Contract analysis

I. Executive Summary This memorandum sets forth our analysis and recommendations regarding whether Torchlight Mining Corp. ("Torchlight" or the "Company") should voluntarily self-disclose ("VSD") to the United States Department of Justice ("DOJ") Fraud Section, Criminal Division, potential violations of the Foreign Corrupt Practices Act ("FCPA"), 15 U.S.C. §§ 78dd-1 et seq., arising from payments totaling approximate

II. Background and Procedural Posture A. Overview of the Investigation Calderwood & Harkness LLP was formally engaged by Torchlight Mining Corp. on March 5, 2025, pursuant to an engagement letter executed by Patricia Sung, General Counsel & Corporate Secretary, on behalf of the Company, to conduct an internal investigation into potential violations of the FCPA and related laws in connection with the Company's West Af

III. The DOJ FCPA Corporate Enforcement Policy — Framework A. Overview of the Policy The DOJ Criminal Division maintains a specific enforcement policy governing corporate FCPA cases: the FCPA Corporate Enforcement Policy (the "CEP" or the "Policy"), which was first announced in November 2017 as a pilot program, subsequently codified in the Justice Manual at JM 9-47.120, and revised most recently in 2023. The CEP repr

IV. Summary of Suspected Misconduct and Financial Exposure A. The Alleged Payment Scheme Based on the preliminary findings of the internal investigation — including the Company's initial review of available documents and financial records, the whistleblower complaint, and the work performed by in-house counsel prior to C&H's engagement — the suspected payment scheme operated as follows: Crestfield Advisory Partners L

1. Kousseri Mining License (KCC-2019-0047) — Issued September 14, 2019. A 25-year mining license covering 14,200 hectares in Kousseri Province, authorizing gold and base-metals extraction. This license was the foundational permit for Torchlight's Ganaran operations. Notably, the license was obtained approximately four months faster than the statutory average processing time for mining licenses in the Republic of Gana

2. Kousseri Environmental Impact Approval (ENV-KCC-2020-113) — Issued March 27, 2020. Environmental impact approval for the Kousseri concession, issued by the Environmental Permitting Office under the authority of Director Traoré.

3. Dembélé Exploration License (DRE-2021-0092) — Issued July 8, 2021. An exploration license covering 8,750 hectares in the Dembélé region, authorizing geological surveys, test drilling, and mineral sampling.

4. Dembélé Mining License Upgrade (DRE-M-2023-0018) — Issued February 14, 2023. An upgrade of the Dembélé exploration license to a full mining license, authorizing commercial extraction operations at the Dembélé site.

5. Kousseri Expansion Permit (KCC-2019-0047-A1) — Issued April 3, 2024. An amendment to the original Kousseri mining license, adding 3,200 hectares to the concession area (bringing the total Kousseri area to 17,400 hectares) and authorizing expanded extraction operations. These five permits collectively enabled the entirety of Torchlight's mining operations in the Republic of Ganara. For the fiscal year ended Decembe

1. DOJ Criminal Penalties. Under the United States Sentencing Guidelines ("U.S.S.G."), the criminal fine for an FCPA anti-bribery violation is typically calculated as twice the gross gain to the defendant or twice the gross loss caused by the offense, whichever is greater. See U.S.S.G. § 2C1.1. Using the total suspected improper payments of $4,730,000 as a proxy for gain, the baseline fine calculation is: $4,730,000

2. SEC Civil Remedies. The SEC has several remedial tools available in FCPA enforcement actions: Disgorgement. The SEC may seek disgorgement of ill-gotten gains, which in FCPA cases is typically calculated based on the amount of the improper payments or the profits derived from the corruptly obtained business. Using the total suspected improper payments as the basis, estimated disgorgement is $4,730,000. Prejudgment

3. Total Government Exposure Range. The total estimated government financial exposure, combining DOJ criminal penalties and SEC civil remedies, ranges as follows: Low End: High End: Total Estimated Government Exposure Range: $14.19 million to $19.63 million. This range does not include the substantial investigation costs that the Company will incur regardless of the VSD decision. Current estimated costs include: Cald

V. Analysis of VSD Versus Non-Disclosure Scenarios This section presents a comparative analysis of the two principal scenarios available to the Company: (A) making a voluntary self-disclosure to the DOJ Fraud Section under the CEP, and (B) declining to self-disclose and instead responding to government inquiries as they arise. A. Scenario 1: Voluntary Self-Disclosure

1. Benefits and Credit Under the CEP. The CEP provides substantial and well-defined benefits for companies that meet all three prongs (VSD, full cooperation, and timely remediation): Presumption of Declination. As discussed above, the CEP establishes a presumption that the DOJ will decline to prosecute a company that satisfies all three prongs, absent aggravating circumstances. A declination — even one accompanied by

2. Potential Outcome with VSD. We project the following range of potential outcomes if Torchlight pursues VSD and meets the full cooperation and remediation requirements of the CEP: Best Case — Declination with Disgorgement. In the most favorable scenario, the DOJ would decline to prosecute Torchlight and the matter would be resolved solely through the SEC enforcement proceeding. Torchlight would disgorge $4,730,000

3. Cooperation Obligations. Pursuing VSD will trigger specific and ongoing cooperation obligations that the Audit Committee should understand and endorse: Disclosure of Individual Conduct. Torchlight must disclose all known facts about the conduct of Marcus Delacroix, Raymond Osei-Bonsu, Jean-Philippe Renard, and the recipient government officials (Diallo, Traoré, Konaté, and others as identified). This disclosure wi

4. Risks of VSD. While we recommend VSD, the Audit Committee should be aware of the following risks associated with self-disclosure: Accelerated Government Scrutiny. VSD will invite immediate and sustained DOJ engagement with the Company and its investigation. The DOJ will expect regular updates, access to witnesses, and timely document productions. This engagement will require significant management time and attenti

1. Potential Outcome without VSD. The alternative to VSD is to decline to self-disclose and instead respond to the DOJ investigation reactively — complying with subpoenas and preservation requests as they are issued, but not proactively approaching the DOJ with information about the misconduct. Under this scenario, the Company would forgo the benefits of the CEP and face the full range of potential penalties. Investi