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CONFIDENTIAL — SUBJECT TO FRE 408 AND DOJ COOPERATION POLICY PROTECTIONS

CALDERWOOD & HARKNESS LLP Antitrust & Competition Practice Group 555 California Street, 40th Floor San Francisco, California 94104 Telephone: (415) 772-6000 Facsimile: (415) 772-6001

September 15, 2023

VIA HAND DELIVERY AND SECURE ELECTRONIC TRANSMISSION

Denise Kowalski, Trial Attorney 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, California 94102

Re: Torchlight Mining Corp. — Enhanced Antitrust Compliance Program Proposal Grand Jury No. GJ-22-0194 (N.D. Cal.) Matter No. 1039-00001

Dear Ms. Kowalski and Mr. Reeves:

I. COVER LETTER

A. Introduction and Purpose

On behalf of our client, Torchlight Mining Corp. ("TMC" or the "Company"), Calderwood & Harkness LLP respectfully submits this Enhanced Antitrust Compliance Program Proposal (the "Proposal") as evidence of TMC's steadfast commitment to remediation and comprehensive compliance culture reform. We understand that the Division places significant weight on whether a company has taken meaningful steps to identify the root causes of the conduct under investigation and to implement systemic changes designed to prevent recurrence. This Proposal is intended to demonstrate that TMC has done precisely that.

The Proposal was developed in conjunction with Meridian Compliance Partners LLC ("Meridian"), an independent regulatory-compliance consulting firm based in Washington, D.C. that specializes in the design, implementation, and evaluation of antitrust and competition compliance programs for multinational corporations. Calderwood & Harkness retained Meridian on August 1, 2023, and the engagement has been led by Claudia Ferraro, a former senior official of the Federal Trade Commission's Bureau of Competition and a recognized authority in the field of corporate antitrust compliance. A summary of Meridian's qualifications and Ms. Ferraro's biography is enclosed as Attachment 1 hereto.

This submission is made in the context of TMC's ongoing cooperation with the Antitrust Division's investigation, as reflected in the proceedings before the federal grand jury empaneled in the Northern District of California (Grand Jury No. GJ-22-0194). The Proposal is intended to support TMC's request for cooperation and remediation credit in connection with the resolution of this matter, consistent with the Division's publicly stated policies regarding the evaluation of corporate compliance programs and the credit afforded to companies that demonstrate genuine remediation efforts.

B. Background Context

As the Division is aware, the investigation into potential antitrust violations in the specialty-minerals sector has been ongoing for approximately nineteen months. The relevant procedural history, which we summarize here for the convenience of the record, underscores the depth and extent of TMC's cooperation with the Division's investigation.

TMC first received Grand Jury Subpoena No. GJ-22-0194-SD-003 on February 14, 2022, calling for the production of documents relating to, among other things, the pricing, sale, and distribution of high-purity feldspar, industrial talc, and rare-earth concentrates in the United States and Canada. TMC subsequently received a target letter from the Division on May 20, 2022, advising that the Company was a target of the grand jury investigation.

Since the commencement of the investigation, TMC has cooperated extensively and in good faith with the Division. Specifically:

• TMC produced approximately 487,000 documents (comprising approximately 3.2 million pages) in response to the first grand jury subpoena (GJ-22-0194-SD-003). These productions were made on a rolling basis, with the first production delivered within forty-five days of receipt of the subpoena, and were accompanied by detailed privilege logs and production indices.

• On June 30, 2023, TMC produced an additional approximately 68,000 documents in response to the Division's second subpoena (GJ-22-0194-SD-007), which sought supplemental materials relating to certain communications identified during the course of the investigation.

• TMC made two employees available for voluntary proffer sessions with the Division: Sandra Chu, Director of Pricing Analytics, who participated in a proffer session on March 10, 2023; and Thomas Eriksen, Regional Sales Manager for the Western Region, who participated in a proffer session on April 22, 2023. Both sessions were conducted at the San Francisco Field Office, and TMC facilitated the employees' participation without undue restriction.

• On February 15, 2023, Calderwood & Harkness submitted a comprehensive cooperation proffer to the Division outlining the findings of its internal investigation. That investigation encompassed the review of approximately 555,000 documents and the interviews of twenty-three (23) current and former TMC employees conducted over a period of approximately ten months.

• On May 1, 2023, Calderwood & Harkness submitted supplemental cooperation materials to the Division, including additional documentary evidence and factual analyses identified during the continued course of the internal investigation.

The internal investigation conducted by Calderwood & Harkness identified a number of significant deficiencies in the Company's existing antitrust compliance program, which had been originally adopted in approximately 2014. Among the most critical deficiencies identified were the following: (i) no annual antitrust training had been conducted since approximately 2018, a gap of nearly four years during which the conduct under investigation is believed to have occurred; (ii) the Company maintained no monitoring protocols or oversight mechanisms for trade-association interactions, including interactions at the North American Specialty Minerals Council ("NASMC") quarterly conferences, which the investigation identified as a primary venue for potentially unlawful competitor contacts; and (iii) the Company maintained no audit procedures, logging requirements, or tracking mechanisms for contacts between TMC personnel and competitor personnel. A detailed timeline of TMC's cooperation efforts is enclosed as Attachment 2.

C. Scope of the Proposal

The Enhanced Antitrust Compliance Program Proposal addresses all of the elements identified in the DOJ Antitrust Division's published guidance on the evaluation of compliance programs, including the criteria set forth in the Division's Evaluation of Corporate Compliance Programs framework, as updated. The Proposal is designed to be comprehensive, addressing governance and leadership commitment, risk assessment, policies and procedures, training and education, confidential reporting mechanisms, investigation and disciplinary protocols, monitoring and auditing, and third-party and acquisition due diligence.

While the Proposal applies enterprise-wide to all of TMC's global operations — which span fourteen mines across Canada, the United States, Brazil, and Australia, and six downstream chemical-processing facilities — particular emphasis has been placed on the U.S. Specialty Minerals Division. That division, which generated approximately USD 687 million in revenue in fiscal year 2021 (representing approximately 20% of TMC's consolidated revenue), is the operational unit at the center of the Division's investigation and is the area in which the most significant compliance deficiencies were identified during the internal investigation.

The Proposal has been designed to be implementable within ninety (90) days of approval by the Division, with certain technology-related components achievable within one hundred twenty (120) days. It is intended to serve as the basis for any compliance program obligations that may be included in a potential resolution agreement between TMC and the Division, and TMC is prepared to commit to the Proposal's terms as binding obligations in any such agreement.

D. Request

TMC respectfully requests that the Division consider this Proposal as a significant remediation step in evaluating the appropriate level of cooperation and remediation credit to be afforded to TMC in connection with the resolution of this matter. The Proposal reflects not merely a paper commitment to compliance, but a fundamental restructuring of TMC's governance, oversight, and operational controls designed to ensure that the deficiencies that permitted the investigated conduct cannot recur.

TMC remains available, through undersigned counsel and through Meridian Compliance Partners, to discuss any modifications, enhancements, or additional measures that the Division may suggest. We are committed to working collaboratively with the Division to ensure that the compliance program meets the Division's expectations in all respects.

II. ENHANCED ANTITRUST COMPLIANCE PROGRAM PROPOSAL

TORCHLIGHT MINING CORP. ENHANCED ANTITRUST COMPLIANCE PROGRAM PROPOSAL

Prepared by Meridian Compliance Partners LLC in conjunction with Calderwood & Harkness LLP

September 15, 2023

Section 1: Executive Summary

1.1 Overview. Torchlight Mining Corp. ("TMC" or the "Company") is a corporation organized under the Canada Business Corporations Act (CBCA Corporation No. 7841526-1), with its registered office located at 200 Bay Street, Suite 3400, Toronto, Ontario M5J 2J2, Canada. TMC's principal U.S. operations are conducted through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc., a Nevada corporation (Entity No. NV20160438721), with its principal office located at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117.

TMC is a publicly listed company, with shares traded on the Toronto Stock Exchange (TSX: TRCL) and the New York Stock Exchange (NYSE: TMC). For the fiscal year ended December 31, 2021, TMC reported consolidated revenue of CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates), and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of CAD 812 million. The Company employs approximately 8,200 personnel globally across its mining, processing, and corporate operations.

TMC operates fourteen (14) mines across four countries — Canada, the United States, Brazil, and Australia — and six (6) downstream chemical-processing facilities that produce refined specialty-mineral products for industrial, construction, and technology-sector customers. The Company's product portfolio includes high-purity feldspar, industrial talc, rare-earth concentrates, silica, and various mineral-derived chemical compounds.

The U.S. Specialty Minerals Division — the division at the center of the Department of Justice Antitrust Division's ongoing investigation — constitutes a significant component of TMC's overall operations. In fiscal year 2021, the U.S. Specialty Minerals Division generated approximately USD 687 million in revenue, representing approximately 20% of TMC's consolidated revenue. The division maintains sales offices in Reno, Nevada; Houston, Texas; and Charlotte, North Carolina, and operates two processing facilities in Nevada and one in Georgia. While the Enhanced Antitrust Compliance Program described in this Proposal applies enterprise-wide, the U.S. Specialty Minerals Division is the primary focus of the enhanced compliance measures detailed herein.

1.2 Objectives of the Enhanced Program

The Enhanced Antitrust Compliance Program (the "Program" or the "Enhanced Program") has been designed to achieve four principal objectives:

First, the Program is designed to prevent the recurrence of the types of conduct that are the subject of the Division's investigation. As the Division is aware, the investigation concerns allegations of price-fixing, market allocation, and bid-rigging in the specialty-minerals sector, with a particular focus on the markets for high-purity feldspar, industrial talc, and rare-earth concentrates. The Program directly addresses the specific mechanisms, channels, and organizational dynamics through which the investigated conduct is alleged to have occurred, including unmonitored trade-association interactions, the use of encrypted messaging platforms, and the concentration of pricing authority in a single individual.

Second, the Program is designed to embed a culture of antitrust compliance at all levels of the organization, from the Board of Directors through senior management and down to front-line sales and commercial personnel. TMC recognizes that a compliance program is only as effective as the commitment of the people who are required to adhere to it, and accordingly the Program places significant emphasis on leadership accountability, "tone from the top," and the integration of compliance expectations into performance evaluations and compensation decisions.

Third, the Program is designed to ensure timely detection of potential antitrust violations through robust monitoring, auditing, and reporting mechanisms. The internal investigation revealed that the Company's prior compliance program lacked the monitoring infrastructure necessary to identify warning signs of anticompetitive conduct. The Enhanced Program addresses this deficiency through continuous monitoring technologies, periodic audits, a confidential reporting hotline, and systematic review of competitor contacts and pricing patterns.

Fourth, the Program is designed to demonstrate to the Department of Justice that TMC has taken meaningful remedial steps that go beyond the minimum required by law or regulation. TMC understands that the Division evaluates not merely whether a company has a compliance program on paper, but whether that program is adequately designed, effectively implemented, and genuinely resourced. The measures described in this Proposal are intended to satisfy each of those criteria.

1.3 Development of the Program

This Enhanced Antitrust Compliance Program was developed by Meridian Compliance Partners LLC ("Meridian"), an independent regulatory-compliance consulting firm headquartered at 1100 Connecticut Avenue NW, Suite 730, Washington, DC 20036. The engagement was led by Claudia Ferraro, a former senior official of the Federal Trade Commission's Bureau of Competition, who brings more than twenty-five years of experience in antitrust enforcement and compliance program design. Meridian was retained by Calderwood & Harkness LLP on August 1, 2023, and has worked in close coordination with Calderwood & Harkness and with TMC's in-house legal and compliance teams to develop the Proposal.

The Program is informed by the findings of Calderwood & Harkness's internal investigation, the results of which were presented to TMC's Board of Directors on January 20, 2023. That investigation identified specific compliance gaps that created the organizational conditions under which the investigated conduct was able to occur. Among the most significant findings were the absence of antitrust training for nearly four years, the lack of monitoring or oversight of trade-association interactions, the concentration of pricing authority in a single senior executive (former Vice President of U.S. Specialty Minerals Sales Gavin Holt), and the use of unmonitored encrypted messaging platforms for communications with competitor personnel. The Enhanced Program has been specifically designed to address each of these identified deficiencies.

In addition, the Program has been benchmarked against the DOJ Antitrust Division's published guidance on the evaluation of corporate compliance programs, including the Division's publicly available Evaluation of Corporate Compliance Programs framework and related speeches and policy statements by Division leadership. The Program also incorporates best practices drawn from recent corporate compliance program evaluations in the mining, specialty-chemicals, and industrial-products industries, as well as guidance from international competition authorities, including the Canadian Competition Bureau and the Australian Competition and Consumer Commission.

Section 2: Governance and Leadership Commitment

2.1 Board-Level Oversight

TMC's Board of Directors (currently chaired by Margaret Caldwell) shall establish a standing Compliance Committee of the Board (the "Board Compliance Committee"), which shall operate as a separate and distinct committee from the existing Audit Committee (currently chaired by Janet Moreau-Shaw). The creation of a dedicated Board Compliance Committee reflects the Board's recognition that antitrust compliance requires focused, specialized oversight that cannot be adequately addressed as a subsidiary function of the Audit Committee's broader financial-oversight mandate.

The Board Compliance Committee shall be composed of no fewer than three (3) independent, non-executive directors, at least one of whom shall have demonstrable experience in regulatory compliance, antitrust law, or corporate governance. The Board Compliance Committee shall be governed by a written charter that sets forth its authority, responsibilities, and operating procedures, and such charter shall be adopted concurrently with the Board resolution endorsing the Enhanced Program.

The Board Compliance Committee shall receive quarterly reports from the Chief Compliance Officer (as described in Section 2.3 below) and shall have the authority to direct compliance resources, commission investigations, and mandate policy changes as it deems appropriate. The Committee shall also receive and review the results of all annual risk assessments and compliance audits conducted pursuant to this Program, and shall have the authority to require supplemental assessments or audits as circumstances warrant.

As a foundational step, the Board of Directors shall adopt a formal resolution endorsing the Enhanced Antitrust Compliance Program and committing to its full implementation and funding. This resolution shall be adopted within thirty (30) days of the Division's approval of this Proposal (or such other date as may be agreed upon) and shall be communicated to all TMC employees in writing. The resolution shall expressly affirm the Board's commitment to a zero-tolerance policy with respect to antitrust violations and shall authorize the allocation of all resources necessary for the Program's implementation and ongoing operation.

2.2 Senior Management Accountability

The Division's guidance on the evaluation of corporate compliance programs emphasizes the importance of senior management commitment, often referred to as "tone from the top." TMC recognizes that a compliance program, however well-designed on paper, will be ineffective unless the Company's most senior leaders actively champion and model compliance behavior.

Accordingly, TMC's Chief Executive Officer, Søren Dalmqvist, and its General Counsel, Priya Anand, shall co-sign annual compliance certifications attesting to the Company's maintenance of and adherence to the Enhanced Antitrust Compliance Program. These certifications, described in greater detail in Section 9 below, shall require Mr. Dalmqvist and Ms. Anand to affirm, under penalty of personal accountability, that the Program has been maintained in full force and effect, that all required training has been delivered, and that all known or suspected violations have been promptly investigated and, where warranted, reported to governmental authorities.

In addition, the CEO shall communicate the Company's zero-tolerance antitrust compliance policy in annual messages distributed to all TMC employees worldwide. These messages shall be disseminated through multiple channels, including company-wide email, the corporate intranet, and town-hall meetings conducted at each of the Company's principal operating locations. The CEO's commitment to antitrust compliance shall also be reflected in TMC's public filings, including its annual report and proxy statement, which shall include a discussion of the Company's antitrust compliance program and the resources devoted to it.

Senior management compensation structures shall incorporate compliance-related performance metrics. Specifically, a meaningful portion of the annual bonus calculations for the CEO, the General Counsel, division presidents, and regional sales managers shall be tied to compliance performance, including completion of required training, adherence to competitor-contact protocols, and the absence of compliance violations within their respective areas of responsibility.

2.3 Chief Compliance Officer

TMC shall appoint an independent Chief Compliance Officer ("CCO") who shall serve as the central figure responsible for the day-to-day administration, implementation, and enforcement of the Enhanced Antitrust Compliance Program. The CCO position shall be a new, full-time role within the organization, and shall not be filled by any individual currently serving in a commercial, sales, or business-development leadership role. This structural requirement is designed to ensure the CCO's independence from the revenue-generating functions of the Company that are the focus of the Enhanced Program.

The CCO shall report directly to the Board Compliance Committee on all compliance-related matters, with a dotted-line reporting relationship to the General Counsel for purposes of administrative coordination and legal privilege management. This dual-reporting structure ensures that the CCO has a direct channel to the Board and is not dependent on the General Counsel or other members of senior management for access to the Board or for the resources necessary to fulfill the compliance function. The CCO shall have the right to request and receive time on the Board Compliance Committee's agenda at any regular or special meeting, and shall have the right to communicate directly with the Board Compliance Committee chair on an urgent basis without prior approval from the CEO or General Counsel.

The CCO shall have the following authorities and resources:

(a) Full and unrestricted access to all relevant Company records, personnel, data, and systems, including but not limited to email systems, document management systems, pricing databases, customer relationship management platforms, and communications archives;

(b) A dedicated compliance budget, the amount of which shall be approved annually by the Board Compliance Committee in consultation with the CCO, and which shall be sufficient to fund the compliance team, training programs, technology investments, third-party audit fees, and other program components;

(c) The authority to hire, direct, and manage a compliance team of sufficient size and expertise to administer the Program effectively across all of TMC's global operations;

(d) The authority to initiate and direct investigations of suspected antitrust violations, to engage outside counsel or forensic consultants as necessary, and to report findings directly to the Board Compliance Committee;

(e) The authority to recommend disciplinary action against any employee, regardless of seniority, for violations of the antitrust compliance policy, and to escalate disagreements regarding the imposition of discipline to the Board Compliance Committee for resolution; and

(f) Protection against removal: the CCO shall not be removed from the position, demoted, or subjected to any adverse employment action without the prior approval of the Board Compliance Committee, which shall document its reasons for any such action.

The CCO shall meet the following minimum qualifications: a minimum of ten (10) years of experience in antitrust or regulatory compliance, including experience in the design, implementation, and administration of corporate compliance programs; a Juris Doctor degree or equivalent professional qualification; and preferably, experience in the mining, chemicals, or industrial-products sectors.

Section 3: Antitrust Risk Assessment

3.1 Initial Risk Assessment

Within sixty (60) days of the adoption of the Enhanced Antitrust Compliance Program, Meridian Compliance Partners LLC shall conduct a comprehensive antitrust risk assessment (the "Initial Risk Assessment") of TMC's global operations. The Initial Risk Assessment shall serve as the baseline against which the effectiveness of the Enhanced Program's controls and safeguards will be measured, and shall identify the specific areas of the Company's business that present the highest risk of antitrust violations.

The Initial Risk Assessment shall encompass the following areas:

(a) Product-Line Analysis. All product lines in which TMC competes shall be evaluated for antitrust risk, with priority given to the three product categories at the center of the Division's investigation: high-purity feldspar, industrial talc, and rare-earth concentrates. The assessment shall consider market concentration, the number and identity of competitors, the degree of product differentiation, the transparency of pricing, the frequency of customer overlap with competitors, and the history of antitrust enforcement in each product market.

(b) Geographic-Market Analysis. All geographic markets in which TMC operates shall be evaluated, with particular focus on the North American markets for specialty minerals. The assessment shall consider the competitive dynamics in each geographic market, including the presence of competitors with whom TMC has had historical contact, the existence of trade associations or industry groups that facilitate competitor interactions, and the regulatory environment in each jurisdiction.

(c) Functional Analysis. All customer-facing functions within TMC shall be assessed, including sales, pricing analytics, business development, contract administration, and customer-service operations. The assessment shall identify the specific roles and positions within each function that present the highest risk of antitrust violations, and shall evaluate the adequacy of existing controls over those roles and positions.

(d) Competitor-Interaction Analysis. All channels through which TMC personnel interact with competitor personnel shall be identified and evaluated, including trade-association participation, joint ventures, industry benchmarking activities, customer site visits, and informal social interactions. The assessment shall evaluate the specific channels through which the investigated conduct is alleged to have occurred, including in-person meetings at NASMC quarterly conferences (held at locations including Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida), communications through the VaultChat encrypted messaging platform, and phone communications with competitor personnel.

(e) Historical Analysis. The risk assessment shall incorporate the findings of Calderwood & Harkness's internal investigation and the forensic pricing analysis conducted by Hargrove Forensic Advisory LLC, and shall identify the specific organizational, structural, and cultural factors that contributed to the investigated conduct.

The Initial Risk Assessment shall result in a written report that identifies the Company's antitrust risk profile, ranks identified risks by likelihood and potential severity, and recommends specific mitigating measures for each identified risk. The report shall be delivered to the CCO, the Board Compliance Committee, and Calderwood & Harkness LLP for review.

3.2 Periodic Risk-Assessment Updates

Following the completion of the Initial Risk Assessment, risk assessments shall be updated on an annual basis and whenever there is a material change in TMC's business operations, product lines, competitive landscape, or organizational structure. Examples of material changes that would trigger an interim risk-assessment update include, without limitation, the entry into a new product market, a significant acquisition or joint venture, the appointment of new senior commercial leadership, or the receipt of information suggesting potential antitrust violations.

The results of each periodic risk assessment shall be reported to the Board Compliance Committee, the CCO, and the General Counsel, and shall be maintained in compliance records for a minimum period of ten (10) years. Risk assessments shall serve as the basis for ongoing refinement and updating of the Enhanced Program's policies, training curriculum, and monitoring protocols.

Section 4: Policies and Procedures

4.1 Antitrust Compliance Policy — Comprehensive Revision

TMC's existing antitrust compliance policy, which was originally adopted in approximately 2014 and has not been substantively updated since that time, shall be entirely replaced with a new, comprehensive Enhanced Antitrust Compliance Policy (the "Policy"). A summary of the draft Policy is enclosed as Attachment 4. The outdated 2014 policy was insufficient in several critical respects: it lacked specificity regarding the types of competitor interactions that are prohibited; it failed to address the use of electronic communications platforms; it did not establish clear reporting protocols for potential violations; and it was not tailored to the specific risks associated with TMC's participation in the specialty-minerals industry.

The new Policy shall include, at a minimum, the following provisions:

(a) A clear and unambiguous prohibition of all forms of horizontal agreements with competitors, including but not limited to price-fixing, market allocation, customer allocation, bid-rigging, and output restriction, whether express or implied, whether formal or informal, and whether entered into directly or through intermediaries;

(b) An explicit prohibition of the exchange of competitively sensitive information with competitors, whether in written, oral, or electronic form. Competitively sensitive information shall be defined to include, without limitation: current or future pricing, pricing methodologies, discounts, or rebates; costs of production, raw materials, or distribution; customer lists, customer-specific pricing, or customer allocations; bid terms, bid strategies, or bid pricing; production volumes, capacity utilization, or inventory levels; and business plans, market strategies, or expansion plans;

(c) Specific and practical guidance on interactions with competitors in all settings, including trade associations, industry conferences, trade shows, industry events, informal gatherings, social settings, and any other venue where competitor personnel may be present. The Policy shall include illustrative examples of permissible and impermissible topics of discussion, and shall instruct employees on the specific steps they must take if a conversation with a competitor turns to a competitively sensitive topic;

(d) A clear statement of the consequences of violating the Policy, including potential termination of employment, forfeiture of compensation, referral for personal criminal prosecution, and the Company's obligation to report violations to governmental authorities;

(e) A statement of the Company's commitment to protecting employees who report potential violations in good faith, including a prohibition on retaliation; and

(f) Contact information for the CCO, the legal department, and the confidential reporting hotline, to ensure that employees have ready access to guidance and reporting channels.

The Policy shall be translated into all languages necessary for distribution to TMC's global workforce, including English, French, Portuguese, and any other languages spoken by a significant portion of the Company's employees.

4.2 Competitor-Contact Protocol

In direct response to one of the most significant deficiencies identified during the internal investigation — the absence of any system for tracking, monitoring, or controlling contacts between TMC personnel and competitor personnel — TMC shall implement a comprehensive Competitor-Contact Protocol. A draft of the competitor-contact protocol form is enclosed as Attachment 5.

The Competitor-Contact Protocol shall include the following requirements:

(a) Pre-Approval Requirement. All contacts with competitors, whether in person, by telephone, by email, by text or messaging application, or through any other communication channel, shall be pre-approved in writing by the CCO or a designated member of the legal department. The pre-approval request shall identify the competitor, the individuals expected to participate, the purpose of the contact, and the topics to be discussed. Approval shall be granted only if the proposed contact serves a legitimate business purpose and does not present an undue antitrust risk.

(b) Competitor-Contact Log. A centralized competitor-contact log shall be maintained by the compliance department. For each approved contact, the log shall record the date of the contact, the names and titles of all participants, the setting in which the contact occurred, the topics discussed, and any follow-up actions taken or agreed upon. The log shall be reviewed by the CCO on a monthly basis.

(c) Reporting of Unsolicited Contacts. Employees who receive unsolicited competitively sensitive information from competitors — whether by email, telephone, in person, or through any other channel — shall be required to report such contact to the CCO or the legal department within twenty-four (24) hours. The report shall describe the nature of the information received, the identity of the competitor representative who provided it, and the circumstances under which it was received.

(d) Investigation of Deviations. Any departure from the Competitor-Contact Protocol — including failure to obtain pre-approval, failure to log an approved contact, or failure to report an unsolicited contact — shall trigger an immediate investigation by the CCO and/or the legal department to determine whether a potential antitrust violation has occurred.

4.3 Trade-Association Interaction Guidelines

The internal investigation identified TMC's participation in the North American Specialty Minerals Council ("NASMC") as a primary risk vector for the investigated conduct. NASMC hosts quarterly conferences at various locations throughout the United States, and these conferences brought together senior commercial personnel from TMC and its principal competitors in an environment that lacked adequate antitrust safeguards. The Enhanced Program therefore includes specific, detailed guidelines governing TMC's participation in NASMC and all other trade-association events.

TMC personnel who are authorized to attend NASMC conferences or any other trade-association event shall be subject to the following requirements:

(a) Pre-Attendance Briefing. Prior to attending any trade-association event, TMC personnel shall receive a pre-attendance briefing from the CCO, a member of the legal department, or a compliance officer. The briefing shall cover the antitrust risks associated with trade-association participation, the specific topics that may and may not be discussed with competitor representatives, and the reporting obligations that apply during and after the event. A draft pre-attendance briefing template is enclosed as Attachment 6.

(b) Agenda Adherence. TMC personnel shall follow a written agenda for all formal meetings held at trade-association events. If the meeting agenda deviates into competitively sensitive topics — including pricing, costs, customer allocations, production volumes, or bid terms — the TMC representative shall (i) object to the discussion on the record, (ii) request that the discussion cease immediately, and (iii) leave the meeting if the discussion continues. The TMC representative shall promptly report any such incident to the CCO or the legal department.

(c) Post-Attendance Reporting. Within five (5) business days following the conclusion of any trade-association event, the TMC attendee shall submit a written post-attendance report to the CCO. The report shall detail all meetings attended, the persons present at each meeting, the topics discussed, any interactions with competitor representatives (whether formal or informal), and any incidents requiring reporting under the antitrust compliance policy. A draft post-attendance report form is enclosed as Attachment 6.

(d) Prohibition on Unauthorized Side Meetings. TMC personnel shall not attend informal "side meetings," dinners, social gatherings, or other unscheduled events with competitor representatives at trade-association events without prior written approval from the CCO or the legal department. This requirement is directly responsive to the investigation's findings that certain contacts between TMC and competitor personnel occurred outside the formal conference program at NASMC events.

(e) Evaluation of Continued Membership. TMC shall conduct a formal evaluation of whether continued membership in NASMC and similar trade associations is appropriate, considering the antitrust risks associated with participation and the adequacy of each association's own antitrust compliance safeguards. TMC shall condition ongoing participation in any trade association on the existence of adequate association-level antitrust compliance safeguards, including the presence of antitrust counsel at meetings, the distribution of written antitrust guidelines to all attendees, and the maintenance of detailed minutes.

4.4 Pricing Authority and Approval

The internal investigation revealed that a significant contributing factor to the investigated conduct was the concentration of pricing authority for the U.S. Specialty Minerals Division in a single individual — specifically, former Vice President of U.S. Specialty Minerals Sales Gavin Holt, who directed pricing changes to Sandra Chu (Director of Pricing Analytics) without meaningful oversight, review, or documentation. The Enhanced Program directly addresses this structural deficiency through a comprehensive restructuring of pricing authority and approval processes.

The following pricing controls shall be implemented:

(a) Prohibition on Unilateral Pricing Authority. No single individual within the U.S. Specialty Minerals Division or any other TMC business unit shall have unilateral authority to set, modify, or adjust published price lists for feldspar, talc, rare-earth concentrates, or any other product sold by TMC. This requirement is specifically designed to eliminate the dynamic under which a single executive could direct pricing changes without oversight.

(b) Dual-Approval Requirement. All pricing changes — including changes to published price lists, customer-specific pricing, volume discounts, rebates, and promotional pricing — shall require the approval of at least two (2) senior officers, at least one of whom must be outside the sales function. In addition, all pricing changes shall be reviewed by the legal or compliance function prior to implementation, with a focus on ensuring that the proposed change is supported by legitimate business justifications and is not indicative of coordination with competitors.

(c) Contemporaneous Documentation. All pricing decisions shall be documented with contemporaneous written business justifications that describe the competitive, cost, market-demand, or other legitimate factors that support the decision. These records shall be maintained in a centralized pricing-decision repository and shall be available for review by the CCO, the legal department, and external auditors.

(d) Direct Compliance Reporting Channel. Personnel in pricing-analytics roles, including the Director of Pricing Analytics position currently held by Sandra Chu, shall have a direct compliance-reporting channel to the CCO. This channel shall enable pricing-analytics personnel to report any concerns about the legitimacy or rationale of pricing directives they receive without fear of retaliation or adverse consequences from the individuals who issued the directives.

4.5 Communications Policy

The internal investigation identified the use of the VaultChat encrypted messaging platform as a channel through which TMC personnel communicated with competitor representatives outside of the Company's monitored communications systems. The use of such platforms circumvented the Company's document-retention policies and made it significantly more difficult to detect and investigate the investigated conduct. The Enhanced Program includes a comprehensive communications policy designed to eliminate this risk.

(a) Prohibition on Unapproved Encrypted Messaging. The use of encrypted messaging applications, including but not limited to VaultChat, Signal, Kestrel Data Systems, Meridian Services Inc., and similar platforms, for business communications with external parties is prohibited unless the platform appears on a Company-approved list. Platforms shall be approved only if they meet specified archiving, retention, and monitoring requirements that ensure all business communications conducted through the platform are captured and available for compliance review.

(b) Company-Controlled Channels. All business communications with competitors, customers, suppliers, trade-association representatives, and other external parties must be conducted through Company-controlled communication channels that are subject to monitoring and retention, including Company email systems, Company-issued mobile devices, and approved collaboration platforms.

(c) Bring-Your-Own-Device (BYOD) Policy. The use of personal devices for business communications shall be governed by a comprehensive BYOD policy that includes archiving requirements. Employees who use personal devices for business communications shall be required to install Company-approved archiving software on such devices, and shall consent to the Company's right to collect and review business communications stored on personal devices in connection with investigations, audits, or litigation.

(d) Enforcement and Monitoring. The CCO and the information-technology department shall jointly implement mechanisms for monitoring compliance with the communications policy, including periodic audits of employee device usage, reviews of archiving completeness, and investigations of any instances in which business communications appear to have been conducted through unapproved channels.

Section 5: Training and Education

5.1 Mandatory Annual Antitrust Training

All TMC employees worldwide, regardless of position, function, or geographic location, shall receive mandatory annual antitrust compliance training. The training program shall be designed by Meridian Compliance Partners in consultation with the CCO and Calderwood & Harkness, and shall be updated annually to reflect changes in antitrust law, enforcement trends, and the Company's evolving risk profile.

The first enterprise-wide training session shall be delivered within sixty (60) days of the adoption of the Enhanced Program, and training shall be repeated on an annual basis thereafter. This requirement directly addresses one of the most significant compliance deficiencies identified during the internal investigation: no annual antitrust training had been conducted at TMC since approximately 2018, a gap of nearly four years during which the conduct under investigation is believed to have occurred. The absence of training left employees without an understanding of the legal boundaries governing their interactions with competitors and without awareness of the Company's expectations regarding antitrust compliance.

The training content shall include, at a minimum, the following topics:

(a) An overview of the principal antitrust statutes applicable to TMC's operations, including Section 1 of the Sherman Act (15 U.S.C. § 1), the applicable provisions of the Canadian Competition Act (R.S.C. 1985, c. C-34), and any other competition laws applicable in jurisdictions where TMC operates;

(b) A detailed discussion of per se antitrust violations, including price-fixing, market allocation, customer allocation, bid-rigging, and output restriction, with specific examples drawn from recent enforcement actions in the mining, chemicals, and industrial-products industries;

(c) Practical instruction on the recognition of "red flags" in competitor interactions, including requests to discuss pricing, proposals to divide territories or customers, invitations to share competitively sensitive information, and the use of coded language or euphemisms;

(d) Real-world case studies, including scenarios drawn from the conduct under investigation (anonymized as appropriate to protect legally privileged information and pending-investigation sensitivities), that illustrate how antitrust violations can arise in the specific commercial contexts in which TMC employees operate;

(e) A comprehensive explanation of employees' reporting obligations, the availability and operation of the confidential reporting hotline, and the protections afforded to whistleblowers under TMC's policies and applicable law;

(f) A discussion of the personal and corporate consequences of antitrust violations, including personal criminal liability (imprisonment of up to ten years per violation under the Sherman Act), substantial criminal fines, civil treble-damages exposure, and reputational harm to the Company and its employees.

Training shall be delivered through a combination of live, instructor-led sessions (conducted in person or via videoconference) and interactive online modules. All training sessions shall include knowledge-assessment components, such as quizzes or scenario-based exercises, to ensure comprehension and retention.

5.2 Enhanced Training for High-Risk Personnel

In addition to the mandatory annual training provided to all employees, personnel identified as occupying "high-risk" roles shall receive additional, more intensive antitrust training on a semi-annual basis (i.e., twice per year). High-risk personnel shall include, without limitation:

• All personnel in the U.S. Specialty Minerals Division, regardless of function;

• All regional sales managers, including the Western Region, Eastern Region, Central Region, and International positions;

• All pricing analysts and pricing-analytics directors;

• All business-development personnel;

• All personnel who attend trade-association events, industry conferences, or other forums where competitor representatives are likely to be present; and

• Any other personnel identified as high-risk through the periodic risk-assessment process.

Enhanced training for high-risk personnel shall include scenario-based exercises designed to simulate real-world situations that these employees may encounter, including trade-association interactions, customer-allocation requests from competitors, receipt of unsolicited competitively sensitive information, and requests to use non-Company communication channels. These exercises shall be designed to be interactive and to require participants to identify the appropriate course of action in response to each scenario.

5.3 New-Hire and Promotion Training

All new hires in sales, marketing, pricing, business development, and other customer-facing or commercially sensitive roles shall be required to complete antitrust compliance training within thirty (30) days of their start date. This training shall cover the full scope of the annual training curriculum and shall additionally include an orientation to the Company's specific antitrust compliance policies, protocols, and reporting mechanisms.

All employees promoted to management positions — including but not limited to regional sales managers, division directors, vice presidents, and senior vice presidents — shall receive supplemental antitrust training within thirty (30) days of their promotion. This supplemental training shall address the enhanced responsibilities of managers with respect to compliance oversight, including the obligation to model compliance behavior, to monitor the activities of direct reports for potential antitrust violations, and to escalate concerns to the CCO or legal department promptly.

5.4 Training Records

Comprehensive training records shall be maintained by the compliance department for each training session conducted under the Enhanced Program. These records shall include, at a minimum:

• The date, time, and location of the training session;

• A copy of the training materials used;

• A complete attendance roster, including the name, title, and business unit of each attendee;

• Completion certifications signed by each attendee confirming participation and comprehension;

• Results of any knowledge-assessment components (quizzes, exercise evaluations, etc.); and

• Documentation of any follow-up actions taken with respect to attendees who failed to complete required training or who did not demonstrate satisfactory comprehension.

Training completion rates shall be tracked by business unit and shall be reported quarterly to the CCO and annually to the Board Compliance Committee. Any business unit with a training completion rate below 95% shall be required to implement remedial measures, including supplemental training sessions and management accountability reviews.

Section 6: Reporting, Investigations, and Discipline

6.1 Confidential Reporting Mechanism (Hotline)

TMC shall implement a confidential, anonymous reporting mechanism (the "Hotline") that is available to all employees worldwide, twenty-four hours per day, seven days per week, three hundred sixty-five days per year, in multiple languages (including, at a minimum, English, French, Portuguese, and Spanish). The Hotline shall be fully operational within forty-five (45) days of the adoption of the Enhanced Program.

The Hotline shall be operated by an independent, third-party service provider that is not affiliated with TMC, its management, or its counsel. The use of an independent third-party operator is designed to maximize employee confidence in the confidentiality and anonymity of the reporting process, and to ensure that reports are received and initially processed by personnel who are independent of the Company's management structure.

Reports to the Hotline may be submitted through multiple channels, including a dedicated telephone number, a secure web portal, and a dedicated email address. All reports shall be received by the third-party operator, assigned a unique tracking number, and forwarded to the CCO for investigation. Reporters who wish to remain anonymous shall be able to do so, and shall be able to track the status of their reports through the secure web portal using their assigned tracking number.

TMC shall publicize the Hotline through multiple channels, including prominently displayed posters in all TMC offices, mine sites, and processing facilities; prominent placement on the Company's intranet; inclusion in all training materials and compliance communications; and incorporation into the Company's employee handbook and Code of Conduct. The goal of the publicity campaign is to ensure that every TMC employee is aware of the Hotline's existence, understands how to use it, and is confident that reports will be taken seriously and investigated promptly.

Retaliation against any employee who makes a report to the Hotline in good faith is strictly prohibited, regardless of whether the report ultimately proves to be substantiated. Retaliation shall be defined broadly to include termination, demotion, suspension, reduction in compensation, reassignment, and any other adverse employment action that is motivated in whole or in part by the employee's report. Any employee or manager found to have engaged in retaliation shall be subject to discipline up to and including immediate termination of employment.

6.2 Investigation Protocol

All reports of potential antitrust violations — whether received through the Hotline, through direct reports to the CCO or legal department, through the competitor-contact log review process, through monitoring and auditing activities, or through any other channel — shall be investigated promptly, thoroughly, and impartially.

The CCO shall have primary responsibility for the conduct of investigations, with the authority to engage outside counsel or forensic consultants as necessary to ensure the quality and independence of the investigation. Investigations shall be conducted in accordance with a written investigation protocol that specifies the procedures for evidence preservation, witness interviews, document review, and findings documentation.

Investigation findings shall be documented in a written report and communicated to the Board Compliance Committee. If the investigation reveals conduct that may constitute a violation of antitrust law, the findings shall be reported to relevant governmental authorities, including the DOJ Antitrust Division, consistent with TMC's cooperation obligations and applicable legal requirements. The Board Compliance Committee shall have the authority to direct the disclosure of investigation findings to governmental authorities, even in the absence of a legal obligation to do so, if the Committee determines that disclosure is consistent with the Company's remediation and cooperation commitments.

6.3 Disciplinary Framework

TMC shall implement a clear, consistent, and rigorously enforced disciplinary framework for violations of the antitrust compliance policy and the associated protocols and procedures established under the Enhanced Program.

Violations of the antitrust compliance policy shall result in discipline commensurate with the severity of the violation, up to and including immediate termination of employment, forfeiture of unvested equity awards and bonus compensation, and referral for personal criminal prosecution. The range of available disciplinary measures shall include, in ascending order of severity: written warning; mandatory supplemental training; suspension with or without pay; demotion; forfeiture of compensation; termination of employment; and referral to law enforcement authorities.

Critically, discipline shall be consistent and shall be applied regardless of the seniority, title, revenue-generation capacity, or tenure of the employee involved. The internal investigation revealed that the Company's prior compliance culture was undermined, in part, by a perception that certain high-performing or senior employees were not subject to the same compliance expectations as other personnel. The Enhanced Program is designed to eliminate this perception through the consistent and transparent application of the disciplinary framework at all levels of the organization.

Compliance performance shall be incorporated into annual employee performance evaluations and compensation decisions for all sales and commercial personnel, including regional sales managers, business-development managers, and pricing-analytics personnel. Employees who demonstrate exemplary compliance behavior shall be recognized and rewarded, while employees who fail to meet compliance expectations shall face adverse consequences in their performance evaluations and compensation determinations.

Section 7: Monitoring, Auditing, and Continuous Improvement

7.1 Ongoing Monitoring

The CCO shall implement a comprehensive suite of continuous monitoring mechanisms designed to detect potential antitrust violations at the earliest possible stage. These mechanisms shall include, at a minimum:

(a) Communications Monitoring. Periodic review of communications with competitors, including both electronic communications (email, messaging, etc.) and in-person contact logs maintained under the Competitor-Contact Protocol. The review shall employ keyword-search methodologies, communication-pattern analysis, and targeted sampling to identify potential red flags.

(b) Pricing-Pattern Analysis. Systematic analysis of TMC's pricing data for anomalies that could indicate coordination with competitors, including unexplained parallel price movements, simultaneous price increases, suspicious bid patterns, and deviations from expected competitive pricing behavior. This analysis shall leverage and build upon the forensic-pricing methodology developed by Hargrove Forensic Advisory LLC during the course of Calderwood & Harkness's internal investigation. The CCO shall work with the pricing-analytics team and external consultants to develop and refine automated pricing-surveillance algorithms capable of flagging potential anomalies for further investigation.

(c) Trade-Association Compliance Audits. Spot-check audits of trade-association attendance reports submitted by TMC personnel, including verification of attendee lists, review of meeting agendas and minutes, and follow-up interviews with attendees to confirm the accuracy and completeness of their reports.

(d) Communications-Platform Compliance. Monitoring of employee use of encrypted messaging applications and personal devices for business communications, including periodic audits of archiving completeness and investigations of instances in which business communications appear to have been conducted through unapproved channels.

(e) Competitor-Contact Log Review. Monthly review of the centralized competitor-contact log by the CCO, with particular attention to the frequency, purpose, and subject matter of approved competitor contacts and any patterns that may indicate potential concerns.

7.2 Annual Compliance Audit

Meridian Compliance Partners LLC, or another qualified independent firm approved by the Board Compliance Committee, shall conduct a comprehensive annual compliance audit evaluating the effectiveness of the Enhanced Antitrust Compliance Program. The first annual audit shall be conducted no later than twelve (12) months from the date of program adoption.

The annual compliance audit shall evaluate, at a minimum: (i) whether the Program's policies and procedures are adequate in light of the Company's current risk profile; (ii) whether the policies and procedures are being effectively implemented and followed by Company personnel; (iii) whether training programs are reaching all required personnel and are achieving their educational objectives; (iv) whether the monitoring and auditing mechanisms are functioning as intended and are identifying potential issues; (v) whether the confidential reporting mechanism is being utilized and whether reports are being investigated promptly and thoroughly; and (vi) whether the disciplinary framework is being applied consistently and without regard to the seniority or revenue-generation capacity of the employees involved.

Audit results shall be documented in a written report and delivered to the Board Compliance Committee, the CCO, and the General Counsel. Any deficiencies identified in the audit shall be remediated within sixty (60) days of the audit's completion, and the CCO shall provide a written confirmation to the Board Compliance Committee upon completion of the remediation.

During any applicable cooperation or monitoring period, audit reports shall be made available to the DOJ Antitrust Division upon request. TMC acknowledges that providing such access is an essential component of demonstrating the Company's ongoing commitment to compliance and remediation.

7.3 Independent Compliance Monitor

TMC anticipates that any resolution agreement reached with the DOJ Antitrust Division may require the appointment of an independent compliance monitor to oversee TMC's implementation of and ongoing adherence to the Enhanced Antitrust Compliance Program. TMC is prepared to accept such a requirement and, indeed, views the appointment of an independent monitor as an additional safeguard that will reinforce the credibility and effectiveness of the Program.

TMC respectfully proposes that Meridian Compliance Partners LLC serve as the independent compliance monitor, subject to the Division's review and approval. Meridian's familiarity with TMC's operations, the specialty-minerals industry, and the design of the Enhanced Program would enable it to begin its monitoring function efficiently and without the significant ramp-up time that would be required of a firm with no prior involvement. Ho

CONFIDENTIAL — SUBJECT TO FRE 408 AND DOJ COOPERATION POLICY PROTECTIONS
CALDERWOOD & HARKNESS LLP Antitrust & Competition Practice Group 555 California Street, 40th Floor San Francisco, California 94104 Telephone: (415) 772-6000 Facsimile: (415) 772-6001
September 15, 2023
VIA HAND DELIVERY AND SECURE ELECTRONIC TRANSMISSION
Denise Kowalski, Trial Attorney 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, California 94102
Re: Torchlight Mining Corp. — Enhanced Antitrust Compliance Program Proposal Grand Jury No. GJ-22-0194 (N.D. Cal.) Matter No. 1039-00001
Dear Ms. Kowalski and Mr. Reeves:
I. COVER LETTER
A. Introduction and Purpose
On behalf of our client, Torchlight Mining Corp. ("TMC" or the "Company"), Calderwood & Harkness LLP respectfully submits this Enhanced Antitrust Compliance Program Proposal (the "Proposal") as evidence of TMC's steadfast commitment to remediation and comprehensive compliance culture reform. We understand that the Division places significant weight on whether a company has taken meaningful steps to identify the root causes of the conduct under investigation and to implement systemic changes designed to prevent recurrence. This Proposal is intended to demonstrate that TMC has done precisely that.
The Proposal was developed in conjunction with Meridian Compliance Partners LLC ("Meridian"), an independent regulatory-compliance consulting firm based in Washington, D.C. that specializes in the design, implementation, and evaluation of antitrust and competition compliance programs for multinational corporations. Calderwood & Harkness retained Meridian on August 1, 2023, and the engagement has been led by Claudia Ferraro, a former senior official of the Federal Trade Commission's Bureau of Competition and a recognized authority in the field of corporate antitrust compliance. A summary of Meridian's qualifications and Ms. Ferraro's biography is enclosed as Attachment 1 hereto.
This submission is made in the context of TMC's ongoing cooperation with the Antitrust Division's investigation, as reflected in the proceedings before the federal grand jury empaneled in the Northern District of California (Grand Jury No. GJ-22-0194). The Proposal is intended to support TMC's request for cooperation and remediation credit in connection with the resolution of this matter, consistent with the Division's publicly stated policies regarding the evaluation of corporate compliance programs and the credit afforded to companies that demonstrate genuine remediation efforts.
B. Background Context
As the Division is aware, the investigation into potential antitrust violations in the specialty-minerals sector has been ongoing for approximately nineteen months. The relevant procedural history, which we summarize here for the convenience of the record, underscores the depth and extent of TMC's cooperation with the Division's investigation.
TMC first received Grand Jury Subpoena No. GJ-22-0194-SD-003 on February 14, 2022, calling for the production of documents relating to, among other things, the pricing, sale, and distribution of high-purity feldspar, industrial talc, and rare-earth concentrates in the United States and Canada. TMC subsequently received a target letter from the Division on May 20, 2022, advising that the Company was a target of the grand jury investigation.
Since the commencement of the investigation, TMC has cooperated extensively and in good faith with the Division. Specifically:
•  TMC produced approximately 487,000 documents (comprising approximately 3.2 million pages) in response to the first grand jury subpoena (GJ-22-0194-SD-003). These productions were made on a rolling basis, with the first production delivered within forty-five days of receipt of the subpoena, and were accompanied by detailed privilege logs and production indices.
•  On June 30, 2023, TMC produced an additional approximately 68,000 documents in response to the Division's second subpoena (GJ-22-0194-SD-007), which sought supplemental materials relating to certain communications identified during the course of the investigation.
•  TMC made two employees available for voluntary proffer sessions with the Division: Sandra Chu, Director of Pricing Analytics, who participated in a proffer session on March 10, 2023; and Thomas Eriksen, Regional Sales Manager for the Western Region, who participated in a proffer session on April 22, 2023. Both sessions were conducted at the San Francisco Field Office, and TMC facilitated the employees' participation without undue restriction.
•  On February 15, 2023, Calderwood & Harkness submitted a comprehensive cooperation proffer to the Division outlining the findings of its internal investigation. That investigation encompassed the review of approximately 555,000 documents and the interviews of twenty-three (23) current and former TMC employees conducted over a period of approximately ten months.
•  On May 1, 2023, Calderwood & Harkness submitted supplemental cooperation materials to the Division, including additional documentary evidence and factual analyses identified during the continued course of the internal investigation.
The internal investigation conducted by Calderwood & Harkness identified a number of significant deficiencies in the Company's existing antitrust compliance program, which had been originally adopted in approximately 2014. Among the most critical deficiencies identified were the following: (i) no annual antitrust training had been conducted since approximately 2018, a gap of nearly four years during which the conduct under investigation is believed to have occurred; (ii) the Company maintained no monitoring protocols or oversight mechanisms for trade-association interactions, including interactions at the North American Specialty Minerals Council ("NASMC") quarterly conferences, which the investigation identified as a primary venue for potentially unlawful competitor contacts; and (iii) the Company maintained no audit procedures, logging requirements, or tracking mechanisms for contacts between TMC personnel and competitor personnel. A detailed timeline of TMC's cooperation efforts is enclosed as Attachment 2.
C. Scope of the Proposal
The Enhanced Antitrust Compliance Program Proposal addresses all of the elements identified in the DOJ Antitrust Division's published guidance on the evaluation of compliance programs, including the criteria set forth in the Division's Evaluation of Corporate Compliance Programs framework, as updated. The Proposal is designed to be comprehensive, addressing governance and leadership commitment, risk assessment, policies and procedures, training and education, confidential reporting mechanisms, investigation and disciplinary protocols, monitoring and auditing, and third-party and acquisition due diligence.
While the Proposal applies enterprise-wide to all of TMC's global operations — which span fourteen mines across Canada, the United States, Brazil, and Australia, and six downstream chemical-processing facilities — particular emphasis has been placed on the U.S. Specialty Minerals Division. That division, which generated approximately USD 687 million in revenue in fiscal year 2021 (representing approximately 20% of TMC's consolidated revenue), is the operational unit at the center of the Division's investigation and is the area in which the most significant compliance deficiencies were identified during the internal investigation.
The Proposal has been designed to be implementable within ninety (90) days of approval by the Division, with certain technology-related components achievable within one hundred twenty (120) days. It is intended to serve as the basis for any compliance program obligations that may be included in a potential resolution agreement between TMC and the Division, and TMC is prepared to commit to the Proposal's terms as binding obligations in any such agreement.
D. Request
TMC respectfully requests that the Division consider this Proposal as a significant remediation step in evaluating the appropriate level of cooperation and remediation credit to be afforded to TMC in connection with the resolution of this matter. The Proposal reflects not merely a paper commitment to compliance, but a fundamental restructuring of TMC's governance, oversight, and operational controls designed to ensure that the deficiencies that permitted the investigated conduct cannot recur.
TMC remains available, through undersigned counsel and through Meridian Compliance Partners, to discuss any modifications, enhancements, or additional measures that the Division may suggest. We are committed to working collaboratively with the Division to ensure that the compliance program meets the Division's expectations in all respects.
II. ENHANCED ANTITRUST COMPLIANCE PROGRAM PROPOSAL
TORCHLIGHT MINING CORP. ENHANCED ANTITRUST COMPLIANCE PROGRAM PROPOSAL
Prepared by Meridian Compliance Partners LLC in conjunction with Calderwood & Harkness LLP
September 15, 2023
Section 1: Executive Summary
1.1 Overview.  Torchlight Mining Corp. ("TMC" or the "Company") is a corporation organized under the Canada Business Corporations Act (CBCA Corporation No. 7841526-1), with its registered office located at 200 Bay Street, Suite 3400, Toronto, Ontario M5J 2J2, Canada. TMC's principal U.S. operations are conducted through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc., a Nevada corporation (Entity No. NV20160438721), with its principal office located at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117.
TMC is a publicly listed company, with shares traded on the Toronto Stock Exchange (TSX: TRCL) and the New York Stock Exchange (NYSE: TMC). For the fiscal year ended December 31, 2021, TMC reported consolidated revenue of CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates), and earnings before interest, taxes, depreciation, and amortization ("EBITDA") of CAD 812 million. The Company employs approximately 8,200 personnel globally across its mining, processing, and corporate operations.
TMC operates fourteen (14) mines across four countries — Canada, the United States, Brazil, and Australia — and six (6) downstream chemical-processing facilities that produce refined specialty-mineral products for industrial, construction, and technology-sector customers. The Company's product portfolio includes high-purity feldspar, industrial talc, rare-earth concentrates, silica, and various mineral-derived chemical compounds.
The U.S. Specialty Minerals Division — the division at the center of the Department of Justice Antitrust Division's ongoing investigation — constitutes a significant component of TMC's overall operations. In fiscal year 2021, the U.S. Specialty Minerals Division generated approximately USD 687 million in revenue, representing approximately 20% of TMC's consolidated revenue. The division maintains sales offices in Reno, Nevada; Houston, Texas; and Charlotte, North Carolina, and operates two processing facilities in Nevada and one in Georgia. While the Enhanced Antitrust Compliance Program described in this Proposal applies enterprise-wide, the U.S. Specialty Minerals Division is the primary focus of the enhanced compliance measures detailed herein.
1.2 Objectives of the Enhanced Program
The Enhanced Antitrust Compliance Program (the "Program" or the "Enhanced Program") has been designed to achieve four principal objectives:
First, the Program is designed to prevent the recurrence of the types of conduct that are the subject of the Division's investigation. As the Division is aware, the investigation concerns allegations of price-fixing, market allocation, and bid-rigging in the specialty-minerals sector, with a particular focus on the markets for high-purity feldspar, industrial talc, and rare-earth concentrates. The Program directly addresses the specific mechanisms, channels, and organizational dynamics through which the investigated conduct is alleged to have occurred, including unmonitored trade-association interactions, the use of encrypted messaging platforms, and the concentration of pricing authority in a single individual.
Second, the Program is designed to embed a culture of antitrust compliance at all levels of the organization, from the Board of Directors through senior management and down to front-line sales and commercial personnel. TMC recognizes that a compliance program is only as effective as the commitment of the people who are required to adhere to it, and accordingly the Program places significant emphasis on leadership accountability, "tone from the top," and the integration of compliance expectations into performance evaluations and compensation decisions.
Third, the Program is designed to ensure timely detection of potential antitrust violations through robust monitoring, auditing, and reporting mechanisms. The internal investigation revealed that the Company's prior compliance program lacked the monitoring infrastructure necessary to identify warning signs of anticompetitive conduct. The Enhanced Program addresses this deficiency through continuous monitoring technologies, periodic audits, a confidential reporting hotline, and systematic review of competitor contacts and pricing patterns.
Fourth, the Program is designed to demonstrate to the Department of Justice that TMC has taken meaningful remedial steps that go beyond the minimum required by law or regulation. TMC understands that the Division evaluates not merely whether a company has a compliance program on paper, but whether that program is adequately designed, effectively implemented, and genuinely resourced. The measures described in this Proposal are intended to satisfy each of those criteria.
1.3 Development of the Program
This Enhanced Antitrust Compliance Program was developed by Meridian Compliance Partners LLC ("Meridian"), an independent regulatory-compliance consulting firm headquartered at 1100 Connecticut Avenue NW, Suite 730, Washington, DC 20036. The engagement was led by Claudia Ferraro, a former senior official of the Federal Trade Commission's Bureau of Competition, who brings more than twenty-five years of experience in antitrust enforcement and compliance program design. Meridian was retained by Calderwood & Harkness LLP on August 1, 2023, and has worked in close coordination with Calderwood & Harkness and with TMC's in-house legal and compliance teams to develop the Proposal.
The Program is informed by the findings of Calderwood & Harkness's internal investigation, the results of which were presented to TMC's Board of Directors on January 20, 2023. That investigation identified specific compliance gaps that created the organizational conditions under which the investigated conduct was able to occur. Among the most significant findings were the absence of antitrust training for nearly four years, the lack of monitoring or oversight of trade-association interactions, the concentration of pricing authority in a single senior executive (former Vice President of U.S. Specialty Minerals Sales Gavin Holt), and the use of unmonitored encrypted messaging platforms for communications with competitor personnel. The Enhanced Program has been specifically designed to address each of these identified deficiencies.
In addition, the Program has been benchmarked against the DOJ Antitrust Division's published guidance on the evaluation of corporate compliance programs, including the Division's publicly available Evaluation of Corporate Compliance Programs framework and related speeches and policy statements by Division leadership. The Program also incorporates best practices drawn from recent corporate compliance program evaluations in the mining, specialty-chemicals, and industrial-products industries, as well as guidance from international competition authorities, including the Canadian Competition Bureau and the Australian Competition and Consumer Commission.
Section 2: Governance and Leadership Commitment
2.1 Board-Level Oversight
TMC's Board of Directors (currently chaired by Margaret Caldwell) shall establish a standing Compliance Committee of the Board (the "Board Compliance Committee"), which shall operate as a separate and distinct committee from the existing Audit Committee (currently chaired by Janet Moreau-Shaw). The creation of a dedicated Board Compliance Committee reflects the Board's recognition that antitrust compliance requires focused, specialized oversight that cannot be adequately addressed as a subsidiary function of the Audit Committee's broader financial-oversight mandate.
The Board Compliance Committee shall be composed of no fewer than three (3) independent, non-executive directors, at least one of whom shall have demonstrable experience in regulatory compliance, antitrust law, or corporate governance. The Board Compliance Committee shall be governed by a written charter that sets forth its authority, responsibilities, and operating procedures, and such charter shall be adopted concurrently with the Board resolution endorsing the Enhanced Program.
The Board Compliance Committee shall receive quarterly reports from the Chief Compliance Officer (as described in Section 2.3 below) and shall have the authority to direct compliance resources, commission investigations, and mandate policy changes as it deems appropriate. The Committee shall also receive and review the results of all annual risk assessments and compliance audits conducted pursuant to this Program, and shall have the authority to require supplemental assessments or audits as circumstances warrant.
As a foundational step, the Board of Directors shall adopt a formal resolution endorsing the Enhanced Antitrust Compliance Program and committing to its full implementation and funding. This resolution shall be adopted within thirty (30) days of the Division's approval of this Proposal (or such other date as may be agreed upon) and shall be communicated to all TMC employees in writing. The resolution shall expressly affirm the Board's commitment to a zero-tolerance policy with respect to antitrust violations and shall authorize the allocation of all resources necessary for the Program's implementation and ongoing operation.
2.2 Senior Management Accountability
The Division's guidance on the evaluation of corporate compliance programs emphasizes the importance of senior management commitment, often referred to as "tone from the top." TMC recognizes that a compliance program, however well-designed on paper, will be ineffective unless the Company's most senior leaders actively champion and model compliance behavior.
Accordingly, TMC's Chief Executive Officer, Søren Dalmqvist, and its General Counsel, Priya Anand, shall co-sign annual compliance certifications attesting to the Company's maintenance of and adherence to the Enhanced Antitrust Compliance Program. These certifications, described in greater detail in Section 9 below, shall require Mr. Dalmqvist and Ms. Anand to affirm, under penalty of personal accountability, that the Program has been maintained in full force and effect, that all required training has been delivered, and that all known or suspected violations have been promptly investigated and, where warranted, reported to governmental authorities.
In addition, the CEO shall communicate the Company's zero-tolerance antitrust compliance policy in annual messages distributed to all TMC employees worldwide. These messages shall be disseminated through multiple channels, including company-wide email, the corporate intranet, and town-hall meetings conducted at each of the Company's principal operating locations. The CEO's commitment to antitrust compliance shall also be reflected in TMC's public filings, including its annual report and proxy statement, which shall include a discussion of the Company's antitrust compliance program and the resources devoted to it.
Senior management compensation structures shall incorporate compliance-related performance metrics. Specifically, a meaningful portion of the annual bonus calculations for the CEO, the General Counsel, division presidents, and regional sales managers shall be tied to compliance performance, including completion of required training, adherence to competitor-contact protocols, and the absence of compliance violations within their respective areas of responsibility.
2.3 Chief Compliance Officer
TMC shall appoint an independent Chief Compliance Officer ("CCO") who shall serve as the central figure responsible for the day-to-day administration, implementation, and enforcement of the Enhanced Antitrust Compliance Program. The CCO position shall be a new, full-time role within the organization, and shall not be filled by any individual currently serving in a commercial, sales, or business-development leadership role. This structural requirement is designed to ensure the CCO's independence from the revenue-generating functions of the Company that are the focus of the Enhanced Program.
The CCO shall report directly to the Board Compliance Committee on all compliance-related matters, with a dotted-line reporting relationship to the General Counsel for purposes of administrative coordination and legal privilege management. This dual-reporting structure ensures that the CCO has a direct channel to the Board and is not dependent on the General Counsel or other members of senior management for access to the Board or for the resources necessary to fulfill the compliance function. The CCO shall have the right to request and receive time on the Board Compliance Committee's agenda at any regular or special meeting, and shall have the right to communicate directly with the Board Compliance Committee chair on an urgent basis without prior approval from the CEO or General Counsel.
The CCO shall have the following authorities and resources:
(a) Full and unrestricted access to all relevant Company records, personnel, data, and systems, including but not limited to email systems, document management systems, pricing databases, customer relationship management platforms, and communications archives;
(b) A dedicated compliance budget, the amount of which shall be approved annually by the Board Compliance Committee in consultation with the CCO, and which shall be sufficient to fund the compliance team, training programs, technology investments, third-party audit fees, and other program components;
(c) The authority to hire, direct, and manage a compliance team of sufficient size and expertise to administer the Program effectively across all of TMC's global operations;
(d) The authority to initiate and direct investigations of suspected antitrust violations, to engage outside counsel or forensic consultants as necessary, and to report findings directly to the Board Compliance Committee;
(e) The authority to recommend disciplinary action against any employee, regardless of seniority, for violations of the antitrust compliance policy, and to escalate disagreements regarding the imposition of discipline to the Board Compliance Committee for resolution; and
(f) Protection against removal: the CCO shall not be removed from the position, demoted, or subjected to any adverse employment action without the prior approval of the Board Compliance Committee, which shall document its reasons for any such action.
The CCO shall meet the following minimum qualifications: a minimum of ten (10) years of experience in antitrust or regulatory compliance, including experience in the design, implementation, and administration of corporate compliance programs; a Juris Doctor degree or equivalent professional qualification; and preferably, experience in the mining, chemicals, or industrial-products sectors.
Section 3: Antitrust Risk Assessment
3.1 Initial Risk Assessment
Within sixty (60) days of the adoption of the Enhanced Antitrust Compliance Program, Meridian Compliance Partners LLC shall conduct a comprehensive antitrust risk assessment (the "Initial Risk Assessment") of TMC's global operations. The Initial Risk Assessment shall serve as the baseline against which the effectiveness of the Enhanced Program's controls and safeguards will be measured, and shall identify the specific areas of the Company's business that present the highest risk of antitrust violations.
The Initial Risk Assessment shall encompass the following areas:
(a) Product-Line Analysis. All product lines in which TMC competes shall be evaluated for antitrust risk, with priority given to the three product categories at the center of the Division's investigation: high-purity feldspar, industrial talc, and rare-earth concentrates. The assessment shall consider market concentration, the number and identity of competitors, the degree of product differentiation, the transparency of pricing, the frequency of customer overlap with competitors, and the history of antitrust enforcement in each product market.
(b) Geographic-Market Analysis. All geographic markets in which TMC operates shall be evaluated, with particular focus on the North American markets for specialty minerals. The assessment shall consider the competitive dynamics in each geographic market, including the presence of competitors with whom TMC has had historical contact, the existence of trade associations or industry groups that facilitate competitor interactions, and the regulatory environment in each jurisdiction.
(c) Functional Analysis. All customer-facing functions within TMC shall be assessed, including sales, pricing analytics, business development, contract administration, and customer-service operations. The assessment shall identify the specific roles and positions within each function that present the highest risk of antitrust violations, and shall evaluate the adequacy of existing controls over those roles and positions.
(d) Competitor-Interaction Analysis. All channels through which TMC personnel interact with competitor personnel shall be identified and evaluated, including trade-association participation, joint ventures, industry benchmarking activities, customer site visits, and informal social interactions. The assessment shall evaluate the specific channels through which the investigated conduct is alleged to have occurred, including in-person meetings at NASMC quarterly conferences (held at locations including Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida), communications through the VaultChat encrypted messaging platform, and phone communications with competitor personnel.
(e) Historical Analysis. The risk assessment shall incorporate the findings of Calderwood & Harkness's internal investigation and the forensic pricing analysis conducted by Hargrove Forensic Advisory LLC, and shall identify the specific organizational, structural, and cultural factors that contributed to the investigated conduct.
The Initial Risk Assessment shall result in a written report that identifies the Company's antitrust risk profile, ranks identified risks by likelihood and potential severity, and recommends specific mitigating measures for each identified risk. The report shall be delivered to the CCO, the Board Compliance Committee, and Calderwood & Harkness LLP for review.
3.2 Periodic Risk-Assessment Updates
Following the completion of the Initial Risk Assessment, risk assessments shall be updated on an annual basis and whenever there is a material change in TMC's business operations, product lines, competitive landscape, or organizational structure. Examples of material changes that would trigger an interim risk-assessment update include, without limitation, the entry into a new product market, a significant acquisition or joint venture, the appointment of new senior commercial leadership, or the receipt of information suggesting potential antitrust violations.
The results of each periodic risk assessment shall be reported to the Board Compliance Committee, the CCO, and the General Counsel, and shall be maintained in compliance records for a minimum period of ten (10) years. Risk assessments shall serve as the basis for ongoing refinement and updating of the Enhanced Program's policies, training curriculum, and monitoring protocols.
Section 4: Policies and Procedures
4.1 Antitrust Compliance Policy — Comprehensive Revision
TMC's existing antitrust compliance policy, which was originally adopted in approximately 2014 and has not been substantively updated since that time, shall be entirely replaced with a new, comprehensive Enhanced Antitrust Compliance Policy (the "Policy"). A summary of the draft Policy is enclosed as Attachment 4. The outdated 2014 policy was insufficient in several critical respects: it lacked specificity regarding the types of competitor interactions that are prohibited; it failed to address the use of electronic communications platforms; it did not establish clear reporting protocols for potential violations; and it was not tailored to the specific risks associated with TMC's participation in the specialty-minerals industry.
The new Policy shall include, at a minimum, the following provisions:
(a) A clear and unambiguous prohibition of all forms of horizontal agreements with competitors, including but not limited to price-fixing, market allocation, customer allocation, bid-rigging, and output restriction, whether express or implied, whether formal or informal, and whether entered into directly or through intermediaries;
(b) An explicit prohibition of the exchange of competitively sensitive information with competitors, whether in written, oral, or electronic form. Competitively sensitive information shall be defined to include, without limitation: current or future pricing, pricing methodologies, discounts, or rebates; costs of production, raw materials, or distribution; customer lists, customer-specific pricing, or customer allocations; bid terms, bid strategies, or bid pricing; production volumes, capacity utilization, or inventory levels; and business plans, market strategies, or expansion plans;
(c) Specific and practical guidance on interactions with competitors in all settings, including trade associations, industry conferences, trade shows, industry events, informal gatherings, social settings, and any other venue where competitor personnel may be present. The Policy shall include illustrative examples of permissible and impermissible topics of discussion, and shall instruct employees on the specific steps they must take if a conversation with a competitor turns to a competitively sensitive topic;
(d) A clear statement of the consequences of violating the Policy, including potential termination of employment, forfeiture of compensation, referral for personal criminal prosecution, and the Company's obligation to report violations to governmental authorities;
(e) A statement of the Company's commitment to protecting employees who report potential violations in good faith, including a prohibition on retaliation; and
(f) Contact information for the CCO, the legal department, and the confidential reporting hotline, to ensure that employees have ready access to guidance and reporting channels.
The Policy shall be translated into all languages necessary for distribution to TMC's global workforce, including English, French, Portuguese, and any other languages spoken by a significant portion of the Company's employees.
4.2 Competitor-Contact Protocol
In direct response to one of the most significant deficiencies identified during the internal investigation — the absence of any system for tracking, monitoring, or controlling contacts between TMC personnel and competitor personnel — TMC shall implement a comprehensive Competitor-Contact Protocol. A draft of the competitor-contact protocol form is enclosed as Attachment 5.
The Competitor-Contact Protocol shall include the following requirements:
(a) Pre-Approval Requirement. All contacts with competitors, whether in person, by telephone, by email, by text or messaging application, or through any other communication channel, shall be pre-approved in writing by the CCO or a designated member of the legal department. The pre-approval request shall identify the competitor, the individuals expected to participate, the purpose of the contact, and the topics to be discussed. Approval shall be granted only if the proposed contact serves a legitimate business purpose and does not present an undue antitrust risk.
(b) Competitor-Contact Log. A centralized competitor-contact log shall be maintained by the compliance department. For each approved contact, the log shall record the date of the contact, the names and titles of all participants, the setting in which the contact occurred, the topics discussed, and any follow-up actions taken or agreed upon. The log shall be reviewed by the CCO on a monthly basis.
(c) Reporting of Unsolicited Contacts. Employees who receive unsolicited competitively sensitive information from competitors — whether by email, telephone, in person, or through any other channel — shall be required to report such contact to the CCO or the legal department within twenty-four (24) hours. The report shall describe the nature of the information received, the identity of the competitor representative who provided it, and the circumstances under which it was received.
(d) Investigation of Deviations. Any departure from the Competitor-Contact Protocol — including failure to obtain pre-approval, failure to log an approved contact, or failure to report an unsolicited contact — shall trigger an immediate investigation by the CCO and/or the legal department to determine whether a potential antitrust violation has occurred.
4.3 Trade-Association Interaction Guidelines
The internal investigation identified TMC's participation in the North American Specialty Minerals Council ("NASMC") as a primary risk vector for the investigated conduct. NASMC hosts quarterly conferences at various locations throughout the United States, and these conferences brought together senior commercial personnel from TMC and its principal competitors in an environment that lacked adequate antitrust safeguards. The Enhanced Program therefore includes specific, detailed guidelines governing TMC's participation in NASMC and all other trade-association events.
TMC personnel who are authorized to attend NASMC conferences or any other trade-association event shall be subject to the following requirements:
(a) Pre-Attendance Briefing. Prior to attending any trade-association event, TMC personnel shall receive a pre-attendance briefing from the CCO, a member of the legal department, or a compliance officer. The briefing shall cover the antitrust risks associated with trade-association participation, the specific topics that may and may not be discussed with competitor representatives, and the reporting obligations that apply during and after the event. A draft pre-attendance briefing template is enclosed as Attachment 6.
(b) Agenda Adherence. TMC personnel shall follow a written agenda for all formal meetings held at trade-association events. If the meeting agenda deviates into competitively sensitive topics — including pricing, costs, customer allocations, production volumes, or bid terms — the TMC representative shall (i) object to the discussion on the record, (ii) request that the discussion cease immediately, and (iii) leave the meeting if the discussion continues. The TMC representative shall promptly report any such incident to the CCO or the legal department.
(c) Post-Attendance Reporting. Within five (5) business days following the conclusion of any trade-association event, the TMC attendee shall submit a written post-attendance report to the CCO. The report shall detail all meetings attended, the persons present at each meeting, the topics discussed, any interactions with competitor representatives (whether formal or informal), and any incidents requiring reporting under the antitrust compliance policy. A draft post-attendance report form is enclosed as Attachment 6.
(d) Prohibition on Unauthorized Side Meetings. TMC personnel shall not attend informal "side meetings," dinners, social gatherings, or other unscheduled events with competitor representatives at trade-association events without prior written approval from the CCO or the legal department. This requirement is directly responsive to the investigation's findings that certain contacts between TMC and competitor personnel occurred outside the formal conference program at NASMC events.
(e) Evaluation of Continued Membership. TMC shall conduct a formal evaluation of whether continued membership in NASMC and similar trade associations is appropriate, considering the antitrust risks associated with participation and the adequacy of each association's own antitrust compliance safeguards. TMC shall condition ongoing participation in any trade association on the existence of adequate association-level antitrust compliance safeguards, including the presence of antitrust counsel at meetings, the distribution of written antitrust guidelines to all attendees, and the maintenance of detailed minutes.
4.4 Pricing Authority and Approval
The internal investigation revealed that a significant contributing factor to the investigated conduct was the concentration of pricing authority for the U.S. Specialty Minerals Division in a single individual — specifically, former Vice President of U.S. Specialty Minerals Sales Gavin Holt, who directed pricing changes to Sandra Chu (Director of Pricing Analytics) without meaningful oversight, review, or documentation. The Enhanced Program directly addresses this structural deficiency through a comprehensive restructuring of pricing authority and approval processes.
The following pricing controls shall be implemented:
(a) Prohibition on Unilateral Pricing Authority. No single individual within the U.S. Specialty Minerals Division or any other TMC business unit shall have unilateral authority to set, modify, or adjust published price lists for feldspar, talc, rare-earth concentrates, or any other product sold by TMC. This requirement is specifically designed to eliminate the dynamic under which a single executive could direct pricing changes without oversight.
(b) Dual-Approval Requirement. All pricing changes — including changes to published price lists, customer-specific pricing, volume discounts, rebates, and promotional pricing — shall require the approval of at least two (2) senior officers, at least one of whom must be outside the sales function. In addition, all pricing changes shall be reviewed by the legal or compliance function prior to implementation, with a focus on ensuring that the proposed change is supported by legitimate business justifications and is not indicative of coordination with competitors.
(c) Contemporaneous Documentation. All pricing decisions shall be documented with contemporaneous written business justifications that describe the competitive, cost, market-demand, or other legitimate factors that support the decision. These records shall be maintained in a centralized pricing-decision repository and shall be available for review by the CCO, the legal department, and external auditors.
(d) Direct Compliance Reporting Channel. Personnel in pricing-analytics roles, including the Director of Pricing Analytics position currently held by Sandra Chu, shall have a direct compliance-reporting channel to the CCO. This channel shall enable pricing-analytics personnel to report any concerns about the legitimacy or rationale of pricing directives they receive without fear of retaliation or adverse consequences from the individuals who issued the directives.
4.5 Communications Policy
The internal investigation identified the use of the VaultChat encrypted messaging platform as a channel through which TMC personnel communicated with competitor representatives outside of the Company's monitored communications systems. The use of such platforms circumvented the Company's document-retention policies and made it significantly more difficult to detect and investigate the investigated conduct. The Enhanced Program includes a comprehensive communications policy designed to eliminate this risk.
(a) Prohibition on Unapproved Encrypted Messaging. The use of encrypted messaging applications, including but not limited to VaultChat, Signal, Kestrel Data Systems, Meridian Services Inc., and similar platforms, for business communications with external parties is prohibited unless the platform appears on a Company-approved list. Platforms shall be approved only if they meet specified archiving, retention, and monitoring requirements that ensure all business communications conducted through the platform are captured and available for compliance review.
(b) Company-Controlled Channels. All business communications with competitors, customers, suppliers, trade-association representatives, and other external parties must be conducted through Company-controlled communication channels that are subject to monitoring and retention, including Company email systems, Company-issued mobile devices, and approved collaboration platforms.
(c) Bring-Your-Own-Device (BYOD) Policy. The use of personal devices for business communications shall be governed by a comprehensive BYOD policy that includes archiving requirements. Employees who use personal devices for business communications shall be required to install Company-approved archiving software on such devices, and shall consent to the Company's right to collect and review business communications stored on personal devices in connection with investigations, audits, or litigation.
(d) Enforcement and Monitoring. The CCO and the information-technology department shall jointly implement mechanisms for monitoring compliance with the communications policy, including periodic audits of employee device usage, reviews of archiving completeness, and investigations of any instances in which business communications appear to have been conducted through unapproved channels.
Section 5: Training and Education
5.1 Mandatory Annual Antitrust Training
All TMC employees worldwide, regardless of position, function, or geographic location, shall receive mandatory annual antitrust compliance training. The training program shall be designed by Meridian Compliance Partners in consultation with the CCO and Calderwood & Harkness, and shall be updated annually to reflect changes in antitrust law, enforcement trends, and the Company's evolving risk profile.
The first enterprise-wide training session shall be delivered within sixty (60) days of the adoption of the Enhanced Program, and training shall be repeated on an annual basis thereafter. This requirement directly addresses one of the most significant compliance deficiencies identified during the internal investigation: no annual antitrust training had been conducted at TMC since approximately 2018, a gap of nearly four years during which the conduct under investigation is believed to have occurred. The absence of training left employees without an understanding of the legal boundaries governing their interactions with competitors and without awareness of the Company's expectations regarding antitrust compliance.
The training content shall include, at a minimum, the following topics:
(a) An overview of the principal antitrust statutes applicable to TMC's operations, including Section 1 of the Sherman Act (15 U.S.C. § 1), the applicable provisions of the Canadian Competition Act (R.S.C. 1985, c. C-34), and any other competition laws applicable in jurisdictions where TMC operates;
(b) A detailed discussion of per se antitrust violations, including price-fixing, market allocation, customer allocation, bid-rigging, and output restriction, with specific examples drawn from recent enforcement actions in the mining, chemicals, and industrial-products industries;
(c) Practical instruction on the recognition of "red flags" in competitor interactions, including requests to discuss pricing, proposals to divide territories or customers, invitations to share competitively sensitive information, and the use of coded language or euphemisms;
(d) Real-world case studies, including scenarios drawn from the conduct under investigation (anonymized as appropriate to protect legally privileged information and pending-investigation sensitivities), that illustrate how antitrust violations can arise in the specific commercial contexts in which TMC employees operate;
(e) A comprehensive explanation of employees' reporting obligations, the availability and operation of the confidential reporting hotline, and the protections afforded to whistleblowers under TMC's policies and applicable law;
(f) A discussion of the personal and corporate consequences of antitrust violations, including personal criminal liability (imprisonment of up to ten years per violation under the Sherman Act), substantial criminal fines, civil treble-damages exposure, and reputational harm to the Company and its employees.
Training shall be delivered through a combination of live, instructor-led sessions (conducted in person or via videoconference) and interactive online modules. All training sessions shall include knowledge-assessment components, such as quizzes or scenario-based exercises, to ensure comprehension and retention.
5.2 Enhanced Training for High-Risk Personnel
In addition to the mandatory annual training provided to all employees, personnel identified as occupying "high-risk" roles shall receive additional, more intensive antitrust training on a semi-annual basis (i.e., twice per year). High-risk personnel shall include, without limitation:
•  All personnel in the U.S. Specialty Minerals Division, regardless of function;
•  All regional sales managers, including the Western Region, Eastern Region, Central Region, and International positions;
•  All pricing analysts and pricing-analytics directors;
•  All business-development personnel;
•  All personnel who attend trade-association events, industry conferences, or other forums where competitor representatives are likely to be present; and
•  Any other personnel identified as high-risk through the periodic risk-assessment process.
Enhanced training for high-risk personnel shall include scenario-based exercises designed to simulate real-world situations that these employees may encounter, including trade-association interactions, customer-allocation requests from competitors, receipt of unsolicited competitively sensitive information, and requests to use non-Company communication channels. These exercises shall be designed to be interactive and to require participants to identify the appropriate course of action in response to each scenario.
5.3 New-Hire and Promotion Training
All new hires in sales, marketing, pricing, business development, and other customer-facing or commercially sensitive roles shall be required to complete antitrust compliance training within thirty (30) days of their start date. This training shall cover the full scope of the annual training curriculum and shall additionally include an orientation to the Company's specific antitrust compliance policies, protocols, and reporting mechanisms.
All employees promoted to management positions — including but not limited to regional sales managers, division directors, vice presidents, and senior vice presidents — shall receive supplemental antitrust training within thirty (30) days of their promotion. This supplemental training shall address the enhanced responsibilities of managers with respect to compliance oversight, including the obligation to model compliance behavior, to monitor the activities of direct reports for potential antitrust violations, and to escalate concerns to the CCO or legal department promptly.
5.4 Training Records
Comprehensive training records shall be maintained by the compliance department for each training session conducted under the Enhanced Program. These records shall include, at a minimum:
•  The date, time, and location of the training session;
•  A copy of the training materials used;
•  A complete attendance roster, including the name, title, and business unit of each attendee;
•  Completion certifications signed by each attendee confirming participation and comprehension;
•  Results of any knowledge-assessment components (quizzes, exercise evaluations, etc.); and
•  Documentation of any follow-up actions taken with respect to attendees who failed to complete required training or who did not demonstrate satisfactory comprehension.
Training completion rates shall be tracked by business unit and shall be reported quarterly to the CCO and annually to the Board Compliance Committee. Any business unit with a training completion rate below 95% shall be required to implement remedial measures, including supplemental training sessions and management accountability reviews.
Section 6: Reporting, Investigations, and Discipline
6.1 Confidential Reporting Mechanism (Hotline)
TMC shall implement a confidential, anonymous reporting mechanism (the "Hotline") that is available to all employees worldwide, twenty-four hours per day, seven days per week, three hundred sixty-five days per year, in multiple languages (including, at a minimum, English, French, Portuguese, and Spanish). The Hotline shall be fully operational within forty-five (45) days of the adoption of the Enhanced Program.
The Hotline shall be operated by an independent, third-party service provider that is not affiliated with TMC, its management, or its counsel. The use of an independent third-party operator is designed to maximize employee confidence in the confidentiality and anonymity of the reporting process, and to ensure that reports are received and initially processed by personnel who are independent of the Company's management structure.
Reports to the Hotline may be submitted through multiple channels, including a dedicated telephone number, a secure web portal, and a dedicated email address. All reports shall be received by the third-party operator, assigned a unique tracking number, and forwarded to the CCO for investigation. Reporters who wish to remain anonymous shall be able to do so, and shall be able to track the status of their reports through the secure web portal using their assigned tracking number.
TMC shall publicize the Hotline through multiple channels, including prominently displayed posters in all TMC offices, mine sites, and processing facilities; prominent placement on the Company's intranet; inclusion in all training materials and compliance communications; and incorporation into the Company's employee handbook and Code of Conduct. The goal of the publicity campaign is to ensure that every TMC employee is aware of the Hotline's existence, understands how to use it, and is confident that reports will be taken seriously and investigated promptly.
Retaliation against any employee who makes a report to the Hotline in good faith is strictly prohibited, regardless of whether the report ultimately proves to be substantiated. Retaliation shall be defined broadly to include termination, demotion, suspension, reduction in compensation, reassignment, and any other adverse employment action that is motivated in whole or in part by the employee's report. Any employee or manager found to have engaged in retaliation shall be subject to discipline up to and including immediate termination of employment.
6.2 Investigation Protocol
All reports of potential antitrust violations — whether received through the Hotline, through direct reports to the CCO or legal department, through the competitor-contact log review process, through monitoring and auditing activities, or through any other channel — shall be investigated promptly, thoroughly, and impartially.
The CCO shall have primary responsibility for the conduct of investigations, with the authority to engage outside counsel or forensic consultants as necessary to ensure the quality and independence of the investigation. Investigations shall be conducted in accordance with a written investigation protocol that specifies the procedures for evidence preservation, witness interviews, document review, and findings documentation.
Investigation findings shall be documented in a written report and communicated to the Board Compliance Committee. If the investigation reveals conduct that may constitute a violation of antitrust law, the findings shall be reported to relevant governmental authorities, including the DOJ Antitrust Division, consistent with TMC's cooperation obligations and applicable legal requirements. The Board Compliance Committee shall have the authority to direct the disclosure of investigation findings to governmental authorities, even in the absence of a legal obligation to do so, if the Committee determines that disclosure is consistent with the Company's remediation and cooperation commitments.
6.3 Disciplinary Framework
TMC shall implement a clear, consistent, and rigorously enforced disciplinary framework for violations of the antitrust compliance policy and the associated protocols and procedures established under the Enhanced Program.
Violations of the antitrust compliance policy shall result in discipline commensurate with the severity of the violation, up to and including immediate termination of employment, forfeiture of unvested equity awards and bonus compensation, and referral for personal criminal prosecution. The range of available disciplinary measures shall include, in ascending order of severity: written warning; mandatory supplemental training; suspension with or without pay; demotion; forfeiture of compensation; termination of employment; and referral to law enforcement authorities.
Critically, discipline shall be consistent and shall be applied regardless of the seniority, title, revenue-generation capacity, or tenure of the employee involved. The internal investigation revealed that the Company's prior compliance culture was undermined, in part, by a perception that certain high-performing or senior employees were not subject to the same compliance expectations as other personnel. The Enhanced Program is designed to eliminate this perception through the consistent and transparent application of the disciplinary framework at all levels of the organization.
Compliance performance shall be incorporated into annual employee performance evaluations and compensation decisions for all sales and commercial personnel, including regional sales managers, business-development managers, and pricing-analytics personnel. Employees who demonstrate exemplary compliance behavior shall be recognized and rewarded, while employees who fail to meet compliance expectations shall face adverse consequences in their performance evaluations and compensation determinations.
Section 7: Monitoring, Auditing, and Continuous Improvement
7.1 Ongoing Monitoring
The CCO shall implement a comprehensive suite of continuous monitoring mechanisms designed to detect potential antitrust violations at the earliest possible stage. These mechanisms shall include, at a minimum:
(a) Communications Monitoring. Periodic review of communications with competitors, including both electronic communications (email, messaging, etc.) and in-person contact logs maintained under the Competitor-Contact Protocol. The review shall employ keyword-search methodologies, communication-pattern analysis, and targeted sampling to identify potential red flags.
(b) Pricing-Pattern Analysis. Systematic analysis of TMC's pricing data for anomalies that could indicate coordination with competitors, including unexplained parallel price movements, simultaneous price increases, suspicious bid patterns, and deviations from expected competitive pricing behavior. This analysis shall leverage and build upon the forensic-pricing methodology developed by Hargrove Forensic Advisory LLC during the course of Calderwood & Harkness's internal investigation. The CCO shall work with the pricing-analytics team and external consultants to develop and refine automated pricing-surveillance algorithms capable of flagging potential anomalies for further investigation.
(c) Trade-Association Compliance Audits. Spot-check audits of trade-association attendance reports submitted by TMC personnel, including verification of attendee lists, review of meeting agendas and minutes, and follow-up interviews with attendees to confirm the accuracy and completeness of their reports.
(d) Communications-Platform Compliance. Monitoring of employee use of encrypted messaging applications and personal devices for business communications, including periodic audits of archiving completeness and investigations of instances in which business communications appear to have been conducted through unapproved channels.
(e) Competitor-Contact Log Review. Monthly review of the centralized competitor-contact log by the CCO, with particular attention to the frequency, purpose, and subject matter of approved competitor contacts and any patterns that may indicate potential concerns.
7.2 Annual Compliance Audit
Meridian Compliance Partners LLC, or another qualified independent firm approved by the Board Compliance Committee, shall conduct a comprehensive annual compliance audit evaluating the effectiveness of the Enhanced Antitrust Compliance Program. The first annual audit shall be conducted no later than twelve (12) months from the date of program adoption.
The annual compliance audit shall evaluate, at a minimum: (i) whether the Program's policies and procedures are adequate in light of the Company's current risk profile; (ii) whether the policies and procedures are being effectively implemented and followed by Company personnel; (iii) whether training programs are reaching all required personnel and are achieving their educational objectives; (iv) whether the monitoring and auditing mechanisms are functioning as intended and are identifying potential issues; (v) whether the confidential reporting mechanism is being utilized and whether reports are being investigated promptly and thoroughly; and (vi) whether the disciplinary framework is being applied consistently and without regard to the seniority or revenue-generation capacity of the employees involved.
Audit results shall be documented in a written report and delivered to the Board Compliance Committee, the CCO, and the General Counsel. Any deficiencies identified in the audit shall be remediated within sixty (60) days of the audit's completion, and the CCO shall provide a written confirmation to the Board Compliance Committee upon completion of the remediation.
During any applicable cooperation or monitoring period, audit reports shall be made available to the DOJ Antitrust Division upon request. TMC acknowledges that providing such access is an essential component of demonstrating the Company's ongoing commitment to compliance and remediation.
7.3 Independent Compliance Monitor
TMC anticipates that any resolution agreement reached with the DOJ Antitrust Division may require the appointment of an independent compliance monitor to oversee TMC's implementation of and ongoing adherence to the Enhanced Antitrust Compliance Program. TMC is prepared to accept such a requirement and, indeed, views the appointment of an independent monitor as an additional safeguard that will reinforce the credibility and effectiveness of the Program.
TMC respectfully proposes that Meridian Compliance Partners LLC serve as the independent compliance monitor, subject to the Division's review and approval. Meridian's familiarity with TMC's operations, the specialty-minerals industry, and the design of the Enhanced Program would enable it to begin its monitoring function efficiently and without the significant ramp-up time that would be required of a firm with no prior involvement. Ho

CONFIDENTIAL — SUBJECT TO FRE 408 AND DOJ COOPERATION POLICY PROTECTIONS

VIA HAND DELIVERY AND SECURE ELECTRONIC TRANSMISSION

I. COVER LETTER

II. ENHANCED ANTITRUST COMPLIANCE PROGRAM PROPOSAL

TORCHLIGHT MINING CORP. ENHANCED ANTITRUST COMPLIANCE PROGRAM PROPOSAL

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