Contract analysis

I. Purpose and Summary The purpose of this memorandum is to provide a detailed analysis of the Government Relations Advisory Agreement dated April 12, 2019, executed between Torchlight Ganara Holdings Ltd. ("TGH") and Crestfield Advisory Partners Ltd. ("Crestfield") (the "Agreement" or the "Crestfield Agreement"). This analysis has been prepared in connection with Calderwood & Harkness LLP's internal investigation of

1. Insufficient Anti-Corruption Protections. The Agreement's terms are materially deficient from an anti-corruption compliance standpoint. The Agreement lacks the substantive protections that would be expected — and that current DOJ and SEC enforcement guidance effectively mandates — for a third-party agent operating in a high-risk jurisdiction on behalf of a U.S.-listed issuer.

2. Payments Substantially Exceeding the Contractual Maximum. Total payments from TGH to Crestfield over the term of the engagement amounted to $3,210,000, exceeding the contractual maximum by $1,170,000 (approximately 57.4%), without any documented contract amendment, addendum, or other formal modification.

3. Absence of Standard FCPA-Compliance Provisions. The Agreement lacks explicit FCPA representations, audit rights, beneficial ownership disclosures, reporting obligations, compliance certifications, and immediate termination rights tied to anti-corruption breaches — all of which are standard components of best-practice agreements with government-facing third-party intermediaries.

4. No Evidence of Competitive Selection or Due Diligence. The investigation has uncovered no evidence that Torchlight or TGH conducted a competitive selection process, issued a request for proposals, or performed any due diligence on Crestfield prior to executing the Agreement. No due diligence file for Crestfield exists in any repository of Torchlight's compliance records that has been reviewed to date. This memoran

II. Background A. The Parties to the Agreement Client — Torchlight Ganara Holdings Ltd. ("TGH"). TGH is a wholly owned subsidiary of Torchlight Mining Corp., a Delaware corporation whose common stock is listed on the New York Stock Exchange (NYSE: TRCH). TGH was incorporated in the British Virgin Islands on March 15, 2017, under BVI Business Companies Act registration number 1928764. TGH serves as the holding company

1. Kousseri Copper-Cobalt Complex Mining License (License No. KCC-2019-0047) — Issued by the Ministry of Mines and Mineral Resources on September 14, 2019. This license was issued approximately four months after the submission of TGM's application on May 20, 2019, and approximately five months after the execution of the Crestfield Agreement. Notably, the statutory average processing time for mining licenses in Ganara

2. Kousseri Environmental Impact Approval (Certificate No. ENV-KCC-2020-113) — Issued by the National Environmental Protection Agency on March 27, 2020. This certificate was a prerequisite for the commencement of full-scale extraction operations at the Kousseri site.

3. Dembélé Rare Earths Exploration License (License No. DRE-2021-0092) — Issued by the Ministry of Mines and Mineral Resources on July 8, 2021. This license authorized TGM to conduct geological surveys and exploratory drilling at the Dembélé concession area in the northern administrative region of Ganara.

4. Dembélé Mining License Upgrade (License No. DRE-M-2023-0018) — Issued by the Ministry of Mines and Mineral Resources on February 14, 2023. This license converted the exploration license to a full mining license, authorizing commercial extraction at the Dembélé site. This upgrade was a significant milestone for Torchlight's rare earths strategy and was highlighted in Torchlight's 2023 Annual Report on Form 10-K fil

5. Kousseri Expansion Permit (Amendment KCC-2019-0047-A1) — Issued by the Ministry of Mines and Mineral Resources on April 3, 2024. This amendment expanded the geographic scope and annual tonnage limits of the original Kousseri Mining License. The issuance of each of these permits was preceded by a spike in invoicing by Crestfield, as discussed further in Section V.I below. The temporal correlation between Crestfield

III. Key Terms of the Agreement This section analyzes the material terms of the Agreement and identifies deficiencies and omissions that are relevant to the FCPA liability analysis. A. Scope of Services (Clause 2)

Clause 2 of the Agreement defines the scope of Crestfield's engagement as follows: "The Advisor shall provide to the Client government relations advisory services, including regulatory liaison, permit facilitation, and stakeholder engagement in the Republic of Ganara." This scope language is both broadly and vaguely drafted. Several observations are warranted: First, the terms "permit facilitation" and "stakeholder e

1. Monthly Retainer (Clause 4.1)

Clause 4.1 provides for a monthly retainer of $15,000 payable to Crestfield, due on the first business day of each calendar month during the term of the Agreement. The retainer is described as compensation for "ongoing advisory availability and general government relations services." Over the 66-month term of the engagement (April 2019 through October 2024, inclusive), the total retainer component amounts to $15,000

Clause 4.2 provides for a success fee of $100,000 payable to Crestfield upon the issuance of each "material government permit, license, or approval obtained in connection with the Client's mining operations in the Republic of Ganara." As set forth in Section II.C above, five permits were issued during the engagement period, yielding total success fees of $100,000 × 5 = $500,000. The success fee structure, while not i

3. Expense Reimbursement (Clause 4.3)

Clause 4.3 provides for reimbursement of Crestfield's "reasonable out-of-pocket expenses incurred in connection with the performance of the Services," subject to a quarterly cap of $25,000. No further specification is provided as to the types of expenses that are reimbursable, and the Agreement contains no requirement that Crestfield provide receipts, invoices, or other supporting documentation for expense claims. Ov

4. Contractual Maximum Calculation Based on the foregoing compensation provisions, the contractual maximum total payments to Crestfield over the 66-month term of the Agreement can be calculated as follows: As discussed in Section IV below, actual payments to Crestfield substantially exceeded this contractual maximum. C. Anti-Corruption Representations (Clause 9.2)

Clause 9.2 of the Agreement contains a general representation by Crestfield warranting compliance with "all applicable anti-corruption laws." The full text of the clause reads as follows: "The Advisor represents and warrants that it has not and shall not, in connection with the performance of its obligations under this Agreement, make, offer, promise, or authorize any payment or transfer of anything of value, directl

Clause 12 of the Agreement addresses termination. The clause permits either party to terminate the Agreement upon 90 days' prior written notice without cause. The clause also provides for termination "for cause" in the event of a material breach by the other party, subject to a 30-day cure period following written notice of the breach. Critically, Clause 12 does not include an immediate termination right triggered by

Clause 14 of the Agreement provides that the Agreement is governed by the laws of Mauritius. Clause 15 provides that any dispute arising out of or in connection with the Agreement shall be referred to and finally resolved by arbitration administered by the Mauritius Chamber of Commerce and Industry Arbitration and Mediation Centre ("MARC"), with the seat of arbitration in Port Louis, Mauritius, and proceedings to be

IV. Analysis of Actual Payments versus Contractual Terms A. Total Payments to Crestfield A review of TGH's banking records at Meridian Commercial Bank (BVI) and the Crestfield invoice files maintained in TGM's accounts payable records reveals that, over the period from April 2019 through October 2024, TGH made total payments to Crestfield of $3,210,000, disbursed across 24 separate invoices. The year-by-year breakdow

V. Identification and Analysis of Red Flags The following red flags have been identified in connection with the Crestfield Agreement and the associated payment activity. Each of these red flags is individually significant; considered collectively, they present a pattern that is strongly indicative of an intermediary arrangement designed to facilitate improper payments to foreign government officials. A. Absence of Co

I. Timing Correlation Between Invoices and Permit Issuances Preliminary forensic analysis, coordinated with Pinnacle Forensic Advisory LLC, has identified a statistically significant correlation between the timing of Crestfield invoices and the issuance of mining permits by Ganaran governmental authorities. Specifically, Crestfield invoices spiked — both in frequency and in amount — in the 30 to 60-day period precedi

VI. Comparison to Best-Practice Anti-Corruption Contractual Provisions The deficiencies of the Crestfield Agreement are placed in sharper relief when measured against the anti-corruption contractual provisions that a properly drafted government relations advisory agreement should contain. The following provisions are recommended by DOJ and SEC guidance — including the Resource Guide to the U.S. Foreign Corrupt Practi

1. Explicit FCPA, CFPOA, and UK Bribery Act Compliance Representations. The agreement should contain express representations by the intermediary that it will comply with the FCPA (including both the anti-bribery provisions and the books-and-records and internal controls provisions), the CFPOA, the UK Bribery Act 2010, and any other applicable anti-corruption statutes, identified by name.

2. Prohibition on Payments to Government Officials Without Prior Written Approval. The agreement should expressly prohibit the intermediary from making, offering, or promising any payment or transfer of anything of value, directly or indirectly, to any government official, political party, party official, or candidate for political office, without the prior written approval of the principal's legal or compliance depa

3. Detailed Scope of Work with Specified Deliverables and Reporting Requirements. The agreement should define the scope of the intermediary's engagement with specificity, identify the particular projects, permits, or regulatory matters within the scope, and require the intermediary to provide regular written reports (e.g., monthly or quarterly) detailing the activities undertaken, meetings held, officials contacted,

4. Robust Audit and Inspection Rights. The agreement should grant the principal the right to audit and inspect the intermediary's books, records, accounts, and supporting documentation, including bank statements, at any time during the term and for a specified period following termination. The audit right should extend to the principal's external auditors, outside counsel, and forensic accountants.

5. Immediate Termination Rights Upon Breach of Anti-Corruption Provisions. The agreement should permit the principal to terminate the agreement immediately, without notice or cure period, upon any breach or suspected breach of the intermediary's anti-corruption obligations, or upon the principal's becoming aware of any investigation or allegation of corruption involving the intermediary.

6. Periodic Compliance Certifications. The agreement should require the intermediary to certify its compliance with anti-corruption obligations on a periodic basis (e.g., annually, or at the time of each invoice submission), with the certification executed by an authorized officer of the intermediary.

7. Disclosure of All Government Relationships and Politically Exposed Person Status. The agreement should require the intermediary to disclose all current and former relationships with government officials, all current and former government employment of the intermediary's principals and employees, and the PEP status of any person associated with the intermediary. The intermediary should be required to promptly updat

8. Beneficial Ownership Disclosure. The agreement should require the intermediary to disclose its complete beneficial ownership structure, including the identity of all direct and indirect owners holding more than a specified threshold (e.g., 10%) of the intermediary's equity, and to notify the principal of any changes in ownership.

9. Training Requirements. The agreement should require the intermediary to ensure that its principals and any employees who will be performing services under the agreement receive anti-corruption training, either provided by the principal or by a qualified third-party provider.

10. Record-Keeping and Document Retention Obligations. The agreement should require the intermediary to maintain accurate and complete books and records reflecting all activities undertaken and all expenditures incurred in connection with the engagement, and to retain such records for a specified period (e.g., seven years) following the termination of the agreement.

11. Requirement for Competitive Selection and Documented Due Diligence. While not a contractual provision per se, best practice requires that the selection of any government-facing intermediary be preceded by a documented competitive selection process and a thorough due diligence review, the results of which should be documented and maintained in the principal's compliance files. Assessment of the Crestfield Agreemen

VII. Implications for FCPA Liability Analysis A. Books and Records Concerns The FCPA's books-and-records provision, Section 13(b)(2)(A) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(b)(2)(A), requires issuers to "make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer." This obligation extends to the

VIII. Recommendations Based on the analysis set forth in this memorandum, the following next steps are recommended:

1. Complete Forensic Reconstruction of Crestfield Invoices. In coordination with Pinnacle Forensic Advisory LLC (Dr. Leonard Strauss), complete the forensic reconstruction and analysis of all 24 Crestfield invoices, including detailed tracing of downstream fund flows from Crestfield's accounts at Harborline Commerce Bank (Mauritius) and Sundial Financial to any ultimate recipients, with particular focus on accounts a