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1039-00001 · Torchlight Mining Corp · documents

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PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT SUBJECT TO FRE 408 PROTECTIONS AND DOJ ANTITRUST DIVISION COOPERATION PROFFER PROTECTIONS

CALDERWOOD & HARKNESS LLP Attorneys at Law

555 California Street, 40th Floor San Francisco, California 94104

Telephone: (415) 772-5000 Facsimile: (415) 772-5001 www.calderwoodharkness.com

February 15, 2023

VIA HAND DELIVERY AND ELECTRONIC MAIL

Denise Kowalski, Trial Attorney Antitrust Division U.S. Department of Justice San Francisco Field Office 450 Golden Gate Avenue, Room 10-0101 San Francisco, CA 94102

Email: denise.kowalski@usdoj.gov

Marcus Reeves, Senior Trial Attorney Antitrust Division U.S. Department of Justice San Francisco Field Office 450 Golden Gate Avenue, Room 10-0101 San Francisco, CA 94102

Email: marcus.reeves@usdoj.gov

Re: In the Matter of Grand Jury Investigation No. GJ-22-0194, U.S. District Court, Northern District of California, San Francisco Division — Cooperation Proffer on Behalf of Torchlight Mining Corp.

Calderwood & Harkness Matter No.: 1039-00001

Dear Ms. Kowalski and Mr. Reeves:

I. INTRODUCTION AND PURPOSE

Calderwood & Harkness LLP respectfully submits this written cooperation proffer on behalf of its client, Torchlight Mining Corp. ("TMC" or "Torchlight"), in connection with the above-referenced grand jury investigation. TMC is a corporation organized under the Canada Business Corporations Act (CBCA Corporation No. 7841526-1), with its registered office at 200 Bay Street, Suite 3400, Toronto, Ontario M5J 2J2, Canada. TMC's operations within the United States are conducted through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc. (Nevada Entity No. NV20160438721; Federal Employer Identification Number 83-2947106), which maintains its principal U.S. office at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117. TMC is a publicly listed company, with its common shares traded on the Toronto Stock Exchange (Ticker: TRCL) and the New York Stock Exchange (Ticker: TMC).

The purpose of this proffer is fourfold. First, it is intended to outline TMC's extensive cooperation with the Antitrust Division's investigation, which has been ongoing since TMC received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 in February 2022. Second, it summarizes the findings of the comprehensive internal investigation conducted by Calderwood & Harkness on TMC's behalf, which has involved the review of hundreds of thousands of documents and the interviews of numerous current and former employees. Third, it describes TMC's significant and ongoing remediation efforts, which reflect TMC's genuine institutional commitment to ensuring that conduct of the kind at issue does not recur. Fourth, and of central importance, it presents the mitigating factors that, taken together, support the resolution of this matter short of criminal prosecution — specifically, through a non-prosecution agreement ("NPA").

TMC's Chief Executive Officer, Søren Dalmqvist, has personally authorized the submission of this proffer and TMC's pursuit of an NPA resolution. TMC's General Counsel, Priya Anand, has been closely involved in directing and overseeing TMC's cooperation efforts and internal investigation. This proffer is submitted by the undersigned, Elaine Forsythe, Responsible Partner in Calderwood & Harkness's Antitrust & Competition Practice Group.

This proffer is made pursuant to the Antitrust Division's policies on cooperation credit, including the Division's updated guidance on the evaluation of corporate compliance programs, and is intended to be considered in connection with the Division's evaluation of the appropriate disposition of Grand Jury Investigation No. GJ-22-0194 as it pertains to TMC. TMC received a target letter from the Antitrust Division dated May 20, 2022, and has since that date committed to full, timely, and comprehensive cooperation with the Division's investigation. This proffer represents a continuation of that commitment. Nothing in this proffer is intended to waive, and TMC does not waive, any applicable privilege, including attorney-client privilege and work product protection, except to the extent that specific factual information is voluntarily disclosed herein for the purposes of cooperation.

II. BACKGROUND OF THE INVESTIGATION

A. Nature of the Investigation

The Antitrust Division of the U.S. Department of Justice opened Grand Jury Investigation No. GJ-22-0194 in the United States District Court for the Northern District of California, San Francisco Division, on or about February 10, 2022. The investigation concerns suspected violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, in the North American specialty-minerals sector. Specifically, the Division's investigation encompasses suspected price-fixing, market allocation, and bid-rigging among competing producers and suppliers of specialty industrial minerals.

The products at the center of the investigation are high-purity feldspar, industrial talc, and rare-earth concentrates — mineral commodities that are critical inputs for a wide range of industrial applications, including ceramics, glass manufacturing, paint and coatings, electronics, and defense-related technologies. The North American market for these products is characterized by a relatively concentrated group of producers and a specialized customer base, features that, as the Division is aware, can create conditions conducive to collusive behavior.

The alleged conspiracy period under investigation spans from approximately January 2017 through August 2021, a period of approximately four and one-half years. During this period, the Division has reason to believe that certain employees of competing specialty-minerals companies engaged in communications and agreements regarding the pricing of the above-listed products, the allocation of customers and geographic markets, and the coordination of bids submitted to certain purchasers.

The investigation was triggered by the cooperation agreement entered into between the Antitrust Division and Cascade Chemical Supply Co. ("Cascade"), a Washington state corporation headquartered at 901 West Riverside Avenue, Suite 300, Spokane, Washington 99201. Cascade is represented in this matter by Rebecca Ostrander of Whitfield, Strauss & Tully LLP. It is Calderwood & Harkness's understanding that Cascade approached the Division in approximately September 2021 and entered into a cooperation agreement pursuant to the Division's leniency program, providing information that formed the basis for the opening of Grand Jury Investigation No. GJ-22-0194. While Calderwood & Harkness has not been privy to the specifics of Cascade's cooperation or the terms of its leniency agreement, the information provided by Cascade appears to have been the primary catalyst for the investigation that followed.

B. Entities and Individuals Under Investigation

Based on Calderwood & Harkness's understanding — derived from the Division's communications, the grand jury subpoena, the target letter, and information developed in the course of TMC's internal investigation — the following entities and individuals are subjects or targets of the investigation:

Torchlight Mining Corp. ("TMC"). TMC received a target letter from the Antitrust Division on May 20, 2022, formally advising TMC that it was a target of the investigation. As noted above, TMC had previously received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 on February 14, 2022, and had been cooperating with the Division's investigation since that date.

Ridgecrest Minerals Inc. ("Ridgecrest"). Ridgecrest is a Delaware corporation headquartered at 1700 Lincoln Street, Suite 4200, Denver, Colorado 80203. Ridgecrest is the second-largest North American producer of high-purity feldspar and industrial talc, with fiscal year 2021 revenue of approximately USD 1.92 billion. Ridgecrest is a portfolio company of Marlowe Asset Management Peak Capital Partners LP, a Denver-based private equity fund. It is Calderwood & Harkness's understanding that Ridgecrest received a target letter from the Division on or about January 12, 2022. Ridgecrest is represented in this matter by Helen Marchetti of Davenport, Kline & Archer LLP.

Pinnacle Earth Resources Ltd. ("Pinnacle"). Pinnacle is an Ontario corporation headquartered at 85 Elm Street West, Suite 600, Sudbury, Ontario P3C 1T3, Canada. Pinnacle conducts its U.S. operations through offices located at 222 South Main Street, Suite 1500, Salt Lake City, Utah 84101. Pinnacle is a top-five North American producer of rare-earth concentrates and specialty industrial minerals, with fiscal year 2021 revenue of approximately CAD 1.45 billion (approximately USD 1.15 billion). Pinnacle is represented in this matter by George Nakamura of Ashford Whitmore LLP.

Key Individuals. The investigation has identified certain individuals as having been directly involved in or having knowledge of the alleged anticompetitive conduct. The key individuals known to Calderwood & Harkness at this time are:

• Gavin Holt, former Vice President, U.S. Specialty Minerals Sales, TMC. Mr. Holt served in this role from approximately 2016 until his departure from TMC effective September 30, 2021. Mr. Holt is the primary TMC employee implicated in the alleged conduct. His role is discussed in detail in Section IV of this proffer.

• Carl Edgerton, Vice President of Sales, Ridgecrest Minerals Inc. Mr. Edgerton is believed to be a current employee of Ridgecrest and is one of the individuals with whom Mr. Holt is alleged to have communicated regarding pricing and market allocation.

• Kevin Tsang, former Senior Vice President, Commercial Operations, Pinnacle Earth Resources Ltd. Mr. Tsang's current employment status is not known to Calderwood & Harkness, but he is identified as a participant in the alleged communications during the relevant period.

C. TMC's Engagement of Counsel and Initial Response

TMC received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 on February 14, 2022. The subpoena was directed to TMC's wholly owned U.S. subsidiary, Torchlight Mining (U.S.) Inc., and called for the production of a wide range of documents related to TMC's pricing, sales, customer relationships, and competitor contacts in the specialty-minerals sector.

Upon receipt of the subpoena, TMC's General Counsel, Priya Anand, immediately recognized the significance of the matter and took preliminary steps to preserve potentially relevant documents, including issuing informal preservation instructions to senior personnel within the U.S. Specialty Minerals Division. Ms. Anand also contacted Calderwood & Harkness's Antitrust & Competition Practice Group to engage outside counsel for the investigation. TMC formally retained Calderwood & Harkness LLP as its counsel in this matter on February 18, 2022 — within four business days of subpoena receipt.

Upon engagement, Calderwood & Harkness promptly undertook the following initial steps:

• Litigation Hold. A comprehensive, company-wide litigation hold was issued on March 1, 2022. This hold was accompanied by targeted, custodian-specific preservation instructions directed to all personnel in the U.S. Specialty Minerals Division, as well as other TMC departments with potentially relevant information. The hold covered all categories of documents and electronically stored information ("ESI"), including email, messaging platforms, shared drives, personal devices, and cloud storage. Compliance with the hold was monitored by Calderwood & Harkness and TMC's legal department on an ongoing basis.

• Initial Assessment. Calderwood & Harkness conducted an initial assessment of the scope of the subpoena, the nature of the investigation, and the potential exposure of TMC and its personnel. This assessment informed the design of the internal investigation and document collection plan described below.

• Communication with the Division. Calderwood & Harkness initiated communications with the Division to discuss the scope of the subpoena and the anticipated timetable for document production, consistent with TMC's commitment to cooperation.

It bears emphasis that TMC's General Counsel, Ms. Anand, had independently initiated document preservation efforts before Calderwood & Harkness was engaged — a fact that reflects TMC's institutional commitment to cooperation and compliance with its legal obligations from the earliest moment of the investigation.

III. TMC'S COOPERATION WITH THE INVESTIGATION

TMC's cooperation with the Antitrust Division's investigation has been voluntary, timely, and comprehensive. From the outset, TMC has treated cooperation as a priority and has devoted substantial resources — both financial and organizational — to ensuring that the Division has access to the information it needs to carry out its investigation effectively. This section describes the principal elements of TMC's cooperation.

A. Document Production

1. First Grand Jury Subpoena (GJ-22-0194-SD-003)

To ensure that its document collection and production efforts met the highest standards of forensic integrity and completeness, TMC retained Redstone Digital Forensics Inc. ("Redstone") on March 15, 2022. Redstone is a nationally recognized digital forensics and e-discovery firm based at 7925 Jones Branch Drive, Suite 600, McLean, Virginia 22102. The engagement was overseen by Neil Ashworth, Redstone's Project Director, in coordination with Calderwood & Harkness's e-discovery team.

Calderwood & Harkness, working with TMC's information technology department and legal team, identified 34 custodians across the U.S. Specialty Minerals Division and other relevant TMC departments whose files were potentially responsive to the subpoena. These custodians included current and former employees in sales, pricing, marketing, business development, executive leadership, and compliance functions.

The data sources collected by Redstone encompassed the following categories:

• Corporate email systems (Strathmore Data Systems and Ashbury Software environments);

• Shared network drives and departmental file repositories;

• VaultChat message archives, which required specialized forensic recovery techniques due to the encrypted nature of the platform;

• Personal devices of identified custodians, collected with the custodians' consent and pursuant to TMC's employment policies governing company data on personal devices; and

• Cloud storage platforms, including Cobalt Ridge Systems and Larkspur Technologies accounts associated with custodian business activities.

TMC's first rolling production of responsive documents was delivered to the Division on April 4, 2022 — approximately seven weeks after the subpoena was received and less than three weeks after the forensic collection process commenced. This first production comprised approximately 42,000 documents. Subsequent rolling productions were made on a regular basis from August 1, 2022, through December 15, 2022, as additional responsive documents were identified, reviewed, and processed.

As of the date of this proffer, TMC's cumulative production under Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 stands at approximately 487,000 documents, comprising approximately 3.2 million pages of material. All productions were made in the format agreed upon with the Division, with sequential Bates numbering (TMC-GJ-000000001 through TMC-GJ-003200000+), load files, and associated metadata.

Privilege logs were submitted with each rolling production, prepared under a rigorous privilege review protocol designed by Calderwood & Harkness. The protocol was implemented with the protections of Federal Rule of Evidence 502(d) in mind, and TMC intends to seek entry of an appropriate FRE 502(d) order to the extent not already in place. The privilege review was conducted by a dedicated team of Calderwood & Harkness attorneys with specialized training in privilege analysis, and each privilege determination was reviewed by a senior associate or partner before final designation. TMC has endeavored to assert privilege only where genuinely warranted and has not used privilege claims as a mechanism to withhold substantive information from the Division.

2. Scope and Thoroughness

TMC's document collection and production efforts went beyond the strict specifications of the grand jury subpoena to ensure completeness and to demonstrate good faith. In particular:

• TMC proactively identified and collected documents from personal devices and non-standard communication repositories that were not expressly called for by the subpoena but that TMC reasonably believed could contain responsive information. This included, notably, the VaultChat messaging archives, which proved to be of particular significance to the investigation. The recovery of VaultChat archives required specialized forensic techniques by Redstone, including the reconstruction of message threads from encrypted database files and the extraction of metadata necessary to establish the timing and participants of specific communications.

• TMC identified and produced documents from shared network drives and departmental repositories that were not initially within the scope of the custodian-based collection plan but were subsequently identified as potentially responsive during the internal investigation.

• When TMC's internal investigation identified additional responsive materials not previously captured in the collection process, TMC made supplemental productions to the Division on a voluntary basis, without waiting for additional subpoenas or requests.

TMC's approach to document production reflects a deliberate decision to err on the side of over-inclusion rather than under-inclusion, consistent with its commitment to full cooperation.

B. Witness Cooperation

TMC has made, and will continue to make, its current employees available for interviews and proffer sessions with the Division. TMC recognizes that the Division's investigation depends not only on documentary evidence but also on witness testimony, and TMC has prioritized facilitating the Division's access to individuals with knowledge of the relevant facts.

To date, TMC has facilitated the cooperation of 23 current and former employees with Calderwood & Harkness's internal investigation. These individuals were interviewed under Upjohn warnings, and their testimony has been instrumental in developing the factual record summarized in Section IV of this proffer. Key witnesses have been prepared by Calderwood & Harkness and are available for Division interviews at the Division's convenience.

In particular, TMC is prepared to make the following individuals available for voluntary proffer sessions with the Division under appropriate proffer protections (i.e., "queen for a day" agreements):

• Sandra Chu, Director, Pricing Analytics, U.S. Specialty Minerals Division. Ms. Chu reported directly to Gavin Holt and was responsible for implementing pricing decisions within the division. Her knowledge of the pricing instructions she received from Holt, and the circumstances surrounding those instructions, is directly relevant to the Division's investigation.

• Thomas Eriksen, Regional Sales Manager, Western Region, U.S. Specialty Minerals Division. Mr. Eriksen attended several North American Specialty Minerals Council (NASMC) quarterly conferences during the conspiracy period and may have information relevant to the side meetings alleged to have occurred at those events.

TMC is prepared to make additional witnesses available as the Division may request, subject to applicable legal protections.

Regarding Gavin Holt. Mr. Holt departed TMC effective September 30, 2021 — approximately four months before Grand Jury Investigation No. GJ-22-0194 commenced and approximately five months before TMC received its grand jury subpoena. As a former employee, TMC has no ability to compel Mr. Holt's cooperation with the Division. Mr. Holt has retained personal counsel, Patrick Dunleavy of Briarcliff Law Group PLLC, located at 50 California Street, Suite 2800, San Francisco, California 94111. It is Calderwood & Harkness's understanding that Mr. Holt appeared before the grand jury on June 14, 2022, and asserted his Fifth Amendment privilege against self-incrimination, declining to testify. TMC wishes to make clear that it has not taken any steps to impede the Division's access to Mr. Holt, has not entered into any agreement or understanding with Mr. Holt regarding his testimony or cooperation, and has not provided financial support for Mr. Holt's legal defense. TMC's inability to produce Mr. Holt as a cooperative witness is a function solely of his status as a former employee and his invocation of his constitutional rights.

C. Timeliness and Good Faith

TMC's cooperation has been characterized by promptness and good faith at every stage of the investigation. The following timeline underscores this commitment:

• TMC received the grand jury subpoena on February 14, 2022, and engaged Calderwood & Harkness within four business days, on February 18, 2022.

• A comprehensive, company-wide litigation hold with targeted custodian-specific instructions was issued on March 1, 2022, within 11 days of subpoena receipt and within 11 calendar days of the engagement of outside counsel.

• Redstone Digital Forensics was retained on March 15, 2022, and forensic data collection commenced immediately thereafter.

• TMC's first rolling production of approximately 42,000 documents was delivered to the Division on April 4, 2022, approximately seven weeks after subpoena receipt.

• By letter dated June 8, 2022, Calderwood & Harkness formally communicated TMC's willingness and commitment to cooperate with the Division's investigation, including the making available of witnesses for interview and the provision of factual information developed through TMC's internal investigation.

• TMC received the Division's target letter on May 20, 2022, and continued to cooperate fully following receipt of that letter, reflecting TMC's commitment to cooperation irrespective of its formal status in the investigation.

TMC has not sought to delay, obstruct, or withhold any information from the Division at any point during the investigation. TMC has responded promptly to all Division communications, has met or exceeded all agreed-upon production deadlines, and has proactively supplemented its productions when new responsive information was identified.

Importantly, TMC has not entered into any joint defense agreement ("JDA") with counsel for Ridgecrest Minerals Inc. (Davenport, Kline & Archer LLP, Helen Marchetti) or Pinnacle Earth Resources Ltd. (Ashford Whitmore LLP, George Nakamura). While such agreements are commonplace in multi-party investigations and would be permissible, TMC made the affirmative decision to forgo any JDA in order to maintain an independent cooperation posture and to avoid any suggestion that TMC's cooperation was being coordinated with or influenced by co-subjects or co-targets. This decision underscores the genuineness and independence of TMC's cooperation.

IV. SUMMARY OF INTERNAL INVESTIGATION FINDINGS

A. Scope and Methodology

Calderwood & Harkness commenced a comprehensive internal investigation on behalf of TMC in March 2022, shortly after its engagement in this matter. The investigation was designed to develop a thorough and accurate factual record of the conduct at issue, to identify the individuals involved, to assess the knowledge and involvement of TMC management and the Board of Directors, and to evaluate the adequacy of TMC's prior compliance program.

The scope of the internal investigation encompassed the following components:

• Document Review. Calderwood & Harkness reviewed the approximately 487,000 documents produced to the Division in response to the grand jury subpoena, as well as additional documents identified during the investigation that were outside the scope of the subpoena but relevant to the factual questions at issue. The review was conducted by a team of Calderwood & Harkness attorneys using a structured review protocol with targeted search terms, date filters, and custodian prioritization.

• Witness Interviews. Calderwood & Harkness conducted interviews of 23 current and former TMC employees, including individuals at all levels of the U.S. Specialty Minerals Division's organizational hierarchy, from administrative and support staff through the divisional sales force, pricing analytics, and management. Each interview was conducted under Upjohn warnings, with the interviewees being advised that Calderwood & Harkness represented TMC and not the individual, that the interview was privileged, and that TMC could waive the privilege and disclose the contents of the interview at its discretion.

• Pricing Data Analysis. Calderwood & Harkness reviewed and analyzed TMC's internal pricing data for the three product categories at issue — high-purity feldspar, industrial talc, and rare-earth concentrates — for the period from 2015 through 2022, a timeframe that encompasses two years before the alleged conspiracy period through one year after its conclusion.

• Economic Analysis. On July 1, 2022, Calderwood & Harkness retained Hargrove Forensic Advisory LLC ("Hargrove") to conduct an independent economic analysis of pricing patterns in the North American specialty-minerals market during the relevant period. The engagement was led by Dr. Vanessa Tremblay, Engagement Partner, at Hargrove's offices located at 233 South Wacker Drive, Suite 4800, Chicago, Illinois 60606. Dr. Tremblay holds a Ph.D. in Economics from the University of Chicago and has extensive experience in antitrust economics, including prior engagements for both the Division and private litigants in price-fixing matters. Hargrove's analysis examined TMC's pricing movements in relation to market conditions, cost inputs, and competitor pricing, and assessed the extent of affected commerce attributable to TMC.

The findings of the internal investigation were presented to the TMC Board of Directors at a special meeting held on January 20, 2023. The Board received the presentation with the seriousness the matter warrants and directed management to continue full cooperation with the Division and to proceed with the comprehensive compliance program enhancements described in Section VI of this proffer.

B. Key Findings Regarding Gavin Holt

Gavin Holt served as Vice President, U.S. Specialty Minerals Sales, at TMC from approximately 2016 until his resignation effective September 30, 2021. In this role, Holt was responsible for overseeing the commercial sales strategy and pricing for TMC's U.S. specialty-minerals product lines, including high-purity feldspar, industrial talc, and rare-earth concentrates. He reported to the divisional President of the U.S. Specialty Minerals Division and had a team of regional sales managers, pricing analysts, and business development professionals reporting to him.

The internal investigation found that, while serving in this capacity, Holt exchanged competitively sensitive pricing information with Carl Edgerton (Vice President of Sales, Ridgecrest Minerals Inc.) and Kevin Tsang (Senior Vice President, Commercial Operations, Pinnacle Earth Resources Ltd.) on at least 37 documented occasions between approximately March 2017 and July 2021. Calderwood & Harkness notes that the actual number of communications may be higher, as certain communications — particularly in-person conversations at industry events — are inherently difficult to document with precision.

The first documented communication between Holt and Edgerton occurred on March 14, 2017, in the form of a VaultChat message in which Holt shared TMC's forthcoming price increase for high-purity feldspar and inquired whether Ridgecrest intended to implement a comparable adjustment. Subsequent communications escalated in both frequency and specificity over the course of the conspiracy period.

The communications between Holt and his counterparts at Ridgecrest and Pinnacle occurred through multiple channels:

(a) Encrypted VaultChat messaging. VaultChat is an encrypted messaging platform that was used by Holt and, according to the evidence developed in the internal investigation, by Edgerton and Tsang as well. The platform was designed to provide end-to-end encryption and message-deletion functionality, which Holt appears to have used in an effort to conceal the communications from TMC's IT systems and compliance monitoring. Despite these efforts, Redstone Digital Forensics was able to recover a significant volume of VaultChat messages from TMC's systems and from Holt's former corporate devices.

(b) In-person conversations at North American Specialty Minerals Council (NASMC) quarterly conferences. The NASMC holds quarterly industry conferences at various locations throughout the United States. During the conspiracy period, conferences were held in Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida, among other locations. The internal investigation found evidence — including calendar entries, travel records, and contemporaneous emails — indicating that Holt attended these conferences and used them as opportunities for side meetings with Edgerton and Tsang. These side meetings typically occurred during networking receptions, on the margins of panel sessions, or over private dinners.

(c) Occasional phone calls. The investigation identified records of phone calls between Holt and Edgerton, and between Holt and Tsang, at times that correlate with pricing announcements or bid deadlines. While the content of these phone calls could not be directly confirmed through recordings, the circumstantial evidence — including the timing, duration, and frequency of the calls, correlated with subsequent pricing actions — supports the inference that these calls involved discussions of competitively sensitive information.

The content of the communications, as revealed by the recovered VaultChat messages and corroborated by witness interviews and pricing data analysis, included:

• Specific pricing information for high-purity feldspar, industrial talc, and rare-earth concentrates, including current and prospective pricing, planned price increases and decreases, and discount structures;

• Discussion of customer allocation, including identification of specific customers and agreements regarding which company would pursue or refrain from pursuing particular accounts;

• Coordination of bids submitted to certain purchasers, including the advance sharing of bid prices and the agreement to submit complementary or cover bids designed to ensure that a pre-determined company would win the contract; and

• Monitoring of each party's adherence to the agreed-upon pricing and allocation arrangements, including complaints about alleged "cheating" by one party or another.

TMC acknowledges that this conduct, to the extent it occurred as the evidence suggests, constitutes per se violations of Section 1 of the Sherman Act. TMC does not seek to minimize the seriousness of the conduct. Rather, TMC submits that the appropriate response — in light of the totality of circumstances, including the factors described in Section VII below — is a resolution short of criminal prosecution.

C. Key Findings Regarding Sandra Chu

Sandra Chu currently serves as Director, Pricing Analytics, in TMC's U.S. Specialty Minerals Division. In this role, Ms. Chu is responsible for maintaining and updating TMC's published price lists for specialty-minerals products, implementing pricing changes as directed by divisional leadership, and conducting analyses of pricing trends and profitability. During the conspiracy period, Ms. Chu reported directly to Gavin Holt.

The internal investigation found that Ms. Chu received instructions from Holt to adjust published price lists on at least 12 occasions that correlated temporally with competitor price movements — specifically, with pricing changes announced by Ridgecrest and Pinnacle. In each instance, Holt directed Chu to implement a specified price change, typically within a narrow timeframe, and Chu carried out the instructions in the normal course of her duties.

However, the internal investigation found no direct evidence that Ms. Chu had knowledge of the inter-competitor communications between Holt and his counterparts at Ridgecrest and Pinnacle. Ms. Chu was not a party to any VaultChat communications with Edgerton or Tsang, did not attend any of the alleged side meetings at NASMC conferences, and was not included in any communications in which the existence of an agreement with competitors was disclosed or implied. In her internal investigation interview, Ms. Chu stated that she understood her instructions from Holt as coming from normal commercial direction within the division. She stated that Holt would periodically direct pricing adjustments, which she understood to reflect competitive market conditions, cost changes, or strategic decisions by divisional management. Ms. Chu stated that she had no reason to suspect that Holt was coordinating pricing with competitors.

Calderwood & Harkness's assessment is that the evidence supports Ms. Chu's account. While the temporal correlation between Holt's instructions to Chu and competitor price movements is suggestive, there is no direct evidence of Chu's knowledge of or participation in the conspiracy. TMC believes that Ms. Chu was an unwitting instrument of Holt's scheme, not a knowing participant.

D. Key Findings Regarding Thomas Eriksen

Thomas Eriksen currently serves as Regional Sales Manager, Western Region, in TMC's U.S. Specialty Minerals Division. In this role, Mr. Eriksen is responsible for managing customer relationships and sales activities in the Western United States and reports to the divisional head of sales (a position previously held by Gavin Holt).

The internal investigation identified that Mr. Eriksen attended four NASMC quarterly conferences during the conspiracy period at which side meetings between Holt, Edgerton, and Tsang are alleged to have occurred. Mr. Eriksen's attendance at these conferences was in the ordinary course of his duties as a regional sales manager and is not, in itself, unusual or suspicious.

The evidence of Mr. Eriksen's direct participation in any anticompetitive agreement is ambiguous. There is no documentary evidence — no VaultChat messages, no emails, no calendar entries — directly linking Eriksen to the substance of the alleged conspiracy. However, certain witness statements suggest that Eriksen may have been present during portions of informal gatherings at conferences at which Holt interacted with Edgerton and Tsang. Whether Eriksen was aware of the nature of those interactions, or was merely present in a social setting, cannot be determined with certainty from the available evidence.

In his internal investigation interview, conducted under Upjohn warnings, Mr. Eriksen denied knowledge of any agreements with competitors. He stated that he attended NASMC conferences for networking and business development purposes, that he occasionally observed Holt speaking with competitors at social events, but that he was not privy to the substance of those conversations and had no reason to believe they involved the exchange of competitively sensitive information.

Calderwood & Harkness's assessment is that the evidence regarding Eriksen is genuinely ambiguous, and that it would be premature to characterize him as a participant in the alleged conspiracy based on the evidence currently available.

E. Key Findings Regarding TMC Senior Management and Board

A critical finding of the internal investigation is that no evidence was found that TMC's C-suite — including Chief Executive Officer Søren Dalmqvist and General Counsel Priya Anand — or any member of the TMC Board of Directors (chaired by Margaret Caldwell) had knowledge of, authorized, or ratified the alleged anticompetitive conduct.

The internal investigation examined this question thoroughly. Calderwood & Harkness reviewed the communications of senior management, including the CEO, General Counsel, Chief Financial Officer, and divisional Presidents, during the entirety of the conspiracy period. Calderwood & Harkness also interviewed members of the senior leadership team and members of the Board's Audit Committee. The investigation found no indication that Holt informed any member of senior management about his communications with competitors, and no indication that senior management had reason to know about the conduct.

The alleged conduct was confined to the commercial sales function within the U.S. Specialty Minerals Division and was conducted by Gavin Holt without authorization from TMC management. Holt's use of an encrypted messaging platform — VaultChat — for his communications with competitors, and his apparent deliberate concealment of those communications from TMC's corporate systems, is consistent with an individual acting alone and without institutional support or direction.

This finding is significant for the Division's assessment of TMC's corporate culpability. While TMC acknowledges its vicarious liability for the conduct of its employees acting within the scope of their employment, the absence of management knowledge or authorization is a recognized mitigating factor under the Division's prosecution guidelines and policy statements.

F. Assessment of TMC's Prior Compliance Program

The internal investigation included an evaluation of TMC's antitrust compliance program as it existed during the conspiracy period. TMC adopted an antitrust compliance policy in approximately 2014, following TMC's expansion into the U.S. market. The policy, as originally promulgated, contained a general prohibition on agreements with competitors regarding pricing, output, and market allocation, and directed employees to consult with the legal department if they had questions regarding their obligations under antitrust law.

However, the internal investigation found that the compliance program was inadequate in several material respects:

• Absence of Regular Training. No annual antitrust compliance training had been conducted since approximately 2018. While TMC conducted a training session for sales personnel in 2017 and another in 2018, the program lapsed thereafter due to competing organizational priorities and a lack of dedicated compliance resources. As a result, employees who joined TMC's U.S. Specialty Minerals Division after 2018 received no formal antitrust training.

• No Monitoring of Trade-Association Interactions. TMC had no protocols in place for monitoring employee interactions at trade-association events, including NASMC quarterly conferences. There were no requirements for pre-approval of attendance, no guidelines regarding permissible and impermissible topics of discussion, and no requirement to report the substance of interactions with competitors at such events.

• No Audit Mechanism for Competitor Contacts. TMC had no system for tracking, auditing, or reviewing employee contacts with competitors. Employees were not required to log their interactions with competitors, and there was no periodic review of employee communications for indicators of anticompetitive behavior.

• Insufficient Compliance Infrastructure. TMC did not have a dedicated Chief Compliance Officer or a compliance function independent of the legal department. Compliance responsibilities were absorbed by the General Counsel's office, which, given its broad portfolio of responsibilities, did not have the capacity to devote sustained attention to antitrust compliance monitoring.

These deficiencies created an environment in which Holt's conduct could go undetected for an extended period. TMC acknowledges these shortcomings candidly. The inadequacy of the prior compliance program is not offered as an excuse for the alleged conduct but rather as context for understanding how the conduct occurred and as a foundation for the comprehensive remediation efforts described in Section VI below.

V. TMC'S FINANCIAL PROFILE AND AFFECTED COMMERCE

A. TMC's Business

TMC is a large, diversified mining and specialty-minerals company with operations spanning four countries. For fiscal year 2021, TMC reported consolidated revenue of CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates) and EBITDA of CAD 812 million. TMC operates 14 mines across Canada, the United States, Brazil, and Australia, and six downstream chemical-processing facilities. TMC employs approximately 9,500 individuals worldwide, including approximately 2,400 in the United States.

TMC's U.S. Specialty Minerals Division — the division at the center of the Division's investigation — generated fiscal year 2021 revenue of approximately USD 687 million, accounting for approximately 20% of TMC's consolidated revenue. The U.S. Specialty Minerals Division is one of several operating divisions within TMC's corporate structure and is responsible for the extraction, processing, and sale of high-purity feldspar, industrial talc, and rare-earth concentrates to customers in the United States. The division is headquartered at TMC's U.S. offices in Reno, Nevada, and operates mines and processing facilities in Nevada, Idaho, and Montana.

B. Affected Commerce

The economic analysis conducted by Hargrove Forensic Advisory LLC, under the direction of Dr. Vanessa Tremblay, assessed TMC's volume of affected commerce during the alleged conspiracy period — that is, the total value of TMC's U.S. sales of the products at issue (high-purity feldspar, industrial talc, and rare-earth concentrates) from approximately January 2017 through August 2021.

Based on this analysis, TMC's share of affected commerce during the conspiracy period is estimated at USD 478 million. This figure represents the total revenue derived by TMC from U.S. sales of the three product categories at issue during the approximately four-and-a-half-year conspiracy period.

Calderwood & Harkness understands that the Division's estimate of the total volume of affected commerce across all participants in the alleged conspiracy — TMC, Ridgecrest Minerals, and Pinnacle Earth Resources — is approximately USD 1.34 billion. TMC's share of total affected commerce accordingly represents approximately 35.7% (USD 478 million / USD 1.34 billion).

TMC provides these figures in the interest of transparency and to facilitate the Division's assessment of an appropriate monetary component of any resolution. TMC reserves the right to present additional economic analysis regarding the calculation of affected commerce, including arguments regarding the appropriate methodology for calculating affected commerce and any applicable adjustments, in the course of NPA negotiations.

VI. REMEDIATION EFFORTS

A. Personnel Actions

The individual primarily responsible for the alleged anticompetitive conduct, Gavin Holt, resigned from TMC effective September 30, 2021. Mr. Holt's departure preceded the commencement of Grand Jury Investigation No. GJ-22-0194 by approximately four months and preceded TMC's receipt of the grand jury subpoena by approximately four and one-half months. While the circumstances of Holt's departure are not entirely clear — and TMC does not claim that his resignation was precipitated by knowledge of an impending investigation — the practical effect is that the individual responsible for the conduct is no longer employed by TMC and has not been employed by TMC at any point during the investigation.

TMC has not rehired Gavin Holt in any capacity, has not engaged him as a consultant or contractor, and has no present intention to do so. TMC has also ensured that no other individuals identified in the investigation as having potential involvement in the alleged conduct remain in positions where they could engage in similar behavior.

B. Compliance Program Enhancements

TMC has commenced a comprehensive overhaul of its antitrust compliance program, reflecting the company's recognition that the deficiencies identified in its prior program contributed to an environment in which the alleged conduct could occur and go undetected. TMC's remediation efforts are not merely reactive; they reflect a genuine institutional commitment — endorsed at the highest levels of TMC's corporate governance structure — to preventing future violations.

On August 1, 2022, Calderwood & Harkness retained Meridian Compliance Partners LLC ("Meridian") to design and implement an enhanced antitrust compliance program tailored to TMC's organizational structure, industry, and risk profile. Meridian is a Washington, D.C.-based compliance consulting firm with extensive experience in antitrust compliance program design and implementation. The engagement is led by Claudia Ferraro, Engagement Lead, at Meridian's offices located at 1100 Connecticut Avenue NW, Suite 730, Washington, D.C. 20036. The formal retention of Meridian has been completed, and design work is actively underway, with a comprehensive program proposal targeted for submission to the Division.

The elements of the enhanced compliance program currently under development include the following:

• Mandatory Annual Antitrust Compliance Training. All employees involved in sales, pricing, business development, and competitor-facing activities will be required to complete annual antitrust compliance training. The training program will cover the basics of antitrust law, the specific risks associated with competitor contacts, the types of conduct that are prohibited, and the consequences of violations. The training will be delivered through a combination of live, instructor-led sessions and interactive online modules, with testing and certification requirements.

• Appointment of a Dedicated, Independent Chief Compliance Officer. TMC will appoint a dedicated Chief Compliance Officer ("CCO") with direct reporting responsibility to the Audit Committee of the TMC Board of Directors. The CCO will be independent of the business functions he or she monitors and will have the authority, resources, and organizational standing necessary to ensure effective compliance oversight. The CCO's responsibilities will include overseeing the antitrust compliance program, investigating potential violations, and reporting to the Audit Committee on compliance matters at least quarterly.

• Competitor-Contact Protocols. TMC will implement protocols requiring pre-approval and documentation of all substantive interactions with competitors. Any planned meeting, call, or communication with a competitor — whether at industry events, in bilateral settings, or otherwise — must be pre-approved by the compliance function, and a written summary of the substance of the interaction must be filed within 48 hours.

• Trade-Association Interaction Guidelines. TMC will adopt detailed guidelines governing employee participation in trade-association events, including NASMC conferences and similar industry gatherings. These guidelines will include restrictions on unscheduled side meetings with competitors, mandatory reporting of any discussion of pricing, competitive terms, or customer-specific information at industry events, and a requirement that TMC attendees be accompanied by a compliance-trained colleague at events where competitor interaction is anticipated.

• Anonymous Reporting Hotline and Whistleblower Protections. TMC will establish an anonymous reporting hotline, operated by an independent third-party provider, through which employees can report suspected antitrust violations or other compliance concerns without fear of retaliation. TMC will adopt and publicize a formal anti-retaliation policy to protect whistleblowers.

• Periodic Auditing and Monitoring. The enhanced compliance program will include periodic audits of compliance with antitrust policies, conducted by the CCO's office or by external compliance consultants. These audits will include review of employee communications, pricing decisions, and competitor contacts, as well as testing of the effectiveness of training and reporting mechanisms.

• Annual Compliance Certifications. TMC's Chief Executive Officer and General Counsel will be required to execute annual certifications attesting to the company's compliance with its antitrust policies and the effectiveness of the compliance program. These certifications will be submitted to the Audit Committee and will form part of the compliance record reviewed during periodic audits.

TMC's Board of Directors, under the leadership of Board Chair Margaret Caldwell and Audit Committee Chair Janet Moreau-Shaw, has directed management to implement these compliance enhancements as a priority. The Board's engagement with this matter — including its receipt and review of the internal investigation findings at the January 20, 2023 special meeting — reflects the seriousness with which TMC's governance leadership views the issues raised by the investigation.

TMC intends to submit a formal enhanced compliance program proposal to the Division, targeted for submission in the third quarter of 2023, and welcomes the Division's input on the design and implementation of the program.

C. Cooperation with Ongoing Investigation

TMC commits to continuing full cooperation with the Antitrust Division for the duration of the investigation and through any resolution of the matter. Specifically, TMC commits to:

• Making current and, to the extent practicable, former employees available for interviews, proffer sessions, and testimony before the grand jury or at trial, as the Division may request;

• Responding promptly and completely to any additional subpoenas, document requests, or other compulsory process issued by the Division;

• Providing supplemental factual information to the Division as it becomes available through TMC's ongoing cooperation efforts;

• Refraining from any action that could impede, obstruct, or delay the Division's investigation; and

• Continuing to maintain and update the litigation hold and preservation protocols established at the outset of the investigation.

VII. MITIGATING FACTORS SUPPORTING RESOLUTION SHORT OF PROSECUTION

TMC respectfully submits that the totality of circumstances — when assessed under the Division's published criteria for evaluating corporate disposition, including the Principles of Federal Prosecution of Business Organizations and the Division's policy guidance on cooperation credit and compliance programs — supports the resolution of this investigation, as it pertains to TMC, through a non-prosecution agreement. The principal mitigating factors are as follows.

A. Cooperation Credit

TMC's cooperation with the Division's investigation has been voluntary, timely, and comprehensive. From the earliest stages of the investigation, TMC chose a path of full cooperation, and it has adhered to that path consistently throughout the past year.

The hallmarks of TMC's cooperation include:

• Extensive Document Production. TMC has produced approximately 487,000 documents, comprising approximately 3.2 million pages, in response to the first grand jury subpoena. TMC's production efforts went beyond the strict terms of the subpoena and included proactive identification and production of materials from non-standard repositories, including VaultChat archives that required specialized forensic recovery.

• Thorough Internal Investigation. TMC commissioned and funded a comprehensive internal investigation conducted by Calderwood & Harkness, retained Hargrove Forensic Advisory for independent economic analysis, and is sharing the findings of the investigation with the Division through this proffer and in ongoing discussions.

• Witness Cooperation. TMC has facilitated the cooperation of 23 current and former employees with the internal investigation and has offered to make key fact witnesses, including Sandra Chu and Thomas Eriksen, available for voluntary proffer sessions with the Division.

• Independent Cooperation Posture. TMC has not entered into joint defense agreements with counsel for Ridgecrest Minerals or Pinnacle Earth Resources, reflecting its commitment to independent, good-faith cooperation.

• Timeliness. TMC engaged counsel within four business days of subpoena receipt, issued a litigation hold within 11 days, and made its first rolling production within seven weeks — a timeframe that compares favorably with industry norms for investigations of this scope and complexity.

B. Nature and Scope of Culpable Conduct

The alleged anticompetitive conduct was committed by a single individual, Gavin Holt, who was acting without authorization from TMC management or the Board of Directors. No member of TMC's C-suite — neither the CEO, the General Counsel, the Chief Financial Officer, nor any other senior executive — had knowledge of Holt's communications with competitors. No member of the Board of Directors authorized or ratified the conduct.

Holt departed TMC effective September 30, 2021, before the investigation commenced. His departure was not the result of any disciplinary action by TMC related to the alleged conduct (of which TMC was not aware at the time), but his absence from the company means that the individual responsible for the conduct is no longer in a position to engage in similar behavior on TMC's behalf.

While TMC does not minimize the seriousness of Section 1 violations, the Division has long recognized that the nature and scope of culpable conduct within a corporation are relevant to the appropriate corporate disposition. Where, as here, the conduct was confined to one employee within one division of a large multinational company, and where that employee acted without management knowledge or authorization, the case for corporate prosecution is materially weaker than in cases involving pervasive, management-directed conspiracies.

C. Remediation

TMC has taken concrete, substantial steps to remediate the compliance failures that permitted the alleged conduct to occur. These steps are not cosmetic or superficial; they represent a fundamental redesign of TMC's antitrust compliance infrastructure, endorsed at the highest levels of the company's governance structure.

As described in detail in Section VI, TMC has retained Meridian Compliance Partners to design and implement an enhanced compliance program that includes mandatory training, a dedicated Chief Compliance Officer, competitor-contact protocols, trade-association guidelines, an anonymous reporting hotline, periodic auditing, and annual executive certifications. The TMC Board of Directors — including the Board Chair and the Audit Committee Chair — has directed management to treat these enhancements as a priority.

TMC's remediation efforts demonstrate a genuine commitment to preventing future violations, not merely a litigation-driven response to the current investigation. The Division's policy guidance recognizes that a corporation's remedial efforts — including the quality and comprehensiveness of its compliance program — are important factors in assessing the appropriate disposition.

D. Collateral Consequences

A criminal prosecution of TMC would have severe collateral consequences that are disproportionate to the nature and scope of the culpable conduct:

• Publicly Listed Company. TMC is publicly listed on both the TSX and the NYSE. An indictment would trigger immediate and severe market consequences, including a likely precipitous decline in TMC's share price, potential credit-rating downgrades, and disruption to TMC's capital markets access. These consequences would be borne primarily by TMC's public shareholders — thousands of individual and institutional investors — who had no involvement in and no knowledge of the alleged conduct.

• Employment Impact. TMC employs approximately 9,500 individuals worldwide, including approximately 2,400 in the United States. A criminal prosecution could destabilize TMC's operations, jeopardize customer and supplier relationships, and ultimately threaten the livelihoods of employees who bear no responsibility for the alleged conduct.

• Government Contracts and Debarment. TMC and its subsidiaries hold contracts with U.S. government entities, including contracts for the supply of specialty minerals to defense and infrastructure programs. A criminal conviction could trigger mandatory or discretionary debarment proceedings, depriving government agencies of a reliable and competitive supplier and further amplifying the economic harm to TMC and its stakeholders.

• Reputational Harm. The reputational consequences of an indictment would extend beyond TMC itself to its innocent employees, customers, suppliers, and business partners, creating a cascade of collateral harm that is out of proportion to the misconduct of a single individual.

TMC has already established a litigation reserve of USD 30 million in connection with this matter, as disclosed in TMC's fiscal year 2021 annual report filed with the SEC and applicable Canadian securities regulators on March 28, 2022. TMC's independent auditor, Calvert & Associates LLP, and its financial advisor, Ironbridge Capital Markets Inc., have been involved in assessing the financial impact of the investigation. TMC is prepared to negotiate a meaningful monetary payment as part of a non-prosecution agreement — one that reflects the seriousness of the conduct and TMC's affected commerce while avoiding the disproportionate collateral consequences of a criminal prosecution.

E. Precedent and Policy

The Antitrust Division has resolved comparable cases involving substantial corporate cooperation through non-prosecution agreements. The Division's published guidance recognizes that NPAs are appropriate where the circumstances — including the nature and extent of the corporation's cooperation, the quality and timeliness of its internal investigation, its remediation efforts, the pervasiveness of the misconduct within the organization, and the availability of individual prosecution — weigh in favor of a corporate resolution short of indictment.

The factors present in this case are precisely those that the Division's guidance identifies as supporting an NPA disposition:

• Voluntary, timely, and comprehensive cooperation with the investigation;

• Conduct and sharing of the results of a thorough internal investigation;

• Proactive and substantial remediation, including the redesign of the compliance program under the oversight of an independent consultant;

• Isolated conduct by a single employee, without management knowledge or authorization;

• Departure of the culpable individual from the corporation; and

• Willingness to accept a meaningful monetary penalty and continuing cooperation obligations.

TMC respectfully submits that these factors, taken together, compel the conclusion that the appropriate resolution of this matter is a non-prosecution agreement.

VIII. PROPOSED RESOLUTION

In light of the foregoing, TMC respectfully submits that the appropriate disposition of Grand Jury Investigation No. GJ-22-0194, as it pertains to Torchlight Mining Corp., is a non-prosecution agreement.

TMC is prepared to negotiate in good faith regarding the terms of an NPA, including:

1. Monetary Payment. TMC is prepared to negotiate a monetary payment reflecting TMC's affected commerce (estimated at USD 478 million), with appropriate credit for TMC's cooperation and remediation efforts. TMC understands that the Division will apply its standard methodologies for calculating fines and penalties in Section 1 cases and reserves the right to present argument regarding the appropriate calculation.

2. Cooperation Obligations. TMC is prepared to accept continuing cooperation obligations for a defined period, including the obligation to make witnesses available, to respond to additional document requests, and to provide factual information in connection with the Division's investigation and prosecution of other e

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT SUBJECT TO FRE 408 PROTECTIONS AND DOJ ANTITRUST DIVISION COOPERATION PROFFER PROTECTIONS
CALDERWOOD & HARKNESS LLP Attorneys at Law
555 California Street, 40th Floor San Francisco, California 94104
Telephone: (415) 772-5000 Facsimile: (415) 772-5001 www.calderwoodharkness.com
February 15, 2023
VIA HAND DELIVERY AND ELECTRONIC MAIL
Denise Kowalski, Trial Attorney Antitrust Division U.S. Department of Justice San Francisco Field Office 450 Golden Gate Avenue, Room 10-0101 San Francisco, CA 94102
Email: denise.kowalski@usdoj.gov
Marcus Reeves, Senior Trial Attorney Antitrust Division U.S. Department of Justice San Francisco Field Office 450 Golden Gate Avenue, Room 10-0101 San Francisco, CA 94102
Email: marcus.reeves@usdoj.gov
Re: In the Matter of Grand Jury Investigation No. GJ-22-0194, U.S. District Court, Northern District of California, San Francisco Division — Cooperation Proffer on Behalf of Torchlight Mining Corp.
Calderwood & Harkness Matter No.: 1039-00001
Dear Ms. Kowalski and Mr. Reeves:
I. INTRODUCTION AND PURPOSE
Calderwood & Harkness LLP respectfully submits this written cooperation proffer on behalf of its client, Torchlight Mining Corp. ("TMC" or "Torchlight"), in connection with the above-referenced grand jury investigation. TMC is a corporation organized under the Canada Business Corporations Act (CBCA Corporation No. 7841526-1), with its registered office at 200 Bay Street, Suite 3400, Toronto, Ontario M5J 2J2, Canada. TMC's operations within the United States are conducted through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc. (Nevada Entity No. NV20160438721; Federal Employer Identification Number 83-2947106), which maintains its principal U.S. office at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117. TMC is a publicly listed company, with its common shares traded on the Toronto Stock Exchange (Ticker: TRCL) and the New York Stock Exchange (Ticker: TMC).
The purpose of this proffer is fourfold. First, it is intended to outline TMC's extensive cooperation with the Antitrust Division's investigation, which has been ongoing since TMC received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 in February 2022. Second, it summarizes the findings of the comprehensive internal investigation conducted by Calderwood & Harkness on TMC's behalf, which has involved the review of hundreds of thousands of documents and the interviews of numerous current and former employees. Third, it describes TMC's significant and ongoing remediation efforts, which reflect TMC's genuine institutional commitment to ensuring that conduct of the kind at issue does not recur. Fourth, and of central importance, it presents the mitigating factors that, taken together, support the resolution of this matter short of criminal prosecution — specifically, through a non-prosecution agreement ("NPA").
TMC's Chief Executive Officer, Søren Dalmqvist, has personally authorized the submission of this proffer and TMC's pursuit of an NPA resolution. TMC's General Counsel, Priya Anand, has been closely involved in directing and overseeing TMC's cooperation efforts and internal investigation. This proffer is submitted by the undersigned, Elaine Forsythe, Responsible Partner in Calderwood & Harkness's Antitrust & Competition Practice Group.
This proffer is made pursuant to the Antitrust Division's policies on cooperation credit, including the Division's updated guidance on the evaluation of corporate compliance programs, and is intended to be considered in connection with the Division's evaluation of the appropriate disposition of Grand Jury Investigation No. GJ-22-0194 as it pertains to TMC. TMC received a target letter from the Antitrust Division dated May 20, 2022, and has since that date committed to full, timely, and comprehensive cooperation with the Division's investigation. This proffer represents a continuation of that commitment. Nothing in this proffer is intended to waive, and TMC does not waive, any applicable privilege, including attorney-client privilege and work product protection, except to the extent that specific factual information is voluntarily disclosed herein for the purposes of cooperation.
II. BACKGROUND OF THE INVESTIGATION
A. Nature of the Investigation
The Antitrust Division of the U.S. Department of Justice opened Grand Jury Investigation No. GJ-22-0194 in the United States District Court for the Northern District of California, San Francisco Division, on or about February 10, 2022. The investigation concerns suspected violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, in the North American specialty-minerals sector. Specifically, the Division's investigation encompasses suspected price-fixing, market allocation, and bid-rigging among competing producers and suppliers of specialty industrial minerals.
The products at the center of the investigation are high-purity feldspar, industrial talc, and rare-earth concentrates — mineral commodities that are critical inputs for a wide range of industrial applications, including ceramics, glass manufacturing, paint and coatings, electronics, and defense-related technologies. The North American market for these products is characterized by a relatively concentrated group of producers and a specialized customer base, features that, as the Division is aware, can create conditions conducive to collusive behavior.
The alleged conspiracy period under investigation spans from approximately January 2017 through August 2021, a period of approximately four and one-half years. During this period, the Division has reason to believe that certain employees of competing specialty-minerals companies engaged in communications and agreements regarding the pricing of the above-listed products, the allocation of customers and geographic markets, and the coordination of bids submitted to certain purchasers.
The investigation was triggered by the cooperation agreement entered into between the Antitrust Division and Cascade Chemical Supply Co. ("Cascade"), a Washington state corporation headquartered at 901 West Riverside Avenue, Suite 300, Spokane, Washington 99201. Cascade is represented in this matter by Rebecca Ostrander of Whitfield, Strauss & Tully LLP. It is Calderwood & Harkness's understanding that Cascade approached the Division in approximately September 2021 and entered into a cooperation agreement pursuant to the Division's leniency program, providing information that formed the basis for the opening of Grand Jury Investigation No. GJ-22-0194. While Calderwood & Harkness has not been privy to the specifics of Cascade's cooperation or the terms of its leniency agreement, the information provided by Cascade appears to have been the primary catalyst for the investigation that followed.
B. Entities and Individuals Under Investigation
Based on Calderwood & Harkness's understanding — derived from the Division's communications, the grand jury subpoena, the target letter, and information developed in the course of TMC's internal investigation — the following entities and individuals are subjects or targets of the investigation:
Torchlight Mining Corp. ("TMC"). TMC received a target letter from the Antitrust Division on May 20, 2022, formally advising TMC that it was a target of the investigation. As noted above, TMC had previously received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 on February 14, 2022, and had been cooperating with the Division's investigation since that date.
Ridgecrest Minerals Inc. ("Ridgecrest"). Ridgecrest is a Delaware corporation headquartered at 1700 Lincoln Street, Suite 4200, Denver, Colorado 80203. Ridgecrest is the second-largest North American producer of high-purity feldspar and industrial talc, with fiscal year 2021 revenue of approximately USD 1.92 billion. Ridgecrest is a portfolio company of Marlowe Asset Management Peak Capital Partners LP, a Denver-based private equity fund. It is Calderwood & Harkness's understanding that Ridgecrest received a target letter from the Division on or about January 12, 2022. Ridgecrest is represented in this matter by Helen Marchetti of Davenport, Kline & Archer LLP.
Pinnacle Earth Resources Ltd. ("Pinnacle"). Pinnacle is an Ontario corporation headquartered at 85 Elm Street West, Suite 600, Sudbury, Ontario P3C 1T3, Canada. Pinnacle conducts its U.S. operations through offices located at 222 South Main Street, Suite 1500, Salt Lake City, Utah 84101. Pinnacle is a top-five North American producer of rare-earth concentrates and specialty industrial minerals, with fiscal year 2021 revenue of approximately CAD 1.45 billion (approximately USD 1.15 billion). Pinnacle is represented in this matter by George Nakamura of Ashford Whitmore LLP.
Key Individuals. The investigation has identified certain individuals as having been directly involved in or having knowledge of the alleged anticompetitive conduct. The key individuals known to Calderwood & Harkness at this time are:
• Gavin Holt, former Vice President, U.S. Specialty Minerals Sales, TMC. Mr. Holt served in this role from approximately 2016 until his departure from TMC effective September 30, 2021. Mr. Holt is the primary TMC employee implicated in the alleged conduct. His role is discussed in detail in Section IV of this proffer.
• Carl Edgerton, Vice President of Sales, Ridgecrest Minerals Inc. Mr. Edgerton is believed to be a current employee of Ridgecrest and is one of the individuals with whom Mr. Holt is alleged to have communicated regarding pricing and market allocation.
• Kevin Tsang, former Senior Vice President, Commercial Operations, Pinnacle Earth Resources Ltd. Mr. Tsang's current employment status is not known to Calderwood & Harkness, but he is identified as a participant in the alleged communications during the relevant period.
C. TMC's Engagement of Counsel and Initial Response
TMC received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 on February 14, 2022. The subpoena was directed to TMC's wholly owned U.S. subsidiary, Torchlight Mining (U.S.) Inc., and called for the production of a wide range of documents related to TMC's pricing, sales, customer relationships, and competitor contacts in the specialty-minerals sector.
Upon receipt of the subpoena, TMC's General Counsel, Priya Anand, immediately recognized the significance of the matter and took preliminary steps to preserve potentially relevant documents, including issuing informal preservation instructions to senior personnel within the U.S. Specialty Minerals Division. Ms. Anand also contacted Calderwood & Harkness's Antitrust & Competition Practice Group to engage outside counsel for the investigation. TMC formally retained Calderwood & Harkness LLP as its counsel in this matter on February 18, 2022 — within four business days of subpoena receipt.
Upon engagement, Calderwood & Harkness promptly undertook the following initial steps:
• Litigation Hold. A comprehensive, company-wide litigation hold was issued on March 1, 2022. This hold was accompanied by targeted, custodian-specific preservation instructions directed to all personnel in the U.S. Specialty Minerals Division, as well as other TMC departments with potentially relevant information. The hold covered all categories of documents and electronically stored information ("ESI"), including email, messaging platforms, shared drives, personal devices, and cloud storage. Compliance with the hold was monitored by Calderwood & Harkness and TMC's legal department on an ongoing basis.
• Initial Assessment. Calderwood & Harkness conducted an initial assessment of the scope of the subpoena, the nature of the investigation, and the potential exposure of TMC and its personnel. This assessment informed the design of the internal investigation and document collection plan described below.
• Communication with the Division. Calderwood & Harkness initiated communications with the Division to discuss the scope of the subpoena and the anticipated timetable for document production, consistent with TMC's commitment to cooperation.
It bears emphasis that TMC's General Counsel, Ms. Anand, had independently initiated document preservation efforts before Calderwood & Harkness was engaged — a fact that reflects TMC's institutional commitment to cooperation and compliance with its legal obligations from the earliest moment of the investigation.
III. TMC'S COOPERATION WITH THE INVESTIGATION
TMC's cooperation with the Antitrust Division's investigation has been voluntary, timely, and comprehensive. From the outset, TMC has treated cooperation as a priority and has devoted substantial resources — both financial and organizational — to ensuring that the Division has access to the information it needs to carry out its investigation effectively. This section describes the principal elements of TMC's cooperation.
A. Document Production
1. First Grand Jury Subpoena (GJ-22-0194-SD-003)
To ensure that its document collection and production efforts met the highest standards of forensic integrity and completeness, TMC retained Redstone Digital Forensics Inc. ("Redstone") on March 15, 2022. Redstone is a nationally recognized digital forensics and e-discovery firm based at 7925 Jones Branch Drive, Suite 600, McLean, Virginia 22102. The engagement was overseen by Neil Ashworth, Redstone's Project Director, in coordination with Calderwood & Harkness's e-discovery team.
Calderwood & Harkness, working with TMC's information technology department and legal team, identified 34 custodians across the U.S. Specialty Minerals Division and other relevant TMC departments whose files were potentially responsive to the subpoena. These custodians included current and former employees in sales, pricing, marketing, business development, executive leadership, and compliance functions.
The data sources collected by Redstone encompassed the following categories:
• Corporate email systems (Strathmore Data Systems and Ashbury Software environments);
• Shared network drives and departmental file repositories;
• VaultChat message archives, which required specialized forensic recovery techniques due to the encrypted nature of the platform;
• Personal devices of identified custodians, collected with the custodians' consent and pursuant to TMC's employment policies governing company data on personal devices; and
• Cloud storage platforms, including Cobalt Ridge Systems and Larkspur Technologies accounts associated with custodian business activities.
TMC's first rolling production of responsive documents was delivered to the Division on April 4, 2022 — approximately seven weeks after the subpoena was received and less than three weeks after the forensic collection process commenced. This first production comprised approximately 42,000 documents. Subsequent rolling productions were made on a regular basis from August 1, 2022, through December 15, 2022, as additional responsive documents were identified, reviewed, and processed.
As of the date of this proffer, TMC's cumulative production under Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 stands at approximately 487,000 documents, comprising approximately 3.2 million pages of material. All productions were made in the format agreed upon with the Division, with sequential Bates numbering (TMC-GJ-000000001 through TMC-GJ-003200000+), load files, and associated metadata.
Privilege logs were submitted with each rolling production, prepared under a rigorous privilege review protocol designed by Calderwood & Harkness. The protocol was implemented with the protections of Federal Rule of Evidence 502(d) in mind, and TMC intends to seek entry of an appropriate FRE 502(d) order to the extent not already in place. The privilege review was conducted by a dedicated team of Calderwood & Harkness attorneys with specialized training in privilege analysis, and each privilege determination was reviewed by a senior associate or partner before final designation. TMC has endeavored to assert privilege only where genuinely warranted and has not used privilege claims as a mechanism to withhold substantive information from the Division.
2. Scope and Thoroughness
TMC's document collection and production efforts went beyond the strict specifications of the grand jury subpoena to ensure completeness and to demonstrate good faith. In particular:
• TMC proactively identified and collected documents from personal devices and non-standard communication repositories that were not expressly called for by the subpoena but that TMC reasonably believed could contain responsive information. This included, notably, the VaultChat messaging archives, which proved to be of particular significance to the investigation. The recovery of VaultChat archives required specialized forensic techniques by Redstone, including the reconstruction of message threads from encrypted database files and the extraction of metadata necessary to establish the timing and participants of specific communications.
• TMC identified and produced documents from shared network drives and departmental repositories that were not initially within the scope of the custodian-based collection plan but were subsequently identified as potentially responsive during the internal investigation.
• When TMC's internal investigation identified additional responsive materials not previously captured in the collection process, TMC made supplemental productions to the Division on a voluntary basis, without waiting for additional subpoenas or requests.
TMC's approach to document production reflects a deliberate decision to err on the side of over-inclusion rather than under-inclusion, consistent with its commitment to full cooperation.
B. Witness Cooperation
TMC has made, and will continue to make, its current employees available for interviews and proffer sessions with the Division. TMC recognizes that the Division's investigation depends not only on documentary evidence but also on witness testimony, and TMC has prioritized facilitating the Division's access to individuals with knowledge of the relevant facts.
To date, TMC has facilitated the cooperation of 23 current and former employees with Calderwood & Harkness's internal investigation. These individuals were interviewed under Upjohn warnings, and their testimony has been instrumental in developing the factual record summarized in Section IV of this proffer. Key witnesses have been prepared by Calderwood & Harkness and are available for Division interviews at the Division's convenience.
In particular, TMC is prepared to make the following individuals available for voluntary proffer sessions with the Division under appropriate proffer protections (i.e., "queen for a day" agreements):
• Sandra Chu, Director, Pricing Analytics, U.S. Specialty Minerals Division. Ms. Chu reported directly to Gavin Holt and was responsible for implementing pricing decisions within the division. Her knowledge of the pricing instructions she received from Holt, and the circumstances surrounding those instructions, is directly relevant to the Division's investigation.
• Thomas Eriksen, Regional Sales Manager, Western Region, U.S. Specialty Minerals Division. Mr. Eriksen attended several North American Specialty Minerals Council (NASMC) quarterly conferences during the conspiracy period and may have information relevant to the side meetings alleged to have occurred at those events.
TMC is prepared to make additional witnesses available as the Division may request, subject to applicable legal protections.
Regarding Gavin Holt. Mr. Holt departed TMC effective September 30, 2021 — approximately four months before Grand Jury Investigation No. GJ-22-0194 commenced and approximately five months before TMC received its grand jury subpoena. As a former employee, TMC has no ability to compel Mr. Holt's cooperation with the Division. Mr. Holt has retained personal counsel, Patrick Dunleavy of Briarcliff Law Group PLLC, located at 50 California Street, Suite 2800, San Francisco, California 94111. It is Calderwood & Harkness's understanding that Mr. Holt appeared before the grand jury on June 14, 2022, and asserted his Fifth Amendment privilege against self-incrimination, declining to testify. TMC wishes to make clear that it has not taken any steps to impede the Division's access to Mr. Holt, has not entered into any agreement or understanding with Mr. Holt regarding his testimony or cooperation, and has not provided financial support for Mr. Holt's legal defense. TMC's inability to produce Mr. Holt as a cooperative witness is a function solely of his status as a former employee and his invocation of his constitutional rights.
C. Timeliness and Good Faith
TMC's cooperation has been characterized by promptness and good faith at every stage of the investigation. The following timeline underscores this commitment:
• TMC received the grand jury subpoena on February 14, 2022, and engaged Calderwood & Harkness within four business days, on February 18, 2022.
• A comprehensive, company-wide litigation hold with targeted custodian-specific instructions was issued on March 1, 2022, within 11 days of subpoena receipt and within 11 calendar days of the engagement of outside counsel.
• Redstone Digital Forensics was retained on March 15, 2022, and forensic data collection commenced immediately thereafter.
• TMC's first rolling production of approximately 42,000 documents was delivered to the Division on April 4, 2022, approximately seven weeks after subpoena receipt.
• By letter dated June 8, 2022, Calderwood & Harkness formally communicated TMC's willingness and commitment to cooperate with the Division's investigation, including the making available of witnesses for interview and the provision of factual information developed through TMC's internal investigation.
• TMC received the Division's target letter on May 20, 2022, and continued to cooperate fully following receipt of that letter, reflecting TMC's commitment to cooperation irrespective of its formal status in the investigation.
TMC has not sought to delay, obstruct, or withhold any information from the Division at any point during the investigation. TMC has responded promptly to all Division communications, has met or exceeded all agreed-upon production deadlines, and has proactively supplemented its productions when new responsive information was identified.
Importantly, TMC has not entered into any joint defense agreement ("JDA") with counsel for Ridgecrest Minerals Inc. (Davenport, Kline & Archer LLP, Helen Marchetti) or Pinnacle Earth Resources Ltd. (Ashford Whitmore LLP, George Nakamura). While such agreements are commonplace in multi-party investigations and would be permissible, TMC made the affirmative decision to forgo any JDA in order to maintain an independent cooperation posture and to avoid any suggestion that TMC's cooperation was being coordinated with or influenced by co-subjects or co-targets. This decision underscores the genuineness and independence of TMC's cooperation.
IV. SUMMARY OF INTERNAL INVESTIGATION FINDINGS
A. Scope and Methodology
Calderwood & Harkness commenced a comprehensive internal investigation on behalf of TMC in March 2022, shortly after its engagement in this matter. The investigation was designed to develop a thorough and accurate factual record of the conduct at issue, to identify the individuals involved, to assess the knowledge and involvement of TMC management and the Board of Directors, and to evaluate the adequacy of TMC's prior compliance program.
The scope of the internal investigation encompassed the following components:
• Document Review. Calderwood & Harkness reviewed the approximately 487,000 documents produced to the Division in response to the grand jury subpoena, as well as additional documents identified during the investigation that were outside the scope of the subpoena but relevant to the factual questions at issue. The review was conducted by a team of Calderwood & Harkness attorneys using a structured review protocol with targeted search terms, date filters, and custodian prioritization.
• Witness Interviews. Calderwood & Harkness conducted interviews of 23 current and former TMC employees, including individuals at all levels of the U.S. Specialty Minerals Division's organizational hierarchy, from administrative and support staff through the divisional sales force, pricing analytics, and management. Each interview was conducted under Upjohn warnings, with the interviewees being advised that Calderwood & Harkness represented TMC and not the individual, that the interview was privileged, and that TMC could waive the privilege and disclose the contents of the interview at its discretion.
• Pricing Data Analysis. Calderwood & Harkness reviewed and analyzed TMC's internal pricing data for the three product categories at issue — high-purity feldspar, industrial talc, and rare-earth concentrates — for the period from 2015 through 2022, a timeframe that encompasses two years before the alleged conspiracy period through one year after its conclusion.
• Economic Analysis. On July 1, 2022, Calderwood & Harkness retained Hargrove Forensic Advisory LLC ("Hargrove") to conduct an independent economic analysis of pricing patterns in the North American specialty-minerals market during the relevant period. The engagement was led by Dr. Vanessa Tremblay, Engagement Partner, at Hargrove's offices located at 233 South Wacker Drive, Suite 4800, Chicago, Illinois 60606. Dr. Tremblay holds a Ph.D. in Economics from the University of Chicago and has extensive experience in antitrust economics, including prior engagements for both the Division and private litigants in price-fixing matters. Hargrove's analysis examined TMC's pricing movements in relation to market conditions, cost inputs, and competitor pricing, and assessed the extent of affected commerce attributable to TMC.
The findings of the internal investigation were presented to the TMC Board of Directors at a special meeting held on January 20, 2023. The Board received the presentation with the seriousness the matter warrants and directed management to continue full cooperation with the Division and to proceed with the comprehensive compliance program enhancements described in Section VI of this proffer.
B. Key Findings Regarding Gavin Holt
Gavin Holt served as Vice President, U.S. Specialty Minerals Sales, at TMC from approximately 2016 until his resignation effective September 30, 2021. In this role, Holt was responsible for overseeing the commercial sales strategy and pricing for TMC's U.S. specialty-minerals product lines, including high-purity feldspar, industrial talc, and rare-earth concentrates. He reported to the divisional President of the U.S. Specialty Minerals Division and had a team of regional sales managers, pricing analysts, and business development professionals reporting to him.
The internal investigation found that, while serving in this capacity, Holt exchanged competitively sensitive pricing information with Carl Edgerton (Vice President of Sales, Ridgecrest Minerals Inc.) and Kevin Tsang (Senior Vice President, Commercial Operations, Pinnacle Earth Resources Ltd.) on at least 37 documented occasions between approximately March 2017 and July 2021. Calderwood & Harkness notes that the actual number of communications may be higher, as certain communications — particularly in-person conversations at industry events — are inherently difficult to document with precision.
The first documented communication between Holt and Edgerton occurred on March 14, 2017, in the form of a VaultChat message in which Holt shared TMC's forthcoming price increase for high-purity feldspar and inquired whether Ridgecrest intended to implement a comparable adjustment. Subsequent communications escalated in both frequency and specificity over the course of the conspiracy period.
The communications between Holt and his counterparts at Ridgecrest and Pinnacle occurred through multiple channels:
(a) Encrypted VaultChat messaging. VaultChat is an encrypted messaging platform that was used by Holt and, according to the evidence developed in the internal investigation, by Edgerton and Tsang as well. The platform was designed to provide end-to-end encryption and message-deletion functionality, which Holt appears to have used in an effort to conceal the communications from TMC's IT systems and compliance monitoring. Despite these efforts, Redstone Digital Forensics was able to recover a significant volume of VaultChat messages from TMC's systems and from Holt's former corporate devices.
(b) In-person conversations at North American Specialty Minerals Council (NASMC) quarterly conferences. The NASMC holds quarterly industry conferences at various locations throughout the United States. During the conspiracy period, conferences were held in Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida, among other locations. The internal investigation found evidence — including calendar entries, travel records, and contemporaneous emails — indicating that Holt attended these conferences and used them as opportunities for side meetings with Edgerton and Tsang. These side meetings typically occurred during networking receptions, on the margins of panel sessions, or over private dinners.
(c) Occasional phone calls. The investigation identified records of phone calls between Holt and Edgerton, and between Holt and Tsang, at times that correlate with pricing announcements or bid deadlines. While the content of these phone calls could not be directly confirmed through recordings, the circumstantial evidence — including the timing, duration, and frequency of the calls, correlated with subsequent pricing actions — supports the inference that these calls involved discussions of competitively sensitive information.
The content of the communications, as revealed by the recovered VaultChat messages and corroborated by witness interviews and pricing data analysis, included:
• Specific pricing information for high-purity feldspar, industrial talc, and rare-earth concentrates, including current and prospective pricing, planned price increases and decreases, and discount structures;
• Discussion of customer allocation, including identification of specific customers and agreements regarding which company would pursue or refrain from pursuing particular accounts;
• Coordination of bids submitted to certain purchasers, including the advance sharing of bid prices and the agreement to submit complementary or cover bids designed to ensure that a pre-determined company would win the contract; and
• Monitoring of each party's adherence to the agreed-upon pricing and allocation arrangements, including complaints about alleged "cheating" by one party or another.
TMC acknowledges that this conduct, to the extent it occurred as the evidence suggests, constitutes per se violations of Section 1 of the Sherman Act. TMC does not seek to minimize the seriousness of the conduct. Rather, TMC submits that the appropriate response — in light of the totality of circumstances, including the factors described in Section VII below — is a resolution short of criminal prosecution.
C. Key Findings Regarding Sandra Chu
Sandra Chu currently serves as Director, Pricing Analytics, in TMC's U.S. Specialty Minerals Division. In this role, Ms. Chu is responsible for maintaining and updating TMC's published price lists for specialty-minerals products, implementing pricing changes as directed by divisional leadership, and conducting analyses of pricing trends and profitability. During the conspiracy period, Ms. Chu reported directly to Gavin Holt.
The internal investigation found that Ms. Chu received instructions from Holt to adjust published price lists on at least 12 occasions that correlated temporally with competitor price movements — specifically, with pricing changes announced by Ridgecrest and Pinnacle. In each instance, Holt directed Chu to implement a specified price change, typically within a narrow timeframe, and Chu carried out the instructions in the normal course of her duties.
However, the internal investigation found no direct evidence that Ms. Chu had knowledge of the inter-competitor communications between Holt and his counterparts at Ridgecrest and Pinnacle. Ms. Chu was not a party to any VaultChat communications with Edgerton or Tsang, did not attend any of the alleged side meetings at NASMC conferences, and was not included in any communications in which the existence of an agreement with competitors was disclosed or implied. In her internal investigation interview, Ms. Chu stated that she understood her instructions from Holt as coming from normal commercial direction within the division. She stated that Holt would periodically direct pricing adjustments, which she understood to reflect competitive market conditions, cost changes, or strategic decisions by divisional management. Ms. Chu stated that she had no reason to suspect that Holt was coordinating pricing with competitors.
Calderwood & Harkness's assessment is that the evidence supports Ms. Chu's account. While the temporal correlation between Holt's instructions to Chu and competitor price movements is suggestive, there is no direct evidence of Chu's knowledge of or participation in the conspiracy. TMC believes that Ms. Chu was an unwitting instrument of Holt's scheme, not a knowing participant.
D. Key Findings Regarding Thomas Eriksen
Thomas Eriksen currently serves as Regional Sales Manager, Western Region, in TMC's U.S. Specialty Minerals Division. In this role, Mr. Eriksen is responsible for managing customer relationships and sales activities in the Western United States and reports to the divisional head of sales (a position previously held by Gavin Holt).
The internal investigation identified that Mr. Eriksen attended four NASMC quarterly conferences during the conspiracy period at which side meetings between Holt, Edgerton, and Tsang are alleged to have occurred. Mr. Eriksen's attendance at these conferences was in the ordinary course of his duties as a regional sales manager and is not, in itself, unusual or suspicious.
The evidence of Mr. Eriksen's direct participation in any anticompetitive agreement is ambiguous. There is no documentary evidence — no VaultChat messages, no emails, no calendar entries — directly linking Eriksen to the substance of the alleged conspiracy. However, certain witness statements suggest that Eriksen may have been present during portions of informal gatherings at conferences at which Holt interacted with Edgerton and Tsang. Whether Eriksen was aware of the nature of those interactions, or was merely present in a social setting, cannot be determined with certainty from the available evidence.
In his internal investigation interview, conducted under Upjohn warnings, Mr. Eriksen denied knowledge of any agreements with competitors. He stated that he attended NASMC conferences for networking and business development purposes, that he occasionally observed Holt speaking with competitors at social events, but that he was not privy to the substance of those conversations and had no reason to believe they involved the exchange of competitively sensitive information.
Calderwood & Harkness's assessment is that the evidence regarding Eriksen is genuinely ambiguous, and that it would be premature to characterize him as a participant in the alleged conspiracy based on the evidence currently available.
E. Key Findings Regarding TMC Senior Management and Board
A critical finding of the internal investigation is that no evidence was found that TMC's C-suite — including Chief Executive Officer Søren Dalmqvist and General Counsel Priya Anand — or any member of the TMC Board of Directors (chaired by Margaret Caldwell) had knowledge of, authorized, or ratified the alleged anticompetitive conduct.
The internal investigation examined this question thoroughly. Calderwood & Harkness reviewed the communications of senior management, including the CEO, General Counsel, Chief Financial Officer, and divisional Presidents, during the entirety of the conspiracy period. Calderwood & Harkness also interviewed members of the senior leadership team and members of the Board's Audit Committee. The investigation found no indication that Holt informed any member of senior management about his communications with competitors, and no indication that senior management had reason to know about the conduct.
The alleged conduct was confined to the commercial sales function within the U.S. Specialty Minerals Division and was conducted by Gavin Holt without authorization from TMC management. Holt's use of an encrypted messaging platform — VaultChat — for his communications with competitors, and his apparent deliberate concealment of those communications from TMC's corporate systems, is consistent with an individual acting alone and without institutional support or direction.
This finding is significant for the Division's assessment of TMC's corporate culpability. While TMC acknowledges its vicarious liability for the conduct of its employees acting within the scope of their employment, the absence of management knowledge or authorization is a recognized mitigating factor under the Division's prosecution guidelines and policy statements.
F. Assessment of TMC's Prior Compliance Program
The internal investigation included an evaluation of TMC's antitrust compliance program as it existed during the conspiracy period. TMC adopted an antitrust compliance policy in approximately 2014, following TMC's expansion into the U.S. market. The policy, as originally promulgated, contained a general prohibition on agreements with competitors regarding pricing, output, and market allocation, and directed employees to consult with the legal department if they had questions regarding their obligations under antitrust law.
However, the internal investigation found that the compliance program was inadequate in several material respects:
• Absence of Regular Training. No annual antitrust compliance training had been conducted since approximately 2018. While TMC conducted a training session for sales personnel in 2017 and another in 2018, the program lapsed thereafter due to competing organizational priorities and a lack of dedicated compliance resources. As a result, employees who joined TMC's U.S. Specialty Minerals Division after 2018 received no formal antitrust training.
• No Monitoring of Trade-Association Interactions. TMC had no protocols in place for monitoring employee interactions at trade-association events, including NASMC quarterly conferences. There were no requirements for pre-approval of attendance, no guidelines regarding permissible and impermissible topics of discussion, and no requirement to report the substance of interactions with competitors at such events.
• No Audit Mechanism for Competitor Contacts. TMC had no system for tracking, auditing, or reviewing employee contacts with competitors. Employees were not required to log their interactions with competitors, and there was no periodic review of employee communications for indicators of anticompetitive behavior.
• Insufficient Compliance Infrastructure. TMC did not have a dedicated Chief Compliance Officer or a compliance function independent of the legal department. Compliance responsibilities were absorbed by the General Counsel's office, which, given its broad portfolio of responsibilities, did not have the capacity to devote sustained attention to antitrust compliance monitoring.
These deficiencies created an environment in which Holt's conduct could go undetected for an extended period. TMC acknowledges these shortcomings candidly. The inadequacy of the prior compliance program is not offered as an excuse for the alleged conduct but rather as context for understanding how the conduct occurred and as a foundation for the comprehensive remediation efforts described in Section VI below.
V. TMC'S FINANCIAL PROFILE AND AFFECTED COMMERCE
A. TMC's Business
TMC is a large, diversified mining and specialty-minerals company with operations spanning four countries. For fiscal year 2021, TMC reported consolidated revenue of CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates) and EBITDA of CAD 812 million. TMC operates 14 mines across Canada, the United States, Brazil, and Australia, and six downstream chemical-processing facilities. TMC employs approximately 9,500 individuals worldwide, including approximately 2,400 in the United States.
TMC's U.S. Specialty Minerals Division — the division at the center of the Division's investigation — generated fiscal year 2021 revenue of approximately USD 687 million, accounting for approximately 20% of TMC's consolidated revenue. The U.S. Specialty Minerals Division is one of several operating divisions within TMC's corporate structure and is responsible for the extraction, processing, and sale of high-purity feldspar, industrial talc, and rare-earth concentrates to customers in the United States. The division is headquartered at TMC's U.S. offices in Reno, Nevada, and operates mines and processing facilities in Nevada, Idaho, and Montana.
B. Affected Commerce
The economic analysis conducted by Hargrove Forensic Advisory LLC, under the direction of Dr. Vanessa Tremblay, assessed TMC's volume of affected commerce during the alleged conspiracy period — that is, the total value of TMC's U.S. sales of the products at issue (high-purity feldspar, industrial talc, and rare-earth concentrates) from approximately January 2017 through August 2021.
Based on this analysis, TMC's share of affected commerce during the conspiracy period is estimated at USD 478 million. This figure represents the total revenue derived by TMC from U.S. sales of the three product categories at issue during the approximately four-and-a-half-year conspiracy period.
Calderwood & Harkness understands that the Division's estimate of the total volume of affected commerce across all participants in the alleged conspiracy — TMC, Ridgecrest Minerals, and Pinnacle Earth Resources — is approximately USD 1.34 billion. TMC's share of total affected commerce accordingly represents approximately 35.7% (USD 478 million / USD 1.34 billion).
TMC provides these figures in the interest of transparency and to facilitate the Division's assessment of an appropriate monetary component of any resolution. TMC reserves the right to present additional economic analysis regarding the calculation of affected commerce, including arguments regarding the appropriate methodology for calculating affected commerce and any applicable adjustments, in the course of NPA negotiations.
VI. REMEDIATION EFFORTS
A. Personnel Actions
The individual primarily responsible for the alleged anticompetitive conduct, Gavin Holt, resigned from TMC effective September 30, 2021. Mr. Holt's departure preceded the commencement of Grand Jury Investigation No. GJ-22-0194 by approximately four months and preceded TMC's receipt of the grand jury subpoena by approximately four and one-half months. While the circumstances of Holt's departure are not entirely clear — and TMC does not claim that his resignation was precipitated by knowledge of an impending investigation — the practical effect is that the individual responsible for the conduct is no longer employed by TMC and has not been employed by TMC at any point during the investigation.
TMC has not rehired Gavin Holt in any capacity, has not engaged him as a consultant or contractor, and has no present intention to do so. TMC has also ensured that no other individuals identified in the investigation as having potential involvement in the alleged conduct remain in positions where they could engage in similar behavior.
B. Compliance Program Enhancements
TMC has commenced a comprehensive overhaul of its antitrust compliance program, reflecting the company's recognition that the deficiencies identified in its prior program contributed to an environment in which the alleged conduct could occur and go undetected. TMC's remediation efforts are not merely reactive; they reflect a genuine institutional commitment — endorsed at the highest levels of TMC's corporate governance structure — to preventing future violations.
On August 1, 2022, Calderwood & Harkness retained Meridian Compliance Partners LLC ("Meridian") to design and implement an enhanced antitrust compliance program tailored to TMC's organizational structure, industry, and risk profile. Meridian is a Washington, D.C.-based compliance consulting firm with extensive experience in antitrust compliance program design and implementation. The engagement is led by Claudia Ferraro, Engagement Lead, at Meridian's offices located at 1100 Connecticut Avenue NW, Suite 730, Washington, D.C. 20036. The formal retention of Meridian has been completed, and design work is actively underway, with a comprehensive program proposal targeted for submission to the Division.
The elements of the enhanced compliance program currently under development include the following:
• Mandatory Annual Antitrust Compliance Training. All employees involved in sales, pricing, business development, and competitor-facing activities will be required to complete annual antitrust compliance training. The training program will cover the basics of antitrust law, the specific risks associated with competitor contacts, the types of conduct that are prohibited, and the consequences of violations. The training will be delivered through a combination of live, instructor-led sessions and interactive online modules, with testing and certification requirements.
• Appointment of a Dedicated, Independent Chief Compliance Officer. TMC will appoint a dedicated Chief Compliance Officer ("CCO") with direct reporting responsibility to the Audit Committee of the TMC Board of Directors. The CCO will be independent of the business functions he or she monitors and will have the authority, resources, and organizational standing necessary to ensure effective compliance oversight. The CCO's responsibilities will include overseeing the antitrust compliance program, investigating potential violations, and reporting to the Audit Committee on compliance matters at least quarterly.
• Competitor-Contact Protocols. TMC will implement protocols requiring pre-approval and documentation of all substantive interactions with competitors. Any planned meeting, call, or communication with a competitor — whether at industry events, in bilateral settings, or otherwise — must be pre-approved by the compliance function, and a written summary of the substance of the interaction must be filed within 48 hours.
• Trade-Association Interaction Guidelines. TMC will adopt detailed guidelines governing employee participation in trade-association events, including NASMC conferences and similar industry gatherings. These guidelines will include restrictions on unscheduled side meetings with competitors, mandatory reporting of any discussion of pricing, competitive terms, or customer-specific information at industry events, and a requirement that TMC attendees be accompanied by a compliance-trained colleague at events where competitor interaction is anticipated.
• Anonymous Reporting Hotline and Whistleblower Protections. TMC will establish an anonymous reporting hotline, operated by an independent third-party provider, through which employees can report suspected antitrust violations or other compliance concerns without fear of retaliation. TMC will adopt and publicize a formal anti-retaliation policy to protect whistleblowers.
• Periodic Auditing and Monitoring. The enhanced compliance program will include periodic audits of compliance with antitrust policies, conducted by the CCO's office or by external compliance consultants. These audits will include review of employee communications, pricing decisions, and competitor contacts, as well as testing of the effectiveness of training and reporting mechanisms.
• Annual Compliance Certifications. TMC's Chief Executive Officer and General Counsel will be required to execute annual certifications attesting to the company's compliance with its antitrust policies and the effectiveness of the compliance program. These certifications will be submitted to the Audit Committee and will form part of the compliance record reviewed during periodic audits.
TMC's Board of Directors, under the leadership of Board Chair Margaret Caldwell and Audit Committee Chair Janet Moreau-Shaw, has directed management to implement these compliance enhancements as a priority. The Board's engagement with this matter — including its receipt and review of the internal investigation findings at the January 20, 2023 special meeting — reflects the seriousness with which TMC's governance leadership views the issues raised by the investigation.
TMC intends to submit a formal enhanced compliance program proposal to the Division, targeted for submission in the third quarter of 2023, and welcomes the Division's input on the design and implementation of the program.
C. Cooperation with Ongoing Investigation
TMC commits to continuing full cooperation with the Antitrust Division for the duration of the investigation and through any resolution of the matter. Specifically, TMC commits to:
• Making current and, to the extent practicable, former employees available for interviews, proffer sessions, and testimony before the grand jury or at trial, as the Division may request;
• Responding promptly and completely to any additional subpoenas, document requests, or other compulsory process issued by the Division;
• Providing supplemental factual information to the Division as it becomes available through TMC's ongoing cooperation efforts;
• Refraining from any action that could impede, obstruct, or delay the Division's investigation; and
• Continuing to maintain and update the litigation hold and preservation protocols established at the outset of the investigation.
VII. MITIGATING FACTORS SUPPORTING RESOLUTION SHORT OF PROSECUTION
TMC respectfully submits that the totality of circumstances — when assessed under the Division's published criteria for evaluating corporate disposition, including the Principles of Federal Prosecution of Business Organizations and the Division's policy guidance on cooperation credit and compliance programs — supports the resolution of this investigation, as it pertains to TMC, through a non-prosecution agreement. The principal mitigating factors are as follows.
A. Cooperation Credit
TMC's cooperation with the Division's investigation has been voluntary, timely, and comprehensive. From the earliest stages of the investigation, TMC chose a path of full cooperation, and it has adhered to that path consistently throughout the past year.
The hallmarks of TMC's cooperation include:
• Extensive Document Production. TMC has produced approximately 487,000 documents, comprising approximately 3.2 million pages, in response to the first grand jury subpoena. TMC's production efforts went beyond the strict terms of the subpoena and included proactive identification and production of materials from non-standard repositories, including VaultChat archives that required specialized forensic recovery.
• Thorough Internal Investigation. TMC commissioned and funded a comprehensive internal investigation conducted by Calderwood & Harkness, retained Hargrove Forensic Advisory for independent economic analysis, and is sharing the findings of the investigation with the Division through this proffer and in ongoing discussions.
• Witness Cooperation. TMC has facilitated the cooperation of 23 current and former employees with the internal investigation and has offered to make key fact witnesses, including Sandra Chu and Thomas Eriksen, available for voluntary proffer sessions with the Division.
• Independent Cooperation Posture. TMC has not entered into joint defense agreements with counsel for Ridgecrest Minerals or Pinnacle Earth Resources, reflecting its commitment to independent, good-faith cooperation.
• Timeliness. TMC engaged counsel within four business days of subpoena receipt, issued a litigation hold within 11 days, and made its first rolling production within seven weeks — a timeframe that compares favorably with industry norms for investigations of this scope and complexity.
B. Nature and Scope of Culpable Conduct
The alleged anticompetitive conduct was committed by a single individual, Gavin Holt, who was acting without authorization from TMC management or the Board of Directors. No member of TMC's C-suite — neither the CEO, the General Counsel, the Chief Financial Officer, nor any other senior executive — had knowledge of Holt's communications with competitors. No member of the Board of Directors authorized or ratified the conduct.
Holt departed TMC effective September 30, 2021, before the investigation commenced. His departure was not the result of any disciplinary action by TMC related to the alleged conduct (of which TMC was not aware at the time), but his absence from the company means that the individual responsible for the conduct is no longer in a position to engage in similar behavior on TMC's behalf.
While TMC does not minimize the seriousness of Section 1 violations, the Division has long recognized that the nature and scope of culpable conduct within a corporation are relevant to the appropriate corporate disposition. Where, as here, the conduct was confined to one employee within one division of a large multinational company, and where that employee acted without management knowledge or authorization, the case for corporate prosecution is materially weaker than in cases involving pervasive, management-directed conspiracies.
C. Remediation
TMC has taken concrete, substantial steps to remediate the compliance failures that permitted the alleged conduct to occur. These steps are not cosmetic or superficial; they represent a fundamental redesign of TMC's antitrust compliance infrastructure, endorsed at the highest levels of the company's governance structure.
As described in detail in Section VI, TMC has retained Meridian Compliance Partners to design and implement an enhanced compliance program that includes mandatory training, a dedicated Chief Compliance Officer, competitor-contact protocols, trade-association guidelines, an anonymous reporting hotline, periodic auditing, and annual executive certifications. The TMC Board of Directors — including the Board Chair and the Audit Committee Chair — has directed management to treat these enhancements as a priority.
TMC's remediation efforts demonstrate a genuine commitment to preventing future violations, not merely a litigation-driven response to the current investigation. The Division's policy guidance recognizes that a corporation's remedial efforts — including the quality and comprehensiveness of its compliance program — are important factors in assessing the appropriate disposition.
D. Collateral Consequences
A criminal prosecution of TMC would have severe collateral consequences that are disproportionate to the nature and scope of the culpable conduct:
• Publicly Listed Company. TMC is publicly listed on both the TSX and the NYSE. An indictment would trigger immediate and severe market consequences, including a likely precipitous decline in TMC's share price, potential credit-rating downgrades, and disruption to TMC's capital markets access. These consequences would be borne primarily by TMC's public shareholders — thousands of individual and institutional investors — who had no involvement in and no knowledge of the alleged conduct.
• Employment Impact. TMC employs approximately 9,500 individuals worldwide, including approximately 2,400 in the United States. A criminal prosecution could destabilize TMC's operations, jeopardize customer and supplier relationships, and ultimately threaten the livelihoods of employees who bear no responsibility for the alleged conduct.
• Government Contracts and Debarment. TMC and its subsidiaries hold contracts with U.S. government entities, including contracts for the supply of specialty minerals to defense and infrastructure programs. A criminal conviction could trigger mandatory or discretionary debarment proceedings, depriving government agencies of a reliable and competitive supplier and further amplifying the economic harm to TMC and its stakeholders.
• Reputational Harm. The reputational consequences of an indictment would extend beyond TMC itself to its innocent employees, customers, suppliers, and business partners, creating a cascade of collateral harm that is out of proportion to the misconduct of a single individual.
TMC has already established a litigation reserve of USD 30 million in connection with this matter, as disclosed in TMC's fiscal year 2021 annual report filed with the SEC and applicable Canadian securities regulators on March 28, 2022. TMC's independent auditor, Calvert & Associates LLP, and its financial advisor, Ironbridge Capital Markets Inc., have been involved in assessing the financial impact of the investigation. TMC is prepared to negotiate a meaningful monetary payment as part of a non-prosecution agreement — one that reflects the seriousness of the conduct and TMC's affected commerce while avoiding the disproportionate collateral consequences of a criminal prosecution.
E. Precedent and Policy
The Antitrust Division has resolved comparable cases involving substantial corporate cooperation through non-prosecution agreements. The Division's published guidance recognizes that NPAs are appropriate where the circumstances — including the nature and extent of the corporation's cooperation, the quality and timeliness of its internal investigation, its remediation efforts, the pervasiveness of the misconduct within the organization, and the availability of individual prosecution — weigh in favor of a corporate resolution short of indictment.
The factors present in this case are precisely those that the Division's guidance identifies as supporting an NPA disposition:
• Voluntary, timely, and comprehensive cooperation with the investigation;
• Conduct and sharing of the results of a thorough internal investigation;
• Proactive and substantial remediation, including the redesign of the compliance program under the oversight of an independent consultant;
• Isolated conduct by a single employee, without management knowledge or authorization;
• Departure of the culpable individual from the corporation; and
• Willingness to accept a meaningful monetary penalty and continuing cooperation obligations.
TMC respectfully submits that these factors, taken together, compel the conclusion that the appropriate resolution of this matter is a non-prosecution agreement.
VIII. PROPOSED RESOLUTION
In light of the foregoing, TMC respectfully submits that the appropriate disposition of Grand Jury Investigation No. GJ-22-0194, as it pertains to Torchlight Mining Corp., is a non-prosecution agreement.
TMC is prepared to negotiate in good faith regarding the terms of an NPA, including:
1. Monetary Payment. TMC is prepared to negotiate a monetary payment reflecting TMC's affected commerce (estimated at USD 478 million), with appropriate credit for TMC's cooperation and remediation efforts. TMC understands that the Division will apply its standard methodologies for calculating fines and penalties in Section 1 cases and reserves the right to present argument regarding the appropriate calculation.
2. Cooperation Obligations. TMC is prepared to accept continuing cooperation obligations for a defined period, including the obligation to make witnesses available, to respond to additional document requests, and to provide factual information in connection with the Division's investigation and prosecution of other e

VIA HAND DELIVERY AND ELECTRONIC MAIL

I. INTRODUCTION AND PURPOSE

II. BACKGROUND OF THE INVESTIGATION

III. TMC'S COOPERATION WITH THE INVESTIGATION

IV. SUMMARY OF INTERNAL INVESTIGATION FINDINGS

V. TMC'S FINANCIAL PROFILE AND AFFECTED COMMERCE

VI. REMEDIATION EFFORTS

VII. MITIGATING FACTORS SUPPORTING RESOLUTION SHORT OF PROSECUTION

VIII. PROPOSED RESOLUTION

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