1039-00001 · Torchlight Mining Corp · documents

letter-doj-monitor-proposal.docx DOCUMENT Litigation

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PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 555 California Street, 40th Floor San Francisco, California 94104

Telephone: (415) 772-3000 Facsimile: (415) 772-3001 www.calderwoodharkness.com

April 20, 2024

VIA ELECTRONIC MAIL AND FIRST-CLASS MAIL

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

Re: Proposed Independent Compliance Monitor — Torchlight Mining Corp. / Non-Prosecution Agreement (DOJ Reference No. ATR-SF-2024-00312); Grand Jury No. GJ-22-0194, N.D. Cal.

Calderwood & Harkness Matter No.: 1039-00001

Dear Ms. Kowalski:

cc: Marcus Reeves, Senior Trial Attorney, Antitrust Division, San Francisco Field Office, U.S. Department of Justice, 450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102; Julia Stafford-Hayes, Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice, 950 Pennsylvania Avenue NW, Washington, D.C. 20530

I. Introduction

This firm serves as counsel to Torchlight Mining Corp. ("TMC") in connection with the above-referenced matter. We write in reference to the Non-Prosecution Agreement between TMC and the United States Department of Justice, Antitrust Division (the "Division"), the principal terms of which were agreed in principle on April 8, 2024, with formal execution anticipated in early May 2024 (the "NPA"). As you are aware, Section 9 of the NPA requires TMC to retain, at its own expense, an independent compliance monitor approved by the Division, to serve for a period of two years from the date of NPA execution. The independent compliance monitor is charged with assessing, overseeing, and reporting on TMC's implementation of and adherence to the Enhanced Antitrust Compliance Program described in Appendix A to the NPA.

The purpose of this letter is to formally propose Meridian Compliance Partners LLC ("Meridian") as the independent compliance monitor, to set forth the proposed scope of work, reporting schedule, fee structure, and term of the monitorship for the Division's review and approval, and to respectfully request that the Division confirm its approval of Meridian as the independent compliance monitor. As discussed on our call with you and Mr. Reeves on March 26, 2024, Meridian was previously identified to the Division as a potential monitor candidate, and the Division indicated its preliminary pre-approval of Meridian as a suitable candidate, subject to receipt and review of a formal proposal outlining the terms and structure of the proposed engagement. This letter is submitted in fulfillment of that request.

We have also enclosed, for the Division's reference, the supporting materials identified in the enclosure list at the conclusion of this letter, including Meridian's detailed credentials, a proposed fee schedule, and a draft monitor engagement agreement for the Division's review and comment.

II. Background

A. The Investigation

This matter arises from a grand jury investigation initiated by the Division through Grand Jury No. GJ-22-0194, empaneled in the United States District Court for the Northern District of California, into suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The investigation has focused on suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, encompassing markets for high-purity feldspar, industrial talc, and rare-earth concentrates. The Division's investigation examined alleged anticompetitive agreements among certain producers and distributors of these minerals, including TMC and certain of its competitors, during a period spanning approximately 2017 through 2022.

B. Torchlight Mining Corp.

TMC 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 conducts its U.S. operations through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc. ("TMC-US"), a Nevada corporation (Nevada Entity No. NV20160438721), with its principal place of business at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117. TMC is a publicly traded company, listed on the Toronto Stock Exchange under the ticker symbol "TRCL" and on the New York Stock Exchange under the ticker symbol "TMC."

For its fiscal year ended December 31, 2021, TMC reported consolidated revenue of approximately CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates). TMC's U.S. Specialty Minerals Division — the business unit at the center of the Division's investigation — generated approximately USD 687 million in revenue for that same fiscal year. The U.S. Specialty Minerals Division is headquartered in Reno, Nevada, and operates mining, processing, and distribution facilities in Nevada, Arizona, South Carolina, and Georgia.

C. The Non-Prosecution Agreement and Enhanced Compliance Program

Under the terms of the NPA agreed in principle on April 8, 2024, TMC has agreed, among other things, to implement and maintain an Enhanced Antitrust Compliance Program, the detailed requirements of which are set forth in Appendix A to the NPA. The Enhanced Antitrust Compliance Program addresses, among other matters, the appointment of an independent Chief Compliance Officer with a direct reporting line to the TMC Board of Directors, mandatory annual antitrust compliance training for specified categories of employees, robust competitor-contact protocols, trade-association interaction guidelines and monitoring, an anonymous compliance hotline, internal audit procedures specific to antitrust compliance, and annual compliance certifications by TMC's Chief Executive Officer and General Counsel. The NPA further requires, under Section 9, that TMC retain an independent compliance monitor, approved by the Division, to oversee and assess TMC's implementation of these requirements for a period of two years from the date of NPA execution.

D. Meridian's Prior Involvement

Calderwood & Harkness, on behalf of TMC, retained Meridian Compliance Partners LLC on August 1, 2023, to design and assist with the implementation of the enhanced antitrust compliance program proposal that was submitted to the Division on September 15, 2023. Over the course of this engagement, Meridian conducted an extensive assessment of TMC's existing compliance infrastructure, identified significant compliance gaps and deficiencies, and developed a comprehensive remediation plan that formed the basis for the Enhanced Antitrust Compliance Program set forth in NPA Appendix A. Meridian's familiarity with TMC's operations, organizational structure, compliance gaps, and the specific remediation measures that have been designed and are being implemented makes it uniquely qualified to serve as the independent compliance monitor during the NPA term. We address below the specific measures that will be implemented to ensure Meridian's independence in the monitor role.

III. Proposed Monitor: Meridian Compliance Partners LLC

A. Firm Overview

Meridian Compliance Partners LLC ("Meridian") is a regulatory-compliance consulting firm headquartered at 1100 Connecticut Avenue NW, Suite 730, Washington, DC 20036. Founded in 2011, Meridian specializes in antitrust and competition compliance, with particular expertise in designing, implementing, and monitoring corporate compliance programs in connection with resolutions reached with the Department of Justice Antitrust Division, the Federal Trade Commission, and their international counterparts. The firm employs approximately forty-five professionals, including former federal prosecutors, former senior Division staff, seasoned compliance consultants, and forensic data analysts, all of whom possess deep subject-matter expertise in antitrust and competition law and enforcement.

Meridian has served as an independent compliance monitor or compliance consultant in connection with multiple prior DOJ antitrust matters, including matters involving international cartel conduct in the automotive parts, chemicals, and packaged-food industries. In addition, the firm has been retained by Fortune 500 corporations and multinational enterprises to design and evaluate antitrust compliance programs in anticipation of and following government enforcement actions. A detailed summary of Meridian's relevant experience and qualifications is enclosed herewith as Enclosure B.

B. Engagement Lead

Claudia Ferraro will serve as the Engagement Lead and primary monitor, with day-to-day responsibility for the conduct and oversight of the monitorship. Ms. Ferraro is a founding partner of Meridian and has over twenty years of experience in antitrust compliance, corporate governance, and regulatory enforcement. Prior to founding Meridian, Ms. Ferraro served as a Senior Counsel in the Division's Washington Criminal II Section, where she supervised cartel investigations in the minerals, chemicals, and industrial-products sectors. She subsequently spent eight years in private practice at a major international law firm, where she counseled clients on antitrust compliance and served as an advisor to independent monitors in three Division matters.

Ms. Ferraro has served as the court-appointed independent compliance monitor in two prior DOJ antitrust resolutions and has acted as lead consultant to monitors in four additional matters. She holds a J.D. from Georgetown University Law Center, an M.B.A. from the Wharton School of the University of Pennsylvania, and is admitted to the bars of the District of Columbia, New York, and California. Her deep expertise in antitrust compliance program design, monitoring methodology, and the specific operational dynamics of the mining and specialty-minerals industry makes her exceptionally well-suited for this engagement. A detailed curriculum vitae for Ms. Ferraro is enclosed herewith as Enclosure A.

Importantly, Ms. Ferraro has led Meridian's work for TMC since August 2023, including the comprehensive compliance assessment, the design of the enhanced antitrust compliance program, and the preparation of the compliance program proposal submitted to the Division on September 15, 2023. As a result, Ms. Ferraro possesses an unparalleled understanding of TMC's organizational structure, its historic compliance deficiencies, the root causes of those deficiencies, and the specific corrective measures that have been developed and are being implemented. This institutional knowledge will enable the monitorship to commence with minimal ramp-up time and to focus immediately on substantive oversight of TMC's compliance performance.

C. Independence. We recognize that the Division's approval of a monitor candidate requires a thorough assessment of the candidate's independence. We address each relevant consideration below.

No Financial Interest. Meridian has confirmed in writing that it holds no equity, debt, or other financial interest in TMC, Torchlight Mining (U.S.) Inc., or any of their subsidiaries or affiliates. Meridian further confirms that it holds no financial interest in Ridgecrest Minerals Inc., Pinnacle Earth Resources Ltd., Cascade Chemical Supply Co., or any of their respective affiliates — each of which has been identified as a subject or target of the Division's investigation in the specialty-minerals sector.

No Personal Relationships with Persons of Interest. Meridian has confirmed that neither Ms. Ferraro nor any Meridian partner, consultant, or employee has any personal, familial, or prior professional relationship with any individual person of interest in the investigation, including, without limitation, Gavin Holt (former Senior Vice President, U.S. Specialty Minerals Division, TMC-US), Carl Edgerton (former Vice President, Sales & Marketing, U.S. Specialty Minerals Division, TMC-US), or Kevin Tsang (former Director, Strategic Pricing, U.S. Specialty Minerals Division, TMC-US).

Transition from Compliance Advisor to Independent Monitor. We acknowledge that Meridian was previously retained by Calderwood & Harkness on behalf of TMC for the compliance program design phase. We are mindful of the Division's emphasis on monitor independence and propose the following structural safeguards to ensure that Meridian's transition from compliance advisor to independent monitor preserves the integrity of the monitorship:

1. Reporting Obligations. Upon commencement of the monitorship, Meridian's reporting obligations will run directly to the Division — not to TMC, Calderwood & Harkness, or any other party. Meridian will submit all reports simultaneously to the Division and to TMC, unless the Division directs otherwise, but Meridian's primary duty of candor and loyalty will be owed to the Division and to the public interest.

2. Separate Engagement Agreement. Meridian will enter into a new, separate engagement agreement directly with TMC — at TMC's expense — under terms reviewed and approved by the Division. The engagement agreement will expressly provide that Meridian's obligations are owed to the Division and that TMC may not terminate or modify the engagement without the Division's prior written consent.

3. No Advocacy on Behalf of TMC. Meridian will not serve as TMC's advocate or consultant during the monitor term. Meridian will not advise TMC on how to respond to monitor findings or recommendations except to the extent that providing such guidance is necessary to enable TMC to remediate identified deficiencies.

4. Separate Billing and No Cross-Subsidization. All monitorship fees and expenses will be billed and accounted for separately from the prior compliance-design engagement. There will be no cross-subsidization of fees, and Meridian's monitorship compensation will not be contingent on any outcome favorable to TMC.

5. Duty of Candor. The engagement agreement will include an express duty of candor to the Division, requiring Meridian to report all material findings — including adverse findings — promptly and completely to the Division.

We believe that these structural safeguards, combined with Meridian's strong track record of independent service and Ms. Ferraro's personal reputation for integrity and objectivity, are sufficient to ensure the independence and credibility of the monitorship. We note that the Division has accepted similar transitions from compliance advisor to independent monitor in prior matters, including in cases where the advisor's institutional familiarity with the subject company was deemed to be an affirmative benefit to the effectiveness of the monitorship.

IV. Proposed Scope of Work

The proposed scope of work for the monitorship is designed to enable the monitor to carry out the specific oversight obligations set forth in Section 9 of the NPA and to provide the Division with comprehensive, reliable, and timely information regarding TMC's compliance performance throughout the monitor term. The scope of work is organized into four principal categories, as set forth below.

A. Initial Assessment (Months 1–3)

During the first three months of the monitorship, the monitor will conduct a comprehensive baseline assessment of TMC's implementation of the Enhanced Antitrust Compliance Program described in NPA Appendix A. The initial assessment will encompass the following areas:

1. Antitrust Compliance Policies and Procedures. A thorough review of all antitrust compliance policies and procedures adopted or revised by TMC in connection with the Enhanced Antitrust Compliance Program, including the TMC Antitrust Compliance Policy, the Competitor Contact Protocol, the Trade Association Interaction Guidelines, the Compliance Hotline and Internal Reporting Policy, and all related standard operating procedures. The monitor will assess the substance, clarity, and sufficiency of these policies and procedures against the specific requirements of NPA Appendix A and industry best practices.

2. Chief Compliance Officer Mandate and Resources. An assessment of the mandate, authority, reporting lines, staffing, and resource allocation of TMC's newly appointed independent Chief Compliance Officer, including whether the Chief Compliance Officer has unfettered access to the Board of Directors and the Audit Committee, consistent with the requirements of the NPA.

3. Training Programs. A detailed assessment of the adequacy, content, and delivery methodology of TMC's antitrust compliance training programs, including the mandatory annual antitrust training required for all commercial, sales, and pricing personnel and for all personnel who attend industry trade-association events or who have material contact with competitor personnel. The monitor will review training curricula, attendance records, evaluation tools, and any certification or testing mechanisms, and will assess whether training content adequately addresses the specific forms of anticompetitive conduct at issue in this investigation.

4. Competitor-Contact Protocols and Trade-Association Interaction Guidelines. A review of TMC's protocols governing contacts and communications with competitors, including pre-approval and post-contact reporting requirements. The monitor will also review TMC's guidelines for participation in industry trade associations, including the North American Specialty Minerals Council ("NASMC") and any similar industry bodies, and will assess TMC's procedures for monitoring and documenting such participation.

5. Hotline and Internal-Reporting Mechanisms. A review of TMC's compliance hotline and other internal-reporting mechanisms, including the independence and confidentiality of the hotline, the procedures for receiving, documenting, escalating, and investigating reports, and the anti-retaliation protections afforded to reporting employees.

6. Internal Audit Function. An assessment of TMC's internal audit function as it relates to antitrust compliance, including the scope, frequency, methodology, and reporting of antitrust-specific audit activities.

7. Remediation of Identified Deficiencies. An evaluation of the corrective measures implemented to address the specific compliance deficiencies identified during the internal investigation that preceded the NPA negotiations and that were detailed in Meridian's September 15, 2023 compliance program proposal. These deficiencies included, but were not limited to: (a) the absence of mandatory annual antitrust compliance training since approximately 2018; (b) the complete lack of monitoring or oversight of TMC employee interactions at trade-association events; and (c) the absence of any audit procedures or protocols for competitor contacts by commercial, sales, and pricing personnel. The monitor will assess the extent to which each identified deficiency has been remediated and will identify any gaps or areas requiring further corrective action.

B. Ongoing Monitoring (Months 1–24)

Throughout the full two-year monitor term, the monitor will conduct ongoing monitoring activities to assess TMC's continued adherence to the Enhanced Antitrust Compliance Program. The ongoing monitoring activities will include, at a minimum, the following:

1. Periodic Compliance Reviews. At least quarterly, the monitor will conduct a structured review of TMC's adherence to each component of the Enhanced Antitrust Compliance Program, including policies, procedures, training, reporting, and audit activities. The monitor will employ a standardized assessment framework to ensure consistency and comparability across review periods.

2. Training Monitoring. The monitor will review employee training completion records on at least a quarterly basis to confirm that all personnel in covered categories have completed mandatory training within the required timeframes. The monitor will also periodically review and evaluate training content to ensure it remains current, relevant, and consistent with the NPA requirements.

3. Communications Sampling and Review. The monitor will conduct periodic sampling and review of communications by TMC commercial, sales, and pricing personnel for compliance with competitor-contact protocols. This review will encompass email communications, instant messages, and — importantly — usage of encrypted messaging applications (such as Meridian Services Inc., Signal, and similar platforms), which the internal investigation identified as a channel through which certain TMC personnel previously communicated with competitor personnel outside the view of TMC's compliance and legal functions. The monitor will work with TMC's information technology and compliance teams to design and implement appropriate monitoring tools and sampling methodologies, subject to applicable privacy and data-protection requirements.

4. Industry Event Monitoring. The monitor will attend, or review detailed records from, relevant industry events attended by TMC personnel, including NASMC quarterly conferences, regional trade-association meetings, and any other industry gatherings at which TMC personnel are likely to interact with competitor personnel. The monitor will review pre-event briefings, post-event reports, and any contemporaneous notes or records generated by TMC attendees.

5. Personnel Interviews. The monitor will conduct periodic interviews with TMC personnel at all levels of the U.S. Specialty Minerals Division and other business units with material exposure to antitrust risk. Interviews will be conducted on a rotating basis, with priority given to personnel in senior commercial, sales, pricing, and business-development roles, as well as to personnel who have direct contact with competitor personnel or who attend industry events. The monitor will also interview compliance, legal, and internal audit personnel to assess the functioning of the compliance program from an operational perspective.

6. Internal Investigations and Disciplinary Actions. The monitor will review all internal investigations and disciplinary actions initiated or completed by TMC during the monitor term that relate to antitrust compliance. The monitor will assess the thoroughness, timeliness, and independence of such investigations and the proportionality and consistency of any disciplinary measures imposed.

7. Compliance Hotline Reports. The monitor will review all new allegations, complaints, or reports received through TMC's compliance hotline during the monitor term that are relevant to antitrust conduct. The monitor will assess TMC's handling of such reports, including the timeliness of investigation, the adequacy of follow-up, and the outcomes.

C. Annual Compliance Certification Review

Under the terms of the NPA, TMC's Chief Executive Officer, Søren Dalmqvist, and General Counsel, Priya Anand, are each required to execute annual compliance certifications attesting to TMC's compliance with the NPA and the Enhanced Antitrust Compliance Program. The monitor will review and verify the accuracy and completeness of each annual compliance certification prior to its submission to the Division. The monitor will independently assess whether the certifications accurately reflect TMC's compliance posture based on the monitor's own review and findings. If the monitor identifies any material inaccuracy, omission, or qualification that should be included in the certifications, the monitor will promptly notify the Division.

D. Access and Cooperation

Consistent with the requirements of Section 9 of the NPA, TMC has agreed to provide the monitor with unrestricted access to TMC's facilities, personnel, records, and systems, including those of Torchlight Mining (U.S.) Inc. and the U.S. Specialty Minerals Division. This access encompasses, without limitation, access to corporate offices, mining and processing facilities, information technology systems, email and communications archives, financial records, compliance records, training records, internal investigation files, personnel files (to the extent relevant to compliance matters), and any other documents or information that the monitor reasonably deems necessary to carry out the monitorship.

TMC will direct all current employees to cooperate fully and candidly with the monitor, including by making themselves available for interviews, responding to document requests, and providing information on a timely basis. TMC will not take any adverse action against any employee for cooperating with the monitor.

In addition, the monitor may retain, at TMC's expense and with the prior approval of the Division, additional consultants, specialists, or experts as reasonably necessary to carry out the monitorship. Such additional personnel may include, for example, forensic data analysts, information technology specialists, or industry experts.

V. Proposed Reporting Schedule

A. Reports to the DOJ

The monitor proposes to deliver the following reports to the Division on the schedule set forth below. All report dates are calculated from the assumed NPA execution date of May 6, 2024, and will be adjusted pro rata if the actual execution date differs.

Each report will be submitted to the Division in writing and will be accompanied by a cover letter from the Engagement Lead summarizing the principal findings and recommendations. The Initial Assessment Report will be submitted simultaneously to the Division and to TMC. Each subsequent report will likewise be submitted simultaneously to the Division and to TMC, subject to the exception described in Section V.B below.

B. Reports to TMC

The monitor will share all reports with TMC simultaneously with their submission to the Division, unless the Division directs otherwise. The Division may direct that a report, or any portion thereof, be withheld from TMC in circumstances involving potential obstruction, interference with the monitorship, or ongoing criminal investigation. In the event TMC submits a written response or comments to any monitor report, the monitor will forward such response to the Division and will address TMC's comments, as appropriate, in the subsequent report.

C. Ad Hoc Reporting

In addition to the scheduled reports described above, the monitor will promptly notify the Division of any of the following circumstances discovered during the course of the monitorship:

(a) Any material compliance failure, including any failure by TMC to implement or maintain a material component of the Enhanced Antitrust Compliance Program;

(b) Any potential new violation of the antitrust laws by TMC, its subsidiaries, or any of their current or former officers, directors, or employees;

(c) Any instance of non-cooperation by TMC personnel, including any refusal to provide access to facilities, documents, or information, or any refusal to participate in interviews;

(d) Any attempt by TMC, its officers, its counsel, or any of its employees to impede, obstruct, or unduly influence the monitorship;

(e) Any allegation or report received through the compliance hotline or otherwise that the monitor reasonably believes may constitute evidence of a criminal violation; and

(f) Any other matter that the monitor reasonably believes the Division should be made aware of on an expedited basis.

Ad hoc notifications will be provided to the Division by the most expeditious means practicable, including by telephone or secure electronic mail, and will be followed by a written memorandum to the Division within five (5) business days.

VI. Proposed Fee Structure

A. Hourly Rates

Meridian proposes the following hourly rate schedule for the monitorship engagement:

These rates are consistent with Meridian's standard rate schedule for government-mandated monitorship engagements and are in line with rates approved by the Division in comparable matters. We note that Meridian's rates reflect the specialized expertise required for this type of engagement and the unique demands and responsibilities of an independent compliance monitor serving under a Division-approved mandate. A detailed rate card is enclosed herewith as Enclosure C.

For reference, Meridian's total fees and expenses for the compliance program design phase (August 1, 2023, through the anticipated NPA execution date) are approximately USD 1,100,000. The monitorship will be structured as a separate engagement, with its own engagement agreement, budget, and billing, entirely distinct from the prior compliance-design engagement.

B. Estimated Annual Budget

Based on Meridian's experience with monitorships of comparable scope and complexity, and taking into account the specific requirements of the TMC monitorship, Meridian proposes the following estimated annual budget:

The Year 1 budget is higher due to the intensive initial assessment phase and the establishment of monitoring systems and protocols. The Year 2 budget reflects a more stabilized monitoring cadence, although it may be adjusted upward if Year 1 findings reveal the need for enhanced monitoring in specific areas. The total estimated cost of the two-year monitorship is approximately USD 2,415,000.

All monitorship fees and expenses will be borne exclusively by TMC, consistent with the requirements of the NPA. TMC has confirmed its willingness to fund the monitorship at the levels described herein.

C. Budget Approval Process

Meridian proposes that the annual monitorship budget be submitted to the Division for review and approval at the outset of the monitorship (concurrently with or promptly following NPA execution) and annually thereafter. In the event that actual fees and expenses in any year are projected to exceed the approved budget by more than ten percent (10%), the monitor will promptly disclose the projected overrun to the Division and will seek the Division's approval before incurring fees in excess of the approved budget. The monitor will maintain detailed time and expense records and will provide the Division with quarterly billing summaries upon request.

VII. Proposed Term

Consistent with the terms of the NPA, the proposed term of the monitorship is two (2) years from the date of NPA execution. Assuming NPA execution on or about May 6, 2024, the monitorship would commence on May 6, 2024, and conclude on May 6, 2026.

We note that TMC's cooperation obligations under the NPA extend for a full three (3) years from the date of NPA execution — that is, through approximately May 6, 2027 — and the Enhanced Antitrust Compliance Program requirements are ongoing and continuous for the entire NPA term. Accordingly, the monitor's Final Report, to be delivered at the conclusion of the two-year monitor term, will specifically address the sustainability of TMC's compliance improvements beyond the monitor term and will include recommendations, as appropriate, to help ensure that TMC's compliance infrastructure remains robust and effective through the end of the NPA cooperation period and beyond.

In addition, and as contemplated by Section 9(d) of the NPA, the monitorship may be extended by the Division, in its sole discretion, if TMC materially breaches the NPA or if the monitor identifies significant compliance deficiencies that have not been adequately remediated by the conclusion of the initial two-year monitor term. TMC has acknowledged and agreed to this extension provision as part of the NPA.

VIII. Proposed Process for DOJ Approval

We respectfully request that the Division confirm its approval of Meridian Compliance Partners LLC, with Claudia Ferraro serving as Engagement Lead, as the independent compliance monitor for the Torchlight Mining Corp. NPA. In order to ensure that the monitorship can commence promptly upon NPA execution, we propose the following timeline:

1. Division Review of This Proposal. The Division will review the proposal set forth in this letter, together with the enclosed supporting materials, and will communicate any questions, comments, or requested modifications to Calderwood & Harkness.

2. DOJ Approval. The Division will confirm its written approval of Meridian as the independent compliance monitor by the date of NPA execution (approximately May 6, 2024), or as soon thereafter as practicable.

3. Finalization of Monitor Engagement Agreement. Upon receipt of the Division's approval, Calderwood & Harkness will work with the Division and with Meridian to finalize the monitor engagement agreement, incorporating the specific scope, reporting, fee, and independence terms outlined in this letter and any modifications required by the Division. A draft of the proposed engagement agreement is enclosed herewith as Enclosure D for the Division's review and comment.

4. Commencement of Monitorship. The monitorship will commence immediately upon execution of the NPA and the finalization of the monitor engagement agreement, whichever occurs later.

We are prepared to accommodate any modifications to this timeline that the Division deems appropriate, and we are available to meet with the Division at any time to discuss the proposal in further detail.

IX. Conclusion

TMC is committed to full and good-faith compliance with the NPA and to the success of the Enhanced Antitrust Compliance Program. TMC takes seriously the compliance failures that gave rise to this matter and has invested substantial resources in designing and implementing a comprehensive remediation program that will ensure that such failures do not recur.

TMC believes that Meridian Compliance Partners LLC is the best-qualified candidate to serve as the independent compliance monitor. Meridian's deep familiarity with TMC's operations, organizational structure, compliance deficiencies, and the specific remediation measures that have been designed and are being implemented will enable the monitorship to be both effective and efficient. Ms. Ferraro's extensive experience serving as an independent monitor in prior Division matters, her subject-matter expertise in antitrust compliance, and her demonstrated commitment to independence and integrity provide strong assurance that the monitorship will serve the Division's interests and the public interest.

We are happy to provide any additional information or documentation that the Division may require in connection with its review of this proposal. We are also prepared to make Claudia Ferraro and other members of the Meridian team available for a meeting or call with the Division at the Division's convenience to discuss Meridian's qualifications, the proposed scope of work, or any other aspect of this proposal.

We respectfully request the Division's written confirmation of its approval of Meridian Compliance Partners LLC as the independent compliance monitor at the Division's earliest opportunity. Please do not hesitate to contact me directly with any questions or to discuss next steps.

Thank you for your consideration of this proposal and for your continued professionalism throughout this matter.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Elaine Forsythe Partner, Antitrust & Competition Practice Group Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, California 94104 Direct: (415) 772-3147

Email: eforsythe@calderwoodharkness.com

Enclosures:

Enclosure A: Curriculum Vitae of Claudia Ferraro, Engagement Lead, Meridian Compliance Partners LLC

Enclosure B: Summary of Meridian Compliance Partners LLC's Relevant Experience and Qualifications

Enclosure C: Proposed Monitor Fee Schedule (Detailed Rate Card)

Enclosure D: Draft Monitor Engagement Agreement (for DOJ Review and Comment)

Report	Due Date (Approximate)	Description
Initial Assessment Report	August 4, 2024 (90 days)	Comprehensive baseline assessment of TMC's implementation of the Enhanced Antitrust Compliance Program, including findings, gap analysis, and remedial recommendations.
Interim Six-Month Report	November 2, 2024 (180 days)	Progress update on remedial recommendations from the Initial Assessment Report; summary of ongoing monitoring findings through the six-month mark.
First Annual Report	May 6, 2025 (1 year)	Comprehensive assessment of TMC's compliance program performance, training completion rates, monitoring findings, any identified deficiencies, remedial actions taken, and recommendations for the second year of the monitorship.
Final Report	May 6, 2026 (2 years)	Comprehensive final assessment of TMC's compliance program, the sustainability of compliance improvements, remaining risks, and any residual recommendations for the one-year NPA cooperation period remaining after the conclusion of the monitorship (through May 6, 2027).
Professional Level	Hourly Rate (USD)
Engagement Lead (Claudia Ferraro)	$895
Senior Consultant	$695
Associate Consultant	$495
Forensic Data Analyst / IT Specialist	$525
Paralegal / Administrative Support	$275
Activity Category	Year 1 (Est.)	Year 2 (Est.)
Initial Assessment (Months 1–3)	$485,000	—
Ongoing Monitoring (Quarterly Reviews, Communications Sampling, Interviews, Industry Event Attendance)	$610,000	$565,000
Report Preparation (Initial Assessment, Interim, Annual, Final Reports)	$225,000	$240,000
Travel (Domestic — San Francisco, Reno, Phoenix, Atlanta, Charlotte)	$85,000	$75,000
Travel (International — Toronto)	$30,000	$25,000
Incidentals (Technology, Document Management, Secure Data Room)	$40,000	$35,000
Total Estimated Annual Budget	$1,475,000	$940,000

PRIVILEGED & CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 555 California Street, 40th Floor San Francisco, California 94104
Telephone: (415) 772-3000 Facsimile: (415) 772-3001 www.calderwoodharkness.com
April 20, 2024
VIA ELECTRONIC MAIL AND FIRST-CLASS MAIL
Denise Kowalski, Esq. Trial Attorney Antitrust Division, San Francisco Field Office U.S. Department of Justice 450 Golden Gate Avenue, Room 10-0101 San Francisco, California 94102
Re: Proposed Independent Compliance Monitor — Torchlight Mining Corp. / Non-Prosecution Agreement (DOJ Reference No. ATR-SF-2024-00312); Grand Jury No. GJ-22-0194, N.D. Cal.
Calderwood & Harkness Matter No.: 1039-00001
Dear Ms. Kowalski:
cc: Marcus Reeves, Senior Trial Attorney, Antitrust Division, San Francisco Field Office, U.S. Department of Justice, 450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102; Julia Stafford-Hayes, Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice, 950 Pennsylvania Avenue NW, Washington, D.C. 20530
I. Introduction
This firm serves as counsel to Torchlight Mining Corp. ("TMC") in connection with the above-referenced matter. We write in reference to the Non-Prosecution Agreement between TMC and the United States Department of Justice, Antitrust Division (the "Division"), the principal terms of which were agreed in principle on April 8, 2024, with formal execution anticipated in early May 2024 (the "NPA"). As you are aware, Section 9 of the NPA requires TMC to retain, at its own expense, an independent compliance monitor approved by the Division, to serve for a period of two years from the date of NPA execution. The independent compliance monitor is charged with assessing, overseeing, and reporting on TMC's implementation of and adherence to the Enhanced Antitrust Compliance Program described in Appendix A to the NPA.
The purpose of this letter is to formally propose Meridian Compliance Partners LLC ("Meridian") as the independent compliance monitor, to set forth the proposed scope of work, reporting schedule, fee structure, and term of the monitorship for the Division's review and approval, and to respectfully request that the Division confirm its approval of Meridian as the independent compliance monitor. As discussed on our call with you and Mr. Reeves on March 26, 2024, Meridian was previously identified to the Division as a potential monitor candidate, and the Division indicated its preliminary pre-approval of Meridian as a suitable candidate, subject to receipt and review of a formal proposal outlining the terms and structure of the proposed engagement. This letter is submitted in fulfillment of that request.
We have also enclosed, for the Division's reference, the supporting materials identified in the enclosure list at the conclusion of this letter, including Meridian's detailed credentials, a proposed fee schedule, and a draft monitor engagement agreement for the Division's review and comment.
II. Background
A. The Investigation
This matter arises from a grand jury investigation initiated by the Division through Grand Jury No. GJ-22-0194, empaneled in the United States District Court for the Northern District of California, into suspected violations of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. The investigation has focused on suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, encompassing markets for high-purity feldspar, industrial talc, and rare-earth concentrates. The Division's investigation examined alleged anticompetitive agreements among certain producers and distributors of these minerals, including TMC and certain of its competitors, during a period spanning approximately 2017 through 2022.
B. Torchlight Mining Corp.
TMC 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 conducts its U.S. operations through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc. ("TMC-US"), a Nevada corporation (Nevada Entity No. NV20160438721), with its principal place of business at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117. TMC is a publicly traded company, listed on the Toronto Stock Exchange under the ticker symbol "TRCL" and on the New York Stock Exchange under the ticker symbol "TMC."
For its fiscal year ended December 31, 2021, TMC reported consolidated revenue of approximately CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates). TMC's U.S. Specialty Minerals Division — the business unit at the center of the Division's investigation — generated approximately USD 687 million in revenue for that same fiscal year. The U.S. Specialty Minerals Division is headquartered in Reno, Nevada, and operates mining, processing, and distribution facilities in Nevada, Arizona, South Carolina, and Georgia.
C. The Non-Prosecution Agreement and Enhanced Compliance Program
Under the terms of the NPA agreed in principle on April 8, 2024, TMC has agreed, among other things, to implement and maintain an Enhanced Antitrust Compliance Program, the detailed requirements of which are set forth in Appendix A to the NPA. The Enhanced Antitrust Compliance Program addresses, among other matters, the appointment of an independent Chief Compliance Officer with a direct reporting line to the TMC Board of Directors, mandatory annual antitrust compliance training for specified categories of employees, robust competitor-contact protocols, trade-association interaction guidelines and monitoring, an anonymous compliance hotline, internal audit procedures specific to antitrust compliance, and annual compliance certifications by TMC's Chief Executive Officer and General Counsel. The NPA further requires, under Section 9, that TMC retain an independent compliance monitor, approved by the Division, to oversee and assess TMC's implementation of these requirements for a period of two years from the date of NPA execution.
D. Meridian's Prior Involvement
Calderwood & Harkness, on behalf of TMC, retained Meridian Compliance Partners LLC on August 1, 2023, to design and assist with the implementation of the enhanced antitrust compliance program proposal that was submitted to the Division on September 15, 2023. Over the course of this engagement, Meridian conducted an extensive assessment of TMC's existing compliance infrastructure, identified significant compliance gaps and deficiencies, and developed a comprehensive remediation plan that formed the basis for the Enhanced Antitrust Compliance Program set forth in NPA Appendix A. Meridian's familiarity with TMC's operations, organizational structure, compliance gaps, and the specific remediation measures that have been designed and are being implemented makes it uniquely qualified to serve as the independent compliance monitor during the NPA term. We address below the specific measures that will be implemented to ensure Meridian's independence in the monitor role.
III. Proposed Monitor: Meridian Compliance Partners LLC
A. Firm Overview
Meridian Compliance Partners LLC ("Meridian") is a regulatory-compliance consulting firm headquartered at 1100 Connecticut Avenue NW, Suite 730, Washington, DC 20036. Founded in 2011, Meridian specializes in antitrust and competition compliance, with particular expertise in designing, implementing, and monitoring corporate compliance programs in connection with resolutions reached with the Department of Justice Antitrust Division, the Federal Trade Commission, and their international counterparts. The firm employs approximately forty-five professionals, including former federal prosecutors, former senior Division staff, seasoned compliance consultants, and forensic data analysts, all of whom possess deep subject-matter expertise in antitrust and competition law and enforcement.
Meridian has served as an independent compliance monitor or compliance consultant in connection with multiple prior DOJ antitrust matters, including matters involving international cartel conduct in the automotive parts, chemicals, and packaged-food industries. In addition, the firm has been retained by Fortune 500 corporations and multinational enterprises to design and evaluate antitrust compliance programs in anticipation of and following government enforcement actions. A detailed summary of Meridian's relevant experience and qualifications is enclosed herewith as Enclosure B.
B. Engagement Lead
Claudia Ferraro will serve as the Engagement Lead and primary monitor, with day-to-day responsibility for the conduct and oversight of the monitorship. Ms. Ferraro is a founding partner of Meridian and has over twenty years of experience in antitrust compliance, corporate governance, and regulatory enforcement. Prior to founding Meridian, Ms. Ferraro served as a Senior Counsel in the Division's Washington Criminal II Section, where she supervised cartel investigations in the minerals, chemicals, and industrial-products sectors. She subsequently spent eight years in private practice at a major international law firm, where she counseled clients on antitrust compliance and served as an advisor to independent monitors in three Division matters.
Ms. Ferraro has served as the court-appointed independent compliance monitor in two prior DOJ antitrust resolutions and has acted as lead consultant to monitors in four additional matters. She holds a J.D. from Georgetown University Law Center, an M.B.A. from the Wharton School of the University of Pennsylvania, and is admitted to the bars of the District of Columbia, New York, and California. Her deep expertise in antitrust compliance program design, monitoring methodology, and the specific operational dynamics of the mining and specialty-minerals industry makes her exceptionally well-suited for this engagement. A detailed curriculum vitae for Ms. Ferraro is enclosed herewith as Enclosure A.
Importantly, Ms. Ferraro has led Meridian's work for TMC since August 2023, including the comprehensive compliance assessment, the design of the enhanced antitrust compliance program, and the preparation of the compliance program proposal submitted to the Division on September 15, 2023. As a result, Ms. Ferraro possesses an unparalleled understanding of TMC's organizational structure, its historic compliance deficiencies, the root causes of those deficiencies, and the specific corrective measures that have been developed and are being implemented. This institutional knowledge will enable the monitorship to commence with minimal ramp-up time and to focus immediately on substantive oversight of TMC's compliance performance.
C. Independence. We recognize that the Division's approval of a monitor candidate requires a thorough assessment of the candidate's independence. We address each relevant consideration below.
No Financial Interest. Meridian has confirmed in writing that it holds no equity, debt, or other financial interest in TMC, Torchlight Mining (U.S.) Inc., or any of their subsidiaries or affiliates. Meridian further confirms that it holds no financial interest in Ridgecrest Minerals Inc., Pinnacle Earth Resources Ltd., Cascade Chemical Supply Co., or any of their respective affiliates — each of which has been identified as a subject or target of the Division's investigation in the specialty-minerals sector.
No Personal Relationships with Persons of Interest. Meridian has confirmed that neither Ms. Ferraro nor any Meridian partner, consultant, or employee has any personal, familial, or prior professional relationship with any individual person of interest in the investigation, including, without limitation, Gavin Holt (former Senior Vice President, U.S. Specialty Minerals Division, TMC-US), Carl Edgerton (former Vice President, Sales & Marketing, U.S. Specialty Minerals Division, TMC-US), or Kevin Tsang (former Director, Strategic Pricing, U.S. Specialty Minerals Division, TMC-US).
Transition from Compliance Advisor to Independent Monitor. We acknowledge that Meridian was previously retained by Calderwood & Harkness on behalf of TMC for the compliance program design phase. We are mindful of the Division's emphasis on monitor independence and propose the following structural safeguards to ensure that Meridian's transition from compliance advisor to independent monitor preserves the integrity of the monitorship:
1. Reporting Obligations. Upon commencement of the monitorship, Meridian's reporting obligations will run directly to the Division — not to TMC, Calderwood & Harkness, or any other party. Meridian will submit all reports simultaneously to the Division and to TMC, unless the Division directs otherwise, but Meridian's primary duty of candor and loyalty will be owed to the Division and to the public interest.
2. Separate Engagement Agreement. Meridian will enter into a new, separate engagement agreement directly with TMC — at TMC's expense — under terms reviewed and approved by the Division. The engagement agreement will expressly provide that Meridian's obligations are owed to the Division and that TMC may not terminate or modify the engagement without the Division's prior written consent.
3. No Advocacy on Behalf of TMC. Meridian will not serve as TMC's advocate or consultant during the monitor term. Meridian will not advise TMC on how to respond to monitor findings or recommendations except to the extent that providing such guidance is necessary to enable TMC to remediate identified deficiencies.
4. Separate Billing and No Cross-Subsidization. All monitorship fees and expenses will be billed and accounted for separately from the prior compliance-design engagement. There will be no cross-subsidization of fees, and Meridian's monitorship compensation will not be contingent on any outcome favorable to TMC.
5. Duty of Candor. The engagement agreement will include an express duty of candor to the Division, requiring Meridian to report all material findings — including adverse findings — promptly and completely to the Division.
We believe that these structural safeguards, combined with Meridian's strong track record of independent service and Ms. Ferraro's personal reputation for integrity and objectivity, are sufficient to ensure the independence and credibility of the monitorship. We note that the Division has accepted similar transitions from compliance advisor to independent monitor in prior matters, including in cases where the advisor's institutional familiarity with the subject company was deemed to be an affirmative benefit to the effectiveness of the monitorship.
IV. Proposed Scope of Work
The proposed scope of work for the monitorship is designed to enable the monitor to carry out the specific oversight obligations set forth in Section 9 of the NPA and to provide the Division with comprehensive, reliable, and timely information regarding TMC's compliance performance throughout the monitor term. The scope of work is organized into four principal categories, as set forth below.
A. Initial Assessment (Months 1–3)
During the first three months of the monitorship, the monitor will conduct a comprehensive baseline assessment of TMC's implementation of the Enhanced Antitrust Compliance Program described in NPA Appendix A. The initial assessment will encompass the following areas:
1. Antitrust Compliance Policies and Procedures. A thorough review of all antitrust compliance policies and procedures adopted or revised by TMC in connection with the Enhanced Antitrust Compliance Program, including the TMC Antitrust Compliance Policy, the Competitor Contact Protocol, the Trade Association Interaction Guidelines, the Compliance Hotline and Internal Reporting Policy, and all related standard operating procedures. The monitor will assess the substance, clarity, and sufficiency of these policies and procedures against the specific requirements of NPA Appendix A and industry best practices.
2. Chief Compliance Officer Mandate and Resources. An assessment of the mandate, authority, reporting lines, staffing, and resource allocation of TMC's newly appointed independent Chief Compliance Officer, including whether the Chief Compliance Officer has unfettered access to the Board of Directors and the Audit Committee, consistent with the requirements of the NPA.
3. Training Programs. A detailed assessment of the adequacy, content, and delivery methodology of TMC's antitrust compliance training programs, including the mandatory annual antitrust training required for all commercial, sales, and pricing personnel and for all personnel who attend industry trade-association events or who have material contact with competitor personnel. The monitor will review training curricula, attendance records, evaluation tools, and any certification or testing mechanisms, and will assess whether training content adequately addresses the specific forms of anticompetitive conduct at issue in this investigation.
4. Competitor-Contact Protocols and Trade-Association Interaction Guidelines. A review of TMC's protocols governing contacts and communications with competitors, including pre-approval and post-contact reporting requirements. The monitor will also review TMC's guidelines for participation in industry trade associations, including the North American Specialty Minerals Council ("NASMC") and any similar industry bodies, and will assess TMC's procedures for monitoring and documenting such participation.
5. Hotline and Internal-Reporting Mechanisms. A review of TMC's compliance hotline and other internal-reporting mechanisms, including the independence and confidentiality of the hotline, the procedures for receiving, documenting, escalating, and investigating reports, and the anti-retaliation protections afforded to reporting employees.
6. Internal Audit Function. An assessment of TMC's internal audit function as it relates to antitrust compliance, including the scope, frequency, methodology, and reporting of antitrust-specific audit activities.
7. Remediation of Identified Deficiencies. An evaluation of the corrective measures implemented to address the specific compliance deficiencies identified during the internal investigation that preceded the NPA negotiations and that were detailed in Meridian's September 15, 2023 compliance program proposal. These deficiencies included, but were not limited to: (a) the absence of mandatory annual antitrust compliance training since approximately 2018; (b) the complete lack of monitoring or oversight of TMC employee interactions at trade-association events; and (c) the absence of any audit procedures or protocols for competitor contacts by commercial, sales, and pricing personnel. The monitor will assess the extent to which each identified deficiency has been remediated and will identify any gaps or areas requiring further corrective action.
B. Ongoing Monitoring (Months 1–24)
Throughout the full two-year monitor term, the monitor will conduct ongoing monitoring activities to assess TMC's continued adherence to the Enhanced Antitrust Compliance Program. The ongoing monitoring activities will include, at a minimum, the following:
1. Periodic Compliance Reviews. At least quarterly, the monitor will conduct a structured review of TMC's adherence to each component of the Enhanced Antitrust Compliance Program, including policies, procedures, training, reporting, and audit activities. The monitor will employ a standardized assessment framework to ensure consistency and comparability across review periods.
2. Training Monitoring. The monitor will review employee training completion records on at least a quarterly basis to confirm that all personnel in covered categories have completed mandatory training within the required timeframes. The monitor will also periodically review and evaluate training content to ensure it remains current, relevant, and consistent with the NPA requirements.
3. Communications Sampling and Review. The monitor will conduct periodic sampling and review of communications by TMC commercial, sales, and pricing personnel for compliance with competitor-contact protocols. This review will encompass email communications, instant messages, and — importantly — usage of encrypted messaging applications (such as Meridian Services Inc., Signal, and similar platforms), which the internal investigation identified as a channel through which certain TMC personnel previously communicated with competitor personnel outside the view of TMC's compliance and legal functions. The monitor will work with TMC's information technology and compliance teams to design and implement appropriate monitoring tools and sampling methodologies, subject to applicable privacy and data-protection requirements.
4. Industry Event Monitoring. The monitor will attend, or review detailed records from, relevant industry events attended by TMC personnel, including NASMC quarterly conferences, regional trade-association meetings, and any other industry gatherings at which TMC personnel are likely to interact with competitor personnel. The monitor will review pre-event briefings, post-event reports, and any contemporaneous notes or records generated by TMC attendees.
5. Personnel Interviews. The monitor will conduct periodic interviews with TMC personnel at all levels of the U.S. Specialty Minerals Division and other business units with material exposure to antitrust risk. Interviews will be conducted on a rotating basis, with priority given to personnel in senior commercial, sales, pricing, and business-development roles, as well as to personnel who have direct contact with competitor personnel or who attend industry events. The monitor will also interview compliance, legal, and internal audit personnel to assess the functioning of the compliance program from an operational perspective.
6. Internal Investigations and Disciplinary Actions. The monitor will review all internal investigations and disciplinary actions initiated or completed by TMC during the monitor term that relate to antitrust compliance. The monitor will assess the thoroughness, timeliness, and independence of such investigations and the proportionality and consistency of any disciplinary measures imposed.
7. Compliance Hotline Reports. The monitor will review all new allegations, complaints, or reports received through TMC's compliance hotline during the monitor term that are relevant to antitrust conduct. The monitor will assess TMC's handling of such reports, including the timeliness of investigation, the adequacy of follow-up, and the outcomes.
C. Annual Compliance Certification Review
Under the terms of the NPA, TMC's Chief Executive Officer, Søren Dalmqvist, and General Counsel, Priya Anand, are each required to execute annual compliance certifications attesting to TMC's compliance with the NPA and the Enhanced Antitrust Compliance Program. The monitor will review and verify the accuracy and completeness of each annual compliance certification prior to its submission to the Division. The monitor will independently assess whether the certifications accurately reflect TMC's compliance posture based on the monitor's own review and findings. If the monitor identifies any material inaccuracy, omission, or qualification that should be included in the certifications, the monitor will promptly notify the Division.
D. Access and Cooperation
Consistent with the requirements of Section 9 of the NPA, TMC has agreed to provide the monitor with unrestricted access to TMC's facilities, personnel, records, and systems, including those of Torchlight Mining (U.S.) Inc. and the U.S. Specialty Minerals Division. This access encompasses, without limitation, access to corporate offices, mining and processing facilities, information technology systems, email and communications archives, financial records, compliance records, training records, internal investigation files, personnel files (to the extent relevant to compliance matters), and any other documents or information that the monitor reasonably deems necessary to carry out the monitorship.
TMC will direct all current employees to cooperate fully and candidly with the monitor, including by making themselves available for interviews, responding to document requests, and providing information on a timely basis. TMC will not take any adverse action against any employee for cooperating with the monitor.
In addition, the monitor may retain, at TMC's expense and with the prior approval of the Division, additional consultants, specialists, or experts as reasonably necessary to carry out the monitorship. Such additional personnel may include, for example, forensic data analysts, information technology specialists, or industry experts.
V. Proposed Reporting Schedule
A. Reports to the DOJ
The monitor proposes to deliver the following reports to the Division on the schedule set forth below. All report dates are calculated from the assumed NPA execution date of May 6, 2024, and will be adjusted pro rata if the actual execution date differs.
Each report will be submitted to the Division in writing and will be accompanied by a cover letter from the Engagement Lead summarizing the principal findings and recommendations. The Initial Assessment Report will be submitted simultaneously to the Division and to TMC. Each subsequent report will likewise be submitted simultaneously to the Division and to TMC, subject to the exception described in Section V.B below.
B. Reports to TMC
The monitor will share all reports with TMC simultaneously with their submission to the Division, unless the Division directs otherwise. The Division may direct that a report, or any portion thereof, be withheld from TMC in circumstances involving potential obstruction, interference with the monitorship, or ongoing criminal investigation. In the event TMC submits a written response or comments to any monitor report, the monitor will forward such response to the Division and will address TMC's comments, as appropriate, in the subsequent report.
C. Ad Hoc Reporting
In addition to the scheduled reports described above, the monitor will promptly notify the Division of any of the following circumstances discovered during the course of the monitorship:
(a) Any material compliance failure, including any failure by TMC to implement or maintain a material component of the Enhanced Antitrust Compliance Program;
(b) Any potential new violation of the antitrust laws by TMC, its subsidiaries, or any of their current or former officers, directors, or employees;
(c) Any instance of non-cooperation by TMC personnel, including any refusal to provide access to facilities, documents, or information, or any refusal to participate in interviews;
(d) Any attempt by TMC, its officers, its counsel, or any of its employees to impede, obstruct, or unduly influence the monitorship;
(e) Any allegation or report received through the compliance hotline or otherwise that the monitor reasonably believes may constitute evidence of a criminal violation; and
(f) Any other matter that the monitor reasonably believes the Division should be made aware of on an expedited basis.
Ad hoc notifications will be provided to the Division by the most expeditious means practicable, including by telephone or secure electronic mail, and will be followed by a written memorandum to the Division within five (5) business days.
VI. Proposed Fee Structure
A. Hourly Rates
Meridian proposes the following hourly rate schedule for the monitorship engagement:
These rates are consistent with Meridian's standard rate schedule for government-mandated monitorship engagements and are in line with rates approved by the Division in comparable matters. We note that Meridian's rates reflect the specialized expertise required for this type of engagement and the unique demands and responsibilities of an independent compliance monitor serving under a Division-approved mandate. A detailed rate card is enclosed herewith as Enclosure C.
For reference, Meridian's total fees and expenses for the compliance program design phase (August 1, 2023, through the anticipated NPA execution date) are approximately USD 1,100,000. The monitorship will be structured as a separate engagement, with its own engagement agreement, budget, and billing, entirely distinct from the prior compliance-design engagement.
B. Estimated Annual Budget
Based on Meridian's experience with monitorships of comparable scope and complexity, and taking into account the specific requirements of the TMC monitorship, Meridian proposes the following estimated annual budget:
The Year 1 budget is higher due to the intensive initial assessment phase and the establishment of monitoring systems and protocols. The Year 2 budget reflects a more stabilized monitoring cadence, although it may be adjusted upward if Year 1 findings reveal the need for enhanced monitoring in specific areas. The total estimated cost of the two-year monitorship is approximately USD 2,415,000.
All monitorship fees and expenses will be borne exclusively by TMC, consistent with the requirements of the NPA. TMC has confirmed its willingness to fund the monitorship at the levels described herein.
C. Budget Approval Process
Meridian proposes that the annual monitorship budget be submitted to the Division for review and approval at the outset of the monitorship (concurrently with or promptly following NPA execution) and annually thereafter. In the event that actual fees and expenses in any year are projected to exceed the approved budget by more than ten percent (10%), the monitor will promptly disclose the projected overrun to the Division and will seek the Division's approval before incurring fees in excess of the approved budget. The monitor will maintain detailed time and expense records and will provide the Division with quarterly billing summaries upon request.
VII. Proposed Term
Consistent with the terms of the NPA, the proposed term of the monitorship is two (2) years from the date of NPA execution. Assuming NPA execution on or about May 6, 2024, the monitorship would commence on May 6, 2024, and conclude on May 6, 2026.
We note that TMC's cooperation obligations under the NPA extend for a full three (3) years from the date of NPA execution — that is, through approximately May 6, 2027 — and the Enhanced Antitrust Compliance Program requirements are ongoing and continuous for the entire NPA term. Accordingly, the monitor's Final Report, to be delivered at the conclusion of the two-year monitor term, will specifically address the sustainability of TMC's compliance improvements beyond the monitor term and will include recommendations, as appropriate, to help ensure that TMC's compliance infrastructure remains robust and effective through the end of the NPA cooperation period and beyond.
In addition, and as contemplated by Section 9(d) of the NPA, the monitorship may be extended by the Division, in its sole discretion, if TMC materially breaches the NPA or if the monitor identifies significant compliance deficiencies that have not been adequately remediated by the conclusion of the initial two-year monitor term. TMC has acknowledged and agreed to this extension provision as part of the NPA.
VIII. Proposed Process for DOJ Approval
We respectfully request that the Division confirm its approval of Meridian Compliance Partners LLC, with Claudia Ferraro serving as Engagement Lead, as the independent compliance monitor for the Torchlight Mining Corp. NPA. In order to ensure that the monitorship can commence promptly upon NPA execution, we propose the following timeline:
1. Division Review of This Proposal. The Division will review the proposal set forth in this letter, together with the enclosed supporting materials, and will communicate any questions, comments, or requested modifications to Calderwood & Harkness.
2. DOJ Approval. The Division will confirm its written approval of Meridian as the independent compliance monitor by the date of NPA execution (approximately May 6, 2024), or as soon thereafter as practicable.
3. Finalization of Monitor Engagement Agreement. Upon receipt of the Division's approval, Calderwood & Harkness will work with the Division and with Meridian to finalize the monitor engagement agreement, incorporating the specific scope, reporting, fee, and independence terms outlined in this letter and any modifications required by the Division. A draft of the proposed engagement agreement is enclosed herewith as Enclosure D for the Division's review and comment.
4. Commencement of Monitorship. The monitorship will commence immediately upon execution of the NPA and the finalization of the monitor engagement agreement, whichever occurs later.
We are prepared to accommodate any modifications to this timeline that the Division deems appropriate, and we are available to meet with the Division at any time to discuss the proposal in further detail.
IX. Conclusion
TMC is committed to full and good-faith compliance with the NPA and to the success of the Enhanced Antitrust Compliance Program. TMC takes seriously the compliance failures that gave rise to this matter and has invested substantial resources in designing and implementing a comprehensive remediation program that will ensure that such failures do not recur.
TMC believes that Meridian Compliance Partners LLC is the best-qualified candidate to serve as the independent compliance monitor. Meridian's deep familiarity with TMC's operations, organizational structure, compliance deficiencies, and the specific remediation measures that have been designed and are being implemented will enable the monitorship to be both effective and efficient. Ms. Ferraro's extensive experience serving as an independent monitor in prior Division matters, her subject-matter expertise in antitrust compliance, and her demonstrated commitment to independence and integrity provide strong assurance that the monitorship will serve the Division's interests and the public interest.
We are happy to provide any additional information or documentation that the Division may require in connection with its review of this proposal. We are also prepared to make Claudia Ferraro and other members of the Meridian team available for a meeting or call with the Division at the Division's convenience to discuss Meridian's qualifications, the proposed scope of work, or any other aspect of this proposal.
We respectfully request the Division's written confirmation of its approval of Meridian Compliance Partners LLC as the independent compliance monitor at the Division's earliest opportunity. Please do not hesitate to contact me directly with any questions or to discuss next steps.
Thank you for your consideration of this proposal and for your continued professionalism throughout this matter.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Elaine Forsythe Partner, Antitrust & Competition Practice Group Calderwood & Harkness LLP 555 California Street, 40th Floor San Francisco, California 94104 Direct: (415) 772-3147
Email: eforsythe@calderwoodharkness.com
Enclosures:
Enclosure A: Curriculum Vitae of Claudia Ferraro, Engagement Lead, Meridian Compliance Partners LLC
Enclosure B: Summary of Meridian Compliance Partners LLC's Relevant Experience and Qualifications
Enclosure C: Proposed Monitor Fee Schedule (Detailed Rate Card)
Enclosure D: Draft Monitor Engagement Agreement (for DOJ Review and Comment)
Report | Due Date (Approximate) | Description
Initial Assessment Report | August 4, 2024 (90 days) | Comprehensive baseline assessment of TMC's implementation of the Enhanced Antitrust Compliance Program, including findings, gap analysis, and remedial recommendations.
Interim Six-Month Report | November 2, 2024 (180 days) | Progress update on remedial recommendations from the Initial Assessment Report; summary of ongoing monitoring findings through the six-month mark.
First Annual Report | May 6, 2025 (1 year) | Comprehensive assessment of TMC's compliance program performance, training completion rates, monitoring findings, any identified deficiencies, remedial actions taken, and recommendations for the second year of the monitorship.
Final Report | May 6, 2026 (2 years) | Comprehensive final assessment of TMC's compliance program, the sustainability of compliance improvements, remaining risks, and any residual recommendations for the one-year NPA cooperation period remaining after the conclusion of the monitorship (through May 6, 2027).
Professional Level | Hourly Rate (USD)
Engagement Lead (Claudia Ferraro) | $895
Senior Consultant | $695
Associate Consultant | $495
Forensic Data Analyst / IT Specialist | $525
Paralegal / Administrative Support | $275
Activity Category | Year 1 (Est.) | Year 2 (Est.)
Initial Assessment (Months 1–3) | $485,000 | —
Ongoing Monitoring (Quarterly Reviews, Communications Sampling, Interviews, Industry Event Attendance) | $610,000 | $565,000
Report Preparation (Initial Assessment, Interim, Annual, Final Reports) | $225,000 | $240,000
Travel (Domestic — San Francisco, Reno, Phoenix, Atlanta, Charlotte) | $85,000 | $75,000
Travel (International — Toronto) | $30,000 | $25,000
Incidentals (Technology, Document Management, Secure Data Room) | $40,000 | $35,000
Total Estimated Annual Budget | $1,475,000 | $940,000

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