1039-00001 · Torchlight Mining Corp · documents

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PRIVILEGED & CONFIDENTIAL

CALDERWOOD & HARKNESS LLP Attorneys at Law

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

Telephone: (415) 398-7200 Facsimile: (415) 398-7201 www.calderwoodharkness.com

April 28, 2022

VIA EMAIL AND OVERNIGHT COURIER

Northland Mutual Insurance Co. 55 Yonge Street, Suite 2100 Toronto, ON M5E 1J4 Canada

Attention: Claims Department

Ref: Claims Handler — D&O Policy No. NMI-DO-2021-5547

Re: Torchlight Mining Corp. — D&O Policy No. NMI-DO-2021-5547 — Response to Reservation of Rights Letter; Demand for Defense Cost Coverage

Dear Sir or Madam:

I. Introduction and Reference to Prior Correspondence

We write on behalf of our client, Torchlight Mining Corp. ("TMC"), a corporation organized under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, with its registered office at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2, Canada, and its wholly owned subsidiary, Torchlight Mining (U.S.) Inc. ("TMC US"), a Nevada corporation with its principal office at 8750 West Sahara Avenue, Suite 210, Reno, NV 89117 (TMC and TMC US are collectively referred to herein as the "Company" or the "Insureds," as the context requires).

We acknowledge receipt of Northland Mutual Insurance Co.'s ("Northland") reservation-of-rights letter dated April 14, 2022 (the "ROR Letter"), which was issued in response to the notice of claim tendered by Calderwood & Harkness LLP on behalf of TMC to Northland on March 4, 2022, under Directors' and Officers' Liability Insurance Policy No. NMI-DO-2021-5547 (the "Policy"), with a policy period of July 1, 2021 through July 1, 2022. That notice of claim was submitted in connection with a United States Department of Justice, Antitrust Division, grand jury investigation (Grand Jury No. GJ-22-0194, U.S. District Court for the Northern District of California, San Francisco Division) (the "Investigation").

TMC respectfully but firmly contests the positions taken by Northland in the ROR Letter. As set forth in detail below, TMC demands that Northland honor its coverage obligations under the Policy, including, in particular, the obligation to advance defense costs for both the entity and for individual directors and officers of the Company who are insured persons under the Policy. Northland's attempt to invoke a criminal-act exclusion at this preliminary, pre-adjudication stage of the Investigation is without merit, contrary to the plain language of the Policy, and inconsistent with well-established principles of directors' and officers' liability insurance law.

II. Background — The Investigation

For the convenience of the Claims Department and to ensure a complete record, we briefly recite the relevant factual background.

On February 10, 2022, the Antitrust Division of the United States Department of Justice ("DOJ") formally opened a grand jury investigation into suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, with a particular focus on the markets for high-purity feldspar, industrial talc, and rare-earth concentrates. The Investigation is being conducted out of the DOJ's San Francisco Field Office, under the supervision of the Antitrust Division's Criminal Enforcement Section in Washington, D.C. The lead prosecutors assigned to the matter are Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves, with Deputy Assistant Attorney General Julia Stafford-Hayes serving in a supervisory capacity.

On February 14, 2022, TMC received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003, which compels the production of an extensive range of documents relating to TMC's pricing, sales, bidding, and customer-allocation practices in the specialty-minerals sector during the period January 1, 2017 through the present. The subpoena is broad in scope and covers documents in the possession of both TMC (Canada) and TMC US.

On February 18, 2022, TMC retained Calderwood & Harkness LLP to represent the Company in connection with the Investigation.

As of the date of this letter, no criminal charges have been filed against TMC, TMC US, or any current or former TMC director, officer, or employee. TMC has received only the grand jury subpoena described above. No target letter has been issued to TMC or to any individual affiliated with TMC. The Investigation remains at a preliminary stage, and there has been no adjudication, finding, or determination of any kind with respect to the conduct of the Company or any of its personnel.

We note for Northland's information that the Investigation is not limited to TMC. Other entities reported to be under investigation include Ridgecrest Minerals Inc., a Colorado corporation headquartered in Denver, Colorado, and Pinnacle Earth Resources Ltd., a corporation with offices in Sudbury, Ontario, and Salt Lake City, Utah. According to publicly available information and filings in related proceedings, the Investigation was reportedly triggered by a cooperation agreement between the DOJ and Cascade Chemical Supply Co., a Washington corporation headquartered in Spokane, Washington, which is believed to have entered into a leniency arrangement with the Antitrust Division.

The key TMC individuals whose conduct is under scrutiny in the Investigation include the following:

• Gavin Holt, former Vice President, U.S. Specialty Minerals Sales, who resigned from his position effective September 30, 2021. Mr. Holt's resignation preceded the commencement of the Investigation and occurred during the Policy period;

• Sandra Chu, Director, Pricing Analytics, who is a current TMC employee and who is believed to have had direct involvement in pricing decisions relevant to the Investigation; and

• Thomas Eriksen, Regional Sales Manager, Western Region, who is a current TMC employee and who is believed to have interacted with competitors in contexts relevant to the DOJ's inquiry.

We emphasize that the Company's CEO, Søren Dalmqvist, General Counsel, Priya Anand, Board Chair, Margaret Caldwell, and other members of TMC's C-suite and Board of Directors have no personal involvement in the conduct under investigation. Their roles in this matter are limited to the oversight, governance, and cooperation functions that would be expected of responsible corporate leadership upon learning of a government investigation.

TMC has taken the Investigation seriously and is cooperating fully. The Company has issued comprehensive litigation holds across its operations in Canada and the United States, retained Redstone Digital Forensics Inc. ("Redstone") to assist with data collection, preservation, and e-discovery, and commenced a thorough internal investigation. The first rolling production of approximately 42,000 documents was delivered to the DOJ on April 4, 2022, with substantial additional productions anticipated over the coming months.

III. The Policy and Coverage Obligations

A. Policy Identification

The Policy at issue is Directors' and Officers' Liability Insurance Policy No. NMI-DO-2021-5547, issued by Northland Mutual Insurance Co. to TMC, with a policy period of July 1, 2021 through July 1, 2022. The Policy has been renewed annually and is the lead layer in a directors' and officers' liability insurance tower.

B. Policy Terms

The following key terms are relevant to this dispute:

• Aggregate Limit of Liability: USD 50,000,000 (fifty million U.S. dollars).

• Retention (Self-Insured Retention / Deductible): USD 2,500,000 (two million five hundred thousand U.S. dollars), applicable to entity-level claims.

• Side A Coverage: Direct coverage for individual directors and officers for non-indemnifiable losses — that is, losses for which the Company cannot or does not indemnify the individual insured persons, including defense costs.

• Side B Coverage: Reimbursement of the entity (TMC) for indemnification payments made by the entity to its directors and officers in connection with covered claims, including the reimbursement of defense costs advanced by the Company on behalf of individual insureds.

• Side C / Entity Coverage: Coverage for the entity itself for securities claims and, depending on the applicable policy provisions, certain regulatory and investigative matters, including defense costs incurred by the entity in connection with covered proceedings.

The Policy is the lead layer in a D&O insurance tower that includes the following excess carriers:

• Layer 2: Greystone Specialty Insurance Ltd., providing USD 25,000,000 in coverage excess of the primary USD 50,000,000 limit (i.e., USD 25 million excess of USD 50 million).

• Layer 3: Sentinel Re Ltd., providing USD 25,000,000 in coverage excess of USD 75,000,000 (i.e., USD 25 million excess of USD 75 million).

Separate notice letters were transmitted to Greystone Specialty Insurance Ltd. and Sentinel Re Ltd. on or about March 8, 2022, as confirmed in our internal correspondence of that date.

C. Timely Notice

Notice of the claim was provided to Northland on March 4, 2022, well within the Policy period and in full compliance with the Policy's notice provisions. Northland has not disputed the timeliness of the notice, and TMC is not aware of any basis for such a dispute.

D. The Investigation Constitutes a Covered Claim

The Investigation constitutes a "Claim" or "Proceeding" (or equivalent defined term) under the Policy, triggering Northland's obligation to provide coverage for defense costs. The issuance of a grand jury subpoena duces tecum by a federal grand jury, in connection with a formal DOJ criminal investigation, plainly falls within the Policy's coverage grant. The defined terms in modern D&O policies — and, we submit, in the Policy — are drafted broadly to encompass governmental investigations, regulatory proceedings, and other official actions that impose defense obligations on the insured. To the extent there is any ambiguity in the Policy language, such ambiguity must be construed in favor of coverage, consistent with well-established principles of insurance contract interpretation in both Canadian and U.S. jurisdictions.

IV. Northland's Reservation-of-Rights Positions — Summary and Contest

We turn now to the specific positions articulated in the ROR Letter and address each in turn.

A. Individual Coverage (Side A) — Accepted but Incomplete

TMC acknowledges and appreciates that the ROR Letter confirmed Northland's acceptance of coverage for defense costs of individual directors and officers under Side A of the Policy. This acknowledgment is consistent with the plain language of the Policy and with standard industry practice.

However, TMC notes that Northland's acceptance of Side A coverage must extend to all current and former directors and officers who are potentially implicated in or affected by the Investigation, including, without limitation, Gavin Holt. Mr. Holt served as TMC's Vice President, U.S. Specialty Minerals Sales, and resigned effective September 30, 2021 — a date that falls squarely within the Policy period. The Policy's definition of "Insured Persons" should include, and in standard D&O policy forms does include, former officers and directors for claims arising out of or relating to their service in such capacity. Mr. Holt's conduct during his tenure is central to the Investigation, and any attempt to exclude him from coverage would be inconsistent with the Policy's terms and the reasonable expectations of the insureds.

TMC requests that Northland confirm in writing that its acceptance of individual coverage extends to Mr. Holt and to all other current and former directors and officers who may be called upon to participate in or respond to the Investigation.

B. Entity Coverage (Side B and Side C) — Disputed

The ROR Letter reserved rights with respect to entity-level coverage, apparently questioning whether the Policy provides entity-level defense-cost coverage for a criminal or regulatory investigation, as distinguished from a securities claim. TMC contests this position for the following reasons.

First, the Policy's definition of "Claim" (or the equivalent defined term) is broad enough to encompass governmental investigations, including grand jury subpoenas and the proceedings arising therefrom. Modern D&O policies routinely include within the definition of "Claim" formal investigations by governmental authorities, service of subpoenas, and similar official actions that impose obligations upon the insured entity and its directors and officers. To the extent the Policy contains such language — and we believe it does — Northland's reservation is without foundation.

Second, to the extent the Policy contains an entity-investigation-coverage endorsement or similar provision — as many modern D&O policies do — that endorsement should apply to the Investigation. TMC's exposure arises directly from an official federal criminal investigation, precisely the type of proceeding that entity-investigation coverage is designed to address.

Third, even if entity coverage under Side C of the Policy is limited to "securities claims" as specifically defined, the Investigation has direct and material implications for TMC's securities-disclosure obligations. TMC is publicly listed on the Toronto Stock Exchange (TSX: TRCL) and on the New York Stock Exchange (NYSE: TMC). TMC disclosed the Investigation in its fiscal year 2021 annual report, which was filed on March 28, 2022, on SEDAR+ (as required under Canadian securities laws) and with the U.S. Securities and Exchange Commission on Form 40-F (as required for foreign private issuers under the Securities Exchange Act of 1934). The existence of the Investigation, and its potential outcomes, create significant derivative securities exposure for TMC and its directors and officers, including the risk of shareholder class-action litigation, regulatory enforcement by the SEC or Canadian securities authorities, and claims arising from the adequacy of TMC's public disclosures. This derivative exposure brings the entity's defense costs within the scope of coverage, as the Investigation and any resulting securities claims are inextricably intertwined.

Fourth, TMC reserves its right to seek entity-level coverage under all applicable provisions of the Policy, and notes that it will pursue all available coverage for entity-level defense costs. To the extent Northland maintains that entity coverage does not apply, TMC will seek a judicial determination of its coverage rights.

C. The Criminal-Act Exclusion — The Central Dispute

The most significant issue raised in the ROR Letter is Northland's invocation of the Policy's criminal-act exclusion (also referred to as a "conduct exclusion"), which purports to exclude coverage for loss arising from deliberately criminal conduct, fraud, or dishonesty on the part of an insured. Northland has reserved rights under this exclusion as a basis for potentially denying coverage for defense costs in connection with the Investigation.

TMC contests this position in the strongest possible terms. As set forth in detail below, the criminal-act exclusion does not and cannot apply at this stage of the proceedings to deny or limit coverage for defense costs.

V. The Criminal-Act Exclusion Does Not Apply at the Pre-Adjudication Stage

A. No Charges Have Been Filed

As of the date of this letter, April 28, 2022, no criminal charges of any kind have been filed against TMC, TMC US, or any current or former TMC director, officer, or employee. The Company has received only a grand jury subpoena duces tecum, which is an investigative tool used by federal prosecutors to gather evidence. The issuance of a subpoena is not an accusation. It is not a charge. It is not an indictment. It carries no presumption of wrongdoing.

The Investigation is at a preliminary stage. No grand jury has returned an indictment. No information has been filed. No individual or entity affiliated with TMC has been named as a target or defendant in any criminal proceeding. The mere existence of a grand jury investigation does not establish — and indeed cannot establish — that any criminal act was in fact committed by any insured person or by the Company.

Under these circumstances, Northland's invocation of the criminal-act exclusion is premature, unsupported, and contrary to the express terms of the Policy.

B. The "Final Adjudication" Requirement

The criminal-act exclusion contained in virtually all D&O liability insurance policies, including Policy No. NMI-DO-2021-5547, requires that the deliberately criminal conduct, fraud, or dishonesty at issue be established by a final adjudication before the exclusion may be invoked to deny coverage. The specific triggering language in the Policy — consistent with standard market forms — requires a "final, non-appealable adjudication" or a "final adjudication in the underlying proceeding" (or words to substantially similar effect) establishing that the insured in fact committed the criminal, fraudulent, or dishonest act alleged.

This "final adjudication" requirement is a bedrock principle of D&O insurance law, and it exists for sound and compelling reasons:

(a) The insurer is not the adjudicator of the underlying claims. It is not Northland's role to determine whether TMC or any of its directors and officers engaged in criminal conduct. That determination is reserved to a court of competent jurisdiction following a full and fair proceeding.

(b) The criminal-act exclusion is, by its express terms, contingent upon a factual predicate — the establishment of criminal conduct — that has not been satisfied and may never be satisfied. An exclusion that is conditioned upon a future event that has not occurred cannot be invoked to deny coverage.

(c) The purpose of the final-adjudication requirement is to ensure that insureds are not deprived of defense funding at precisely the moment when it is most critically needed — that is, during the pendency of an investigation or prosecution, before any determination of guilt or innocence has been made. To allow insurers to invoke conduct exclusions at the investigation stage would render the defense-cost coverage provisions of D&O policies largely illusory.

We have reviewed the language of the ROR Letter carefully. Northland's invocation of the criminal-act exclusion does not identify any final adjudication, guilty plea, admission, or other triggering event that would permit the exclusion to be applied. That is because no such event has occurred. The exclusion is, at this stage, inapplicable as a matter of contract and as a matter of law.

C. Public Policy Considerations

Beyond the express terms of the Policy, significant public policy considerations weigh against Northland's position.

Denying or withholding defense-cost coverage at the investigation stage effectively presumes the guilt of the insureds before any adjudication has taken place. This is contrary to fundamental principles of due process and the presumption of innocence that undergird both the Canadian and American legal systems. While we recognize that these principles arise primarily in the criminal law context, they have long been recognized as relevant to the interpretation of insurance contracts that allocate the economic consequences of criminal allegations.

TMC paid substantial premiums for coverage under the Policy — coverage that was designed to protect the Company and its directors and officers against precisely the type of investigative proceeding now at issue. The D&O insurance market exists because companies and their directors and officers face the risk of governmental investigation and enforcement action. If insurers were permitted to invoke conduct exclusions at the earliest stages of an investigation — before any charges, let alone any adjudication — the coverage would be available only to those who are never investigated or never charged, rendering it of little practical value to those who need it most.

Northland's position, if sustained, would create a perverse result: the insured would be required to fund its own defense during the investigation and prosecution phases, and would be entitled to coverage only if acquitted — by which time the defense costs would already have been incurred and the insured's resources potentially exhausted. This is not the bargain reflected in the Policy, and it is not a result that any reasonable interpretation of the Policy supports.

D. The Advancement Obligation

Even if Northland believes — despite the foregoing — that the criminal-act exclusion may ultimately apply upon a final adjudication, that belief does not relieve Northland of its obligation to advance defense costs in the interim.

The obligation to advance defense costs is a separate and distinct obligation from the obligation to indemnify. The Policy requires Northland to advance defense costs as they are incurred, without waiting for a final resolution of the underlying matter. This advancement obligation exists precisely because defense costs are incurred on a rolling basis during the course of an investigation or litigation, and the insured cannot be expected to wait years for a final adjudication before receiving the benefit of the coverage for which it has paid.

To the extent Policy No. NMI-DO-2021-5547 contains an explicit "defense cost advancement" provision — as we believe it does — Northland is obligated to comply with that provision and to advance defense costs now, subject to the Policy's USD 2,500,000 retention. If the criminal-act exclusion is ultimately triggered by a final adjudication establishing deliberate criminal conduct, Northland may at that time seek recoupment of advanced defense costs to the extent permitted by the Policy and applicable law. But the possibility of future recoupment is not a basis for withholding advancement in the present.

We note that this principle has been recognized and enforced by courts in numerous jurisdictions, including in the context of antitrust investigations and prosecutions. The law is clear: defense costs must be advanced pending final adjudication, and the insurer's right to invoke a conduct exclusion ripens only upon the occurrence of the triggering event specified in the Policy.

E. Scope of Covered Defense Costs

For Northland's information, and to ensure there is no misunderstanding regarding the nature and scope of the defense costs at issue, TMC provides the following summary.

Legal Fees. The defense costs for which TMC seeks coverage include the fees of Calderwood & Harkness LLP for the representation of TMC, TMC US, and individual directors and officers in connection with the Investigation. This representation encompasses, without limitation, the following activities: responding to the grand jury subpoena, conducting document review and privilege analysis, preparing and supervising document productions, conducting the internal investigation, interviewing witnesses, preparing individuals for potential grand jury testimony, interfacing with the DOJ and its representatives, providing legal advice to the Company and its Board of Directors regarding cooperation and compliance obligations, and all related legal services. The firm's current standard hourly rates for this engagement are as follows:

• Partners: USD 1,450 per hour

• Senior Associates: USD 950 per hour

• Associates: USD 725 per hour

These rates are consistent with prevailing market rates for attorneys of comparable experience and skill in complex antitrust criminal defense matters, and TMC submits that they are eminently reasonable.

Expert Vendors. TMC has also retained the following expert vendors in connection with the Investigation, and submits that the costs of these vendors constitute reasonable and necessary defense costs within the meaning of the Policy:

• Redstone Digital Forensics Inc. — retained for data collection, preservation, processing, and e-discovery support. Redstone's services are essential to TMC's compliance with the grand jury subpoena and to the efficient management of the voluminous data involved in this matter.

• Hargrove Forensic Advisory LLC — retained for forensic economic analysis, including analysis of pricing data, market-share data, and competitive dynamics in the specialty-minerals sector. Hargrove's services are necessary to support the defense of TMC and its directors and officers against the allegations under investigation.

Budget Estimate. TMC's initial budget estimate for the internal investigation and grand jury defense phase of this matter is approximately USD 12,000,000. This estimate reflects the scope and complexity of the Investigation, the volume of documents at issue (the first rolling production alone comprised approximately 42,000 documents, with substantial additional productions anticipated), the number of custodians and witnesses involved, and the multi-jurisdictional nature of the matter. Actual costs are expected to be significant and may exceed this estimate depending on the trajectory of the Investigation.

TMC expects to submit defense-cost invoices to Northland on a regular basis and requests that Northland process and pay such invoices promptly upon receipt, in accordance with the Policy's terms.

VI. Demand for Coverage and Specific Actions Requested

In light of the foregoing, TMC demands that Northland take the following actions:

1. Withdraw or Limit the Reservation of Rights Regarding the Criminal-Act Exclusion. Northland must withdraw its reservation of rights with respect to the criminal-act exclusion, or, at a minimum, acknowledge in writing that the criminal-act exclusion cannot be applied to deny, delay, or reduce defense-cost coverage at the pre-adjudication stage. The exclusion, by its express terms, is not triggered until a final adjudication establishes that the insured engaged in deliberately criminal conduct. No such adjudication has occurred or is imminent.

2. Confirm Defense-Cost Advancement for Individual and Entity Insureds. Northland must confirm in writing that it will advance defense costs for both individual insured persons (including, without limitation, Gavin Holt, Sandra Chu, and Thomas Eriksen) and the entity (TMC and TMC US) in connection with the Investigation, subject only to the Policy's USD 2,500,000 retention.

3. Process and Pay Defense-Cost Invoices. Northland must process and pay defense-cost invoices submitted by Calderwood & Harkness LLP, Redstone Digital Forensics Inc., Hargrove Forensic Advisory LLC, and any other approved vendors in a timely manner and in accordance with the Policy's terms, including any applicable claims-handling guidelines.

4. Refrain from Applying the Criminal-Act Exclusion Prematurely. Northland must refrain from asserting the criminal-act exclusion, or any other conduct exclusion, to deny, delay, or reduce defense-cost payments pending a final adjudication of the underlying matter.

TMC emphasizes that it has already incurred, and continues to incur, substantial defense costs in connection with the Investigation. The Investigation is active and ongoing; the DOJ has communicated its expectation of additional document productions, and witness interviews are anticipated in the near term. Northland's delay or refusal to advance defense costs is causing material prejudice to the Insureds and is undermining their ability to mount an effective defense and conduct a thorough internal investigation.

VII. Reservation of TMC's Rights

TMC expressly reserves all of its rights under the Policy and at law, including but not limited to the following:

• The right to seek a judicial declaration, in a court of competent jurisdiction in Canada or the United States, that Northland is obligated to provide defense-cost coverage under the Policy in connection with the Investigation;

• The right to claim breach of Northland's duty to advance defense costs, and to seek damages for any such breach;

• The right to recover consequential damages, interest, costs, and attorneys' fees resulting from Northland's improper denial, delay, or limitation of coverage;

• The right to pursue claims against Northland for bad faith, including claims for extracontractual damages, if coverage is unreasonably withheld, delayed, or denied; and

• The right to assert any other claims or causes of action that may be available under the Policy, applicable statutes, or common law.

Nothing in this letter, or in any prior or subsequent correspondence between TMC and Northland, shall be construed as a waiver of any right, defense, or claim of TMC, TMC US, or any insured person under the Policy.

TMC also reserves its rights under the excess layers of the D&O insurance tower, including the policies issued by Greystone Specialty Insurance Ltd. (Layer 2) and Sentinel Re Ltd. (Layer 3). Separate notice letters were transmitted to those carriers on or about March 8, 2022, and TMC will pursue all available coverage under the entire tower as appropriate.

VIII. Request for Prompt Response

TMC requests that Northland respond in writing to this letter within fourteen (14) calendar days — that is, on or before May 12, 2022 — confirming Northland's coverage position with respect to each of the matters raised herein. Specifically, TMC requests that Northland confirm (a) its acceptance of the obligation to advance defense costs for both individual insured persons and the entity, (b) its withdrawal or limitation of the criminal-act exclusion reservation, and (c) its commitment to process and pay defense-cost invoices in a timely manner.

If Northland fails to respond within the time specified, or if Northland continues to reserve rights on the criminal-act exclusion without adequate justification, TMC will consider all available remedies, including but not limited to the commencement of coverage litigation and the filing of regulatory complaints with the appropriate insurance regulatory authorities.

In the interest of resolving this dispute efficiently and without unnecessary expense to either party, TMC is willing to arrange a telephone conference or in-person meeting between counsel for TMC and Northland's claims personnel and coverage counsel, at a mutually convenient time, to discuss the coverage issues identified in this letter. If Northland would find such a discussion productive, please contact the undersigned to arrange a date and time.

IX. Closing

TMC appreciates Northland's attention to this matter and sincerely hopes that this dispute can be resolved promptly and amicably, without the need for litigation. The Policy was purchased to provide protection to the Company and its directors and officers in precisely the circumstances now presented. TMC expects Northland to honor its contractual obligations and to act in good faith in the administration of this claim.

We look forward to Northland's timely response.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Elaine Forsythe Partner, Antitrust & Competition Practice Group

555 California Street, 40th Floor San Francisco, CA 94104 Telephone: (415) 398-7200

Email: eforsythe@calderwoodharkness.com

Enclosures:

1. Copy of Calderwood & Harkness LLP notice letter to Northland Mutual Insurance Co. dated March 4, 2022

2. Copy of Northland Mutual Insurance Co. reservation-of-rights letter dated April 14, 2022 (for reference)

cc:

Priya Anand, General Counsel Torchlight Mining Corp. 200 Bay Street, Suite 3400 Toronto, ON M5J 2J2, Canada

Howard Bellamy, Esq. Calderwood & Harkness LLP One Liberty Plaza, 50th Floor New York, NY 10006

C&H Matter No. 1039-00001

PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
555 California Street, 40th Floor San Francisco, California 94104
Telephone: (415) 398-7200 Facsimile: (415) 398-7201 www.calderwoodharkness.com
April 28, 2022
VIA EMAIL AND OVERNIGHT COURIER
Northland Mutual Insurance Co. 55 Yonge Street, Suite 2100 Toronto, ON M5E 1J4 Canada
Attention: Claims Department
Ref: Claims Handler — D&O Policy No. NMI-DO-2021-5547
Re: Torchlight Mining Corp. — D&O Policy No. NMI-DO-2021-5547 — Response to Reservation of Rights Letter; Demand for Defense Cost Coverage
Dear Sir or Madam:
I. Introduction and Reference to Prior Correspondence
We write on behalf of our client, Torchlight Mining Corp. ("TMC"), a corporation organized under the Canada Business Corporations Act, R.S.C. 1985, c. C-44, with its registered office at 200 Bay Street, Suite 3400, Toronto, ON M5J 2J2, Canada, and its wholly owned subsidiary, Torchlight Mining (U.S.) Inc. ("TMC US"), a Nevada corporation with its principal office at 8750 West Sahara Avenue, Suite 210, Reno, NV 89117 (TMC and TMC US are collectively referred to herein as the "Company" or the "Insureds," as the context requires).
We acknowledge receipt of Northland Mutual Insurance Co.'s ("Northland") reservation-of-rights letter dated April 14, 2022 (the "ROR Letter"), which was issued in response to the notice of claim tendered by Calderwood & Harkness LLP on behalf of TMC to Northland on March 4, 2022, under Directors' and Officers' Liability Insurance Policy No. NMI-DO-2021-5547 (the "Policy"), with a policy period of July 1, 2021 through July 1, 2022. That notice of claim was submitted in connection with a United States Department of Justice, Antitrust Division, grand jury investigation (Grand Jury No. GJ-22-0194, U.S. District Court for the Northern District of California, San Francisco Division) (the "Investigation").
TMC respectfully but firmly contests the positions taken by Northland in the ROR Letter. As set forth in detail below, TMC demands that Northland honor its coverage obligations under the Policy, including, in particular, the obligation to advance defense costs for both the entity and for individual directors and officers of the Company who are insured persons under the Policy. Northland's attempt to invoke a criminal-act exclusion at this preliminary, pre-adjudication stage of the Investigation is without merit, contrary to the plain language of the Policy, and inconsistent with well-established principles of directors' and officers' liability insurance law.
II. Background — The Investigation
For the convenience of the Claims Department and to ensure a complete record, we briefly recite the relevant factual background.
On February 10, 2022, the Antitrust Division of the United States Department of Justice ("DOJ") formally opened a grand jury investigation into suspected price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector, with a particular focus on the markets for high-purity feldspar, industrial talc, and rare-earth concentrates. The Investigation is being conducted out of the DOJ's San Francisco Field Office, under the supervision of the Antitrust Division's Criminal Enforcement Section in Washington, D.C. The lead prosecutors assigned to the matter are Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves, with Deputy Assistant Attorney General Julia Stafford-Hayes serving in a supervisory capacity.
On February 14, 2022, TMC received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003, which compels the production of an extensive range of documents relating to TMC's pricing, sales, bidding, and customer-allocation practices in the specialty-minerals sector during the period January 1, 2017 through the present. The subpoena is broad in scope and covers documents in the possession of both TMC (Canada) and TMC US.
On February 18, 2022, TMC retained Calderwood & Harkness LLP to represent the Company in connection with the Investigation.
As of the date of this letter, no criminal charges have been filed against TMC, TMC US, or any current or former TMC director, officer, or employee. TMC has received only the grand jury subpoena described above. No target letter has been issued to TMC or to any individual affiliated with TMC. The Investigation remains at a preliminary stage, and there has been no adjudication, finding, or determination of any kind with respect to the conduct of the Company or any of its personnel.
We note for Northland's information that the Investigation is not limited to TMC. Other entities reported to be under investigation include Ridgecrest Minerals Inc., a Colorado corporation headquartered in Denver, Colorado, and Pinnacle Earth Resources Ltd., a corporation with offices in Sudbury, Ontario, and Salt Lake City, Utah. According to publicly available information and filings in related proceedings, the Investigation was reportedly triggered by a cooperation agreement between the DOJ and Cascade Chemical Supply Co., a Washington corporation headquartered in Spokane, Washington, which is believed to have entered into a leniency arrangement with the Antitrust Division.
The key TMC individuals whose conduct is under scrutiny in the Investigation include the following:
• Gavin Holt, former Vice President, U.S. Specialty Minerals Sales, who resigned from his position effective September 30, 2021. Mr. Holt's resignation preceded the commencement of the Investigation and occurred during the Policy period;
• Sandra Chu, Director, Pricing Analytics, who is a current TMC employee and who is believed to have had direct involvement in pricing decisions relevant to the Investigation; and
• Thomas Eriksen, Regional Sales Manager, Western Region, who is a current TMC employee and who is believed to have interacted with competitors in contexts relevant to the DOJ's inquiry.
We emphasize that the Company's CEO, Søren Dalmqvist, General Counsel, Priya Anand, Board Chair, Margaret Caldwell, and other members of TMC's C-suite and Board of Directors have no personal involvement in the conduct under investigation. Their roles in this matter are limited to the oversight, governance, and cooperation functions that would be expected of responsible corporate leadership upon learning of a government investigation.
TMC has taken the Investigation seriously and is cooperating fully. The Company has issued comprehensive litigation holds across its operations in Canada and the United States, retained Redstone Digital Forensics Inc. ("Redstone") to assist with data collection, preservation, and e-discovery, and commenced a thorough internal investigation. The first rolling production of approximately 42,000 documents was delivered to the DOJ on April 4, 2022, with substantial additional productions anticipated over the coming months.
III. The Policy and Coverage Obligations
A. Policy Identification
The Policy at issue is Directors' and Officers' Liability Insurance Policy No. NMI-DO-2021-5547, issued by Northland Mutual Insurance Co. to TMC, with a policy period of July 1, 2021 through July 1, 2022. The Policy has been renewed annually and is the lead layer in a directors' and officers' liability insurance tower.
B. Policy Terms
The following key terms are relevant to this dispute:
• Aggregate Limit of Liability: USD 50,000,000 (fifty million U.S. dollars).
• Retention (Self-Insured Retention / Deductible): USD 2,500,000 (two million five hundred thousand U.S. dollars), applicable to entity-level claims.
• Side A Coverage: Direct coverage for individual directors and officers for non-indemnifiable losses — that is, losses for which the Company cannot or does not indemnify the individual insured persons, including defense costs.
• Side B Coverage: Reimbursement of the entity (TMC) for indemnification payments made by the entity to its directors and officers in connection with covered claims, including the reimbursement of defense costs advanced by the Company on behalf of individual insureds.
• Side C / Entity Coverage: Coverage for the entity itself for securities claims and, depending on the applicable policy provisions, certain regulatory and investigative matters, including defense costs incurred by the entity in connection with covered proceedings.
The Policy is the lead layer in a D&O insurance tower that includes the following excess carriers:
• Layer 2: Greystone Specialty Insurance Ltd., providing USD 25,000,000 in coverage excess of the primary USD 50,000,000 limit (i.e., USD 25 million excess of USD 50 million).
• Layer 3: Sentinel Re Ltd., providing USD 25,000,000 in coverage excess of USD 75,000,000 (i.e., USD 25 million excess of USD 75 million).
Separate notice letters were transmitted to Greystone Specialty Insurance Ltd. and Sentinel Re Ltd. on or about March 8, 2022, as confirmed in our internal correspondence of that date.
C. Timely Notice
Notice of the claim was provided to Northland on March 4, 2022, well within the Policy period and in full compliance with the Policy's notice provisions. Northland has not disputed the timeliness of the notice, and TMC is not aware of any basis for such a dispute.
D. The Investigation Constitutes a Covered Claim
The Investigation constitutes a "Claim" or "Proceeding" (or equivalent defined term) under the Policy, triggering Northland's obligation to provide coverage for defense costs. The issuance of a grand jury subpoena duces tecum by a federal grand jury, in connection with a formal DOJ criminal investigation, plainly falls within the Policy's coverage grant. The defined terms in modern D&O policies — and, we submit, in the Policy — are drafted broadly to encompass governmental investigations, regulatory proceedings, and other official actions that impose defense obligations on the insured. To the extent there is any ambiguity in the Policy language, such ambiguity must be construed in favor of coverage, consistent with well-established principles of insurance contract interpretation in both Canadian and U.S. jurisdictions.
IV. Northland's Reservation-of-Rights Positions — Summary and Contest
We turn now to the specific positions articulated in the ROR Letter and address each in turn.
A. Individual Coverage (Side A) — Accepted but Incomplete
TMC acknowledges and appreciates that the ROR Letter confirmed Northland's acceptance of coverage for defense costs of individual directors and officers under Side A of the Policy. This acknowledgment is consistent with the plain language of the Policy and with standard industry practice.
However, TMC notes that Northland's acceptance of Side A coverage must extend to all current and former directors and officers who are potentially implicated in or affected by the Investigation, including, without limitation, Gavin Holt. Mr. Holt served as TMC's Vice President, U.S. Specialty Minerals Sales, and resigned effective September 30, 2021 — a date that falls squarely within the Policy period. The Policy's definition of "Insured Persons" should include, and in standard D&O policy forms does include, former officers and directors for claims arising out of or relating to their service in such capacity. Mr. Holt's conduct during his tenure is central to the Investigation, and any attempt to exclude him from coverage would be inconsistent with the Policy's terms and the reasonable expectations of the insureds.
TMC requests that Northland confirm in writing that its acceptance of individual coverage extends to Mr. Holt and to all other current and former directors and officers who may be called upon to participate in or respond to the Investigation.
B. Entity Coverage (Side B and Side C) — Disputed
The ROR Letter reserved rights with respect to entity-level coverage, apparently questioning whether the Policy provides entity-level defense-cost coverage for a criminal or regulatory investigation, as distinguished from a securities claim. TMC contests this position for the following reasons.
First, the Policy's definition of "Claim" (or the equivalent defined term) is broad enough to encompass governmental investigations, including grand jury subpoenas and the proceedings arising therefrom. Modern D&O policies routinely include within the definition of "Claim" formal investigations by governmental authorities, service of subpoenas, and similar official actions that impose obligations upon the insured entity and its directors and officers. To the extent the Policy contains such language — and we believe it does — Northland's reservation is without foundation.
Second, to the extent the Policy contains an entity-investigation-coverage endorsement or similar provision — as many modern D&O policies do — that endorsement should apply to the Investigation. TMC's exposure arises directly from an official federal criminal investigation, precisely the type of proceeding that entity-investigation coverage is designed to address.
Third, even if entity coverage under Side C of the Policy is limited to "securities claims" as specifically defined, the Investigation has direct and material implications for TMC's securities-disclosure obligations. TMC is publicly listed on the Toronto Stock Exchange (TSX: TRCL) and on the New York Stock Exchange (NYSE: TMC). TMC disclosed the Investigation in its fiscal year 2021 annual report, which was filed on March 28, 2022, on SEDAR+ (as required under Canadian securities laws) and with the U.S. Securities and Exchange Commission on Form 40-F (as required for foreign private issuers under the Securities Exchange Act of 1934). The existence of the Investigation, and its potential outcomes, create significant derivative securities exposure for TMC and its directors and officers, including the risk of shareholder class-action litigation, regulatory enforcement by the SEC or Canadian securities authorities, and claims arising from the adequacy of TMC's public disclosures. This derivative exposure brings the entity's defense costs within the scope of coverage, as the Investigation and any resulting securities claims are inextricably intertwined.
Fourth, TMC reserves its right to seek entity-level coverage under all applicable provisions of the Policy, and notes that it will pursue all available coverage for entity-level defense costs. To the extent Northland maintains that entity coverage does not apply, TMC will seek a judicial determination of its coverage rights.
C. The Criminal-Act Exclusion — The Central Dispute
The most significant issue raised in the ROR Letter is Northland's invocation of the Policy's criminal-act exclusion (also referred to as a "conduct exclusion"), which purports to exclude coverage for loss arising from deliberately criminal conduct, fraud, or dishonesty on the part of an insured. Northland has reserved rights under this exclusion as a basis for potentially denying coverage for defense costs in connection with the Investigation.
TMC contests this position in the strongest possible terms. As set forth in detail below, the criminal-act exclusion does not and cannot apply at this stage of the proceedings to deny or limit coverage for defense costs.
V. The Criminal-Act Exclusion Does Not Apply at the Pre-Adjudication Stage
A. No Charges Have Been Filed
As of the date of this letter, April 28, 2022, no criminal charges of any kind have been filed against TMC, TMC US, or any current or former TMC director, officer, or employee. The Company has received only a grand jury subpoena duces tecum, which is an investigative tool used by federal prosecutors to gather evidence. The issuance of a subpoena is not an accusation. It is not a charge. It is not an indictment. It carries no presumption of wrongdoing.
The Investigation is at a preliminary stage. No grand jury has returned an indictment. No information has been filed. No individual or entity affiliated with TMC has been named as a target or defendant in any criminal proceeding. The mere existence of a grand jury investigation does not establish — and indeed cannot establish — that any criminal act was in fact committed by any insured person or by the Company.
Under these circumstances, Northland's invocation of the criminal-act exclusion is premature, unsupported, and contrary to the express terms of the Policy.
B. The "Final Adjudication" Requirement
The criminal-act exclusion contained in virtually all D&O liability insurance policies, including Policy No. NMI-DO-2021-5547, requires that the deliberately criminal conduct, fraud, or dishonesty at issue be established by a final adjudication before the exclusion may be invoked to deny coverage. The specific triggering language in the Policy — consistent with standard market forms — requires a "final, non-appealable adjudication" or a "final adjudication in the underlying proceeding" (or words to substantially similar effect) establishing that the insured in fact committed the criminal, fraudulent, or dishonest act alleged.
This "final adjudication" requirement is a bedrock principle of D&O insurance law, and it exists for sound and compelling reasons:
(a) The insurer is not the adjudicator of the underlying claims. It is not Northland's role to determine whether TMC or any of its directors and officers engaged in criminal conduct. That determination is reserved to a court of competent jurisdiction following a full and fair proceeding.
(b) The criminal-act exclusion is, by its express terms, contingent upon a factual predicate — the establishment of criminal conduct — that has not been satisfied and may never be satisfied. An exclusion that is conditioned upon a future event that has not occurred cannot be invoked to deny coverage.
(c) The purpose of the final-adjudication requirement is to ensure that insureds are not deprived of defense funding at precisely the moment when it is most critically needed — that is, during the pendency of an investigation or prosecution, before any determination of guilt or innocence has been made. To allow insurers to invoke conduct exclusions at the investigation stage would render the defense-cost coverage provisions of D&O policies largely illusory.
We have reviewed the language of the ROR Letter carefully. Northland's invocation of the criminal-act exclusion does not identify any final adjudication, guilty plea, admission, or other triggering event that would permit the exclusion to be applied. That is because no such event has occurred. The exclusion is, at this stage, inapplicable as a matter of contract and as a matter of law.
C. Public Policy Considerations
Beyond the express terms of the Policy, significant public policy considerations weigh against Northland's position.
Denying or withholding defense-cost coverage at the investigation stage effectively presumes the guilt of the insureds before any adjudication has taken place. This is contrary to fundamental principles of due process and the presumption of innocence that undergird both the Canadian and American legal systems. While we recognize that these principles arise primarily in the criminal law context, they have long been recognized as relevant to the interpretation of insurance contracts that allocate the economic consequences of criminal allegations.
TMC paid substantial premiums for coverage under the Policy — coverage that was designed to protect the Company and its directors and officers against precisely the type of investigative proceeding now at issue. The D&O insurance market exists because companies and their directors and officers face the risk of governmental investigation and enforcement action. If insurers were permitted to invoke conduct exclusions at the earliest stages of an investigation — before any charges, let alone any adjudication — the coverage would be available only to those who are never investigated or never charged, rendering it of little practical value to those who need it most.
Northland's position, if sustained, would create a perverse result: the insured would be required to fund its own defense during the investigation and prosecution phases, and would be entitled to coverage only if acquitted — by which time the defense costs would already have been incurred and the insured's resources potentially exhausted. This is not the bargain reflected in the Policy, and it is not a result that any reasonable interpretation of the Policy supports.
D. The Advancement Obligation
Even if Northland believes — despite the foregoing — that the criminal-act exclusion may ultimately apply upon a final adjudication, that belief does not relieve Northland of its obligation to advance defense costs in the interim.
The obligation to advance defense costs is a separate and distinct obligation from the obligation to indemnify. The Policy requires Northland to advance defense costs as they are incurred, without waiting for a final resolution of the underlying matter. This advancement obligation exists precisely because defense costs are incurred on a rolling basis during the course of an investigation or litigation, and the insured cannot be expected to wait years for a final adjudication before receiving the benefit of the coverage for which it has paid.
To the extent Policy No. NMI-DO-2021-5547 contains an explicit "defense cost advancement" provision — as we believe it does — Northland is obligated to comply with that provision and to advance defense costs now, subject to the Policy's USD 2,500,000 retention. If the criminal-act exclusion is ultimately triggered by a final adjudication establishing deliberate criminal conduct, Northland may at that time seek recoupment of advanced defense costs to the extent permitted by the Policy and applicable law. But the possibility of future recoupment is not a basis for withholding advancement in the present.
We note that this principle has been recognized and enforced by courts in numerous jurisdictions, including in the context of antitrust investigations and prosecutions. The law is clear: defense costs must be advanced pending final adjudication, and the insurer's right to invoke a conduct exclusion ripens only upon the occurrence of the triggering event specified in the Policy.
E. Scope of Covered Defense Costs
For Northland's information, and to ensure there is no misunderstanding regarding the nature and scope of the defense costs at issue, TMC provides the following summary.
Legal Fees. The defense costs for which TMC seeks coverage include the fees of Calderwood & Harkness LLP for the representation of TMC, TMC US, and individual directors and officers in connection with the Investigation. This representation encompasses, without limitation, the following activities: responding to the grand jury subpoena, conducting document review and privilege analysis, preparing and supervising document productions, conducting the internal investigation, interviewing witnesses, preparing individuals for potential grand jury testimony, interfacing with the DOJ and its representatives, providing legal advice to the Company and its Board of Directors regarding cooperation and compliance obligations, and all related legal services. The firm's current standard hourly rates for this engagement are as follows:
• Partners: USD 1,450 per hour
• Senior Associates: USD 950 per hour
• Associates: USD 725 per hour
These rates are consistent with prevailing market rates for attorneys of comparable experience and skill in complex antitrust criminal defense matters, and TMC submits that they are eminently reasonable.
Expert Vendors. TMC has also retained the following expert vendors in connection with the Investigation, and submits that the costs of these vendors constitute reasonable and necessary defense costs within the meaning of the Policy:
• Redstone Digital Forensics Inc. — retained for data collection, preservation, processing, and e-discovery support. Redstone's services are essential to TMC's compliance with the grand jury subpoena and to the efficient management of the voluminous data involved in this matter.
• Hargrove Forensic Advisory LLC — retained for forensic economic analysis, including analysis of pricing data, market-share data, and competitive dynamics in the specialty-minerals sector. Hargrove's services are necessary to support the defense of TMC and its directors and officers against the allegations under investigation.
Budget Estimate. TMC's initial budget estimate for the internal investigation and grand jury defense phase of this matter is approximately USD 12,000,000. This estimate reflects the scope and complexity of the Investigation, the volume of documents at issue (the first rolling production alone comprised approximately 42,000 documents, with substantial additional productions anticipated), the number of custodians and witnesses involved, and the multi-jurisdictional nature of the matter. Actual costs are expected to be significant and may exceed this estimate depending on the trajectory of the Investigation.
TMC expects to submit defense-cost invoices to Northland on a regular basis and requests that Northland process and pay such invoices promptly upon receipt, in accordance with the Policy's terms.
VI. Demand for Coverage and Specific Actions Requested
In light of the foregoing, TMC demands that Northland take the following actions:
1. Withdraw or Limit the Reservation of Rights Regarding the Criminal-Act Exclusion. Northland must withdraw its reservation of rights with respect to the criminal-act exclusion, or, at a minimum, acknowledge in writing that the criminal-act exclusion cannot be applied to deny, delay, or reduce defense-cost coverage at the pre-adjudication stage. The exclusion, by its express terms, is not triggered until a final adjudication establishes that the insured engaged in deliberately criminal conduct. No such adjudication has occurred or is imminent.
2. Confirm Defense-Cost Advancement for Individual and Entity Insureds. Northland must confirm in writing that it will advance defense costs for both individual insured persons (including, without limitation, Gavin Holt, Sandra Chu, and Thomas Eriksen) and the entity (TMC and TMC US) in connection with the Investigation, subject only to the Policy's USD 2,500,000 retention.
3. Process and Pay Defense-Cost Invoices. Northland must process and pay defense-cost invoices submitted by Calderwood & Harkness LLP, Redstone Digital Forensics Inc., Hargrove Forensic Advisory LLC, and any other approved vendors in a timely manner and in accordance with the Policy's terms, including any applicable claims-handling guidelines.
4. Refrain from Applying the Criminal-Act Exclusion Prematurely. Northland must refrain from asserting the criminal-act exclusion, or any other conduct exclusion, to deny, delay, or reduce defense-cost payments pending a final adjudication of the underlying matter.
TMC emphasizes that it has already incurred, and continues to incur, substantial defense costs in connection with the Investigation. The Investigation is active and ongoing; the DOJ has communicated its expectation of additional document productions, and witness interviews are anticipated in the near term. Northland's delay or refusal to advance defense costs is causing material prejudice to the Insureds and is undermining their ability to mount an effective defense and conduct a thorough internal investigation.
VII. Reservation of TMC's Rights
TMC expressly reserves all of its rights under the Policy and at law, including but not limited to the following:
• The right to seek a judicial declaration, in a court of competent jurisdiction in Canada or the United States, that Northland is obligated to provide defense-cost coverage under the Policy in connection with the Investigation;
• The right to claim breach of Northland's duty to advance defense costs, and to seek damages for any such breach;
• The right to recover consequential damages, interest, costs, and attorneys' fees resulting from Northland's improper denial, delay, or limitation of coverage;
• The right to pursue claims against Northland for bad faith, including claims for extracontractual damages, if coverage is unreasonably withheld, delayed, or denied; and
• The right to assert any other claims or causes of action that may be available under the Policy, applicable statutes, or common law.
Nothing in this letter, or in any prior or subsequent correspondence between TMC and Northland, shall be construed as a waiver of any right, defense, or claim of TMC, TMC US, or any insured person under the Policy.
TMC also reserves its rights under the excess layers of the D&O insurance tower, including the policies issued by Greystone Specialty Insurance Ltd. (Layer 2) and Sentinel Re Ltd. (Layer 3). Separate notice letters were transmitted to those carriers on or about March 8, 2022, and TMC will pursue all available coverage under the entire tower as appropriate.
VIII. Request for Prompt Response
TMC requests that Northland respond in writing to this letter within fourteen (14) calendar days — that is, on or before May 12, 2022 — confirming Northland's coverage position with respect to each of the matters raised herein. Specifically, TMC requests that Northland confirm (a) its acceptance of the obligation to advance defense costs for both individual insured persons and the entity, (b) its withdrawal or limitation of the criminal-act exclusion reservation, and (c) its commitment to process and pay defense-cost invoices in a timely manner.
If Northland fails to respond within the time specified, or if Northland continues to reserve rights on the criminal-act exclusion without adequate justification, TMC will consider all available remedies, including but not limited to the commencement of coverage litigation and the filing of regulatory complaints with the appropriate insurance regulatory authorities.
In the interest of resolving this dispute efficiently and without unnecessary expense to either party, TMC is willing to arrange a telephone conference or in-person meeting between counsel for TMC and Northland's claims personnel and coverage counsel, at a mutually convenient time, to discuss the coverage issues identified in this letter. If Northland would find such a discussion productive, please contact the undersigned to arrange a date and time.
IX. Closing
TMC appreciates Northland's attention to this matter and sincerely hopes that this dispute can be resolved promptly and amicably, without the need for litigation. The Policy was purchased to provide protection to the Company and its directors and officers in precisely the circumstances now presented. TMC expects Northland to honor its contractual obligations and to act in good faith in the administration of this claim.
We look forward to Northland's timely response.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Elaine Forsythe Partner, Antitrust & Competition Practice Group
555 California Street, 40th Floor San Francisco, CA 94104 Telephone: (415) 398-7200
Email: eforsythe@calderwoodharkness.com
Enclosures:
1. Copy of Calderwood & Harkness LLP notice letter to Northland Mutual Insurance Co. dated March 4, 2022
2. Copy of Northland Mutual Insurance Co. reservation-of-rights letter dated April 14, 2022 (for reference)
cc:
Priya Anand, General Counsel Torchlight Mining Corp. 200 Bay Street, Suite 3400 Toronto, ON M5J 2J2, Canada
Howard Bellamy, Esq. Calderwood & Harkness LLP One Liberty Plaza, 50th Floor New York, NY 10006
C&H Matter No. 1039-00001

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