclosure Assessment. The red flag analysis presented in this memorandum will be incorporated into the ongoing assessment of whether Torchlight should make a voluntary self-disclosure to the DOJ and/or the SEC. The engagement team has set a target decision deadline of June 30, 2025 for the VSD determination, which will be informed by the totality of the investigative findings available at that time

8. D&O Insurance Considerations. The engagement team will consider the implications of these findings for the directors' and officers' insurance claim under the policy issued by Dalton & Mercer Inc., Policy No. DM-0092-FCPA-2024. A notice of claim was filed on March 8, 2025. The scope and potential coverage limitations of the policy should be assessed in light of the red flags identified, including any exclusions tha

9. Compliance Program Assessment. The engagement team will begin a comprehensive assessment of Torchlight's anti-corruption compliance program against the framework set forth in the DOJ Criminal Division's and SEC Enforcement Division's published guidance on the Evaluation of Corporate Compliance Programs. This assessment will serve as the basis for remediation recommendations and will be an important component of an

VI. Conclusion Nine distinct red flags have been identified during the preliminary phase of this investigation. Each red flag independently raises significant concerns regarding potential FCPA violations, and collectively they form a pattern that is highly indicative of an improper payment scheme involving approximately $4,730,000 directed to Ganaran government officials through two principal channels: (1) the Crestf