1039-00001 · Torchlight Mining Corp · documents

board-resolution-authorize-npa.docx DOCUMENT Litigation

4 / 88 ← → ✕

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / WORK PRODUCT

RESOLUTIONS OF THE BOARD OF DIRECTORS OF TORCHLIGHT MINING CORP.

A Corporation Organized Under the Canada Business Corporations Act (CBCA Corporation No. 7841526-1)

Adopted at a Special Meeting of the Board of Directors Held on April 25, 2024

200 Bay Street, Suite 3400 Toronto, ON M5J 2J2, Canada

Prepared by: Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, CA 94104, USA C&H Matter No. 1039-00001

CLASSIFICATION: This document is protected by the attorney-client privilege and constitutes attorney work product. It has been prepared by Calderwood & Harkness LLP at the direction and for the exclusive benefit of the Board of Directors of Torchlight Mining Corp. Distribution of this document, or any portion thereof, to any person not authorized to receive privileged communications on behalf of Torchlight Mining Corp. may result in a waiver of applicable privileges. If you have received this document in error, please contact Elaine Forsythe at Calderwood & Harkness LLP immediately at (415) 555-2900.

Right-click to update Table of Contents

I. RECITALS

A. Identification of the Corporation

The Board of Directors (the "Board") of Torchlight Mining Corp., a corporation organized and existing under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended (CBCA Corporation No. 7841526-1), with its registered office located at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2, Canada (the "Corporation" or "TMC"), convened a special meeting of the Board on April 25, 2024, for the purposes set forth herein.

TMC is a publicly listed corporation whose common shares are listed and posted for trading on the Toronto Stock Exchange under the symbol "TSX: TRCL" and on the New York Stock Exchange under the symbol "NYSE: TMC." As a dual-listed issuer, TMC is subject to the continuous disclosure requirements of Canadian securities legislation, applicable provincial securities commissions, the rules of the TSX, as well as the reporting obligations under the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the United States Securities and Exchange Commission (the "SEC").

TMC conducts a substantial portion of its North American mining, processing, and sales operations through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc., a corporation organized under the laws of the State of Nevada (Nevada Entity No. NV20160438721), with its principal U.S. office located at 8750 West Sahara Avenue, Suite 210, Reno, NV 89117, USA ("TMC-US"). TMC-US holds the Corporation's material U.S. mining permits, processing facilities, and customer contracts relevant to the matters described in these resolutions.

B. Background of the DOJ Investigation

WHEREAS, on or about February 10, 2022, the Antitrust Division of the United States Department of Justice (the "DOJ" or the "Antitrust Division") formally opened a grand jury investigation (Grand Jury No. GJ-22-0194, empaneled in the United States District Court for the Northern District of California, San Francisco Division) into suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, including suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, principally involving the production, processing, and sale of high-purity feldspar, industrial talc, and rare-earth concentrates (the "DOJ Investigation" or the "Investigation");

WHEREAS, the Investigation is supervised by Deputy Assistant Attorney General Julia Stafford-Hayes of the Antitrust Division, with lead prosecutors Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves of the DOJ Antitrust Division, San Francisco Field Office, 450 Golden Gate Avenue, Suite 10-0101, San Francisco, CA 94102;

WHEREAS, on or about February 14, 2022, TMC-US received, on behalf of the Corporation, Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003, issued by the United States District Court for the Northern District of California, commanding the production of documents relating to, among other things, the Corporation's pricing practices, customer allocation agreements, and communications with competitors in the specialty-minerals sector for the period from January 1, 2015 through February 14, 2022;

WHEREAS, on or about May 15, 2023, TMC-US received a second Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-007, expanding the scope of the document demand to include additional categories of electronic communications and internal sales-strategy documents for the period from January 1, 2014 through May 15, 2023;

WHEREAS, on or about May 20, 2022, the Corporation received a target letter from the DOJ Antitrust Division, San Francisco Field Office, advising that TMC was a target of the Grand Jury Investigation and that the DOJ had reason to believe that TMC had engaged in conduct constituting violations of Section 1 of the Sherman Antitrust Act in connection with the pricing and allocation of high-purity feldspar and industrial talc in North America;

C. Engagement of Outside Counsel and Advisors

WHEREAS, on or about February 18, 2022, promptly following receipt of the first grand jury subpoena and in consultation with the Corporation's General Counsel, Priya Anand, the Corporation engaged Calderwood & Harkness LLP ("C&H"), 555 California Street, 40th Floor, San Francisco, CA 94104, USA, as outside counsel to represent TMC and TMC-US in connection with the DOJ Investigation, with Elaine Forsythe serving as the Responsible Partner and lead defense counsel, and Howard Bellamy serving as the Billing Partner for the engagement;

WHEREAS, in connection with the Investigation and upon the recommendation of C&H, the Corporation retained the following expert advisors and forensic specialists:

(i) Redstone Digital Forensics Inc. ("Redstone"), with Neil Ashworth serving as Project Director, engaged to perform forensic data collection, processing, and e-discovery services in connection with the Corporation's document preservation and production obligations arising from the grand jury subpoenas;

(ii) Hargrove Forensic Advisory LLC ("Hargrove"), with Dr. Vanessa Tremblay serving as Engagement Partner, engaged to perform economic analysis, including affected-commerce calculations, penalty-range analysis, market-impact modeling, and the preparation of expert submissions in support of the NPA negotiations; and

(iii) Meridian Compliance Partners LLC ("Meridian"), with Claudia Ferraro serving as Engagement Lead, engaged to assess the Corporation's existing antitrust-compliance infrastructure, identify gaps and deficiencies, and design and implement an enhanced antitrust compliance program meeting the DOJ's current guidance on the evaluation of corporate compliance programs;

D. Internal Investigation and Cooperation

WHEREAS, at the direction of the Board and the Audit Committee, C&H conducted a comprehensive internal investigation into the allegations underlying the DOJ Investigation (the "Internal Investigation"), encompassing the review and analysis of approximately 555,000 documents (comprising approximately 3.2 million pages) collected from the Corporation's electronic and physical records, including email accounts, instant-messaging platforms, shared drives, personal devices (where authorized), and hard-copy files maintained at the Corporation's U.S. and Canadian offices;

WHEREAS, the Internal Investigation further included in-person and videoconference interviews of twenty-three (23) current and former employees of TMC and TMC-US, including members of the sales, commercial operations, pricing, and executive management teams, conducted between March 2022 and November 2022 under Upjohn warnings and subject to the attorney-client privilege;

WHEREAS, on January 20, 2023, C&H presented the findings of the Internal Investigation to the Board in a privileged oral presentation, which included, among other matters, the following principal findings:

(a) Gavin Holt, the Corporation's former Vice President of U.S. Specialty Minerals Sales (employed by TMC-US from September 2014 through August 2021, when he was terminated for cause), exchanged competitively sensitive pricing information, customer-allocation proposals, and bid-coordination communications with counterparts at two competing firms—specifically, Carl Edgerton, Vice President of Sales at Ridgecrest Minerals Inc. ("Ridgecrest"), and Kevin Tsang, former Senior Vice President of Commercial Operations at Pinnacle Earth Resources Ltd. ("Pinnacle")—on at least thirty-seven (37) documented occasions between March 2017 and July 2021, as evidenced by email communications, text messages, and calendar entries recovered during the Internal Investigation;

(b) The conduct attributable to Gavin Holt included sharing TMC-US's proposed pricing matrices for high-purity feldspar and industrial talc with Ridgecrest and Pinnacle in advance of customer bid submissions, coordinating the allocation of certain large-volume industrial customers among the three firms, and discussing the timing of price increases to avoid competitive undercutting;

(c) The Internal Investigation found no evidence that any member of TMC's senior management—including Chief Executive Officer Søren Dalmqvist, General Counsel Priya Anand, Chief Financial Officer Richard Fong, or any other C-suite executive—had knowledge of, authorized, directed, or participated in the alleged anticompetitive conduct; and

(d) The Internal Investigation found no evidence that any member of the Board of Directors had knowledge of or was complicit in the alleged conduct;

WHEREAS, the Corporation cooperated extensively and in good faith with the DOJ Investigation, as recommended by C&H and authorized by the Board, including by:

(i) Producing approximately 555,000 documents (approximately 3.2 million pages) in response to the two grand jury subpoenas, following a comprehensive document-preservation and collection protocol designed by C&H and Redstone;

(ii) Making current employees Sandra Chu (Senior Manager, Specialty Minerals Pricing) and Thomas Eriksen (Regional Sales Director, Western Region) available for voluntary proffer sessions with the DOJ on March 10, 2023 and April 22, 2023, respectively, each conducted pursuant to proffer agreements negotiated by C&H with the DOJ;

(iii) Providing timely and comprehensive factual presentations to the DOJ regarding the findings of the Internal Investigation; and

(iv) Implementing prompt remedial measures, including the termination of Gavin Holt in August 2021, enhanced document-retention procedures, and interim compliance-training initiatives;

E. NPA Negotiations

WHEREAS, on or about November 1, 2023, the DOJ, through Deputy Assistant Attorney General Stafford-Hayes and Trial Attorney Kowalski, communicated to C&H that, in light of the Corporation's substantial cooperation, timely remediation, and the nature and scope of the underlying conduct, the DOJ was willing to negotiate a non-prosecution agreement with TMC as a resolution of the Investigation;

WHEREAS, on or about January 10, 2024, the DOJ circulated to C&H an initial draft of a proposed Non-Prosecution Agreement bearing DOJ Reference No. ATR-SF-2024-00312 (the "Initial DOJ Draft"), setting forth the proposed terms under which the DOJ would agree to forego the filing of criminal charges against the Corporation;

WHEREAS, on or about February 5, 2024, C&H, acting on behalf of TMC and upon authorization of the General Counsel and after consultation with the Audit Committee Chair, submitted a comprehensive counter-draft of the NPA to the DOJ, incorporating TMC's proposed revisions to, among other things, the cooperation period, the scope of the compliance-monitoring provisions, the calculation of the monetary payment, and the language of the Agreed Statement of Facts;

WHEREAS, between February 5, 2024 and April 8, 2024, the parties engaged in extensive good-faith negotiations over the remaining open terms of the NPA, including multiple in-person and telephonic negotiation sessions between C&H and the DOJ;

WHEREAS, on or about March 12, 2024, Hargrove Forensic Advisory LLC delivered its final affected-commerce and penalty analysis report (the "Hargrove Report"), which confirmed that TMC's share of the affected commerce during the relevant period (March 2017 through July 2021) totaled approximately USD 478 million, representing approximately 35.7% of the total affected commerce across all implicated firms of approximately USD 1.34 billion, and which supported the reasonableness of the negotiated monetary payment in the context of the DOJ's penalty guidelines and the cooperation credits earned by TMC;

WHEREAS, on or about April 8, 2024, the DOJ and TMC reached agreement in principle on the final terms of the NPA, and C&H transmitted the agreed-upon final execution version of the NPA to the General Counsel and the Board for review;

WHEREAS, C&H has provided the Board with the final execution version of the NPA (DOJ Reference No. ATR-SF-2024-00312), together with all appendices thereto, including Appendix A (Enhanced Antitrust Compliance Program) and Appendix B (Agreed Statement of Facts), for the Board's review and consideration;

F. Prior Board and Audit Committee Actions

WHEREAS, the Board received a privileged briefing from C&H, delivered by Elaine Forsythe and Howard Bellamy, on the status of the NPA negotiations on December 1, 2023, at which time C&H outlined the principal terms under discussion, the range of potential monetary obligations, and the anticipated cooperation and compliance requirements;

WHEREAS, the Audit Committee of the Board, chaired by Janet Moreau-Shaw, has exercised oversight of the Investigation and the Corporation's financial exposure in connection therewith, including by receiving detailed privileged briefings from C&H and Hargrove on the investigation status, litigation-risk assessment, and financial-reserve analysis on October 18, 2022, March 15, 2023, and September 20, 2023;

WHEREAS, following the September 20, 2023 briefing and upon the recommendation of the Audit Committee, the Board approved an increase in the Corporation's litigation reserve attributable to the DOJ Investigation from USD 30 million (originally established in March 2022) to USD 50 million in Q3 2023, as disclosed in the Corporation's Q3 2023 interim financial statements filed on SEDAR+ and with the SEC;

G. Compliance Remediation

WHEREAS, C&H and Meridian Compliance Partners LLC collaboratively designed an Enhanced Antitrust Compliance Program (the "Enhanced Compliance Program") tailored to the Corporation's organizational structure, industry sector, and risk profile, incorporating the DOJ's June 2020 Evaluation of Corporate Compliance Programs guidance and subsequent updates thereto;

WHEREAS, the Enhanced Compliance Program was submitted to the DOJ on September 15, 2023, and following review and comment by the DOJ, was finalized and incorporated as Appendix A to the NPA;

WHEREAS, the NPA requires the Corporation to retain an independent compliance monitor for a period of two (2) years from the date of execution of the NPA, and the DOJ has pre-approved Meridian Compliance Partners LLC (Claudia Ferraro, Engagement Lead) to serve as the independent compliance monitor, subject to the terms and conditions set forth in the NPA;

H. Board Determination

WHEREAS, the Board has carefully reviewed and considered the terms of the NPA in its entirety, including the Agreed Statement of Facts (Appendix B), the Enhanced Antitrust Compliance Program (Appendix A), and all other terms and conditions set forth therein;

WHEREAS, the Board has received and considered the advice of C&H regarding the legal implications, risks, and benefits of executing the NPA, including the consequences of declining to execute the NPA and the risks associated with a potential criminal prosecution;

WHEREAS, the Board has received and considered the analysis and recommendations of Hargrove Forensic Advisory LLC regarding the reasonableness of the monetary payment and the affected-commerce calculations underlying the NPA;

WHEREAS, the Board has considered the potential impact of the NPA on the Corporation's business operations, financial condition, regulatory standing, stock-exchange listings, customer and supplier relationships, and reputation;

WHEREAS, after due deliberation and upon consideration of all relevant factors, the Board has determined that execution of the NPA on the terms presented is in the best interests of the Corporation and its shareholders, and that the NPA represents a fair, reasonable, and appropriate resolution of the DOJ Investigation.

II. RESOLUTIONS

NOW, THEREFORE, having considered the foregoing recitals and the materials presented to the Board, and upon motion duly made, seconded, and unanimously adopted, the Board of Directors of Torchlight Mining Corp. hereby adopts the following resolutions:

Resolution 1: Approval of the Non-Prosecution Agreement

BE IT RESOLVED, that the Board hereby approves the Non-Prosecution Agreement between Torchlight Mining Corp. and the United States Department of Justice, Antitrust Division (DOJ Reference No. ATR-SF-2024-00312), substantially in the form presented to and reviewed by the Board at this meeting (the "NPA"), including all appendices, schedules, exhibits, and attachments thereto, specifically including:

(a) Appendix A — Enhanced Antitrust Compliance Program (Final Execution Version); and

(b) Appendix B — Agreed Statement of Facts (Final Execution Version);

and the Board hereby determines that the execution and delivery of the NPA on the terms set forth therein is in the best interests of the Corporation and its shareholders, and is hereby authorized and approved in all respects.

Resolution 2: Approval of Key NPA Terms

BE IT FURTHER RESOLVED, that the Board specifically acknowledges, has reviewed, and hereby approves the following material terms and conditions of the NPA:

(a) Monetary Payment. TMC shall pay a monetary amount of USD 48,500,000 (Forty-Eight Million Five Hundred Thousand United States Dollars) to the United States Treasury within sixty (60) days of the execution date of the NPA. The Board acknowledges and confirms that this monetary payment was calculated based on the DOJ's standard methodology of twenty percent (20%) of TMC's affected commerce (USD 478,000,000 × 20% = USD 95,600,000), reduced by approximately 49.2% in recognition of cooperation credit and remediation credit earned by the Corporation through its timely and substantial cooperation with the Investigation and its prompt implementation of remedial measures, yielding a final negotiated payment of USD 48,500,000. The Board finds this amount to be reasonable and appropriate under the circumstances.

(b) Cooperation Obligations. TMC must continue to cooperate fully and truthfully with the DOJ in any related investigations or prosecutions for a period of three (3) years from the NPA execution date (i.e., through May 6, 2027, based on an anticipated execution date of May 6, 2024), including, without limitation, making current and former employees available for interviews, proffer sessions, grand jury testimony, and trial testimony as reasonably requested by the DOJ, and continuing to produce documents and information as required.

(c) Enhanced Antitrust Compliance Program. TMC must implement and maintain the Enhanced Antitrust Compliance Program described in Appendix A to the NPA for the duration of the three-year NPA term and thereafter as a matter of corporate policy. The Enhanced Compliance Program includes, among other requirements: (i) mandatory annual antitrust-compliance training for all employees in sales, commercial operations, pricing, business development, and executive management roles; (ii) the appointment of an independent Chief Compliance Officer reporting directly to the Board or a designated committee thereof; and (iii) annual compliance certifications executed by the Chief Executive Officer and the General Counsel and submitted to the DOJ.

(d) Independent Compliance Monitor. TMC must retain an independent compliance monitor for a period of two (2) years from the NPA execution date (i.e., through May 6, 2026). The DOJ has pre-approved Meridian Compliance Partners LLC (Claudia Ferraro, Engagement Lead) to serve as the independent compliance monitor. The monitor shall have access to Corporation personnel, documents, and records as necessary to assess compliance with the NPA and the Enhanced Compliance Program, and shall submit written reports to the DOJ and the Corporation at six-month intervals during the monitoring period.

(e) No Criminal Charges. The DOJ agrees that, provided TMC complies fully with all terms and conditions of the NPA throughout the three-year NPA term, the DOJ will not bring criminal charges against TMC or any current employee of TMC (other than Gavin Holt, who is individually carved out from the NPA's protections, as described below) based on the conduct described in the Agreed Statement of Facts or any conduct discovered during the Investigation.

(f) Holt Carve-Out. The NPA expressly does not cover, protect, or confer any benefit upon Gavin Holt individually. The DOJ reserves all rights to investigate, charge, and prosecute Holt for any and all conduct arising from or related to the Investigation. The Board notes that Holt is separately represented by Briarcliff Law Group PLLC (Patrick Dunleavy, counsel of record), and that the Corporation has no obligation under the NPA to provide legal representation or indemnification to Holt in connection with any individual prosecution.

(g) NPA Term and Breach Provisions. The NPA shall have a term of three (3) years from the date of execution (anticipated execution date: May 6, 2024; anticipated expiration date: May 6, 2027). If TMC materially breaches any term or condition of the NPA during the three-year term, the DOJ retains the right, in its sole discretion, to prosecute TMC based on the admissions and factual stipulations contained in the Agreed Statement of Facts set forth in Appendix B to the NPA. In such event, TMC would waive any applicable statutes of limitations, venue objections, and certain other procedural defenses as specified in the NPA.

Resolution 3: Authorization of CEO to Execute the NPA

BE IT FURTHER RESOLVED, that Søren Dalmqvist, in his capacity as Chief Executive Officer of Torchlight Mining Corp., is hereby authorized and directed, for and on behalf of the Corporation, to execute and deliver the NPA (DOJ Reference No. ATR-SF-2024-00312), together with all appendices, schedules, exhibits, ancillary documents, side letters, and instruments relating thereto, in substantially the form presented to the Board, with such non-material changes, modifications, or amendments as the CEO, in consultation with Calderwood & Harkness LLP and the General Counsel, may determine to be necessary, appropriate, or desirable, and the execution and delivery of the NPA by the CEO shall constitute conclusive evidence of the Board's approval thereof.

Resolution 4: Authorization of Monetary Payment

BE IT FURTHER RESOLVED, that the Chief Financial Officer, Richard Fong, in consultation with the General Counsel, Priya Anand, is hereby authorized and directed to cause the Corporation to remit the monetary payment of USD 48,500,000 (Forty-Eight Million Five Hundred Thousand United States Dollars) to the United States Treasury on or before July 5, 2024 (being sixty (60) days from the anticipated NPA execution date of May 6, 2024), by wire transfer or such other method of payment as specified in the payment instructions set forth in the NPA or as otherwise directed by the DOJ, and to take all actions necessary to effect such payment in a timely manner.

The Board notes that the monetary payment of USD 48,500,000 is within the Corporation's revised litigation reserve of USD 50,000,000, which was established and increased by the Board as described in the recitals above, and that the remaining reserve balance of approximately USD 1,500,000 shall be available to defray administrative costs associated with the NPA's execution and initial implementation, subject to further direction by the CFO and General Counsel.

Resolution 5: Authorization of Compliance Expenditures

BE IT FURTHER RESOLVED, that the Board hereby authorizes management to incur all expenditures reasonably necessary to implement the Enhanced Antitrust Compliance Program described in Appendix A to the NPA, including but not limited to the costs of compliance training, the hiring or appointment of an independent Chief Compliance Officer, the development and deployment of compliance-monitoring systems and technologies, and the revision of relevant corporate policies and procedures.

BE IT FURTHER RESOLVED, that the Board hereby authorizes management to retain Meridian Compliance Partners LLC (Claudia Ferraro, Engagement Lead) as the independent compliance monitor for the two-year monitor term (anticipated May 6, 2024 through May 6, 2026), with the fees, expenses, and costs of the monitorship engagement to be approved by the General Counsel in the ordinary course of business, consistent with the Corporation's existing approval authorities and procurement procedures, and to be reported to the Audit Committee on a quarterly basis.

Resolution 6: Authorization of Ongoing Cooperation

BE IT FURTHER RESOLVED, that the Board hereby authorizes and directs management, in consultation with Calderwood & Harkness LLP, to comply with all cooperation obligations of the Corporation under the NPA for the full three-year cooperation period (anticipated May 6, 2024 through May 6, 2027), including, without limitation:

(a) Making current and, to the extent within the Corporation's control, former employees available for interviews, proffer sessions, depositions, grand jury testimony, and trial testimony as requested by the DOJ;

(b) Continuing to produce documents and information responsive to DOJ requests, subject to applicable privileges;

(d) Maintaining and preserving all documents, data, and records relevant to the Investigation and the NPA for the duration of the cooperation period and for such additional period as may be required by applicable law or regulation.

Resolution 7: Delegation of Authority for Ancillary Actions

BE IT FURTHER RESOLVED, that each of Søren Dalmqvist (Chief Executive Officer), Priya Anand (General Counsel), and Richard Fong (Chief Financial Officer) is hereby authorized, individually and collectively, without further action by the Board, to take any and all actions, execute any and all documents, instruments, agreements, certificates, and filings, and to incur any and all expenditures, as may be necessary, appropriate, or desirable to carry out the intent and purposes of the foregoing resolutions and to effectuate the Corporation's obligations under the NPA, including but not limited to the following:

(a) Executing the annual compliance certifications required under the NPA and the Enhanced Antitrust Compliance Program, to be submitted to the DOJ as specified therein;

(b) Coordinating with the independent compliance monitor (Meridian Compliance Partners LLC) and facilitating the monitor's access to Corporation personnel, records, systems, and facilities as required under the NPA;

(c) Making any required public disclosures in connection with the NPA and the resolution of the DOJ Investigation, including the preparation and filing of Current Reports on Form 8-K with the SEC, material change reports and press releases filed on SEDAR+ in accordance with Canadian securities legislation, and such other disclosures as may be required by applicable law, regulation, or stock-exchange rules, in each case in consultation with Calderwood & Harkness LLP and the Corporation's Canadian securities counsel, Calvert & Associates LLP (Daniel Moreau, TMC engagement partner);

(d) Coordinating with Ironbridge Capital Markets Inc. (Alan Kirkwood, Managing Director) regarding market-disclosure strategy, investor-relations communications, and shareholder engagement in connection with the public announcement of the NPA resolution, as appropriate;

(e) Communicating with the Corporation's directors' and officers' liability insurers—namely, Northland Mutual Insurance Co. (Policy No. NMI-DO-2021-5547, primary layer), Greystone Specialty Insurance Ltd. (first excess layer), and Sentinel Re Ltd. (second excess layer)—regarding the resolution of the DOJ Investigation, any potential claims under the applicable D&O insurance program, and any notice or reporting obligations arising under such policies; and

(f) Taking such other and further actions as any of the foregoing officers may deem necessary, appropriate, or desirable to carry out the purposes and intent of these resolutions, including the execution and delivery of any certificates, opinions, or other instruments required by the DOJ in connection with the NPA.

Resolution 8: Ratification of Prior Actions

BE IT FURTHER RESOLVED, that the Board hereby ratifies, approves, and confirms, in all respects, all actions heretofore taken by the Chief Executive Officer, the General Counsel, the Chief Financial Officer, Calderwood & Harkness LLP, and the Corporation's other advisors in connection with the DOJ Investigation, the Internal Investigation, and the negotiation of the NPA, including without limitation:

(a) The engagement of Calderwood & Harkness LLP as outside counsel on February 18, 2022, and the engagement of Redstone Digital Forensics Inc., Hargrove Forensic Advisory LLC, and Meridian Compliance Partners LLC as described in the recitals above;

(b) The conduct of the Internal Investigation, including document collection, review, and analysis, employee interviews, and the preparation and delivery of privileged reports and presentations to the Board and the Audit Committee;

(c) The production of approximately 555,000 documents (approximately 3.2 million pages) to the DOJ in response to Grand Jury Subpoena Duces Tecum Nos. GJ-22-0194-SD-003 and GJ-22-0194-SD-007;

(d) The cooperation with the DOJ Investigation, including the voluntary proffer sessions of Sandra Chu (March 10, 2023) and Thomas Eriksen (April 22, 2023), and the provision of factual presentations to the DOJ;

(e) The negotiation of the NPA with the DOJ, including the submission of the counter-draft NPA on February 5, 2024, and all subsequent negotiations leading to the agreement in principle on April 8, 2024; and

(f) All related expenditures incurred in connection with the foregoing activities.

The Board specifically ratifies and confirms the total professional fees and disbursements incurred through the anticipated close of the matter, as reported to the Board and the Audit Committee, which are as follows:

The Board acknowledges that the Calderwood & Harkness LLP fees and disbursements of approximately USD 18,700,000 reflect a budget overage beyond the initial engagement estimate of USD 12,000,000, which overage was reviewed and approved by the General Counsel in Q1 2023 in light of the expanded scope of the Internal Investigation and the second grand jury subpoena. The Board finds that all professional fees and expenditures incurred in connection with the Investigation and the NPA negotiations were reasonable, necessary, and incurred in the best interests of the Corporation.

Resolution 9: Confirmation of Continuing Board Oversight

BE IT FURTHER RESOLVED, that the Audit Committee of the Board (Chair: Janet Moreau-Shaw) shall continue to exercise oversight of the Corporation's compliance with all terms and conditions of the NPA throughout the three-year NPA term, including by:

(a) Receiving periodic reports from management and the General Counsel on the status of the Corporation's compliance with the NPA;

(b) Receiving and reviewing the semi-annual written reports of the independent compliance monitor (Meridian Compliance Partners LLC);

(c) Reviewing and approving, as appropriate, management's responses to any findings, recommendations, or concerns raised by the independent compliance monitor or the DOJ;

(d) Reporting to the full Board, at regular intervals and as circumstances warrant, on the Corporation's NPA compliance status and any material developments; and

(e) Overseeing the Corporation's implementation and maintenance of the Enhanced Antitrust Compliance Program.

BE IT FURTHER RESOLVED, that the Board Chair, Margaret Caldwell, shall be kept apprised of all material developments relating to the NPA, the Corporation's compliance therewith, and any communications from the DOJ, the independent compliance monitor, or any other governmental authority in connection with the matters addressed by these resolutions.

III. GENERAL AUTHORITY PROVISION

BE IT FURTHER RESOLVED, that any and all actions heretofore taken by any officer, director, employee, or authorized representative of the Corporation that are within the scope of the authority conferred by the foregoing resolutions are hereby ratified, approved, and confirmed in all respects as the acts and deeds of the Corporation, and that each officer of the Corporation is hereby authorized to certify these resolutions and the authority granted hereby to any person or entity requiring evidence thereof.

IV. EFFECTIVE DATE

These resolutions shall be effective as of April 25, 2024, and shall remain in full force and effect unless and until amended, modified, or rescinded by subsequent action of the Board of Directors.

V. CERTIFICATION AND ATTESTATION

Secretary's Certificate. I, Priya Anand, General Counsel of Torchlight Mining Corp., acting in my capacity as Corporate Secretary of the Corporation, do hereby certify that:

1. The foregoing resolutions are a true, complete, and correct copy of the resolutions duly adopted by the Board of Directors of Torchlight Mining Corp. at a duly convened special meeting of the Board held on April 25, 2024, at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2, Canada;

2. A quorum of the Board was present throughout the meeting, either in person or by means of telephonic or electronic communication facilities that permitted all participants to communicate adequately with each other during the meeting, in accordance with the Corporation's by-laws and the Canada Business Corporations Act;

3. The foregoing resolutions were adopted by the affirmative vote of all directors present at the meeting, with no dissenting votes and no abstentions;

4. The resolutions have not been amended, modified, or rescinded and remain in full force and effect as of the date of this certificate; and

5. I am authorized to execute this certificate on behalf of the Corporation.

Signature Lines.

BOARD CHAIR

________________________________________

Name: Margaret Caldwell

Title: Chair, Board of Directors

Torchlight Mining Corp.

Date: ________

CORPORATE SECRETARY / GENERAL COUNSEL

________________________________________

Name: Priya Anand

Title: General Counsel and Corporate Secretary

Torchlight Mining Corp.

Date: ________

WITNESSED / ATTESTED BY

________________________________________

Name: ________

Title: ________

Date: ________

VI. APPENDICES AND ATTACHMENTS (REFERENCED)

The following attachments are incorporated by reference into these resolutions and shall be appended hereto upon execution of the NPA:

Attachment 1: Non-Prosecution Agreement (DOJ Reference No. ATR-SF-2024-00312) — Final Execution Version (to be attached upon execution on or about May 6, 2024)

Attachment 2: NPA Appendix A — Enhanced Antitrust Compliance Program (Final Execution Version)

Attachment 3: NPA Appendix B — Agreed Statement of Facts (Final Execution Version)

This document constitutes the complete and official record of the resolutions adopted by the Board of Directors of Torchlight Mining Corp. on April 25, 2024, in connection with the authorization to execute the Non-Prosecution Agreement with the United States Department of Justice, Antitrust Division. This document is subject to the attorney-client privilege and work-product doctrine. Unauthorized reproduction or distribution is strictly prohibited.

Calderwood & Harkness LLP	C&H Matter No. 1039-00001 Prepared by: Elaine Forsythe, Partner	Howard Bellamy, Partner 555 California Street, 40th Floor, San Francisco, CA 94104
Advisor / Firm	Key Personnel	Approximate Fees & Disbursements (USD)
Calderwood & Harkness LLP	E. Forsythe (Responsible Partner); H. Bellamy (Billing Partner)	$18,700,000
Hargrove Forensic Advisory LLC	Dr. V. Tremblay (Engagement Partner)	$1,850,000
Redstone Digital Forensics Inc.	N. Ashworth (Project Director)	$2,300,000
Meridian Compliance Partners LLC	C. Ferraro (Engagement Lead)	$1,100,000
Total Aggregate Professional Fees	$23,950,000

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / WORK PRODUCT
RESOLUTIONS OF THE BOARD OF DIRECTORS OF TORCHLIGHT MINING CORP.
A Corporation Organized Under the Canada Business Corporations Act (CBCA Corporation No. 7841526-1)
Adopted at a Special Meeting of the Board of Directors Held on April 25, 2024
200 Bay Street, Suite 3400 Toronto, ON M5J 2J2, Canada
Prepared by: Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, CA 94104, USA C&H Matter No. 1039-00001
CLASSIFICATION: This document is protected by the attorney-client privilege and constitutes attorney work product. It has been prepared by Calderwood & Harkness LLP at the direction and for the exclusive benefit of the Board of Directors of Torchlight Mining Corp. Distribution of this document, or any portion thereof, to any person not authorized to receive privileged communications on behalf of Torchlight Mining Corp. may result in a waiver of applicable privileges. If you have received this document in error, please contact Elaine Forsythe at Calderwood & Harkness LLP immediately at (415) 555-2900.
Right-click to update Table of Contents
I. RECITALS
A. Identification of the Corporation
The Board of Directors (the "Board") of Torchlight Mining Corp., a corporation organized and existing under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended (CBCA Corporation No. 7841526-1), with its registered office located at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2, Canada (the "Corporation" or "TMC"), convened a special meeting of the Board on April 25, 2024, for the purposes set forth herein.
TMC is a publicly listed corporation whose common shares are listed and posted for trading on the Toronto Stock Exchange under the symbol "TSX: TRCL" and on the New York Stock Exchange under the symbol "NYSE: TMC." As a dual-listed issuer, TMC is subject to the continuous disclosure requirements of Canadian securities legislation, applicable provincial securities commissions, the rules of the TSX, as well as the reporting obligations under the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the United States Securities and Exchange Commission (the "SEC").
TMC conducts a substantial portion of its North American mining, processing, and sales operations through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc., a corporation organized under the laws of the State of Nevada (Nevada Entity No. NV20160438721), with its principal U.S. office located at 8750 West Sahara Avenue, Suite 210, Reno, NV 89117, USA ("TMC-US"). TMC-US holds the Corporation's material U.S. mining permits, processing facilities, and customer contracts relevant to the matters described in these resolutions.
B. Background of the DOJ Investigation
WHEREAS, on or about February 10, 2022, the Antitrust Division of the United States Department of Justice (the "DOJ" or the "Antitrust Division") formally opened a grand jury investigation (Grand Jury No. GJ-22-0194, empaneled in the United States District Court for the Northern District of California, San Francisco Division) into suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, including suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, principally involving the production, processing, and sale of high-purity feldspar, industrial talc, and rare-earth concentrates (the "DOJ Investigation" or the "Investigation");
WHEREAS, the Investigation is supervised by Deputy Assistant Attorney General Julia Stafford-Hayes of the Antitrust Division, with lead prosecutors Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves of the DOJ Antitrust Division, San Francisco Field Office, 450 Golden Gate Avenue, Suite 10-0101, San Francisco, CA 94102;
WHEREAS, on or about February 14, 2022, TMC-US received, on behalf of the Corporation, Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003, issued by the United States District Court for the Northern District of California, commanding the production of documents relating to, among other things, the Corporation's pricing practices, customer allocation agreements, and communications with competitors in the specialty-minerals sector for the period from January 1, 2015 through February 14, 2022;
WHEREAS, on or about May 15, 2023, TMC-US received a second Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-007, expanding the scope of the document demand to include additional categories of electronic communications and internal sales-strategy documents for the period from January 1, 2014 through May 15, 2023;
WHEREAS, on or about May 20, 2022, the Corporation received a target letter from the DOJ Antitrust Division, San Francisco Field Office, advising that TMC was a target of the Grand Jury Investigation and that the DOJ had reason to believe that TMC had engaged in conduct constituting violations of Section 1 of the Sherman Antitrust Act in connection with the pricing and allocation of high-purity feldspar and industrial talc in North America;
C. Engagement of Outside Counsel and Advisors
WHEREAS, on or about February 18, 2022, promptly following receipt of the first grand jury subpoena and in consultation with the Corporation's General Counsel, Priya Anand, the Corporation engaged Calderwood & Harkness LLP ("C&H"), 555 California Street, 40th Floor, San Francisco, CA 94104, USA, as outside counsel to represent TMC and TMC-US in connection with the DOJ Investigation, with Elaine Forsythe serving as the Responsible Partner and lead defense counsel, and Howard Bellamy serving as the Billing Partner for the engagement;
WHEREAS, in connection with the Investigation and upon the recommendation of C&H, the Corporation retained the following expert advisors and forensic specialists:
(i) Redstone Digital Forensics Inc. ("Redstone"), with Neil Ashworth serving as Project Director, engaged to perform forensic data collection, processing, and e-discovery services in connection with the Corporation's document preservation and production obligations arising from the grand jury subpoenas;
(ii) Hargrove Forensic Advisory LLC ("Hargrove"), with Dr. Vanessa Tremblay serving as Engagement Partner, engaged to perform economic analysis, including affected-commerce calculations, penalty-range analysis, market-impact modeling, and the preparation of expert submissions in support of the NPA negotiations; and
(iii) Meridian Compliance Partners LLC ("Meridian"), with Claudia Ferraro serving as Engagement Lead, engaged to assess the Corporation's existing antitrust-compliance infrastructure, identify gaps and deficiencies, and design and implement an enhanced antitrust compliance program meeting the DOJ's current guidance on the evaluation of corporate compliance programs;
D. Internal Investigation and Cooperation
WHEREAS, at the direction of the Board and the Audit Committee, C&H conducted a comprehensive internal investigation into the allegations underlying the DOJ Investigation (the "Internal Investigation"), encompassing the review and analysis of approximately 555,000 documents (comprising approximately 3.2 million pages) collected from the Corporation's electronic and physical records, including email accounts, instant-messaging platforms, shared drives, personal devices (where authorized), and hard-copy files maintained at the Corporation's U.S. and Canadian offices;
WHEREAS, the Internal Investigation further included in-person and videoconference interviews of twenty-three (23) current and former employees of TMC and TMC-US, including members of the sales, commercial operations, pricing, and executive management teams, conducted between March 2022 and November 2022 under Upjohn warnings and subject to the attorney-client privilege;
WHEREAS, on January 20, 2023, C&H presented the findings of the Internal Investigation to the Board in a privileged oral presentation, which included, among other matters, the following principal findings:
(a) Gavin Holt, the Corporation's former Vice President of U.S. Specialty Minerals Sales (employed by TMC-US from September 2014 through August 2021, when he was terminated for cause), exchanged competitively sensitive pricing information, customer-allocation proposals, and bid-coordination communications with counterparts at two competing firms—specifically, Carl Edgerton, Vice President of Sales at Ridgecrest Minerals Inc. ("Ridgecrest"), and Kevin Tsang, former Senior Vice President of Commercial Operations at Pinnacle Earth Resources Ltd. ("Pinnacle")—on at least thirty-seven (37) documented occasions between March 2017 and July 2021, as evidenced by email communications, text messages, and calendar entries recovered during the Internal Investigation;
(b) The conduct attributable to Gavin Holt included sharing TMC-US's proposed pricing matrices for high-purity feldspar and industrial talc with Ridgecrest and Pinnacle in advance of customer bid submissions, coordinating the allocation of certain large-volume industrial customers among the three firms, and discussing the timing of price increases to avoid competitive undercutting;
(c) The Internal Investigation found no evidence that any member of TMC's senior management—including Chief Executive Officer Søren Dalmqvist, General Counsel Priya Anand, Chief Financial Officer Richard Fong, or any other C-suite executive—had knowledge of, authorized, directed, or participated in the alleged anticompetitive conduct; and
(d) The Internal Investigation found no evidence that any member of the Board of Directors had knowledge of or was complicit in the alleged conduct;
WHEREAS, the Corporation cooperated extensively and in good faith with the DOJ Investigation, as recommended by C&H and authorized by the Board, including by:
(i) Producing approximately 555,000 documents (approximately 3.2 million pages) in response to the two grand jury subpoenas, following a comprehensive document-preservation and collection protocol designed by C&H and Redstone;
(ii) Making current employees Sandra Chu (Senior Manager, Specialty Minerals Pricing) and Thomas Eriksen (Regional Sales Director, Western Region) available for voluntary proffer sessions with the DOJ on March 10, 2023 and April 22, 2023, respectively, each conducted pursuant to proffer agreements negotiated by C&H with the DOJ;
(iii) Providing timely and comprehensive factual presentations to the DOJ regarding the findings of the Internal Investigation; and
(iv) Implementing prompt remedial measures, including the termination of Gavin Holt in August 2021, enhanced document-retention procedures, and interim compliance-training initiatives;
E. NPA Negotiations
WHEREAS, on or about November 1, 2023, the DOJ, through Deputy Assistant Attorney General Stafford-Hayes and Trial Attorney Kowalski, communicated to C&H that, in light of the Corporation's substantial cooperation, timely remediation, and the nature and scope of the underlying conduct, the DOJ was willing to negotiate a non-prosecution agreement with TMC as a resolution of the Investigation;
WHEREAS, on or about January 10, 2024, the DOJ circulated to C&H an initial draft of a proposed Non-Prosecution Agreement bearing DOJ Reference No. ATR-SF-2024-00312 (the "Initial DOJ Draft"), setting forth the proposed terms under which the DOJ would agree to forego the filing of criminal charges against the Corporation;
WHEREAS, on or about February 5, 2024, C&H, acting on behalf of TMC and upon authorization of the General Counsel and after consultation with the Audit Committee Chair, submitted a comprehensive counter-draft of the NPA to the DOJ, incorporating TMC's proposed revisions to, among other things, the cooperation period, the scope of the compliance-monitoring provisions, the calculation of the monetary payment, and the language of the Agreed Statement of Facts;
WHEREAS, between February 5, 2024 and April 8, 2024, the parties engaged in extensive good-faith negotiations over the remaining open terms of the NPA, including multiple in-person and telephonic negotiation sessions between C&H and the DOJ;
WHEREAS, on or about March 12, 2024, Hargrove Forensic Advisory LLC delivered its final affected-commerce and penalty analysis report (the "Hargrove Report"), which confirmed that TMC's share of the affected commerce during the relevant period (March 2017 through July 2021) totaled approximately USD 478 million, representing approximately 35.7% of the total affected commerce across all implicated firms of approximately USD 1.34 billion, and which supported the reasonableness of the negotiated monetary payment in the context of the DOJ's penalty guidelines and the cooperation credits earned by TMC;
WHEREAS, on or about April 8, 2024, the DOJ and TMC reached agreement in principle on the final terms of the NPA, and C&H transmitted the agreed-upon final execution version of the NPA to the General Counsel and the Board for review;
WHEREAS, C&H has provided the Board with the final execution version of the NPA (DOJ Reference No. ATR-SF-2024-00312), together with all appendices thereto, including Appendix A (Enhanced Antitrust Compliance Program) and Appendix B (Agreed Statement of Facts), for the Board's review and consideration;
F. Prior Board and Audit Committee Actions
WHEREAS, the Board received a privileged briefing from C&H, delivered by Elaine Forsythe and Howard Bellamy, on the status of the NPA negotiations on December 1, 2023, at which time C&H outlined the principal terms under discussion, the range of potential monetary obligations, and the anticipated cooperation and compliance requirements;
WHEREAS, the Audit Committee of the Board, chaired by Janet Moreau-Shaw, has exercised oversight of the Investigation and the Corporation's financial exposure in connection therewith, including by receiving detailed privileged briefings from C&H and Hargrove on the investigation status, litigation-risk assessment, and financial-reserve analysis on October 18, 2022, March 15, 2023, and September 20, 2023;
WHEREAS, following the September 20, 2023 briefing and upon the recommendation of the Audit Committee, the Board approved an increase in the Corporation's litigation reserve attributable to the DOJ Investigation from USD 30 million (originally established in March 2022) to USD 50 million in Q3 2023, as disclosed in the Corporation's Q3 2023 interim financial statements filed on SEDAR+ and with the SEC;
G. Compliance Remediation
WHEREAS, C&H and Meridian Compliance Partners LLC collaboratively designed an Enhanced Antitrust Compliance Program (the "Enhanced Compliance Program") tailored to the Corporation's organizational structure, industry sector, and risk profile, incorporating the DOJ's June 2020 Evaluation of Corporate Compliance Programs guidance and subsequent updates thereto;
WHEREAS, the Enhanced Compliance Program was submitted to the DOJ on September 15, 2023, and following review and comment by the DOJ, was finalized and incorporated as Appendix A to the NPA;
WHEREAS, the NPA requires the Corporation to retain an independent compliance monitor for a period of two (2) years from the date of execution of the NPA, and the DOJ has pre-approved Meridian Compliance Partners LLC (Claudia Ferraro, Engagement Lead) to serve as the independent compliance monitor, subject to the terms and conditions set forth in the NPA;
H. Board Determination
WHEREAS, the Board has carefully reviewed and considered the terms of the NPA in its entirety, including the Agreed Statement of Facts (Appendix B), the Enhanced Antitrust Compliance Program (Appendix A), and all other terms and conditions set forth therein;
WHEREAS, the Board has received and considered the advice of C&H regarding the legal implications, risks, and benefits of executing the NPA, including the consequences of declining to execute the NPA and the risks associated with a potential criminal prosecution;
WHEREAS, the Board has received and considered the analysis and recommendations of Hargrove Forensic Advisory LLC regarding the reasonableness of the monetary payment and the affected-commerce calculations underlying the NPA;
WHEREAS, the Board has considered the potential impact of the NPA on the Corporation's business operations, financial condition, regulatory standing, stock-exchange listings, customer and supplier relationships, and reputation;
WHEREAS, after due deliberation and upon consideration of all relevant factors, the Board has determined that execution of the NPA on the terms presented is in the best interests of the Corporation and its shareholders, and that the NPA represents a fair, reasonable, and appropriate resolution of the DOJ Investigation.
II. RESOLUTIONS
NOW, THEREFORE, having considered the foregoing recitals and the materials presented to the Board, and upon motion duly made, seconded, and unanimously adopted, the Board of Directors of Torchlight Mining Corp. hereby adopts the following resolutions:
Resolution 1: Approval of the Non-Prosecution Agreement
BE IT RESOLVED, that the Board hereby approves the Non-Prosecution Agreement between Torchlight Mining Corp. and the United States Department of Justice, Antitrust Division (DOJ Reference No. ATR-SF-2024-00312), substantially in the form presented to and reviewed by the Board at this meeting (the "NPA"), including all appendices, schedules, exhibits, and attachments thereto, specifically including:
(a) Appendix A — Enhanced Antitrust Compliance Program (Final Execution Version); and
(b) Appendix B — Agreed Statement of Facts (Final Execution Version);
and the Board hereby determines that the execution and delivery of the NPA on the terms set forth therein is in the best interests of the Corporation and its shareholders, and is hereby authorized and approved in all respects.
Resolution 2: Approval of Key NPA Terms
BE IT FURTHER RESOLVED, that the Board specifically acknowledges, has reviewed, and hereby approves the following material terms and conditions of the NPA:
(a) Monetary Payment. TMC shall pay a monetary amount of USD 48,500,000 (Forty-Eight Million Five Hundred Thousand United States Dollars) to the United States Treasury within sixty (60) days of the execution date of the NPA. The Board acknowledges and confirms that this monetary payment was calculated based on the DOJ's standard methodology of twenty percent (20%) of TMC's affected commerce (USD 478,000,000 × 20% = USD 95,600,000), reduced by approximately 49.2% in recognition of cooperation credit and remediation credit earned by the Corporation through its timely and substantial cooperation with the Investigation and its prompt implementation of remedial measures, yielding a final negotiated payment of USD 48,500,000. The Board finds this amount to be reasonable and appropriate under the circumstances.
(b) Cooperation Obligations. TMC must continue to cooperate fully and truthfully with the DOJ in any related investigations or prosecutions for a period of three (3) years from the NPA execution date (i.e., through May 6, 2027, based on an anticipated execution date of May 6, 2024), including, without limitation, making current and former employees available for interviews, proffer sessions, grand jury testimony, and trial testimony as reasonably requested by the DOJ, and continuing to produce documents and information as required.
(c) Enhanced Antitrust Compliance Program. TMC must implement and maintain the Enhanced Antitrust Compliance Program described in Appendix A to the NPA for the duration of the three-year NPA term and thereafter as a matter of corporate policy. The Enhanced Compliance Program includes, among other requirements: (i) mandatory annual antitrust-compliance training for all employees in sales, commercial operations, pricing, business development, and executive management roles; (ii) the appointment of an independent Chief Compliance Officer reporting directly to the Board or a designated committee thereof; and (iii) annual compliance certifications executed by the Chief Executive Officer and the General Counsel and submitted to the DOJ.
(d) Independent Compliance Monitor. TMC must retain an independent compliance monitor for a period of two (2) years from the NPA execution date (i.e., through May 6, 2026). The DOJ has pre-approved Meridian Compliance Partners LLC (Claudia Ferraro, Engagement Lead) to serve as the independent compliance monitor. The monitor shall have access to Corporation personnel, documents, and records as necessary to assess compliance with the NPA and the Enhanced Compliance Program, and shall submit written reports to the DOJ and the Corporation at six-month intervals during the monitoring period.
(e) No Criminal Charges. The DOJ agrees that, provided TMC complies fully with all terms and conditions of the NPA throughout the three-year NPA term, the DOJ will not bring criminal charges against TMC or any current employee of TMC (other than Gavin Holt, who is individually carved out from the NPA's protections, as described below) based on the conduct described in the Agreed Statement of Facts or any conduct discovered during the Investigation.
(f) Holt Carve-Out. The NPA expressly does not cover, protect, or confer any benefit upon Gavin Holt individually. The DOJ reserves all rights to investigate, charge, and prosecute Holt for any and all conduct arising from or related to the Investigation. The Board notes that Holt is separately represented by Briarcliff Law Group PLLC (Patrick Dunleavy, counsel of record), and that the Corporation has no obligation under the NPA to provide legal representation or indemnification to Holt in connection with any individual prosecution.
(g) NPA Term and Breach Provisions. The NPA shall have a term of three (3) years from the date of execution (anticipated execution date: May 6, 2024; anticipated expiration date: May 6, 2027). If TMC materially breaches any term or condition of the NPA during the three-year term, the DOJ retains the right, in its sole discretion, to prosecute TMC based on the admissions and factual stipulations contained in the Agreed Statement of Facts set forth in Appendix B to the NPA. In such event, TMC would waive any applicable statutes of limitations, venue objections, and certain other procedural defenses as specified in the NPA.
Resolution 3: Authorization of CEO to Execute the NPA
BE IT FURTHER RESOLVED, that Søren Dalmqvist, in his capacity as Chief Executive Officer of Torchlight Mining Corp., is hereby authorized and directed, for and on behalf of the Corporation, to execute and deliver the NPA (DOJ Reference No. ATR-SF-2024-00312), together with all appendices, schedules, exhibits, ancillary documents, side letters, and instruments relating thereto, in substantially the form presented to the Board, with such non-material changes, modifications, or amendments as the CEO, in consultation with Calderwood & Harkness LLP and the General Counsel, may determine to be necessary, appropriate, or desirable, and the execution and delivery of the NPA by the CEO shall constitute conclusive evidence of the Board's approval thereof.
Resolution 4: Authorization of Monetary Payment
BE IT FURTHER RESOLVED, that the Chief Financial Officer, Richard Fong, in consultation with the General Counsel, Priya Anand, is hereby authorized and directed to cause the Corporation to remit the monetary payment of USD 48,500,000 (Forty-Eight Million Five Hundred Thousand United States Dollars) to the United States Treasury on or before July 5, 2024 (being sixty (60) days from the anticipated NPA execution date of May 6, 2024), by wire transfer or such other method of payment as specified in the payment instructions set forth in the NPA or as otherwise directed by the DOJ, and to take all actions necessary to effect such payment in a timely manner.
The Board notes that the monetary payment of USD 48,500,000 is within the Corporation's revised litigation reserve of USD 50,000,000, which was established and increased by the Board as described in the recitals above, and that the remaining reserve balance of approximately USD 1,500,000 shall be available to defray administrative costs associated with the NPA's execution and initial implementation, subject to further direction by the CFO and General Counsel.
Resolution 5: Authorization of Compliance Expenditures
BE IT FURTHER RESOLVED, that the Board hereby authorizes management to incur all expenditures reasonably necessary to implement the Enhanced Antitrust Compliance Program described in Appendix A to the NPA, including but not limited to the costs of compliance training, the hiring or appointment of an independent Chief Compliance Officer, the development and deployment of compliance-monitoring systems and technologies, and the revision of relevant corporate policies and procedures.
BE IT FURTHER RESOLVED, that the Board hereby authorizes management to retain Meridian Compliance Partners LLC (Claudia Ferraro, Engagement Lead) as the independent compliance monitor for the two-year monitor term (anticipated May 6, 2024 through May 6, 2026), with the fees, expenses, and costs of the monitorship engagement to be approved by the General Counsel in the ordinary course of business, consistent with the Corporation's existing approval authorities and procurement procedures, and to be reported to the Audit Committee on a quarterly basis.
Resolution 6: Authorization of Ongoing Cooperation
BE IT FURTHER RESOLVED, that the Board hereby authorizes and directs management, in consultation with Calderwood & Harkness LLP, to comply with all cooperation obligations of the Corporation under the NPA for the full three-year cooperation period (anticipated May 6, 2024 through May 6, 2027), including, without limitation:
(a) Making current and, to the extent within the Corporation's control, former employees available for interviews, proffer sessions, depositions, grand jury testimony, and trial testimony as requested by the DOJ;
(b) Continuing to produce documents and information responsive to DOJ requests, subject to applicable privileges;
(c) Providing timely notification to the DOJ of any material developments relevant to the subject matter of the NPA; and
(d) Maintaining and preserving all documents, data, and records relevant to the Investigation and the NPA for the duration of the cooperation period and for such additional period as may be required by applicable law or regulation.
Resolution 7: Delegation of Authority for Ancillary Actions
BE IT FURTHER RESOLVED, that each of Søren Dalmqvist (Chief Executive Officer), Priya Anand (General Counsel), and Richard Fong (Chief Financial Officer) is hereby authorized, individually and collectively, without further action by the Board, to take any and all actions, execute any and all documents, instruments, agreements, certificates, and filings, and to incur any and all expenditures, as may be necessary, appropriate, or desirable to carry out the intent and purposes of the foregoing resolutions and to effectuate the Corporation's obligations under the NPA, including but not limited to the following:
(a) Executing the annual compliance certifications required under the NPA and the Enhanced Antitrust Compliance Program, to be submitted to the DOJ as specified therein;
(b) Coordinating with the independent compliance monitor (Meridian Compliance Partners LLC) and facilitating the monitor's access to Corporation personnel, records, systems, and facilities as required under the NPA;
(c) Making any required public disclosures in connection with the NPA and the resolution of the DOJ Investigation, including the preparation and filing of Current Reports on Form 8-K with the SEC, material change reports and press releases filed on SEDAR+ in accordance with Canadian securities legislation, and such other disclosures as may be required by applicable law, regulation, or stock-exchange rules, in each case in consultation with Calderwood & Harkness LLP and the Corporation's Canadian securities counsel, Calvert & Associates LLP (Daniel Moreau, TMC engagement partner);
(d) Coordinating with Ironbridge Capital Markets Inc. (Alan Kirkwood, Managing Director) regarding market-disclosure strategy, investor-relations communications, and shareholder engagement in connection with the public announcement of the NPA resolution, as appropriate;
(e) Communicating with the Corporation's directors' and officers' liability insurers—namely, Northland Mutual Insurance Co. (Policy No. NMI-DO-2021-5547, primary layer), Greystone Specialty Insurance Ltd. (first excess layer), and Sentinel Re Ltd. (second excess layer)—regarding the resolution of the DOJ Investigation, any potential claims under the applicable D&O insurance program, and any notice or reporting obligations arising under such policies; and
(f) Taking such other and further actions as any of the foregoing officers may deem necessary, appropriate, or desirable to carry out the purposes and intent of these resolutions, including the execution and delivery of any certificates, opinions, or other instruments required by the DOJ in connection with the NPA.
Resolution 8: Ratification of Prior Actions
BE IT FURTHER RESOLVED, that the Board hereby ratifies, approves, and confirms, in all respects, all actions heretofore taken by the Chief Executive Officer, the General Counsel, the Chief Financial Officer, Calderwood & Harkness LLP, and the Corporation's other advisors in connection with the DOJ Investigation, the Internal Investigation, and the negotiation of the NPA, including without limitation:
(a) The engagement of Calderwood & Harkness LLP as outside counsel on February 18, 2022, and the engagement of Redstone Digital Forensics Inc., Hargrove Forensic Advisory LLC, and Meridian Compliance Partners LLC as described in the recitals above;
(b) The conduct of the Internal Investigation, including document collection, review, and analysis, employee interviews, and the preparation and delivery of privileged reports and presentations to the Board and the Audit Committee;
(c) The production of approximately 555,000 documents (approximately 3.2 million pages) to the DOJ in response to Grand Jury Subpoena Duces Tecum Nos. GJ-22-0194-SD-003 and GJ-22-0194-SD-007;
(d) The cooperation with the DOJ Investigation, including the voluntary proffer sessions of Sandra Chu (March 10, 2023) and Thomas Eriksen (April 22, 2023), and the provision of factual presentations to the DOJ;
(e) The negotiation of the NPA with the DOJ, including the submission of the counter-draft NPA on February 5, 2024, and all subsequent negotiations leading to the agreement in principle on April 8, 2024; and
(f) All related expenditures incurred in connection with the foregoing activities.
The Board specifically ratifies and confirms the total professional fees and disbursements incurred through the anticipated close of the matter, as reported to the Board and the Audit Committee, which are as follows:
The Board acknowledges that the Calderwood & Harkness LLP fees and disbursements of approximately USD 18,700,000 reflect a budget overage beyond the initial engagement estimate of USD 12,000,000, which overage was reviewed and approved by the General Counsel in Q1 2023 in light of the expanded scope of the Internal Investigation and the second grand jury subpoena. The Board finds that all professional fees and expenditures incurred in connection with the Investigation and the NPA negotiations were reasonable, necessary, and incurred in the best interests of the Corporation.
Resolution 9: Confirmation of Continuing Board Oversight
BE IT FURTHER RESOLVED, that the Audit Committee of the Board (Chair: Janet Moreau-Shaw) shall continue to exercise oversight of the Corporation's compliance with all terms and conditions of the NPA throughout the three-year NPA term, including by:
(a) Receiving periodic reports from management and the General Counsel on the status of the Corporation's compliance with the NPA;
(b) Receiving and reviewing the semi-annual written reports of the independent compliance monitor (Meridian Compliance Partners LLC);
(c) Reviewing and approving, as appropriate, management's responses to any findings, recommendations, or concerns raised by the independent compliance monitor or the DOJ;
(d) Reporting to the full Board, at regular intervals and as circumstances warrant, on the Corporation's NPA compliance status and any material developments; and
(e) Overseeing the Corporation's implementation and maintenance of the Enhanced Antitrust Compliance Program.
BE IT FURTHER RESOLVED, that the Board Chair, Margaret Caldwell, shall be kept apprised of all material developments relating to the NPA, the Corporation's compliance therewith, and any communications from the DOJ, the independent compliance monitor, or any other governmental authority in connection with the matters addressed by these resolutions.
III. GENERAL AUTHORITY PROVISION
BE IT FURTHER RESOLVED, that any and all actions heretofore taken by any officer, director, employee, or authorized representative of the Corporation that are within the scope of the authority conferred by the foregoing resolutions are hereby ratified, approved, and confirmed in all respects as the acts and deeds of the Corporation, and that each officer of the Corporation is hereby authorized to certify these resolutions and the authority granted hereby to any person or entity requiring evidence thereof.
IV. EFFECTIVE DATE
These resolutions shall be effective as of April 25, 2024, and shall remain in full force and effect unless and until amended, modified, or rescinded by subsequent action of the Board of Directors.
V. CERTIFICATION AND ATTESTATION
Secretary's Certificate.  I, Priya Anand, General Counsel of Torchlight Mining Corp., acting in my capacity as Corporate Secretary of the Corporation, do hereby certify that:
1.  The foregoing resolutions are a true, complete, and correct copy of the resolutions duly adopted by the Board of Directors of Torchlight Mining Corp. at a duly convened special meeting of the Board held on April 25, 2024, at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2, Canada;
2.  A quorum of the Board was present throughout the meeting, either in person or by means of telephonic or electronic communication facilities that permitted all participants to communicate adequately with each other during the meeting, in accordance with the Corporation's by-laws and the Canada Business Corporations Act;
3.  The foregoing resolutions were adopted by the affirmative vote of all directors present at the meeting, with no dissenting votes and no abstentions;
4.  The resolutions have not been amended, modified, or rescinded and remain in full force and effect as of the date of this certificate; and
5.  I am authorized to execute this certificate on behalf of the Corporation.
Signature Lines.  
BOARD CHAIR
________________________________________
Name: Margaret Caldwell
Title: Chair, Board of Directors
Torchlight Mining Corp.
Date: ________
CORPORATE SECRETARY / GENERAL COUNSEL
________________________________________
Name: Priya Anand
Title: General Counsel and Corporate Secretary
Torchlight Mining Corp.
Date: ________
WITNESSED / ATTESTED BY
________________________________________
Name: ________
Title: ________
Date: ________
VI. APPENDICES AND ATTACHMENTS (REFERENCED)
The following attachments are incorporated by reference into these resolutions and shall be appended hereto upon execution of the NPA:
Attachment 1: Non-Prosecution Agreement (DOJ Reference No. ATR-SF-2024-00312) — Final Execution Version (to be attached upon execution on or about May 6, 2024)
Attachment 2: NPA Appendix A — Enhanced Antitrust Compliance Program (Final Execution Version)
Attachment 3: NPA Appendix B — Agreed Statement of Facts (Final Execution Version)
This document constitutes the complete and official record of the resolutions adopted by the Board of Directors of Torchlight Mining Corp. on April 25, 2024, in connection with the authorization to execute the Non-Prosecution Agreement with the United States Department of Justice, Antitrust Division. This document is subject to the attorney-client privilege and work-product doctrine. Unauthorized reproduction or distribution is strictly prohibited.
Calderwood & Harkness LLP | C&H Matter No. 1039-00001 Prepared by: Elaine Forsythe, Partner | Howard Bellamy, Partner 555 California Street, 40th Floor, San Francisco, CA 94104
Advisor / Firm | Key Personnel | Approximate Fees & Disbursements (USD)
Calderwood & Harkness LLP | E. Forsythe (Responsible Partner); H. Bellamy (Billing Partner) | $18,700,000
Hargrove Forensic Advisory LLC | Dr. V. Tremblay (Engagement Partner) | $1,850,000
Redstone Digital Forensics Inc. | N. Ashworth (Project Director) | $2,300,000
Meridian Compliance Partners LLC | C. Ferraro (Engagement Lead) | $1,100,000
Total Aggregate Professional Fees | $23,950,000

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / WORK PRODUCT

RESOLUTIONS OF THE BOARD OF DIRECTORS OF TORCHLIGHT MINING CORP.

I. RECITALS

II. RESOLUTIONS

III. GENERAL AUTHORITY PROVISION

IV. EFFECTIVE DATE

V. CERTIFICATION AND ATTESTATION

BOARD CHAIR

CORPORATE SECRETARY / GENERAL COUNSEL

WITNESSED / ATTESTED BY

VI. APPENDICES AND ATTACHMENTS (REFERENCED)

Record

Parties

Dates

Amounts